Limitations of liability Case Study no.2

This claim arose in relation to a project for the redevelopment of a brownfield site for use as a waste processing facility.

Griffiths & Armour
20 September 2014

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This claim arose in relation to the remediation of land contaminated by a neighbouring site. The consultant involved in this claim was appointed by the owner of the site (a waste processing company) to prepare schematic designs for the facility and prepare a planning application for submission to the local authority. 

There was a lack of documentary evidence to show that the consultant had given the site owner appropriate advice regarding the risks....

The local authority subsequently granted limited planning permission for the site, allowing it to be used for business, general industrial, storage and distribution purposes but which did not allow the site to be used for the production of energy from the waste processing operation. The site owner alleged that the failure to secure the desired planning permission was a direct result of the consultant’s negligence in preparing the planning application.

As a consequence of the local authority’s decision in relation to the initial planning application, the site owner had to prepare a second planning application. The subsequent claim against the consultant comprised sums for loss of profit totalling approximately £2m and costs of around £120,000 for the preparation of the second planning application.

Although our client’s original planning application made clear reference to the proposal to create energy from waste, the precise method to be used by the site owner had yet to be decided when the application was submitted with the result that the application was vague on this point. There was a lack of documentary evidence to show that the consultant had given the site owner appropriate advice regarding the risks of submitting a planning application without adequate information on the energy from waste proposal, so there was no doubt that the consultant had an exposure to the site owner’s claim. 

However, the consultant’s appointment contained a cap on liability to a level of £200,000, which had been agreed with the site owner at the start of the project as representing a reasonable cap on the consultant’s liability. 

Outcome

Once highlighted to the site owner, settlement negotiations were quickly brought into focus and settlement agreed in a relatively short period of time at a sum of £150,000 plus a contribution to the site owner’s legal costs. Not only had the liability cap potentially saved the consultant and his insurers a significant amount of money, but the existence of the cap was arguably one of the main drivers for a speedy settlement, limiting the amount incurred by both sides in legal and dispute resolution costs.