to its alternative claim of incremental staffing costs in the
amount of $543,548.89.
 The trial judge did not accept Sapient’s position. He
started his analysis by considering the first step in the test set
out in Tercon Contractors Ltd. v. British Columbia (
Transportation and Highways),  1 S.C.R. 69,  S.C.J. No. 4, 2010
SCC 4, at para. 122. Under the first step, a court must ask
whether the exclusion clause would even apply in the circumstances of the case.
 The trial judge applied the principles of contractual interpretation discussed in Sattva and concluded, at para. 354, that
“when the words in Section 18.6.1 are read both on their own
and in the context of the Subcontract as a whole, the limitation
of liability set out in Section 18.6.1 does not apply to Siemens
damage claim for loss of profits in respect of AMS”.
 The trial judge explained how he reached this conclusion,
at paras. 356 to 361 of his reasons:
Turning first to the wording of Section 18.6, the wording in Section 18.6.1,
which limits damages to direct damages only, includes loss of profits under
the Subcontract. As previously discussed, expectation damages, which are
direct damages, include loss of profits.
Section 18.6.1 goes on, however, “for greater certainty” to provide that
neither Siemens nor Sapient will be liable to the other for “indirect, spe-
cial, consequential or punitive damages or for loss of profits (collectively,
‘Excluded Damages’), even if the party has been advised of the possibility of
Given the above grouping and inclusion of “loss of profits” as Excluded
Damages along with “indirect, special and consequential damages”, in my
view the reference to “loss of profits” in Section 18.6.1 refers to consequen-
tial or indirect lost profits, i.e., a breach that causes either Siemens or Sapi-
ent to lose profit from other work forgone as a result of the breach.
Consequential lost profits do not include profits under the Subcontract but
rather are indirect losses which are only recoverable when they are foresee-
able or communicated to the defendant: Hadley v. Baxendale (1854), 9 Exch.
341, 156 E.R. 145 (Eng. Ex. Div.) at para. 3. My conclusion that the provi-
sion of “loss of profits” in Excluded Damages relates to consequential or
indirect profits is further confirmed by the concluding words of the para-
graph which provide: “even if the party has been advised of the possibility of
such damages.” That language is in accordance with the Hadley recovery
principle for consequential damages.
In my view, the above interpretation of “loss of profits” in s. 16.1 is also
confirmed when considering the context of the Subcontract. The AMS portion of the Subcontract is a fixed price commercial contract for services.
It is reasonable to assume that parties who enter into such a contract would
rely on the fact that they would receive the loss of profit component of the
price in the event of a breach. As stated by Professor Waddams in the Law of
Contracts, (6th ed.), at pp. 523-524, the main purpose of contracts in a commercial context is to allow and protect reliance. The learned author goes
on to state: