The issue of limitation of the liability of professionals has recently been before the courts again.
You may recall that last year, in the Ampleforth case, it was decided that a cap on the liability of Turner & Townsend of £111,000 was unreasonable because Turner & Townsend was required under the contract to take out professional indemnity insurance of £10 million.
In the recent case of Elvanite Full Circle Limited and AMEC Earth & Environmental (UK) Limited EWHC 1191 the judge made a number of (admittedly obiter) comments on the exclusion clause in that case.
The clause stated that AMEC’s liability would be limited to the total compensation actually paid to AMEC or £50,000 whichever was the less. The judge was clear that this was not an unreasonable clause (unlike Ampleforth) and commented that there was no “stark discrepancy” as there had been in Ampleforth between the amount of insurance required and the cap on liability .
The judge also commented on the part of the exclusion clause which stated “All claims by the CLIENT shall be deemed relinquished unless filed within one (1) year after substantial completion of the Services”. The judge said that such a clause did not require proceedings to be issued (the clause did not refer to the issuing of any proceedings), the use of the word filing meant the requirement to send a Letter of Claim under the Technology and Construction Pre-Action Protocol.
The moral of this – be very very careful what words are used in any exclusion clause.