Disclosure and Barring Service v Tata Consultancy Services Limited

Whether a contractual requirement is a condition precedent depends on the words used in their contractual context. Clear conditionality is normally required, but no express label is necessary. Mandatory language alone is insufficient, and a flexible period such as promptly may be sufficiently certain. An if–then structure can make compliance with an intervening obligation a condition before a contractual remedy arises. A detailed non-conformance report was an essential part of the delay machinery. It had to be provided before the authority could select any remedy, including on-demand delay payments. Failure to provide one therefore prevented recovery. Courts should focus on the particular contract; authorities concerning differently worded clauses and different contexts offer limited assistance.

The appellant authority and the respondent IT contractor were parties to an agreement for the modernisation of disclosure and barring processes. Following a substantial trial, the High Court held that the authority’s right to recover Delay Payments under clause 6.2.3 depended on compliance with clause 6.1, including the prompt issue of a Non-conformance Report. Because no such reports had been issued, the claim failed. The decision is reported at [2024] EWHC 1185 (TCC). Permission to appeal was granted only on the construction of clause 6.1. The central issue was whether the reporting obligation was a condition precedent to recovering Delay Payments.

1. Appeal dismissed. Coulson LJ delivered the leading judgment. Snowden LJ agreed with his reasons. Lewison LJ agreed with the result and added a short concurring judgment.
2. The question whether a contractual requirement is a condition precedent depends on the precise words used, read in the context of the contract as a whole and relevant legal principles. The leading authority remained Bremmer Handelsgesellscheft Schaft m.b.H v Vanden Avenne Izegem PVBA [1978] 2 Lloyd's Rep 109. Clear words are usually required, although the contract need not expressly use the words condition precedent. The word shall is not sufficient alone. A flexible period such as promptly can be sufficiently certain.
3. Clause 6.1 contained a conditional if–then structure. If a Deliverable failed the acceptance criteria or a Milestone was not achieved due to contractor default, the authority had to promptly issue a detailed Non-conformance Report. Only then did the clause 6.2 options arise. The report was not a procedural formality. It identified the relevant test issues or non-conformities, other reasons for delay and consequential effects on other Milestones.
4. The reporting obligation was necessary for all three clause 6.2 remedies. Conditional certification and dispute escalation could not sensibly operate without identifying the relevant issues. Delay Payments were payable on demand, so the contractor was entitled to the information which the report would provide. The authority’s failure to issue any report therefore prevented it from exercising the option to recover Delay Payments.
5. The different language of clause 5.6 did not create a presumption that clause 6.1 had a different effect. The court’s task was to construe the words actually used. Comparisons with differently worded contracts, including Scottish Power UK PLC v BP Exploration Operating Co. Limited & Ors [2015] EWHC 2658 (Comm), offered limited assistance and did not alter the natural construction of clause 6.1.
6. Lewison LJ observed obiter that the separate question whether a report served late would bar reliance on clause 6 was not necessary to decide because no report had been served at all.

1. Court of Appeal (Civil Division) The appeal on the construction of clause 6.1 was dismissed. Permission on the separate Volume Based Service Charges issue had been refused. Judgment dated 4 April 2025: [2025] EWCA Civ 380.
2. High Court of Justice, Technology and Construction Court Constable J held that compliance with clause 6.1 was a condition precedent to recovering Delay Payments and rejected the claim because no Non-conformance Reports had been issued. Judgment: [2024] EWHC 1185 (TCC).