Smith and others v South Wales Switchgear Ltd

For some years the respondents, motor manufacturers, had engaged the appellants to carry out an annual overhaul of electrical equipment at the respondents' factory in Scotland. By letter dated 18 March 1970 the respondents requested the appellants to carry out an overhaul of the equipment during July 1970. The appellants replied that they were able to do so and on 27 May the respondents sent the appellants a purchase note requesting them to supply the services specified in the note, ie the service of overhauling the equipment, 'subject to ... our General Conditions Contract 24001, obtainable on request'. By letter dated 16 July the appellants informed the respondents that they had given instructions for the work to be carried out. The appellants did not request a copy of the general conditions, although on 1 July a copy of the 1969 version was sent to them. There were two other versions of the general conditions, the original version and the version as revised in March 1970. All three versions bore the number 24001. Each version contained an indemnity clause which provided that 'In the event of [the] order involving the carrying out of work by the Supplier and its sub-contractors on land and/or premises of the [respondents], the Supplier will keep the [respondents] indemnified against ... Any liability, loss, claim or proceedings whatsoever under Statute or Common Law (i) in respect of personal injury to, or death of, any person whomsoever, (ii) in respect of any injury or damage whatsoever to any property, real or personal, arising out of or in the course of ... the execution of [the] order'. On 25 July 1970 an employee of the appellants who was engaged on the overhaul at the respondents' factory was seriously injured in an accident at the factory. The employee brought an action for damages against the respondents in the Court of Session alleging negligence and breach of statutory duty. The respondents served a third party notice on the appellants claiming indemnity in

respect of the claim under the indemnity clause in the respondents' general conditions of contract. The court held that the accident was wholly caused by the respondents' negligence and breach of statutory duty and awarded the employee damages against the respondents. The court also held that the respondents were entitled under the indemnity clause to be indemnified by the appellants against the liability which they had incurred, and that decision was affirmed by the Second Division of the Court of Session. The appellants appealed to the House of Lords, contending (i) that, since it was uncertain which of the three versions of the general conditions of contract would have been sent to the appellants if the latter had requested a copy, it had not been proved that any of the versions had been incorporated into the contract, and (ii) that on its proper construction the indemnity clause did not require the appellants to indemnify the respondents against liability for the respondents' own negligence or that of their employees.

Held - (i) The reference in the purchase order to the respondents' 'General Conditions of Contract 24001, obtainable on request' was sufficient to incorporate into the contract between the respondents and the appellants the general conditions of contract, as revised in March 1970, since the reference clearly indicated the manner in which the terms of the general conditions could be ascertained by the appellants, and the meaning reasonably to be attributed to the reference was that the conditions referred to were those current at the date of the contract, for it was common experience that the general conditions of contract of undertakers were revised from time to time, and if the appellants had requested a copy of the conditions they would reasonably have expected to receive the current, March 1970, edition which was the version which, on a request, the respondents ought to have sent to them (see p 21 a to c, p 23 f, p 24 f to p 25 a and p 29 j to p 30 c, post).
(ii) The principles applicable to a clause which purported to confer exemption from liability on one party to a contract applied to a clause of indemnity. Accordingly, the party in whose favour the indemnity clause was made (the proferens) was entitled to indemnity against the consequence of his own negligence or that of his servants only where the indemnity clause contained an express provision to that effect or where the words of the clause in their ordinary meaning were wide enough to cover negligence on the part of the proferens. A clause did not contain an express provision indemnifying the proferens against his own or his servants' negligence unless it contained the word 'negligence' or some synonym for 'negligence'. Accordingly, since there was no express reference in the clause to negligence and the inclusion of the word 'whatsoever' could not be read as equivalent to an express reference to negligence since it was no more than a word of emphasis, the indemnity clause did not expressly provide that the respondents were to be indemnified against the results of their own or their servants' negligence. Nor were the words of the indemnity clause, read as a whole, wide enough in their ordinary meaning to cover negligence on the part of the respondents or their servants. The indemnity applied only where the order involved the carrying out of work by the appellants (the suppliers) or by their sub-contractors, and was in respect of injuries 'arising out of or in the course of ... the execution of [the] order'; it was therefore intended to apply only to liabilities incurred by the respondents for acts or omissions of the appellants or their servants in connection with carrying out the contractual work, and not to liability incurred by the respondents for their own or their servants' negligence towards the appellants' employees engaged on the contractual work since such liability was not, in a sufficiently proximate sense, connected with the carrying out of the contractual work by the appellants. It followed that the appeal would be allowed (see p 21 a b, p 22 a g h, p 23 f, p 25 d to h, p 26 b to j, p 27 d e, p 31 b and e to p 32 a and p 33 b c, post); dicta of Lord Greene MR in Alderslade v Hendon Laundry Ltd [1945] 1 All ER at 245, of Lord Morton of Henryton in Canada Steamship Lines Ltd v Regem [1952] 1 All ER at 310 and of Lord Maxwell in Clark v Sir William Arrol & Co Ltd 1974 SLT (Notes) at 92 applied; North of Scotland19 Hydro-Electric Board v D & R Taylor 1956 SC 1 and Walters v Whessoe Ltd and Shell Refining Co Ltd (1960) [1968] 2 All ER 816n approved; dicta of Buckley and Orr LJJ in Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd [1973] 1 All ER at 204, 205 disapproved.
Per Lord Fraser of Tullybelton. Where there is an indemnity against a breach of statutory duty by the proferens but no express provision applying the indemnity to negligence, if the liability of the proferens is founded on breach of statutory duty without any finding against him of negligence at common law he will not lose his indemnity if the breach of statutory duty can be regarded as negligent. It cannot be relevant, for the purpose of ascertaining whether the indemnity applies or not, to enquire whether the breach of statutory duty involves negligence (see p 28 a b, post).

