THE TRUSTEES OF THE AMPLEFORTH ABBEY TRUST -V- TURNER & TOWNSEND PROJECT MANAGEMENT LIMITED
…Limitation of Liability
It seems only a matter of weeks since we were putting the flourishes to the Trial Bundles and heading down to Atkin Chambers for a con with Counsel.
In reality, it is almost a year since the Trial of Ampleforth v Turner & Townsend and eight or so months since His Honour Judge Keyser Q.C. handed down Judgment.
In this time, a number of articles have been written on the Judgment and its impact in Construction Law by a number of different firms and chambers. A great deal of these articles have focused on the impact the Judgment has had on the role of a Project Manager and the danger of Letters of Intent; it is not proposed to rehearse the content of those opinions in this article.
Instead, an important element of the Judgment dealt with Turner and Townsend’s attempt, in their terms and conditions, to limit their liability to the value of fees paid to them or £1 million, whichever the lesser.
The terms and conditions went on to detail that Turner & Townsend would keep professional indemnity insurance in place to a level of £10 million.
We successfully argued, on behalf of the Abbey, that the attempt to limit liability was unreasonable within the requirements of the Unfair Contract Terms Act 1977. The thrust of our argument was that the Abbey, through the fees it was paying to Turner & Townsend, was paying (at least in part) for the benefit of professional indemnity insurance to a limit of £10 million; it would therefore be unreasonable to limit the Abbey’s ability to claim against this insurance to 1% of the full level of indemnity.
Paragraph 201 of HHJ Keyser Q.C.’s Judgment deals with the point and, whilst reference is made to other factors which may be specific to this case (such as the pre-existing relationship between the parties regarding previous projects) it is clear that the central factor for the Honourable Judge in deciding that the limitation of liability was unreasonable, is the fact that Turner & Townsend were seeking to limit their liability to a fraction of the contractual indemnity limit which was being paid for (implicitly) by the Abbey.
This element of the Judgment gives the case application throughout Contract Law and means the precedents it sets are not confined to the obscurities of Construction Law (the parties’ experts had in excess of 50 years’ collective experience and could recall only one other instance of a project being run entirely on letters of intent).
Rather now, in circumstances where a party is obligated to carry indemnity insurance cover to a specified limit and seeks ultimately to limit its liability to a level below the level of this indemnity, such limitation will likely be unreasonable and therefore unenforceable.
The Judgment will also have implications for our Corporate & Commercial Law colleagues as further definition has now been added to the extent to which it is reasonable to limit liability in a commercial contract.
Assistant Solicitor to Giles Ward in Ampleforth Abbey Truste –v- Turner & Townsend Project Management Limited.