Bloomberg LP v Malling Pre-Cast Ltd

A contractual time bar preventing proceedings by a beneficiary does not, without clear words, extinguish the beneficiary’s underlying right. It therefore does not engage the proviso in section 1(3) of the Civil Liability (Contribution) Act 1978, which requires the underlying right to have been extinguished by limitation or prescription. Contribution proceedings may consequently continue where the original claimant’s direct proceedings are contractually barred. Contractual terms are construed principally from their language, read in context and with commercial common sense used cautiously. A declaration should not be made on a summary judgment application where the issue is fact-sensitive, insufficiently defined or unlikely to serve a useful purpose.

Bloomberg was the tenant of a building where Malling had designed, fabricated and installed stone cladding. Malling gave Bloomberg a collateral warranty containing a clause stating that no proceedings should be commenced against it more than 12 years after practical completion.

Bloomberg’s direct claim against Malling was not pursued because of that clause. Sandberg subsequently brought Part 20 contribution proceedings against Malling under section 1 of the Civil Liability (Contribution) Act 1978. Malling applied under CPR 3.4(2)(a) and CPR 24.2 for strike-out or summary judgment, arguing that the warranty clause barred contribution proceedings and, alternatively, barred contribution for damage occurring after the contractual cut-off date. The central issues were the construction and legal effect of the clause, and whether the statutory contribution regime was thereby excluded.

1. Application refused. The Part 20 contribution proceedings disclosed a legally recognisable claim and Sandberg had a real prospect of succeeding. Malling was not entitled to strike-out or summary judgment.
2. The tests under CPR 3.4(2)(a) and CPR 24.2 were distinct. Strike-out required certainty that the claim was bound to fail. Summary judgment required there to be no real prospect of success and no other compelling reason for trial. The application was properly considered under the summary judgment test.
3. Applying the contractual construction principles in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and Arnold v Britton [2015] UKSC 36, clause 6 was clear. In the context of a warranty between Bloomberg and Malling, “no proceedings” meant proceedings brought by Bloomberg, not contribution proceedings brought by another party. The heading “Limitation” supported that conclusion.
4. The clause created a procedural bar to enforcement of Bloomberg’s right after the cut-off date. It did not extinguish the underlying legal right. Section 1(3) of the Civil Liability (Contribution) Act 1978 therefore did not assist Malling, because its proviso applies only where expiry of limitation or prescription extinguishes the right on which the claim is based. The Act continued to apply to Malling as a person potentially liable for the same damage.
5. The approach in Oxford University Fixed Assets Ltd v Architects Design Partnership (1994) 64 Con LR 12 was distinguishable because a final certificate had a different legal effect from the passage of time under clause 6. The distinction between no-liability and cessation-of-liability cases identified in Co-operative Retail Services Ltd v Taylor Young Partnership Ltd [2002] 1 WLR 1419 was accepted. A declaration concerning post-cut-off damage was refused because the facts, dates of damage and precise issue were insufficiently defined, and the declaration would not serve a useful purpose.
6. The court declined to decide whether parties could contract out of the statutory contribution regime through a contractual limitation clause. Clearer words would in any event be required.