Causation and global claims under construction contracts

26 Jun, 2014

Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184, a recent decision of the New South Wales Court of Appeal, confirms that there has been no relaxation by Australian courts of the requirement that a plaintiff must prove causation in the context of a global claim.

A “global claim” is a class of claim, often advanced under construction contracts, in circumstances where the Contractor (or Subcontractor or other plaintiff) alleges that it has suffered loss as a consequence of multiple interacting events for which the Principal (or Head Contractor or other defendant) is responsible. The Contractor does not seek to prove precisely the loss from each event; rather, the Contractor pursues a claim for the total loss it alleges it suffered as a result of all of the events. It is said that, in the context of a global claim, causation is proved by inference.

Global claims are generally in the nature of “total cost” claims, wherein the Contractor quantifies its loss as the difference between the contract price and the actual cost of performing the works.

Australian courts have recognised that a Contractor may bring a global claim where it is impractical to disentangle the composite loss attributable to a series of causes and that situation was not brought about by the Contractor.

The decision of the Court of Appeal in Mainteck is significant because the Court expressed the view that it is unlikely that a global claim will succeed if other causally significant events exist for which the defendant is not responsible. In these circumstances, it is likely that the claim will fail in its entirety. In that respect, the Court declined to follow the decision of the Inner House of the Court of Session (Scotland) in Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2004] BLR 295, in which the Court held that it may be possible in some cases to apportion the loss between the causes.

Clayton Utz.

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