McGee Group Ltd v Galliford Try Building Ltd

INTRODUCTION

This is a Part 8 claim, pursuant to which the claimant (“McGee”) seeks declarations as to the proper interpretation of their sub-contract with the defendant (“GT”). In essence, McGee seek to argue that the amount of their liability for any financial claims brought by GT for delay and disruption, by operation of clause 2.21B, was capped at 10% of the sub-contract sum, a figure agreed at £1,489,733. GT accept that some of their delay and disruption claims against McGee are caught by clause 2.21B, but maintain that others, worth £2,291,495.53, are not caught by the same cap.

This Judgment is structured as follows. In Section 2, I set out the brief factual background, about which there is no dispute. In Section 3, I identify the relevant terms of the sub-contract. In Section 4, I summarise GT’s claims against McGee which have given rise to the dispute about the liability cap. In Section 5, I set out the principles of construction applicable to clauses which seek to limit one party’s liability. In Section 6, I identify what I consider to be the natural meaning of Clause 2.21B, the clause which provides the cap. Then, in Section 7, I analyse GT’s arguments as to why that cap does not apply to the entirety of their delay and disruption claims. In Section 8, I deal with the most significant of McGee’s secondary arguments. There is a brief summary of my conclusions in Section 9. I am very grateful to leading counsel on both sides for their clear and helpful submissions.

FACTUAL BACKGROUND

GT were the main contractors at a site known as Resort’s World, in Birmingham. In about February 2013, they engaged McGee as sub-contractors to undertake the design and construction of the earthworks, substructures, drainage, reinforced concrete superstructures and post tensioned slabs and beams.

The sub-contract works started in around February 2013. There was a supplemental agreement in September 2013 which recognised that certain delays had occurred. The formal sub-contract order was eventually dated 17 December 2013. The sub-contract incorporated the JCT Design and Build Sub-Contract agreement (DB Sub/A, 2011 Edition), together with a large swathe of bespoke amendments.

Happily, the terms of the sub-contract relevant to this dispute are not very numerous. They are set out in Section 3 below. On one view, the problem which has arisen in this case is all too common: a potential mismatch between the JCT standard terms and the bespoke amendments.

On 17 June 2014, GT sent McGee four letters setting out cross-claims for delay and disruption. These claims, at that time, came to over £2 million. Thereafter, between September and December 2014, when GT notified McGee of deductions from the sums otherwise due to McGee under the sub-contract, the largest single item notified by GT was what they described as “reimbursement costs loss and expense and costs associated with McGee’s failing to regularly and diligently progress their works.” Each time, they cross-referred to the letters of 17 June; each time, the figure deducted for these claims was the same, £1,489,733. That was the figure produced by the clause 2.21B cap, being 10% of the sub-contract sum. In other words, until December 2014, it appears that GT expressly accepted that McGee’s liability for their financial claims for delay and disruption was limited to 10% of the sub-contract sum, the case advanced in these proceedings by McGee.

In January 2015, GT’s description of these claims changed slightly, and thereafter the amount of the deduction sought by GT in respect of delay and disruption increased beyond the 10% cap. At present, the total amount claimed by GT against McGee in relation to delay is £3,318,124.29, of which it is said that claims worth £2,291,495.53 are not affected by the cap.

GT did not notify McGee of the date of practical completion of the sub-contract works until January 2016, when McGee were informed that practical completion of the entirety of the main contract works had been certified as having been achieved on 4 November 2015. Thereafter, in 2016, there were exchanges regarding the McGee final account and the amount of GT’s cross-claim for the financial consequences of McGee’s alleged delay, which highlighted the applicability or otherwise of the clause 2.21B cap.

THE RELEVANT TERMS OF THE SUB-CONTRACT

I set out below the relevant terms of the sub-contract, identifying each time their source and their setting.

McGee’s principal obligations were set out at clauses 2.1-2.5 of the JCT Standard Form. They included the obligation at clause 2.3 to carry out and complete in accordance with the programme details “and reasonably in accordance with the progress of the Main Contract Works”; and the obligation at clause 2.5 which, where applicable, required McGee to observe perform and comply with GT’s obligations under the main contract and provide an indemnity in respect of any breach thereof.

The sub-contract period was 53 weeks and the sub-contract completion date was originally 6 February 2014. This date was extended by the supplementary agreement to 5 March 2014. There were also various key dates referred to in appendix 14 of the sub-contract which were also extended by the supplementary agreement.

The completion date for the main contract works was stated as 16 January 2015. The works were divided into various units. Schedule 7 of the sub-contract identified the access target date for each of these units and then went on to identify the sum due by way of liquidated damages if the access target date was not met. Some of these amounts were significant. The access target dates themselves ranged from July to October 2014.

Clauses 2.20 and 2.21 of the JCT Standard Form are set out under the overall heading of ‘Practical Completion and Lateness’. Clauses 2.20.1 and 2.20.2 then come under the first sub-heading, ‘Date of Practical Completion’. Clause 2.20.1, dealing expressly with the date of practical completion, has been heavily amended, but it is unnecessary to set out those amendments here. It should also be noted that new clauses have been inserted after clause 2.20 dealing with “the achievement of the Access Condition and provision of Access to Tenants”, so as to dovetail with schedule 7 (paragraph 12 above). Taken together, these were important provisions because they set out the stages by which McGee was obliged to achieve “the Access Condition for all Units by the relevant Access Target Date”.

The amendments to clause 2.20 led to a new clause 2.21A, although clause 2.21 itself was unamended. Clause 2.21B provided the cap. The amended Clause in full provided as follows:

“Failure of Sub-Contractor to complete on time

2.21

If the Sub-Contractor fails to complete the Sub-Contract Works or such works in any Section within the relevant period or periods for completion, and if the Contractor gives notice to that effect to the Sub-Contractor within a reasonable time of the expiry of the period or periods, the Sub-Contractor shall pay or allow to the Contractor the amount of any direct loss and/or expense suffered or incurred by the Contractor and caused by that failure.

Non-achievement of Access Condition by the Access Target date caused by Sub-Contractor

2.21A If the Sub-Contractor fails to complete the Sub-Contract Works or fails to undertake such of the Sub-Contract Works or such works in any Unit within the relevant period or periods such that the Contractor is unable to achieve the Access Condition for the given Unit under the Main Contract by the Access Target Date or such that the Main Contractor incurs loss and expense in meeting the Access Condition by the Access Target Date and if the Contractor gives notice to that effect to the Sub-Contractor the Sub-Contractor shall pay or allow to the Contractor the amount of any direct loss and/or expense suffered or incurred by the Contractor and caused by the Sub-Contractor’s failure. The Sub-Contractor acknowledges that under the Main Contract the Contractor is liable to pay the liquidated damages set out in schedule 7 if the Access Condition is not achieved by the Access Target Date for the given Unit.

2.21B Provided always that the Subcontractor’s liability for direct loss and/or expense and/or damages shall not exceed 10% (ten percent) of the value of this Subcontract order.”

In its unamended form, the JCT Standard Form (at clauses 4.19-4.22 inclusive), includes various provisions under the heading ‘Loss and Expense’. Clause 4.19 and 4.20 are concerned with events which might entitle the sub-contractor to an extension of time and loss and expense as a result of delays and disruption occurring for particular reasons. Clause 4.21 is, in some ways, a mirror image of that because it is concerned with claims by the main contractor for loss and expense arising out of the sub-contractor’s default affecting the regular progress of the main contract works. In the unamended version, there is also a provision at clause 4.22 which stipulates that these provisions are “without prejudice to any other rights or remedies which the contractor or sub-contractor may possess”.

In the completed version of this sub-contract, all of these provisions again were heavily amended, although I note that the headings have remained the same. Again, it is not necessary for present purposes to set out anything other than the new clauses at 4.21 and 4.22, which replace, in their entirety, the clauses in the original JCT sub-contract form.

New clause 4.21 provided as follows:

“4.21.1

If the regular progress of the Main Contract Works or any part of them is materially affected by any act, omission or default of the Sub-Contract [sic] or any of the Sub-Contractor’s Persons, the Contractor shall within a reasonable time of such material effect becoming apparent notify the Sub-Contract in writing giving:

4.21.1.1 reasonable particulars of the effects or likely effects on the regular progress;

4.21.1.2 such details of the resultant loss, damage, expense or cost as the Sub-Contractor reasonably requests; and

4.21.1.3 the sum reasonably estimated by the Contractor as the amount of such loss, damage, expense or cost.

4.21.2

Any sum reasonably estimated by the Contractor as due in respect of any loss, damage, expense or cost thereby caused to the Contractor may pending final determination of the matter in litigation, arbitration, adjudication award or agreement between the Contactor and the Sub-Contractor, be deducted from any monies due or to become due to the Sub-Contractor or shall be recoverable by the Contractor from the Sub-Contractor as a debt.”

Clause 4.22 related only to the sub-contractor, McGee. It provided:

“Save to the extent that the Sub-Contractor is entitled to reimbursement of the same under any other provision of this sub-contract, the sub-contractor’s rights under the sub-contract of payment in respect of any loss or expense suffered or sustained by the sub-contractor because the regular progress of the sub-contract works or any part of them has been effected by any act or omission of the Employer or anyone for whom the Employer is responsible under the Main Contract (or because of such act or omission regular progress has been effected as a consequence by an act or omission of the Contract) are fully set out in clauses 4.19-4.21 and no other rights whatsoever of the sub-contractor in relation thereto shall be implied as terms of this sub-contract.”

GT’S CLAIM

On 11 October 2016, GT sent McGee a Statement of the Calculation of the Final Sub-Contract Sum. This included a document entitled ‘Galliford Try Summary Statement of Entitlement to Loss and Expense and Interest’ (“GT’s Loss and Expense Claim”). It set out GT’s financial claims for delay and disruption, and sought to differentiate between claims under clauses 2.21 and 2.21A of the sub-contract, on the one hand, and claims under clause 4.21, on the other.

Paragraphs 4.13-4.69 of GT’s Loss and Expense Claim set out financial claims arising out of what GT call McGee’s “delayed and disruptive delivery of the sub-contract works”. GT say that McGee’s default caused them to remain on site working on certain units beyond the access target dates set out in the main contract. These claims are said to amount to £1,026,628.76. GT accept that these claims are capped by operation of clause 2.21B.

Paragraphs 4.70-4.112 of GT’s Loss and Expense Claim also appear to set out claims for the financial consequences of delay and disruption. These claims are said to arise directly out of a critical delay of 52 days to the main contract caused by McGee (see paragraph 4.71). These claims total £2,291,495.53. GT say these are claims under clause 4.21 and are not caught by the cap. Accordingly, it is this sum which represents the prima facie value of these Part 8 proceedings.

THE APPLICABLE PRINCIPLES

Clauses which seek to limit liability, as opposed to excluding liability altogether, have been the subject of a number of important decisions in the last 40 years. This line of authority begins with Ailsa Craig Fishing Co Limited v Malvern Fishing Co Limited [1983] 1 WLR 964, 970, where Lord Fraser said:

“In my opinion these principles [dealing with exclusion clauses] are not applicable in their full rigour when considering the effect of clauses merely limiting liability. Such clauses will of course be read contra proferentem and must be clearly expressed, but there is no reason why they should be judged by the specially exacting standards which are applied to exclusion and indemnity clauses…It is enough in the present case that the clause must be clear and unambiguous.”

On the same topic, in Price Waterhouse v The University of Keele [2004] PNLR 43, Buxton LJ said:

“The principle set out by Lord Fraser is wider than the general rule of contra proferentem, which latter depends for its applicability on discernment of an ambiguity in the language. Rather, Lord Fraser’s principle applies in a case such as the present directly, and without nice analysis in terms of ambiguity, when a clause that seeks to exclude liability that would otherwise attach under the contract cannot be construed with ease or confidence whichever party’s argument is addressed.”

Similar points were made more recently by Simon J (as he then was) in Bikam OOD and Another v Adria Cable S.a.r.l [2012] EWHC 621 (Comm). He said:

“35.

I do not accept the broad submission of the Buyer that exclusion and limitation clauses are to be construed restrictively. As Moore-Bick LJ put it in Tradigrain SA and others v Intertek Testing Services (ITS) Canada Ltd and another [2007] EWCA Civ 154 at [46]:

‘It is certainly true that English law has traditionally taken a restrictive approach to the construction of exemption clauses and clauses limiting liability for breaches of contract and other wrongful acts. However, in recent years it has been increasingly willing to recognise that parties to commercial contracts are entitled to apportion the risk of loss as they see fit and that provisions which limit or exclude liability must be construed in the same way as other terms: see, for example, Photo Production Ltd v Securicor Transport Ltd [1980] AC 827…’

See also the judgment of Moore-Bick LJ in Whitecap Leisure Ltd v John H Rundle Ltd [2008] EWCA Civ 429 at [20].

36.

Nor does any residual hostility apply to clauses which attempt to limit the liability of parties to a fixed financial amount. As Lord Wilberforce said in Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 WLR 964 at 966H:

‘Clauses of limitation are not regarded by the courts with the same hostility as clauses of exclusion: this is because they must be related to other contractual terms, in particular to the risks to which the defending party may be exposed, the remuneration which he receives, and possibly also the opportunity of the other party to insure.’”

In summary, a clause which seeks to limit the liability of one party to a commercial contract, for some or all of the claims which may be made by the other party, should generally be treated as an element of the parties’ wider allocation of benefit, risk and responsibility. No special rules apply to the construction or interpretation of such a clause although, in order to have the effect contended for by the party relying upon it, a clause limiting liability must be clear and unambiguous.

THE NATURAL MEANING OF CLAUSE 2.21B

In my view, clause 2.21B is a straightforward provision seeking to cap McGee’s liability for ‘direct loss and/or expense and/or damages’ at 10% of the value of the sub-contract order. The percentage cap is a common way in which the parties to a commercial agreement seek to reduce risk and promote certainty. This cap is not said to be referable to claims which may be made under particular clauses of the sub-contract or, for that matter, for breach of any express or any implied terms. It is specifically a cap on McGee’s liability for a particular type of claim, namely one for “direct loss and/or expense and/or damages”.

Can there be any doubt as to what is covered by that wording? In my view, there can be no doubt. The expression ‘direct loss and/or expense’ was the subject of the Court of Appeal decision in F G Minter v Welsh HTSO [1980] 13 BLR 1. It is the financial loss which flows directly from delay and disruption caused to a main contractor (or a sub-contractor), and is recoverable under the first limb of Hadley v Baxendale. It is a term much-used by the JCT and therefore dear to every construction lawyer’s heart: it is synonymous with the financial consequences of delay and disruption.

Does the fact that the term here caps McGee’s liability, not only for direct loss and/or expense, but also “and/or damages”, extend the cap beyond McGee’s liability for the financial consequences of delay and disruption? In my view, it does not. Precisely the same claim for loss and expense due to delay and disruption under the express terms of the main contract (or, as here, under the sub-contract) will be routinely put in the alternative as a claim for damages for breach of contract. This is particularly so since the decision of Vinelott J in Hugh Stanley Leech v London Borough of Merton [1986] 32 BLR 51, in which the learned judge found a whole series of terms, relating to co-operation, hindrance, prevention and the like, were to be implied into a standard form of building contract. Although the decision has been criticised over the years, there can be no doubt that it represents settled law. Thus, financial claims for delay and disruption are routinely put in the alternative as claims for damages for breach of the implied terms identified by Vinelott J, particularly if the contractor or sub-contractor is concerned that he may not have complied with all of the notice provisions required for the same claims under the contract. On that analysis, the reference to “and/or damages” in clause 2.21B is entirely unremarkable.

GT submitted that the reference to the words “and/or damages” meant that, on one view, clause 2.21B was seeking to limit the entirety of GT’s claims against McGee (including, for example, any claims for damages for defective work), to the 10% cap. GT said that in consequence, McGee’s submission “proved too much”. I reject that submission.

First, I have explained in paragraph 28 above how and why the inclusion of the words “and/or damages” in a clause concerned with claims for loss and expense due to delay and disruption is unremarkable.

That approach is consistent with the fact that clause 2.21B is in a part of the sub-contract dealing with ‘Practical Completion and Lateness’. Although headings may not be used as an aid to interpretation, that is where the clause can be found. On the face of it, it was providing a limit to McGee’s liability for loss and/or expense and/or damages caused by lateness (delay). It was not capping McGee’s liability for anything else.

Secondly and in any event, the reference to “and/or damages” in clause 22.1B has to be read in conjunction with the reference to the preceding words “loss and/or expense”. The natural reading of the words “loss and/or expense and/or damages” is that it is identifying McGee’s liability for loss and/or expense and/or damages arising out of delay and disruption caused to GT. The earlier words modify and limit the ambit of the “damages” being referred to. McGee do not argue that the words should be given any wider meaning. For the reasons I have given, I think they are right not to do so.

