Caselaw Digest
Caselaw Digest

Drax Energy Solutions Limited (formerly Haven Power Limited) v Wipro Limited

9 June 2023
[2023] EWHC 1342 (TCC)
High Court
Drax sued Wipro for a big software mess. A contract clause limited Wipro's liability. The judge decided the clause limited Wipro's total liability to one amount, not several separate amounts for each problem. The judge thought this made the most sense based on the contract's wording and what's fair.

Key Facts

  • •Drax Energy Solutions Ltd (Drax) sued Wipro Ltd (Wipro) for approximately £31 million due to alleged breaches of a Master Services Agreement (MSA) dated January 20, 2017.
  • •The dispute centers on the interpretation of a limitation of liability clause (Clause 33.2) within the MSA.
  • •The MSA involved Wipro providing software services to Drax, including a new IT system based on Oracle software.
  • •Wipro's counterclaim is approximately £10 million.
  • •Drax's claim is categorized into misrepresentation, quality, delay, and termination claims.
  • •The total charges paid by Drax to Wipro under the MSA were £4.9 million.
  • •Two preliminary issues were considered: whether Clause 33.2 provides a single aggregate cap or multiple caps, and if multiple, which claims each cap applies to.

Legal Principles

Contractual interpretation requires considering the words in their documentary, factual, and commercial context, including natural meaning, other provisions, overall purpose, known facts, and commercial common sense, but disregarding subjective intentions.

Wood v Capita [2017] UKSC 24; Lamesa v Cynergy [2020] EWCA Civ 821; Arnold v Britton [2015] UKSC 36; Rainy Sky SA v Kookmin Bank [2011] UKSC 50

Clear words are necessary to show a contract removes valuable common law or statutory rights or remedies.

Triple Point Technology v PTT [2021] AC 1148

Ambiguity in exclusion or limitation clauses may be resolved by a narrower construction because such clauses detract from important obligations or remedies. Commercial parties are free to allocate risks but clear words are needed to limit remedies for breaches of important contractual obligations.

Nobahar-Cookson v Hut Group [2016] EWCA Civ 128

When interpreting clauses with multiple possible interpretations that lack perfect sense, the court chooses the interpretation with the least bizarre consequences.

Royal Devon and Exeter NHS Trust v ATOS [2017] EWCA Civ 2196

Outcomes

Clause 33.2 imposes a single aggregate cap on Wipro's liability.

The language of the clause, considered with other relevant provisions of the MSA, including Clause 33.3, points to a single cap. Commercial considerations and principles from Triple Point Technology v PTT do not outweigh this interpretation.

If multiple caps were applicable, the claims would be the Misrepresentation Claim, Quality Claim, Delay Claim, and Termination Claim.

This interpretation avoids equating 'claim' with 'cause of action' or 'liability,' aligning with a common-sense view of the claims made and avoiding an absurdly high overall cap.

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