Jomast Accommodation Ltd v G4S Care and Justice Services (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Ms Lesley Anderson |
| Judgment Date | 09 February 2017 |
| Neutral Citation | [2017] EWHC 200 (Ch) |
| Docket Number | Case No: HC 2015 001313 AND HC 2016 001426 |
| Court | Chancery Division |
| Date | 09 February 2017 |
[2017] EWHC 200 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Lesley Anderson QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: HC 2015 001313 AND HC 2016 001426
Michael Todd QC and Philip Gillyon (instructed by Squire Patton Boggs (UK) LLP) for the Claimant)
Duncan McCall QC and Matthew Lavy (instructed by Clyde & Co for the Defendant)
Hearing dates: 15 th, 16 th, 17 th, 18 th, 21 st and 24 th November 2016
Judgment Approved
Ms Lesley Anderson QC:
Preliminary
This is my judgment following the trial of: (a) preliminary issues in a Part 7 Claim brought on 27 March 2015 ("the Part 7 Claim") and (b) a Part 8 Claim brought by Claim Form on 12 May 2016 ("the Part 8 Claim") by Jomast Accommodation Limited ("Jomast"), the Claimant. Both claims concern a sub-contract agreement made on 3 July 2012 between Jomast and G4S Care and Justice Services (UK) Limited ("G4S"), the Defendant, for the provision of accommodation services to asylum seekers ("the Agreement").
By the Part 7 Claim, Jomast seeks: firstly, damages for fraudulent misrepresentations which it claims were made to it by G4S in order to induce it to enter into the Agreement and, secondly, declarations as to the proper construction of a warranty (paragraph 4.8 of Schedule 5) in the Agreement and an account and damages in respect of sums which it says are due on that construction. By the Part 8 Claim, Jomast seeks a series of further declarations as to the proper construction of the Agreement, in particular as to the extent to which it is obliged to accept asylum seekers (or "Service Users" as I shall more generally refer to them).
By his order dated 14 June 2016, Nugee J. ordered the trial of the following issues in the Part 7 Claim:
a) Whether G4S is liable to Jomast in fraudulent misrepresentation as alleged in paragraphs 38 to 42 of the Particulars of Claim; and
b) Whether on the correct construction of paragraph 4.8 of Schedule 5 and having regard to the relevant surrounding circumstances or "factual matrix":
i) in circumstances where G4S itself provides services and where the actual cost to G4S of providing the services exceeds £8.10 per service user per night, G4S is liable to pay Jomast an increased sum measured by reference to the difference between £8.10 per service user per night and the cost incurred by G4S in carrying out "Compliant Services" (as that term is defined in paragraph 30.3 of the Particulars of Claim) the same or similar to those supplied by Jomast (with or without a profit margin) as alleged at paragraph 37.2.2 of the Particulars of Claim;
ii) in circumstances where G4S provides services itself which are not Compliant Services the same or similar to those supplied by Jomast, G4S is liable to pay Jomast an increased Service sum measured by reference to the difference between £8.10 per service user per night and the cost that would have been incurred by G4S in providing the services had such services been Compliant Services, as alleged at paragraph 37.3 of the Particulars of Claim;
iii) in circumstances where a sub-contractor of G4S carries out services which are not "Compliant Services" (as that term is defined in paragraph 30.3 of the Particulars of Claim) the same or similar to those supplied by Jomast, G4S is liable to pay Jomast an increased Service Charge measured by reference to the difference between £8.10 per service user per night and the price that would have been charged by G4S's sub-contractor had its services been Compliant Services" as alleged at paragraph 37.3 of the Particulars of Claim;
iv) If the answer to (ii) and/or (iii) is in the affirmative, how such cost or price of providing Compliant Services is to be ascertained?
I am not otherwise presently concerned with issues of breach or quantum on the Part 7 Claim.
In the Part 8 Claim, Jomast seeks 11 declarations as to the meaning and effect of a statement of work ("the SOW") which was agreed between it and G4S pursuant to clause 3 of the Agreement and which forms part of the Agreement. G4S disputes Jomast's entitlement to the declarations sought and by its Acknowledgment of Service in the Part 8 Claim dated 27 May 2016, seeks two alternative declarations as to the proper meaning and effect of the Agreement. By his order dated 14 June 2016, Nugee J. ordered, by consent of the parties, that the Part 8 Claim would be heard at the end of the trial of the preliminary issues in the Part 7 Claim. In the end, it was more convenient for the Part 8 Claim to be heard following the conclusion of the evidence on those issues, but before closing submissions in the Part 7 Claim.
