Persimmon Homes Ltd v Ove Arup and Partners Ltd
Court of Appeal
Citations: [2017] EWCA Civ 373; [2017] 2 CLC 28; [2017] BLR 417; [2017] PNLR 29; [2017] CILL 4005; [2017] CLY 463.
Facts
The claimant purchased a site adjacent to some docks for commercial and residential development. In 2009, they contracted with the defendant to provide engineering and environmental services for the project. Clause 6.3 of the contract limited the defendant’s liability for tort, contract or breach of statutory duty to £12 million. It also limited pollution and contamination liability to £5 million, and excluded liability for any claim relating to asbestos.
In 2012, the claimant’s ground-works contractor encountered asbestos on the site, in a quantity substantially higher than expected. They sued the defendant for breach of contract, negligence and breach of statutory duty, arguing that the defendant failed to identify and report on the asbestos. The defendant relied on clause 6.3 as excluding their liability in relation to these claims. The claimant responded that clause 6.3, properly construed, applied only to claims relating to the spread or causation of asbestos. It did not apply to the failure to identify or report asbestos.
Issue(s)
- How should clause 6.3 be construed?
Decision
The Court of Appeal held in favour of the defendant. Clause 6.3’s language plainly showed the parties intended to exclude liability for all asbestos related claims, not just a limited class. Business common sense did not contradict this.
This Case is Authority For…
The 3-stage test in The Canada Steamship Lines Ltd v King [1952] AC 192 is merely guidelines rather than a strict test. In commercial cases, it is normally more help in construing indemnity clauses, rather than exclusion clauses. This is because commercial contracts often deliberately use exemption clauses to distribute risk. There is no need to have any presumption that they should be narrowly construed. In any case, the court thought that the 3-stage test was met in the present case.
Other
The court declined to apply the contra proferentem rule. This rule holds that ambiguous clauses should be construed against the person attempting to rely on them. The court thought that the rule had little application in interpreting commercial contracts negotiated between parties of equal bargaining power.