VISCOUNT DILHORNE. My Lords, I have had the advantage of reading the speeches of my noble and learned friends, Lord Fraser of Tullybelton and Lord Keith of Kinkel, and I agree with their conclusions.
   I agree with them in thinking that the 1970 edition of the general conditions was the edition to be treated as incorporated in the contract. If the respondents had been asked to send a copy of the conditions and had sent an earlier edition, it would no doubt have been difficult for them successfully to contend that another edition was that to which the purchase order referred.
   The main question for determination in this appeal is as to the construction to be placed on cl 23(b) of the general conditions. The view of their Lordships as expressed by Lord Morton of Henryton in Canada Steamship Lines Ltd v Regem as to the approach to be made in construing 'such clauses' was summarised by the formulation of what has been referred to as three tests. In that case there was both an exemption clause and an indemnity clause. Although the tests themselves referred only to clauses exempting from liability, the reference by Lord Morton of Henryton in the preceding sentence to 'such clauses' shows that the tests were meant to apply both to exemption and to indemnity clauses.
   It is, however, to be noted that after formulating these tests, Lord Morton of Henryton said ([1952] 1 All ER 305 at 311, 312, [1952] AC 192 at 211) in relation to the indemnity provision:

   While an indemnity clause may be regarded as the obverse of an exempting clause, when considering the meaning of such a clause one must, I think, regard it as even more inherently improbable that one party should agree to discharge the liability of the other party for acts for which he is responsible. In my opinion it is the case that the imposition by the proferens on the other party of liability to indemnify him against the consequences of his own negligence must be imposed by very clear words. It cannot be said, in my opinion, that it has been in the present case.
   The tests formulated by Lord Morton of Henryton are applicable to the exempting or indemnity provision itself but in construing such a provision other parts of the contract which throw a light on the meaning to be given to it, are not to be ignored. It would be wrong in this case only to have regard to cl 23(b) to which the tests apply, and to ignore the other parts of the clause which in my opinion throw a revealing light on the meaning to be given to that provision.
   In Hollier v Rambler Motors (AMC) Ltd ([1972] 1 All ER 399 at 405, 406, [1972] 2 QB 71 at 80) Salmon LJ, as he then was, made some observations on the passage in Lord Greene MR's judgment in Alderslade v Hendon Laundry Ltd ([1945] 1 All ER 244 at 245, [1945] KB 189 at 192), which was cited with approval by Lord Morton of Henryton in the Canada Steamship case ([1952] 1 All ER 305 at 309, 310, [1952] AC 192 at 207, 208). He pointed out that 'in the end you are driven back to construing the clause in question to see what it means'. My noble and learned friend Lord Salmon's observations met with the approval of Lord Denning MR in Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd ([1973] 1 All ER 193 at 199, [1973] QB 400 at 414) and while the tests formulated by Lord Morton of Henryton are a useful aid to construing such clauses, they must not be interpreted as if they were provisions in a statute. At the end of the day one must construe the clause in the light, inter alia, of other provisions of the contract. It might be, though I do not think it is the case, that applying the tests to cl 23(b) alone might lead to the conclusion that the respondents succeeded while regard to the other provisions of the clause led to a contrary conclusion.
   When one considers cl 23(b) by itself in relation to the three tests, I agree with my noble and learned friend, Lord Fraser of Tullybelton, that it did not expressly indemnify the respondents from the consequences of their or their servants' negligence, and so did not satisfy the first test. To satisfy that, there must be a clear and unmistakable reference to such negligence; that is shown by the words 'If there is no express reference to negligence' with which the second test begins. In Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd ([1973] 1 All ER 193 at 204, 205, [1973] QB 400 at 420, 421) Buckley and Orr LJJ thought that the first test was satisfied by a clause whereby one party undertook to 'save harmless and keep' the other party 'indemnified against all claims or demands whatsoever'. With that conclusion I must express my dissent.
   Clause 23(b) begins with very wide words, but their width is restricted to liability for personal injuries or death or injury or damage to property arising out of or in the course of or caused by the execution of the order, that is to say, by the doing of the work the subject of the order. The liability in respect of which the respondents are to be indemnified is thus linked with the doing of the work. This appears to me to point to liability incurred by the respondents for acts or omissions of the appellants and their servants, and not to liability of the respondents for their or their servants' negligence. Whether or not this be right, it cannot be said that the language of cl 23(b) makes it perfectly clear that the respondents were to be indemnified against that.
   On the assumption that I am wrong about this, and that the words of cl 23(b) are wide enough to cover negligence on the part of the respondents and so are covered by the second part, I now turn to the third test. In my opinion it cannot be said that the clause was not intended to cover something other than negligence on the part of the

