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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Triple Point Technology, Inc v PTT Public Company Ltd  EWCA Civ 230 (05 March 2019)
Cite as:  EWCA Civ 230,  1 WLR 3549,  WLR(D) 126
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ON APPEAL FROM THE HIGH COURT,
Queen's Bench Division
Technology and Construction Court
Mrs Justice Jefford
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE FLOYD
SIR RUPERT JACKSON
| Triple Point Technology, Inc.
|- and -
|PTT Public Company Ltd
Mr James Howells QC (instructed by Watson Farley & Williams LLP) for the Respondent
Hearing dates: Wednesday 16th and Thursday 17th January 2019
Crown Copyright ©
Sir Rupert Jackson:
|Part 1 Introduction||Paragraphs 2 - 7|
|Part 2 The facts||Paragraphs 8 - 37|
|Part 3 The present proceedings||Paragraphs 38 - 44|
|Part 4 The appeal to the Court of Appeal||Paragraphs 45 - 49|
|Part 5 Grounds of Appeal I III: Payment arrangements and right to suspend for non-payment||Paragraphs 50 - 67|
|Part 6 Ground of Appeal IV: Entitlement to liquidated damages for delay||Paragraphs 68 - 114|
|Part 7 Ground of Appeal VI and respondent's cross-appeal: The operation of the cap||Paragraphs 115 - 128|
|Part 8 Conclusion||Paragraphs 129 - 130|
"Payment shall be made by milestone
1 AU [Absolute Unit] @ 6,920,000.00
Reference is made to PTT's Terms of Reference."
Triple Point countersigned the letter of intent on 10 January 2013.
"ARTICLE 1. DEFINITIONS
1.1 "Project" means the Implementation of Commodity Trading & Risk Management Software in accordance with the scope as described in this Terms of Reference.
1.2 "Services" means all activities rendered by CONTRACTOR to PTT in connection with the Project.
1.6 "Contract Price" means the total price for the Scope of Services performed under the Contract.
ARTICLE 3. SCOPE OF SERVICES
Services to be performed by CONTRACTOR shall be as described in this Terms of Reference.
ARTICLE 5. SCHEDULE OF SERVICES
The Services to be performed by the CONTRACTOR shall be in conformance with the Schedule for the Services ("Project Plan") as proposed by the CONTRACTOR and accepted by PTT.
The CONTRACTOR shall use its best effort and professional abilities to complete Phase 1 of the Project within 460 calendar days after the Effective Date. If however such date is not attainable due to a delay out of the control of the CONTRACTOR, the CONTRACTOR shall continue to perform the Services for the time necessary to complete the project. This extension will require written approval from PTT.
If CONTRACTOR fails to deliver work within the time specified and the delay has not been introduced by PTT, CONTRACTOR shall be liable to pay the penalty at the rate of 0.1% (zero point one percent) of undelivered work per day of delay from the due date for delivery up to the date PTT accepts such work, provided, however, that if undelivered work has to be used in combination with or as an essential component for the work already accepted by PTT, the penalty shall be calculated in full on the cost of the combination.
ARTICLE 12. LIABILITY AND RESPONSIBILITY
12.1 CONTRACTOR shall exercise all reasonable skill, care and diligence and efficiency in the performance of the Services under the Contract and carry out all his responsibilities in accordance with recognized international professional standards. The CONTRACTOR, his employees and sub-contractors, while in Thailand and/or other countries where the Services are being carried out, shall respect the law and customs of the respective countries. The CONTRACTOR shall replace employees and sub-contractors who commit serious violation of the laws of such countries with others of equal competence satisfactory to PTT at the expense of the CONTRACTOR.
12.2 CONTRACTOR's personnel, representatives, successors and permitted assignees shall not have the benefit, whether directly or indirectly, of any royalty on or of any gratuity of commission in respect of any patented or protected articles or process used on or for the purpose of the Contract unless it is mutually agreed in writing that CONTRACTOR shall have such benefit.
12.3 CONTRACTOR shall be liable to PTT for any damage suffered by PTT as a consequence of CONTRACTOR's breach of contract, including software defects of inability to perform "Fully Complies" or "Partially Complies" functionalities as illustrated in Section 24 of Part III Project and Services. The total liability of CONTRACTOR to PTT under the Contract shall be limited to the Contract Price received by CONTRACTOR with respect to the services or deliverables involved under this Contract. Except for the specific remedies expressly identified as such in this Contract, PTT's exclusive remedy for any claim arising out of this Contract will be for CONTRACTOR, upon receipt of written notice, to use best endeavour to cure the breach at its expense, or failing that, to return the fees paid to CONTRACTOR for the Services or Deliverables related to the breach. This limitation of liability shall not apply to CONTRACTOR's liability resulting from fraud, negligence, gross negligence or wilful misconduct of CONTRACTOR or any of its officers, employees or agents.
