The moving defendant sought leave to amend its defence in a construction defect action to plead that the owner’s covenant to insure barred the owner’s claim and entitled the moving party to indemnity.
Applying Rule 26.01, the court held that leave to amend is mandatory absent prejudice that cannot be compensated by costs or an adjournment, and found that the asserted prejudice arising from delay, settlement decisions, and possible claims against former counsel was not sufficient.
The court also held that the proposed insurance-based defence had arguable merit under construction law authorities recognizing that a contractual covenant to insure can shift the risk of project damage.
The amendment was permitted, including a paragraph claiming indemnity for defence costs and apportioned damages, but without prejudice to limitation arguments.