respondents. The language is apt to cover negligence on the part of the appellants and their servants and to my mind the likely object of it was to make it clear that the respondents were to be indemnified against liability to the third parties in respect of acts or omissions of the appellants and their servants. I agree with my noble and learned friend, Lord Keith of Kinkel, in agreeing with the observations of the Lord Justice Clerk Lord Thomson and Lord Patrick in North of Scotland Hydro-Electric Board v D & R Taylor (1956 SC 1 at 8, 10) which he has cited. It does not suffice to show that this conclusion with regard to the third test is wrong, that at common law the respondents would have a remedy against the appellants if held liable for something which was the appellants' fault.
   I think the view that cl 23(b) considered by itself does not indemnify the respondents against liability for their own negligence is reinforced when one comes to consider the introductory words of that clause, para (a), and its concluding part.
   The words 'In the event of this order involving the carrying out of work by the Supplier ... on land and/or premises of the Purchaser' support the view that the indemnity was intended to protect the respondents against liability resulting from the carrying out of the work by the appellants. Clause 23(a) makes it clear that all losses and costs incurred by reason of the supplier's breach of the statute etc are to be covered. This again points to the clause being intended to protect the respondents from any liability arising from conduct of the supplier. It was sought to attach significance to the omission of any reference in cl 23(b) to the supplier, but I do not think that omission significant. If, after providing that the indemnity was to cover liability for the appellants' breaches of statute, it was intended that cl 23(b) should extend to indemnity against the consequences of the respondents' own negligence, that could easily have been made clear.
   The final words of the clause as to insurance are difficult indeed to construe, but I think they were intended to mean that the supplier and sub-contractors were required to insure against liabilities they might incur under the contract or sub-contracts. I cannot suppose that sub-contractors would be required to insure against a liability to indemnify the respondents against the consequences of their own negligence.
   I, too, would allow the appeal.

LORD FRASER OF TULLYBELTON. My Lords, this is an appeal from the Second Division of the Court of Session. The Lord Justice Clerk (Lord Wheatley), with whom Lord Kissen and Lord Leechman concurred, held that an indemnity clause had been incorporated in a contract between the appellants and the respondents and that its effect was to entitle the respondents to be indemnified against a liability solely caused by their own negligence. The appellants appeal against both parts of the decision.
The respondents are motor manufacturers with a factory at Linwood in Renfrewshire. For some years before 1970 they or their predecessors, Rootes Motors (Scotland) Ltd, had employed the appellants to carry out an annual overhaul of the electrical equipment in the factory. On 25 July 1970, while the appellants were carrying out the annual overhaul, an electrical fitter employed by them and engaged on the overhaul work was seriously injured. He raised this action for damages against the respondents as defenders and they later convened the appellants as third parties. After a proof, limited to the question of liability for the accident, the Lord Ordinary (Lord Brand), held that it had been wholly caused by negligence and breach of statutory duty on the part of the respondents, and his decision on that part of the case has been

accepted. A separate proof was then held on the question of indemnity. The pursuer had no interest in this issue and took no part in the second proof. Lord Brand held that the respondents were entitled to be indemnified by the appellants and, on a reclaiming motion, the Second Division affirmed his decision.
The respondents found on an indemnity clause in their general conditions of contract and the first question is whether the general conditions were incorporated in the contract between the respondents and the appellants. If they were, there is a subsidiary question as to which of three versions of the conditions was incorporated, but this is of no practical importance because all three versions included an indemnity clause and there is no difference material to this issue between the clauses. If any of the versions was incorporated there arises a second question as to the construction of the indemnity clause.
The first question arises in this way. The contract was formed by several documents, one of which was a purchase order dated 27 May 1970 issued by the respondents to the appellants which included the words:

(The word 'facts' is obviously a mistake for 'face'.) The appellants did not request a copy of the general conditions. Some time later, on 1 July 1970, a copy of the general conditions (January 1969 version) was sent to the appellants because it happened to be printed on the back of a purchase order amendment issued by the respondents after confusion had arisen between this contract and another contract to which the respondents and appellants were parties. In May 1970 there were three versions of the conditions. The original version was headed 'General Conditions of Contract (24001)' and the later versions bore the same heading with the addition of 'Revised January 1969' and 'Revised March 1970' respectively. The respondents' system of referring to general conditions which would be sent on request was only in operation for about a year, during which period no supplier ever asked for a copy of them, but the evidence of the respondents' chief buyer at Linwood was that if anyone had asked, he would have sent whichever of the three versions happened to come first to hand. In that state of matters counsel for the appellants argued that none of the versions had been incorporated by the reference in the purchase order because such a reference could only be effective if it was to a unique set of conditions. I cannot agree. If the argument had any validity, its logical result would seem to be that there was no contract at all, but that was rightly not maintained. The reference in the purchase order clearly shows that the respondents intended to include the general conditions in the contract. The appellants never raised any objection to their incorporation, nor any question as to their terms and a few days after receiving the copy of the January 1969 version, they proceeded to carry out the work. In these circumstances I agree with the Lord Justice Clerk (Lord Wheatley), who delivered the only opinion in the Second Division, that one or other of the three versions of the conditions was certainly incorporated. The only question is which.
The Lord Ordinary (Lord Brand) and the Second Division held that the original (unrevised) version had been incorporated because it was the only one that precisely fitted the description in the purchase order which made no mention of 'revised January 1969' or 'revised March 1970'. In my opinion that view depends on too strict a reading of the words in the purchase order. It seems to me that the reference to general conditions without any further description must be taken to refer to the edition current at the date of the contract, that is, the edition revised in March 1970. If the appellants had asked for a copy of the general conditions that is the version which ought to have been sent, and, as the appellants do not suggest that they were in any way misled by the sending of the January 1969 edition in July 1970, I consider

that the latest edition is to be taken as having been incorporated in the contract. I shall hereafter refer to the clause, cl 23, in the March 1970 edition, although as I have already mentioned, the argument on construction would be the same whichever edition had been incorporated.
I come now to the question of construction. The indemnity clause is as follows:

These rules were stated in relation to clauses of exemption, but they are in my opinion equally applicable to a clause of indemninity which in many cases, including Canada Steamship Lines Ltd v Regem, is merely the obverse of the exemption. The statement has been accepted as authoritative in the law of Scotland: see North of Scotland Hydro-Electric Board v D & R Taylor, which was concerned with a clause of indemnity and it was accepted by both parties, rightly in my opinion, as being applicable to the present appeal.
The argument based on the first of Lord Morton of Henryton's tests can be disposed of quickly. Counsel for the respondents argued that para (b) in the present indemnity clause contained language which 'expressly' entitled the respondents to indemnity against the consequence of their own negligence and that the first test was satisfied. The argument was that the words 'any liability, loss, claim or proceedings whatsoever'

amounted to an express reference to such negligence because they covered any liability however caused. The argument was supported by reference to the opinions of Buckley and Orr LJJ in Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd ([1973] 1 All ER 193 at 204, 205, [1973] QB 400 at 420, 421), where great emphasis was placed on the word 'whatsoever' occurring in an indemnity clause as showing that the indemnity was intended to apply to all claims and demands however caused including claims for negligence. I agree with the decision in that case and with the statement by Buckley LJ that the clause was one 'which cannot sensibly be construed as subject to an implied qualification' but I am unable to agree with the Buckley LJ's conclusion ([1973] 1 All ER 193 at 205, [1973] QB 400 at 421) that the clause contained 'an agreement in express terms' to indemnify the proferens. I do not see how a clause can 'expressly' exempt or indemnify the proferens against his negligence unless it contains the word 'negligence' or some synonym for it and I think that is what Lord Morton of Henryton must have intended as appears from the opening words of his second test ('If there is no express reference to negligence'). On this point I agree with the opinion of the Lord Justice Clerk (Lord Wheatley) in the present case and of Lord Maxwell in Clark v Sir William Arrol & Co Ltd (1974 SLT (Notes) 90 at 92). The word 'whatsoever' occurs in para (b) of cl 23 here, but in my opinion it is no more than a word of emphasis and it cannot be read as equivalent to an express reference to negligence. To hold that it could would be to invest it with the same sort of magic property as the word 'allenarly' used to have in relation to an alimentary liferent in Scotland and there is no justification for that. In the present case I am clearly of opinion that there is no express provision that the respondents are to be indemnified against the results of their own negligence and that the Second Division were right in so holding.
I pass then to consider the second test. The words 'Any liability ... whatsoever under ... Common Law ... in respect of personal injury' which occur near the beginning of cl 23(b), if read in isolation, are of course wide enough to cover liability arising from negligence of the respondents or their servants. But they cannot properly be read in isolation from their context in cl 23 and in the general conditions. I have reached the opinion that cl 23(b), read as a whole, does not apply to liability arising from negligence by the respondents or their servants. The general conditions are evidently intended to apply to many contracts where the respondents are 'the Purchaser' and some other party is the supplier of goods or services to them. But cl 23 applies only 'in the event of [the particular contract] involving the carrying out of work by the supplier and its sub-contractors on' the respondents' premises. (Counsel for the appellants accepted, rightly in my opinion, that the word 'and' which I have italicised must be read as if it were, or included, 'or'. Otherwise in a case such as the present, where no sub-contractors were involved, the clause would not apply at all. That seems absurd.) The clause is thus looking to cases where the employees of the supplier will be working on the respondents' premises and it very naturally provides for an indemnity against the consequences of negligence by those employees while working there. But the employees of the respondents would not require to do any work in carrying out the contract and it seems unlikely that the parties intended that the respondents were to be indemnified by the appellants against liability as occupiers of the factory, especially as the indemnity is against claims in respect of injury to any person whomsoever and is not limited to servants of the suppliers or sub-contractors. Moreover, the indemnity is, in the final words of para (b), in respect of injuries etc 'arising out of or in the course of or caused by the execution of this order' and the only parties who will be concerned in 'execution' of the order are the appellants and any sub-contractors. 'In the course of' must convey some connection with execution of the order beyond the merely temporal; and thus they appropriately apply to activities of the party who is carrying out work under the order.

   The scope of the indemnity is defined in paras (a) and (b) of cl 23. It was accepted by both parties in argument that para (a) is concerned only with breaches of criminal law. That appears rather less clearly in the March 1970 version ('all losses and costs incurred by reason of the Suppliers' breach of any statute, bye-law or regulation') than in the original version ('all fines, penalties and loss incurred ... ') but I think it is clear enough. Paragraph (b) is evidently concerned with civil liability. In contrast with para (a) it is not expressly limited to liabilities incurred by reason of the acts or omissions of the supplier. So far as it goes, that contrast is in favour of the respondents, but it is not, in my opinion, enough to overcome the other indications that I have mentioned which point in favour of the appellants.
   Some further support for the appellants' argument is to be derived from the final part of cl 23 dealing with insurance. No doubt these provisions are obscure, and the reference to sub-contractors insuring against 'their liability hereunder' (which I read as meaning 'under this clause') is inept as no liability was imposed on sub-contractors under the clause nor could it have been as no sub-contractors were parties to the contract. But it evidently contemplates both suppliers and sub-contractors, if any, having liabilities under para (b) of the clause; these must, I think, be separate liabilities arising from their respective acts or omissions. Otherwise the effect of the insurance provisions would be to require double (or multiple) insurance by suppliers and (apparently all) sub-contractors against liability arising from acts or omissions of any party including the respondents; it seems to me most unlikely that that can have been intended.
   For these reasons the construction of cl 23 goes, in my opinion, further than raising a doubt to be resolved against the respondents as the proferens under the second test, and leads to a positive conclusion adverse to them. That is enough for the decision of the appeal, but if it were necessary to go on to consider the third test I would hold that the head of damage under liability at common law for personal injury may be based on some ground other than the respondents' own negligence. The possibility of common law liability falling on the respondents, as occupiers of the premises, through the fault of the suppliers' servants is in my opinion not fanciful or remote. Nor is the possibility of claims for nuisance or for breach of contract caused by defective work by the suppliers. No doubt the respondents would have a right of relief against the supplier in most if not all of these cases, but that is not a sufficient answer as they might well prefer to rely on the protection of an express right of indemnity rather than on their right to raise an action of relief with all its inevitable hazards. See North of Scotland Hydro-Electric Board v D & R Taylor (1956 SC 1 at 8, 10), per the Lord Justice Clerk (Thomson) and Lord Patrick.
   The conclusion that I have reached is in harmony with several recent decisions both in Scotland and in England to which we were referred, particularly North of Scotland Hydro-Electric Board v D & R Taylor and Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd, and Walters v Whessoe Ltd and Shell Refining Co Ltd (unreported) but cited and followed in AMF International Ltd v Magnet Bowling Ltd. We were supplied with a full transcript of the judgments in Walters v Whessoe and the decision seems to be unexceptionable, but there is a short passage in the opinion of Devlin LJ ([1968] 2 All ER 789 at 812, 813, [1968] 1 WLR 1028 at 1057) which might be read as meaning that an indemnity against a breach of statutory duty by the proferens would in the absence of express provision apply only if it occurred 'without negligence on his part'. It is followed by this sentence: 'In none of these cases is there any negligence on his part and there is therefore no reason to presume an intention to

