![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Technology and Construction Court) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just Β£5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Westminster City Council v Sports And Leisure Management Ltd [2021] EWHC 98 (TCC) (22 January 2021) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2021/98.html Cite as: [2021] EWHC 98 (TCC) |
[New search]
[Context]
[View without highlighting]
[Printable PDF version]
[Help]
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Fetter Lane, London, EC4Y 1NL |
||
B e f o r e :
____________________
![]() ![]() ![]() ![]() ![]() | Claimant |
|
- and - |
||
![]() ![]() ![]() ![]() |
Defendant |
____________________
Westminster
City
Council)
for the Claimant
Mr Jason Coppel QC (instructed by Anthony Collins Solicitors) for the Defendant
Hearing date: 21 December 2020
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
Mr Justice Kerr:
Introduction
Facts
" the Contractor shall deliver the Services. The Contractor shall at its own cost be solely responsible for procuring that the Services are performed to the following standards (the 'Service Standard' .
7.1.1 the Services at each Facilities [sic] are provided in accordance with all the requirements of this Agreement, the Services Specification, the Contractor's Proposals, Good Industry Practice, any accreditation schemes and all the Authority's Policies and Legislation . ."
"26 PAYMENT PROVISIONS
26.1 The Contractor shall pay the Authority theManagement
Fee calculated as further detailed in Schedule 13 (Payment and Performance
Management
system). The
Management
Fee shall be payable in twelve (12) instalments accruing daily and payable monthly by BACS in arrears. The
Management
Fee shall be subject to any adjustments or
variations
in accordance with the provisions of the Agreement . ."
"the net fee payable by the Contractor to the Authority in consideration of the right for the Contractor to use the Facilities and provide the Services in accordance with this Agreement 'as shown in line 110 of the Total Tender sheet of the Pricing Tables (Schedule 4)' ".
"27 INCOME
27.1 Charges to Users
The Contractor shall charge Users for using the Facilities in accordance with paragraph section 3.2 of the Services Specification. It shall be entitled to retain all receipts from Users of the Facilities including receipts from any ancillary services. The Contractor shall bear all risks in relation to such receipts, including thevolume
of Users and any bad debts.
.
27.3 Profit Share
The provisions of Schedule 16 shall have effect."
"that on the proper construction of the Contract a Qualifying Change in Law that is a Specific Change in Law:
(1) Does not reduce theManagement
Fee to below zero; and
Does not oblige the Claimant to make any payment by way of reverse or negativeManagement
Fee or at all, to the Defendant".
Submissions
" a person who puts forward the wording of a proposed agreement may be assumed to have looked after his own interests, so that if the words leave room for doubt about whether he is intended to have a particular benefit there is reason to suppose that he is not".
" there is precious little, if anything, of this doctrine remaining in commercial cases."
(1) The contract does not oblige the council
to indemnify SLM in respect of any losses in excess of the
Management
Fee, which can reduce to zero but not below zero.
(2) The Management
Fee is defined (in schedule 1) as payable "by the Contractor to the Authority", not
vice
versa.
It cannot become payable by the
council
to SLM.
(3) Likewise, clause 26.1 requires SLM to pay the Management
Fee and does not provide for it to receive it; the rest of clause 26 addresses the mechanism for payment, making provision only for payment one way, not either way.
(4) There is no basis for SLM's contention that the contract obliges the council
to indemnify SLM in respect of all losses arising from a Specific Change in Law.
(5) The contract is a concession agreement. Thus, SLM agreed "at its own cost" to be "solely responsible for procuring that the Services are performed" to the "Service Standard" (clause 7.1).
(6) Likewise, clause 27.1 addresses allocation of commercial risk, allowing SLM to retain all receipts from users but requiring SLM to "bear all risks in relation to such receipts, including the volume
of Users and any bad debts".
(7) Clause 39 is straightforward. The parties are to agree the way in which any Qualifying Change in Law is effected (clause 39.4).
(8) SLM is required to bear the costs of any General Change in Law; there is no change to the Management
Fee in such a case (clause 39.5.1).
(9) If there is a Specific Change in Law, the parties, acting reasonably, may agree a change in the Management
Fee; or, "if applicable and agreed by the Authority" (the
council),
a capital payment (clause 39.5.2).
