The usual rules for making a claim, whether in court or arbitration, are that a claimant has to prove that the loss he is claiming has been caused by a default of the defendant. Each loss should be tied in to a specific cause. A global claim is a claim for a loss arising from a number of causes, all of which are said to be the responsibility of the defendant. Global claims are sometimes referred to as total cost claims: these are the claims where the anticipated cost of the job is subtracted from the actual cost of the job, and the difference claimed as a result of multiple causes. It is most usual to find global claims pleaded in the context of delay and/or disruption claims, where a loss is said to have been caused by a large number of events. That is not to say that global claims will be confined to these areas. It is just as possible to find a global claim in a defects case, where the need for remedial works will be blamed on multiple defects.
Construction law textbooks do not speak of global claims in favourable terms. Perhaps the most strongly worded criticism is from I.N. Duncan Wallace QC, who writes, in damning terms: “There will rarely if ever be any genuine factual justification for the use of either the global or total cost method in presenting claims under a construction contract, and the advancement of such claims, whether by owners, contractors or sub-contractors, should be treated as a clear indication of a weak or exaggerated or non-existent case which, if pleaded in a proper and sufficiently particularised form under the normal rules of pleading, would be unlikely to survive careful examination. … It is submitted that, in the English jurisdiction, claims on a total cost basis, a fortiori if in respect of a number of disparate claims, will prima facie be embarrassing and an abuse of the process of the court, justifying their being struck out and the action dismissed at the interlocutory stage.” As we will see below, striking out is not the usual approach taken by the Courts in England or Scotland: Mr Duncan Wallace’s words may go too far.
The Society of Construction Law Delay and Disruption Protocol also discourages the use of global claims without substantiating cause and effect. It says if accurate and complete records are maintained, it should only be in rare cases that it will be impossible to distinguish the financial causes of various events.
Despite this, there have been many global claims made over the years (many of which have been successful), and they will no doubt continue to be made. In an ideal world of course, it would not be necessary to make such a claim, as perfect records would be kept. But in the real world, sometimes the contractor is too busy trying to complete the job, get paid, deal with numerous instructions and valuations, cope with claims (maybe even adjudications) from sub-contractors…record keeping may not be top of the list of priorities. A global claim could result.
What should a party forced to make a global claim, or one that is faced with one, do?Under the Court rules (and good practice in arbitration), the claimant’s Particulars of Claim must set out a concise statement of the facts upon which the claimant relies. Sufficient detail must be given so that the defendant knows the case he has to meet. It seems that the claimant should plead that it is impossible or impracticable to identify a causal link between individual events and individual items of loss, together with any facts that the claimant will rely upon to prove that impossibility (although the cases are not completely clear as to whether a case that does not include this averment will fail).
The claimant should then set out, in as much detail as he can, the various causes of the loss. If it is possible to link any one of these, or groups of them, to individual losses, the claimant should do that, leaving the remainder as the global part of the claim. If there are causes of the overall loss for which the defendant has no responsibility, the claimant should identify these and exclude them from the claim, as much as is possible. If the claimant is able to put forward an alternative or lesser claim, should he only succeed in proving some of the causes of loss, he should do so, setting out how the claim could be reduced. The claimant will have to prove that his tender or programme was realistic and that the additional cost or time incurred was reasonable, so he should set out the facts he will rely upon to do this. This will help minimise the attacks that the defendant can make upon the global claim. However, a defendant will usually make some sort of challenge to the claim.
The common reaction from a defendant used to be to apply to strike out the claim, whether it was made in Court or in arbitration. It would be said that no causal nexus was pleaded between the alleged breaches of contract and the loss claimed. Tempting though it is for a defendant to apply to strike out, in practice, it seems rarely to be successful. The most often quoted case where an application to strike out succeeded, Wharf Properties Limited v Eric Cumine Associates (1991), is an extreme example, where the court process had been abused by the Claimant. Nevertheless, if the circumstances are extreme, there is a substantial amount in issue and/or the claim is obviously a try-on, it may be worth risking it.
A more fertile ground of attack will be to ask for more information, or particulars, about the case. However, a request for particulars can be a double-edged sword. A claimant may take the opportunity to make improvements to his case. If particulars are given, the claimant should be tied down to that case when he presents his evidence. The request for particulars may demonstrate to the claimant that the defendant can see the weaknesses in the claim – if the claimant thought he would be offered some money on a nuisance basis, he might think again. In many cases where the defendant applied to strike out a claim, the claim has lived to see another day, provided that proper particulars are provided. (In fact, a defendant who applies to strike out but obtains an order for particulars should have good grounds for arguing that the claimant should pay the costs of the application in any event.)
