HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
H.H. Judge Richard Seymour Q. C. :
Introduction
- Astea (UK) Ltd. ("Astea") carries on business as a provider of software, in particular a software package called "ServiceAlliance" ("the Software"). It is a subsidiary of a Delaware corporation, ASTEA International Inc., but is itself a small company, with only some twenty employees.
- As I understand it, the Software is designed for use independently of other systems to enable a user to undertake automated field service operations, that is to say, the provision to customers of the facility of having equipment belonging to the customer serviced at the customer's own location, as well as at the user of the Software's workshop. When used independently the Software is described as "out of the box" software, meaning that all that is required to use it is its installation in appropriate computer hardware. However, a customer has a number of options as to the precise form in which the facilities offered by the Software in its "out of the box" manifestation are enjoyed. These options are selected by use of something called the "AllianceStudio toolkit". The process of selecting and giving effect to options available as standard is called "configuration".
- The Software can also be linked with other software systems so as to provide, in conjunction with them, facilities beyond those which are the core elements of the Software itself. To enable this to happen links to the other relevant software have to be created by means of what are called "interfaces". The process of creating such interfaces is sometimes called "integration".
- The managing director of Astea is Mr. Pat Noble. At paragraph 7 of his first witness statement, dated 24 January 2003, in a passage which I accept as accurate, Mr. Noble described the three core elements of the Software in this way:-
"(a) Contract capability
ServiceAlliance will record information on the computer screen that tells the customer that a contract exists with a third party for maintenance of a certain product. If you take a simple example of a washing machine, perhaps the owner of this washing machine pays a [sic] £100 a year for one of our customers to maintain and fix the machine whenever necessary. Astea's product allows a customer to take a call from the owner of the washing machine to say that it is broken, the system checks as to whether a contract exists, and also whether it is still in date, and if all is in order the call is logged, and the customers determine whether billing is appropriate or not. This really represents the front end of the system, which allows the customer to get the money in the door.
(b) Call handling and despatch
This element of the product moves the system onto the next stage, and allows a customer to perhaps write onto the system that (in the washing machine example) there is water spilling onto to [sic] the floor. This detail is logged into the system, and so is the fact that an engineer is required to visit the client. The system itself will search for a field engineer at the correct skill level who can be available at the requested time, and that engineer can then be booked through the system. There are lots of clever options in this aspect of the product, and it is possible to send information that is logged to the engineer on his hand held terminal, and the opposite is true such that the engineer can record details of what he did on any particular visit, and return this information to despatch, or he can log it against the costs. This information (such as the types of visits that the engineers have been called out to do, the remedial work that is required, and so on) can all then be analysed so that the customer is able to become more client focused, and also on a very practical level can monitor stock. This would become relevant where the information coming back from the engineer is that he has had to for example replace a rubber seal that was broken. The system then knows that this was the part that was required for the job, which brings me onto the third core element.
(c) Spare parts
Astea's product will allow a customer to track spares, and also has a programme which can automatically reorder certain parts, to maintain a minimum level at all times. This is really the logistics module, which will not only record details of where the spare parts are, but also which engineer may have reasonable access to them and handle the job."
- Time Group Ltd. ("Time") carries on business as manufacturer and retailer of personal computers. The vast majority of its sales is, and has been, historically, to individual consumers. However, a relatively small proportion of sales – apparently some 2% or so - is, and has been, made to businesses and to educational establishments. Attached to every sale is a warranty in relation to the quality of the goods sold which is valid for a period. In the case of sales to individual consumers, if a claim is made upon the warranty the relevant goods have to be returned to Time for appropriate remedial action. However, in the case of business and educational customers a Time engineer will attend the customer's site to undertake repairs.
- As I understand it, a substantial part, at least, of the retail sales operation is conducted on the telephone rather than in shops, although Time also has a significant network of retail outlets. The telephone sales operation is conducted, as is now common, through a Call Centre, which in the terminology of Time is called the "Customer Care Centre", but to which I shall refer in this judgment simply as "the Call Centre". The Call Centre is, and was at all times relevant to this action, also charged with responsibility for dealing, in the first instance, with claims by individual consumers under warranties in relation to equipment sold to them. In the event of a claim being accepted a repair order, called by Time a "Return Material Authorisation", or "RMA", is issued and the relevant goods are sent to Time's service centre ("the Service Centre") for repair. The Service Centre is also the base from which the field service network is operated which deals with claims by business or educational customers under warranties. It seems that a means, perhaps the principal means, by which business and educational customers of Time notify claims for repair under warranty of goods supplied is also by telephone to the Call Centre.
- In order to operate the Call Centre effectively Time needed appropriate computer-based support. Until about the middle of 1999 that computer-based support was provided by a management information system called "Swan" installed on appropriate computer hardware. From about the beginning of 1999 Time was considering replacing Swan and was interested in utilising three different software packages to do so. The principal package was an office accounting package which provided a means by which customer orders could be taken and processed, stock could be managed, product manufacture could be scheduled and internal accountancy and financial functions fulfilled. In this judgment I shall call that package "the Accounting Package". A further package which it was envisaged would be required was one to facilitate the performance of the sales functions of the Call Centre by handling calls from existing customers, providing technical assistance and passing requests for repair of equipment to the Service Centre. In this judgment I shall call that package "the Call Centre Package". The third of the packages which was contemplated was one to manage all aspects of service and repair, whether undertaken on goods returned to the Service Centre or by attendance of a Time engineer at the premises of a business or educational customer. In this judgment I shall call that package "the Service Package". It was obviously envisaged that the Accounting Package, the Call Centre Package and the Service Package would be integrated the one with the others by appropriate interfaces.
- As matters turned out Time decided that a software product called "Tetra CS/3", to which I shall refer in this judgment as "CS/3", created by a company called Tetra International Ltd., but which traded under the name Sage Tetra, should be utilised as the Accounting Package. CS/3, as I understand it, is an "out of the box" software package, but it possesses the ability to be integrated with other software packages via appropriate interfaces. Time entered into an agreement in writing dated 3 March 2000 with Apex Computers Ltd., which traded under the style or title "Apex Systems", for the supply of CS/3. Shortly after the agreement was made Apex Computers Ltd. changed its name to Lynx Commercial Systems Ltd., and its trading style to "Lynx Commercial Systems". It is convenient to refer to that company for the purposes of this judgment by the name "Lynx".
- Time decided to produce a bespoke software package to serve as the Call Centre Package. This package was in the event produced by Time itself using the services of contracted software developers, or programmers. The Call Centre Package came to be called, and will be referred to in this judgment as, "Pulse".
- By about the beginning of April 2000 there were two main products in the running for selection as the Service Package. One of these, and that which was eventually chosen, was the Software. It will be necessary to a limited extent to consider what led up to it, but by an agreement ("the Contract") in writing signed on behalf of Time on 14 July 2000 and on behalf of Astea on 23 July 2000 Astea granted to Time 20 full licences and 280 occasional licences to use the Software. Astea also agreed to provide services, to which in this judgment I shall refer as "the Services", set out in Schedule C to the Contract. There was an issue in this action as to whether what I have called the Contract was, as a matter of law, a single agreement, as was contended on behalf of Time, or three agreements, as was contended on behalf of Astea. Curiously, given the analysis contended for on behalf of Astea, another theoretical possibility could be that it was two agreements. I shall return to this issue of how many agreements were contained, as a matter of law, in the Contract.
- In circumstances which I set out later in this judgment Time did not make to Astea payments for which the Contract provided. In this action Astea claimed the sums which it contended were due under the Contract. Time resisted that claim principally on the ground that, by its failure to complete the Services by about 6 March 2001, Astea had repudiated the Contract, Time had accepted that repudiation, and thus, so it was said, Astea was not entitled to payment of the sums claimed. However, it was also contended on behalf of Time that, if not a breach going to the root of the Contract, and thus a repudiation, the failure of Astea to complete the Services by about 6 March 2001 was still a breach of the Contract in respect of which Time was entitled to damages. Time sought to set off the amount of the damages to which it contended it was entitled against any liability it was otherwise under to pay to Astea the sums claimed under the Contract. It was denied on behalf of Astea that it was in breach of the Contract by reason of the fact, as to which there was no dispute, that it had not completed the Services by about 6 March 2001. It was contended on behalf of Astea that it was under no contractual obligation to complete the Services by about 6 March 2001 or any other specific date. Astea's case was that it owed an obligation to use reasonable skill and care, subject to a proviso to which I shall return, to complete the execution of the Services by 1 August 2000, but that compliance with that obligation was in any event waived. Thereafter, its only obligation was to complete the execution of the Services within a time which was reasonable in all the circumstances. It was contended that Astea was not in breach of that obligation because the causes of the delays in the completion of the execution of the Services up to about 6 March 2001 were not its fault. There were a number of other issues in the action, to the exact nature of which I shall return, but one of the answers advanced on behalf of Astea to the contention that it was in breach of the Contract by reason of non-completion of the execution of the Services by about 6 March 2001 was that, because, on proper construction, the Contract constituted three agreements, and in particular there were separate agreements in relation to the grant of licences to use the Software, on the one hand, and to undertake the provision of the Services, on the other, it was no answer to the claim in the action for payment of the balance of the agreed licence fees that there had been, if there had been, a breach of the agreement for the undertaking of the Services. It is for that reason that an issue arose as to whether the Contract as a matter of law constituted a single agreement, or three, or conceivably two, agreements.
The Contract
- The Contract was in a form substantially produced by Astea. It was enclosed in a cover which bore the legend, "ServiceAlliance License and Support Agreement Between". No parties were identified on the cover, but the name of Astea appeared at the foot of it. Inside the cover was a front sheet which bore the same wording as the cover, but included the identification of the parties as "Astea International" and Time. The front sheet also gave an "Agreement No.", SA170400001.
- The first substantive page of the Contract was numbered "Page 2 of 5" and was entitled "ServiceAlliance License and Support Agreement", with the number of the agreement underneath. The text which followed was:-
"This ServiceAlliance License and Support Agreement is between Astea UK Ltd with its registered office at Trent House, University Way, Cranfield Technology Park, Cranfield, Bedfordshire MK43 0AN, UK ("Astea") and Time Group Limited, with its registered office at Time Technology Park, Burnley, Lancs, BB12 7TG ("you" or "the client"). Intending to be legally bound, you and Astea agree to the terms and conditions stated in this Agreement."
- Beneath the introductory words set out in the preceding paragraph the first page of the Contract went on to set out in tabular form details of the licences granted in sections numbered I and II. Section III was not completed. Section IV provided that:-
"You and Astea agree that Astea will provide, and you will purchase and pay for, support and maintenance services for the foregoing software at Time Technology Park, Burnley, Lancs (the "Central Site") for the period ending on 16th May 2001 under the terms and conditions stated in this Agreement."
There followed a table in which it was set out that the licence fees payable amounted to £170,400.
- Schedule C, which I have already mentioned was set out on a page numbered 3 of 5 in the Contract. Beneath the words "Schedule C", which were a title at the top of the page, appeared the words "Order for Services". There followed a table which included the name and address of Time, the identity of a contact person, in fact Mr. Derek Brotherston, and the number of the agreement, SA170400001. Beneath the table appeared the words:-
"Reference is hereby made to that certain ServiceAlliance License and Support Agreement No SA170400001 dated ……… (the "Software Agreement") by and between Astea UK Ltd. ("Astea") and Time Group Limited ("you"). This Schedule shall become valid and binding upon the parties only after it is signed by Astea and you. In the event that any of the terms and conditions of this Schedule conflict with the Software Agreement, this Schedule shall control for all purposes. In accordance with the Software Agreement, Astea shall provide the Services listed below upon the following additional terms and conditions."
In a table entitled "Description of Services" below the words just quoted were set out:-
"ServiceAlliance Implementation Services Up to 72 days
Modifications to AllianceLink for Tetra CS/3"
The stated "Total Value of Services" in the table was £60,000.
- Also on page 3 of 5 were set out "Terms and Conditions for Services". They were:-
"Invoicing
Services will be invoiced bi-monthly following performance of the services together with travel and living expenses, if applicable and are due and payable within 30 days of invoice date.
Working hours
The standard unit of charge is one day, which provides 7.5 hours of work. Standard working hours are from 9.00 am to 17.30 pm local time, with a one hour break for lunch. Hours worked in excess of 7.5 per day will normally be charged at pro-rata rates, although if the total hours in a week does not exceed 37.5, then the additional charges will not be made.
Travel time
No charge will be made for travel time to or from the place of work where the total time travelled does not exceed 2 hours. Any time in excess of 2 hours will be billed at pro-rata hourly rates. Where long-haul, overnight flights of greater than 5 hours are made, we expect that our staff should have the opportunity for 4 hours rest before commencing work. This time will be billed to the customer.
Expenses
All expenses for travel, accommodation and subsistence will be the responsibility of the customer."
- Page 3 of 5 of the Contract was signed on behalf of Time by Mr. Richard Hope and dated 14 July 2000 and was signed on behalf of Astea by Mr. Noble and dated 23 July 2000.
- Pages numbered 4 of 5, 5 of 5 and 6 of 5 of the Contract contained what were described as "ServiceAlliance License and Support Agreement Terms and Conditions" ("Astea's Conditions"). At the foot of each of the relevant pages appeared the indication "(Rev 1.2) Sept 1999 - UK". Astea's Conditions were fairly obviously the written standard terms of business of Astea at the date of the Contract.
- Clause 1.1 of Astea's Conditions incidentally included a number of definitions in the course of granting a licence. The word "System" was defined as meaning "the Programs and Materials". The word "Programs" was defined as meaning "Astea's computer ServiceAlliance software program(s) identified on the first page of this Agreement or under any Schedule A and will consist of a set of information processing programs in machine-readable object code form only for use by you under this Agreement". The word "Materials" was defined as meaning "the documentation related to the Software, as described above or on a Schedule A and any related support material specified". No "Materials" seem to have been included within the Contract. The expression "Packaged Software" was defined as meaning "the Programs and the Third Party Software", and the latter was defined as "the software products and related documentation listed as such in, or on a Schedule A to, this Agreement." Again, it does not appear that any "Third Party Software" was included within the Contract.
- Included within clause 2 of Astea's Conditions, which was actually concerned with provision of "Software Support", was a definition of the latter expression as meaning "software support as described in this Agreement". In the same clause the expression "Support Period" was defined as meaning "the period from January 1 through 31 December or the remaining portion of a calendar year following the operation of the warranty period for the Packaged Software".
- By clause 6.3 of Astea's Conditions it was provided that:-
"Charges for out-of-pocket expenses will be invoiced as incurred by Astea. All invoices are due and payable within thirty (30) days after invoice date unless otherwise noted in this Agreement or on the invoices. Late payment charges will be imposed at the rate of 1.5% per month. Astea will also have the option to extend, on a day-for-day basis, the related delivery schedule for each day an invoice is past due."
- Clause 8 of Astea's Conditions was entitled "Termination". By clause 8.2 provision was made that:-
"If either party to this Agreement defaults in the performance of any of its obligations under this Agreement or any of the Schedules or Addenda attached to this Agreement and such default is not corrected within thirty (30) days after receipt of written notification of such default from the non-defaulting party, then the non-defaulting party may terminate this Agreement (or, if applicable, individual Schedules or Addenda to this Agreement) immediately upon delivery of written notice of termination to the defaulting party. If you are the non-defaulting party, you will be reimbursed for the unused portion of the Software Support Fee as of the termination date."
- Clause 10 of Astea's Conditions was entitled "Warranty". It was in these terms:-
"Astea warrants that the Packaged Software will operate in substantial conformity with the Materials (a) for a period that will end ninety (90) calendar days following the Delivery of the Packaged Software (the Applicable Warranty Period), and (b) during the current Support Period. This warranty does not apply to any third party software or Packaged Software that has been altered or modified in any way by you. You acknowledge that you have had sufficient opportunity to review the Materials prior to the execution of this Agreement and understand the capabilities and limitations of the System. You agree to provide all reasonable assistance requested by Astea in identifying, researching and documenting the circumstances of any non-conformance of the System. During the warranty period set forth in this Section 10.0 Astea agrees to provide you with Packaged Software support services at no additional charge."
- Clause 11 of Astea's Conditions was entitled "Limitations". By clause 11.1 it was provided that:-
"Other than the warranties expressly stated in this agreement, Astea neither makes nor grants any warranties, representations or conditions, express or implied. Astea expressly excludes all implied warranties, representations and conditions, including specifically any implied warranty arising by statute or otherwise in law or from a course of dealing or usage of trade. Astea hereby excludes any and all implied warranties, representations or conditions of non-infringement, merchantability, merchantable quality, or fitness for any purpose, particular, specific or otherwise."
- Following the page of the Contract numbered 6 of 5 was what was called an "Addendum". That Addendum constituted three pages and was signed on behalf of both parties. It began:-
"The following Addendum shall modify the terms and conditions of that certain Master Software Agreement dated as of 14 July 2000 by and between Astea UK Ltd., with its registered office at Trent House, University Way, Cranfield Technology Park, Cranfield, Bedfordshire MK43 0AN, UK and Time Group Limited, with its registered office at Time Technology Park, Burnley, Lancs. BB12 7TG, United Kingdom, and each of the schedules and agreements attached thereto and incorporated by reference therein (collectively, the "Master Software Agreement"). Capitalized [sic] terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Master Software Agreement. Any term or condition of the Master Software Agreement in explicit conflict with the terms or conditions of this Addendum shall be deemed to be specifically and expressly superseded by the provisions hereof."
- Following the words quoted in the preceding paragraph was a heading "Master Software Agreement Terms and Conditions". There followed a number of alterations to terms of Astea's Conditions. These included a new clause 11.2:-
"Except as provided in section 12 hereof, your sole and exclusive remedy for any damage or loss in any way connected with the System, this Agreement or any of the schedules, Addenda, amendments or attachments hereto, or for any damage or loss in any way connected with the enhancements, Software Support or any other material, information or services furnished by Astea hereunder, whether or not caused by Astea's breach of warranty, negligence or any breach of any other duty, shall be, at Astea's option, replacement of the System or enhancements, re-performance of the Software Support or services, or return or credit of the appropriate portion of any amounts received by Astea from you with respect to the System or Software Support. In no event shall Astea's liability exceed the amounts received by Astea for the System or Software Support under this Agreement during the twelve (12) month period immediately preceding your claim for recovery hereunder, even if Astea is advised of the possibility of such damages. You agree that Astea shall not be liable for any special, indirect, punitive or consequential damages hereunder, including but not limited to, loss of use or the loss of data or information of any kind, however caused, or failure of the System to work or perform in any way, or any liability to end-users or to third parties.
No indemnification of any kind is provided by Astea hereby to you or any other person, except as expressly provided in Section 12.0 below."
- The Addendum also included a new clause of Astea's Conditions, clause 15, of which the material parts for present purposes were:-
"Section 15.0 In addition, the parties hereto agree to the following points of clarification and understanding regarding the Agreement….
15.4 The payment schedule shall be 1/3 on execution of the Agreement, 1/3 on delivery of the System, and 1/3 on 1st September 2000.
15.5 Provided Time Group has provided timely assistance and cooperation [sic] on its part, the scheduled date of implementation by Astea shall be 1 August 2000…."
- What I have called "the Services" were not defined in the Contract more specifically than in Schedule C. However, in general terms they comprised both the configuration of the Software to suit the particular requirements of Time (to which part of the Services I shall refer in this judgment as "the Configuration Services") and the integration of the Software with CS/3 and Pulse (to which part of the Services I shall refer in this judgment as "the Integration Services").
The sums claimed by Astea in this action
- I have already indicated that Time did not make payment of sums which Astea claimed were due under the Contract. In particular Time did not make payment of the second and third instalments of the agreed licence fees of £170,400. Those instalments together amount to £113,600. The sum payable as Value Added Tax at 17.5% on that amount is £19,880. In addition Astea rendered invoices to Time in respect of the Services which, inclusive of Value Added Tax at 17.5%, totalled £85,382.04. The breakdown of that figure was £63,483.31 claimed in respect of the time of Astea employees in providing the Services, £9,182.25 expenses and £12,716.48 Value Added Tax. Time did not pay any sum in respect of the provision of the Services. Thus in this action at the date upon which it was commenced the sum claimed on behalf of Astea was a total of £218,862.04, being £133,480 in respect of the unpaid balance of licence fees, together with Value Added Tax, and £85,382.04 in respect of the provision of the Services. A point which was taken in the Re-Amended Defence and Part 20 Claim of Time was that, under the Contract, the maximum sum which Astea could claim in respect of the time of its employees in providing the Services was £60,000 plus Value Added Tax. While not conceding that that point was sound, Mr. Cyril Kinsky, who appeared on behalf of Astea at the trial, limited the claim of Astea in respect of the time of its employees in providing the Services to the sum of £60,000 plus Value Added Tax. In the result, therefore, the sum claimed, exclusive of interest, by Astea in the action was £214,769.14, comprising, inclusive of Value Added Tax at 17.5%, £133,480 unpaid balance of licence fees, £70,500 (£60,000 plus £10,500 Value Added Tax) in respect of the time of employees in providing the Services and £10,789.14 (£9,182.25 plus £1,606.89 Value Added Tax) in respect of expenses. There was no dispute as to those figures as figures.
