Bloomberg LP v Sandberg and Others

[2015] EWHC 2858 (TCC)

Bloomberg and Standard Life entered into a lease dated 19 September 2000 whereby Bloomberg agreed to become the tenant at 50 Finsbury Square. That lease was preceded by an agreement for a lease between the same parties dated 14 June 2000, pursuant to which Standard Life agreed to perform certain works at 50 Finsbury Square. Practical Completion of those works was achieved on 29 August 2000. Malling performed cladding works for Standard Life as part of those wider works.

The trade contract required Malling to provide warranties, and on 20 December 2000 Malling entered into a warranty with Bloomberg. Clause 6 stated under the heading “Limitation”:

“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.”

In 2001, two cladding tiles fell from the building. Investigative works were carried out, a condition survey was produced and Malling carried out remedial works to the cladding. On 8 July 2013 a soffit cladding tile fell to the pavement from the seventh floor of 50 Finsbury Square. Temporary works to make the building safe were carried out at a cost of £470k. It was estimated that further costs would be in the region of £2 million.

Although Bloomberg brought a claim against Malling, that claim could not proceed because of clause 6 of the Warranty. However, Bloomberg also raised a claim against the two other parties who had carried out certain investigative works and provided the condition survey during 2001 and 2002. Those two parties sought to join Malling to the claim as a result of the role Malling themselves had played in these remedial works.

In particular, Sandberg claimed a contribution from Malling pursuant to the Civil Liability (Contribution) Act 1978 (“the Act”). Sandberg said that in addition to carrying out the cladding work prior to practical completion, Malling was also asked to review it later. Sandberg argued that Malling’s fixings were defective in both design and workmanship, Malling’s review was inadequate with the consequence that Malling was in breach of its obligations under the collateral warranty, and if, contrary to Sandberg’s defence, Bloomberg established liability against Sandberg, Malling was liable to Bloomberg for the same damage. Clause 1 of the Act provides:

“(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).

. . .

(3) A person shall be liable to make contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based.”

Malling sought to rely again on clause 6 of the Warranty, saying that the words “no proceedings shall be commenced against the Contractor” should be taken to include proceedings brought by any other party, not just Bloomberg, including the contribution proceedings brought by Sandberg against Malling. Malling argued that applying the relevant process of construction to clause 6, “no proceedings” must mean — indeed, in commercial common sense terms “can only be taken to mean” — proceedings by any other party, not simply proceedings by Bloomberg. For example, this matched the obligation upon Malling to insure for the like period. The purpose of the provision was that there would come a point in time at which Malling would know it was no longer liable to proceedings arising from the works performed on the building.

Mr Justice Fraser noted that the words used in the clause were clear. There was no ambiguity. “No proceedings” in this contractual context, in what was a warranty between Bloomberg and Malling, could only mean proceedings by Bloomberg. Malling originally performed the cladding works, was involved in the review in 2001 and 2002, and performed the remedial works undertaken at that time. Malling potentially fell within the terms of the Act as being “any other person liable” for the damage which caused the cladding to fall. 

Finally the Judge noted that the overall effect of Malling’s arguments would be that parties could effectively “contract out” of the operation of the Contribution Act, an Act that had been put in place by Parliament to benefit other third parties, those third parties not being parties to the contract between (here) Bloomberg and Malling. Even if that could be achieved and the point was not argued, clear words would be required. They were not present here.

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