ARTICLE 14. EFFECTIVE DATE
The Contract shall become effective as from January 10th, 2013.
ARTICLE 15. DURATION AND TERMINATION
15.1 The Contract shall come into force on its Effective Date by virtue of Article 14 and shall terminate as hereinafter indicated in this Article 15.
15.2 The Contract shall normally terminate upon the expiration of CONTRACTOR's responsibilities, liabilities and warranty period.
15.3 In addition to the regular termination as described in this Article 15, PTT is entitled to the following:
15.3.1 Terminate the Contract if PTT is of the opinion that CONTRACTOR has not exercised the professional skills and care which can be expected from CONTRACTOR as provided herein. In such case, PTT will notify CONTRACTOR in writing specifying the reason(s) of termination. Should CONTRACTOR fail to satisfy PTT within 30 (thirty) calendar days from the date of receiving the said written notice, PTT is entitled to terminate such Contract; or
15.3.2 PTT may at any time and at its absolute discretion to terminate the Contract. Such termination shall become effective immediately after delivery of written notice to the CONTRACTOR or on such later date as specified in such notice, such date being the effective date of termination for the purposes of this Article 15.3.
15.7 PTT shall be entitled by written notice to CONTRACTOR to terminate all or any part of Services without prejudices to any other rights and remedies under the Contract when CONTRACTOR is deemed to be in breach of the Contract under the following circumstances:
15.7.1 Failure by CONTRACTOR to comply with any fundamental condition of this Contract except where such non-compliance arises from Force Majeure circumstances envisaged in Article 16 or from some other circumstances accepted by PTT as justification for the said non-compliance provided that PRR shall give CONTRACTOR a minimum of 15 (fifteen) Working Days following receipt of termination notice in writing to remedy the said failure and provided that CONTRACTOR upon receipt of such notice commences with all due diligence to correct the said failure then no breach of Contract shall be deemed to have occurred.
ARTICLE 18 INVOICING AND PAYMENT
18.1 Payment shall be made by milestone as indicated in the below table. The CONTRACTOR shall submit invoice to PTT (1 original and 2 copies) along with sign off document of each milestone in section 23, DELIVERABLES of Part III Project & Services.
|Percentage of Payment of Total Contract Value|
|1||Project Preparation and Review Business Process||
|2||Business Blueprint||Business Blueprint|
|3||Implementation and Configuration||
|4||Functional/Technical Test||Functional/Technical Test|
|5||Core Team Training||
|6||UAT/End User Training||UAT/End User Training|
|7||Final Preparation||Final Preparation|
|8||Go-Live and Post Implementation Support||
|9||First Month End Closing||First Month End Closing|
ARTICLE 28. MODIFICATION TO CONTRACT
This Contract consists of the Contract document and the Exhibits thereto
Exhibit 1 Letter of Intent Number 4110000917 and Terms of Reference (TOR) For Commodity Trading & Risk Management (CTRM) System, Rev. June 13[th], 2012
Exhibit 2 Technical Document (Clarification)
Exhibit 3 Triple Point Software Product Perpetual License Agreement, Software Maintenance Services and Order Form 2012 (dated January 31st, 2013)
Exhibit 4 Performance Security
The Contract constitutes the entire agreement between PTT and CONTRACTOR and shall not be altered, amended or modified except in writing which shall bear the authorized signatures of both parties
ARTICLE 29. ORDER OF PRECEDENCE
In the event of a conflict in the provisions of this Contract, the following shall prevail in the order set forth below:
29.1 This Contract
29.2 Exhibit 1 and 2
29.3 Exhibit 3
CONTRACTOR shall immediately refer to PTT for clarification of any such inconsistency."
"1.15 "Order Form" means that certain Order Form attached hereto and each subsequently executed Order Form, each of which is incorporated herein by reference.
5.1 Licensee shall pay the Software Licence Fee and the Maintenance Fee (for the Initial Maintenance Term) as set forth on the relevant Order Form. Subsequent Maintenance Fees, if applicable pursuant to Section 3.4 above, are payable in advance on the commencement of each Renewal Maintenance Term. Consulting fees are payable within 30 calendar days after Licensee has received the invoice, verified and approved the Consulting Services, unless otherwise provided on the Statement of Work.
7.4 WITHOUT LIMITING THE FOREGOING, LICENSEE AGREES THAT THE AGGREGATE LIABILITY OF TRIPLE POINT FOR DAMAGES FROM ANY CAUSE OF ACTION WHATSOEVER, REGARDLESS OF THE FORM OF ACTION, SHALL NOT EXCEED THE FEES PAID TO TRIPLE POINT UNDER THE CTRM CONTRACT AND EXCEPT SUCH DAMAGES CAUSED BY FRAUD, GROSS NEGLIGENCE AND WILLFUL MISCONDUCT.
