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A broader interpretation of exclusions on liability?

In Persimmon Homes Ltd and others v Ove Arup & Partners Ltd [2015] EWHC 3573 (TCC) the court interpreted a consultant’s exclusion of liability…

In Persimmon Homes Ltd and others v Ove Arup & Partners Ltd [2015] EWHC 3573 (TCC) the court interpreted a consultant’s exclusion of liability clause.

Persimmon formed part of a consortium of housebuilders who had engaged a consultancy, Arup, to assist the consortium in considering whether to submit a bid to develop a site. The consultant had been retained for a number of years under a number of agreements to consider, amongst other matters, potential contamination at the site.

The last form of agreement entered into with the consultant contained the following clause “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 with the liability for pollution and contamination limited to £5,000,000 in the aggregate. Liability for any claim in relation to asbestos is excluded”. (emphasis applied)

Asbestos contamination was subsequently discovered at the site and the consortium sued the consultant alleging breach of contract and negligence. The consultant argued that any claims in relation to asbestos were excluded. The consortium argued, relying on existing case law, that the exclusion was ambiguous. It did not expressly refer to an exclusion for claims in negligence. Therefore any such ambiguity should be construed against the consultant and the exclusion should not be effective.

The court upheld the exclusion clause. It looked to see what a reasonable person would take the clause to mean and was not going to “strain” to find ambiguity where none existed. Reflecting the general approach of the courts over the past few years the court was reluctant to interfere in bargains reached between two commercial entities. Therefore whilst the final sentence of the clause in question did not expressly refer to an exclusion for negligent acts, taking the exclusion clause in context as a whole, a reasonable person would conclude that the intent was to exclude any liability in relation to matters concerning asbestos. The consortium argued this meant that the consultant had no incentive to deliver its services so far as concerned investigations into asbestos. However, the court concluded that advice in relation to asbestos formed only a part of the services to be provided and that the parties had commercially agreed an allocation of risk which excluded Arup’s liability in relation to asbestos.

Whilst previously the courts have taken a strict approach to the interpretation of exclusion of liability clauses they are now less likely to do so. As with any other clause in a commercial contract the courts are now less willing to interfere in agreements reached between two commercial entities. That is especially so where those commercial entities have allocated risk between them.