Effective relief notices: Agilisys Limited v CGI IT UK limited

25 January 2019

Background

In August 2015 CGI IT UK Limited (“CGI”) entered into a contract with the City of Edinburgh Council for the provision of ICT and Transformation Services.

CGI subsequently engaged Agilisys Limited (“Agilisys”) under a sub-contract, making it responsible for replacing three finance systems with a new single system and delivering a new online platform giving citizens access to the council’s services and the ability to transact online with the council.

In the event of delay to the project, the sub-contract stipulated that Agilisys should issue a relief notice informing CGI of the cause or reasonable cause of Agilisys’ non-performance that had been caused by CGI. Following the receipt of a relief notice, the sub-contract necessitated that CGI respond stating whether or not they agreed with the Agilisys assessment.

After delays to the project accompanied by several relief notices, in March 2017 Agilisys rescinded the sub-contract due to what it considered to be a repudiatory breach by CGI. Agilisys sought payment of sums due under the sub-contract and advanced a damages claim for loss of opportunity.

CGI disputed the ability of Agilisys to rescind the sub-contract and terminated the sub-contract on the grounds that Agilisys had committed an irremediable material default. CGI also sought damages for certain losses under the sub-contract.

Preliminary Hearing

The case was heard on 4 December 2018 by Lord Bannatyne in the Court of Session (Outer House).

Agilisys argued that CGI failed to adequately respond to a number of relief notices between January and October 2016, and that they were therefore entitled to rescind the sub-contract.

CGI contested that delays to the projects were attributable to Agilisys’ failure to competently manage the projects as they had failed to produce clear plans and strategies for implementation, document project meetings and management, or establish a clear governance structure.

Judgment

Lord Bannatyne described CGI’s submission as ‘wholly unconvincing’ as they failed to provide any contemporaneous evidence to support their claims and their witnesses were criticised as ‘one-sided’ and ‘unreliable’. In contrast, Agilisys provided evidence of their issued relief notices, and Lord Bannatyne considered their witnesses to be credible and reliable.

It was concluded that CGI had breached its obligations to Agilisys under the sub-contract, and that there had been no breach or contribution to the breach by Agilisys.

Implications

In this case, without contemporaneous evidence to the contrary, the relief notices were upheld.

While the case largely turns on its facts, it provides a number of important reminders for contracting authorities and organisations entering into complex contracts:

  • Where a contract provides a mechanism for the issuing of relief notices (which may also be called “default notices” and “compensation event notifications”), this must be complied with. Taking a collaborative or partnership approach to the contractual relationship does not negate the need to comply with contractual notices.
  • Respond to notices within the timescales, and provide the information required in the contractual mechanism.
  • Keep contemporaneous records which can be produced as evidence of compliance with the notification regime.

We have extensive experience advising on commercial and ICT contracts and would be happy to advise further on any aspect of relief notices and similar notification regimes in complex contracts. Please contact a member of the technology law team for information.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.

« Back to news index

Register for updates

Click here to register »

Share this news

© Copyright 2019 Sharpe Pritchard