The High Court has ruled in favour of the defendant, Pinewood Technologies in Pinewood Technologies Asia Pacific Ltd v Pinewood Technologies Plc [2023] EWHC 2506 (TCC).  Pinewood is a UK-registered company and a subsidiary of Pendragon plc, an automotive retailer.  It develops and supplies a dealer management system for the automotive industry. Pinewood Technologies typically contracts with resellers to market and sell the dealer management system to motor vehicle dealerships overseas. Pinewood Asia is an unrelated company despite its similar name, and is a reseller, registered in Hong Kong.

The case concerned a counterclaim about the construction of the provisions of an exclusion clause.  Pinewood Technologies argued that the Pinewood Asia's claim for breach of two reseller agreements was excluded due to being a claim for "loss of profit".

The two agreements contained an identical clause which excluded the defendant's liability for breach of contract under several heads of loss.  One head of loss was "loss of profit". 

Pinewood Asia argued that the reseller agreements formed part of Pinewood Technologies' written standard terms of business under section 3(1) of UCTA, and the exclusion clause did not meet the requirement of "reasonableness" under section 11 of UCTA. 

The judge said that the evidence showed that negotiations took place between the parties involving email exchanges and calls; it was also clear that both sides had access to legal advice. The draft agreement went backwards and forwards between the parties on several occasions.  Therefore, the UCTA argument had no realistic prospect of success at trial.

The judge rejected the suggestion that there is any principle that exclusion clauses cannot apply to the non-performance of contractual obligations or to repudiatory breaches of contract. Instead, it is a question of construction in every case whether the exclusion clause covers the breach or the loss in question. The judge said that she was satisfied that on a true interpretation any liability on the part of Pinewood Technologies for breach of the reseller agreements giving rise to damage in the form of loss of profit and wasted expenditure fell within the terms of the exclusion. The language was clear and unambiguous. The words of the exclusion had to be read in the context of the whole exclusion clause, the contract as a whole, the material background and circumstances as at the time the reseller agreements were entered into.

The judge applied established principles, so the case does not create new law.  However, it is always useful to have examples of the courts considering the interpretation of exclusion clauses.