Again, Most Losses Held To Be Direct Losses

McCain Foods (GB) Limited v Eco-Tec (Europe) Limited [2001] EWHC 66

McCain had a waste water treatment system which produced biogas. It contracted with Eco-Tec for a system to remove hydrogen sulphide from the biogas. McCain could then use the biogas as fuel to generate heat and electricity. Because the plant produced renewable energy, McCain was entitled to "Renewables Obligation Certificates" (ROCs) which could be sold on to other electricity suppliers. The contract excluded liability for "indirect, special, incidental and consequential damages". The Eco-Tec system was defective, so McCain claimed damages for the cost of replacement equipment, the extra cost of buying electricity because it could no longer generate its own electricity, the cost of contractors etc and the revenue lost through being unable to sell the ROC's. Eco-Tec accepted responsibility for the replacement equipment, but claimed the other heads of loss were indirect and thus covered by the exclusion clause.

The High Court (Mr Recorder Acton Davis QC, sitting as a Deputy Judge) held that all the heads of claim were direct losses. He reviewed several cases, starting with Hadley v Baxendale. In particular he looked at Hotel Services Limited v Hilton International Limited [2000] (where loss of profit from chillers in mini bars that were removed because they leaked ammonia was held to be a...