Save that it arises out of the same contractual relationship and, for the reasons already stated, it has been ordered that aspects of them are tried together, the Part 8 Claim is unrelated to the Part 7 Claim but it is nevertheless convenient to deal with both in this judgment rather than giving separate ones.
Jomast was represented before me by Michael Todd QC and Philip Gillyon and G4S was represented by Duncan McCall QC and Matthew Lavy. I am grateful to them and to their respective instructing solicitors for the helpful manner in which they conducted their cases.
Factual Background
Much of the factual background was not contentious. To the extent that it was, in setting it out below, these are my findings as to those facts.
Until its dissolution in 2013, the UK Border Agency ("UKBA") was part of the Home Office and responsible for providing accommodation, transport and related services to asylum seekers. The responsibility now lies with UK Visa and Immigration ("UKVI"). Between 2005 and 2012, UKBA discharged that responsibility by contracting with numerous contractors under a model known as "Target". Under Target, there were in excess of 20 contracts across 12 regions. Between 2009 and 2012, Jomast (then known as Jomast Property & Finance Co. Limited) supplied, to UKBA, accommodation services for asylum seekers in the North East of England. Jomast, which is a family run business, also owns and rents residential and commercial property and is part of a group of companies known as the Jomast Group. Between January 2009 and 2012, the number of service users per night accommodated by Jomast rose from c. 800 to c.2000.
In April 2011, UKBA commenced, and advertised in OJEU, a competitive tender process to replace Target with a new model of contracting known as Commercial and Operating Managers Procuring Asylum Support Services ("COMPASS"). COMPASS was the largest Home Office contract under procurement in 2011 and was valued at £1.7bn. At the time there were 24,000 destitute applicants for asylum. UKBA's stated strategic aims included: the delivery of better value for money; to build in sufficient flexibility to vary services in line with changing demands in terms of volume, Service User type and location and greater transparency. A primary objective of COMPASS was to reduce the UKBA's costs of providing asylum seeker accommodation services by £140 million over the seven year (5 plus 2) term of the COMPASS contracts.
COMPASS aimed to streamline the system by using a regional aggregator model across only 6 regions: London and South of England; North East, Yorkshire & the Humber; North West; Midlands and the East of England; Wales; and Scotland and Northern Ireland and using fewer and larger providers. A single provider was to provide a turnkey service in each region, the performance of which would be monitored by UKBA using key performance indicators ("KPIs"). The turnkey solution included the provision of initial accommodation (short term hostel accommodation for service users on their arrival into the UK); dispersal accommodation (longer term self-catering accommodation in houses across the region); and transport and management. This dispute is concerned only with dispersal accommodation which is the most significant from a financial and logistics perspective. Providers were obliged to provide services to single asylum seekers ("Single Service Users") and family groups ("Family Member Service Users") which were paid for on a per Service User Per Night ("PSUPN") basis.
The tender process involved various stages. In May 2011, UKBA issued Requests for Information ("RFI") to potential service providers who had registered an interest in being awarded a COMPASS contract. Potential bidders were invited to submit information regarding their financial stability, technical capacity and business capacity for evaluation by the UKBA. Both Jomast and G4S submitted tenders to be service providers to UKBA. Unlike Jomast, G4S had not previously provided social housing services but it had provided transportation and was keen to enhance its role in the supply chain.
On 17 June 2011, the UKBA confirmed to G4S that its tender was to be taken forward to the Request for Proposal ("RFP") stage of the procurement process. On the same day, Jomast was told that its bid had been unsuccessful because it did not meet the financial criteria on turnover. Although Jomast sought to challenge that decision by judicial review proceedings, the challenge was unsuccessful. However, shortly afterwards, it entered into a teaming agreement with Serco Plc ("Serco") and, for some time, it assisted Serco, as a principal partner, with its bid.
The tender process culminated with an e-auction for qualifying bidders which took place over several days in late October 2011. The e-auction was a computer-based reverse auction whereby, in a sequence of time-limited windows, bidders were invited to lower the price at which they were prepared to provide the services. Although UKBA did not rank bids on price alone, price was an...
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