Mindful Contract Solutions Limited v Secretary of State for the Home Department [2026] EWHC 1011 (Ch)

[2026] EWHC 1011 (Ch)

Case No CH-2025-000091

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY APPEALS

Venue The Rolls Building, 7 Rolls Buildings, N Fetter Lane

London EC4A 1NL

Date of Hearing: Thursday, 26 th March 2026

Before

MRS JUSTICE JOANNA SMITH

Between

MINDFUL CONTRACT SOLUTIONS LIMITEDClaimant

SECRETARY OF STATE FOR THE HOME DEPARTMENTDefendant

MR M. GRANT (Direct Access) appeared for Claimant

MR J. MOSS KC (Government Legal Department) appeared for Defendant

Approved Judgment

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Date 2026-03-26

[1]This is an appeal from a decision of HHJ Saggerson sitting in the Central London County Court following a two day trial. Having construed the provisions of a contract between the parties for the provision of managed services by Mindful Contract Solutions Limited (“Mindful”) to the Secretary of State to the Home Department (“the Home Office”), he held that the Home Office was liable under the contract to pay Mindful the sum of £16,037.71 plus interest at 5% (totalling £19,137.71) by way of an “introduction fee”.

[2]Mindful appeals this decision, contending that the judge erred in his construction of the contract and that he should have found that the Home Office was liable to pay Mindful the sum of £195,498.58 including VAT.

THE BACKGROUND FACTS

[3]Mindful is a supplier of managed services in relation to, amongst other things, IT. It supplied these services to the Home Office through individuals working for sub-contractor companies under a series of contractual arrangements pursuant to the Home Office’s Framework Agreement and Call-Off Contract. Although the individual Call-Off Contracts relating to the supply of specific services and resources, including the supply of sub-contractors, were different, the key provisions for the purposes of these proceedings were identical. Furthermore, it was common ground at trial that these contracts expressly provided for the incorporation of Mindful’s own terms and conditions (“the Supplier Terms”) which were also identical.

[4]Clause 5 of the Supplier Terms (“Clause 5”) made provision for the payment of what was referred to as an introduction fee in the event of the continuing engagement of a sub-contractor by the Home Office after the supply agreement with Mindful had ceased:

“The engagement by a Buyer of a sub-contractor / consultant introduced by the Supplier, or the introduction by the Buyer of the sub-contractor, and/or the consultant to any third party resulting in an engagement renders the Buyer subject to the payment of an introduction fee calculated as 25% of the annual fee provided that the engagement takes place within a period of six months from the termination of the assignment under which the sub-contractor / consultant was supplied, or if there was no assignment, within six months of the introduction of the sub-contractor and/or the consultant by the Supplier to the Buyer. Where the Buyer fails to inform the Supplier of the fee or annual remuneration payable to the sub-contractor and/or the consultant, the introduction fee will be calculated by multiplying the monthly charge of the Supplier for the sub-contractor and/or the consultant services by six months. No refund of the introduction fee will be paid in the event that the engagement subsequently terminates. VAT is payable in addition to any fee due.”

[5]Under Clause 8.3 of the Framework Agreement, the terms of the Framework Agreement and Call-Off Contract take precedence over the Supplier Terms if there is a conflict or ambiguity.

[6]Clause 7 to Part B of the Call-Off Contract made provision for “Payment, VAT, and Call-Off Contract charges”. Clause 7.11 was in the following terms: “If there is an invoice dispute the Buyer must pay the undisputed amount and return the invoice within 10 working days of the invoice date. The Buyer will provide a covering statement with proposed amendments and the reason for non-payment. The Supplier must notify the Buyer within 10 working days of receipt of the returned invoice if it accepts the amendments. If it does, then the Supplier must provide a replacement valid invoice with the response”.

[7]Pursuant to these contractual arrangements, Mindful supplied two sub-contractors to the Home Office, a Mr Vinit Goswami and a Mr Tony Nwagbolu (together “the Sub-Contractors”). It was common ground at trial that their services under the relevant Call-Off Contracts between Mindful and the Home Office (the G-Cloud 10 Contract in the case of Mr Goswami and the G-Cloud 11 Contract in the case of Mr Nwagbolu) expired on 10 October 2020 and 30 September 2020 respectively. Thereafter, the Home Office continued directly to engage them for a brief period in order to complete their specialist activities in relation to contract deliverables.

