Persimmon Homes Ltd and Others (Appellants / Claimants) v Ove Arup & Partners Ltd and Another (Respondents / Defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Moylan,Lord Justice Beatson |
| Judgment Date | 25 May 2017 |
| Neutral Citation | [2017] EWCA Civ 373 |
| Docket Number | Case No: A1/2016/0483 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 May 2017 |
[2017] EWCA Civ 373
Lord Justice Jackson
Lord Justice Beatson
and
Lord Justice Moylan
Case No: A1/2016/0483
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Queesn's Bench Division, Technology and Construction Court
Mr Justice Stuart-Smith
HT2014000199
Royal Courts of Justice
Strand, London, WC2A 2LL
Marcus Taverner QC & Tom Owen (instructed by Dentons UKMEA LLP) for the Appellant
Manus McMullan QC & Rónán Hanna (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Respondent
Hearing dates: Wednesday 3rd & Thursday 4th May 2017
Approved Judgment
This judgment is in six parts, namely:
Part 1 – Introduction
| Part 1 – Introduction | Paragraphs 2 – 7 |
| Part 2 – The facts | Paragraphs 8 – 30 |
| Part 3 – The present proceedings | Paragraphs 31 – 36 |
| Part 4 – The appeal to the Court of Appeal | Paragraphs 37 – 39 |
| Part 5 – Grounds 1 & 2: The natural meaning of the exemption clauses | Paragraphs 40 – 50 |
| Part 6 – Ground 3 & 4: The canons of construction and whether the exemption clauses extend to negligence by Arup | Paragraphs 51 – 62 |
This is an appeal by developers against a decision that their engineers have no liability for unexpected quantities of asbestos found on site. The issue in this appeal is whether the following clause, when read in context, exempts the engineers from liability for any asbestos which they may negligently have failed to identify:
"Liability for any claim in relation to asbestos is excluded."
The claimants in the action and appellants in the Court of Appeal are Persimmon Homes Limited ("Persimmon"), Taylor Wimpey UK Limited ("Taylor Wimpey") and BDW Trading Limited ("BDW"). Together they are operating as a consortium ("the Consortium").
The defendants in the litigation and respondents in the Court of Appeal are Ove Arup & Partners Limited and Ove Arup & Partners International Limited. No distinction has been drawn between those two companies for the purposes of this appeal. I shall refer to the defendants as a single entity, "Arup".
In this judgment I shall use the following abbreviations:
"ABP" means Associated British Ports.
"Berridges" means Berridge Environmental Laboratories Limited.
"Cuddy" means Cuddy Demolition and Dismantling Limited.
" ESP" means Earth Science Partnership.
"Healer" means Healer Associates Limited.
" UCTA" means the Unfair Contract Terms Act 1977.
"WDA" means the Welsh Development Agency.
The present appeal arises from a decision on preliminary issues. No evidence was called in the court below. The relevant facts either emerge as common ground on the pleadings or are set out in a Schedule of Agreed Facts and Assumptions, which the parties have prepared jointly.
After these introductory remarks, I must now turn to the facts.
Part 2 – The Facts
Barry is a seaside town in Wales, about six miles west of Cardiff. It was once a thriving port through which much coal was exported. That industry has now gone and there is little use for the docks.
In the early 1990s ABP and WDA decided to regenerate approximately 170 acres of land adjacent to Barry Number 1 Dock. This project involved site clearance, reclamation, some limited decontamination, earthworks and the provision of basic infrastructure.
ABP engaged Arup as civil engineers in connection with the project. Arup were principally engaged to give advice and to supervise, rather than to undertake physical investigations or groundwork. ABP also engaged many other consultants and contractors, including Berridges. Berridges investigated and reported on the presence of contaminants, in particular asbestos. The presence of such contamination was hardly a surprise. Barry's past history as a major industrial centre made the presence of contamination likely.
Arup started their work in May 1992. There was a time lag of some four years before the parties got round to drawing up and executing a formal contract.
By a deed of appointment dated 20 th February 1996 ("the 1996 appointment") ABP appointed ARUP to provide engineering and environmental services, as set out in the documents attached. Those services included a wide range of advisory, design and supervisory services. The subject matter included site contamination, traffic issues, archaeology, ecology, drainage, statutory services, road links, integration with rail links and compliance with local authority requirements.
After undertaking that regeneration project, ABP invited tenders for the purchase of the site. A consortium comprising Persimmon, Taylor Wimpey and BDW expressed interest.
In December 2006 or January 2007 the Consortium invited Arup to a meeting, with a view to Arup acting as consultant to the Consortium for the purpose of their bid. That meeting took place on 22 nd January 2007.
By an exchange of emails on 23 rd January 2007 the Consortium engaged Arup to provide consultant engineering services with regard to the Consortium's bid for the site. The fee was costs plus 10%, subject to an overall cap of £10,000 plus VAT.
The parties have referred to that exchange of emails as "the 2007 contract" and I shall do the same. The 2007 contract required Arup to produce a constraints plan; to advise on sustainability and the potential for removal of a railway in the west of the site; to supply "information on infrastructure quantities and abnormals to cost up the scheme". The 2007 contract also required to Arup to attend weekly meetings up to March 2007.
Between January and March 2007 Arup provided services to the Consortium in accordance with the 2007 contract. The Consortium put in a successful bid. They purchased the site for £53 million on 21 st September 2007. The Consortium intended to construct a commercial and residential development on the site.
Whilst the purchase negotiations were proceeding, the Consortium discussed with Arup the possibility of Arup providing further professional services. As part of these discussions Arup provided a document setting out their proposals for future scope of work and fees. I shall refer to this as "the June proposal". The proposed future scope of work included:
a) Geotechnical/contamination input;
b) Transportation assessment;
c) Earthworks and remediation;
d) On-site spine road highways, drainage, utilities, services diversions and footbridge;
e) Off-site highways and foul improvement;
f) Input into environmental impact assessment produced by others;
g) Public realm and public open spaces;
h) Site presence and as-built drawings;
i) BREEAM eco-homes assessment.
Clause 14 of the June 2007 proposal stated:
" 14.0 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 in aggregate. We would be prepared to provide a professional indemnity of £5m for each and every event. The liability for any claim in relation to asbestos is excluded. Warrantees would be made available to the three consortium members, with wording to be agreed."
The Consortium decided to appoint Arup to perform some, but not all, of the services set out in the June proposal. They sent a letter of intent on 17 th October 2007, on the basis of which Arup started work. Paragraph 8 of the letter stated:
"Your liability to us under this letter (whether in contract, tort (including negligence), breach of statutory duty, restitution or otherwise) shall be limited to £2,000,000 (two million pounds)."
At this point I interject to say that both the June proposal and the letter of intent are part of the pre-contract negotiations between the parties. They cannot be used as aids to construing the final agreement. On the other hand those documents record the background knowledge of the parties and the risks to which they were turning their minds.
In due course the Consortium and Arup entered into a written contract of engagement which superseded the letter of intent. This contract was dated 22 nd September 2009. I shall refer to it as "the 2009 agreement".
By the 2009 agreement the Consortium engaged Arup to provide engineering services for the Barry Docks project for a fee of £655,000. The agreed services fell into the following categories:
a) Strategic Flooding Consequences Assessment;
b) Revised constraints plan and programme updates, costs advice an input on drainage and highways up to November 2007;
c) Geotechnical/Contamination investigation;
d) Transport assessment input;
e) Specific input on earthworks and remediation consisting of the preliminary and detail design of East Quay, Arno Quay and West Pond and South Quay and the preparation and submission of design information to discharge planning conditions;
f) Strategic level input on on-site highways and drainage to assist masterplanning and earthworks/remediation;
g) Engineering input in environmental impact assessment dealing with geology and ground conditions, water quality and drainage, transportation including text sections and figures.
The 2009 agreement contained the following provisions:
" 1. CONSULTANT'S OBLIGATIONS
1.1. The terms and conditions of this Agreement and the warranties and undertakings which it contains are deemed to apply to all services performed and to be performed by the Consultant in relation the Project both before and after the date of this Agreement.
1.2. The Consultant shall provide...
To continue reading
Request your trial
-
Multiplex Construction Europe Ltd (formerly Brookfield Multiplex Construction Europe Ltd) v Gordon Alan Dunne
...context, are, and should be, normally enough to determine the meaning of a contractual provision." 29 In Persimmon Homes Ltd and others v Ove Arup Partners Ltd and others [2017] EWCA Civ 373, a case concerned with exclusion of liability concerning asbestos in an appointment of consulting en......
-
Alan Bates and Others v Post Office Ltd
...agreeing the wording of that provision.” (emphasis added) 637 Further, in Persimmon Homes Ltd and others v Ove Arup & Partners Ltd [2017] EWCA Civ 373 at [52] Jackson LJ stated that “in relation to commercial contracts, negotiated between parties of equal bargaining power, that rule [ cont......
-
Deep Sea Maritime Ltd v Monjasa A/S
...Funding Solutions Ltd v Barrington Support Services Ltd [2016] UKSC 57; [2017] AC 73 at [55] (Lord Toulson JSC) and Persimmon Homes Ltd v Ove Arup & Partners Ltd [2017] EWCA Civ 373 at [57] (Jackson 33 Second, an expansive construction of Article III Rule 6 was supported by the purpose o......
-
Microlise Ltd v James Kemball Ltd
...and limitation clauses are an integral part of pricing and risk allocation.” See also Persimmon Homes Ltd v. Arup & Partners Ltd 2017 EWCA Civ 373, per Jackson LJ at [56–57] and Goodlife Foods Ltd v. Hall Fire Protection Ltd [2018] EWCA Civ 1371 per Coulson LJ at 125 In Watford Electronics......
-
Complex Commercial Litigation Law Review – England and Wales
...has been jointly drafted by the parties or where the parties are of comparable bargaining power – see Persimmon Homes v. Ove Arup [2017] EWCA Civ 373.© 2020 Law Business Research LtdEngland and Wales113Finally, the Supreme Court recently found that it was not appropriate for the courts or a......
-
Complex Commercial Litigation Law Review – England & Wales
...has been jointly drafted by the parties or where the parties are of comparable bargaining power – see Persimmon Homes v. Ove Arup [2017] EWCA Civ 373. 19 Marks & Spencer Plc v. BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 20 Bou-Simon v. BGC Brokers LP [2018] EWCA Civ 1......
-
English Court of Appeal signals broader approach to exemption clauses in commercial contracts
...the importance of ensuring that contracts accurately reflect the allocation of risk. Facts At issue in Persimmon Homes v Ove Arup [2017] EWCA CIV 373 was who was liable for additional costs incurred by the late discovery of unexpected quantities of asbestos on a building The relevant contra......
-
Contra Proferentem - Another Latin Principle Bites The Dust?
...seeks to rely upon it. But in its recent judgment in Persimmon Homes Limited and Others v Ove Arup & Partners Limited and another [2017] EWCA Civ 373, the Court of Appeal has suggested that the effect of the rule in commercial contracts should now be Background facts The claimants were ......