In Bloomberg LP v Sandberg (a firm), Sandberg LLP, Buro Happold Limited v Malling Pre-Cast Limited, the Court had to decide an interesting issue of time limitation clauses and claims for contribution under the Civil Liability (Contribution) Act 1978 (the "Contribution Act").
The owner of a building, Standard Life, appointed Malling to carry out stone cladding and precast concrete works on the building, as part of a wider set of works. The contract required Malling to provide collateral warranties. The wider works were completed in August 2000, and in December 2000 Malling entered into a warranty (the "Warranty") with Bloomberg, the tenant of the building.
In 2001, a cladding tile fell from the building to the street below. Sandberg (an engineering consultancy) investigated the failure and produced a report, as a result of which certain remedial works were performed to the cladding by Malling between October 2001 and February 2002. Buro Happold (an engineering company hired by Bloomberg to advise on certain aspects of the works at the building) later produced a condition survey in June 2002. However, in July 2013 there was another fall of soffit cladding tile material, and Bloomberg had to perform further remedial works.
In November 2013, Bloomberg issued separate proceedings against each of Sandberg, Buro Happold and Malling. Bloomberg's action against Malling did not proceed, because Malling relied upon clause 6 of its Warranty, which stated:
"Notwithstanding the date hereof no proceedings shall be commenced against the Contractor after the expiry of twelve years from the date of issue of the last written statement by the Client that practical completion of the Project has been achieved under the Contract."
That period expired in August 2012.
However, Sandberg issued Part 20 proceedings against Malling making a claim for contribution pursuant to Section 1(3) of the Contribution Act, alleging that if Sandberg's liability was established, Malling would also be liable. Malling applied to strike out the Part 20 proceedings, and alternatively for summary judgment in its favour. In doing so, Malling relied on the wording of clause 6 of the Warranty as giving it a complete defence to any contribution proceedings pursued by any other party.
The Court considered that the words used in clause 6 were clear and without ambiguity: "no proceedings" in a warranty between Malling and Bloomberg meant proceedings by Bloomberg. Furthermore, Section 1(3) of the Contribution Act provides that:
"A person shall be liable to make contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based."
The Court considered that clause 6 was a procedural bar to Bloomsberg bringing a claim against Malling after the 12 year cut-off date. However, that did not extinguish the underlying substantive right of Sandberg to bring a claim. This meant that the last phrase of Section 1(3) above did not apply, and hence clause 6 was not a bar for finding Malling liable to make a contribution to Sandberg.
COMMENT: Time limitation clauses in construction documents may not always shield a party 100% against liability after their limitation period elapses, and contractors may want to look at other additional mechanisms to limit their future exposure to liability (e.g. caps on liability, or net contribution clauses, when these are acceptable to the employer). As always, the need for good legal advice and careful contract drafting remains paramount.