In Soteria, the claimant sought to recover the significant expenditure that it had incurred in anticipation of receiving a highly upgraded IT system from the defendant. However, the defendant failed to supply the IT system, in contravention of the terms of the contract, causing the claimant to suffer losses of £128m.
In the contract between the companies, a clause stated that IBM’s liabilities in the event of termination excluded “loss of profit, revenue, savings (including anticipated savings)”.
High Court decision
The High Court held that, although the exclusion clause did not specifically exclude wasted expenditure, the claimant’s loss consisted of savings, revenue and profit it would have recovered had the defendant supplied the IT system.
The High Court, therefore, concluded that framing the loss as wasted expenditure did not detract from the characteristics of the loss, meaning that the £128m lost by the claimant was excluded and thus irrecoverable.