The defences raised on behalf of Time
- I have already indicated the principal line of defence advanced on behalf of Time, namely that by its failure to complete the Services by about 6 March 2001 Astea had repudiated the Contract and Time had accepted that repudiation. It was pleaded on behalf of Time that the Contract was a single agreement, such that the repudiation alleged, and acceptance thereof, put an end to all of the unperformed obligations of Time under it – in particular the obligation to pay the unpaid balance of the licence fees. As to the alleged repudiation and acceptance, the way in which Time's case was put in the Re-Amended Defence and Part 20 Claim was as follows, omitting underlining and words deleted by amendment:-
"7. Further, it was a term of the Master Software Agreement that the Claimant would provided "ServiceAlliance Implementation Services" in respect of the System provided under the Software Agreement part of the Master Software Agreement. The said ServiceAlliance Implementation Services were agreed between the parties and are contained in and/or evidenced by the following documents copies of which are attached to this Defence and Amended Part 20 claim:
(a) The document entitled "Time Computers – ServiceAlliance Business Requirement Call Centre System Integration" ("the BRD") dated 11 July 2000, produced by Mr. Ian Dundas, European Product Manager of the Claimant and agreed by the Defendant. The Defendant will rely on the BRD for its full terms meaning and effect. The BRD provided, inter alia, that "This requirement covers the integration requirements between [the Defendant's] call centre system [Pulse], ServiceAlliance and Sage Tetra's CS/3 Product." Together with the further BRD's [sic] produced by Ian Dundas on 11 July 2000 relating to the integration of ServiceAlliance with Tetra CS/3 and referred to in paragraphs 6(a)-(d) of the Defendant's further information.
(b) The document entitled "Service Centre ServiceAlliance Requirements Time Group Limited" produced by the Defendant and agreed by the Claimant setting out the agreed minimum requirements of the Defendant for phase 1 of the Implemented System and the further requirements to be completed in subsequent phases.
(c) The document entitled "Issues for Time Group Limited/Service Alliance Project" dated 7 July 2000, produced by the Claimant and agreed with the Defendant setting out those tasks to be completed in phase 1 of the Implementation Services and those further tasks to be completed in subsequent phases.
8. Further or alternatively, it was an implied term of the Master Software Agreement:
(a) by Section 14 (2), (2A) and (2B) of the Sale of Goods Act 1979, that the Implemented System, including both the System and the disk containing the software necessary for the implementation of the System would be of satisfactory quality and reasonably fit for all purposes for which goods of the kind in question are commonly supplied;
(b) by Section 14 (3) of the Sale of Goods Act 1979 and/or at common law, that the Implemented System, including both the System and the disk containing the software necessary for the implementation of the System would be reasonably fit for its purpose, such purpose being the fulfilment of the requirements set out in the Specification;
(c) if, contrary to the Defendant's primary case, there was no contractual time for completion of the Implementation Services, then the Implementation Services were to be completed within a reasonable time. A reasonable time, having regard to all the circumstances, was 13 November 2000 alternatively the end of December 2000 alternatively 6 March 2001.
Variation of the Agreement
9. In or about July 2000, the System was delivered to the Defendant in readiness for the Implementation Services to be carried out. Thereafter it was agreed that the date for delivery and installation of all 5 integration software programs under the Services Agreement would be delayed until the end of October 2000. The said agreement is evidenced by an e-mail dated 17 October 2000 from Derek Brotherston of the Defendant to Ian Mapp of the Claimant and the further documents referred to in paragraphs 17-21 of the Defendant's further information. Further or alternatively there was an agreement that implementation would be by 6 November 2000 as evidenced by the documents described in paragraphs 22-4 of the Defendant's further information.
9A. It was an implied term of the Master Software Agreement that the Implementation Services would be completed, by which is meant the delivery, installation and testing of the said integration software by the Claimant, within a reasonable time. A reasonable time, having regard to all the circumstances, was 13 November 2000 alternatively the end of December 2000 alternatively 6 March 2001.
9B. If, contrary to the Defendant's primary case, no variation was agreed to the effect that the said integration software would be delivered and installed by the end of October 2000 alternatively 6 November 2000, it was an implied term of the agreement that the Implementation Services would be completed within a reasonable time. A reasonable time, having regard to all the circumstances, was 13 November 2000 alternatively the end of December 2000 alternatively 6 March 2001.
Breach of the Master Software Agreement
10. Wrongfully and in breach of the Master Software Agreement, the Claimant failed to complete and install the said integration software by 30 October 2000 or 6 November 2000 and failed to complete the Implementation Services by 13 November 2000 or at all:
(a) By 17 November 2000, some 8 weeks after the due date for successful Phase 1 implementation of the System, the installation and testing of the necessary interfaces between the System and Tetra CS/3 and Pulse had not been completed.
(b) Further delays ensued, as a result of which the Defendant instructed the Claimant that although it should continue to carry out all possible Implementation Services including implementation of the System on the Defendant's test network, it would not be permitted to implement the System on the core hardware used for the Defendant's business over the busy pre- and post-Christmas period because of the considerable disruption that would then be caused to the Defendant's business.
(c) During early 2001, the Claimant continued to attempt to provide the Implemented System, but even by 6 March 2001 the Claimant had still failed to provide the same.
11. The delay in the completion of the Implementation Services beyond 13 November 2000 was caused or substantially contributed to by the Claimant's negligence and/or unreasonable conduct in that it was caused by the Claimant's failure prior to the end of October 2000 to allocate adequate resources to the completion of the said integration software and its failure after the end of October 2000 to ensure continuity in its staff responsible for implementing the System or to ensure that employees with sufficient experience or knowledge and understanding of the Defendant's requirements were used by it in attempting to do so.
12. By reason of the Claimant's aforesaid delays in implementing the System the Claimant was in repudiatory breach of the Master Software Agreement entitling the Defendant to terminate the same.
13. On or about 6 March 2001 at a meeting between Mr. Mohsan, the managing director of the Defendant, and Mr. Noble of the Claimant, Mr. Noble informed Mr. Mohsan that the Claimant would need several more months in order successfully to provide the Implemented System. Mr. Mohsan informed Mr. Noble that he had lost faith in the Claimant's ability to perform the Master Software Agreement, that market conditions had changed and that the Defendant did not wish the Claimant to carry out any further work. In the premises, the Master Software Agreement was terminated at the said meeting alternatively by the Defendant's conduct in preventing further work, denying the Claimant's claim and at the very latest by service of this Defence on 24 June 2002.
14. By reason of the foregoing, the System delivered to the Defendant in its unimplemented form is of no value to the Claimant and the sums paid by the Defendant to the Claimant were paid for a consideration which has wholly failed. Further, such additional sums as the Claimant now claims would, if paid, be paid for a consideration which has wholly failed."
- The way in which the central plank of the defence of Time was put in its statement of case immediately threw up a number of obvious difficulties. It was not contended that it had been expressly agreed that Astea would do anything by a date proximate to March 2001. It was not contended that any notice had been given making time of the essence of the Contract in relation to Astea doing something by a date proximate to March 2001. What was contended, as at least part of Time's case, was that Astea had agreed to complete performance of the Services by the end of October 2000 or by 6 November 2000, dates which were long past by 6 March 2001 when it was contended that the Contract was terminated by Mr. Mohsan. One might suppose that it was highly probable that strict compliance with an agreement to complete by the end of October 2000 or by 6 November 2000 had been waived by 6 March 2001 by failure to treat such failure as repudiatory earlier and permitting Astea to continue with the performance of the Services. Mr. Sa'ad Hossain, who appeared on behalf of Time, sought to circumvent that difficulty by placing heavy reliance upon the alternative case based upon an implied term that Astea would complete the Services within a reasonable time. He contended that the failure to complete the Services within a reasonable time could itself amount to a repudiation of the Contract and thus entitle Time to accept such repudiation as bringing the Contract to an end. However, that way of putting the case is very vulnerable to findings that the time taken to complete the Services by the date of the supposed termination of the Contract had not exceeded a time which was reasonable in all the circumstances or that any supposed repudiation had not in fact been accepted.
- Apart from the principal line of defence contained in the Re-Amended Defence and Part 20 Claim a number of other points were taken in that statement of case. Astea was put to proof of the sums claimed in respect of the execution of the Services. However, in the event Mr. Hossain accepted, at least implicitly, that the sums charged were correct, as he based part of his attack upon Astea's dedication of resources to performance of the Services upon the details contained in the invoices sued upon. It was contended that had Astea used reasonable skill and care in the performance of the Services and they had been completed when it was contended that they should have been, the cost of them would have been less, specifically £42,647.83. That figure is simply half of the total sum originally charged by Astea in relation to the execution of the Services. No attempt was made at trial to justify the contention that had Astea undertaken the execution of the Services with reasonable skill and care the cost to Time would have been £42,647.83, or any figure other than that in fact charged. In his closing submissions Mr. Hossain recognised this difficulty and restricted himself to contending that Astea's charges for the period after 13 November 2000, totalling £12,848.77 including Value Added Tax, should not be allowed. There was a plea that Time would seek to set off the sums claimed in its Part 20 claim against the sums claimed by Astea.
Time's Part 20 claim
- The main contentions advanced in Time's Part 20 claim were that the Software was of no use to it and thus as a result of the failure of Astea to complete the execution of the Services it had suffered loss in the shape of the sum which it did pay on account of the licence fees, £56,800 plus Value Added Tax, and other costs incurred in connection with attempting to integrate the Software with CS/3 and Pulse. Those other costs were said to be a sum of £89,417.50 paid to Lynx for its work on the integration of the Software and CS/3 ("the Lynx Element"), internal management and staff costs amounting to £22,307.54 ("the Management Element") and the cost of hardware acquired to enable the Software to be run, put at £3,700. Further alleged losses were the result, it was contended, of not making savings which could have been made had the Software been successfully integrated with CS/3 and Pulse. The relevant savings were in staff costs, put at £48,330 between October 2000 and March 2001 and continuing thereafter at £12,082 per month. As an alternative to the damages claim there was a claim for repayment of the instalment of the licence fees paid as money paid for a consideration which had wholly failed.
The Amended Reply and Defence to Part 20 Claim
- Various factual issues were raised in the Amended Reply and Defence to Part 20 Claim served on behalf of Astea. It is not necessary to set them out at this point in this judgment. I shall set out my findings as to the material facts later. However, it was made clear in the Amended Reply and Defence to Part 20 Claim that there were issues as to the material terms of the Contract. It was also denied that any of the variations to the Contract contended for in the Re-Amended Defence and Part 20 Claim had been agreed. It was indicated that reliance would be placed upon clause 11.1 of Astea's Conditions as excluding the terms which it was alleged on behalf of Time were to be implied into the Contract by statute, and also upon the new clause 11.2 set out in the Addendum as limiting the liability of Astea in relation to the Part 20 claim. It was initially in issue whether clause 11.2 fell to be treated as part of Astea's written standard terms of business for the purposes of Unfair Contract Terms Act 1977 s. 3, but in his closing submissions Mr. Kinsky accepted, sensibly as it seems to me, that it did. Each of clause 11.1 and clause 11.2 was said to satisfy the requirement of reasonableness set out in Unfair Contract Terms Act 1977. In relation to clause 11.1 it was pleaded in paragraph 19 of the Reply and Defence to Part 20 Claim that:-
"The above term satisfied the requirement of reasonableness because:
(1) The licensee under the Software Agreement was adequately protected by Clause 10.0 of the agreement.
(2) The nature of computer software is such that the conditions implied by the Sale of Goods Act 1979 are not appropriate.
(3) The balance of bargaining power between the parties was, if anything, tilted in favour of the Defendant."
