(1) Persimmon Homes Ltd (2) Taylor Wimpey Uk Ltd (3) Bdw Trading Ltd v (1) Ove Arup & Partners Ltd and (2) Ove Arup & Partners International Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 07 December 2015 |
| Neutral Citation | [2015] EWHC 3573 (TCC) |
| Docket Number | Case No: HT-2014000199 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 07 December 2015 |
[2015] EWHC 3573 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Stuart-Smith
Case No: HT-2014000199
Mr Marcus Taverner QC and Mr Tom Owen (instructed by Dentons UKMEA LLP) for the Claimants
Mr Manus McMullan QC and Mr Rónán Hanna (instructed by Nabarro LLP) for the Defendants
Hearing dates: 17 and 18 November 2015
Introduction
The Claimants (who are collectively known at "the Consortium") are developers who bought and developed a large site at Barry Quays, Barry Waterfront, Barry in South Wales. The Defendant ["Arup"] is a well known firm of engineers which was involved over many years with the potential and actual development of the site, advising and providing professional services successively to the Association of British Ports ["ABP"], the Welsh Development Agency ["WDA"] and the Consortium. It is common ground that, at least in general terms, potential contamination of the site was one of the areas of concern for ABP, WDA, the Consortium and Arup. It is the Consortium's case that, after committing themselves to the development and purchasing the site on 21 September 2007, the Consortium discovered asbestos contamination of which they had previously been unaware.
In these circumstances, the Consortium has brought proceedings against Arup claiming damages for alleged breach of contract and negligence, as set out in a long and detailed Particulars of Claim running to 85 pages with annexes of another 124 pages that provide copies of the main contractual documents. The Consortium's claim is founded on (i) a deed of appointment between ABP and Arup dated 20 February 1996 ["the 1996 Appointment"], (ii) an agreement between the Consortium and Arup reached by exchange of emails in January 2007 for the provision of services in preparation for the Consortium's bid for the site ["the January 2007 Contract"], (iii) an agreement made under seal on 22 September 2009 between the Consortium and Arup relating to the provision of services concerning the site ["the September 2009 Agreement"], and (iv) warranties provided by deed by Arup in favour of each of the Claimants, there being three deeds in essentially identical terms ["the 2010 Warranties"].
Arup denies liability and raises multiple issues by its Defence, many of which are beyond the scope of this judgment.
On 10 July 2015 the Court ordered the trial of three preliminary issues, each of which involves the construction of one or more of the various agreements to which I have referred. The preliminary issues are:
" Issue 1: Was the effect of the [September 2009] Agreement:
(a) To supersede (and thereby obliterate) the January 2007 Contract so that it ceased to exist as an independent source of contractual obligations and can give rise to its claim for a breach of its terms?
(b) To cause Clause 6.3 of the [September 2009] Agreement to be incorporated into the January 2007 Contract?
Issue 2: Do 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 the Warranties exclude liability for each and every claim asserted in the Particulars of Claim?
Issue 3: If the answer is negative, is Arup's liability to the Consortium for each and every claim asserted in the Particulars of Claim limited to £5,000,000.00:
(a) Under the Agreement?
(b) Under the Warranties?
Clause 6.3 of the Agreement (to which the preliminary issues refer as above) provides:
"The Consultant's aggregate liability under this Agreement whether in contract, tort (including negligence), for breach of statutory duty or otherwise (other than for death or personal injury caused by the Consultant's negligence) shall be limited to £12,000,000.00 (twelve million pounds) with the liability for pollution and contamination limited to £5,000,000.00 (five million pounds) in the aggregate. Liability for any claim in relation to asbestos is excluded."
Clause 4.3 of the Warranties is in the same terms except that the overall limit is not £12,000,000.00 but £5,000,000.00.
The trial of the preliminary issues was heard on 17 and 18 November 2015. This judgment sets out my decision and reasons.
The Contract Terms and Factual Background
I set out the potentially relevant terms of the various contracts and warranties as follows:
i) The 1996 Appointment in Annexe 1;
ii) The January 2007 Contract in Annexe 2;
iii) The September 2009 Agreement in Annexe 3; and
iv) The 2010 Warranties in Annexe 4.
