Global claims – the effect of John Doyle v Laing Management

Contractors have always traditionally sought to rely on recovering their losses through global claims. Has the Scottish Court of Session's recent judgment in John Doyle v Laing Management affected this strict area of the law?

Global claims are claims where a sum, however calculated, is put forward as the measure of damage or contractual compensation for the loss or expense said to have been caused by two or more events. Often, "a whole series of events which individually would form the basis of a claim for loss and expense inter-react with each other in very complex ways, so that it becomes very difficult, if not impossible, to identify what loss and expense each event has caused[1]".

Why are they so frequently used?

Global claims are typically used by contractors as a way of seeking to recover delay and/or disruption related costs. Contractors often try to advance claims on a global basis as apart from being easier, quicker and cheaper to prepare, the method avoids the need to attribute a specific loss to specific breaches of contract. It is also often used as a way of "forest pleading"[2] , whereby the claimant believes that by alleging that every event caused a disturbance and additional loss, the need to critically review each event will be avoided.

What's wrong with that?

Because of the strict procedural rules relating to proceedings in court, the courts have historically treated global claims with a great deal of suspicion. The main reason for this is that global claims, as generally pleaded, do not provide a proper basis for the claimant to meet the standards of proof required by the courts. In the past, this has caused courts and arbitrators to dismiss global claims out of hand.

The pre-Doyle position

The first significant case that tried to address the issue of global claims was Crosby v Portland Urban District Council[3]. In this case, the judge acceded to the argument that where a claim depends on "an extremely complex interaction in the consequences of various denials, suspensions and variations, it may well be difficult or even impossible to make an accurate apportionment of the total extra cost between the several causative events". It was for this reason that the judge held that there was no reason "why [the arbitrator] should not recognise the realities of the situation and make individual awards in respect of those parts of individual items of the claim which can be dealt with in isolation and a supplementary award in respect of the remainder of these claims as a composite whole."

This case therefore appears to support recourse to a global claim in the event of a "complex interaction" between various different heads of claim and where it is impractical or impossible to provide a breakdown or sub-division of the claim between those heads.

Crosby was followed by, amongst others, Merton v Leach[4]. The court endorsed the judge's approach in Crosby and held that where loss or expense arose as a result of a number of compensable events (i.e. events for which the contractor is entitled to compensation), each contributing towards a cumulative disruption cost, it was often wholly artificial to apportion the totality of the extra costs incurred between the various events which had contributed towards those costs. On the other hand, it said, an application must be made in regard to each event which is alleged to be compensable and liability for that event proved.

If one of the grounds or events on which the claimant relies fails, such a claim would have traditionally been vulnerable to an argument by the defendant that the whole of the loss claimed could have been caused by that one event rather than any of the other events which may have been proved. Since the claimant's claim relies on the basis that it was impossible to attribute any particular part of the loss to any one or more of the several events relied upon, it has in principle no answer to the defendant's argument. Similarly, if the defendant is able to establish that an event for which the claimant was responsible caused an unidentified part of the loss claimed, again the claimant becomes unable to disentangle the good from the bad.

John Doyle Construction Limited v Laing Management (Scotland) Limited[5]

In this recent Scottish case, a dispute arose concerning the construction of a new corporate headquarters for Scottish Widows in Edinburgh. The pursuers (claimants), who were sub-contractors, advanced a global claim for loss and expense and the defenders (defendants), the contractors, attacked the pleading on the basis that certain events alleged to have caused the loss claimed were not events on which they could rely, at least in part, because they did not give rise to a claim for time or money[6]. In the absence of being able to separate the good from the bad, the whole claim had to fail, the defenders argued (i.e. the all or nothing argument was deployed).

However, the Court of Session concluded that such a strict view could deny the claimant a remedy even if the conduct of the employer or his agent is plainly culpable and has clearly caused damage to the contractor. The court said that in such cases, "the contractor should be able to recover for part of his loss and expense, and [the court was] … not persuaded that the practical difficulties of carrying out the exercise should prevent him from doing so.[7]" If a contractor can demonstrate that all the events on which it relies were the employer's responsibility (for example, late information and design changes) then it is not necessary to demonstrate causal links between individual events and particular heads of loss. If a significant cause of the delay and disruption is not the employer's responsibility (for example, bad weather and the contractor's own errors), then such a claim will fail.