(10) The Specific Change in Law is to be "put into effect" (clause 39.5.2) as if the council
had issued an Authority Notice of Change. This means clause 37.9 is incorporated by cross-reference.
(11) Clause 37.9 (Implementation of Change) then requires the parties to "implement the Change" which must also be "recorded and formalised by the use of the Change Note template" (which is set out in schedule 9).
(12) Under clause 39.5.2, there are only two potential responses to a Specific Change in Law: a change to the Management
Fee; or a "capital payment" but only if both "applicable" and "agreed by the Authority".
(13) SLM's interpretation attempts to add non-existent wording to clause 39.5.2 and is inconsistent with the nature of a concession agreement in which the relationship is defined by the contractor assuming and bearing the risks of running the concession in return for retaining all or part of the revenue.
(14) If SLM's interpretation were correct, the drafter would have replicated symmetrically in clause 39.5.2 the wording of clause 39.5.1, so as to allocate the costs of effecting a Specific Change in Law to the council
(the Authority), just as clause 39.5.1 allocates them to SLM (the Contractor).
(15) Clause 39.5.2 does not import the whole of the Authority Notice of Change process in clause 37. The Authority has a choice whether to propose such a change and can withdraw a proposed change, but has no choice where the change is forced by external circumstances, i.e. a Specific Change in Law.
(16) The brief cross-reference to clause 37 in clause 39.5.2 does not bear the weight SLM seeks to place on it. The significance of the cross-reference is only that the Change in Law must be "put into effect" as if the Authority had issued a Notice of Change under clause 37.
(17) The financial consequences of the Change in Law being "put into effect" are then also set out but are restricted to agreed changes to the Management
Fee - but not so as to reverse the direction of payment and a capital payment only if "applicable" and "agreed by the Authority".
(18) Clause 39.5.2 says nothing about the process by which agreement is to be reached; it is not the detailed clause 37 process. Clause 39.5.2 says only that any financial changes "shall be reasonably agreed between the parties".
(19) The requirement that the parties conduct themselves "reasonably" is a matter for the dispute resolution procedure in the event of a suggestion that a party is behaving unreasonably.
(20) SLM's interpretation reasons backwards from the desired result at the expense of gross distortion of the meaning of the provisions and asks the court to rewrite the contract, without relying on any implied term that SLM should not be worse off as a result of a Specific Change in Law.
(21) The Sport
England standard contract is irrelevant; it makes completely different provision from that made in this contract. It is of no assistance to the court or to SLM.
(1) Clause 39.5.2 provides for the financial losses arising from a Specific Change in Law to be the same as those resulting from an Authority Notice of Change under clause 37. The council's
contrary core submission is wrong.
(2) Whereas the commercial risk of giving effect to a General Change in Law is placed by clause 39.5.1 on SLM as Contractor, in the case of a Specific Change in Law the losses are to be borne by the council,
"as if the Authority had issued a[n] Authority Notice of Change
" (clause 39.5.2).
(3) The practical steps to implement a Specific Change in Law are ordained by clauses 39.3 and 39.4, not 39.5. The latter clause applies "[f]ollowing agreement as to the way in which the Qualifying Change in Law is to be effected" (opening words of clause 39.5).
(4) Clause 39.5.2 addresses the financial consequences of practical steps already agreed under clauses 39.3 and 39.4. The financial impact of the practical steps can only be assessed once the practical steps are known.
(5) It would be odd to leave entirely at large, for negotiation and agreement or the dispute resolution procedure, the financial consequences of a Discriminatory or Specific Change in Law, while allocating to the Contractor the full costs of effecting any General Changes in Law.
(6) By contrast, clause 37, incorporated by the reference to it in clause 39.5.2, provides a commercially sensible yardstick for adjustment to the financial terms of the contract, to inform the dispute resolution process; otherwise the only guidance in the dispute resolution process is the uncertain obligation to act "reasonably", which is not capable of independent determination.
(7) The symmetry between clause 39.5.1 (losses from a General Change in Law are borne by the Contractor) and clause 39.5.2 (losses from a Specific Change in Law are borne by the Authority) is achieved by importing, in the latter case, the clause 37 procedure conveniently already in place.
(8) The reference in clause 39.5.2 to changes in the Management
Fee is to changes to it resulting from operating the clause 37 procedure. The requirement that changes to the
Management
Fee be "reasonably agreed" mirrors and supplements with an obligation of reasonableness the requirement in clause 37.4.1 to "discuss and agree the issues set out in the Contractor's Response" to a proposed Authority Notice of Change.
(9) The fact that an Authority Notice of Change is a matter of choice for the council
and may be withdrawn does not mean those parts of clause 37 apt for a Specific Change in Law case should not be operated. While in such a case withdrawal under clause 37.7.2 may not occur, the main parts of clause 37 can be and must be operated.
(10) The words "put into effect as provided in Clause 37 and 38" do not undermine SLM's interpretation of the contract. Putting into effect a Change in Law may mean adjusting not just the services provided but also the financial arrangements between the parties. There is no reason to confine "put into effect" to the practical arrangements.
(11) The undisputed evidence of Mr Jefford is that the vast
majority of leisure centre operation contracts adopt standard
Sport
England terms under which the local authority bears the loss resulting from a Specific Change in Law. Those standard terms require the contractor to submit a revised financial model to ensure the contractor is not made worse off by the change in law.
(12) The relevance of the standard Sport
England terms is that there is imputed to the parties knowledge of standard commercial practice within the industry and an intention to follow it rather than depart significantly from it, in the absence of clear words signifying a departure from it.
(13) If it is necessary to rely on the contra proferentem principle, it should impel the court to prefer an interpretation of ambiguous words against the proferens, i.e. the council,
whose standard wording was pre-ordained in the tendering exercise; especially where the construction for which the
council
contends is also contrary to standard industry practice.
(14) In operating clause 37, an "Adjustment" to the Management
Fee may reduce it to below zero so that it becomes a negative amount, payable by the
council
to SLM and not the other way round. An adjustment is broadly defined, without limitation, as "the change in financial terms between the Parties as the result of an Authority Change or a Contractor Change".
(15) The definition of "Management
Fee" refers to the "net" fee payable and that it is as shown in line 110 of the Total Tender sheet in the Pricing Tables in schedule 4. The net fee is an outturn figure based on an arithmetical calculation and the figure can in principle be or become a negative one, as demonstrated by the actual negative figures for some
management
fee payments at some centres for some of the contract years.
(16) While the definition refers to a payment by the Contractor to the Authority, that definition describes the situation at the start of the contract but it can be superseded by an Adjustment causing it to become a payment the other way, by and not to the Authority.
(17) The possibility of a negative Management
Fee payable to SLM is allowed by the terms of clause 37.3.7 which acknowledges that the Contractor's revised "Estimate", i.e. "the estimated change in the
Management
Fee" (see clause 37.2.1) shall "see clause 37.3.7) "set out any adjustments required to the
Management
Fee".
(18) The standard Sport
England terms are again relevant. On the evidence, many local authorities were already paying a fee to their leisure centre operators, while others have started to do so as a result of "Specific Change in Law" provisions. The parties, again, may be taken to have intended to follow normal industry practice unless clear contrary words are used. The contra proferentem principle also applies if the words are ambiguous.
(19) Alternatively, if the council
is right that the
Management
Fee cannot be reduced to below zero, clause 37.10 read together with clause 39.5.2, between them provide for a payment to be made to SLM. In clause 39.5.2 it is called a "capital payment", while in clause 37.10 it is called a "lump sum payment".
(20) These expressions are not defined; to give effect to the purpose of clause 39 "capital payment" in clause 39.5.2 should be given the non-technical meaning "one off payment from the council's
capital"; which comes to the same thing as a lump sum and is exemplified by the agreed payments made in 2020 by the
council
to offset SLM's losses and meet its salary costs.
Reasoning and Conclusions
(1) A Specific Change in Law requires the parties to operate the clause 37 process, adapted so that it addresses the Specific Change in Law which cannot be withdrawn.
(2) The outcome is determined by agreement between the parties acting reasonably or as determined under the dispute resolution procedure; the outcome is not necessarily that the Contractor is "no worse off"; nor that the Contractor bears all the losses from the Specific Change in Law.