So far as clause 11.2 was concerned, at paragraph 35 the matters relied upon in support of the contention that that satisfied the requirement of reasonableness were that the clause itself gave adequate protection to the licensee, that the balance of bargaining power was, if anything, tilted in favour of Time, and
"The liability of a provider of software, if unlimited, is potentially very high indeed, and insurance is therefore expensive or impossible to obtain."
Mr. Kinsky did not formally abandon reliance upon the provisions of clause 11.1 and clause 11.2, but Astea in fact made no attempt to justify by evidence the proposition that the provisions of either satisfied the requirement of reasonableness set out in Unfair Contract Terms Act 1977. As the onus of proving that they did was upon Astea, the failure to adduce evidence meant that a finding that they did not was inevitable. I need say no more in this judgment about these provisions.
- On the main issues as to alleged terms of the Contract, alleged variation, alleged breach, alleged repudiation and alleged acceptance the case set out in the Amended Reply and Defence to Part 20 Claim was this:-
"20. Further or alternatively, although it [is] admitted that the Software Agreement provided for the sale by the Claimant to the Defendant of the medium upon which the ServiceAlliance software was delivered,
(1) The Software Agreement was otherwise not an agreement for the sale of anything, but a licence to use the ServiceAlliance software, and
(2) The ServiceAlliance software was not "goods" within the meaning of the Sale of Goods Act 1979.
(3) The Sale of Goods Act 1979 therefore does not apply to the licensing of the software or the provision of the implementation services.
21. In the premises, paragraphs 8(a) and (b) are denied.
22. Clause 11 also applied to the terms of the Service Agreement and satisfied the requirement of reasonableness for the reasons set out in paragraph 19 above. Paragraph 8(c) is therefore denied.
23. As to the first sentence of paragraph 9 it is admitted that the ServiceAlliance software was delivered to the Defendant but the Defendant is put to proof as to the date.
24. The second sentence of paragraph 9 is denied.
(1) At the date when the Claimant delivered the ServiceAlliance software to the Defendant, both parties knew that it was not going to be possible to implement the system by 1 August 2000. In the premises, if there was a contractual obligation on the Claimant to implement the ServiceAlliance software by that date, it was waived by the Defendant and/or the contract was varied by consent so as to remove that obligation.
(2) The Claimant never agreed to implement the ServiceAlliance software by the end of October 2000. The e-mail relied upon in the third sentence of paragraph 9 does not evidence the agreement of the Claimant to do so.
(3) There was no agreed implementation date; at best, the Defendant was entitled to have the ServiceAlliance software implemented by the Claimant within a time that was reasonable in all the circumstances.
25. Paragraph 10 is denied:
(1) It is admitted that the ServiceAlliance software was not implemented by the end of October 2000. There was no breach of contract on the part of the Claimant and/or the cause of the delay beyond that date was not caused by any such breach.
(2) There was no "due date for successful Stage 1 implementation of the System".
(3) Delay was caused by
(a) The fact that relations between the Defendant and Lynx deteriorated to a point where Lynx were very unwilling to cooperate [sic] on the project.
(b) The fact that Tetra CS/3 software was not working properly and/or the interfaces had not been developed by Lynx and/or by its subcontractors, VI Software and/or by the Defendant's individual contractors.
(c) The team working on the Pulse software could not provide the data necessary for the Claimant to test the ServiceAlliance software and/or develop the necessary interfaces with Tetra CS/3 and Pulse.
(4) It is admitted that the ServiceAlliance software had not been implemented by early November, and that the Claimant had no access to the Defendant's computer system between that date and the beginning of February 2001.
(5) As to paragraph 10(c) the Claimant admits that it continued to attempt to work on the necessary interfaces with Tetra CS/3 and Pulse but continued to be hampered by the provision of inaccurate test data.
26. Paragraph 11 is denied. The Claimant exercised reasonable skill and care in delivering the services it was obliged to provide under the Services Agreement.
(1) It is denied that any part of the process of implementing the System should have been completed by the end of October 2000. Due to delays in implementation and deficiencies in the performance of the Tetra CS/3 and Pulse software and interfaces, it could not have been.
(2) The Defendant was not entitled to and did not benefit from a warranty to the effect that individual members of the Claimant's staff would remain the same throughout the project period.
(3) Further or alternatively the delays caused by the Defendant and/or Lynx and/or VI Software were outside the Claimant's control and, to the extent that rotation of the Claimant's staff resulted from those delays, the Claimant is not responsible for any subsequent delay.
(4) The allegation that the Claimant's employees did not have sufficient experience or knowledge and understanding of the Defendant's requirements is so vague as to make it impossible to respond to. For the present it is simply denied.
27. Paragraph 12 is denied. None of the breaches alleged (even if established) evidence an intention on the part of the Claimant no longer to be bound by the terms of any of its contracts with the Defendant.
28. Paragraph 13 is denied. It is admitted that on 6 March 2001 a meeting took place between Mr. Mohsan and Mr. Noble. At that meeting:
(1) Mr. Mohsan made no complaint at all of any alleged defective performance by the Claimant.
(2) Instead, he criticised the defective performance of Lynx, and identified that as the cause for the delay.
(3) He told Mr. Noble that the Defendant's staff had repeatedly complained about the performance of Lynx, but that he had heard no complaint about the Claimant's performance.
(4) He told Mr. Noble that trading conditions for the Defendant had deteriorated, and this had caused the Defendant anyway to lay off the staff that it had been planning to lay off when the new repairs management system went live.
(5) At Mr. Noble's offer to suspend implementation work for the time being, Mr. Mohsan agreed on the basis that he would have time to consider what he would do next.
(6) Mr. Noble and Mr. Mohsan then discussed, in an amicable fashion, whether it would be possible for the Defendant to sell its licenses to use ServiceAlliance to someone else, thus recouping some of the Defendant's cost of the abortive project.
(7) Mr. Mohsan made no mention of terminating any of the agreements between the Defendant and the Claimant and the agreements were not terminated at the meeting. In any event any purported oral termination would not have been effective to terminate them under clause 8.2 of the Software Agreement.
29. Paragraph 14 is denied. It was the Defendant, not the Claimant, that breached the agreements by changing its mind about wanting the software package it had agreed to take on license and requested the Claimant to implement. At all material times the Claimant remained willing to perform its obligations."
- In the Defence to the Part 20 Claim the various losses alleged on behalf of Time were denied. The point was made that:-
"It is irrelevant to consider whether or not the software delivered to the Defendant by the Claimant is of any value or use to the Defendant. The Claimant's contractual obligation was to licence and deliver the software, and it licensed and delivered it. Alternatively, the Defendant is required to prove that the software is of no value or use."
In relation to the alleged inability to make anticipated savings by reduction in numbers of staff it was pleaded that:-
"The Defendant has laid off the staff it was intending to lay off, and has therefore achieved the savings anyway."
The circumstances leading up to the making of the Contract
- For present purposes it is convenient to begin a consideration of the circumstances leading up to the making of the Contract by recording that, after initial contact, Time showed sufficient interest in the possibility of acquiring the Software for Mr. Brotherston, who was at that time employed by Time as, in effect, project manager of the project for the acquisition and implementation of the Service Package, and Mr. Stephen Taylor, at that time the manager of the Service Centre, to consider it worthwhile to meet Mr. Noble at the premises of a customer of Astea called MSAS in Milton Keynes on 5 April 2000 to see the Software in action. There was little dispute between Mr. Noble, Mr. Brotherston and Mr. Taylor, each of whom gave evidence before me, as to what had happened on that occasion. The visit was followed by lunch, over which there was a general discussion about the Software. While neither Mr. Noble nor Mr. Brotherston had any very definite recollection of the discussion, it seems that there was some reference to Time needing the Service Package in time for its Christmas season in that year. Mr. Taylor's recollection was that he explained that the Service Package would need to be installed and integrated with the Call Centre Package and the Accounting Package before Time's pre-Christmas period, which started at the end of September. It probably is not very important exactly what was said, for Mr. Noble agreed in his evidence that he understood that the Service Package would be needed in time for Time's Christmas season in 2000, and that that would start some time before 25 December.
- There followed various technical and commercial discussions between representatives of Time and Astea the detail of which it is not material to set out. However, as matters proceeded it became increasingly clear that the likely selection for the Service Package was the Software.
- In any situation in which it is necessary for software programming on a bespoke basis to take place, as it was if the Software was to be integrated with CS/3 and Pulse, a usual, and prudent, step is to seek to identify what it is exactly that the client is expecting the bespoke software to do and how he is expecting it to do it in terms of the requirements of his business. A common means of addressing these questions is to prepare a document or documents in which the business needs to be met are set out. In the case of Astea such a document is called a "Business Requirements Document", or "BRD". In relation to Time the task of preparing appropriate BRDs was entrusted to Mr. Ian Dundas, who was at that time European Product Manager and is now an integration consultant. Mr. Dundas first tackled the job of seeking to prepare an appropriate BRD in about the middle of April 2000.
- From an e-mail sent on 15 May 2000 by Mr. Brotherston to Kevin Beel of Astea, a copy of which was put in evidence, it is plain that by that date, if not before, it was known within Astea that at that time Time was anxious that the installation of the Software be completed by 1 August 2000. Mr. Beel's response of the same date indicated that:-
"I think we need a statement from Time as to what you will require live by 1st August. We cannot expect to get the whole lot up by then, so we need to know the minimum acceptable. For example, is the Tetra/CCC interface required to be in place by then? What modules do you expect to be running live on 1st Aug?
You will have to concede that if we do not get the project going this week/next, then the 1st August is not feasible, no matter whose system you had chosen. That is not a basis for negotiation, it is a basis for a practical, and possibly achievable, project – We will not agree to any contract we don't think we can deliver on – no matter what the customer may think as to our motives. If we say it is not possible, then you'd better believe it is not, because we will walk away rather than sign – no matter how much money is involved. The decision on such matters lies with Ian Mapp, our Operations Manager, not me."
"CCC" was how, at the time, Pulse was known. Thus the significance of the question whether the Tetra/CCC interface was required by 1 August 2000 was whether it was expected that the Integration Services would be completed by that date. In an e-mail of 16 May 2000 to Mr. Beel Mr. Brotherston made clear that Time was seeking complete integration by the end of July 2000. In a reply to Mr. Brotherston Mr. Beel indicated that the concern on Astea's side was with whether the Integration Services could be achieved by 1 August 2000.
- In the short term, at least, the focus of Astea's attention was on obtaining a basis upon which it could commence work with the aim of meeting the requirements of Time for completion of the Integration Services by 1 August 2000. Mr. Noble decided that Time should at least send Astea a purchase order to enable work to proceed whilst negotiations in relation to the Contract continued. Mr. Brotherston sent a purchase order dated 8 June 2000 ("the Purchase Order") to Mr. Beel under cover of a letter dated the same day. Attached to the Purchase Order were a number of special conditions. They included:-
"5. Payment terms shall be as follows:
1/3 on implementation date (see 6 below)
1/3 on delivery of software
1/3 on 1st September 2000 (assuming successful implementation by this date)
6. The date of implementation is 1 August 2000, which is a fundamental part of this agreement."
In his covering letter Mr. Brotherston requested that Astea sign and return a copy of the special conditions. Astea did not do so.
- The Software in its "out of the box" form seems to have been installed by Astea at Time for training purposes on 13 June 2000. Responsibility for liaison with Time to ascertain its requirements in relation to the Configuration Services, performance of the Configuration Services and the conducting of what were called "workshops" was entrusted by Astea primarily to Mr. Nigel Vant, who was at that time employed by Astea as a business consultant. Much of the work for which Astea claims in this action in relation to performance of the Services was actually undertaken by Mr. Vant, but he is not central to the facts relevant to the matters which I have to decide. The Configuration Services were not complete by the date of the alleged acceptance by Time of a repudiation of the Contract on the part of Astea, but the focus of attention in relation to the alleged repudiation was the non-completion of the Integration Services, rather than the non-completion of the Configuration Services.
- An internal e-mail sent on 8 June 2000 by Mr. Brotherston to Mr. Keith Anyon of Time, a copy of which was put in evidence, indicated that by that stage it had been accepted within Time that completion of the Integration Services would not be achieved by 1 August 2000, for Mr. Anyon was being asked to look at the list of functions which he would require to be working for that date.
- Mr. Ian Mapp, who was, until the end of 2000 European Operations Manager of Astea, and then became European Product Director, sent to Mr. Brotherston an e-mail on 18 June 2000 in which he set out how Astea then saw progress towards achieving Time's wishes in relation to completion of the Integration Services. What he said was this:-
"I have delayed releasing this until Ian Dundas had completed his discussions with yourselves/Lynx on the feasibility of the interfacing tasks – seen as the critical path for this project. These are the key events/milestones for the remaining weeks. I have not produced a formal MS Project plan as the tasks are fairly straightforward – but I assume that you will be incorporating this into your overall planning for the management of Time resources.
There are two assumptions built in:
- there will be no electronic transfer of data from existing systems;
- we will assist in the definition of reports from ServiceAlliance, but Time will be responsible for their production.
(oh, and the contract gets signed!! I am sure Kevin would not want me to miss an opportunity….)
Week commencing 19 June
- Astea match documented process flows to ServiceAlliance to identify any potential gaps
(Resources: Astea – Nigel Vant)
- documenting of interface specification begins
(Resources: Astea – Ian Dundas)
Week commencing 26 June
- 3 day workshop to identify screen/business rule changes and follow draft ServiceAlliance processes
(Resources: Astea – Nigel Vant, Time)
- Milestone: confirmed processes
(Resources: Astea – Nigel Vant, Time)
- Milestone: agreed interface specifications
(Resources: Astea, Ian Dundas, Time Lynx)
Week commencing 3 July
- Coding work on interfaces begins
(Resources: Astea – Custom Development)
- 2 days of setup for production environment – database, clients
(Resources: Astea – Damon Bernd, Time)
- AllianceStudio work begins on changes, including knowledge transfer to Time personnel
(Resources: Astea – Nigel Vant, Time)
Week commencing 10 July
- Milestone: documented ServiceAlliance processes
(Resources: Astea – Nigel Vant, Astea – 2nd business consultant, Time)
- Milestone: training materials produced
(Resources: Time)
- Milestone: Reporting Requirements Defined
(Resources: Astea – 2nd Business Consultant, Time)
(Resources: Astea – Ian Mapp, Nigel Vant, Time)
Week commencing 17 July
- delivery /testing of interfaces begins
(Resources: Astea – 2nd business consultant, Time, Lynx)
(Resources: Astea – Nigel Vant, Time)
- manual data loading begins
(Resources: Time)
Week commencing 24 July
- Milestone: User Training completed
(Resources: Astea – Nigel Vant, Time)
- Milestone: Interfaces signed off
(Resources: Astea – 2nd business consultant, Time, Lynx)
Week commencing 31 July
- Milestone: System signed-off for production
(Resources: Astea – Ian Mapp, Time, Lynx)
- Milestone: Cutover to ServiceAlliance
(Resources: Astea – All, Time)
- live running initial support
(Resources: Astea – Nigel Vant)
Week commencing 7 August
(Resources: Astea – Ian Mapp, Time)
Please confirm your acceptance of this schedule, so that final arrangements can be made."
It does not appear that Time ever did confirm its acceptance of the schedule.
- Mr. Tahir Mohsan, the managing director of Time, gave evidence at the trial. I have to say that I did not find him to be at all a satisfactory witness. Over a number of matters his evidence in chief or initially in cross-examination was shown to be incorrect by reference to contemporaneous documents. It was suggested by Mr. Kinsky to Mr. Mohsan in terms that he was simply making up some of his evidence as he went along. I was initially sympathetic to the view that Mr. Mohsan is a gentleman who, at the time of the events which have given rise to this action, and now, has many calls upon his attention and not an especially good memory, particularly in relation to matters which he considered at the time they were happening not to be especially significant. Unhappily it became plain to me that, in relation to the evidence which he gave as to a meeting, to which I shall come, between him and Mr. Noble on 6 March 2001, what Mr. Mohsan said was so far at variance from contemporaneous documents of which he himself was the author, that his evidence was untrue to his knowledge. It also became plain to me that an alteration in Mr. Mohsan's evidence in relation to the basis upon which an assessment of the amount charged to Time by Lynx for work in connection with the integration of the Software and CS/3 was the result of Mr. Mohsan making up his revised evidence on the point in the witness box. Those conclusions have coloured my approach to all of his evidence. However, whether, as Mr. Kinsky suggested, Mr. Mohsan was to an extent making up his evidence of matters in addition to those which I have specifically mentioned, or whether his recollection of relevant events, other than as to those matters to which I have referred, is simply very poor, the net result was the same, namely that I did not feel that I could rely upon the evidence of Mr. Mohsan save in respects in which it was corroborated by contemporaneous documents.
- An example of the unreliability of the evidence of Mr. Mohsan is that he assured me that in his belief a contract was concluded between Time and Astea in the terms of the Purchase Order, that there were no negotiations between Time and Astea after the despatch of the Purchase Order, and that he was unaware of the fact that the Contract was in prospect or had been concluded until much later than the summer of 2000. That evidence cannot be reconciled with his receipt, which he did not dispute, of an e-mail dated 2 July 2000 from Mr. Brotherston and his response to that e-mail. In the e-mail dated 2 July 2000 Mr. Brotherston wrote:-
"I have just spoken to Astea and they appreciate the effort that has been made to complete the contract details in time for the end of month deadline.
Work is already progressing well and we have the technical design spec for the integration from Lynx, which both Astea and Lynx will be discussing at H/O on Monday.
However they need the contract to be dated for the 30th June 2000, as this is the last day of their current quarter.
If you have an opportunity to review the contract document, that Richard Hope has produced in conjunction with them, they need it faxed to their USA office on Monday.
The key requirement is for the date to be as given above.
I am assuming that there are no remaining issues with the contract, as Richard seems confident that all aspects have been covered.
I hope you will be able to sign the document over the weekend."
- Mr. Mohsan did not respond to the e-mail dated 2 July 2000 sent by Mr. Brotherston which I have quoted in the preceding paragraph. That prompted Mr. Brotherston to send a further e-mail to Mr. Mohsan, dated 7 July 2000. In that e-mail Mr. Brotherston wrote:-
"We seem to have reached an impasse with the Astea contract.
My understanding is that whilst they are happy for their US parent to guarantee the UK contract should it become necessary, we have extended the contract obligations through our wording of the guarantee.
The US CEO cannot sign the document he has been presented with at present.
I am not sure if you have prompted this extension of the terms or if it has crept in through the interpretation of the legal wording Richard has produced.
Astea UK are still working at the speed we need but I think Pat Noble is getting worried that the US may instruct him to hold back until the contract is signed.
Will you please give this some thought with an aim to resolve today if at all possible."
- In a facsimile transmission dated 3 July 2000 to Mr. Mohsan Mr. James Spencer of Lynx wrote, so far as is presently material, as follows:-
"The work involved to provide the Astea integration is 45 days development plus 5 days consultancy/training; total 50 days. Hence the cost of this project will be (45 x £550 plus 5 x £650) £28,000.
As I have already asked our sub-contractor (VI Software) to commence work on the project in order to meet the required timescales I would appreciate a prompt purchase order."
- It is clear that all was not plain sailing in relation to the installation of CS/3 or Pulse. In an e-mail dated 10 July 2000 to Mr. Brotherston Mr. Keith Anyon, who was, at that time, and remains, employed by Time as Business Process Re-engineering Analyst (Internal systems) and had a particular focus on service operations, wrote, with reference to "Astea/Lynx" :-
"Has there been any development on this front? If so, how does it affect current priorities, all the focus for the last 3 days, Friday, Saturday, Sunday has been on Pulse and CS/3 – no work done on Service Alliance."
Mr. Anyon, who gave evidence at the trial, told me, and I accept, that he himself was diverted from doing any work in relation to the Software during the month of July 2000 and for half of August in order to concentrate upon the more important, from the point of view of Time, issues concerning the problems with Pulse and CS/3.
- By 11 July 2000 Mr. Dundas had produced four BRDs in respect of the integration of the Software with CS/3 and one in relation to the integration of the Software with Pulse. The four BRDs in respect of the integration of the Software with CS/3 were each titled with a reference to CS/3 but were otherwise called, "Customer Synchronisation and Installed Base Creation", "Product Master Synchronisation", "Integration – Stock Movement in ServiceAlliance" and "Integration – Billing and Cost of Sales". The BRD in relation to Pulse was simply entitled "Call Centre System Integration". Those BRDs were sent by e-mail on 11 July 2000 by Mr. Dundas to Mr. Brotherston, Mr Anyon and Mr. Steven Devine, at that time IT Manager of Time. They were copied to, amongst others, Mr. Khalid Elbarjaj, a developer employed by Astea at its Dutch office. The reason for copying the BRDs to Mr. Elbarjaj was that it was envisaged that it would be he who undertook the programming work necessary in order to effect the interfaces between the Software and Pulse and CS/3. The whole purpose of preparing a BRD was in order to obtain confirmation from a client that its requirements from a business point of view had been correctly understood by Astea, or clarification of what those business requirements were. In the event there was no reaction on behalf of Time to the BRDs to which I have referred until a meeting to discuss them took place on 30 and 31 August 2000. However, Mr. Anyon did send an e-mail on 12 July 2000 to Mr. Brotherston enquiring as to the procedure for signing off the five BRDs.
- The problems with CS/3 and Pulse, coupled with the time which it took to negotiate the terms of the Contract as executed, seem to have prompted Time to put back the date as at which it expected the Software to become operational, a point sometimes referred to in the contemporaneous documentation as "Cutover". It appears that Mr. Brotherston told Mr. Beel of this decision on about 13 July 2000, the day before Mr. Hope signed the Contract on behalf of Time. Mr. Beel reported on the conversation in an e-mail dated 13 July 2000 to Mr. Noble, as follows:-
"Derek has advised me that they have now agreed to put the live date back to 1st September (partly because of the delays on Lynx's side and because of the contract signing delays). I think we should not press them to amend the contracts that should be signed today. In the event that the contract still says 1st August, we get them they [sic] send a separate letter stating the change in deadline. Otherwise we will get further delays in getting the contract through.
Do you agree?"
Mr. Noble did agree, as he made known in an e-mail to Mr. Beel dated 24 July 2000. In that e-mail he asked Mr. Beel to press Mr. Brotherston to send Astea a letter to the effect contemplated in Mr. Beel's e-mail dated 13 July 2000 so that it was clear that Astea was not in breach of contract. No such letter was ever in fact sent, and the matter was not pursued on behalf of Astea.
- Mr. Anyon returned to the theme of having to devote his time to the important tasks of trying to get Pulse and CS/3 to work in an e-mail to Mr. Taylor and to Mr. Brotherston dated 14 July 2000. He said:-
"Until we have a system that will work on Monday, I cannot spend any more time on Astea as it will prevent me from completing my other work."
Mr. Brotherston replied the same day, so far as is presently material:-
"Don't worry about your time and Astea, I have put them on hold for next week anyway so that we can re evaluate our time commitments."
- Meanwhile thought was being given within Astea to the question of allocating resources to do the work which needed to be done in relation to the Integration Services. At that time all of the programming resources of Astea were based at its office in the Netherlands. Mr. Bart van den Hurk of that office sent an e-mail to Mr. Mapp on 17 July 2000 in which he said:-
"thinking about the discussions we have been having last week at Time in Burnley, I feel that it would be good (given that we have a deal by then) to plan Marc Tonen (or someone with similar qualities) for 1 or 2 days to work on some of the issues. Some of the AllianceStudio changes [i.e. configuration] are not difficult, but we also have hit difficult ones where expert level would be welcome. I believe that Marc can do all that work without being on site.
Are you doing the planning for Time? Can you then take this into account? Please consider that I will also be needing Marc for some WMData work very soon after his holiday ends (problems with invoice interface to their accounting system)."
- Mr. Mapp anticipated that it might be difficult for him to find the programming resources which he needed at the time he would need them. He thus enquired of Astea's American parent company as to whether it had spare capacity. He sent an e-mail to Mr. Bruce Breder on 17 July 2000 in which he said:-
"We are looking at some ServiceAlliance custom work to develop some interfaces to a customers Fiancancial [sic] and Call Centre applications. This work is specified and ready to go now. We have hit the vacation season here and do not have anyone available to start this work soon – do you have anyone by chance?
A speedy response would be appreciated (I guess that you don't have to think too hard!) so that we can look at other alternatives if necessary."
In fact there were no spare resources. Mr. Mapp was cross-examined about this e-mail. He explained that he was exploring options. While it was correct that all of the programmers working for Astea in Europe must have been occupied with other tasks, he could re-deploy some one or more of them. He could also bring in resources from outside, although Mr. Noble told me that that was not really an effective option for work of integrating the Software with other software because a good knowledge of the Software was necessary for that task, which an outside contractor would be unlikely to have.
- A full licence key to the Software was handed over by Astea to Time on 21 July 2000. As I have already recorded, the Contract was signed on behalf of Astea on 23 July 2000.
Progress between the signing of the Contract and the installation of the integration software
- While the formal position of Time on its statement of case was that it required Astea to prove the accuracy of the time and expenses sought to be charged on Astea's invoices in relation to the provision of the Services, Mr. Hossain in fact relied upon the invoices in question as an accurate record of time spent in cross-examining Mr. Mapp, in particular, to the effect that the resources devoted to providing the Services in a timeous fashion were inadequate. I am satisfied that that was an appropriate course to take and that the invoices were an accurate record of the time spent and expenses incurred. Mr. Hossain made a helpful analysis of the invoices which demonstrated that Mr. Elbarjaj worked on the programming of the interface between the Software and CS/3, or on the configuration of the Software, on 10 and 11 August 2000, 14 to 18 August 2000 inclusive, 28 to 31 August 2000 inclusive, 1 September 2000, three other unidentified days in September 2000, 5 October 2000 and 8 to 13 October 2000, inclusive. In addition the invoices rendered in connection with the Services showed that Mr. Vant worked on providing the Services, principally, on the evidence, in conducting workshops and doing other work at the premises of Time in Burnley, on 3 July 2000, 9 to 11 July 2000 inclusive, 28 July 2000, on twelve days in August 2000, six days in September 2000, thirteen days in October 2000, ten days in November 2000, three and a half days in December 2000 and two days in January 2001. In addition to this time the invoices to which I have referred indicate that Mr. Tonen did indeed spend the contemplated two days on working on the Services during August 2000, and that Mr. Mapp himself spent a total of one and a quarter days on the provision of the Services.
- As at 25 July 2000 the implementation of both CS/3 and Pulse was in crisis. That is clear from the fact that by an e-mail of that date to a large number of Time personnel Mr. Mohsan's secretary indicated the timing of daily meetings which were to take place with him that week in relation to the implementation of CS/3. The next day she sent an e-mail indicating that the meetings were thenceforth to take place three times each day. It had been envisaged that both CS/3 and Pulse would commence running, or, in the language of the projects, "go live", on 31 July 2000. In an e-mail sent early on that day Mr. Devine requested Mr. Anyon to make sure that no one used either CS/3 or Pulse. He repeated that message to a wider readership a little later on the same day. It was not until 5 August 2000 that Mr. Anyon indicated that Pulse could be used, although it was running slowly.
- On 31 July 2000 Astea raised its first clutch of invoices. The first sought payment of the first two one-third instalments of licence fees in respect of the Software. Invoices were also raised in respect of the time and expenses of Mr. Vant and Mr. Dundas in respect of work in connection with the Services during the month of July 2000.
- After the anticipated date for the Software to become operational was deferred from 1 August to 1 September 2000 Time seems to have taken no steps to prepare for that to happen. That failure to take any steps prompted Mr. Mapp to send to Mr. Brotherston an e-mail on 7 August 2000 in which he said:-
"I am getting concerned that we do not seem to have re-established a proper project plan for the implementation of ServiceAlliance since the initial delay. Nigel is continuing to work on a week by week basis, but this will certainly result in missing the present 1 September target. I understand that other projects are dragging on resources, but I would like to create a more formal workplan.
Can you let me know whether the September date is still valid, and the availability of Time resources? Or should we be considering a postponement? I have run into a period of holidays for various of the consultancy team and I need to make some decisions regarding priorities between projects."
That e-mail, as it seems to me, put the point very fairly to Mr. Brotherston. He responded the same day:-
"I share your concerns and, as you may remember I am on holiday from the 12th for two weeks.
Being realistic I think we should plan to implement the full system on the 11th September and then go live on the 18th
Will that work for you?"
- In an e-mail to Mr. Elbarjaj sent on 12 August 2000 Mr. Mapp asked him to specify what he considered would be the delivery dates for the interface packages upon which he was working. Mr. Elbarjaj replied on 14 August 2000 indicating that he thought that CS/3 Billing and Cost of Sales would be complete by 17 August 2000, CS/3 Stock Movement would be complete by 4 September 2000, CS/3 Customer Synchronisation and Installed Base would be complete by 13 September 2000, CS/3 Product Master Synchronisation would be complete by 20 September 2000, and Call Centre System Integration would be complete by 19 October 2000, each estimate being made on the assumption that he spent all his time on the Integration Services. In the light of those estimates it was obvious to Mr. Mapp on 16 August 2000 that it was unlikely that the dates proposed by Mr. Brotherston in his e-mail of 7 August 2000 could be met unless Mr. Elbarjaj was given some assistance in the required programming work. Mr. Mapp does not appear at that time to have sought to identify any source of such assistance. He may have had in mind that on the Time side there seemed to be a concentration of effort on resolving problems with CS/3 and Pulse, accompanied by a lack of attention to the question of the Software, as was evidenced in part by the fact that he had to raise with Mr. Brotherston what was the plan for completion of the Services, rather than Mr. Brotherston raising it with him.
- A "kick off" meeting to get the project for the operational implementation of the Software after completion of the Services started was held on 16 August 2000. Mr. Anyon made up a list of action points following the meeting. There were a number of fundamental matters to be addressed. According to Mr. Anyon's list these included:-
- "Determine the user platform, requirements, and traffic to identify real hardware requirements including fat, thin and concurrent users.
- Test the current available hardware that exists with the service alliance package…
- Set up a test network utilising the proposed hardware solution….
- Complete specification of integration/interfaces and produce a prioritised list of additional requirements to inc. Accounts
- Review the details of the integration/interfaces spec and agree a testing plan….
All of these activities required a contribution from Time. The first few action points all revolved around the selection and installation of appropriate computer hardware to permit the Software to run once integrated with CS/3 and Pulse.
- As was plain from the terms of Mr. Anyon's list of action points, by this stage the sufficiency of the BRDs prepared by Astea still had not been considered by Time. In an internal Time e-mail sent on 17 August 2000 Mr. Anyon confirmed the need, set out in his list of action points, to agree the BRDs by 25 August 2000.
- From an e-mail sent by Mr. Taylor on 21 August 2000 it appears that by then he had seen and considered an implementation plan for the Software which:-
"…aims to go live on 18/9/00 with parallel running for 2 weeks leading to cut over on 2/10/00. The critical aspects are integration and completing the business process detailed workshops as intake volumes are likely to increase considerably during October."
He told me in cross-examination, and I accept, that the business process detailed workshops referred to were a matter for Time internally to deal with.
- From an internal Time e-mail sent on 21 August 2000 by Mr. Paul Russell to Mr. Brotherston which was put in evidence it seems that by that time Astea was getting restive about the fact that the invoices rendered on 31 July 2000 had not been paid. Mr. Russell said in his e-mail that Astea were chasing for payment of the first and second instalments of the licence fees and sought confirmation from Mr. Brotherston that it was in order to make payment. In an e-mail of the next day to Mr. Mohsan's secretary Mr. Anyon indicated that he had been contacted not for the first time by Astea seeking payment of the £133,000 which represented the first two instalments of the licence fees.
- While, ultimately, it appeared, at least to Mr. Mapp, according to his evidence before me, that Mr. Vant may have misunderstood the position, Mr. Vant certainly had the impression that the problems which Time was having with Pulse meant that it was considering an enhanced role for the Software. He expressed his fear that this might be so in an e-mail dated 21 August 2000 to Mr. Noble. It is not necessary for me to make any finding as to what prompted Mr. Vant to write as he did in the e-mail, or what grounds he may have had for the fear which he expressed, although there was some evidence that Mr. Devine was giving the question of an enhanced role for the Software active consideration at the time. In any event, that Mr. Vant was contemplating that Time might be thinking of abandoning Pulse was undoubtedly consistent with the difficulties which it is clear Time was having with Pulse in August 2000.
- Time was, and is, essentially a family company in which not only does Mr. Tahir Mohsan have a leading part, but also four of his brothers have prominent roles. The brothers who feature in the history of the matters with which I am concerned are, respectively, Zuber and Zia.
- Another issue which moved into prominence towards the end of August 2000 which had some impact on the progress of moving the Software to the point of being operational was the question of the computer hardware necessary to enable the Software to run satisfactorily once integrated with CS/3 and Pulse. That issue had been the subject of a number of action points which resulted from the "kick off" meeting on 16 August 2000. Mr. Anyon sent an e-mail on 22 August 2000 to, among others, Mr. Zuber Mohsan seeking to prompt him to discuss with Mr. Dundas the requirements for setting up the Software on a network for testing and inputting of data. In the event Time took the view, at least initially, that the hardware requirements communicated by Astea were excessive. The failure to acquire and instal appropriate hardware created problems, to some of the detail of which I shall return. For the present it is enough to record that in an e-mail sent on 25 August 2000 to Mr. Brotherston, to await his return from holiday, Mr. Taylor described the issue in relation to hardware as "critical", because "Tahir and Zuber insist the application server architecture is maintained and Service Alliance conflicts with this strategy." Mr. Brotherston's reply, in an e-mail dated 27 August 2000 was:-
"The requirements for all hardware required by Service Alliance, and its configuration were agreed by Zuber and Steve Devibe [sic – in fact Devine], before we started this project.
Zuber has seen and agreed the spec as listed in Ian Dundas' proposal which dates back to May/June.
The only point was that the client systems really need 128MB of ram and ours have 64MB, however Ian confirmed that this would only effect [sic] the speed of operation.
There has NEVER been any mention of a clash of architecture.
I am now surprised, confused and concerned!"
- On 24 August 2000 Astea raised two further invoices addressed to Time. One was for the final instalment of the licence fees due on 1 September 2000. The other was in respect of the time of Mr. Elbarjaj in providing the Services during the month of August 2000.
- Mr. Dundas sent a revised server specification in relation to the requirements of the Software as an attachment to an e-mail dated 30 August 2000 to Mr. Brotherston.
- I have already mentioned the fact that the sufficiency and accuracy of the BRDs was not addressed on behalf of Time until a meeting on 30 and 31 August 2000. That meeting was attended by Mr. Brotherston, Mr. Anyon and Mr. Taylor on behalf of Time and by Mr. Vant on behalf of Astea. Mr. Anyon went on holiday immediately afterwards. He did, however, prepare notes of the meeting before leaving. From those notes it cannot be said that the matter of agreeing or modifying the BRDs was dealt with at all satisfactorily. A number of points were raised, but effectively how matters were left was that Astea was to proceed on the basis that the points, "need to be addressed by Astea and, where necessary, update the Specifications accordingly or respond to questions that have been raised."
- On 31 August 2000 Astea raised an invoice in respect of the time of Mr. Tonen in undertaking the Services.
- Work on the resolution of problems with CS/3 continued as at the end of August 2000. As an attachment to an e-mail with a wide circulation sent on 31 August 2000 Mr. Devine distributed an up to date list of the outstanding issues surrounding CS/3. On the same day Mr. Tahir Mohsan wrote to Mr. Spencer of Lynx and set out how Time saw the situation with CS/3 at that stage. The main points which he made were:-
"1. The overall project is significantly over the budget that was agreed.
2. The data conversions which we are still coming to terms with went badly wrong. I have just been told that just last Thursday we got a new file for the Archives.
3. The locking issue was a problem that brought the company to its knees with up time averaging about 2 –3 hours a day for the first 2 – 3 weeks after launch.
4. The current performance issues, although appear to have disappeared, need to be identified and fixed. I assume based on what you have told me that service pack 2 from MS will fix this.
5. I am deeply concerned still that we do not have a system which is true client server. Despite repeated assurance from Sage Tetra, I remain to be convinced. Issues such as no waiting message or the "hour glass" add to my fear.
6. Because of the significant locking and data migration issue, we have significantly increased costs from our third party contractors such as the pulse system.
7. I am told that over the past two weeks, the Application servers have rebooted four times with the latest being Wednesday. I cannot see how you can call the system performance satisfactory if this is happening.
8. Phase 2 is significantly late due to the above issues."
- At the beginning of September 2000 it appears that enthusiasm for the Software at Time was waning, other than with Mr. Brotherston and Mr. Taylor. An important part of the background to this seems to have been the problems which had been experienced with CS/3 and Pulse, and also with a new electronic point of sale ("EPOS") software package which had been introduced in Time's retail stores. Senior management at Time, in the shape of Mr. Tahir Mohsan's brothers Zia and Zuber, appear, from e-mails which they each generated on 1 September 2000, to have wanted to try to make Astea accept responsibility for all aspects of the Software, including in particular integration with CS/3 and Pulse. Mr. Zia Mohsan's e-mail was addressed to Mr. Brotherston. His reply included:-
"The problem is that due to the high degree of problems with CS/3, Pulse and EPOS nobody has been interested in Astea until now. Steve Taylor and I need this system to be in and working for the end of the month, it is not some form of nice add-on, it is an essential requirement for our service operations."
- Also on 1 September 2000 Mr. Taylor sent an e-mail to Mr. Devine on the subject of the hardware necessary to enable the Software to operate satisfactorily. He wrote:-
"Steve we are now at an advanced position with Astea and on track to implement by the end of September;
- essentially we (the users) have completed 98% of the functional spec and process design which is fully documented
- the integration spec has also been agreed with a few questions left to be clarified, this will be completed on Tuesday 5/9 ready for sign off (integration development has now been started by Astea)
- the hardware platform/configuration/spec has been agreed between Astea, Zuber and Derek
The critical point now is setting up a production network using the agreed configuration, this is essential to allow us to set up the Service Alliance data, products, customers and warranties and to carry out functional testing.
We need to start setting the system up on Monday 4/9 and therefore must have the production network in place ASAP. I understand Paul Mangham needs a day to do this. If this cannot be achieved delays will occur that will have a significant operational impact."
- An e-mail sent by Mr. Vant to Mr. Mapp on 4 September 2000 indicated that Mr. Vant had doubts as to how realistic it was at that time to expect that the Software would be operational by 18 September 2000. However, at the Time end Mr. Brotherston was also expressing some concerns, focused on the question of necessary hardware. In an e-mail of 4 September 2000 to Mr. Zuber Mohsan he wrote:-
"I now have the signed copy of the hardware spec. document from Astea.
Given that this can be agreed at the meeting tomorrow (9.30) can we get the hardware together in time for Astea to attend on Thursday to configure the system?
We have a "go live" date of the end of September so we need to be installing the actual hardware that will be in use and not a small, dummy network.
The consultant from Astea will be coming from Holland so I need to let them know as soon as possible if we will be ready for him or not.
Please let me know by return."
The response was evidently that the hardware would not be ready and the attendance of the engineer should be cancelled, for in an e-mail of the next day to Mr. Zuber Mohsan Mr. Brotherston confirmed that he had cancelled the visit by the engineer and asked when the hardware would be ready. He pointed out that any delay beyond the end of that week would compromise the "go live" date then in contemplation.
- A meeting about the Software was held internally within Time on 5 September 2000. The outcome was recorded by Mr. Taylor in an e-mail of the same date to Mr. Zia Mohsan and others. Part of the outcome as recorded was that additional resource for integration of the Software needed to be found and that further work needed to be undertaken on Pulse to prepare for integration. As an attachment to an e-mail of 5 September 2000 to Mr. Brotherston Mr. Taylor sent an implementation plan concerning the Software which provided for cut over to the Software on 3 October 2000. However, about the plan the e-mail itself said:-
"Given the developments today regarding delays to hardware and lack of Time resource for integration we will need to rethink the implementation dates. In order to do this I need some commitment to actual delivery dates from Steven [Devine] and Zuber."
- On 6 September 2000 a further internal meeting concerning the Software took place within Time. Mr. Brotherston, who was the project manager of the Software programme at the Time end, was not invited. His perception, and that of Mr. Taylor, seems to have remained that only the two of them at Time were at all interested in achieving the successful implementation of the Software. Mr. Taylor in an e-mail to Mr. Brotherston sent on 6 September 2000 wrote, among other things:-
"Derek I was in a meeting this morning regarding how returns would be handled in store and pointed out that Service Alliance would probably be the solution but may not be until next year. Steven Devine said he was very nervous about being able to go live with Service Alliance in 3 to 5 weeks.
I am also getting exasperated with the apparent lack of will to achieve our deadline.
For now we will continue to do all we can, however I am on holiday next week and wont be around to fight. Keith [Anyon] will also be away for another week. I know you will be pursuing our joint cause…"
Mr. Brotherston replied the next day:-
"I think we are all nervous but there is nothing to loose [sic] by going for it anyway. It is disappointing that it is just the two of us that want the system in!
If we we [sic] sensible we would postpone until Zia, Tahir and Steve Devine are ready to support us."
- It appears that one consequence of the dissatisfaction of Time with the performance of Lynx in relation to CS/3 was that Time did not pay invoices rendered by Lynx. That was the subject of correspondence between Lynx and Time, including a letter dated 7 September 2000 from Mr. Peter Lloyd, the managing director of Lynx, to Mr. Tahir Mohsan. The material part of the letter was in these terms:-
"As outlined in James Spencer's letter of the 30th August, I am extremely concerned that your account is significantly in arrears. Whilst I recognise that Time Group Limited are a major and very important customer you nevertheless currently owe us in excess of one million pounds, of which over five hundred thousand is overdue (please see attached schedule). As you will appreciate this is not a situation that we can allow to continue indefinitely. That said, we recognise that a project of this nature is complex and difficult and as a reflection of our continued commitment and a demonstration of our consistently reasonable approach we are willing to accept, as you have already discussed with James, a payment on account of £200,000. Provided we receive this by Tuesday of next week (12th Sept) we would be willing to discuss a schedule of payment for the balance, and upon (and only upon) agreement of a new payment schedule, we would consider this to be an accepted amendment to our contract with you.
I am also aware that there is a significant amount of Adaptus bespoke work that has for some time been expected to start in September or earlier and that we do not currently have a purchase order from you for this work. Any further delay in raising a purchase order will make it more likely that this critical phase in the project will not be delivered within your desired time-scales. I therefore request that you send to us by return your written confirmation to proceed with the Adaptus work, together with your payment on account of £200,000."
In fact the proposal set out in the letter was not acceptable to Time. Relations between Lynx and Time continued to deteriorate such that Lynx threatened to activate a time lock on CS/3 unless it was paid the sums which it claimed were due. On 1 December 2000 litigation was commenced on behalf of Time against Lynx seeking damages for alleged breach of the contract between them and, in particular, an order that Lynx be restrained from acting upon the threat to activate the time lock.
- In the action between Time and Lynx Time sought an interim injunction preventing Lynx from activating the time lock on CS/3. A number of affidavits were sworn in support of that application, including one by Mr. Devine on 29 November 2000. In that affidavit Mr. Devine gave an account, the accuracy of which he confirmed in his evidence before me, and which I accept, of the difficulties which Time experienced with CS/3 after it was supposed to have "gone live" on 28 July 2000. What he said was:-
"The Lynx system was supposedly designed to support a minimum of 2,000 users. At the "go live" on 28 July 2000 we had about 400 users. Even so, at "go live" there was a serious problem with the system going slow and locking e.g. on 25 September the cancellation of a particular order took 22 minutes. This should have been accomplished in one minute. Despite the efforts of Lynx "locking" has remained a persistent problem and continues to occur to this day. In the weeks following "go live" the system would slow down to the extent that it was almost unusable with the result that telesales, administration and dispatch operations would frequently come to a halt. Lynx has put a lot of resources into trying to resolve the locking problem and it has gradually improved but remains a significant issue. For example the batch release operation and picking list print operation are creating deadlocks within telesales and administration. Typically batch release and picking list print take about an hour to run. Frequently, when those programs are run, there will be a locking problem. This may manifest itself in the locking of the batch release or picking list print operation or the locking of either individual users or groups of users. Whichever operation is "locked out" has to be re run from the beginning. Lynx acknowledge that this problem persists and are due to provide yet another fix later this week."
- As was plain from the evidence of Mr. Anyon, Mr. Taylor and Mr. Devine before me, the very real problems with CS/3 and Pulse, the former of which affected essentially the totality of Time's business, were the main focus of attention within Time during the period from the end of July 2000 up to at least settlement of the litigation between Time and Lynx just before Christmas 2000. Between about the end of August and the end of November 2000 the commitment of Lynx to resolving the difficulties was affected adversely by the continuing failure of Time to pay sums considered by Lynx to be due. Both the problems and the time taken to solve them had a significant impact upon the work of integrating the Software with CS/3 and Pulse, not least because it was necessary for Lynx and Astea to co-operate to a degree in order to achieve an effective interface between the Software and CS/3. On the Lynx side the work of developing the interface was sub-contracted to VI Software Ltd. ("VI"). For a period while the litigation between Time and Lynx was proceeding Lynx was not prepared to instruct VI to have any dealings with Astea, and that delayed work on testing integration software, as I shall relate.
- While non-payment of the invoices of suppliers with whose efforts he was not content may have seemed to Mr. Tahir Mohsan a sensible tactic, its effect so far as Astea was concerned was in September 2000 to provide a disincentive to commit resources payment for which was considered uncertain. This was explained to Mr. Mohsan by Mr. Brotherston in an e-mail of 12 September 2000. Mr. Brotherston wrote:-
"I am being chased, twice a day, by Astea for payment of their invoices.
They have now invoiced twice for the software, one for two thirds and one for the final third. The second is not due as the system is not yet in and working.
However the first is well overdue and we must pay it before it affects the implementation process….
There are other invoices due for other items included within the implementation but they are of lesser amount and importance…"
- Mr. Brotherston emphasised the point in an e-mail sent on 14 September 2000 to Mr. Zia Mohsan. He said:-
"With regard to Astea/Service Alliance, I am, on the one hand pushing them to commit resource to setting up the new hardware and trying to meet our deadlins [sic] and on the other receiving no help at all from Tahir with regard to paying their outstanding and overdue invoice.
Can you help at all?"
- It seems from the terms of an e-mail sent by Mr. Brotherston to Mr. Tahir Mohsan's secretary on 20 September 2000 that Astea's persistent requests for payment were fended off temporarily by a promise that Mr. Mohsan would speak to Mr. Noble about the matter. However, that had not happened and it is plain from an e-mail which Mr. Brotherston sent Mr. Zia Mohsan on the same day that Astea was again becoming restive so that:-
"The projects in danger of stopping if we do not move quickly, please let me know what you would like to do."
- The question of payment of Astea had not been resolved by 22 September 2000. On that date Mr. Brotherston sent Mr. Tahir Mohsan an e-mail in which he said:-
"Will you please give the issue of Astea some serious thought and then let me know how you would like me to proceed.
We have currently come to a halt and need to get moving as soon as possible.
My recommendation is that we pay the first third of the licence cost and then review the rest as your confidence in the product builds.
I need to be able to plan our next stage and at present am unable to.
I will happily pass any message on to Pat if you let me know how you would like to proceed."
- The matter of payment of Astea was not resolved until 27 September 2000, by which time Astea activities had been suspended for about two weeks. In an e-mail dated 25 September 2000 to Mr. Zia Mohsan Mr. Brotherston warned that:-
"We will lose this week as well unless I can make arrangements today, as we stand at present there will be no Service Alliance activity this week."
Mr. Tahir Mohsan in fact accepted the recommendation of Mr. Brotherston as to the way forward. Mr. Brotherston put the proposal to Mr. Noble. He reported the reaction of Mr. Noble in an e-mail to Mr. Tahir Mohsan sent on 27 September 2000:-
"I have spoken at length to Pat Noble this morning.
I have put to him your proposal that we pay the first third (£58k) this week with the understanding that we need to see the system working before the second payment is made.
He is concerned that he has no control over the interfaces being produced by Lynx or our Pulse team and that these are required to demonstrate a "working system".
He proposes that they install the software, load data from CS/3 and produce a working test system which will demonstrate the full facilities to the full user count.
I have told him that he needs to meet with his developers and Lynx to further discuss the interfaces as I am sure there will be issues here in the same way as there have been with Pulse and Epos.
Pat wants to continue to commit to the project and will work under the proposal we discussed."
Payment of the first one-third instalment of the licence fees was made on 2 October 2000.
- In an e-mail sent on 26 September 2000 to Mr. Brotherston Mr. Anyon again mentioned the "need to have equipment that is to the required specification from Astea". Mr. Zuber Mohsan at length announced in an e-mail dated 28 September 2000 to Mr. Taylor that the required upgrading of hardware to enable testing of the Software on a five user system would take place.
- Mr. Elbarjaj arranged to visit the premises of Time in Burnley on 5 October 2000. In advance of his visit Mr. Taylor prepared an agenda for the meeting with him and a revised project plan. The agenda and project plan were sent as attachments to an e-mail to Mr. Devine and others dated 2 October 2000. The agenda specified the first item for discussion as "Actions required to achieve go-live date 30th October 2000". That reference to "go-live" was to the Software starting to run. The revised project plan recorded 30 October 2000 as the date for "implementation phase" of the Software and 13 November 2000 as the date for "Cut over to Service Alliance". The dates set out in the revised project plan represented further modification of dates previously indicated by Time. They were again the product of revised requirements on the part of Time as a result of its continuing difficulties with CS/3 and Pulse and the resources which Time had to deploy to grappling with those difficulties, which in consequence were not available to devote to pursuing the project in relation to the Software. Those continuing difficulties were mentioned by Mr. Keith Bond, the manager of the Call Centre, in an e-mail sent on 2 October 2000 to Mr. Devine in which he said of Pulse:-
"Development should now be completed however I still do not have the basic functionality I need to be able to manage customer contacts in Q4 [that is, the months of October, November and December 2000]
The outstanding issues include the following:-
Speed – Nobody can confirm whether speed is a network or software problem….
Run time errors – still occurring on an ad-hoc basis; staff being thrown out of the application apparantly [sic] randomly…
Missing records – the overnight update (of notes etc) does not seem to happen regularly.
Proactive sales – seem unable to see previous accounts, therefore create new records for new sales transactions. This then knocks on to the CCC and makes our attempts to support the customer very difficult.
We cannot search effectively by postcode….
Reports – I still do not have access to reports despite regular chasing…
At the moment the application is not suitable for supporting anticipated winter traffic.
I know people are working hard on this, but I need to see some progress quickly please."
- Mr. Anyon prepared minutes of the meeting with Mr. Elbarjaj on 5 October 2000 which were put in evidence. The other people who attended the meeting were Mr. Vant of Astea and Mr. Michael Bredbury and Mr. Jonathan Cleaver, who were both engaged on the development of Pulse. Mr. Elbarjaj was recorded as reporting that only two of the four integration packages for CS/3 and the Software had been completed, namely CS/3 Billing and Cost of Sales and CS/3 Stock Movement in Service Alliance, while the others had not been started. He was also recorded as reporting that the integration package between the Software and Pulse had not been started either. That may be a true record of what Mr. Elbarjaj said. It may be a correct statement of what the position was as at 5 October 2000. However, it is surprising as it is not easy to reconcile with other evidence put before me. As I have already set out, as at 14 August 2000, according to his timetable of projected activities to develop the software needed for integration of the Software with CS/3 and Pulse, Mr. Elbarjaj was envisaging that CS/3 Billing and Cost of Sales would be complete by 17 August 2000, CS/3 Stock Movement would be complete by 4 September 2000, CS/3 Customer Synchronisation and Installed Base would be complete by 13 September 2000, CS/3 Product Master Synchronisation would be complete by 20 September 2000 and Call Centre System Integration would be complete by 19 October 2000. The lengths of time which Mr. Elbarjaj indicated he then estimated to complete those integration packages were, respectively, 5 days, 7 days, 7 days, 5 days and 20 days. As, on the evidence of the invoices by which charges were made for his time, Mr. Elbarjaj had commenced work on the integration of the Software and CS/3 on 10 August 2000, by the time he gave his estimate on 14 August 2000 that it would take him 5 days to complete CS/3 Billing and Cost of Sales he had already been working on it for at least two days, and so should have been in a position to make a fairly accurate estimate. On the evidence of the invoices Mr. Elbarjaj in the event only worked on 15 days on CS/3 integration and on 4 days on what was described as "Customisation", yet the integrated Software was delivered and installed by about 14 November 2000. There was some evidence that another developer in the Dutch office of Astea, Mr. Carlo Alberding, also worked on the integration of the Software, but no charge was sought to be made specifically for his time. A time sheet put in evidence showed Mr. Alberding spending 5 October 2000 working on CS/3 integration. In the result there was no clear evidence about how long it in fact took Astea developers to complete the work of integration of the Software with CS/3 and Pulse, and thus no clear evidence as to how accurate or otherwise the estimates made by Mr. Elbarjaj on 14 August 2000 proved to be. If his estimates were accurate the amount of time charged for his work prior to 5 October 2000 should have got him further forward than simply completing the two packages recorded in Mr. Anyon's minutes of the meeting of 5 October 2000 as having been completed by then. The integration packages which were recorded in the minutes of the meeting of 5 October 2000 as not having been started Mr. Elbarjaj had estimated would take him 32 days to complete, yet in the event only 27 or so working days elapsed between 5 October 2000 and the date upon which the integrated Software was delivered and installed. Of those 27 or so days, Mr. Elbarjaj himself spent four working on "Customisation", which I take to be configuration, and one, 12 October 2000, at another meeting at Time to which I shall come. Mr. Noble told me in cross-examination, and I accept, that in October 2000 the only developers employed by Astea in Europe were Mr. Elbarjaj and Mr. Alberding.
- Whatever may be the position concerning the accuracy of the record of progress made by Mr. Elbarjaj up to 5 October 2000 as set out in the minutes of the meeting on that date, the minutes did not record any expression of dissatisfaction with the recorded progress or any reservations as to the attainability of the then desired implementation date of 30 October 2000. Some of the "Discussions and Decisions" set out in the minutes were:-
- "Feedback on RMA acceptance by Service Alliance to Pulse still need