Global claims in Scotland and beyond

By Philip Dawson and Donna Vella.

Key Points:
It could be easier for courts to accept global claims, following a recent Scottish decision.

It is not uncommon for contractors to make global claims for time or payment. Thus a contractor may argue that all project delays and disruption are the result of a series of events due to the owner without demonstrating cause and effect. Courts have been cautious to accept global claims and they are only accepted in limited circumstances.

The Extra Division, Inner House of the Court of Session, in the case of John Doyle Construction Limited v Laing Management (Scotland) Limited [2004] ScotCS 141 (11 June 2004) considered whether a global claim could succeed where the defendant was not liable for all the delay and disruption but only part of it. This decision may lead to a widening of the boundaries where a global claim may be recognised in other jurisdictions.

Prior to this decision, the claimant was required to establish that it was unable to determine the extent of each individual event and its contribution to the delay and the cost. Further, the claimant also had to establish that it was not itself be responsible for any of the loss, and that the defendant was responsible for all of the loss.

The facts

John Doyle Construction Limited (JDC) was engaged as the subcontractor and Laing Management (Scotland) Limited (LMS) was the management contractor, on two separate work packages for the construction of office headquarters of the Scottish Widows Fund (namely WP2010 and WP2011).

WP2011 was delayed by 22 weeks and consequently JDC brought an application in the Commercial Court for an extension of time and made a "global claim" for the 22 week delay, the related delay and disruption costs in the amount of £4,807,144.16. It was alleged that some of the delay was due to the late completion of WP2010 which ultimately resulted in the late start of WP2011 and a further delay which was not caused by LMS. The Statement of Claim identified that the claim was made as a "global claim" because it was impossible to "identify the causative links between each such course of delay and disruption, and the cost consequence thereof". LMS sought to have the global claim struck out on the basis that it included some delays for which LMS was not responsible.

The Scottish decision

The claim made by LMS to have the global claim struck out was unsuccessful at first instance. The Commercial Court held that while the global claim may fail in respect of events which were not the fault of LMS, it should not fail in its entirety.

LMS appealed the decision to the Court of Succession where Lord MacFadyen again dismissed the application. The case was then appealed to the Inner House Court of Session where on 11 June 2004 it was again held that LMS was unsuccessful and the matter was referred to trial.

In its decision, the Court of Session suggested a three-pronged approach when considering whether a global claim is successful:

• where particular events can be directly linked to individual loss, then they should be extracted from the global claim and argued separately. This is unlikely to be very common as the nature of a global claim is that the loss cannot be directly linked to an individual event.
• if there are concurrent delays, the claimant must prove that the defendant is the "dominant" cause of each event leading to the delay. If it can be proven that the defendant is the "dominant" cause of the delay then the concurrent events which are not the responsibility of the defendant can be ignored when assessing the loss or damage payable to the claimant.
• where the claimant cannot or fails to prove that the defendant is the "dominant" cause of the loss, the loss shall be apportioned between each cause, dependent on responsibility. While this method is similar to that adopted in assessing contributory negligence, it is a very rough and ready approach.

The Court also held that causation must be treated with common sense. That is, it should be reasonably obvious that a particular event caused the loss, notwithstanding that other events played a part in its occurrence.

Implications for Australia

The Australian courts are yet to endorse the decision of the House of Session. The Supreme Court of Victoria previously considered the issue of global claims in John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) 13 BCL 262, where it was held that a global claim may be relied upon:

"where it is impractical to disentangle that part of the loss which is attributable to each head of claim, and this situation has not been brought about by delay or other conduct of the claimant…

…the proprietor's breaches represent the only causally significant factor responsible for the difference between the expected cost and the actual cost."

More recently in Thiess Contractors Pty Ltd v Murchison Zinc Co Pty Ltd [2000] WASC 71, the Supreme Court of Western Australia also considered the issue of a global claim. Thiess was engaged for the excavation and construction of a decline. The Superintendent (acting on behalf of Murchison Zinc) directed Thiess to depart from the original design. Consequently, Thiess adopted a different work method and claimed a variation, an extension of time, and loss and damage. The defendant sought to have Thiess' claim struck out on the basis that no adequate particulars relating to the loss and damage were provided in the Statement of Claim. The defendant relied on the same reasoning in John Holland set out above. While it was held that there was no global claim as Thiess' claim related to one variation arising from different contractual provisions, Justice Templeman stated that the particulars were clear enough as they allowed the defendant to identify "what work was performed and material supplied, and the amount claimed in respect of those items". Further it was held that the evidentiary burden of reasonableness begins with the claimant which needs to establish that it acted reasonably in the circumstances when it incurred the additional costs. Once the claimant establishes this burden, the burden shifts to the defendant to establish that the amount of the additional costs are not reasonable.

The Scottish case appears to take the issue of global claims further than currently considered by the Australian courts as the Scottish decision does not require the loss to be totally caused by the contract. Further, it is likely that the detail required in the particulars is less onerous.

For further information, please contact Philip Dawson.