Presume Not…

A commentary on Mott MacDonald Ltd v Trant Engineering Ltd [2021] EWHC 754 (TCC) (30 March 2021)

The case of Mott MacDonald Ltd v Trant Engineering is likely to have a profound impact on exclusion of liability clauses.

In November 2017, the Claimant (an engineering consultancy) and the Defendant (a contractor) entered into a Settlement and Services Agreement (“the SSA”). Pursuant to the SSA the Claimant was to provide services in relation to work being undertaken by the Defendant in upgrading facilities at a military base in the Falkland Islands. Contained within the SSA, were clauses limiting, and in some instances, completely excluding the liability which the Claimant would ordinarily have had to the Defendant in the event of a breach of the SSA.

The Defendant counterclaimed alleging that the Claimant had ‘fundamentally, deliberately, and wilfully” breached the SSA. The Claimant responded and issued an application for summary judgment on the issue.

The authorities as to whether special rules of interpretation apply to exclusion/limitation clauses in circumstances where there has been a deliberate repudiatory breach are quite conflicted. In Internet Broadcasting Corp Ltd v MAR LLC [2009] EWHC 844 (Ch) it was suggested that a party found to have deliberately breached the contract could not rely on an exclusion clause. However, in AstraZeneca UK Ltd v Albemarle International Corp [2011] EWHC 1574) Judge Flaux asserted this should not be followed, which Judge Lewison agreed with in Shared Network Services Ltd v Nextiraone UK Ltd [2012] EWCA Civ 1171.

At the summary judgment application hearing, it was argued by Counsel on behalf of the Claimant that the SSA was ‘a clear agreement making commercial sense and to the extent that the Defendant has made a bad bargain the court is not to adopt an artificial construction so as to enable the Defendant to escape from that bad bargain’.

Ultimately, HHJ Eyre QC decided that the correct approach is as set out in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, as summarised in the Astrazeneca case and she commented in her Judgment that:

‘Exemption clauses including those purporting to exclude or limit liability for deliberate and repudiatory breaches are to be construed by reference to the normal principles of contractual construction without the imposition of a presumption and without requiring any particular form of words or level of language to achieve the effect of excluding liability’.

In the end, HHJ Eyre QC decided in favour of the Claimant and awarded summary judgment. The impact of this Judgment means contracting parties should give considerable thought to the wording of any exclusion and liability clauses as they will be interpreted at face value.

If you would like to discuss anything relating to this article, please contact Tamrah Woolfe at [email protected]