HT-2020-000448 - [2024] EWHC 1185 (TCC)

DBS contends that the words “in respect of all other claims, losses or damages” appear at the end of a number of provisions addressing different types of liability and providing different limits for such claims; they must be read in that context. The contractual regime envisages a limit specific to each different claim. Moreover, the monetary limit is an alternative to a limit based on “the Charges paid under this Agreement during the 12 month period immediately preceding the date of the event giving rise to the claim under consideration”, which will be a different period for each claim depending upon the facts which give rise to that claim. It is said therefore that such language indicates that for each claim under consideration there is a separate limit defined by the charges over a separate period. DBS seeks to demonstrate this by an example, which it says is unanswerable and, indeed, unanswered by TCS. If TCS were right, then a claim made in 2014 would give rise to a cap based on the 12 month period preceding that claim. However, when a further claim is made the cap could no longer be based on the charges paid in the previous 12 months but by definition must relate to an earlier 12-month period when a previous claim was made. This cannot be right because it would involve an exercise which is directly contrary to the agreed regime. It also contends that the language “less the amounts previously paid” etc at the end of the sub-clause does not change the meaning of the language above.

TCS argues that the clause (and its equivalent at Clause 52.3.4) gives rise to a single cap, whose level is set by reference to the Charges due to be paid (or, for DBS’s counterclaim, paid) in the 12 months prior to the first event giving rise to the claim arising. This, it is said, is correct because: (i) both clauses define the party’s ‘total aggregate liability’ and not a per claim liability; (ii) in the case of cl. 52.2.6, the deduction of amounts previously paid strongly suggests an intent to provide for one cap rather than multiple caps; and (iii) a pair of cases (Royal Devon and Exeter NHS Foundation Trust v ATOS IT Services UK Ltd [2017] EWCA Civ 2196, and Drax Energy Solutions Ltd v Wipro Ltd [2023] EWHC 1342 (TCC)) have held a single cap to apply in relation to clauses with similar language.

Whilst, plainly, each contract will turn on its own wording, it is instructive to consider the two cases relied upon by TCS.

In Devon and Exeter, the relevant clause was as follows:

“9.2

The aggregate liability of the Contractor in accordance with sub-clause 8.1.2 paragraph (b) shall not exceed:

9.2.1

for any claim arising in the first 12 months of the term of the Contract, the Total Contract Price as set out in section 1.1; or

9.2.2

for claims arising after the first 12 months of the Contract, the total Contract Charges paid in the 12 months prior to the date of that claim.”

At first instance, O’Farrell J held that this provided for a single cap (rather than multiple caps or two caps) focussing principally upon the phrase ‘aggregate liability’, and the word ‘or’. On appeal, Jackson LJ agreed that the clause did not provide for multiple caps. O’Farrell J had rejected this (see [86]) on the basis that if there was a separate cap for each claim, the potential, very large, total cap would render the clause devoid of any real purpose. Jackson LJ disagreed, however, that the clause provided for a single cap, and found instead that it created two caps, not one. He rejected the contention that the phrase ‘aggregate liability’ was a pointer toward one cap rather than two. He said ‘It could equally well mean that the limit of liability is the aggregate of the sums set out in paragraphs 9.2.1 and 9.2.2.’ In the present case, the emphasis placed on the phrase has much more resonance because the words ‘total aggregate liability’ attached to, and are effectively repeated in relation to, each of the sub-paragraphs which follow (in contrast to the way clause 9.2 in the Devon and Exeter clause is drafted). Thus, Clause 52.2.6 should be read as: ‘the CONTRACTOR’s total aggregate liability…in respect of all other claims, losses or damages shall in no event exceed £10,000,000 ....or, if greater…etc’.

In Drax the central clause 33.2 (together with clause 33.3 which is also of some relevance) read:

Waksman J found that, despite some linguistic quirks, the correct interpretation of clause 33.2 was that there was a single cap and not separate caps for each claim. This meant that the clause was in effect construed to mean that the cap was 150% of the Charges paid or payable in the preceding twelve months from the date when ‘the first [of the various] claim[s] arose’ (see [58]). In terms of the language used, the Judge emphasised that this was supported by the phrase ‘total liability’ as well as the absence of the words like ‘for each claim’ after the word ‘liability’. It was also common ground that clause 33.3 imposed a single cap for all claims relating to a breach of clause 21, which used similar language in terms of ‘the claim first arose…’ Thus, in circumstances where there could be more than one claim, it was nevertheless accepted that there was a single cap for all claims. It can also be noted that the Judge, entirely understandably, considered that the clauses were not well drafted.

In the present case, the same is true: Clause 52.2.6 is far from a model of clarity. Nevertheless, the correct construction is that the clause gives rise to a single cap applicable to all claims, losses or damages for the following reasons:

The question arises what ‘less in all circumstances any amounts previously paid (as at the date of satisfaction of such liability) by the CONTRACTOR to the AUTHORITY in satisfaction of any liability under this Agreement’ means. These words are wide enough to include sums paid pursuant to the preceding sub-paragraphs. The effect of this is that the cap of £10m (or alternative) is the absolute cap, notwithstanding the existence of other claims. This is inconsistent with the opening words of Clause 52.2.6, which suggest that the cap relates to ‘other’ claims (i.e. other than those dealt with in the preceding sub-paragraphs). In my judgment, the words should be read to mean liability under the clause rather than the agreement. This is because the words at the start of the clause are a clear indication that Clause 52.2.6 is a cap which applies to matters other than those previously dealt with and if the intention had been that it was an over-riding cap, considerably simpler language would have been used to express that intention.

Finally, I note that in light of my findings on liability and quantum below, the question of whether one or multiple caps applies to DBS’s claims is academic.