10.9 Entire Agreement. This Agreement (with any executed and delivered Order Forms) AND THE CTRM CONTRACT constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof AND THEREOF. The Entire Agreement supersedes any and all OTHER prior agreements and understandings, oral or written, relating to the subject matter hereof. This Entire Agreement may only be amended by a writing signed by both parties and shall inure to the benefit of and be binding upon each party's successors and permitted assigns. PROVIDED, HOWEVER, THAT TRIPLE POINT AGREES THAT THIS AGREEMENT SHALL NOT SUPERSEDE AND SHALL BE AN ANNEX TO THE CTRM CONTRACT. IN ADDITION, TRIPLE POINT AGREES THAT IF THERE IS ANY CONFLICT BETWEEN THE CTRM CONTRACT AND THIS AGREEMENT, THE CTRM CONTRACT SHALL PREVAIL AND BE ENFORC[E]ABLE."
Installation, configuration and training $4,320,000
Software licence fees $2,600,000
That made a total of $6.92 million.
Due on Project Start Date (no later than 31st January 2013) $390,000
Due on Implementation Configuration and Testing (15th Dec 2013) $780,000
Due on Core team and end user training (20th February 2014) $1,170,000
Due on Go Live: No later than 20th MAY 2014 $260,000
Total of payments due $2,600,000"
Due 30th April 2013 $157,500
Due 30th September 2013 $315,000
Due 15th December 2013 $420,000
Due 15th January 2014 $157,500
Due on 15th January 2014 $780,000
Due each 15th January thereafter until 15th January 2019 $330,000"
"Order Form is subject to the terms and conditions set forth in CTRM contract, dated 8 February, 2013"
|Phase 1||Phase 1||Phase 1|
|Stages 1 and 2||31st October 2013||15%|
|Stages 3 and 4||20th January 2014||30%|
|Stages 5, 6 and 7||30th April 2014||45%|
|Stages 8 and 9||11 June 2014||10%|
|Phase 2||Phase 2||Phase 2|
|Stages 1 and 2||11th July 2013||15%|
|Stages 3 and 4||23rd September 2013||30%|
|Stages 5, 6 and 7||30th December 2013||45%|
|Stages 8 and 9||12th February 2014||10%|
i) There was a single contract between the parties with a single payment regime.
ii) There was an inconsistency between Article 18 of the CTRM contract (which required payment by milestones) and the payment dates stated in order forms A, B and C. Article 18 prevailed.
iii) Accordingly, Triple Point was not entitled to receive any further payments under the contract.
iv) During 2013 and 2014 Triple Point failed properly to perform their duties under the contract. They failed to provide the required resources. They did not effectively integrate the three software packages CXL, VO and CR. Although not expressly stated in the TOR, it was implicit that Triple Point would integrate the software packages.
v) The delay and ultimate failure of the contract was not caused by PTT's lack of cooperation. It was caused by Triple Point's negligent failure to plan, programme or manage the project; its failure to provide sufficient numbers of suitably qualified staff; its negligent failure to conduct adequate business analysis and production of business blueprints required under the terms of the CTRM contract; and/or its negligent failure to follow appropriate or internationally recognised and applied methodologies for the design, development and implementation of the software. See paragraphs 5 and 198 of the judgment.
vi) Triple Point was not entitled to suspend work in May 2014. By doing so, Triple Point was in repudiatory breach of contract.
vii) PTT terminated the CTRM contract pursuant to Article 15.3.1 or 15.7.1. Alternatively, the contract was terminated at common law.
viii) PTT is entitled to recover (a) the costs of procuring an alternative system and (b) wasted costs, but subject to a cap of $1,038,000 pursuant to Article 12.3.
ix) PTT is also entitled to recover liquidated damages for delay pursuant to Article 5.3, totalling $3,459,278.40. These damages are not subject to a cap under Article 12.3.
i) The judge ought to have held that payment was due for the software licences and related services on the dates stated in order forms A, B and C.
ii) Alternatively, if Triple Point is entitled to payment of only 15% (as contended by PTT and as held by the judge), then Triple Point should recover 15% of the sums set out in order forms B and C. So far Triple Point has only received 15% of the sums shown in order form A.
iii) It was an implied term that Triple Point could suspend work, if it did not receive payment in accordance with the order forms. Therefore, Triple Point's suspension of work in May 2014 was not a breach of contract.
iv) Liquidated damages for delay under Article 5 are irrecoverable.
v) Any liquidated damages recoverable are subject to the Article 12.3 cap.
"Order Form is subject to the terms and conditions set forth in CTRM contract, dated 8 February, 2013."
i) Delay on Stages 1 and 2 of Phase 1 from 13th October 2013 to 19th March 2014, the date of completion: $154,662.
ii) Delay on all other elements of the work from the specified completion dates to 15th February 2015, the date when the contract was terminated: $3,304,616.40.
iii) Total: $3,459,278.40.
