HT-2020-000448 - [2024] EWHC 2025 (TCC)

The Court has found that critical delays to R1-D were caused by ‘AUTHORITY Cause’ from 13/06/2018. Based on the ‘artificial’ third alternative analysis at [370], TCS says that the Court has also found that DBS’s removal of scope and non-engagement could be ‘AUTHORITY Cause’ of critical delay. The Court has also found that, for period through to 07/09/2018, TCS would not have, in any event, achieved the Milestone Date and loss and expense is therefore irrecoverable until after that date. TCS contends that loss and expense in respect of R1-D should be recoverable from 07/09/2018 until the end of the Contract. Consequently, TCS’s claim, it says, should be calculated on the basis of the period from 07/09/2018 to 31/03/2020, subject to the salary data point. Inconsistently, it says, [397] of the Judgment seeks to quantify the non-manpower loss only from 07/09/2019 to 31/03/2020.

TCS’s analysis is wrong. The explanation of my approach is set out clearly in paragraph 389. The Court found that from September 2017 there was about one year of work for TCS to complete. TCS would plainly not be entitled to any losses during the time it would have been carrying out its original scope of work. There was a year of delay between September 2017 and September 2018, when Partial Termination took place. Having analysed the reasons for delay against contractual entitlement during that year, I found that TCS is entitled to 12 days’ loss and expense. TCS may then, because of the wrongful partial termination, claim losses post partial termination, but this must take account of the fact that – as at the actual date of partial termination – TCS still had one years’ worth of its own scope which it would have needed to carry out had the Agreement not been partially terminated. TCS’s proposed approach would allow it, unjustifiably, to claim for losses equivalent to the period during which it would have been carrying out its own scope but for the partial termination. This would not be permitted by Clause 7 or by the application of ordinary principles of causation. The logic of the approach in paragraph 389 is correct.

Interest on the VBSC

TCS claims interest on the VBSC of £6,976,737 which the Court awarded to TCS under the Late Payment of Commercial Debts (Interest) Act 1998 (‘the 1998 Act’). The claim is substantial; the precise figure is not clear given the lack of precision surrounding the commencement date for the calculation of interest referred to further below, but the delta between a claim at 8% over base and 2% over base (as otherwise contended for by TCS pursuant to section 35A of the Senior Courts Act 1981 (‘the 1981 Act’)) is in excess of £2m.

TCS’s claim under the 1998 Act was not pleaded. There is no suggestion that such a claim was not required to be pleaded: it plainly was, not least in accordance with CPR 16.4. This requires that if a claimant is seeking interest they must (a) state whether they are doing so under the terms of a contract; under an enactment and, if so, which; or on some other basis and, if so, what that basis is; andif the claim is for a specified amount of money (which is the case here), the pleading must state (i) the percentage rate at which interest is claimed; (ii) the date from which it is claimed; (iii) the date to which it is calculated, which must not be later than the date on which the claim form is issued; (iv) the total amount of interest claimed to the date of calculation; and (v) the daily rate at which interest accrues after that date.

TCS applied on 10 July 2024 for permission to re-amend its Particulars of Claim to plead such a claim, as well as to claim VAT. The draft amended pleading merely included the following addition:

The pleading therefore remained substantially non-compliant with the CPR at the point at which permission to amend was sought. I should add, however, that the draft pleading was provided at the same time as a letter to which was appended TCS’s interest calculations from which TCS’s case on the matters required by (i) to (v) of CPR16.4 where the claim is for a specified sum could be discerned.

The application for permission to amend is resisted. DBS contends that the application is made very late. The principles applicable to very late applications to amend were set out by Carr J (as she then was) in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) at [36]-[38] (endorsed by the Court of Appeal in Nesbit Law Group LLP v Acasta European Insurance Company Ltd [2018] EWCA Civ 268 at [41]) and Coulson J in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & ors [2015] EWHC 1345 (TCC); 160 Con. L.R. 73 at [19]. As summarised at [41] of Nesbit Law:

TCS contends, in this regard, that their application should not be regarded as a ‘very late’ application on the basis that no hearing date will be lost, nor indeed any other disruption caused. Mr Cogley KC, for TCS, points to the observation of Carr J as she then was in Quah Su-Ling that ‘lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done’. On any view, this is a very late amendment. It is brought two months after the judgment has been handed down and two weeks before the consequentials hearing. The application to amend itself is being considered as part of the consequentials. Other than being brought during an appeal, it could not, by definition, be any later. That conclusion does not mean it is not, of course, necessary to consider the implications, if any, arising out of the time at which it is brought; but in the circumstances of this case, it cannot realistically be considered anything other than a very late application.

Next, DBS argues that no reason, let alone a good reason, has been identified for the lateness of the application. No evidence was submitted explaining the lateness of the application. In its skeleton argument TCS explained the lateness of the pleading by reference to its increased focus on the question of interest in the context of the consequentials hearing. On the assumption that TCS considered it was entitled to bring such a claim, this explanation amounts to no more than an acceptance that the issue had effectively been overlooked. As a reason, this is not a ‘good’ reason. This, of itself, is not determinative against the application, but it is a factor to be weighed in all the circumstances, increasing as it does the indulgence required of the Court.

DBS also raises a number of points which went to merits of the 1998 Act interest claim, which were advanced to establish either that I can conclude on this application that it has no real prospect of success at this stage (such that permission should not be granted); or alternatively conclude that evidence would be required in order to consider the merits of the claim, which is not available now and which it is now too late to have adduced, militating strongly against permitting the amendment at this stage.

These three points were (in the order in which they logically arise):

Following argument, I raised a potential interaction between Clause 16.3, which was central to the first of these arguments, and Clause 3.3 of Schedule 2-4 of the Agreement, which had not been the focus of any submissions by either party. I therefore invited short, further submissions from the parties. A fresh point was raised by DBS as to the existence of any qualifying debt for the purposes of the 1998 Act in light of Clause 3.3. TCS were given the opportunity to, and did, provide submissions in reply to this point.