Liability Caps and Exclusion clauses considered again by the TCC in Tata Consultancy Services v DBS

Tata Consultancy Services Limited v Disclosure and Barring Service [2024] EWHC 1185 (TCC) 

This TCC decision is a useful further case on the interpretation of liability caps, as well as a decision which considers the proper interpretation of an exclusion clause and the impact in that context of how a party characterises its losses. 

The Dispute 

The Disclosure and Barring Service (“DBS”) is a non-departmental public body which is responsible for processing and issuing DBS checks in England and Wales, and for maintaining Barred Lists of individuals. Tata Consultancy Services (“TCS”) provides business process outsourcing and IT services. TCS was engaged by DBS in 2012 to modernise and digitise its manual paper-based processes, while simultaneously operating the pre-existing processes until the modernisation project was live. 

The modernisation project suffered from delays, and was the subject of a “partial termination”. The remainder of the project went live in 2017. The dispute between the parties related to liability for delays, and defects in those elements of the project which were ultimately delivered. TCS brought claims for breach of contract in the value of £110.2 million, plus a claim of £14.3 million for underpaid charges. DBS brought counterclaims for losses arising from delays and defects in the system with a value of £108.7 million. 

The Liability Clause

The contract between the parties contained an exclusion clause, the key elements of which provided:

"52.2 Subject to clause 52.1, [TCS’] total aggregate liability: 
… [separate sub-clauses setting caps for IPR claims, damage to tangible property, damage to data, Service Credits]…
52.2.5 in respect of Delay Payments shall be limited to 10% of the implementation Charges.
52.2.6 in respect of all other claims, losses or damages, shall in no event exceed £10,000,000 (subject to indexation) or, if greater, an amount equivalent to 100% of the Charges paid under this Agreement during the 12 month period immediately preceding the date of the event giving rise to…