Caselaw Digest
Caselaw Digest

Tata Consultancy Services Limited v Disclosure and Barring Service

17 May 2024
[2024] EWHC 1185 (TCC)
High Court
DBS hired TCS to build new IT systems. The project was delayed and the systems had some problems. The judge said TCS messed up some small things, but DBS messed up more by not following the rules and trying to end the contract early. In the end, DBS had to pay TCS some money.

Key Facts

  • The Disclosure and Barring Service (DBS) contracted Tata Consultancy Services Limited (TCS) to modernize its systems (R1), alongside maintaining existing systems (R0).
  • The R1 project experienced significant delays and resulted in disputes over liability for delays and defects.
  • TCS claimed £110,229,124 for losses due to DBS's breaches, and £14,373,099 for underpayment of service charges.
  • DBS counterclaimed £108,705,984 for losses due to delays and defects.
  • The modernization project involved multiple suppliers, with Hewlett Packard Enterprises (HPE) providing infrastructure.
  • R1 Barring and Basics (R1-B&B) went live on 7 September 2017, and R1 Disclosure (R1-D) was removed from the scope on 19 September 2018.

Legal Principles

Contractual interpretation considers the words' natural and ordinary meaning within their documentary, factual, and commercial context, including the parties' intentions at the time of execution and commercial common sense.

Rainy Sky SA v. Kookmin Bank [2011] UKSC 50, Wood v. Capita Insurance Services Limited [2017] UKSC 24, Arnold v. Britton [2015] AC 1619

Notice requirements may operate as conditions precedent, even without explicit warnings, if the language clearly indicates conditionality.

Bremer Handelsgesellscheft Schaft v Vanden-Avenne Izegem PVBA [1978] 2 Lloyd’s Rep 109, London Borough of Merton v Stanley Hugh Leach Ltd (1985) 32 BLR 51, WW Gear Construction Limited v McGee Group Limited [2010] EWHC 1460 (TCC), Steria Limited v Sigma Wireless Communications Limited [2007] EWHC 3454 TCC, Yuanda (UK) Company Limited v Multiplex Construction Europe Limited & Others [2020] EWHC 468 (TCC), Scottish Power UK PLC v BP Exploration Operating Company Ltd [2016] All ER 536

Clear words are needed to exclude liability for negligence or to derogate from normal common law rights.

Triple Point Technology, Inc v PTT Public Company Limited [2021] UKSC 29

A claim for wasted expenditure, unlike a claim for loss of profit, is not usually regarded as a claim for consequential loss and is not typically excluded by limitation clauses.

Soteria Insurance Ltd v IBM United Kingdom Ltd [2022] EWCA Civ 440

Estoppel requires a common assumption shared by both parties, communicated between them, with reliance and assumption of responsibility by the party against whom the estoppel is raised.

Tinkler v Revenue and Customs Commissioners [2021] UKSC 39, ABN Amro Bank NV v Royal and Sun Alliance Insurance Plc & Ors [2021] EWCA Civ 1789

Outcomes

TCS's claim for delays to R1-B&B failed.

TCS failed to demonstrate that the critical path ran through infrastructure delays and that it would have met the milestone but for those delays. The methodology used by TCS's expert was deemed unreliable.

DBS's claim for liquidated damages for R1-B&B delays failed.

DBS failed to issue a Non-conformance Report as required by Clause 6.1.

TCS's claim for compensation for delays to R1-D succeeded partially.

DBS's actions from June 2018 onwards constituted a breach of contract by failing to cooperate and effectively de-scoping R1-D. This caused delay for which TCS is entitled to compensation.

DBS's Partial Termination of R1-D was invalid.

DBS failed to engage the Remedial Plan Process (Clause 56) before asserting that the delay was irremediable. The inevitable contract extension was not considered.

TCS's claim for manpower costs succeeded partially (£666,735).

The claim for the period before the unlawful de-scoping of R1-D failed due to lack of entitlement under Clause 7. The claim for the period after the unlawful de-scoping was limited to verified costs.

TCS's claim for non-manpower costs succeeded partially (£1,732,989.70).

The claim was limited to costs incurred after the date the R1-D milestone should have been met, excluding costs related to the continuation of R0.

TCS's claim for loss of anticipated cost savings failed.

This claim is essentially a claim for loss of profit, which is excluded by Clause 52.4.

DBS's claim for delay payments failed.

DBS did not issue a Non-conformance Report as required by Clause 6.1.

DBS's claim for Disclosure Scotland extension costs failed.

DBS failed to establish a causal link between the delay and these costs.

DBS's claim for loss of anticipated savings relating to R1 Barring failed.

The WFPM used to calculate the loss was deemed unreliable.

DBS's claim for R1-D delays failed.

TCS was not responsible for the delay beyond 6 months from the relevant Milestone Date, and the costs claimed are not causally linked to the remaining period of delay.

DBS's defects counterclaims relating to the Basics and Barring Portals failed.

While some usability defects were established, they did not justify DBS's decision to rebuild the portals. DBS's decisions were driven by strategic objectives beyond TCS's contractual obligations and were not reasonable acts of mitigation.

DBS's counterclaim for Snowbound redaction issues succeeded (£8,270).

The redaction functionality was deficient, causing inefficiencies.

DBS's counterclaim for document storage issues failed.

DBS failed to establish that TCS's configuration was not in accordance with Good Industry Practice.

DBS's counterclaim for other R1 Barring quality issues failed.

DBS's method for quantifying loss was flawed and unsupported by evidence.

DBS's counterclaim for N-1 sustainment costs failed.

While TCS was in breach of its obligation to maintain software at N-1, DBS failed to establish a causal link between the breach and the costs claimed.

DBS's counterclaim for exit/service transfer costs failed.

DBS failed to establish a causal link between the established breach of contract (inadequate knowledge transfer plan) and the costs incurred.

DBS's claim for nominal damages for security incidents was dismissed.

No claim for damages was pleaded, and the incidents did not cause financial loss.

TCS's claim for underpayment of Volume Based Service Charges succeeded (£6,976,737).

The court determined the correct interpretation of the Charges Variation Clause and found that TCS had been underpaid.

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