Triple Point Technology, Inc. v PTT Public Company Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Rupert Jackson,Lord Justice Floyd,Lord Justice Lewison |
| Judgment Date | 05 March 2019 |
| Neutral Citation | [2019] EWCA Civ 230 |
| Docket Number | Case No: A1/2017/2912 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 March 2019 |
Neutral Citation Number: [2019] EWCA Civ 230
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT,
Queen's Bench Division
Technology and Construction Court
Mrs Justice Jefford
HT-2015-000056
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Lewison
Lord Justice Floyd
and
Sir Rupert Jackson
Case No: A1/2017/2912
Mr Andrew Stafford QC & Mr Nathaniel Barber (instructed by Kobre & Kim (UK) LLP) for the Appellant
Mr James Howells QC (instructed by Watson Farley & Williams LLP) for the Respondent
Hearing dates: Wednesday 16 th and Thursday 17 th January 2019
Approved Judgment
This judgment is in eight parts, namely:
Part 1 – Introduction
| 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 |
This is an appeal by the supplier of a software system against a judgment of the Technology and Construction Court, dismissing its claim for payment and ordering it to pay substantial damages on the counterclaim. The main issue of principle which arises is how to apply a clause imposing liquidated damages for delay in circumstances where the contractor or supplier never achieves completion. The other issues concern the interpretation of particular wording in the contract before the court.
Triple Point Technology, Inc. is claimant in the action and appellant in this court. I shall refer to it as “Triple Point”.
The defendant in the action and respondent in this court is PTT Public Company Limited. I shall refer to it as “PTT”.
In this judgment “CTRM” is an abbreviation for “Commodities Trading, Risk Management and Vessel Chartering System”. “TCC” is an abbreviation for Technology and Construction Court.
All sums of money mentioned in this judgment are in US dollars.
After these introductory remarks, I must now turn to the facts.
Part 2 – The facts
Triple Point is a company based in Delaware which designs, develops and implements software for use in commodities trading. This software is based on Triple Point's proprietary platforms known as “Commodity XL” (“CXL”) and “Softmar Vessel Chartering and Vessel Operations” (“VO”).
PTT is a company which, amongst many other activities, undertakes commodities trading. PTT is based in Thailand. The principal commodities which it trades are oil, refined products and petrochemicals.
In 2012, PTT decided to acquire a new CTRM system. PTT intended there to be two phases to the project: Phase 1 would replace the existing system and Phase 2 would involve the development of the system to accommodate new types of trade. PTT set out its requirements in a document dated 13 June 2012 entitled “Terms of Reference (TOR) for Commodity Trading and Risk Management (CTRM) System”. I shall refer to this as the “TOR”.
Paragraph 22 of Part III of the TOR made it clear that all bids should include the costs of the software, as well as the costs of the installation and implementation. Paragraph 23 set out a series of milestones for the project, beginning with project preparation and ending with one month of standby support after going live.
PTT sought tenders for the provision of software and related services, as set out in the TOR. On 7 September 2012 Triple Point submitted its bid to undertake the project.
There then followed discussions between the parties, during which Triple Point clarified its bid. These discussions resulted in two documents. The first document was entitled “Technical Document (Clarification)”. I shall refer to this as “the clarification document”. It comprised a series of written questions and answers, which distilled what PTT had asked and what Triple Point had responded in the period November 2012 to January 2013.
The second document was entitled “Technical and Commercial Clarifications basis the meeting on 14 th December 2012 with PTT”. This document contained many technical details. Paragraph (3) stated that the total price for Phase I was $6.92 million. That comprised $2.6 million for CTRM software; $4.04 million for implementation (including training, testing, initial support and maintenance); $280,000 for travel and related expenses. I shall refer to this as “the technical document”.
On 28 December 2012, PTT sent a letter of intent addressed to Triple Point. This stated PTT's intention to replace the CTRM system for $6.92 million. The “description” box in the letter of intent stated:
“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.
During January 2013 the parties negotiated and agreed the terms of their contract for the provision of the CTRM system to PTT. The contract was entitled “Contract for Commodity Trading and Risk Management System” and is generally referred to as the “CTRM contract”. Triple Point signed the CTRM contract on 31 January 2013. PTT signed it on 8 February 2013. The CTRM contract included the following provisions:
“ 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 10 th, 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...
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