All aboard the Good Faith Express, but mind the causation gap

In Matière v ABM, the court found that there was an express obligation of good faith in a number of contracts concerning a joint venture for a subcontracting role in the construction of the HS2 railway. However, it concluded that although Matière had breached this obligation, ABM had failed to establish that the breach caused the loss it claimed. 

Background

The claim arose out of a failed joint venture between Matière and ABM, who had agreed to work together to provide subcontracting services to the main contractor, a second joint venture, EKJV, as part of the HS2 railway project. Matière initially brought a claim against ABM for sums due under a consortium agreement. In response, ABM brought a counterclaim primarily for the loss of the chance of winning the bid on the basis of breach of express good faith obligations by Matière under the consortium agreement, as well as other agreements entered into between the parties. 

Good faith obligation

Since the consortium agreement was “not well drafted”, the court had to lean heavily on the surrounding factual matrix when interpreting it. The agreement said, expressly, that ABM and Matière would “act in good faith toward the other and use reasonable endeavours to forward the interests of the co-operative enterprise”.  This, the court said, required each of ABM and Matière to “act honestly” and to “not conduct themselves in a manner which would be regarded as commercially unacceptable to reasonable and honest people”. 

This was a wide-ranging obligation, which Matière had breached by undermining ABM's plans, liaising covertly with competitors and, eventually, contracting alone with EKJV.

Lack of causation

Despite Matière's breaches, ABM ultimately lost its counterclaim. The court found that, although ABM had had a real and substantial chance of winning the bid, the breaches by Matière did not play a material part in the reduction of ABM's prospects of being appointed. Its grounds were that: 

1. whenever Matière undermined ABM's plans, it did so in response to, or at the behest of, EKJV;
2. other factors had played a role in diminishing ABM's prospects of winning the bid until they were effectively non-existent; and
3. ABM was never in a financial position to carry out its promises under the bid, despite implying to EKJV that it was. 

Judgment: Matière v ABM Precast