St. Albans City and District Council v International Computers Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 26 July 1996 |
| Date | 26 July 1996 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Nourse, Lord Justice Hirst and Sir Iain Glidewell
Damages - different sources of loss distinguished - whether computer program 'goods'
A local authority suffering a loss of community charge receipts as a consequence of faulty computer software that provided erroneous population figures, was unable to recover the loss from the computer company that had provided the software because the chargepayers themselves were under an obligation to pay.
However, the local authority was entitled to recover damages from the company in respect of the increased precept payments to the county council that it had had to make and could not recover.
The Court of Appeal so held in reserved judgments allowing in part an appeal by the defendant, International Computers Ltd, from the judgment of Mr Justice Scott Baker (The Times November 11, 1994; [1995] FSR 686) by reducing by £484,000 an award of damages for breach of contract payable to the plaintiffs, St Albans City and District Council.
The Court of Appeal upheld the judge's decision that the exemption clause in the defendant's standard contractual terms and conditions seeking to limit its liability for loss to £100,000 was unreasonable and not enforceable under the Unfair Contract Terms Act 1977.
Mr Conrad Dehn, QC, Mr Timothy Lamb, QC and Mr Adam Tolley for the defendant; Mr Richard Mawrey, QC for the plaintiffs.
LORD JUSTICE NOURSE said that the judge awarded the plaintiffs damages of £1.3 million on the basis that the defendant had breached its contract to supply a computer system to be used in the collection of community charge by providing faulty software which in 1989 significantly overstated the relevant population.
Thus when the plaintiffs came to calculate the amount needed to defray their budgeted expenditure they had proceeded on the footing that they had a larger number of chargepayers to call on than they in fact had. So they had set the charge at a lower figure than they would have done had they known the true number.
Their losses fell into two categories: £484,000 which they had not received for community charge in 1990-91 and a net amount of £685,000 which they had had to pay out by way of increased precept to Hertfordshire County Council.
The judge was clearly right to hold that there was a breach of contract on the defendant's part because the software...
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