- Indemnity clause did not extend to liabilities of third party (First National Trustco (UK) Ltd v McQuitty)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Commercial analysis: The legal owner of timeshare apartments in Spain incurred liabilities under Spanish law to pay various taxes. The owner’s English trustee sought to rely on an indemnity clause contained in the timeshare scheme, under which the trustee was to be indemnified for expenses incurred by it in connection with the timeshare properties. The court held that the construction of deeds of trust is governed by the same well-established principles which govern the construction of commercial contracts. Accordingly, the plain meaning of the indemnity clause was to indemnify the trustee for expenses which it incurred as trustee and, since the tax liabilities had been incurred by the legal owner of the apartments, which was a company owned by the trustee, the indemnity for the trustee did not extend to those liabilities. Written by Denis Edwards, barrister, Normanton Chambers.
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