Exclusion clause thwarts claim

Posted: 6th January 2016

RCJThe law assumes that experienced businesspeople know what they are doing when it comes to allocating risk. In a case which exemplified that position, the High Court found that a development consortium accepted the risk of asbestos contamination interfering with its plans, even if that eventuality arose through negligence.

The consortium had spent £53 million on acquiring a development site before a major problem with asbestos contamination was discovered. It sued an engineering firm which had advised it extensively prior to the purchase, alleging professional negligence. However, the latter pointed to a contractual term which excluded any claim being made against it in respect of asbestos-related losses.

In upholding the validity of that exclusion clause, the Court found that it reflected a rational apportionment of risk between the contracting parties. The consortium had not begun to show that such an exclusion of liability, even in the case of negligence, was inherently improbable or inconsistent with business common sense. On the contrary, there was every business reason why the engineering firm would have wished to limit its potential liabilities.

The Court’s ruling was fatal to much of the consortium’s case, although it remained free to pursue a claim in respect of services rendered by the engineering firm under an earlier contract which did not contain an asbestos exclusion clause and which had not been subsumed by the later agreement.