The parties agreed a Schedule of Agreed Facts and Assumptions for the Preliminary Issues Trial ["the SOAFA"]. In addition, factual allegations made in the Claimants' Statements of Case are to be taken as true for present purposes.
From the start of Arup's involvement in about 1992, contamination and pollution were recognised as potential problems at the site. This is clear from the SOAFA at [7] and from express references to the need for Arup to insure against contamination and pollution risks in the 1996 Appointment (Clause 7.1), the reference in the email dated 23 January 2007 timed at 09:56 (which forms part of the exchange that is alleged to constitute the January 2007 Contract) to contamination being one of a number of engineering constraints at the site, Clause 6.3 of the September 2009 Agreement, and Clause 4.3 of the 2010 Warranties.
Quite apart from these specific references to contamination and pollution in the contracts, it is plain that Arup was aware of the presence of asbestos on site from an early stage. Amongst other references, this appears from Report 92/2069 Volume 1 [1/5/145.34] and the Particulars of Claim at [30].
Initially Arup provided professional services to ABP. It did so between 1992 and 2007, its appointment being formalised in the terms of the 1996 Appointment: see Annexe 1. In about 2006 or early 2007, ABP invited tenders for the purchase of the development site; and on 22 January 2007 there was a meeting between Arup and the Consortium. The idea behind the meeting was that Arup should act as consultant to the Consortium with regard to its bid for the Development. It is common ground that there was an exchange of emails on the day after the meeting by which the Consortium appointed Arup to provide consultant engineering services with regard to the Consortium's bid. The fee for these services was cost plus 10%, with an overall budget cap of £10,000 excluding VAT. That is the January 2007 Contract: see Annexe 2.
The Consortium bid £53 million for the site and purchased it for that sum on 21 September 2007. Before then the Consortium and Arup had been in negotiations so that Arup should go on providing engineering services. On 26 June 2007 Arup provided a document entitled "The Waterfront, Barry// Fees Related to Engineering Scope". It outlined Arup's proposed fee for remediation, earthworks, highways and infrastructure elements at the site, with the fee being split up into Submission Input, Pre-agreement Input and Post-agreement Input. It recorded that Submission Input had been undertaken between January and March 2006 (which should have been 2007), was already complete and had been invoiced (in the sum of £8,850) and paid: those were the services that Arup had provided pursuant to the January 2007 Contract. It stated that the Pre-agreement was currently ongoing (elsewhere in the document being described as "specific activities between April and the end of June [2007]") with a total lump sum cost of £17,500 plus the contractor's cost for a topographical survey. It set out a list of the work that was assumed to be required for Post-agreement Input, the "agreement" in question being the prospective agreement by the Consortium to buy the site. In some respects the works to be included in the Post-agreement Input could be described as further work along the lines that had already been undertaken, including geotechnical/contamination investigation input, transportation assessment, earthworks and remediation, on-site spine road highways, drainage, utilities, services diversions and a footbridge, off-site highways and foul improvement and other services. But the proposed Post-agreement Input was intended to be much more extensive, as is shown by the proposed fees of more than £1.375 million – against which the combined fees of £26,350 for the Submission Input and Pre-Agreement Input pale into relative insignificance. By way of further illustration, the proposed fee for the Post-Agreement geotechnical/contamination investigation input alone was £165,000; the proposed fee for the transportation assessment was £135,000; and the proposed fee for earthworks and remediation (which included addressing the challenge of the site being in a floodplain) were £410,000.
Although it is common ground that Arup's June 2007 proposal is to be treated as forming part of pre-contractual negotiations when interpreting the contracts at issue in these proceedings, it remains of interest that it contained the following, under the heading "Contract and Limits of Liability":
"We propose that the appointment will be in accordance with ACE agreement or similarly worded appointment contract. Assuming the above commission includes all of the above elements, and the contract is with one party, we propose that the total liability of Arup is limited to £10m, with the liability for pollution limited to £5m...
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