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

Fecha: 17-May-2024

Limitations of Liability

105.

Clause 52.2 deals with limits on the TCS’s aggregate liability. Clause 52.3 deals with DBS’s aggregate liability. Clause 52.4 deals with losses which neither side is liable to the other for. Clause 52.5 deals with what are considered to be direct losses recoverable by the Authority. These clauses are set out below:

‘52.2 Subject to clause 52.1, the CONTRACTOR's total aggregate liability:

52.2.1

in respect of the indemnity in clauses 17.2 (Tax), 29 (Employment Indemnity), and 51 (IPR Indemnity), shall be unlimited;

52.2.2

for all loss of or damage to the AUTHORITY Premises, property or assets (including technical infrastructure, assets or equipment but excluding any loss or damage to the AUTHORITY's Data or any other data) of the AUTHORITY caused by the CONTRACTOR's Default shall in no event exceed £5,000,000 (subject to indexation);

52.2.3

for all loss, destruction, corruption, degradation, inaccuracy or damage to the AUTHORITY Data caused by the CONTRACTOR's Default shall be £5,000,000 (subject to indexation);

52.2.4

in respect of Services Credits shall be limited in each Service Year to 10% of the Charges in that year;

52.2.5

in respect of Delay Payments shall be limited to 10% of the implementation Charges.

52.2.6

in respect of all other claims, losses or damages, shall in no event exceed £10,000,000 (subject to indexation) or, if greater, an amount equivalent to 100% of 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 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.

52.3.

Subject to clause 52.1, the AUTHORITY's total aggregate liability, (in addition to its obligation to pay the Charges as and when they fall due for payment):

52.3.1

for all Defaults by the AUTHORITY resulting in loss of or damage to the property or assets (including technical infrastructure, assets or equipment) of the CONTRACTOR shall in no event exceed £5,000,0000 (subject to indexation);

52.3.2

for the Termination Payment, shall not exceed:

52.3.2.1 in first Contract Year, £35,000,000 (subject to indexation);

52.3.2.2 in the Contract Years two and three and four and five, £25,000,000 (subject to indexation) for that respective year

52.3.2.3 in the final Contract year, £15,000,000 (subject to indexation);and

52.3.3

for the Compensation Payment, shall not exceed £10,000,000 (subject to indexation);

52.3.4

in respect of all other Defaults by the AUTHORITY shall in no event exceed the greater of:

52.3.4.1 an amount equivalent to the total Charges paid or properly invoiced and due to be paid under this Agreement in the 12 month period immediately preceding the event giving rise to the liability; or

52.3.4.2 £25,000,000.

52.4

Subject to clauses 52.1 and 52.5, neither party will be liable to the other party for:

52.4.1

any indirect, special or consequential loss or damage; or

52.4.2

any loss of profits, turnover, business opportunities or damage to goodwill (whether direct or indirect).

52.5

Subject to clause 52.2, the AUTHORITY may, amongst other things, recover as a direct loss:

52.5.1

any additional operational and/or administrative costs and expenses arising from the CONTRACTOR's Default;

52.5.2

any wasted expenditure or charges rendered unnecessary and/or incurred by the AUTHORITY arising from the CONTRACTOR's Default; and

52.5.3

the additional cost of procuring Replacement Services for the remainder of the Term; and

52.5.4

any anticipated savings.’

106.

The points of construction which arise are as follows:

(1)

DBS contends that the cap of £10,000,000 (subject to indexation) referred to in Clause 52.2.6 applies separately to each of its counterclaims brought against TCS. TCS contends that the clause provides a single, aggregate cap of £10,000,000 which applies to all claims, save for those dealt with in the preceding sub-paragraphs of the Clause. The only relevant one of these to provide a separate limit of liability is Clause 52.2.5 in respect of Delay Payments;

(2)

in relation to Clause 52.2.5, TCS contends that the Delay Payments are to be limited to 10% of the ‘implementation Charges’. These are not specifically defined. TCS argues that, by reference to Schedule 2-3, the implementation Charges should be regarded as a reference to the Charges associated with the successful Delivery of the Modernisation Release, which are £2,898,420.23. The limit would therefore be £289,842. DBS denies that any meaning can be given to the cap, or, alternatively, identifies other materials which may bear on what ‘implementation Charges’ mean, and which would give rise to a substantially higher cap;

(3)

DBS contends that TCS’s claim for wasted expenditure is in fact a claim for loss of profits, and as such is excluded by Clause 52.4.2. TCS contends that, whilst accepting that its loss could be characterised as either wasted expenditure or loss of profit, having characterised it as wasted expenditure, it is not caught by the exclusion at Clause 52.4.2.