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

‘5. IMPLEMENTATION DELAYS - GENERAL PROVISIONS

If, at any time, the CONTRACTOR becomes aware that it will not (or is unlikely to) Achieve any Milestone by the relevant Milestone Date it shall as soon as reasonably practicable notify the AUTHORITY of the fact of the Delay or potential Delay and summarise the reasons for it.

The CONTRACTOR shall then submit a draft Exception Report to the AUTHORITY for its approval not later than five (5) Working Days (or such other period as the AUTHORITY may permit and notify to the CONTRACTOR in writing) after the initial notification under clause 5.1.

The draft Exception Report shall give the AUTHORITY full details in writing of:

the reasons for the Delay;

the actions being taken to avoid or mitigate the Delay;
5.3.3 the consequences of the Delay;

if the CONTRACTOR claims that the Delay is due to an AUTHORITY Cause, the reason for making that claim.

The AUTHORITY shall not withhold its approval of a draft Exception Report unreasonably. If the AUTHORITY does not approve the draft Exception Report it shall inform the CONTRACTOR of its reasons in writing, promptly following its decision to withhold approval and the CONTRACTOR shall take those reasons into account in the preparation of a further draft Exception Report, which shall be resubmitted to the AUTHORITY within five (5) Working Days of the rejection of the first draft.

Whether the Delay is due to an AUTHORITY Cause or not, the CONTRACTOR shall make all reasonable endeavours to eliminate or mitigate the consequences of the Delay.

Where the CONTRACTOR considers that a Delay is being caused or contributed to by an AUTHORITY Cause the AUTHORITY shall not be liable to compensate the CONTRACTOR for Delays to which clauses 7 or 8 apply unless the CONTRACTOR has fulfilled its obligations set out in, and in accordance with, clauses 5.1, 5.2 and 5.3.

…

If a Deliverable does not satisfy the Acceptance Test Success Criteria and/or a Milestone is not Achieved due to the CONTRACTOR’s Default, the AUTHORITY shall promptly issue a Non-conformance Report to the CONTRACTOR categorising the Test Issues as described in the Testing Procedures or setting out in detail the non-conformities of the Deliverable where no Testing has taken place, including any other reasons for the relevant Milestone not being Achieved and the consequential impact on any other Milestones. The AUTHORITY will then have the options set out in clause 6.2.

The AUTHORITY may at its discretion (without waiving any rights in relation to the other options) choose to:

…

require the payment of Delay Payments, which shall be payable by the CONTRACTOR on demand, where schedule 2-3 (The Charges and Charges Variation Procedure) identifies that Delay Payments are payable in respect of the relevant Milestone. The Delay Payments will accrue on a daily basis from the relevant Milestone Date and will continue to accrue until the date when the Milestone is Achieved in accordance with the Correction Plan.

Where schedule 2-3 (Charges) does not identify the payment of Delay Payments in respect of a Milestone the AUTHORITY reserves its rights. Otherwise Delay Payments are provided as the primary remedy for the CONTRACTOR’s failure to Achieve the relevant Milestone Date and it shall be the AUTHORITY’s exclusive financial remedy except where:

the AUTHORITY is otherwise entitled to or does terminate this Agreement for the CONTRACTOR’s Default or for Force Majeure; or

the failure to Achieve the Milestone exceeds a period of six months.

DELAYS TO MILESTONES DUE TO AUTHORITY CAUSE

Without prejudice to clause 5.3 and subject to clause 5.4, if the CONTRACTOR would have been able to Achieve the Milestone by its Milestone Date but has failed to do so as a result of an AUTHORITY Cause the CONTRACTOR will have the rights and relief set out in this clause 7.

The CONTRACTOR shall:

subject to clause 7.3, be allowed an extension of time equal to the Delay caused by that AUTHORITY Cause;

not be in breach of this Agreement as a result of the failure to Achieve the relevant Milestone by its Milestone Date; and

have no liability for Delay Payments in respect of the relevant Milestone to the extent that the Delay results directly from the AUTHORITY Cause.

The AUTHORITY Representative, acting reasonably, shall:

consider the duration of the Delay, the nature of the AUTHORITY Cause and the effect of the Delay and the AUTHORITY Cause on the CONTRACTOR’s ability to comply with the Implementation Plan;

consult with the CONTRACTOR Representative in determining the effect of the Delay;

fix a Revised Milestone Date; and

if appropriate, make any consequential revision to subsequent Milestones in the Implementation Plan.

If the CONTRACTOR has incurred any direct loss and/or expense as a result of a Delay due to an AUTHORITY Cause, the CONTRACTOR shall be entitled to compensation to the extent that it cannot mitigate the loss or expense in accordance with the principles set out in paragraph 27 of schedule 2-3 (The Charges and Charges Variation Procedure). The CONTRACTOR shall provide the AUTHORITY with any information the AUTHORITY may require in order to assess the validity of the CONTRACTOR’s claim to compensation.

…

DELAYS NOT DUE TO ONE PARTY

Without prejudice to clause 5.3 and subject to clause 5.4, where a Delay is attributable in part to the CONTRACTOR’s Default and in part to an AUTHORITY Cause the parties shall negotiate in good faith with a view to agreeing a fair and reasonable apportionment of responsibility for the Delay. The parties agree that Delay Payments and compensation payable pursuant to clause 7.4 (Delays to Milestones Due to AUTHORITY Cause) shall be recoverable subject to reductions to reflect the extent to which the AUTHORITY or the CONTRACTOR respectively has contributed to the Delay…’

Delay ‘means the period of time by which the implementation or provision of the Services by reference to the Implementation Plan is delayed arising from a failure to Achieve a Milestone.’

‘108.         The modern view is accordingly to recognise that commercial parties are free to make their own bargains and allocate risks as they think fit, and that the task of the court is to interpret the words used fairly applying the ordinary methods of contractual interpretation. It also remains necessary, however, to recognise that a vital part of the setting in which parties contract is a framework of rights and obligations established by the common law (and often now codified in statute). These comprise duties imposed by the law of tort and also norms of commerce which have come to be recognised as ordinary incidents of particular types of contract or relationship and which often take the form of terms implied in the contract by law. Although its strength will vary according to the circumstances of the case, the court in construing the contract starts from the assumption that in the absence of clear words the parties did not intend the contract to derogate from these normal rights and obligations.

…

To the extent that the process has not been completed already, old and outmoded formulas such as the three-limb test in Canada Steamship Lines Ltd v The King [1952] AC 192, 208, and the “contra proferentem” rule are steadily losing their last vestiges of independent authority and being subsumed within the wider Gilbert-Ash principle. As Andrew Burrows QC, sitting as a Deputy High Court Judge, said in Federal Republic of Nigeria v JP Morgan Chase Bank NA [2019] EWHC 347 (Comm); [2019] 1 CLC 207, para 34(iii):