In this case, Fraser J considered a limitation of liability provision in a contractor's collateral warranty to a tenant, and its relationship with section 1(3) of the Civil Liability (Contribution) Act 1978.  Bloomberg was tenant of a property for which cladding works were carried out by Malling on behalf of the freeholder.  Malling provided a warranty to Bloomberg which contained the following provision at clause 6: "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."

This was agreed to mean 12 years from practical completion, which was achieved in August 2000.  In 2001, two cladding tiles fell off the exterior of the property; following investigation Malling returned to the property to carry out remedial works.  In 2013, a further tile fell off the property.  Bloomberg carried out temporary works, but the required remedial works were estimated to cost GBP 2 million.

Bloomberg commenced proceedings against Malling, and two engineering consultants who had also provided warranties, Sandberg and Buro Happold. The claim against Malling did not proceed, as it was able to rely on the limitation at clause 6. However, Sandberg issued Part 20 proceedings against Malling, relying on the 1978 Contribution Act.  Malling applied for the Part 20 proceedings to be struck out, and a declaration that Sandberg had no prospect of recovering a contribution for any damage occurring after August 2012.  Malling suggested the Act should not override agreed contractual periods on policy grounds.

The court held that Malling was not entitled to summary judgment, nor would it grant the declaration sought.  The reasoning was that the contractual limitation was a procedural bar which prevented the tenant from enforcing its rights in any proceedings brought after the cut-off date, but it did not extinguish any underlying substantive rights. "No proceedings" meant no proceedings by the tenant after the cut-off date, but could not be interpreted more widely to include all proceedings. The judge drew a distinction between cases of 'no liability' and 'cessation of liability', and noted the case was a cessation of liability case, where the cessation barred the enforcement of the tenant's rights. He thus held that the cladding contractor fell within the definition of "any person liable" within section 1(1) of the Act, but could not rely on the proviso at section 1(3) (that liability had ceased).  The judge went on to note that issues of limitation might arise in the Part 20 proceedings, but it was too early to tell.

To read more, please click here.