Build Magazine December 2015

Build Magazine 30 he Bloomberg Case In the Bloomberg case Judge Fraser found that a warranty entered into between Bloomberg (the tenant of 50 Finsbury Square, London) and Malling Pre-cast Ltd (the contractor), which included a limitation period for the bringing of claims by the tenant in respect of works carried out by the contractor, had limited effect on third parties. The warranty did not prevent Sandberg (an engineering consultancy, which had been sued by the tenant in connection with a building defect) making claim for a contribution (under Part 20 of the Civil Procedure Rules) against the contractor. The limitation period clause in the warranty between the contractor and the claimant contained the following clause:- “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”. The contractor, Malling, argued that the words “no proceedings” should be taken to comprise not just proceedings issued by the claimant but proceedings issued by any other party (in this case, Sandberg); in other words, it said, Sandberg was precluded from making a claim against Malling under the Civil Liability (Contribution) Act 1978 (“the Act”), the 12-year period having lapsed. Judge Fraser decided that “No proceed- ings” in the contractual context, could only mean proceedings by the claimant, (Bloomberg, which had a direct contractual link with Malling via the warranty) and not proceedings brought by a third party (such as, in this case, Sandberg). The limitation clause therefore presented a procedural bar to any claim that the tenant might bring against the contractor after the cut-off date, but this did not extinguish the underlying substantive right under the Act, which remained available to Sandberg. Thus, Malling could be brought back into proceedings by a ‘back door’, despite the limitation in the warranty. In fact, the tenant and the contractor did not appear to have even attempted to “contract out” of the operation of the Act or to have chosen in their contractual framework to put either of them outside the operation of the Act so far as contribution was concerned. The case demonstrates that where parties fail to address potentially unforeseen pitfalls in warranties then cracks can develop. However, it remains to be seen whether, had the tenant and the contractor decided to ‘contract out’ of the operation of the Act or chosen to put either outside of the operation of the Act with regards contri- bution, this would stand up to scrutiny if challenged by a third party. It seems clear that the courts are unlikely to treat the par- ties’ silence as meaning that contribution claims must fail with the primary ‘contractual’ claim. At the very least, therefore, parties will need to include careful wording to align both ‘contractual’ and ‘contribution’ claims if this ‘back door’ is to be shut. Risk Analysis Limits of Liability in Construction Contracts – Rock Solid Protection, or just Crumbly Cladding? Written by Richard Wade at Blake Morgan Following the recent case of BLOOMBERG LP v (1) SANDBERG (2) SANDBERG LLP (3) BURO HAPPOLD LTD (Defendants) MALLING PRE-CAST LTD (Third Party) [2015] EWHC 2858 QBD (TCC) (“the Bloomberg case”), this article looks to provide a back to basics guide on limitation of liability and what contracting authorities or organisations need to look out for when it comes to working together with different parties to secure contracts for construction projects. T