exclude them from the indemnity.' I do not think that that can have been intended to mean that if the liability of the proferens is founded on breach of statutory duty without any finding of negligence at common law against him he will lose his indemnity if the breach of statutory duty can be regarded as negligent. If it is intended to mean that, I would respectfully disagree. I do not consider that it can be relevant, for the purpose of ascertaining whether an indemnity applies or not, to enquire whether the breach of statutory duty involves negligence. A decision of my own in the Outer House in McGlynn v Robert Rome & Son Ltd (1968 SLT (Notes) 16) was referred to by the Lord Justice Clerk (Lord Wheatley) in his opinion in the present case. The decision turned entirely on the words of the particular clause and the circumstances of the case, and raised no question of general principle, but I think the statement near the end of the opinion that 'there was no distinction for this purpose between claims for negligence at common law and claims arising out of breach of statutory duty' has to be read with reference to the clause then under consideration, and is not of general application. There are cases, of which Murfin v United Steel Companies Ltd is an example, where the terms of the indemnity clause clearly draw a distinction between statutory liability and negligence.
I would allow the appeal.

LORD KEITH OF KINKEL. My Lords, the action with which this appeal is concerned arose out of an accident which occurred within the respondents' factory at Linwood, Renfrewshire on 25 July 1970, and which resulted in serious personal injuries to the pursuer, an electrician employed by the appellants. On 29 August 1974 the Lord Ordinary (Lord Brand), after hearing proof, held that the accident was wholly caused by negligence and breach of statutory duty on the part of the respondents, and awarded the pursuer damages of �51,639. He found that no fault was to be attributed to the appellants.
The respondents by their pleadings in the action claimed against the appellants both a contribution under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 and also a contractual indemnity in respect of any damages and expenses which they might be found liable to pay to the pursuer. That issue was separated from the pursuer's claim to damages and made the subject of a second proof, following which, on 25 February 1976, the Lord Ordinary (Lord Brand) held that the respondents were entitled to a contractual indemnity from the appellants in respect of all damages and expenses payable by the respondents to the pursuer. The Second Division affirmed that decision by interlocutor dated 21 December 1976, against which the present appeal is taken.
The facts material to the indemnity issue are as follows. For some years before 1970 the respondents had engaged the appellants to carry out an annual overhaul of electrical equipment at their factory. On 18 March 1970 they sent to the appellants a letter asking whether the latter could carry out certain specified work on their electrical sub-stations during the period 19 to 20 July. The appellants replied by letter dated 10 April 1970 stating that they were able to carry out the work and requesting early instructions. On 27 May 1970 the respondents sent to the appellants a purchase order containing an order no NQ492122. The purchase order stated inter alia: 'Please supply goods or services specified below subject to the instructions and conditions on the facts [sic] hereof and our General Conditions Contract 24001, obtainable on request.' A specification of the work followed, and a detachable slip was appended which was designed to be returned by the recipient acknowledging receipt of the order. The appellants did not sign and return this slip. There followed a period of confusion which resulted from the appellants mistakenly thinking that order

no NQ492122 related to contractual work for the respondents which had been completed at the end of 1969, but which had apparently not yet been paid for. The respondents fell into the same error and sent the appellants a purchase order amendment dated 1 July 1970, the purpose of which was to fix the price for work done. It bore the reference number NQ492122 and had printed on the reverse a copy of the respondents' 'General Conditions of Contract (24001) revised January 1969'. Later it was informally agreed between the appellants and the respondents that the work required would start on 25 July 1970, and on 17 July the appellants wrote to the respondents saying that they had issued instructions for the work to be put in hand, but that they were unable to trace the original order no NQ492122. On 22 July the respondents sent to the appellants a copy of the order which was identical to the original except that it did not have the detachable slip appended to it. On 25 July the appellants duly sent the pursuer to the respondents' factory to carry out the specified work and the accident occurred on that day.
In the course of the proof it emerged that in addition to the original version of the respondents' general conditions of contract 24001, and the version as revised in January 1969, there existed a third version as revised in March 1970. Each of these versions contained an indemnity clause, the terms of which, in the two revised versions, were as follows:

   The terms of the corresponding clause in the unrevised version (cl 25) were the same, save that in place of the words 'All losses and costs' at the beginning of para (a), there appeared the words 'All fines, penalties and loss'. The punctuation also differed in certain respects. There were differences of greater or less significance in other provisions of the three versions.
   It was argued for the appellants before the Lord Ordinary (Lord Brand) and the Second Division that, since it was uncertain which of the three versions of the general conditions of contract would have been sent by the respondents to the appellants had the latter requested a copy, it had not been proved that any of the versions had in fact been incorporated into the contract. Reliance was placed on the evidence of an employee of the respondents responsible for sending out the conditions. This witness stated that no supplier had ever asked for a copy of the conditions, and that he was unsure which version he would have sent if he had been asked. The Lord Ordinary (Lord Brand) and the Second Division both held that the original unrevised version of the conditions had been incorporated in the contract.
   Counsel for the appellants advanced the same argument to this House. In my opinion it is ill-founded. I consider that the contract was concluded by the appellants receiving the respondents' original purchase order dated 27 May 1970, coupled with their letter to the respondents dated 16 July 1970 saying that they had instructed the work to be carried out. It is true that at the same time they said they had been unable to trace the original order, but on a copy being sent to them they put the work in hand without demur. The purchase order referred to the respondents', 'General Conditions of Contract 24001, obtainable on request.' It thus clearly indicated the manner in which the terms of these conditions could be ascertained, and that was

sufficient in law, unconditional acceptance having followed, for their incorporation into the contract. A question however arises as to what in the circumstances is the meaning to be attributed to 'General Conditions of Contract 24001, obtainable on request', it having emerged that the original terms of these conditions were revised by the respondents in January 1969 and again in March 1970. In my opinion the meaning reasonably to be attributed is that the conditions referred to are the current conditions, that is to say, the conditions as revised in March 1970. It is common experience that the general conditions of contract of various undertakers are revised from time to time, and anyone requesting a copy of such conditions would reasonably expect to receive the current up-to-date edition. Further, that is the edition which a responsible employee of the undertaker clearly ought to send to an enquirer. Viewing the matter objectively therefore, I am of opinion that the parties contracted on the basis of the respondents' general conditions of contract 24001 as revised in March 1970. I do not consider that the reference in the purchase order to 'General Conditions of Contract 24001', without any mention of revision, precludes the relevant conditions from being the latest revised version. All three versions in fact bore the number 24001. The situation does not differ from that which would exist had the reference simply been to 'General Conditions of Contract' without any number. It would be unreasonable to suggest that whenever such conditions are revised the fact of revision must necessarily be indicated on any contractual reference to them. Any reference to conditions can only be understood, in the mind of an ordinary reasonable man, as a reference to the conditions currently in force. The circumstance that on 1 July 1970 the respondents sent to the appellants a purchase amendment order having printed on the reverse a copy of the general conditions as revised in January 1969 does not, in my view, affect the matter. This occurred at a time when both parties were erroneously attributing the number NQ492122 to contractual work which had been completed at the end of 1969, and engaged in fixing the price to be paid for that work. In that situation the January 1969 version of the general conditions was quite rightly attributed to the particular work in question.
The second question in the appeal poses a much more difficult problem. It is whether cl 23 of the general conditions as revised in March 1970, on a proper construction, requires the appellants to indemnify the respondents against the liability which they incurred to the pursuer by reason of their own negligence and breach of statutory duty. The matter is essentially one of ascertaining the intention of the contracting parties from the language they have used, considered in the light of surrounding circumstances which must be taken to have been within their knowledge. Certain guidelines of assistance in approaching this task where an exemption clause or a clause of indemnity is under consideration were, however, laid down in the Privy Council case of Canada Steamship Lines Ltd v Regem ([1952] 1 All ER 305 at 310, [1952] AC 192 at 208). Lord Morton of Henryton, delivering the advice of the Board, expressed these as follows:

