Persimmon Homes Ltd & Ors v Ove Arup & Partners Ltd & Anor [2015] EWHC 3573 (TCC)

“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.”

“Their Lordships think that the duty of a court in approaching the consideration of such clauses may be summarized as follows:- (1) If the clause contains language which expressly exempts the person in whose favour it is made (hereafter called "the proferens") from the consequence of the negligence of his own servants, effect must be given to that provision. … (2) If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens in accordance with article 1019 of the Civil Code of Lower Canada: "In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation." (3) If the words used are wide enough for the above purpose, the court must then consider whether "the head of damage may be based on some ground other than that of negligence," to quote again Lord Greene in the Alderslade case. The "other ground" must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it; but subject to this qualification, which is no doubt to be implied from Lord Greene's words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are prima facie wide enough to cover negligence on the part of his servants.”

“The approach that ought to be taken to the construction of clauses of this kind is well established. In Canada Steamship Lines Ltd v The King [1952] AC 192, 208 Lord Morton of Henryton quoted with approval the principles applicable to clauses which purport to exempt one party to a contract from liability for negligence which were stated by Lord Greene MR in Alderslade v Hendon Laundry Ltd [1945] KB 189 , 192. In summary, these principles are (1) that if the clause expressly exempts the party in whose favour it is made (the proferens) from liability for negligence, effect must be given to it; (2) if there is no express reference to negligence, the court must consider whether the words used are wide enough to cover it; and (3) if a doubt arises on this point it must be resolved in favour of the other party and against the proferens.”

“In commercial contracts negotiated between business-men capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is , in my view wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only even after due allowance has been made of the presumption in favour of the implied primary and secondary obligations.”

“There are, as it seems to me, at least two good reasons why the courts should not refuse to give effect to an acknowledgement of non-reliance in a commercial contract between experienced parties of equal bargaining power— a fortiori, where those parties have the benefit of professional advice. First, it is reasonable to assume that the parties desire commercial certainty. They want to order their affairs on the basis that the bargain between them can be found within the document which they have signed. They want to avoid the uncertainty of litigation based on allegations as to the content of oral discussions at precontractual meetings. Second, it is reasonable to assume that the price to be paid reflects the commercial risk which each party—or, more usually, the purchaser—is willing to accept. The risk is determined, in part at least, by the warranties which the vendor is prepared to give. The tighter the warranties, the less the risk and (in principle, at least) the greater the price the vendor will require and which the purchaser will be prepared to pay. It is legitimate, and commercially desirable, that both parties should be able to measure the risk, and agree the price, on the basis of the warranties which have been given and accepted.” (Emphasis added).

“It is certainly true that English law has traditionally taken a restrictive approach to the construction of exemption clauses and clauses limiting liability for breaches of contract and other wrongful acts. However, in recent years it has been increasingly willing to recognise that parties to commercial contracts are entitled to apportion the risk of loss as they see fit and that provisions which limit or exclude liability must be construed in the same way as other terms: see, for example, Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 …”

“There can be no doubting the general authority of [the well-known principles propounded by Lord Morton of Henryton giving the judgment of the Board in Canada Steamship Lines Ltd v The King [1952] AC 192 at 208], which have been applied in many cases, and the approach indicated is sound. The courts should not ordinarily infer that a contracting party has given up rights which the law confers upon him to an extent greater than the contract terms indicate he has chosen to do; and if the contract terms can take legal and practical effect without denying him the rights he would ordinarily enjoy if the other party is negligent, they will be read as not denying him those rights unless they are so expressed as to make clear that they do. But, as the insurers in argument fully recognised, Lord Morton was giving helpful guidance on the proper approach to interpretation and not laying down a code. The passage does not provide a litmus test which, applied to the terms of the contract, yields a certain and predictable result. The courts' task of ascertaining what the particular parties intended, in their particular commercial context, remains.”

“(1) A clear intention must appear from the words used before the Court will reach the conclusion that one party has agreed to exempt the other from the consequences of his own negligence or indemnify him against losses so caused. The underlying rationale is that clear words are needed because it is inherently improbable that one party should agree to assume responsibility for the consequences of the other's negligence: …. (2) The Canada Steamship principles are not to be applied mechanistically and ought to be considered as no more than guidelines; the task is always to ascertain what the parties intended in their particular commercial context in accordance with the established principles of construction:… . They nevertheless form a useful guide to the approach where the commercial context makes it improbable that in the absence of clear words one party would have agreed to assume responsibility for the relevant negligence of the other.”

“The total fee for progressing the items listed above is £655,000, this sum includes expenses but excludes VAT. Third party costs for surveys such as topographical, transportation and geotechnical/contamination surveys, together with Statutory Authority costs are not included. For this scope and fee amount, the total liability of Arup is limited to £12m with the liability for pollution and contamination limited to £5m in aggregate. The liability for any claim in relation to asbestos is excluded. The Professional Indemnity Insurance for this scope and fee is £5m for each and every event.” (Emphasis added)

“The Project comprises the design and construction of … the residential and commercial development of Barry Waterfront, Barry.”

“Dear All It was good to meet you yesterday to discuss the bid for the project, thank you for asking us to be part of your team. As discussed at the meeting, the site has a number of engineering constraints in terms of access and transportation, contamination and geotechnics together with utilities and drainage, whilst the flooding issue will also need to be checked out. … In the first instance you have asked us to draw up a constraints plan for the site, and you have also asked us to advise on sustainability and the potential for removal of the railway in the west. We assume that, in due course, you will need us to supply information on infrastructure quantities and abnormals to cost up the scheme. We note that you have asked us to pencil-in weekly meetings up to the 16th March and have assumed that we will need to attend most of these. In terms of our input, we propose that we are remunerated for our work on a cost plus 10% basis. It is difficult to judge how much input will be required, however, we suggest that an overall budget ceiling of £10,000 plus VAT is allowed. Should our level of input during the process suggest that the ceiling budget may be exceeded, we will let you know in due course. We propose that we incorporate terms and conditions of the ACE Short Form 2002, and we invoice monthly, in areas for our input.” (2) 23 January 2007 (Consortium to Arup): “Thanks John – quote seems reasonable to me. Please confirm you will be able to invoice three ways in thirds to each of us.” (3) 23 January 2007 (Arup to Consortium): “… yes we can invoice three ways in thirds.”