(3) The financial consequences of a Specific Change in Law cannot include Management
Fee becoming payable to the Contractor instead of
vice
versa;
the
Management
Fee cannot be less than zero for any contract year.
(4) The financial consequences of a Specific Change in Law can include reduction of the Management
Fee as far as (but not below) zero and can include payment of a lump sum by the Authority to the Contractor.
"PART 7-CHANGES
37 AUTHORITY CHANGES
37.1 The Authority has the right to propose Authority Changes in accordance with this Clause 37. Where the Authority Change involves the closure of a Facility or the opening of a new Facility, then the provisions of Clause 37.11 shall also apply. If the Authority requires an Authority Change, it must serve a notice ("Authority Notice of Change") on the Contractor in accordance with Clause 37.2 (Authority Notice of Change). The Authority shall not be entitled to propose Authority Change which requires the Services to be performed in a way that infringes any law or is inconsistent with Good Industry Practice or would otherwise be unlawful.
37.2 Authority Notice of Change
The Authority Notice of Change shall:
37.2.1 set out the change in the Services required in sufficient detail to enable the Contractor to calculate and provide the estimated change in theManagement
Fee in accordance with Clause 37.3.7 (the "Estimate"); and
37.2.2 require the Contractor to provide to the Authority within fifteen (15) Working Days of receipt of the Authority Notice of Change an estimate of the likely effects of the proposedvariation
("Contractor's Response").
37.3 Contractor's Response
As soon as practicable and in any event within fifteen (15) Working Days after having received the Authority Notice of Change, the Contractor shall deliver to the Authority the Contractor's Response or confirmation as to when the Contractor's Response is to be provided to the Authority. The Contractor's Response shall include the opinion of the Contractor on:
37.3.1 whether relief from compliance with obligations is required, including the obligations of the Contractor to meet the requirements set out in the Services Specification during the implementation of the Authority Change;
37.3.2 any impact on the provision of the Services including whether the proposed change is in contravention of Clause 37.1;
37.3.3 any amendment required to this Agreement and/or any Contract Document as a result of the Authority Change;
37.3.4 any impact on Income generation;
37.3.5 any capital expenditure that is required as a result of the Change;
37.3.6 any regulatory approvals which are required; and
37.3.7 an Estimate which shall set out any adjustments required to theManagement
Fee. For the avoidance of doubt the Parties hereby acknowledge that the Estimate may result in an increase or decrease in the
Management
Fee (or, if applicable and agreed by the Party making the payment, a capital payment). The Estimate should be broken down clearly showing all the requisite elements of the adjustments and should be priced in accordance with the amounts set out in the Pricing Tables. Where there are no directly relevant prices and rates in the Pricing Tables any Estimate should be based on the principles of the prices and rates contained within the Pricing Tables. The Estimate shall not include any amount by way of compensation for loss of projected profits.
37.4 Discussion
37.4.1 As soon as practicable after the Authority receives the Contractor's Response, the Parties shall discuss and agree the issues set out in the Contractor's Response, including:
37.4.1.1 providing evidence that the Contractor has and as applicable has used reasonable endeavours to oblige its Sub-Contractors to, including where practicable the use of competitive quotes, minimise any increase in costs or decrease in income and maximise any reduction in costs or increase in income;
37.4.1.2 demonstrating that any expenditure that has been avoided, has been taken into account in the amount which in its opinion has resulted or is required under Clause 37.3.4.
37.4.2 In such discussions the Authority may modify the Authority Notice of Change, and if the estimated increase or decrease in expenditure in respect of the Authority Change is expected to exceed fifty thousand pounds (£50,000) (indexed in line with the Index) and it is practical for the Contractor to do so, the Authority may require the Contractor to seek and evaluate competitive tenders for any capital works relevant to the Change. In each case the Contractor shall, as soon as practicable, and in any event not more than ten (10) Working Days after receipt of such modification, notify the Authority of any consequential changes to the Estimate.
37.5 Value
for Money
If the Contractor does not intend to use its own resources to implement any Authority Change it shall comply with Good Industry Practice with the objective of ensuring that it obtains best value
for money (taking into account all relevant circumstances including, in particular, the requirements that the Contractor should not be worse off as a result of the implementation of the Authority Change) when procuring any work, services, supplies, materials or equipment required in relation to the Authority Change.
