Advancing a global claim for loss is a risky business

Global claims, where a loss is attributed to a list of events with no specific link to each part of the claim, can be particularly useful when dealing with the complicated processes of construction, writes Daniel Atkinson.

WHEN a party to a contract makes a claim to recover a loss, it is normally required to prove a connection between individual events and each item of loss.

But the process of construction is a complicated interaction of activities and the overall loss might well be caused by the combination of a number of different events.

If this is the case, and it is impossible to trace the connection between each individual event and each individual loss, then a 'global' claim is often made.

In a global claim the loss is attributed to the list of events without any specific link being made between each part of the loss and each event.

The recent decision by Lord MacFadyen in the case of John Doyle Construction v Laing Management (Scotland) gives a useful summary of the law regarding global claims. It also raises a number of interesting points.

The dispute in this case concerned the construction of a new corporate headquarters building in Edinburgh. It resulted in Doyle making a global claim.

It was acknowledged by all parties that a global claim for loss may be advanced and there was plenty of case law to confirm this.

The judge held that the logic of a global claim was that all the events that contributed to causing global loss must be the liability of the other party.

If there are events for which the other party had no liability, the effect of upholding the global claim would be to impose a liability which, in part, was not justified. In such a situation, a global claim would fail.

Advancing a global claim for loss, therefore, is a risky strategy.

Failure to prove that a particular event was the liability of the other party would not be fatal to the claim if the remaining events for which the other party was liable were proved to have caused the global loss.

On the other hand, proof that an event which played a material part in causing global loss but was not the responsibility of the other party would undermine the logic of the global claim.

In addition, if the other party proved that other factors, for which he or she had no liability had made a material contribution to the cause of the global loss, then the global claim would again be undermined.

Lord MacFadyen went on to comment that this "all or nothing" approach was mitigated by certain factors, which formed an important aspect of his decision.

The first of these was that, while the global claim may fail, it does not follow that no claim would succeed.

The fact that a global claim is necessary because of the complexity of causation does not mean that, after evidence has been presented, it would be impossible to attribute individual sums of loss to individual events.

Although the global claim may fail, there may still be in the evidence a sufficient basis to make some connection and make a rational apportionment of part of the global loss to the causes for which the other party is responsible.

Applying those principles to the Doyle v Laing case, Lord MacFadyen held that the case should proceed.

In doing so, he gave two warnings. Firstly, he said that concurrent causes in which one cause was not the responsibility of the other party were best left for detailed consideration in subsequent proceedings.

He also warned that it would be wrong to exclude the possibility that the evidence given could provide a satisfactory basis for an award of some lesser sum than the full global claim. On that basis it is difficult to see that a global claim would be rejected simply on the basis that it was global.

Nevertheless, even in subsequent proceedings, a global claim would fail if a material part of the cause of the loss was an event for which the other party was not liable and if the evidence disclosed no rational basis for the award of any lesser sum.

Allowing the case to proceed did not give carte blanche to choose how to prove loss, said Lord MacFadyen.

If a lesser claim were to be made, then it must be done on the basis of evidence that was presented within the scope of the existing case as represented.

This was a warning to those reluctant to attempt a full cause and effect analysis with the hope of proving its case in subsequent proceedings.

Key points

A global claim is often made in a situation where a loss is attributed to a combination of events, without any specific link being made between each part of the loss and each event.

All the events that contribute to causing global loss must be the liability of the other party.

If an event that played a part in causing global loss was not the responsibility of the other party, this would undermine a global claim.

A global claim will also fail if the opposing party proves that other factors, for which he had no liability, had made a material contribution to the cause of the global loss.