"24. If the contractor fail to complete the works by the date named in clause 23, or within any extended time allowed by the architect under these presents, and the architect shall certify in writing that the works could reasonably have been completed by the said date, or within the said extended time, the contractor shall pay or allow to the employer the sum of £250 sterling per week for the first four weeks, and £500 per week for all subsequent weeks as liquidated and ascertained damages for every week beyond the said date or extended time, as the case may be, during which the works shall remain unfinished, except as provided by clause 23, and such damages may be deducted by the employer from any moneys due to the contractor."
" first of all, that is altogether inapt to the provisions made by clause 26, which contain a complete code of themselves; and secondly, because upon its construction I read it as meaning that if the contractors have actually completed the works, but have been late in completing the works, then, and in that case only, the clause applies. Under the circumstances in which this appeal comes before us the contractors have not completed the works; on the contrary, they have been ousted from the works by the employers under their powers given them by clause 26. I am therefore of the same opinion as the learned Judges in the Court of Session, who were unanimous in holding that clause 24 has no application to the present case "
" Clause 24, in my judgment, gives no foundation for such a hypothetical claim. It only applies to the failure by Brown himself to complete this contract timeously, but it does not apply to a state of matters in which, under section 26 of the contract, a different remedy has been adopted under what is really a separate code."
"22. If the Contractor fails to complete the Works by the Date for Completion stated in the appendix to these Conditions or within any extended time fixed under clause 23 or 33(1)(c) of these Conditions and the Architect certified in writing that in his opinion the same ought reasonably so to have been completed, then the Contractor shall pay or allow to the Employer a sum calculated at the rate stated in the said appendix as Liquidated and Ascertained Damages for the period during which the Works shall so remain or have remained incomplete, and the Employer may deduct such sum from any monies due or to become due to the Contractor under this Contract."
The rate of liquidated damages specified in the appendix was £1,000 per week.
" The pursuers' case is not that the Contract was completed late in time but is that it was not completed at all conform to Contract, and was late in completion as well. They argued that Clause 22 only applies when there is delay in completion and nothing else. It does not supersede or exclude the right to obtain common law damages for delay occasioned by a breach of contract.
That in my view finds support in what Lord Chancellor Haldane said when the aforementioned case went to the House of Lords 1913 S.C. (H.L.) I (at p.3), namely "if the Contractors have actually completed the works, but have been late in completing the works, then, and in that case only, the clause applies".
In my opinion the pursuers are right in their submission and the first defenders' argument fails. It was for them to show that Clause 22 applies, and in particular how it applies to the damages in question, and this they have failed to do. In that situation the common law rule of damages will operate in respect of the pursuers' claim based on delay, as it will in respect of their other heads of claim "
"So far as liquidated damages are concerned, in respect of any period of culpable delay up to the date when the contract is terminated the employer is entitled to recover liquidated damages at the contractual rate (or nothing, if that is what the contract provides). However, after the date of termination the parties are no longer required to perform their primary obligations under the contract and so the contractor's obligation to complete by the completion date no longer remains and the provision for liquidated damages therefore becomes irrelevant. In its place arises an obligation to pay damages for the employer's losses resulting from the breach of contract, including damages for any loss resulting from any further delay caused by the need to have the works completed by a different contractor. Accordingly, whilst the arbitrator was correct to conclude that the liquidated damages provision prevailed up to the date of termination, he was wrong to conclude (if he did) that Mr and Mrs Shaw were not entitled to damages for any delay occurring thereafter."
i) The clause does not apply: Glanzstoff; Chanthall; Gibbs.
ii) The clause only applies up to termination of the first contract: Greenore; Shaw; LW Infrastructure; Bluewater.
iii) The clause continues to apply until the second contractor achieves completion: Hall; Crestdream; GPP.
(i) Article 5.3 provides a formula for quantifying damages for delay.
(ii) Sentence 3 of Article 12.3 deals with breaches of contract not involving delay. Hence sentence 3 necessarily includes the words "Except for the specific remedies expressly identified as such in this contract". It is common ground that this phrase refers to liquidated damages under Article 5.3. Sentence 3 of Article 12.3 imposes a cap on the recoverable damages for each individual breach of contract.
(iii) Sentence 2 of Article 12.3 imposes an overall cap on the contractor's total liability. That cap on total liability means what it says. It encompasses damages for defects, damages for delay and damages for any other breaches.
I readily accept that it would be more logical and easier to understand if sentence 3 had preceded sentence 2. But the draughtsmen of this particular contract were not trying to make life easy for the reader. In my view, this interpretation gives an intelligible meaning to all the provisions of Article 12.3. This reading of the clause should be preferred to the rival interpretation which has been canvassed.
Lord Justice Floyd:
Lord Justice Lewison: