THE MEANING OF ‘ALL DIRECT COSTS AND DIRECTLY INCURRED LOSSES’

Robertson Group Construction Ltd v Amey Miller (Edinburgh) Joint Venture [2005] CSIH 89, 22 December 2005

In Robertson Group Construction Ltd v Amey Miller (Edinburgh) Joint Venture [2005] CSIH 89, 22 December 2005, the Inner House of the Court of Session dismissed an appeal from the judgment of Lord Drummond Young ( [2005] BLR 491) and held that the words ‘all direct costs and directly incurred losses’ permitted the pursuers to recover reasonable sums by way of general corporate overheads and profit provided that they arose naturally, in the usual course of things, from the works instructed by the defenders. The source of the defenders’ obligation to pay was a letter written to the pursuers in which the defenders stated that, in the event that the parties failed to conclude a formal contract, all direct costs and directly incurred losses would be underwritten and reimbursed by the defenders.