[8]Mr Nwagbolu worked for 45 days for a fee of £27,809.10, his day rate being £617.98, and Mr Goswami worked for 38 days for a fee of £25,650, his day rate being £675. The judge explained that both re-engagements had been described as “at risk”, which meant that neither Sub-Contractor was actually paid while the Home Office attempted to work out what the basis of such re-engagements would be, and how, and to what extent, a liability may have arisen to Mindful. The judge found that the Home Office re-engaged the Sub-Contractors within six months of the end dates on the relevant Call-Off Contracts.

[9]Pursuant to the provisions of Clause 5, Mindful raised two invoices on 17 November 2020 (“the Invoices”) seeking an “introduction fee” in respect of Messrs Nwagbolu and Goswami in the sums of £93,438.58 including VAT and £102,060 including VAT respectively. These figures were calculated by multiplying Mindful’s monthly charge for the Sub-Contractors’ services by six months.

THE JUDGMENT

[10]The judge found that the contractual arrangements between the parties had been negotiated on an equal commercial footing, that recruitment commission terms were not unusual in project contracts of this sort, that Clause 5 was incorporated into the contracts between Mindful and the Home Office, and that this rendered the Home Office liable to pay an introduction fee to Mindful. However, the key question for the judge was how Clause 5 was to be interpreted.

[11]At [14] of the judgment the judge set out some well-known extracts from Arnold v Britton

[2015] UKSC 36

on the approach to be taken to the construction of contracts.

[12]As to the true interpretation of Clause 5, the judge rejected a submission from the Home Office that it was too uncertain, observing that he preferred to adopt the alternative approach “which is to strive to give effect to a term that the parties incorporated in their dealings on the basis that it must have some commercial meaning”.

The judge accepted that Clause 5 provided for two possible alternative calculations:

[13]the first involving 25% of the annual fee paid by the Home Office to the sub-contractor (“the 25% Basis”); the second, which was triggered where the Buyer “fails to inform the Supplier of the fee or annual remuneration payable to the sub-contractor”, involved multiplying the monthly charge levied by the Supplier for the sub-contractor’s services by six months (“the Six Month Basis”).

[14]The judge rejected Mindful’s case that the Six Month Basis was applicable on the facts, holding that no time limit had been specified with regard to the provision of remuneration information by the Home Office and effectively implying a provision that “relevant information should be forthcoming within a reasonable time”. He decided on the facts that the provision of such information in the Amended Defence in December 2022 “was within a reasonable time”, albeit that he said: “[i]t falls at the outer boundary of what might be considered reasonable”.

[15]Having determined that the 25% Basis was applicable on the facts of this case, the judge was then required to deal with opposing submissions as to the construction of the 25% Basis. The broad construction, rejected by the judge but pursued on appeal, is that regardless of the period for which a sub-contractor works directly with the Home Office after the termination of the original contract, the introduction fee amounts to 25% of what he would have been paid by the Home Office if he had been employed for a year. The narrow construction, which the judge accepted, is that the calculation of the introduction fee amounts to 25% of the actual fee paid to the sub-contractor by the Home Office in any given year.

[16]The judge expressed his confidence that the construction of Clause 5, which he had accepted, reflected the intention of the parties at the time the contracts were made by reference to what a reasonable person having all the background knowledge available to the parties would have understood them to be using the language in the contract to mean. He said that this construction focused on “the relevant words in their full documentary, factual, and commercial context”.

[17]Accordingly, the judge held that the introduction fee payable to Mindful under Clause 5 was 25% of the Sub-Contractors’ actual charges, namely, £16,037.71 inclusive of VAT. The judge ordered that interest at 5% be paid, and the total judgment sum was therefore recorded as £19,137.71 in his order of 3 March 2025.

[18]Given his preference for the narrow construction of the 25% Basis, the judge declined to deal with submissions from the Home Office to the effect that the broad construction of the 25% Basis, alternatively the Six Month Basis, would represent an unenforceable penalty and/or would be an unreasonable restraint of trade. He observed that the variables giving rise to conflicting submissions on penalties and restraint of trade were “too numerous”.