   In North of Scotland Hydro-Electric Board v D & R Taylor the Second Division accepted that these principles applied in the law of Scotland. It is to be stressed that they do not represent rules of law, but simply particular applications of wider general principles of construction, the rule that express language must receive due effect and the rule omnia praesumuntur contra proferentem. While they apply to the construction both of a clause relied on as exempting from certain liabilities a party who has undertaken to carry out contractual work and of a clause whereby such a party has agreed to indemnify the other party against liabilities which would ordinarily fall on him, they apply a fortiori in the latter case, since it represents a less usual and more extreme situation.
   In the contract under consideration the clause in question is an indemnity clause. In terms of its preamble, it is to apply only where the order involves the carrying out of work by the supplier and its sub-contractors on land or premises of the purchasers. This suggests that it is to be concerned with matters connected with acts of the supplier or its sub-contractors in the course of carrying out the work. Under para (a) 'all losses and costs incurred by reason of the Suppliers' breach of any statute, bye-law or regulation' are made the subject of indemnity by the supplier. It is here contemplated that such a breach by the supplier might involve the purchaser in losses or costs on the basis, it is to be inferred, of strict legal responsibility. There is no question here of the supplier indemnifying the purchaser against anything for which the supplier is not personally responsible. As regards para (b), its language is of the widest possible import down to the point where there occur the words 'arising out of or in the course of or caused by the execution of this order'. In my view these words are naturally to be read as qualifying 'any liability, loss, claim or proceedings whatsoever', and thus they impose a limit on the width of what has gone before. The words 'out of or in the course of' go together with 'arising'. What then, is the extent of the limit so set? In my opinion the words 'execution of this order' means 'the doing by the suppliers of the contractual work'. Insofar as a liability on the purchaser may arise out of the doing by the suppliers of the contractual work, that must clearly, in my view, be a liability resulting from some act or omission on the part of the suppliers. It is not so clear what might constitute a liability 'arising in the course of' the doing by the suppliers of the contractual work. It was accepted by counsel for the respondents that the significance of 'in the course of' could not reasonably be purely temporal, otherwise the suppliers would have to indemnify the purchasers against some negligent act of the latter done in a part of the factory where no contractual work was going on, or even in some other factory. He submitted that 'in the course of' meant 'connected with'. Accepting that as sound, I am of opinion that a liability incurred by the purchasers by reason of a breach by them of their common law duty of care towards a servant of the suppliers who is in the factory for the purpose of the contractual work is not, in a sufficiently proximate sense, connected with the doing by the suppliers of the contractual work. Any connection between the liability and the doing of the contractual work is purely fortuitous, resting merely on the circumstance that the doing of the contractual work led to the presence in the factory of the suppliers' servant and thus exposed him to the possibility of injury through the purchasers' negligence.
   I conclude that the limit set by the concluding words of para (b) is such that the negligence of the purchasers is not expressly made the subject of indemnity by the suppliers, and further that the words used are not wide enough, in their ordinary meaning, to cover such negligence. If I were wrong as regards the latter aspect, I should be of the opinion that the indemnity stipulated for is intended to apply, not to

liabilities arising from the purchasers' own negligence, but to liabilities incurred by them by reason of acts or omissions on the suppliers' part in the course of carrying out the contractual work. There is no difficulty in envisaging situations where something done or left undone by the suppliers might result in the purchasers incurring liabilities at common law either as occupiers of the factory or as employers, or for breaches of the Factories Acts or the Electricity Acts. In my opinion the possibility of such situations must be taken to have been in the contemplation of the parties and not only provides ample content for the clause but casts considerable light on the intention to be gathered from the language used.
It was argued for the respondents that the indemnity clause was unnecessary for the purpose of protecting the purchasers against claims arising through acts or omissions of the suppliers, since in relation to such claims the purchasers would have available to them an action of relief against the supplier. A similar argument was advanced in North of Scotland Hydro-Electric Board v D & R Taylor, but it was rejected. The Lord Justice Clerk (Lord Thomson) said (1956 SC 1 at 8):

I respectfully agree, and am of opinion that the argument fails in the present case for the same reason.
I have to add that I have found the final part of cl 23, dealing with the suppliers' obligation to insure and cause all sub-contractors to insure 'against their liability hereunder' extremely difficult of construction. In particular it is very uncertain whether 'their liability hereunder' refers to liability under the indemnity clause or general liability that may be incurred by reason of the contract. Considering that the suppliers are not taken bound to require sub-contractors to grant an indemnity, there are difficulties in attributing the former meaning to the words. But in my opinion this part of the clause is not in any event significant for the purpose of ascertaining the extent of indemnity obligation, and it is therefore unnecessary to resolve the problems which it presents.
Your Lordships were referred to a decision in 1960 of the Court of Appeal in Walters v Whessoe Ltd. This is incompletely reported, but transcripts of the judgments were made available. A contractual indemnity clause in terms very similar to that under consideration in the present case was there held to afford no relief to the party founding on it. While every such clause is to be construed on its own terms in the light of the circumstances of the particular case, I consider that the decision is helpful as indicating the proper approach in principle to this question of construction. Sellers LJ said in the course of his judgment: