Loss and Expense - Global Claims
Introduction
I would like to take the opportunity to remind readers of the Scottish decision of Laing Management (Scotland) Limited v John Doyle Construction Limited 2004 which was a case heard in the Scottish Court of Appeal (the Inner House of the Court of Session).
The case dealt with a global claim for loss and expense. That is a loss and expense claim calculated using a comparison between pre-contract estimates of costs used to tender to win the work and the actual cost incurred in carrying out the works. Often a party claiming loss and expense will provide calculations to show that their costs in carrying out the works have been more than anticipated beforehand and will seek to claim the increase from the Employer.
The general position remains that a global claim for loss and expense will fail if any material contribution to the global loss is caused by events for which the Employer bears no legal liability. The party claiming loss and expense must therefore eliminate all matters that are not its customers responsibility pursuant to the Contract between them.
This was considered in the case of Laing Management (Scotland) Limited v John Doyle Construction.
The Court held that for a loss and expense claim to succeed the contractor must prove the following :-
- The existence of one or more events for which the employer was responsible
- The existence of loss and expense suffered by the contractor
- That the event caused the loss and expense (causation)
The problem with a global claim is that it does not demonstrate that the events complained of caused the loss and expense. The Court held that global claims are only permissible if it is impossible to separate the consequences of each event and if the Contractor can demonstrate that all of the events relied upon are in law the responsibility of the employer. If some of the loss was caused by an event the contractor is responsible for such as inefficient working then the global claim will fail.
The Court said if did not follow that because the global claim failed, that no claim succeeded. It may be possible to establish that a group of events for which the Employer is responsible could be linked to a group of heads of loss provided that such loss has no other significant cause.
In summary the contractor who seeks to bring a global claim will face an uphill struggle and will have to demonstrate that it is impossible to separate out the consequences of each of the events complained of and that all of these events are the responsibility of the Employer.
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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