UK: Global Claims In 2005

Joint Editor: Keating on Building Contracts

A lecture first given on Tuesday 21st June 2005

I GLOBAL CLAIMS – THE CONCEPT

Global claims, variously known as "rolled-up" or "total-cost" claims are a modification of the following basic principles of contractual claims, so far as a tribunal will allow such modification.

  • Breach/claims event

The claimant has the burden of proving that the breach of contract, breach of duty or other claims event:

    1. has actually occurred; and
    2. that the defendant is factually and legally responsible for it.

  • Causation

The claimant has the burden of proving that the breach/claims event caused the loss alleged to have been suffered.

  • Quantum

The claimant has the burden of proving loss suffered and amount of that loss.

A global claim is a substitute for one or all of these: where the claimant cannot or will not adduce evidence to prove the essential elements and offers instead a collection of breaches/events and a total sum of loss incurred and asserts that the former caused the latter.

Classic definitions:

Hudson p.1086-87:

"Global claims may be defined as those where a global or composite sum, however computed, is put forward as the measure of damages or of contractual compensation where there are two or more separate matters of claim or complaint, and where it is said to be impractical or impossible to provide a breakdown or sub-division of the sum claimed between those matters".

More succinctly, the Editors of the Building Law Reports in their commentary on Wharf Properties v Eric Cumine (see below):

Global claims are "ones where the connections between the matters complained of and their consequences, whether in terms of time or money, are not fully spelled out".

Supreme Court of Victoria in John Holland Construction v Kvaerner RJ Brown (see below) per Byrne J:

"The claim as pleaded .... is a global claim, that is, the claimant does not seek to attribute any specific loss to a specific breach of contract, but is content to allege a composite loss as a result of all the breaches alleged, or presumably as a result of such breaches as are ultimately proved".

II ENGLISH LAW: A BALANCING ACT

An extreme anti-global claims view is adopted by Ian Duncan Wallace in Hudson (p.1090):

"....claims on a total cost basis, a fortiori if in respect of a number of disparate claims, will, prima facie, be embarrassing and an abuse of the process of the court, justifying their being struck out and the action dismissed at the interlocutory stage".

An example of this strict approach was the Privy Council’s decision of the Hong Kong case of Wharf Properties v Eric Cumine Associates (No. 2) [1991] 52 BLR 8, where the clients’ actions against their architects for negligent design and contract administration were struck out as incomplete and therefore disclosing no reasonable course of action.

Per Lord Oliver "the pleading is hopelessly embarrassing as it stands ....in cases where the full extent of extra costs incurred through delay depend upon a complex interaction between the consequences of various events, so that it may be difficult to make an accurate apportionment of the total extra costs, it may be proper for an arbitrator to make individual financial awards in respect of claims which can conveniently be dealt with in isolation and a supplementary award in respect of the financial consequences of the remainder as a composite whole. This has, however, no bearing upon the obligation of a plaintiff to plead his case with such particularity as is sufficient to alert the opposite party to the case which is going to be made against him at the trial". (emphasis supplied)

But this hard-line position has historically been balanced by exceptions and qualifications:

J. Crosby & Sons Ltd v Portland Urban District Council [1967] 5 BLR 121:

Per Donaldson J. "I can see no reason why (the arbitrator) should not recognise the realities of the situation and make individual awards in respect of those parts of individual items of the claim which can be dealt with in isolation and a supplementary award in respect of the remainder of these claims as a composite whole".

London Borough of Merton v Stanley Hugh Leach [1985] 32 BLR 31:

"If application is made....for reimbursement of direct loss and expense attributable to more than one head of claim and at the time when the loss or expense comes to be ascertained, it is impractical to disentangle or disintegrate the part directly attributable to each head of claim then, provided of course that the contractor has not unreasonably delayed in making the claim and so has himself created the difficulty, the architect must ascertain the global loss attributable to the two causes ...".

Since Wharf Properties v Cumine, the courts, while not accepting of incomplete claims, have been more reticent about applications to strike them out.

