Contra Proferentem - Another Latin Principle Bites The Dust?

Contra proferentem is a legal principle which, broadly speaking, means that where there is ambiguity in a contract, a clause will be construed against the party who put it forward and seeks to rely upon it.

But in its recent judgment in Persimmon Homes Limited and Others v Ove Arup & Partners Limited and another [2017] EWCA Civ 373, the Court of Appeal has suggested that the effect of the rule in commercial contracts should now be restricted.

Background facts

The claimants were members of a consortium formed to bid for the purchase of a site in Barry docks, South Wales, with a view to developing it for commercial and residential use.

The defendants were civil engineers who had originally been engaged by the owner of the site to advise and supervise on its regeneration prior to sale; and who were subsequently engaged by the claimants to act as consultant for the purposes of their bid for the site.

The claimants succeeded in their bid and purchased the site for £53 million in September 2007. In 2009, the claimants engaged the defendants (among other engineering contractors) to provide further engineering services for the development of the site, including "geotechnical / contamination investigation". In 2012, when excavation commenced, the groundworks contractor found substantial quantities of asbestos.

High Court proceedings

In 2014, the claimants brought proceedings against the defendants for breach of contract, negligence and breach of statutory duty. They contended that the asbestos discovered on site was significantly more than expected, and that the defendants had been negligent in failing to identify and report on the asbestos at an early stage. As a result the claimants said they had overpaid for the site by £2 million, and that the late discovery had caused them to incur additional costs.

In their defence, the defendants referred to a clause which was contained both in the 2009 agreement between the claimants and defendants, and in the individual warranties given by the defendants to each of the claimants. The clause read as follows:

"Liability for any claim in relation to asbestos is excluded".

The defendants said this clause excluded liability for all the claims brought against them by the claimants. The High Court ordered a trial of preliminary issues to determine, as a matter of principle, whether the clause excluded liability for each and every claim asserted in the claimants' particulars of claim.

High Court decision

At first...