Building contract – Exclusion clause – Construction – Appellant consortium purchasing land in South Wales for development – Respondent engineers providing advice and professional services – Appellants subsequently discovering asbestos contamination on site – Appellants commencing proceedings for breach of contract, negligence and breach of statutory duty against respondents – Court determining as preliminary issue that agreement and warranties excluding liability for asserted claims – Whether relevant clause excluding liability for claims relating to asbestos – Appeal dismissed
The appellant consortium comprised developers who had bought and developed a large site at Barry Quays, Barry Waterfront, Barry, South Wales. The respondents were engineers who had been involved with the potential and actual development of the site, providing advice and professional services. Potential contamination of the site was of concern to all parties involved. It was the appellants’ case that, after committing themselves to the development and purchasing the site, they discovered asbestos contamination of which they had previously been unaware.
In those circumstances, the appellants brought proceedings against the respondents, claiming damages for alleged breach of contract, negligence and breach of statutory duty. The claim was founded on various agreements between the parties. On a trial of preliminary issues, the court held that the words “liability for any claim in relation to asbestos is excluded” in clause 6.3 of the September 2009 agreement and clause 4.3 of warranties provided by deed in 2010, which made provision for the respondents to take out professional indemnity insurance, excluded liability for each and every claim asserted in the particulars of claim; and that the exclusion clauses limited the respondents’ liability in respect of other contamination to £5 million: [2015] EWHC 3573 (TCC); [2015] PLSCS 361.
The appellants appealed contending that (i) the phrase “liability for pollution and contamination” in clause 4.3 meant “liability for causing pollution and contamination” and not any liability in connection with pollution and contamination; and that the phrase “liability for any claim in relation to asbestos” should be construed in the same way; (ii) the judge had erred in failing to apply the contra proferentem rule and the rules governing the construction of exemption clauses. The contra proferentem rule required any ambiguity in an exemption clause to be resolved against the party who put the clause forward and relied on it, in accordance with the line of authorities on exemption clauses starting with Canada Steamship Lines Ltd v The King [1952] AC 192.
Held: The appeal was dismissed.
(1) On the natural meaning of the words used, clause 4.3 excluded any claim relating to asbestos, not only claims for causing the spread of asbestos. Both the language used by the parties and any application of business common sense led to conclusion that the exemption clauses limited the respondents’ liability for any claims in relation to pollution and contamination to £5 million. That was not limited to claims for causing the spread of contamination. The exemption clauses also excluded the respondents’ liability for claims in relation to asbestos which was not limited to claims for causing the spread of asbestos.
(2) In relation to commercial contracts, negotiated between parties of equal bargaining power, the contra proferentem rule now had a very limited role. Since the enactment of the Unfair Contract Terms Act 1977, the courts had softened their approach to both indemnity and exemption clauses. In major construction projects, the parties commonly agreed how they would allocate the risks between themselves and who would insure against what. Exemption clauses were part of the contractual apparatus for distributing risk. There was no need to approach them with horror or with a mindset designed to cut them down. The canons of construction elucidated in the Canada Steamship case, in so far as they survived, were now more relevant to indemnity clauses than to exemption clauses and were of little assistance in the present case. The meaning of the two exemption clauses was clear, and neither the contra proferentem rule nor the case law on exemption clauses could come to the rescue of the appellants. Both clauses excluded liability for all the appellants’ pleaded claims in respect of asbestos: K/S Victoria Street v House of Fraser (Store Management) Ltd [2011] EWCA Civ 904; [2012] Ch. 497, Lictor Anstalt v Mir Steel UK Ltd [2012] EWCA Civ 1397 and Transocean Drilling UK Ltd v Providence Resources plc [2016] EWCA Civ 372 applied.
Marcus Taverner QC and Tom Owen (instructed by Dentons UKMEA LLP) appeared for the appellants; Manus McMullan QC and Rónán Hanna (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared for the respondents.
Eileen O’Grady, barrister
Click here to read transcript: Persimmon Homes Ltd and others v Ove Arup & Partners Ltd and another
