HT-2020-000448 - [2024] EWHC 1185 (TCC)

Fecha: 17-May-2024

Clause 14.5 of Schedule 2-6 which states

(4)

Clause 14.5 of Schedule 2-6 which states:

“The CONTRACTOR is responsible for…. all reasonable assistance to Other Service Line Providers in the management by them of their respective services (including any specific business projects or Application Development Services)….’

(5)

Clauses 15.4 and 15.6 of Schedule 2-6, set out above, when construed (as they should be) as setting out the obligations of TCS in respect of their interactions with Other Service Providers.

34.

As a matter of contractual analysis, therefore, I reject the existence of the implied term relied upon by TCS.

35.

Finally, it is necessary to deal with the case pleaded by TCS at paragraph 34 of the Amended Particulars of Claim, that ‘the aforesaid …failures on the part of [HPE] each amounted to an AUTHORITY Cause as that term is defined in the Agreement’. The ‘failures’ are the matters pleaded at paragraphs 30, 31, and 31A of the Amended Particulars of Claim (which are, in general terms, the matters which TCS claim were the causes of delay to its work). Paragraphs 30 and 31 relate to what are effectively both systemic and particular problems with HPE, and paragraph 31A relates to problems caused by DBS itself in relation to an issue referred to (and considered in more detail below) as ‘PSN Connectivity’ and another relating to the introduction of two-factor authentication (‘2FA’).

36.

In relation to the failures by HPE, it is said that an act of prevention on their part is of itself an ‘Authority Cause’ for the purpose of Clause 7 (the clause pursuant to which TCS can claim relief from Delay Damages and its own losses caused by delay).

37.

In Closing Submissions, Mr Croall indicated that DBS’s primary position that this ‘broad’ case was not open on the pleadings. However, I do not agree. I consider that the general case is one encompassed within paragraphs 34 of the Amended Particulars of Claim.

38.

Authority Cause is defined as:

“any breach by the AUTHORITY of any of the AUTHORITY’s Responsibilities (except to the extent that it is the result of any act or omission by the AUTHORITY to which the CONTRACTOR has given its prior consent)”.

39.

It is also relevant that Default (in the context of ‘Contractor’s Default’), is defined as follows:

‘any breach of the obligations of any party (including but not limited to fundamental breach or breach of a fundamental term) or any default, act, omission, negligence or statement of any party, its employees, agents or sub- contractors in connection with or in relation to the subject matter of this Agreement and in respect of which such party is liable to the other.’

40.

Neither the words ‘AUTHORITY’s Responsibilities’ nor ‘Responsibilities’, which, as can be seen, form a central part of the definition of ‘AUTHORITY Cause’ has been contractually defined, notwithstanding the fact that ‘Responsibility’ is capitalised, as though the parties had intended the word reflect a defined term.

41.

TCS contends that as a matter of natural and ordinary language, and as a matter of common sense given the contractual usage of the term, ‘AUTHORITY’s Responsibilities’ capture not only matters that were strict breaches of the Agreement by DBS but extended to all aspects of the project which were within what it describes as DBS’s ‘sphere of responsibility’. As such, it says that (even if DBS is not in breach of an express or implied term) critical delays caused to it by HPE’s services were nevertheless ‘AUTHORITY Responsibility’ because HPE was DBS’s contractor, and it was only DBS that had the right and power to instruct HPE and to procure its timely performance. Put shortly, as between DBS and TCS, TCS contends that DBS was ‘responsible’ for HPE and any failure by HPE to deliver something which TCS was dependent upon amounts to an ‘AUTHORITY Cause’ whether or not that failure was itself a breach by DBS of its own obligations to TCS.

42.

By contrast, DBS contends that AUTHORITY Cause was defined as comprising only a ‘breach’ by DBS of its ‘Responsibilities’ and that the use of the word ‘breach’ is consistent with an interpretation that only a breach of a contractual obligation by DBS can amount to ‘AUTHORITY Cause’. In these circumstances, failures by third parties (even if they are sub-contractors to DBS) and/or matters not amounting to a breach by DBS of its own contractual obligations do not constitute ‘AUTHORITY Cause’. DBS relies upon what might be described as a relatively liberal use of the phrase ‘responsible/responsibility for’ within the Agreement as synonymous with the phrase ‘obliged/obligation to’.

43.

I note at the outset that the parties have chosen to use within the delay/relief regime in Clauses 5-8 (and also the relief regime in the context of operational delays in Clause 11) two different phrases: ‘CONTRACTOR Default’ and ‘AUTHORITY Cause’.

44.

As set out above CONTRACTOR Default means, in essence, a breach of TCS’s obligations or any default, act, omission, negligence by it, its employees, agents or sub-contractors in connection with or in relation to the subject matter of the Agreement. If the word ‘Default’ had been used to define the trigger for TCS’s entitlement within Clause 7 (i.e. ‘Authority Default’) a failure on the part of HPE, as DBS’ subcontractor, would be a failure on the part of DBS, but, and importantly, only insofar as HPE failed in providing to TCS something to which it was contractually entitled.

45.

Instead of using the phrase Authority ‘Default’, the parties have used different language.

46.

TCS contends that ‘Auth AUTHORITY ority Cause’ is wider than ‘Default’ in that it includes matters for which the Authority may generally be ‘Responsible’ even if that does not arise out a breach of a particular obligation. A key example of this provided in argument is an instruction: the instruction of additional work would be something covered by ‘AUTHORITY Cause’ even though DBS was entitled to give instructions. Particularly pertinent to the present dispute is that the phrase is said to cover what, TCS contends, would generally be an act of prevention by any party for whom DBS would be ‘responsible’ as between it and TCS, in the sense that the third party in question is in contract with DBS and DBS is the only party with any contractual ability to control that third party.

47.

By contrast, DBS contends that ‘AUTHORITY Cause’ is narrower than ‘Default’. Responsibility, it is argued, is simply a synonym for ‘obligation’. DBS accepts that ‘AUTHORITY Cause’ would capture breach of an Authority obligation whether or not it was carried out by the Authority itself or a contractor or servant or agent of the Authority. However, it says, when compared with ‘Default’, breach of an obligation is a subset of the types of matters which would be included in ‘Default by the Authority’ (a phrase which is used in, for example, the limitation of liability provisions at Clause 52.3.4). It would not include, for example, a ‘statement in respect of which [DBS] is liable to [TCS]’ (unless it was also a breach of obligation).

48.

The submission of DBS is to be preferred. This is because:

(1)

in the context of the present case, ‘responsibility’ simply means ‘obligation’. As DBS points out, the word is used throughout the Agreement and wherever it is used, it refers to something that one of the parties is responsible for pursuant to the terms of the contract;

(2)

as a matter of ordinary language in the context of a commercial contract, the word ‘responsibility’ is, unless clearly explained otherwise, most likely to mean contractual responsibility, a term which is readily understood and, importantly, a readily ascertainable meaning in any specific scenario;

(3)

this is supported by conjunction with the word ‘breach’: the phrase ‘breach of responsibility’ is likely, as a matter of language, to mean breach of an identifiable obligation which is to be found (expressly or implicitly) within the Agreement;

(4)

a fundamental difficulty for TCS is that, if it does not mean contractual responsibility, how is responsibility to be defined with any certainty?;

(5)

TCS sought in argument to align identification of ‘responsibility’ within the clause to the concept of an act of ‘prevention’. This does not assist it to avoid the conclusion that the word ‘responsibility’ is aligned with contractual responsibility. As made clear in North Midland Build Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744, the ‘prevention principle’ is not an overriding rule of public or legal policy but is the effect of an implied term that acts of hindrance and prevention on the part an employer will be a breach of contract (London Borough of Merton v Stanley Hugh Leach Limited [1985] 32 BLR 51). It is a creature of contract. An act of prevention may be (a) a breach of an express or implied contractual obligation; and also (b) the exercise of an entitlement (such as the giving of an instruction). It will not be the happening of an event for which the parties have otherwise agreed the allocation of risk within the contract. The concept of ‘prevention’ is, therefore, itself rooted in consideration of the parties’ express or implied obligations. In the present case, the word ‘responsibility’ within the term ‘AUTHORITY Cause’ is unlikely to refer to the giving of an instruction where (a) this sits unhappily with the term ‘breach’, but more importantly (b) the parties have agreed a comprehensive scheme for the giving of and complying with instructions through a detailed Change Control Procedure;

(6)

in the specific circumstances of this case, TCS’s construction is used to impose general ‘responsibility’ upon DBS for the actions of third parties with whom DBS is in contract, and who are envisaged as interacting with TCS. The parties have, however, expressly turned their mind within the Agreement to how that interaction is to be governed contractually: see, for example:

Clause 44.2 dealing with equipment provided by a third party contractor that is required to interface with TCS’s system: a general but otherwise undefined ‘responsibility’ on the part of DBS for the third party’s equipment is inconsistent with the ‘primary management responsibility’ placed upon TCS and/or the specific circumstances in which TCS may claim for its additional expenses (TCS do not bring a claim pursuant to Clause 44.2 in this litigation);

Clause 2 which relates to the inspection of the Operating Environment. The ‘Operating System’ means the ‘AUTHORITY System’, and this in turn means the ‘AUTHORITY’s computing environment (consisting of hardware, software and/or telecommunications networks or equipment) used by the AUTHORITY of the CONTRACTOR in connection with this Agreement which is owned by or licenced to the AUTHOIRTY by a third party and which interfaces with the CONTRACTOR System or which is necessary for the AUTHOIRTY to receive the Services’. This would, in general terms, relate therefore to the infrastructure provided to a supplier to DBS over whom TCS had no control, but with whose system it was required to interact. (I note that reliance on Clause 2 in the context of the question of general construction is not therefore affected by the parties’ competing arguments about the specific application of this clause in circumstances where HPE’s services were introduced by Contract Change Notice (‘CCN’)). As a matter of general construction in the context of the meaning of the word ‘Responsibility’, the specific way in which the parties have sought carefully to cater for the extent of DBS responsibility for issues in systems provided by third party suppliers to DBS with whom TCS interact points strongly towards the word ‘responsibility’ meaning contractual responsibility, rather than a nebulous concept of ‘general responsibility’ which DBS may be in breach of notwithstanding the absence of any contractual hook by which to identify with certainty the basis of TCS’s entitlement.

49.

Thus, to the extent that TCS is entitled to receive something from DBS and/or its third party suppliers pursuant to the terms of the carefully drafted Agreement, a failure to provide that will be a breach of an obligation, and an ‘AUTHORITY Cause’. However, unless TCS is able to demonstrate an express or implied contractual obligation on DBS to have provided TCS with something, the absence of that thing cannot in my judgment be a ‘breach by the AUTHORITY of any of the AUTHORITY’s Responsibilities’ and therefore it cannot be an ‘AUTHORITY Cause’ for the purposes of Clause 7.