Triple Point: More Than Simply 'Liquidated Damages'

• Published date: 24 November 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Trials & Appeals & Compensation, Professional Negligence
• Law Firm: Fenwick Elliott LLP
• Author: Ms Karen Gidwani

The Supreme Court judgment in Triple Point has perhaps received the most coverage in relation to the findings concerning liquidated damages. However, two other issues were considered by the Supreme Court in this important case, as explained in more detail by Karen Gidwani.

Summary of the case

By a contract dated 8 February 2013 ("the Contract"), PTT Public Company Ltd ("PTT"), a commodities trading company, engaged Triple Point Technology Inc ("Triple Point") to provide it with a Commodities Trading Risk Management and Vessel Chartering System ("CTRM system"). The works were to be carried out in two phases, and payment was to be made against milestones.

Article 5 of the Contract provided that, if Triple Point failed to deliver the work within the time specified and the delay was not caused by PTT, then Triple Point was liable for liquidated damages at the rate of 0.1% of "undelivered work per day of delay from the due date for delivery up to the date PTT accepts such work". Article 12.3 of the Contract provided, amongst other things, that the total liability of Triple Point to PTT under the Contract was limited to the Contract Price received by Triple Point (this limitation was referred to as the "cap" in the litigation). However, the limitation on liability was stated not to apply to Triple Point's "liability resulting from fraud, negligence, gross negligence or wilful misconduct".

The work proceeded slowly. In March 2014, Triple Point achieved completion of Stages 1 and 2 of Phase 1, 149 days late. Triple Point submitted an invoice in respect of this work which PTT paid. Triple Point then asked PTT to pay further invoices in respect of other work that had not yet been completed. PTT refused to make any further payments, relying on the contract terms which stated that payment would be made against milestones. PTT argued that Triple Point had not achieved any of the milestones except the completion of Stages 1 and 2 of Phase 1. In late May 2014, Triple Point suspended work and left the site. PTT maintained that Triple Point had wrongfully suspended work and terminated the Contract for negligent breach and fundamental breach.

In February 2015, Triple Point commenced court proceedings seeking the sums claimed under the invoices. PTT responded by way of defence and counterclaim, claiming liquidated damages for delay to the date of termination and general damages for losses arising upon termination of the contract.

The trial took place in the TCC in late 2016 and judgment was handed down by Jefford J in August 2017. The judge dismissed Triple Point's claim and awarded PTT $4,497,278.40 made up of an award of approximately $3.4m for liquidated damages and $1m for general damages. The judge found that the delay to the project was caused by Triple Point's negligence in carrying out its obligations under the Contract¹ and that PTT had been entitled to terminate due to Triple Point's breaches of contract which also comprised negligent performance.² The judge found that PTT was entitled to liquidated damages for delay up to the date of termination and to its general damages arising from the termination.³ The judge also found that, whilst liquidated damages liability was not caught by the limitation of liability in Article 12.3, the general damages liability was capped as the exclusion for "negligence" only related to a breach of a duty of care in tort rather than a breach of the contractual duty to take reasonable skill and care.⁴ Imposing that cap reduced the amount recoverable as general damages significantly, to approximately $1m.

Triple Point appealed and PTT cross appealed against the finding that general damages were capped. Interestingly, the issue on liquidated damages that was then determined by the Supreme Court, and which has excited so much comment, was not part of the parties' prepared arguments. During oral argument in the Court of Appeal, Triple Point was invited to make submissions on liquidated damages and, in particular, the proposition that it was not liable to pay any liquidated damages for delay because the work in question was never completed or accepted by PTT.

In its judgment, the Court of Appeal (Lewison and Floyd LJJ and Sir Rupert Jackson) considered this question on liquidated damages and held that, following termination of the contract, PTT was not entitled to claim liquidated damages in respect of incomplete work.⁵ Liquidated damages were, therefore, only available to the point where works have been completed (i.e. Stages 1 and 2...