Pinewood Technologies Asia Pacific Limited v Pinewood Technologies PLC

On a summary judgment application, a contract is made on written standard terms only where those terms are used routinely and remain effectively untouched. Substantive negotiations can take the contract outside section 3 of the Unfair Contract Terms Act 1977, even if the exclusion clauses themselves were not negotiated.

Exclusion clauses are construed by ordinary contractual principles. There is no separate rule preventing coverage of non-performance or repudiatory breach. Clear wording can exclude loss of profit and reliance expenditure while leaving direct loss and specific performance available, subject to a cap. A no-set-off clause requiring payment without withholding, deduction or set-off ordinarily includes equitable set-off. Specific disclosure to discover an unpleaded case is a fishing expedition and is not a compelling reason for trial.

Pinewood Technologies Asia Pacific Limited, a reseller of the defendant’s dealer management software, claimed damages for alleged breaches of development obligations in two reseller agreements. The claim included lost profits and reliance expenditure. The defendant counterclaimed for unpaid invoices, relying on a contractual no-set-off clause.

The defendant sought reverse summary judgment on the claim and summary judgment on the counterclaim. The claimant sought amendments to plead arguments under the Unfair Contract Terms Act 1977, including reasonableness challenges to the exclusion and no-set-off clauses, together with specific disclosure to investigate possible fraud or economic tort claims. The central issues were whether the contractual provisions excluded or capped liability and whether the claimant had a real prospect of success or another compelling reason for trial.

The defendant’s summary judgment application succeeded in substantial part. The claimant’s amendment and disclosure applications were dismissed. Reverse summary judgment was granted on the claims for loss of profit and reliance expenditure, but the claim for direct incurred costs remained capable of proceeding. Summary judgment was also entered for the defendant on its counterclaim.

1. Section 3 of the Unfair Contract Terms Act 1977 involved two stages. First, the claimant had to show that it dealt on the defendant’s written standard terms of business. Secondly, if that threshold was met, the relevant terms had to satisfy the requirement of reasonableness under section 11. The principles in African Export-Import Bank v Shebah Exploration & Production Co Ltd [2017] EWCA Civ 845 were applied. Substantive variations made during negotiation meant that the agreements were not effectively untouched standard terms. The fact that clauses 8.10 and 16 had not themselves been negotiated did not alter that conclusion.
2. The court accepted a residual jurisdiction to order specific disclosure under CPR PD57AD and CPR rule 3.1(2)(m), but only where disclosure was reasonable and necessary and did not undermine the disclosure regime. Disclosure to discover whether an unpleaded fraud or economic tort claim might exist was speculative and impermissible.
3. The construction issues were suitable for summary determination. Applying Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), the court had sufficient evidence and no real prospect existed that further evidence would affect the outcome. The possibility of future disclosure was not itself a compelling reason for trial.
4. Clause 16.2 clearly excluded liability for loss of profit and costs or expenses incurred in reliance on the agreements. The word breach was unqualified. There was no rule that an exclusion clause could not cover non-performance or repudiatory breach. The separate categories in clause 16.2 were not confined to indirect or consequential loss. Direct incurred costs fell outside clause 16.2 but could be subject to clause 16.3. Specific performance remained available, so the exclusion did not deprive the contractual obligations of all meaningful content.
5. Clause 8.10 required payment without withholding, deduction or set-off. Applying FG Wilson (Engineering) v John Holt & Co [2014] 1 WLR 2365, the reference to set-off included equitable set-off. The reference to taxes, charges and duties was non-exhaustive because the agreements defined including as without limitation.