McGee Group Ltd v Galliford Try Building Ltd

A contractual liability cap is construed as part of the parties’ commercial allocation of risk. No special restrictive rules apply, but the cap must be clear and unambiguous. A cap expressed by reference to a type of loss applies to claims of that type, regardless of the contractual clause under which they are advanced. Claims for loss, expense or damages arising from delay and disruption may therefore be subject to the same cap even where pleaded under different provisions. A party cannot avoid the cap by reframing a claim or relying on overlapping contractual causes of action.

McGee was engaged by Galliford Try Building Ltd as a subcontractor on a major construction project. The subcontract incorporated amended JCT Design and Build Sub-Contract terms. Clause 2.21B provided that McGee’s liability for direct loss, expense and damages was limited to 10% of the subcontract order value.

Galliford Try accepted that some delay and disruption claims fell within the cap but contended that claims advanced under clause 4.21, concerning loss arising from interference with the regular progress of the main contract works, were outside it. McGee sought declarations under Part 8 concerning the proper construction and application of the cap.

1. The declarations were granted. Clause 2.21B capped all of Galliford Try’s claims for loss, expense or damages arising from delay and disruption caused by McGee.
2. Following Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 WLR 964, and the later authorities discussed in the judgment, limitation clauses are generally construed as part of the parties’ commercial allocation of benefit, risk and responsibility. They must be clear and unambiguous, but are not subject to the specially exacting approach applicable to exclusion clauses.
3. The natural meaning of clause 2.21B was a cap by reference to the type of claim, not to claims arising only under clauses 2.21 and 2.21A. The words “loss and/or expense and/or damages” identified financial consequences of delay and disruption. The reference to damages did not extend the clause to unrelated claims, such as defective work.
4. No meaningful distinction could be drawn between delay and disruption claims under clauses 2.21 and 2.21A and those under clause 4.21. Construction claims commonly involve overlapping effects, and the contractual wording and Galliford Try’s own loss and expense claim treated them generically as claims for delay and disruption.
5. Alternatively, applying the reasoning in Bikam OOD and Another v Adria Cable S.a.r.l [2012] EWHC 621 (Comm), a claim capable of being brought under clauses 2.21 or 2.21A would remain subject to the cap even if it could also be advanced under clause 4.21. Allowing otherwise would make the cap commercially ineffective.