Jomast Accommodation Ltd v G4S Care And Justice Services (UK) Ltd (Rev 1)

In construing a commercial contract, the court must identify the meaning understood by a reasonable person, giving primacy to the language used while considering the contractual purpose, admissible background and commercial common sense. A contractual warranty comparing charges payable to alternative subcontractors may also apply where the contracting party self-delivers the relevant services, if the wording expressly includes that possibility. The warranty does not extend to a hypothetical uplift based on the cost of making non-compliant services compliant where the contract contains no such mechanism and the exercise would be commercially unworkable. A claim in deceit requires a false representation, the requisite dishonest state of mind, intention that it be acted on, reliance and loss.

The claimant and defendant entered into a subcontract for asylum-seeker accommodation services under the COMPASS contracting model. The claimant brought a Part 7 claim alleging fraudulent misrepresentations during negotiations and seeking declarations concerning a price warranty. It also brought a Part 8 claim concerning the meaning of the statement of work, including market-share targets, volume thresholds and the defendant’s ability to allocate excess service users.

The court tried preliminary issues concerning liability in deceit, construction of the warranty and construction of the statement of work.

1. Fraudulent misrepresentation. The claim failed. The alleged statements were either true, not shown to have been understood in the alleged sense, or were made innocently. Where a statement is capable of more than one meaning, liability requires that the representor intended it to be understood in its untrue sense, or deliberately used the ambiguity to deceive. The claimant also failed to establish the necessary dishonest state of mind, reliance and loss.
2. The court followed the four ingredients identified in Eco 3 Capital Ltd v Ludsin Overseas Ltd [2013] EWCA Civ 413, treating loss as additionally necessary. Applying Hayward v Zurich Insurance Company plc [2016] UKSC 48, reasonable belief in the representation was not an independent ingredient, but reliance and causation remained factual questions. The claimant would have been in the same position even without the alleged representations.
3. Warranty. Paragraph 4.8 of Schedule 5 applied where G4S itself supplied accommodation services at a cost exceeding £8.10 per service user per night. The express reference to G4S itself could not be treated as surplusage. The warranty compared G4S’s liability for self-delivery costs with the charges payable to alternative subcontractors.
4. The warranty did not provide a compliant-services uplift. It assumed a like-for-like comparison of services and contained no express mechanism for calculating a hypothetical cost of compliant performance. Such an elaborate and commercially unworkable exercise could not be implied.
5. Statement of work. The target market share was 33.3% of service-user nights, subject to the contractual qualifications. Within the volume thresholds, G4S had to use reasonable endeavours to allocate that share and Jomast had to provide services at £8.10. Above the upper thresholds, G4S was no longer obliged to allocate the target share and could refer excess volumes to subcontractors, but if it allocated them to Jomast, Jomast had to provide the services at the existing price. No quantum meruit arose.
6. The court determined the ordered issues accordingly and reserved the precise form of declarations and consequential directions.