The recovery of losses restricted by inadequate disclosure

The case of Crown House Technologies Limited v Cardiff Commissioning Limited reinforces the necessity of disclosing comprehensive documentation, such as invoices or payment records, in order to prove a specific loss.

This is of particular importance in conditional bond claims where the bond wording often refers to losses which are “sustained and incurred”.

Where a claimant fails to provide adequate documentation to evidence a loss, it is clear from this case that the claim will likely be limited to the extent reflected in the documentation provided.

The facts

The claim concerned the installation of eight air-conditioning units (“Chiller Units”) by the claimant, Crown House Technologies Limited (“the Contractor”), at a site in Gloucester. The Contractor sub-contracted the balancing and commissioning of the Chiller Units to the defendant, Cardiff Commissioning Limited (“the Sub-Contractor”).

In January 2009, leaks were discovered in the Chiller Units. The Contractor commenced proceedings against the Sub-Contractor in 2014, alleging breaches by the Sub-Contractor and claiming under three heads of loss:

• £820,090 for replacement of coils and repairs;
• £200,564 in respect of supervision costs; and
• £194,216 for storage costs.

At a case management conference, the Judge specifically ordered the Contractor to disclose documents supporting the amount of its claims in relation to the three heads of loss by 27 October 2017 and to provide a list of documents by 10 November 2017.

Failures and deficiencies in the provision of documents

The Contractor eventually supplied some documents and a list of documents, albeit late, but no further quantum documentation, such as invoices or payment records, were provided to evidence the £820,090 losses claimed for replacement and repair.

The Sub-Contractor pointed out that the invoices provided by the Contractor relating to the other heads of loss only reflected a supervision cost of £9,702 and a storage cost of £52,651.

The Sub-Contractor sought an order that the claim be limited to the amount represented in the invoices and also contended that the list of documents provided by the Contractor was defective, so the Contractor should be ordered to produce a proper list within 7 days, otherwise the claim be struck out.

The Contractor defended the application and served a further list of documents, however, the Judge ordered the Contractor to re-serve the quantum documents in respect of storage and replacement of coils, identifying the further documents included on the list which fell under those headings, within 7 days and stating that if the Contractor failed to do so, the claim would be struck out.

Even with the additional documents, there was no explanation as to how the sum claimed of £200,564 was made up. The Sub-Contractor was in no better position to understand the pleaded supervision claim and the court, therefore, limited the claim in respect of supervision costs to £9,702.

This judgment signals the court’s willingness to exercise its powers to limit the amount of a claim where insufficient documentary evidence is produced to support losses claimed.

Implications

Sometimes those claiming on bonds fail to provide documents to substantiate the sums claimed. This can occur even in the face of specific requests for information from the surety’s quantity surveyors and lawyers and this also results in costs for the party requesting information which should be provided as a matter of course to support a claim. In those situations, this case may be helpful in limiting a party, who is unable or unwilling to prove its loss, to the amount actually demonstrated on those documents which have been disclosed.