[19]The judge dismissed what he described as a “slam dunk” argument relied upon by Mindful that, in raising a claim on the Invoices, Mindful was entitled to rely on the provisions of Clause 7.11 of Part B of the Call-Off Contract (and so was entitled to the full amount claimed in the Invoices). He observed that the Invoices were not in respect of services under the contracts, or in respect of deliverables, and were therefore not “valid” invoices in the context of, and within the meaning of, Clause 7 of Part B of the Call-Off Contract as a whole.

THE APPEAL

[20]Mindful appeals on four grounds as follows: i) The judge was wrong in law to hold that the introduction fee fell to be calculated on the 25% Basis provided for in Clause 5. He should instead have held that the introduction fee fell to be calculated on the Six Month Basis (“Ground 1”); ii) The judge was wrong in law to construe “fee or annual remuneration” as meaning “total fees actually paid within the first 12 months” rather than “annualised” (“Ground 2”); iii) The Judge was wrong in law not to hold that, by virtue of Clause 7.11 of Part B of the Call-Off Contract, the Home Office was, in the circumstances, debarred from disputing the Invoices (“Ground 3”); iv) If, but only if, one of Grounds 1 to 3 succeeds, the judge was wrong in law not to award interest to Mindful pursuant to, and at the rate provided for by, the Late Payment of Commercial Debts (Interest) Act 1998 (“Ground 4”).

[21]The judge refused permission to appeal. However, permission to appeal on Grounds 1 to 3 of the Grounds of Appeal was subsequently granted by Rajah J on 22 September 2025. He ordered a rolled-up hearing (submissions on permission to appeal followed by the appeal if permission is granted) in relation to Ground 4. Mindful’s pragmatic position on the appeal was that, as I have indicated, Ground 4 would only be pursued in the event of Mindful being successful on one of the other three grounds.

[22]The Home Office served a Respondent’s Notice purporting to identify further reasons for upholding the Order of 3 March 2025. However, these reasons involved the submission that if the judge was wrong as to the scope of Clause 5, then it is unenforceable, for reasons set out in the Home Office’s Defence and skeleton argument for trial. In a skeleton argument served late for the appeal the Home Office explained that in the event of the appeal succeeding it wished to argue, as it had done below, that Clause 5 is a penalty clause and in restraint of trade.

[23]I explored this further with Mr Moss KC, acting on behalf of the Home Office, during oral submissions and he confirmed that it was the position of the Home Office that if the appeal were to succeed these issues would have to be remitted to the judge. He did not seek to persuade me that they were suitable for determination by this court. Save that Mr Grant, acting on behalf of Mindful, suggested that it might be possible for this court to make a finding on the threshold question of whether Clause 5 was susceptible to the penalties doctrine, I did not understand him to disagree that there would otherwise be a need for remission of these issues to the judge in the event of Mindful succeeding in its appeal.

[24]There is nothing between the parties on the approach to be taken to the interpretation of a written contract. Relevant guidance was provided by the Supreme Court in the well-known triumvirate of cases, Rainy Sky SA v Kookmin Bank

[2011] UKSC 50

, Arnold v Britton

[2016] UKSC 36

, and Wood v Capita Insurance Services Limited

[2017] UKSC 24

. I do not need to set this guidance out in this judgment. It was recently summarised by the Supreme Court in Providence Building Services v Hexagon

[2026] UKSC 1

at 21: “The modern approach in English law to contractual interpretation is to ascertain the meaning of the words used by applying an objective and contextual approach”.

[25]I turn now to address each of the grounds of appeal in turn. Ground 1

[26]Mindful submits that on its proper construction Clause 5 granted the Home Office the right to elect between providing the relevant information as to the annual fee or remuneration (in which case the 25% Basis applied) or not providing that information (in which case the Six Month Basis applied). It says that, from the outset, the Home Office unequivocally elected for the latter. Initially, as the judge found, the Home Office wrongly denied that it had continued to engage the Sub-Contractors and only accepted that this had taken place on 28 January 2021. The Sub-Contractors were on day rates and “at risk”, and it was only in December 2022, in its Amended Defence, that the Home Office identified the relevant daily rates. By this stage, Mindful’s contracts with the Home Office had long since ended, Mindful had raised the Invoices on the Six Month Basis, the Sub-Contractors had ceased to work for the Home Office, legal proceedings had been commenced by Mindful, and the Home Office (in its original Defence) had failed to provide any payment information.

[27]Alternatively, if there was no such election, Mindful submits that although the judge was right to construe Clause 5 as requiring the provision of information as to fees within a reasonable time, the judge was wrong to hold that the notification of that information by the Home Office in its Amended Defence was within a reasonable time. On a proper construction of the contracts as a whole (and in particular of Clause 7.11 of Part B of the Call-Off Contract) the judge should have held that a reasonable time was no later than 10 working days after Mindful had raised an invoice for the introduction fees; alternatively that notification of the relevant information in its Amended Defence served in December 2022, more than two years after the direct engagement by the Home Office of the Sub-Contractors, was not within a reasonable time.

[28]These arguments were skilfully and persuasively advanced by Mr Grant, but in the end I do not consider that the judge made any error of law. My reasons are as follows.

[29]The argument that the Home Office “unequivocally elected” not to provide the relevant information was not pleaded, is not in the list of issues for trial and did not feature clearly in the submissions at trial. Mr Grant frankly acknowledged this, but explained that it was suggested to the judge that the Home Office had a choice under Clause 5 to elect between two bases of calculation. He pointed to the judge’s identification of the two alternative calculations arising in Clause 5 at [26.6] of the judgment, namely: “An alternative calculation of the introduction fee is provided if the Buyer (HO) fails to inform the Supplier (Mindful) of the actual annual fees. The alternative calculation arises where the Buyer prefers not to or refuses to provide the remuneration information relevant to the sub-contractor”.

[30]Having made this point, the judge immediately went on to address the fact that no time limit is specified in relation to the provision of information by the Home Office. He then said this:

“This is because there will be circumstances in which the actual annual fee will be contingent on the services provided by the sub-contractor, contingent on the length and content of the services provided, and circumstances where the Buyer prefers not to reveal the figures. The relevant information should be forthcoming within a reasonable time. What a reasonable time is will depend on all the circumstances, including the terms on which the sub-contractor is re-engaged.”

[31]The parties accept that the judge accordingly decided to imply a term into Clause 5 that information as to the “fee or annual remuneration payable to a sub-contractor” should be provided within a reasonable time. Neither party seeks to criticise this decision, albeit that it is common ground that neither party proposed the implication of such a term in its pleading or at trial (other than possibly in passing during closing submissions). There was nothing in the list of issues at trial on the point, and neither party advanced any positive case as to what would amount to a reasonable time. There is no appeal against the judge’s decision to imply such a term.

[32]Pausing there, I cannot see that the election argument is anything more than an attempt to attack the judge’s finding that the information as to remuneration was provided within a reasonable time. If the judge was right about that, then the new argument that there has been an “unequivocal election” takes matters no further. On a fair reading of Clause 5, it does not appear to me to be a provision which requires an election to be made, just as it does not appear to be a clause which was objectively intended by the parties to grant the Home Office “the right to elect” between two options.

[33]In my judgment, Clause 5 simply provides for two possible calculations of the “introduction fee”, as the judge identified. In the first instance, it provides for the 25% Basis of calculation (assuming other relevant requirements are met). By way of alternative, however, it includes what is effectively a fall-back or default provision designed to ensure that the Supplier can recover under the clause even where information as to the remuneration of the sub-contractor is not forthcoming from the Home Office (whether because, as the judge said, the Home Office prefers not to, or refuses to, provide that information). In this fall-back scenario, as the judge has found and is not disputed, the Six Month Basis will be triggered where that information has not been provided within a reasonable time.

[34]Accordingly, I reject the suggestion that the judge erred in law in omitting to identify that Clause 5 granted the Home Office “the right to elect” between the provision of information or the non-provision of information. That seems to me to be a mischaracterisation of the effect and operation of the clause.

[35]Turning then to Mindful’s alternative argument under Ground 1, that the judge was wrong to hold that the Home Office had notified Mindful of the relevant information within a reasonable time, I also reject this argument. I do so for two primary reasons.

[36]First, I reject the suggestion by Mindful that, on a proper construction of the contract as a whole, the judge should have held that a reasonable time was no later than 10 working days after Mindful had raised an invoice for the introduction fees. This submission is entirely dependent upon the court accepting that Clause 5 is to be read together with, or seen in the context of, Clause 7.11 of Part B of the Call-Off Contract. For reasons I have set out in detail in respect of Ground 3, I consider this submission to be misconceived. I agree with the judge’s view that, on a true construction of the contracts, “the disputed invoices are not in respect of the delivery of G-Cloud services under the contract(s) or in respect of deliverables…and are not ‘valid’ invoices in the context of and within the meaning of Clause 7 as a whole”. Where the Invoices fell outside the scope of Clause 7, as the judge held, I cannot see that the question of what may be a reasonable time for the provision of information under Clause 5 could possibly be informed, much less determined by, the provisions of Clause 7.11.