37.6 Disputes
If the Parties cannot agree on the contents of the Contractor's Response, then the dispute will be determined in accordance with the Dispute Resolution Procedure.
37.7 Confirmation or Withdrawal of Authority Notice
As soon as practicable after the contents of the Contractor's Response have been agreed or otherwise determined pursuant to the Dispute Resolution Procedure, the Authority shall:
37.7.1 confirm in writing to the Contractor the Contractor's Response (as modified); or
37.7.2 withdraw the Authority Notice of Change.
37.8 Failure to Confirm Authority Change
37.8.1 If the Authority does not confirm the Contractor's Response (as modified) within twenty (20) Working Days of the contents of the Contractor's Response having been agreed or determined, then the Authority Notice of Change shall be deemed to have been withdrawn.
37.9 Implementation of Change
In the event that the Contractor's Response has been confirmed by the Authority, then the Parties shall implement the Change. Each such Change shall be recorded and formalised by the use of the Change Note template set out at Schedule 9.
37.10 Method of implementing Adjustments
37.10.1 Where the Authority agrees to any Adjustment set out in the Contractor's Response the Authority and Contractor shall agree either a lump sum payment or an adjustment to theManagement
Fee.
37.11 Where the Authority Change consists of the addition of a new Facility (whether in direct
replacement for a previous Facility or not) or the closure of a current Facility, this will not be an Authority Change if:
37.11.1 The Contractor submitted a price or fee for the new Facility / reflected the closure of the current Facility in its pricing shown in the Pricing Tables, and
37.11.2 The plan for closure or opening as appropriate has not changed in scope from when the relevant price was submitted in the Pricing Tables (examples of a change in scope are a smaller or larger centre opening or a partial closure instead of a total one), and
37.11.3 The closure or opening as appropriate takes place on the date assumed within those Pricing Tables.
In all other circumstances the opening or closure shall be an Authority Change, however in such circumstances the price for the closure or the opening included within the Pricing Table shall form the basis of the agreement between the Parties as set out in clause 37.10.1. Conversely where Clause 37.11.1 applies, but the Facility does not open, then this will be an Authority Change but one without any financial implication except to the extent that any existing payment is affected by that Authority Change eg a Facility that was due to close does not do so.
37.12 Where the Pricing Tables include the carrying out of Planned Enhancement Works by he Contractor, then the implementation of these Planned Enhancement Works shall not be an Authority Change if:
37.12.1 the Contractor submitted a price or fee for the Planned Enhancement Works within its pricing shown in the Pricing Tables, and
37.12.2 the Planned Enhancement Works as priced within the Pricing Tables has not changed in scope from when the relevant price was submitted in the Pricing Tables and described in the Contractor's Proposals, and
37.12.3 any partial closure of the relevant Facility as a result of such Planned Enhancement Works takes place at the time indicated in the Pricing Tables or in the Contractor's Proposals, and
37.12.4 (where the pricing for the Planned Enhancement Works assumed the availability of Authority Prudential Borrowing from the Public Works Loan Board of 6.3%) the availability of Authority Prudential Borrowing is still available on the terms issued by the Contractor within its proposals for Planned Enhancement Works
In all other circumstances the Planned Enhancement Works shall be an Authority Change (including where the Planned Enhancement Works do not proceed at all) so that any adjustment to the Management
Fee from that shown in the Pricing Tables can be calculated.
37.13 In the event of closure of any Facility, the Contractor may need to make some Staff redundant. The Authority will not meet any of the Contractor's costs relating to those redundancies. The Contractor shall use best endeavours to mitigate these redundancy costs by maximising its internal procedures for redeployment.
37.14 Unless agreed otherwise, the Authority Change shall be recorded formally using the Change Note template at Schedule 9.
38 CONTRACTOR CHANGES
38.1 If the Contractor wishes to introduce a change in the Services ("a Contractor Change"), it must serve a notice ("Contractor Notice of Change") on the Authority.
