Background
In the construction industry, the term "global claim" is most frequently used to describe a contractor’s claim for loss resulting from any number of different causes, for which the employer is responsible, where there is no link between the individual causes and the loss.
Hudson’s Building and Engineering Contracts defines global claims as follows:
"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".
Global claims have often been found by the Courts to be objectionable and dismissed on the basis that the claimant contractor has not proved causation between the sums claimed and the various causes of complaint. Furthermore, in adopting a global approach, contractors ignore their possible culpability in causing additional cost.
Indeed, The Delay And Disruption Protocol (the Protocol) published by the (UK) Society of Construction Law states:
"The not uncommon practice of contractors making composite or global claims without substantiating cause and effect is discouraged by the Protocol and rarely accepted by the courts".
However, a more relaxed view of global claims has now been endorsed by the English courts in London Underground Limited v Citylink Telecommunications Limited (2007).
London Underground Limited v Citylink Telecommunications Limited
This action arose from an arbitration award concerning the Connect Project to replace the communication network systems throughout London’s underground rail network. Citylink claimed an extension of time because of delays caused by the late completion of LUL’s preparatory works. The Judge, the Honourable Mr Justice Ramsey, stated that he would apply the "proper approach to global claims" in assessing whether there was a serious irregularity in the award of a 48 week extension of time and went on to accept the approach to global claims as set out in the decision of the Scottish Inner Court in John Doyle Construction Limited v Laing Management (Scotland) Limited (2002).
The dispute in Doyle concerned the construction of new corporate headquarters in Edinburgh. Doyle was supposed to complete the works in 28 weeks but, due to delays caused by the late issue of information and restricted access, the work overran by 22 weeks. Doyle claimed an extension of time plus loss and expense arising from delay and disruption on a global basis.
In Doyle it was held that the logic of a global claim was that all the events which contribute to causing global loss must be the liability of the party which caused the delay. If there were events for which that party had no liability, the effect of upholding the global claim would be to impose a liability which, in part, was not justified and the global claim would then fail.
However, it was also held that, while the global claim as such may fail, it did not follow that no claim would succeed. There may be in the evidence a sufficient basis to make some connection and to make a rational apportionment of part of the global loss to the causes for which the party was responsible.
Implications Of Citylink
The adoption of the Doyle method for dealing with global claims by the English courts will be seen by many as encouraging global claims. A claimant contractor can assert that his losses were all attributable to the defendant employer without having to demonstrate causation, knowing that if he fails to show that the defendant was responsible, the court may help him out by effecting an apportionment of his total cost claim.
This has raised a number of concerns, for example, the practicality of carrying out an "apportionment" exercise on a failed global claim where a claimant has by his own admission asserted that it is impracticable or impossible to allocate cost to particular causes. How will the court succeed where the claimant has failed? Is it satisfactory to the defendant for this apportionment to be, as acknowledged by the Inner House in Doyle, "a somewhat rough and ready result"?
Furthermore, in English law it is long established that the party asserting a fact or matter has the burden of proving it. However, global claims allow the claimant to shift the practical onus of proving the extent of their damage, or lack thereof, to the defendant.
Advice
The easiest way to avoid the uncertainty and risk of a global claim is to keep up to date and accurate records. The Protocol guidance states that:
"if the contractor has made and maintained accurate and complete records, the contractor should be able to establish the causal link between the Employer Risk Event and the resultant loss and/or expense suffered, without the need to make a global claim".
However, for a claimant forced to make a global claim:
- Whenever possible, set out the various causes of the loss and link them to individual losses thereby reducing the value of the global part of the claim.
- Exclude any losses for which the defendant has no responsibility.
- Demonstrate that the tender and programme were realistic and that the additional costs or time incurred were reasonable.
And for the defendant who is forced to defend it:
- Seek further particulars about the claim to identify weaknesses in the form of incorrect tasks or claimant capability.
- Investigate other possible factors that may have contributed materially to the loss for which it has no liability.
- Demonstrate that the claimant’s tender costs or programme were unrealistic and unachievable so that the tender cost or programme is not a suitable benchmark against which to measure additional cost or delay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
