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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hewlett Packard Ltd v Severn Trent Systems Ltd [2002] EWCA Civ 1778 (14 November 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1778.html Cite as: [2002] EWCA Civ 1778

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(His Honour Judge Havery QC)

		Royal Courts of Justice Strand London, WC2 Thursday, 14th November 2002

1. LORD JUSTICE MUMMERY: The defendant, STS, is responsible for the information technology at Customer Call Centres operated by its parent utility company, Severn Trent Water Limited. In 1998 STS sought the assistance of the claimant, HP, with a project to upgrade the call centres. To this end, HP provided services to STS for which in these proceedings they claim over £700,000 under an interim agreement contained in a letter of 9th October 1998. STS contended that the agreement was not intended to have any or any immediate contractual effect and/or was not binding because it was uncertain, but Judge Havery QC gave summary judgment in favour of HP for an amount to be assessed. He dismissed HP's application for an interim payment and gave directions for the assessment which is due to be heard next April. After refusal by the judge and by this court on paper, STS's renewed application for permission to appeal was adjourned to be heard on notice, with appeal to follow if permission was granted. If, but only if, permission is granted to STS, HP seek to appeal the judge's refusal to order an interim payment.
2. HP were first retained to carry out a project feasibility study for a fixed fee of £500,000. Before the agreement under which they did this (the feasibility agreement) was finally concluded, STS and HP entered into what was described as an interim agreement to enable the work to start on 30th June 1998. The services to be provided and the payment for them were to be in accordance with the draft agreement then under discussion. The interim agreement was very similar in form to the one with which we are concerned. STS accept that it was binding. The interim agreement was to be superseded by the feasibility agreement when this was finally concluded, as it was.
3. The work to be done under the feasibility agreement was substantially complete by the end of September 1998, and HP has subsequently been paid the agreed fee for that work. There were a number of aspects of the study which were detailed in the first schedule to the agreement, one of which was the provision of a migration plan to define the steps necessary to move from the current to the upgraded system. No migration plan had been produced by October 1998, but a document described by the parties as a Gant chart and headed 'High Level Migration Plan' had been, the latest version of which showed that it had been updated on 25th September 1998. This document, a kind of work flow chart, set out, among other things, the tasks which it would be necessary for HP to perform in order to implement the upgraded system, starting with mobilisation and a number of other tasks at the beginning of November 1998. Such a chart would form an important part of the Migration Plan when it was produced. On about 6th October 1998 HP produced a further draft agreement, (the Framework Agreement) under which they would carry out this next stage of the project and any future work and supply any equipment. The draft framework agreement contemplated that before any work was carried out, a schedule would be signed by the parties recording the work to be undertaken by HP, the price to be paid for it and all other relevant details. A pro forma schedule was annexed to the draft agreement, as were details of the daily rates which HP would charge for their services 'where appropriate'.
4. It is common ground that there was a meeting on 30th September 1998 at which the Gant chart was discussed and a further meeting on 9th October 1998, attended, among others, by Mr Jarvis, STS's contract manager, and Messrs Tarbatt and Shaw on behalf of HP. At or following this meeting, Mr Jarvis produced and signed the letter upon which HP's claim is based. It was on STS paper and addressed to Mr Tarbatt. It was headed "Framework Contract No. 462 - Interim Agreement Re Draft Schedule No. STS001" and said:

"Further to our meeting on 07/10/1998 I can confirm that you are hereby instructed to proceed with the work as currently defined effective from 12/10/1998, subject to the following:

1. The services to be provided by Hewlett-Packard together with the associated payment provisions shall be those specified in the HP proposal entitled 'Migration Plan' dated 25/09/1998.

2. The maximum amount authorised by this Interim Agreement is £2,200,000.

3. The terms and conditions which shall apply shall be those specified in the above mentioned Framework Contract (Version 1.0) together with any additional terms specified in the above-mentioned HP proposal.

4. The parties to use their reasonable endeavours to conclude agreement on Schedule No. STS001 by 30/11/1998 the terms of which (in conjunction with those of the Framework Agreement) will then supersede this Interim Agreement.

5. Both parties have the right to terminate this Interim Agreement upon reasonable notice. In the event of termination Hewlett-Packard shall be entitled to payment for the services provided up to the date of termination albeit that Hewlett-Packard shall be obliged to use their reasonable endeavours to mitigate such costs. If any ambiguities exist then a fair and reasonable evaluation shall be made.

6. This Interim Agreement shall be subject to the exclusive jurisdiction of the English courts."

It is signed by Mr Jarvis, "Contracts Manager".

5. Following receipt of this letter, HP started work on the next stage of the project and did, they say, a substantial amount of work, to the knowledge of STS, until they were told on 10th December 1998 to put their work on hold because the parent company had reacted unfavourably to a presentation which STS had made about the project. When in due course it became apparent that HP were not going to be instructed further, they submitted their invoice for the work they had done which was not paid. These proceedings followed.
6. The claim for summary judgment was supported by a long statement from Mr Shaw. He said that STS wanted the second stage of the project to start in time so that the new system could be installed by March 2000. That meant that HP had to start on 2nd November 1998, which was a Monday, as shown on the Gant chart. On 5th October he had discussed starting work under an interim agreement, as has happened with the feasibility study. That led to the meeting on 9th October for which a draft of such an agreement had been produced. The letter signed by Mr Jarvis meant what it said and what had been agreed. Mr Jarvis, on the other hand, says of this meeting:

"The draft letter was referred to by everyone as a letter of intent and nobody described it as an 'agreement' or 'interim agreement'. It was on that basis that .... I agreed that we would sign the letter as it was not an order or binding agreement but merely a letter indicating our intention to proceed at a later date. ... I explained to Tim Shaw at this meeting that when the migration plan was completed and delivered in accordance with the feasibility agreement, which it had not been, STS would produce a purchase order in respect of each piece of work. HP knew that this is the way it was intended the project would proceed. HP were aware of STS's systems and procedures and in particular, the procedure that work was only carried out against a defined scope of work on a written STS order."

He says that he signed the letter to secure the HP team. If he had not done so, they might have lost continuity of personnel if and when the project was given the go ahead. He could not have given an order until after he had received the Migration Plan (then scheduled for 18th November) and approval of funding. Not surprisingly, Mr Shaw denied this account.

7. After hearing argument over one and a half days, the judge gave a short extemporary judgment. He said that the terms of the letter were clear. However it was described, no one could have thought that it did not create a contract. Nor could it be said to be conditional upon receipt of a specific order because it said: "You are hereby instructed to proceed with the work." It was not uncertain because it referred to the Gant chart and the draft framework agreement.
8. Mr Hollington QC, counsel for STS, submits that the judge was wrong to grant summary judgment. The conflict of evidence between Mr Shaw and Mr Jarvis gave rise to triable issues as to whether the interim agreement was of any contractual effect, or at least whether it was of conditional effect until STS had placed a written order. STS's case did not conflict, he says, with the parol evidence rule because there was an exception to this rule which allowed extrinsic evidence to be admitted to show that an apparently binding written agreement was not intended to have contractual effect or was only of conditional effect.
9. I accept that there is such an exception but do not think that there is any scope for its application in this case. The starting point must be the terms of the letter itself, looked at objectively. It was not a statement of intention but confirmation of what had been agreed. Its language is entirely inconsistent with any lack of contractual intent. The letter is contractual in form and purports to say what work HP are to do, what they are to be paid for it and on what terms, by reference to other documents. It contains provisions for termination and jurisdiction. These are all contractual hallmarks. As Mummery LJ commented in the course of argument, this is as much a contract as one could ever expect to see. The language of the letter is entirely inconsistent with any intention to defer its effect. HP are "hereby instructed to proceed with the work". The parties undertake to use best endeavours to agree the schedule to define that work and the framework agreement by November 1998. This will then supersede the agreement which, in the meantime, can be terminated upon reasonable notice. So the interim agreement was intended to cover only a short period of time. These time considerations make it impossible to see how the parties could have contemplated that the agreement would be ineffective for some indefinite period while the Migration Plan was produced and funding approval was obtained. The earlier interim agreement took effect immediately to enable work to proceed and this interim agreement was obviously made for the same purpose and had the same effect. As Mr Dhillon submitted, there was no reason for Mr Jarvis to sign the agreement unless it was intended to be of immediate contractual effect. These were commercial parties in a commercial relationship. STS, acting through its contract manager, must be taken to have meant what it said in the letter. So, in short, I do not think that the case advanced by STS can withstand the clear meaning and effect of the letter. If this necessitates the conclusion, as I think it does, that there is no real prospect of the judge accepting STS's evidence about this at trial, that is the conclusion I reach.
10. In a clear case such as this, it is permissible for the court to reach such a conclusion summarily. Paragraph 24.2.3 of the White Book, under the heading "No real prospect of succeeding/successfully defending", says:

"The hearing of an application for summary judgment is not a summary trial. The court at the summary judgment application will consider the merits of the respondent's case only to the extent necessary to determine whether it has sufficient merit to proceed to trial. The proper disposal of an issue under Pt 24 does not involve the court conducting a mini-trial (per Lord Woolf M.R. in Swain v Hillman [2001] 1 All ER 91). However, that does not mean that the court has to accept without thinking everything said by a party in his statements of case. In some cases it may be clear that there is no substance in factual assertions made by a party. If so, any issues which are dependent upon those assertions can be eliminated at an early stage so saving the parties the costs and delay of trying an issue, the outcome of which is already known."

A number of cases are referred to, including the Three Rivers case (No.3), [2001] UKHL 16 and [2001] 2 All ER 513, per Lord Hope of Craighead, at paragraph 95, where he said:

"The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example .... In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based."

In my judgment, this is such a case. Mr Hollington, in his submissions to us this morning, resisted that view. He said that one could not dismiss the evidence of Mr Jarvis without beginning a mini trial and that in fact no real saving would be achieved in this case by granting summary judgment because the same witnesses would have to be called upon for the assessment in any event. I do not agree. I do not think that it is necessary to reach the conclusion which I have by the process of a mini trial. There is obviously a considerable saving by granting summary judgment. Otherwise it would be necessary for the court to go back over the history of the events leading up to 9th October which, judging by the length of the witness statements, would not be something which could be done swiftly.

11. I turn to the issue of uncertainty. STS contend that both the work to be done by HP and the price to be paid for it were sufficiently unclear to make the agreement unenforceable. Mr Hollington in his submissions concentrated on the work to be done. Paragraph 1 of the letter referred to "the services to be provided together with the associated payment provisions shall be those specified in the HP proposal entitled Migration Plan dated 25/9/1998". Mr Hollington suggests that this was a reference to some document which had not yet come into existence because the Gant chart was not and did not call itself the Migration Plan and did not contain any payment provision. I do not agree. The parties were obviously referring to an existing document. The only candidate was the Gant Chart which did bear the date 25th September 1998 and did contain the words 'Migration Plan' in its title. In these circumstances, there really can be no doubt about which document the letter was referring to, albeit it did so slightly inaccurately.
12. Nevertheless, Mr Hollington submits that the Gant chart could not and did not identify which work HP were to do. The tasks did not identify what the parties defined as deliverables; that is to say, documents and data for which payment would be made. The point was made good, he submitted, by the fact that HP had great difficulty marrying up the work for which they claimed payment with the tasks described in the Gant chart. When pressed before the judge, they said that two of the deliverables were the result of oral requests made by STS after October 9th. Mr Hollington argues that it was not possible at this stage to say whether the Gant Chart defined any of the work with sufficient precision. That could only be determined at trial. I do not accept these submissions. The Gant Chart obviously did specify work to be done by HP and had been the subject of discussion between the parties. Some at least of the work for which HP claimed payment can be matched to the tasks shown in the Gant Chart. I do not think that in these circumstances it can be argued that the work to be done over the short start up period contemplated by the interim agreement was sufficiently uncertain to justify the conclusion that these parties had not reached a binding contract despite their stated intention to the contrary in the letter.
13. The summary judgment is confined to HP's claim under the interim agreement. It is for them to establish the extent of that claim at the assessment. If they cannot show that the work that they did was done under the interim agreement, STS's liability to pay for it has not been determined by the summary judgment. However, it does not follow from this that the agreement was uncertain.
14. I can deal with the suggested uncertainty about price shortly. The Gant chart did not contain any payment provisions but the draft framework agreement did. Moreover, the letter said that on termination of the interim agreement HP should be entitled to payment for services they had provided to date and for a fair and reasonable valuation if there were ambiguities. Such a term would be implied in any event. There was, therefore, no uncertainty about the payment provisions of the interim agreement.
15. For these reasons I think that the judge was right to grant summary judgment in this case and we should refuse permission to appeal. This makes it unnecessary to consider HP's contingent cross appeal.
16. LORD JUSTICE MUMMERY: I agree.
17. THE VICE CHANCELLOR: I also agree.

Order: Application for permission to appeal dismissed with costs; application for fresh evidence dismissed with costs; detailed assessment to take place at the end of the hearing on quantum.