38.2 The Contractor Notice of Change must:
38.2.1 set out the proposed change to Services in sufficient detail to enable the Authority to evaluate it in full;
38.2.2 specify the Contractor's reasons for proposing the change to the Services;
38.2.3 request the Authority to consult with the Contractor with aview
to deciding whether to agree to the change to the Services and, if so, what consequential changes the Authority requires as a result;
38.2.4 indicate any implications of the change to the Services;
38.2.5 indicate, in particular, whether avariation
to the
Management
Fee is proposed (and, if so, give a detailed cost estimate of such proposed change); and
38.2.6 indicate if there are any dates by which a decision by the Authority is critical.
38.3 The Authority shall evaluate the Contractor Notice of Change in good faith, taking into account all relevant issues, including, without limitation, whether:
38.3.1 a change in theManagement
Fee will occur;
38.3.2 the change affects the quality of the Services or the likelihood of successful delivery of the Services;
38.3.3 the change will interfere with the relationship of the Authority with third parties;
38.3.4 the financial strength of the Contractor is sufficient to perform the changed Services;
38.3.5 the residualvalue
of the Equipment or Facilities is reduced; or
38.3.6 the change materially affects the risk or costs to which the Authority is exposed.
38.4 As soon as practicable after receiving the Contractor Notice of Change, the Parties shall meet and discuss the matters referred to in it. During their discussions the Authority may propose modifications or, subject to Clause 38.3, approve or reject the Contractor Notice of Change.
If the Authority approves the Contractor Notice of Change (with or without modification), the implementation of the relevant change to the Services shall be commenced within five (5) working Days of the Authority's acceptance. Within this period, the parties shall consult and agree the remaining details as soon as practicable. Each such Change shall be recorded and formalised by the use of the Change Note template set out at Schedule 9.
38.5 If the Authority rejects the Contractor Notice of Change, it shall not be obliged to give its
reasons for such a rejection.
38.6 Unless the Authority's acceptance specifically agrees to a decrease in the Management
Fee, there shall be no decrease in the
Management
Fee as a result of a change to the Services
proposed by the Contractor.
38.7 If the change to the Services set out in the Contractor Notice of Change causes or will cause the Contractor's costs or those of a Sub-Contractor to decrease then there shall be an equivalent increase in the Management
Fee. At its absolute discretion, the Authority may agree that the
Management
Fee will not increase to the full extent of the saving delivered by the Contractor under the Contractor Change.
38.8 Unless agreed otherwise, the Contractor Change shall be recorded formally using the Change Note template at Schedule 9.
39 CHANGE IN LAW
39.1 The Contractor shall comply with all and any Legislation, amended Legislation or re-enacted Legislation which comes into force at any time during the Contract Period and shall ensure that the Services are provided in accordance with the same.
39.2 The provisions of Schedule 17 shall apply in relation to NNDR to the exclusion of the
provisions of this Clause 39.
39.3 If at any time during the Contract Period either Party becomes aware of a Qualifying Change in Law which in its reasonable opinion will result in:-
39.3.1 a necessary change in the Services;
39.3.2 avariation
or amendment to the terms of this Agreement;
39.3.3 the procurement of new or additional Equipment; and/or
39.3.4 an amendment, revision, modification or refurbishment of the Facilities or any part of the Facilities
that Party shall issue a notice in writing to the other giving full details of the Qualifying Change in Law and the resulting effect.
39.4 As soon as practicable after receipt of any notice from either Party under Clause 39.3 above, the Parties shall discuss and agree the issues referred to in the notice and shall agree the
way in which the Qualifying Change in Law should be effected and the steps which may be reasonably taken by the Contractor to mitigate the effect of the Qualifying Change in Law.
39.5 Following agreement between the Parties as to the way in which the Qualifying Change in Law is to be effected:
39.5.1 the Contractor shall bear the costs of effecting any General Changes in Law and there shall be no changes to theManagement
Fee as a result; or
39.5.2 any Specific Changes in Law or Discriminatory Changes in Law shall be put into effect as provided in Clause 37 and 38 as if the Authority had issued a Authority Notice of Change and any changes to theManagement Fee (or, if applicable and agreed by the Authority, a capital payment) shall be reasonably agreed between the Parties.
39.6 Both Parties shall consult with each other to agree the resultant changes required to the Services Specification or other Contract Documents to govern the performance of the Change in Law."