Swansea, Wales, UK - April 20th 2009: Liberty Stadium, Swansea, home of the Ospreys rugby union team and Swansea City football club

The operator of Swansea’s Liberty Stadium has failed in part of its bid to force the building contractor to accept liability for defects in the stadium.  The claim failed because it was started after the 12-year limitation period had expired.  The case has provided guidance on ‘no greater liability’ clauses, commonly used in collateral warranties.

Building contractor Interserve Construction was hired by Swansea City Council to build the stadium in 2004.  In 2005 the Stadium was let to Swansea Stadium Management Company (SSMC) for 50 years.  It became the home of Swansea City FC, Ospreys Ruby Union Club and a venue for rock concerts.

Interserve provided SSMC with a 12-year collateral warranty that it would comply with the original building contract with Swansea City Council.  This included a provision that Interserve would have ‘no greater liability’ than set out in its original contract.

In 2017 SSMC started proceedings against Swansea City Council and Interserve.  It alleged that the stadium’s steel structure was corroding and that visitors had fallen on slippery surfaces.

Interserve asked the court to throw out part of the claim because SSMC had started its action more than 12 years after practical completion of the stadium.  In response SSMC argued that the 12-year period started when the warranty was signed in 2005 so that its claim fell inside the limitation period.

Interserve relied on a ‘no greater liability’ clause in the warranty to argue that its liability under the warranty was back-to-back with the building contract.  The court agreed that overly technical interpretations of the clause were inappropriate, and granted summary judgement to Interserve.

Further elements of the claims will be heard later this year.

Practitioners will be reassured that that the court interpreted the clause as expected and backed the appointment liability period accordingly,” said James Burgoyne, Director – Claims & Technical, Brunel Professions.  “Any other result would have been very concerning, as professional indemnity insurance policies do not cover liability under reliance documentation which is greater or of longer duration than that under the appointment for the professional’s actual client. The “no greater liability” clause is the typical way of dealing with this.

Reports on the case have been published by the BBC, Lamb Chambers and CMS Law-Now.

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