A claim document may simply be impossible to work with. It could refer to numerous schedules with no pleaded links between the schedules and what the claimant seeks, to the extent that the defendant does not know what case it has to meet. If so, it may be preferable to ask the court for an order that the claimant re-pleads his case in a comprehensible fashion. Again, the claimant may improve upon his case, but this is probably better than the defendant having to guess what the case against him may be, with the risk of getting it wrong.
If the claim document is understandable, the defence should try to undermine it as far as possible. Most importantly, the defendant should investigate other factors that may have contributed materially to the loss for which the defendant has no liability. These factors should be pleaded in the defence. The defendant may also be able to claim that certain events relied upon by the claimant are not the defendant’s responsibility or could not have contributed to the loss. The reason for doing this is that if the defendant can prove that an event which has materially contributed to the loss is not the defendant’s responsibility, the defendant can argue that the global claim should fail.
If the defendant believes that the claimant could put forward a positive case on causation, it should say so, bearing in mind that the defendant will then have to put forward its own case. A defendant risks doing the claimant’s work for it. If the defendant believes that the claimant’s anticipated costs or programme were unrealistic and unachievable, so that the tender cost or programme is not a suitable benchmark against which to measure additional cost or delay, the defendant should put forward details of its contentions.
How are the Courts treating global claims now? A recent Scottish case, John Doyle Construction Limited v Laing Management (Scotland) Limited (2002), gives some answers and maybe shows a more relaxed approach to global claims. Doyle had put forward a global claim, for an extension of time and loss and expense, which Laing applied to strike out. Since £4.8m was at stake, one cannot blame Laing for trying. Laing pointed out various events relied upon which were not relevant events for the purposes of a loss and expense claim, and said this was fatal to the global claim.
The Court agreed that if the causal events of the global claim included events for which the defendant bore no liability, and those events were material to the loss, the global claim would fail. Hence, the Judge described it as “a risky enterprise” to make such a claim. However, just because the global claim might fail did not mean that no claim would succeed. After evidence had been led, it might be possible to attribute individual sums of loss and expense to individual causative events. Alternatively, depending on the evidence, it might be possible to make a rational apportionment of part of the global loss for which Laing was held responsible. The Court said that causation must be treated as a common sense matter (although it not clear quite what this means!).
However, not everything was in Doyle’s favour. The Court made two observations: “The risk that the [claimant’s] global claim will fail because a material part of the causation of the loss and expense was an event for which the [defendants] are not liable, if the evidence discloses no rational basis for the award of any lesser sum, remain a live one. Secondly, the allowance of [allowing evidence to be adduced] does not afford the [claimants] carte blanche to attempt to prove their loss and expense in any way they choose. Their pleadings remain the measure of what they are entitled to prove by way of computation of loss and expense. If a lesser claim is to be made out, that must be done on the basis of evidence which is properly led within the scope of the existing pleadings.” The Doyle decision is not binding on the English courts, so we do not yet know if they will follow its approach. However, a Scottish decision can be persuasive to an English judge.
A global claim may not now reach a Court or Arbitrator, because the dispute will be taken to adjudication. Adjudicators have to be careful when dealing with global claims. An adjudicator can take the initiative in ascertaining the facts and the law, but there seems to be a limit as to how far he can go. In Balfour Beatty Construction Limited v London Borough of Lambeth (2002), the adjudicator in effect came up with his own critical path programme in respect of a global claim before him, and based his decision on it, without giving the other party an opportunity to address him on it. The Court held that the adjudicator may not have acted impartially and the consequences were sufficiently serious that they should not be disregarded. Therefore, his decision was not upheld. The lesson? Adjudicators need to be careful not to be drawn into making a party’s case for it. The other party should be given an opportunity to respond but this can be difficult in the 28 day timescale.
Is there any scope for further relaxation in the approach to global claims? Well, possibly. In the case of Fairchild v Glenhaven Funeral Services Limited & Others (2002), claimants succeeded in personal injury claims where they were unable to prove that the defendants had in fact caused the injury; all they could show was the defendants had materially contributed to the risk of injury. These were special cases, involving claims for mesothelioma, caused by exposure to asbestos, and it could be said that the House of Lords allowed the claims to succeed on public policy. Alternatively, maybe it shows the common sense approach to causation being applied so that justice could be seen to be done in an appropriate case. Despite this, it is still a risky strategy to plead a global claim.
For further information please contact Clare Collier at clare.collier@cms-cmck.com or on +44 (0)20 7367 2354
