Jacob Austin 00:00:17 Hi all Jacob Austin here from QS.zone. And welcome to episode 65 of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow and grow their business. Today's episode is all about global claims, a complex and often misunderstood area of construction disputes. And I'll be breaking down what global claims are, how they work, and what you need to know to protect yourself and your business. If you're new to the show. Please subscribe for more user friendly advice on all things subcontracting. All right, so let's get into it. What exactly is a global claim? Well, in simple terms, a global claim is when a subcontractor or contractor submits a claim for additional costs or time without clearly linking to a specific cause, or rather to a series of specific causes. And instead of breaking down how each event caused an item of cost or delay, a global claim lumps everything together and argues that the overall cost was caused by a combination of multiple events. For example, let's say a project suffers from multiple delays and cost overruns.
Jacob Austin 00:01:34 Maybe there variations in the work, some unforeseen site conditions, and some poor coordination between subcontractors. In a typical claim, each delay or extra cost would be caused by a single event or one single trade. But in a global claim, the contractor might say, here's the total additional cost. And the result of all these issues Whose combined is X, without showing exactly how each event contributed to the total. Global claims are sometimes referred to as rolled up, total cost or actual cost claims. And while they might seem like an easier way to present a claim, they come with a lot of risks, especially when it comes to proving causation, which we'll get to in a little bit. So now that we've spoken about what exactly a global claim is, let's talk about the legal principles that come into play. In normal circumstances, when a contractor or subcontractor makes a claim, they have to prove three things. Firstly, that there's some sort of a breach or an event that gives rise to a claim and how that occurred.
Jacob Austin 00:02:42 Secondly, we've got causation that this breach or event caused the losses that are being claimed. And then finally we've got the quantum, the total amount of the loss or expense suffered as a result of the breach. In a global claim, the contractor or subcontractor is effectively skipping over the second part, the causation, and saying that it's too complicated to break everything down to one single specific cause, or rather, each single specific cause. Instead, they present a total figure and argue that the sum is due to the combination of multiple issues. And here's the problem. The burden of proof is still on the claimant to show that the events they're claiming for actually caused the loss. A global claim doesn't change the fact that the contractor or subcontractor needs to prove that causation, but it makes it much harder to do so because everything is rolled up into one single lump sum. Imagine you're working on a project where there are numerous delays. Some are caused by client's design changes and others by late deliveries, and then a few more by bad weather.
Jacob Austin 00:03:54 If you were to submit a global claim, you'd be saying that the total delay was caused by all of these issues all together, but without clearly linking each delay to a specific cause. This can be risky because if one of those issues is found to not be the contractor's fault, the entire claim could fall apart. Let's talk about the risks of submitting a global claim. One of the biggest challenges is that global claims often face pushback from the other party, whether it's the main contractor, client, or employer, because they're seen as unfair and prejudicial. And here's why a global claim doesn't give the other party a clear picture of what they're being held responsible for. Without a detailed breakdown of which event cause, which part of the loss. It's almost impossible for the defendant to defend themselves properly. This lack of clarity can lead to significant prejudice against the defendant, as they don't know which specific issues they're meant to be addressing. Even more problematic is that global claims can sometimes allow the claimant to shift their argument midway through the case.
Jacob Austin 00:05:02 Because the claim is sometimes so vague, the claimant could potentially change their narrative based on how the case is going, which then makes it even harder for the defendant to mount their proper defense. Another issue is that global claims don't allow for individual adjustments in a typical claim. A tribunal could disallow specific parts of the claim, perhaps finding that one delay wasn't the contractor's fault. But other delays were. But with a global claim, if one part of the case fails, the whole thing can unravel because there's no clear breakdown of the costs. Now, historically, global claims have been looked at with suspicion by the courts. In fact, many early cases made it clear that a global claim could only succeed in very specific circumstances. One of the key cases in this was London Borough of Merton versus Stanley. Hugh Leach, back as long ago as 1985. And the court in this case said that the global claim could be allowed if it was genuinely impossible to detangle the different causes of the loss. However, this was a rare exception, and in most cases the courts are skeptical of global claims.
Jacob Austin 00:06:20 In the 90s, things got even tougher still in the case of wharf properties versus Eric Cumin Associates. The court struck out a global claim all together, on the grounds that it didn't provide enough detail about the causes of the loss. The courts made it clear that the claimants had to show a clear link between the evidence behind the event and the loss, and that if they couldn't do that, their entire claim would fail. However, in the early 2000, things started to change a little bit with cases like John Doyle Construction versus Lange Management and London Underground Limited versus Citylink telecommunications. In these cases, the courts took a more relaxed approach to global claims, allowing them to proceed even if the causation wasn't perfectly clear, as long as it was shown that the events were largely the responsibility of the employer or the party being claimed against. So what are the key takeaways from these cases? Here's what you need to know if you're considering making or defending against a global claim. Firstly, causation still matters. Even though courts have become more flexible with global claims, you still need to prove causation.
