St. Albans City and District Council v International Computers Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 02 October 1994 |
| Date | 02 October 1994 |
| Court | Queen's Bench Division |
Queen's Bench Division
Before Mr Justice Scott Baker
Contract - exclusion clause - limitation of liability unfair term
An exclusion clause in a computer firm's standard terms and conditions in a contract made with a local authority when supplying it with a database for the community charge register, which limited the firm's liability for loss to £100,000 was unreasonable and not enforceable under the Unfair Contract Terms Act 1977.
Mr Justice Scott Baker so held in the Queen's Bench Division in giving judgment for the plaintiff, St Albans City and District Council, in the sum of £1,314,846 against the defendant, International Computers Ltd.
Mr Richard Mawrey, QC, for the plaintiffs; Mr Timothy Lamb for the defendants.
MR JUSTICE SCOTT BAKER said that when the plaintiffs extracted the population figures from the database to be returned to the Secretary of State for the Environment in December 1989 the population was overstated by 2,966 owing to an error in the software.
The consequences of the error were disastrous. The community charge rate was set too low which was recouped by setting a higher rate the following year and there were other more serious financial consequences with a total loss to the council of £1,314,846.
It did not avail the defendants that the shortfall in the collection fund was made up by borrowing from the general fund. The loss was still that of the plaintiffs. Nor did it help them that the deficit was passed on to the chargepayers of the following year.
This was a case where a public authority had been wronged and was, by statute, obliged to seek recoupment from its taxpayers. It would offend common sense for the defendants to escape liability on the basis that the money could be recouped from some of the plaintiffs' taxpayers in a subsequent year. The plaintiffs had suffered a recoverable loss.
The question then arose whether the defendants were entitled to exclude or restrict what otherwise would be their liability.
Unless the 1977 Act applied the defendants' total liability was limited to £100,000 because the agreement limited their liability to that sum.
By section 3 of the Act a party when in breach of contract could not rely on a term restricting liability in respect of that breach except in so far as the term satisfied the requirement of reasonableness.
In order for section 3 to apply it was...
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