Accordingly, in my judgment, the natural meaning of clause 2.21B is plain. It was an agreement whereby GT’s financial claims (whether described as loss, expense or damages) as a result of delay and disruption caused by McGee would be capped at 10% of the sub-contract sun. It is now necessary to turn to the detailed submissions advanced by GT to see if what I consider to be the obvious interpretation of clause 2.21B can be allowed to stand.

ANALYSIS OF GT’S SUBMISSIONS

Overview

GT argue, for a variety of reasons, that the clause only caps their claims under clauses 2.21 and 2.21A and has no effect on their claims under clause 4.21. They put forward a number of reasons for that conclusion, and I deal with each below.

The Location of Clause 2.21B

Mr Williamson QC noted in his pithy skeleton argument that the limitation of liability provision at clause 2.21B “is local to the liabilities arising out of the clauses 2.21 and 2.21A”. Accordingly, he argued that the cap must relate only to claims under those clauses which are proximate in the sub-contract to clause 2.21B, and not to clauses in other parts of the sub-contract, such as clause 4.21.

I do not accept that submission for a number of reasons. First, clause 2.21B is not capping claims which arise under specific clauses of the sub-contract. Instead, it is capping McGee’s liability for an entire type of claim, regardless of how and where the sub-contract liability for that type of claim might arise. When they agreed this provision, the parties must be taken to have been specifically focussing on McGee’s liability to GT for the financial consequences suffered by GT as a result of delay and disruption caused by McGee, rather than claims under particular clauses of the sub-contract: see Arnold v Britton [2015] AC 1619, 1628 (SC).

In order to counter this, Mr Williamson QC sought to argue that McGee’s interpretation was undermined by the fact that clause 4.21 contained no cross-reference back to clause 2.21B, which would have been an easy and straightforward thing to do. But on my analysis, that is a point against him. No such cross-reference was necessary or appropriate because this was a cap on McGee’s liability for a certain type of claim, however it arose, rather than their liability for claims made by reference to individual clauses.

In addition, it is plain on the face of the words used that clause 2.21B goes wider than clauses 2.21 and 2.21A, and is not therefore the simple product of those earlier provisions. One obvious example is that, whilst those latter clauses both refer only to loss and expense, clause 22.1B expressly extends the cap to claims for damages. Such claims would not ordinarily arise under the sub-contract except by way of clause 4.21. That is another reason why clause 2.21B is not necessarily linked to or limited by clauses 2.21 and 2.21A.

Making a Nonsense of the Sub-Contract

This is the argument that McGee’s interpretation is said to prove too much, because clause 2.21 would, for the sake of argument, also impose a cap on claims for damages for defective work. I have already explained how and why I consider that to be wrong: clause 2.21B is a limit on claims for damages for delay and disruption, and not for anything else.

As part of this argument, Mr Williamson QC noted that the original clause 4.22 of the JCT Form, which provides that the provisions of clauses 4.19-4.21 are without prejudice to other rights or remedies available to both parties, had been amended so that McGee’s rights and remedies, but not those of GT, were limited to those set out in the clauses.

In my view, this is irrelevant to the issue of construction. The court is concerned with the scope of GT’s claims, not those of McGee. Neither the unamended nor the amended versions of clause 4.22 sought to limit GT’s claims, so the one-sided change to clause 4.22 cannot be material. Moreover, I have already explained that, in my view, it was the parties’ intention to provide a financial cap to GT’s claims for financial loss arising out of delay and disruption, howsoever they arose. That was part of the commercial allocation of risk and responsibility noted above. It is unaffected by an amendment which limited McGee’s claims to those under the sub-contract and left GT’s position unchanged.

Difference in Wording: Clause 2.21B and Clause 4.21

Mr Williamson QC’s next submitted that the wording of clause 4.21 was different because it was concerned with “loss, damage, expense or cost”, and not “direct loss and/or expense”, as referred to in clause 2.21B. For the reason previously noted, I consider that, on one analysis, this is a point against him.

In any event, a fair comparison between the words of the two clauses shows how similar they are, not how different. The words ‘loss’, ‘expense’ and ‘damage(s)’ appear in both clause 2.21B and clause 4.21. I do not consider there is any practical or meaningful difference between a liability for ‘direct loss and/or expense and/or damages’ arising out of delay and disruption, and a liability for ‘loss, damage, expense or cost’ arising out of delay and disruption. Certainly none was identified during the hearing.

Ultimately, I consider that this is a distinction without a difference. Again I note as a matter of fact (or ‘convenience’ as it is called in the sub-contract), clause 4.21 comes under a part of the sub-contract said to be dealing with ‘Loss and Expense’, words that are replicated in clauses 2.21 and 2.21A. In addition, I note that GT’s Loss and Expense Claim (Section 4 above) includes claims under both clauses 2.21/2.21A and 4.21, but is expressly described on the title page as a claim for ‘Loss and Expense’.

Different Claims under Clauses 2.21/2.21A and 4.21?

The next issue is whether, on a proper consideration of the scope and application of clause 2.21B, there is or could be a difference between claims made under clauses 2.21/2.21A, on the one hand, and clause 4.21, on the other. In my view there is no such difference. I deal with this by reference, first to the clauses themselves and then, secondly, by reference to GT’s Loss and Expense Claim.

The first point to make is that, if GT are right, then their claims for loss and expense arising out of delay and disruption under clause 2.21/2.21A would be capped (because they accept that that is what clause 2.21B says), but that other claims for delay and disruption, such as a claim pursuant to clause 4.21, or a claim for breach of the Merton v Leech implied terms, would not be caught by the cap. To put this same point another way, GT accept that loss and expense caused to them by McGee’s failure to complete the sub-contract on time, and/or loss and expense caused to them by McGee’s failures to allow them to meet the access dates, is caught by the cap; but they say loss and expense caused to them by McGee’s failures affecting the regular progress of the main contract is not caught by the cap.

In my view this is an artificial and uncommercial interpretation of the terms. It has no basis in practical reality. Such a construction would be impossible to operate or police effectively because the overlaps would be so persistent. It is a reading of the sub-contract designed solely to try and get round the effect of the cap. As such, it should not be condoned by the court.

In his oral submissions, Mr Williamson QC had another way of attempting to distinguish between the two sets of clauses. He said, for the first time, that clause 2.21 was concerned with delay, whilst clause 4.21 was concerned with disruption. In this way, he argued that a sensible distinction between the two clauses, and the claims made under them, could be made.

In my view, that argument is also unsustainable. Anyone who has ever put together, argued or been obliged to decide a claim for loss and expense under a building contract, knows that no sensible distinction can be drawn between delay and disruption. One man’s delay is another man’s disruption. A sub-contractor’s failure to complete a particular part of his work may have an adverse effect on the main contractor, but whether the consequential claim is one for delay or disruption, or a mixture of the two, will depend on a raft of factors: whether or not the delay was on the critical path of the main contract programme, what other sub-contractors were affected and how, if others were also in default etc. It is impossible to divide up such claims between delay, on the one hand, and disruption, on the other. The proof of that pudding is in the eating: as I note in paragraph 51 below, GT themselves have been unable to make any distinction between delay and disruption.

The conclusion that no sensible distinction can be drawn between claims arising under clauses 2.21/2.21A and 4.21 is supported by an analysis of GT’s Loss and Expense Claim. This is a legitimate exercise for the court to undertake since both the Claim Form and the Acknowledgement of Service ask the court to reach its conclusions of principle by reference to GT’s Loss and Expense Claim. Can a sensible distinction be made between the claims at paragraphs 4.13 To 4.69 of GT’s Claim, and the claims at paragraphs 4.70 and 4.112. Again I consider that the answer is in the negative.

All the claims in GT’s Loss and Expense Claim are just that: claims for loss and expense arising out of delay and disruption. That is why the claims are referred to generically as a claim for Loss and Expense on the title page and that is how they are presented in the pages of the document itself. And that is why GT’s claims pursuant to clause 4.21 repeatedly refer to themselves as claims for ‘delay and disruption’ (see, simply by way of example, paragraphs 4.73 and 4.86, where the two words are used together in the usual way).

In essence, underpinning both sets of claims, is the assertion that McGee were on site for too long and that this default caused GT financial loss of various types. In my view, GT are entitled to make a claim for that loss. But it is a traditional claim for direct loss and/or expense and/or damages and is therefore caught by the cap in clause 2.21B.

SECONDARY FINDING

With his customary zeal, Mr Hargreaves QC advanced a number of alternative or secondary cases. It follows, from my conclusions above, that it is strictly unnecessary for me to comment on any of them. Moreover, I think Mr Williamson QC was right to say that, at least at times, Mr Hargreaves QC’s alternative cases strayed too close to a fact-finding exercise, which is not appropriate under Part 8.

However, Mr Hargreaves QC raised one secondary point which I ought to address since it is a part of principle; it may be important; and I have reached a firm conclusion on it. It arises out of paragraph 26 of his skeleton argument. The point is straightforward. It is said on behalf of McGee that, if they were wrong as to their primary interpretation of the clauses, so that claims arising under clause 4.21 were not caught by the cap, the only claims that would be excluded would be claims that arose only under clause 4.21. In other words, if a claim could be demonstrated as arising under either clause 2.21/2.21A, or under clause 4.21, it would be caught by the cap, no matter how it was presented by GT.

In support of that contention, Mr Hargreaves QC referred back to Bikam (see paragraph 24 above). In that case, the cap applied to claims under an SPA for inaccuracies in the sellers’ warranties. The buyer endeavoured to avoid the cap by putting its claims, not for breach of warranty under the SPA, but under the Misrepresentation Act. Simon J rejected that approach. The relevant paragraphs are set out as follows:

“37.

In my judgment the provisions of the SPA with which I am concerned involved a calculated allocation of risk and remuneration. If the Buyer's submissions were correct the allocation of risk and reward would depend on the way in which a party framed its cause of action. A similar point arose in Bottin (International) Investments Ltd v Venson Group Plc[2004] EWCA Civ 1368where Peter Gibson LJ, giving the judgment of the Court said at [65]:

‘…to my mind it makes no commercial sense for the Agreement to impose conditions as to the giving of notice of a breach of warranty and as to the commencement of proceedings for such breach and limiting the maximum liability if Bottin was intended to be left free of those conditions and those time limits and the limits on liability by treating the same warranties as representations. [Counsel] was, in my judgment, plainly right to submit that the obvious commercial purpose in the conditions and limits was to enable the Warrantors to know that they would not be sued on the warranties if no notice was served in time and proceedings were not brought in time and that, if they were sued, there was a quantified limit to their liability. That purpose would be frustrated if the claim for breach of warranty could be regarded as a claim in misrepresentation…’

38.

I recognise that a claim for negligent misrepresentation involves an allegation of fault and involves a different measure of damages, but it seems to me that a court should at least have in mind the contractual allocation of risk and reward when deciding whether the parties are to be taken to have intended that claims for misrepresentation based on the same facts as give rise to the claim for breach of warranty are to fall entirely outside the confined liability prescribed by the SPA.”

Simon J went on to say that it was an uncommercial reading of the provision in the SPA to construe it as permitting a claim to be brought (without limitation of liability) based on a breach of the warranty obligations, on the basis that the claim had been brought instead under the Misrepresentation Act. Mr Hargreaves QC argued, by analogy, that the same would apply here.

In my view, that submission is well-founded. It is in accordance with the authorities. So if I was wrong as to my primary construction of the sub-contract, I consider that, if an individual claim against McGee could have been brought under clauses 2.21/2.21A then, even if such a claim could also be brought under clause 4.21, it would be caught by the cap in clause 2.21B. Any other reading would be uncommercial and render the cap otiose.

CONCLUSIONS

For the reasons set out above, I consider that the cap in the sub-contract at clause 2.21B catches all GT’s claims for loss and/or expense and/or damages for delay and disruption. I also consider that, on the face of it, it catches all of the claims advanced by GT in their Loss and Expense Claim. In those circumstances, subject to the precise wording, I am prepared to grant the declarations sought by McGee.

If I am wrong about that, it will be because, contrary to my findings, claims under clause 4.21 are not caught by the cap in clause 2.21B. If that is the case, then I find that the only claims not caught by the cap would be those which can only be brought under clause 4.21. If a claim can be or could have been made under clauses 2.21/2.21A as well as under clause 4.21, it would be caught by the cap. Otherwise the cap would cease to have any commercial purpose.