Professional Appointments - What's The Limit?

The Ampleforth Case

The facts

The Trustees of the Ampleforth Abbey Trust ("the Trust") engaged Turner & Townsend Project Management Limited ("T&T") to project manage building works at Ampleforth College in Yorkshire between 2000 and 2005. The building works included three accommodation blocks.

T&T provided a fee proposal for the third accommodation block in November 2002. The fee proposal was headed 'Terms of Appointment' and included a liability cap which provided:

"Liability for any negligent failure by Us [T&T] to carry out Our duties under these Terms shall be limited to such liability as is covered by Our Professional Indemnity Insurance Policy terms. ...and in no event shall Our liability exceed the fees paid to Us or £1million, whichever is the less."

The Terms of Appointment further provided:

"We shall take out a policy of Professional Indemnity Insurance with a limit of indemnity of £10 million for any one occurrence or series of occurrences arising out of any one event ... and maintain such insurance for a period of 6 years from the date of completion of the services providing such insurance remains available in the market on reasonable rates and terms."

The Terms of Appointment for the other two accommodation blocks did not limit T&T's liability but the Trust nevertheless confirmed its acceptance to the Terms of Appointment for the third block without reading them.

Tender documents were issued in July 2003. By October 2003, it had been agreed that Kier Northern ("Kier") would be selected as contractor and the works proceeded under a series of letters of intent.

During 2004, the works fell into delay. The relationship between the Trust and T&T ended during 2005 and T&T claimed some £62,000 of additional fees in addition to the £111,000 it had already been paid. The Trust subsequently issued proceedings against T&T alleging T&T was in breach of contract and / or negligent for failing to procure an executed contract which deprived the Trust of the opportunity of obtaining a better outcome in its negotiations with Kier. The sum claimed by the Trust was in excess of the liability cap which T&T then sought to rely on to limit its liability.

Could T&T rely on its liability cap?

The issue then was whether the liability cap was effective to limit T&T's liability. The court held that T&T was not entitled to rely on the liability cap as it was unreasonable. In reaching this decision, the court emphasised that the Terms of Appointment...