UT/2024/000002 - [2025] UKUT 00188 (TCC)

Under this Ground the Appellant highlights a number of features which are said to amount an error of law in the approach the FTT took to its analysis of the contract. Mr Hitchmough drew a distinction between looking behind the contract (which he made clear was not CBNA’s case) and looking beyond it to fill in gaps. Both parties are agreed one can look at the surrounding circumstances and context in accordance with normal principle of contractual interpretation as part of determining what the contractual obligations are.

In particular the Appellant points to the fact, the contracts were:

We disagree any of the specific points amount to an error of law. Firstly we note that the FTT recorded the submissions about the purpose of the GMSAs at [287] and responded to it at [288]. The FTT did not fail to consider the point. The FTT’s essential point regarding the lack of detail in the contracts was that despite the intra-group nature of those, in circumstances where the EAP had envisaged invoicing would deal with intra group charging, that if more detail had been required then it would have been provided for. The intra-group nature of the arrangements was not therefore a reason not to regard the contractual arrangements as reflecting the entirety of the arrangement. Mr Hitchmough explained he was not saying the contract did not conform to economic reality but, consistent with his case that the FTT needed to look “beyond” not “behind” the contract, that there were gaps that needed filling. However, as Mr Beal rightly responded that rather presupposed the existence of gaps that needed filling. The FTT’s point here was that there were none.

As to the other two points concerning respectively the CPP focus of the EAP, and the limitations of the IETI tool, the FTT did not make any assumptions that in fact relied on the outcome of those tools for its analysis that the contract provided for an undifferentiated supply so it is difficult to see how therefore these points were material. As already mentioned above under Ground 1, the contract effectively contained a mechanism which it was hoped would characterise services as single or separate. The FTT correctly noted that the scope of the service was, pursuant to the contractual arrangement, determined by this mechanism. But what the FTT was not doing was relying on the mechanism from the point of view of the accuracy of the outcome that it generated. The CPP focus of the mechanism, and the limitation of the IETI tool (which as Mr Beal pointed out was not in any event part of the contractual arrangement) did not (and could not because it would be a question of legal characterisation to be determined ultimately by the tribunal) answer the question of how the contractual arrangements should be characterised for the purpose of whether there were single or multiple supplies.

The Appellant also argues under this ground that the FTT failed to consider other evidence that was inconsistent with its conclusion that there was a single supply. Mr Hitchmough’s submissions highlighted for instance findings regarding specialised personnel in the business areas ([52]) in relation to the bespoke governing and commissioning processes ([57]), the different procurement process for support services ([85]) the fact Business Delivery process was not used for Support Services, and the fact support Services were “one step removed” from the transactions with clients.

Thus the essential point made here is the bespoke nature of what was required in respect of Business Delivery services from the point of view of each of the seven business areas, which was to be contrasted with the generic nature of the Support Services and also that there were for instance different procurement processes for the two types of services.

We disagree there was any error by the FTT here. The first point we make in response is that none of these issues would mean the FTT was not entitled to take the view of the contract that it did (and Mr Hitchmough was clear he was not arguing the contract did not reflect economic reality). The second point is that when these aspects are considered (we consider they were under the topics of indivisibility, indispensability and separate availability), neither the bespoke nature of what individual business areas required, their different role in relation to the onward services SPLC provided to its clients, nor the different procurement were necessarily inconsistent with there being a single undifferentiated supply from CBNA to SPLC. The nature of onwards supplies by definition concerned what happened after the relevant supply was made. As regards procurement process that focussed what happened before the relevant supply was made.

We also reject Mr Hitchmough’s criticism of the FTT that at no point did it consider the findings made in respect of Business Delivery and ask how many Business Delivery Services had been made and that it simply assumed one overarching supply. The FTT did not simply assume such overarching supply. Rather,that was where the FTT’s contractual analysis led it to and it is common ground that the contractual obligations represented the correct starting point.

Ground 3 therefore fails.