Jacob Austin 00:07:36 You can't just say that a bunch of issues caused your loss. You need to show how those issues caused your loss or contributed to the overall delay or cost overrun. Secondly, a dominant cause, or one of the more interesting developments, is the idea that a dominant cause can be present. And if a claimant can show that the dominant cause of the loss was something for which the other party is responsible, then the global claim can still succeed, even if there are other contributing factors. And finally, apportionment. In some cases, the tribunal can make an apportionment, dividing the losses between the events for which either the employer or the contractor is responsible for, and for those which they are not. This allows the claim to partially succeed, even if it's not entirely clear how much each event contributed. Now, let's talk about how you can avoid getting caught up in a global claim situation. The best way to avoid a global claim is to keep detailed records throughout the project. Now done some episodes on project reporting and avoiding disputes previously that you might find of interest here.
Jacob Austin 00:08:50 But as any good shows will tell you, a good claim is all about records, records, records, and it's all about how you found the time to do that in and amongst keeping the job going, keeping production up and keeping on top of that when things aren't going so well is the hardest part. It's easy enough doing weekly workarounds when things are going well, but when you're under the caution, you're rushing around trying to source materials and put out fires all day. Ironically, those are the times when you've got the least time to take the records, but you need them the most. Keeping regular logs of variations, delays, disruptions, and the specific cause and impact of those on your work is key. Be sure to track costs separately for each event. If you have a variation that causes extra costs, record those costs separately from the costs associated with the delays or other causes. Provide notices as required by your contract. Many contracts require that you provide written notice when an event occurs that might affect the timeline or the budget and failing.
Jacob Austin 00:09:55 To do this and do it within the right time scale can make it much harder to make a claim later on. If you do find yourself in a situation where a global claim seems unavoidable, make sure you consult an expert. Whether that comes down to assembling the claim or just having an expert witness on hand to give you some essential insight. The quality of that advice or their testimony can make or break a global claim. So it's important to bring in someone with experience in this area early on in the process. And now from time to time, you might find yourself on the receiving end of a global claim. And here are a few tactics you can use to defend yourself. Firstly, it should come as no surprise given what we've previously mentioned, challenging the causation is the easiest attack point to challenge your global claim. If you can show that not all of the events claimed for by the contractor have actually caused the loss, you may be able to reduce or even eliminate the claim altogether. Remember that global claims rely on the idea that multiple events contributed to the loss.
Jacob Austin 00:11:06 So if you can break the chain of causation, the claim may fail altogether or at least be heavily reduced. Secondly, prove other contributing factors. Another really effective defense is to show that other factors contributed to delay or cost overrun, especially factors for which you aren't responsible. And we're thinking things like another subcontractors involvement, which is caused delay, or of course, the good old British weather, which you can almost always rely on to delay the job at some point. If you can argue that these other external factors have caused part of the delay. Then you can argue that the total sum claimed isn't justified, and if you actually end up in court, there are two other things that you may be able to do which are considering a strikeout, which is where the claim gets fully reversed and struck out before it even goes to trial. It's a pretty aggressive tactic, but if the claim is vague, unclear or prejudicial, the court may agree to strike it out. But be warned that they won't do that unless they think it's absolutely necessary, and it may lead to a further and costly legal battle.
Jacob Austin 00:12:20 You also have the option of what's called a CPR 36 offer, which is a formal offer to settle the case without admitting liability, but do so outside of the court system. This can protect you from the risk of paying the other side's legal costs. If the case goes to trial and they win. And of course, a well-timed offer can push the claimant to settle early, saving both parties time and money. So, in conclusion, whilst global claims might seem like an easier way to present complex disputes, they come with significant risks both for the claimant and for the defendant. As a subcontractor, your best defense is always going to be maintaining good, accurate records along with clear communication of any issues with your contractor and solid contract management. If you do find yourself in a situation where a global claim is on the table, whether you're making the claim or you're defending it, try and get expert advice early on. With the right strategy and right support, you should be able to avoid some of the common pitfalls that make global claims so difficult to navigate.
Jacob Austin 00:13:30 My mission for the Subcontractors Blueprint is to help the million SME contractors working out there in our industry. If you've taken some value away from today's episode. I'd love it if you'd share the show and pass on that value to someone else who'd benefit from hearing it. And of course, subscribe yourself if you haven't already. And thanks for tuning in. If you like what you've heard and you want to learn more, please do find us at www.QS.zone where you can subscribe to our training and support system for like minded subcontractors. In there you'll find templates, how to videos, interviews, and more. It's less than the price of your cup of coffee per day and you can cancel any time. Also, check us out on all your favourite socials [email protected]. Feel free to give me some constructive feedback or even some abuse. And thanks again! I've been Jacob Austin and you've been awesome!
