Triple Point Technology, Inc v PTT Public Company Ltd

An express order-of-precedence clause governs conflicts between payment provisions in a substantial contract. The operation of liquidated damages after abandonment or termination depends on the wording of the clause; there is no universal rule. Where the clause runs until the contractor completes and the employer accepts the work, it does not apply to work never completed by that contractor. The employer may instead recover damages at large for non-completion. Valid liquidated damages substitute for general damages for the same delay loss and do not permit double recovery. An overall liability cap may encompass delay damages even where an individual-breach cap excludes specific remedies. An exception for negligence may refer to the freestanding tort rather than every negligent breach of a contractual skill-and-care obligation.

Triple Point agreed to provide and implement a software system for PTT under a contract incorporating several order forms and a licence agreement. The contract contained milestone payment provisions, a liquidated-damages clause for delay and liability caps.

Triple Point completed only the first two milestones of Phase 1, suspended work after PTT refused further payments and was later terminated. The High Court dismissed Triple Point’s claim, awarded PTT damages on its counterclaim and awarded liquidated damages for delay. Triple Point appealed on payment, suspension, penalty and liability-cap issues. PTT cross-appealed against the application of the cap. The central issues included whether liquidated damages were recoverable for work never completed and how the Article 12.3 cap operated.

Sir Rupert Jackson gave the judgment, with which Lord Justice Floyd and Lord Justice Lewison agreed. Triple Point’s first three grounds of appeal were rejected, its appeal on the operation of the cap was allowed, and PTT’s cross-appeal was dismissed.

1. Payment and suspension. There was one contract and one payment regime. The principal contract ranked above the licence agreement and order forms under its precedence clause. Article 18 therefore required payment by achieved milestones, not by the calendar dates in the order forms. Triple Point had achieved only the first two Phase 1 milestones and was not entitled to payment for Phase 2. No term permitting suspension for non-payment was necessary. Ordinary remedies for non-payment existed, and the contract expressly identified other circumstances in which work could be suspended.
2. Penalty and double recovery. Article 5.3 was a valid liquidated-damages provision. The daily formula was not out of proportion to PTT’s legitimate interest and was a genuine pre-estimate of likely loss. Liquidated damages, if valid, substituted for a general assessment of the same delay losses and did not permit double recovery.
3. Incomplete work. The authorities disclosed three approaches, but the wording of the particular clause controlled. Following the reasoning in British Glanzstoff Manufacturing Co. Ltd v General Accident, Fire and Life Assurance Co. Ltd 1913 SC (HL) 1, Article 5.3 was directed to delay ending when Triple Point completed and PTT accepted the work. It therefore applied to the 149-day delay in completing the first two milestones, but not to sections never completed or handed over. PTT remained entitled to ordinary damages for non-completion, assessed at large.
4. Liability cap. In Article 12.3, negligence meant the freestanding tort of negligence, not merely breach of the contractual skill-and-care obligation. Sentence 3 imposed individual caps for breaches other than delay and excluded specific remedies such as Article 5.3 liquidated damages. Sentence 2 imposed an overall cap covering defects, delay and other breaches. Since that overall cap had been exhausted by general damages, PTT could not recover the $154,662 liquidated-damages sum.

The dismissal of Triple Point’s claim was upheld. The High Court’s liquidated-damages award was set aside.

• Court of Appeal (Civil Division), [2019] EWCA Civ 230: allowed Triple Point’s appeal in relation to the liability cap, set aside the liquidated-damages award and dismissed PTT’s cross-appeal.
• High Court, Queen’s Bench Division, Technology and Construction Court: Mrs Justice Jefford dismissed Triple Point’s claim and awarded PTT $4,497,278.40 on its counterclaim.