The court said that where the dominant cause of the loss was not the employer's responsibility, it may nevertheless be possible to apportion the loss between two different causes. This should be done, it said, according to their relative significance. It was suggested that as a "rule of thumb", responsibility should be divided on an equal basis unless there are special reasons to the contrary.

Further, if one or more of the concurrent causes of the loss and expense is the contractor's responsibility, it may be appropriate to deny the contractor any recovery for the period of delay during which the contractor is in default. The court has also suggested that this approach may be taken in relation to issues of disruption which cause loss and expense, although the resulting apportionment may be somewhat "rough and ready". The court stressed that any such allocation must be based on the evidence.

The judgment in Doyle represents a major shift in judicial approaches to global claims, adopting a much more permissive stance. The court defended this approach on the basis of the interests of natural justice. It rejected the narrow approach to global claims in which the contractor's claim might fail simply because small elements of the total claim were shown not to be the responsibility of the employer. The judge in Doyle expressly recognised that even if one or more of the grounds of the global claim was not made out at trial, a sensible assessment of the loss might still be made. In other words, where it is shown that some of the events – albeit not a "significant" amount in causal terms – are not actually the responsibility of the employer, the global claim should not necessarily fail since it may be possible for the judge or arbitrator to apportion the loss as between the causes for which the employer is responsible and other causes, providing sufficient evidence is presented (this is an important health-warning).

The all or nothing argument utilising the "single prick to burst a balloon" analogy now, therefore, seems to have been significantly undermined. The global claim can now only be defeated where the employer shows he is not liable for a significant causal element of the total costs claimed.

The post-Doyle position

Unsurprisingly, many contractors have wasted little time in relying on Doyle. It is likely that some contractors will now, relying on Doyle, increasingly seek to advance their loss and expense claims on a global claim basis relishing the more relaxed approach to the need to prove cause and effect. Although it will now be more difficult for employers to successfully defeat such a claim outright, it is by no means the case that every single global claim will satisfy the court or, more likely, the adjudicator. The court in Doyle was careful to lay down a number of defined stages for dealing with these claims and, without passing these, a global claim will still fail.

Although, as a Scottish case, Doyle is persuasive in the English courts, it remains to be seen how they will treat this case. There is a strong argument that Doyle should not apply in England for the following two reasons:

• The concept of apportionment is inconsistent with the established principles of English law. It does not sit well with the fact that the courts of common law jurisdictions tend to apply the principles of causation in an "all or nothing" way. Historically, the courts have tried to attribute any one event to a single cause with the result that the claimant succeeded completely or not at all. In the absence of statutory authority, the courts have historically declined to apportion damages as between two or more competing causes[8]; and
• The concept also seems to go against the judgment of Judge LLoyd in the Bernhard's Landscapes[9] case. In this case, it was held that a global claim would be permissible only providing that the inability to attribute loss to each head of claim had not been brought about by delay or other conduct on the part of the plaintiff contractor.

The Doyle case seems to have extended the circumstances in which a global claim will be allowed to succeed, however, only time will tell whether this will remain the state of the law once the inevitable happens and this principle is examined by the English courts.

For further information please contact Adrian Bell on +44 20 7367 3558 or at [email protected]

[1] John Doyle Construction Limited v Laing Management (Scotland) Limited [2002] ScotCS 110 para 35 (First instance)

[2] Referred to by Judge Lloyd in Bernhard's Landscapes

[3] [1967] 5 BLR 121

[4] London Borough of Merton v Stanley Hugh Leach Ltd [1985] 32 BLR 51

[5] [2004] BLR 295

[6] See Inner House's decision in Doyle [2004] BLR 295, para 6

[7] See Inner House's decision in Doyle [2004] BLR 295, para 17

[8] For more, see "Concurrent Delay" by John Marrin Const. L.J.2002, 18(6), 436-448

[9] Bernhard's Rugby Landscapes Ltd v Stockley Part Consortium Ltd [1997] 82 BLR 39