R v Henrickson and Knutson

The parties to this dispute were the contractors, Henrickson and Knutson (the respondents), and the Crown (the appellant). The contractors sought indemnity from the Crown for damages and costs incurred in an action brought against them by a third party, Mrs. Cohney, whose property was damaged during the construction of a sewer. The contractors argued that the damage was a necessary consequence of the work they were contracted to perform, not due to any negligence on their part. The case originated in the Supreme Court of Western Australia, with an appeal to the High Court of Australia.

The central legal issue before the High Court was whether the contractors were entitled to an indemnity from the Crown for the loss sustained in Mrs. Cohney's action, and whether the terms of the construction contract excluded this implied right to indemnity. Specifically, the court had to determine if certain clauses within the contract, namely General Condition 25 and Specification Clause 12, operated to shift the liability for such damage entirely onto the contractors, thereby negating any implied contractual indemnity from the Crown.

The High Court applied the principle established in *Sheffield Corporation v. Barclay*, which states that where one person acts at the request of another, and the act is not manifestly tortious to the knowledge of the actor, but turns out to be injurious to a third party, the actor is entitled to an indemnity from the person who requested the act. The court found that the contractors performed the work at the Crown's request, were unaware of any manifest tortious nature of the act at the time, and the act ultimately caused injury to Mrs. Cohney. The court then examined whether the contract excluded this implied indemnity. It concluded that General Condition 25, which dealt with contractor liability for damage caused by their operations, did not apply to damage arising from the inherent nature of the work itself, as opposed to negligence in its execution. Similarly, Specification Clause 12, which required the contractor to repair or replace disturbed buildings and works, was interpreted as applying only to disturbances incidental to the immediate site of the works and not to consequential damage to adjacent private property over which the contractor had no control.

The High Court dismissed the Crown's appeal, upholding the judgment of the Supreme Court of Western Australia. The court found that the contractors were entitled to an indemnity from the Crown for the damages and costs awarded to Mrs. Cohney, as the contractual provisions relied upon by the Crown did not exclude the implied right to indemnity.