GB Gas Holdings Ltd v Accenture (UK) Ltd & Ors

Under a contractual hardware-budget and procurement scheme, a party may recover hardware costs both as contractual reimbursement and, where established, as damages for a fundamental defect. A contractual obligation to seek consent before purchasing hardware does not permit the consenting party to defeat an accrued claim by unreasonably delaying its decision. The relevant consent request must, however, have been made within the contractual reconciliation framework. Hardware purchased after the contractual date may still be recoverable where a timely request was unreasonably withheld or delayed. A release clause applies according to the date on which the facts constituting the relevant breach occurred, subject to any express reservation.

This was a further judgment in proceedings concerning the Amended Jupiter Programme Agreement between GB Gas Holdings Limited, referred to as Centrica, and Accenture. The judgment followed an earlier judgment reported at [2009] EWHC 2734 (Comm). The court was directed to determine four further issues concerning hardware costs, the effect of a release clause, the contractual termination date, and the consequences of unreasonable refusal or delay in consenting to hardware purchases.

The central questions were whether hardware costs could be recovered under clause 15.4.3, whether claims concerning Accenture’s obligation to specify hardware were released, whether hardware requests or purchases could be made after 28 February 2007, and whether reimbursement or damages remained available where consent had been unreasonably withheld or delayed.

1. Issue 7. Centrica could, in principle, recover the cost of hardware as damages under clause 15.4.3. Schedules 3 and 10 did not show an intention that a fundamental breach of warranty arising from failure to specify adequate or appropriate hardware would exclude a damages claim. The measure of damages was not confined to the contractual time-and-material basis; damages for fundamental defects were at large at common law where Accenture had not taken the prescribed contractual steps. (para. [7])
2. Issue 8. Accenture’s obligation under paragraph 2.1.1 of Schedule 10 to specify hardware remained binding after the Amended JPA took effect. A claim for breach was released only where the facts constituting the breach occurred before 31 March 2006. Claims based on later facts were outside the release because they were not within the proviso. Such a claim had to be treated as a claim for breach of paragraph 2.1.1, rather than recast as a warranty claim merely because the same facts might also amount to a warranty breach. (paras. [8]-[9])
3. Issue 9. Requests for consent under paragraph 1.4 of Schedule 10 had to be made before 28 February 2007, because the contractual scheme required reconciliation within that framework. Nevertheless, where a timely request was unreasonably withheld or delayed, Centrica could purchase the hardware after 28 February 2007 and claim under paragraphs 5.3 or 5.4 of Schedule 3. It could also claim damages under clause 15.4.3 if a fundamental defect was established. A request made only after 28 February 2007 would not support reimbursement under paragraphs 5.3 or 5.4, although a damages claim for a fundamental defect might remain available.
4. Issue 10. The parties accepted the general rule that, where consent is required but may not be unreasonably refused, the requesting party may proceed without consent if it is unreasonably withheld. Accordingly, subject to a request having been made before 28 February 2007, Centrica could obtain reimbursement from the hardware budget and could recover replacement hardware costs as damages if the requirements for a fundamental-defect claim were established. (para. [16])
5. The court answered issues 7 and 10 “Yes”. Issue 8 was answered “No” in respect of claims based on facts occurring after 31 March 2006. Issue 9 was answered “No”, subject to the stated qualification concerning timely requests and later purchases. (para. [17])

The judgment was a further first-instance determination following an earlier judgment in the same proceedings, reported at [2009] EWHC 2734 (Comm). Burton J had ordered the four further issues to be tried. No appeal or appellate disposition is stated.