British Airways Pension Trustees Ltd v Sir Robert McAlpine & Sons Ltd [1994] 72 BLR 31 Saville LJ in the Court of Appeal:

"This is again not a case in which it could be said that the plaintiff’s claims were fundamentally flawed, in the sense that no further particulars could assist their cause, nor a case where (as in Wharf Properties v Eric Cumine) there had been an express refusal to provide further particulars or a contumelious disregard of court orders ....the default of the plaintiffs, serious though it was, fell far short of calling for the draconian remedy of striking them out".

Byrne J. in John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd [1996] 82 BLR 81 had preferred to give the plaintiff leave to amend an incomplete claim or to supply further particulars to remedy the deficiency.

This approach from the Supreme Court of Victoria was adopted in English Law by the then HH Judge Humphrey LLoyd in Bernhards Rugby Landscapes Ltd v Stockley Park Consortium Ltd [1997] 82 BLR 39, where he also gave the plaintiff leave to amend the claim since "its current form is not so oppressive or abusive as to justify refusal of leave to amend .... The deficiencies may ....be cured by the provision of particulars or in some other way".

The Stockley Park case represented the law on global claims until at least 2002 and it is characterised by careful balance:

A party "is entitled to present its case as it thinks fit" but "a defendant on the other hand is entitled to know the case it has to meet".

"What is sufficient particularity is a matter of fact and degree in each case. A balance has to be struck between excessive particularity and basic information. The approach must also be cost effective".

While leave to amend would be justified where not oppressive or abusive to the defendant, "If, however, that is not done or if there is no reason for the plaintiff’s inability to do so then the pleading will be susceptible to being struck out".

III JOHN DOYLE: A WATERSHED

John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2004] BLR 295 Court of Session (Inner House).

John Doyle were works contractors employed by management contractors Laing under an amended Scottish Works Contract Form, the project being the construction of a new corporate headquarters for Scottish Widows. John Doyle claimed a 22 week extension of time and £4.8 million for loss and expense caused by delayed and disruption. Laing argued that since John Doyle had made a global claim, if any of the loss and expense in it was not caused by them, the whole claim must fail. Lord MacFadyen at first instance felt that "it would be wrong to exclude, at this stage, the possibility that the evidence led at proof before answer will afford a satisfactory basis for an award of some lesser sum than the full global claim".

The decision of the Inner House on Laing’s appeal is an important re-assessment of the modern law.

The findings of the Inner House can be summarised as follows:

  • Individual causal links must normally be proved between each breach/claims event and each item of loss and expense.
  • If this is impossible, the claims events can be pleaded as producing a cumulative effect, where it is not necessary to break down and isolate them.
  • If, however, the employer is not liable for a significant cause of loss and expense, the claim fails.
  • If there are only "some" events, not "significant" in this category, the claim need not fail. The tribunal may be able to apportion loss, although this will lead sometimes to rough and ready results.
  • In pleading the claim, reasonable detail on events and heads of loss must be provided. Causation will be largely a matter of inference and based on experts reports; consideration of these aspects should wait until all the evidence is before the tribunal.

There are three main changes in emphasis in the law in John Doyle and each is, to a greater or lesser extent, encouraging of global claims.

  • Whereas previously it was understood that any cause of loss shown to be not the responsibility of the defendant would be fatal to the global claim, it now appears that this only applies if the cause of loss is significant or dominant.
  • The court seemed comfortable with the idea of apportionment of loss by the tribunal between causes for which the employer is and is not liable, even if this may be a rough and ready process.
  • The issue of whether causation can be proved should normally wait until the trial when all the evidence is in and so, presumably, would not be decided at the interlocutory stage on an application to strike out.

IV CONCLUSION

The basic position is still as summarised in Keating in 2001 (p. 546) "Contractors often have claims dependent on a number of separate causes, each of which has contributed to delay and extra cost. In principle, the loss attributable to each cause should be separately identified and particularised, but separation may be difficult".

The law has developed as a careful balance between these practical difficulties for claimants and the rights of defendants to know the case against them in adequate detail. John Doyle has not changed the law in the sense of formally overruling existing authority. It still remains English law, as was stated in Australia in John Holland, that "the court should approach a total cost claim with a great deal of caution, even distrust".

However, there is definitely a change of emphasis in John Doyle in favour of a more pragmatic approach to global claims by tribunals. In the short to medium term, this must inevitably create a perception of better prospects for claimants than before the decision and clients and main contractors will need to brace themselves for the consequences.

The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

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