[37]Second, it is said by Mindful that the judge should have held that notification of the relevant information in the Amended Defence in December 2022 was not within a reasonable time because it was more than two years after the Home Office’s engagement of the Sub-Contractors had begun and ended, because legal proceedings had been commenced and because a Defence had already been filed which did not include that information. However, what is reasonable must depend on all the circumstances of the case, and the judge’s decision was no doubt informed, as Mr Moss submitted, by the evidence he had heard at trial. In my judgment, that decision was a finding of fact, with which this court cannot interfere unless it was a finding that no reasonable judge could have made. Mindful does not make such a submission, and accordingly there is no proper basis on which this court could accede to the appeal on Ground 1 on this point.

[38]Although Mr Grant sought to recast the judge’s decision, submitting that there was an unspoken finding of law that a reasonable time was more than two years, I reject that submission. The judge found as a matter of law that a term was to be implied that information was to be provided in a reasonable time. He then found as a matter of fact that information had been provided within a reasonable time. No grounds have been advanced in this appeal to justify this court in overturning that factual decision. Accordingly, I dismiss Ground 1. Ground 2

[39]Before looking in detail at the parties’ respective arguments under this ground I must first stand back and consider the purpose of Clause 5. The judge considered that the contracts with which he was concerned were hybrid in nature, being neither true managed services contracts nor agency recruitment contracts. He observed that non-solicitation, or recruitment commission terms are not unusual in project contracts or managed services contracts. He accepted evidence from Mr Kapoor of Mindful that Clause 5 was designed to protect Mindful’s interests against the possibility that the Home Office would employ sub-contractors directly at the end of the contract period. Such employment would “seriously undermine Mindful’s business interests and its ability to operate effectively”, no doubt because it would preclude Mindful’s ability to use those sub-contractors on fresh contracts. That this was the purpose of Clause 5 is accepted by the Home Office in this appeal, which described the clause as seeking to deal with the allocation of risk.

[40]Against that background, I am inclined to agree with the Home Office, that while the fee provided for in Clause 5 is called an “introduction fee”, that is really something of a misnomer. By the time Clause 5 comes into operation, Mindful will already have introduced sub-contractors under the Call-Off Contracts who may have been working with the Home Office under the auspices of those contracts for many months, if not years. On the facts as found by the judge, the fee is instead intended to deter the Home Office from employing those same sub-contractors directly at the end of the contract with Mindful, and to provide an element of compensation for Mindful in the event that the Home Office nevertheless decides to do just that.

[41]I now turn to the arguments on Ground 2, where the central question is whether the judge was wrong to prefer the narrow construction I have identified above.

[42]The judge held that “the ‘annual fee’ is the fee paid, or to be paid, to the engaged sub-contractor in the calendar year commencing on the date of the introduction”. This he said was “the actual sub-contractor’s fee for the period worked and services delivered, not a sub-contractor’s notional fee based on previous annual fees, or the grossing up or annualisation of actual fees paid for a shorter period”. His reasons for preferring this interpretation were(i) that if the parties had intended to provide for 25% of annualised fees “Clause 5 could have unambiguously said so”;

(ii) that an “annual fee” is not an “annualised fee” reflecting a notional annual figure derived from actual fees payable over a shorter period; and that

(iii) were it otherwise, in an “extreme case”, the “re-engagement of a sub-contractor for a single day would trigger a notional annual figure by way of commission” and that such a result would be “startling”. In the case of the Sub-Contractors, the amounts alleged to be due under the Invoices are approximately four times what was actually paid. The judge also explained, as I have mentioned above, that his construction of Clause 5 was a construction focused on “the relevant words in their full documentary, factual and commercial context”.

[43]Mr Grant advances three main arguments in support of the proposition that the judge’s construction was wrong in law.

[44]First, Mr Grant submits that the judge should not have placed much weight, if any, on the fact that Clause 5 could have referred to ‘annualised’ fees but did not do so. I am inclined to accept this submission. Mr Grant took me to an extract from Lewison: Interpretation of Contracts at Section 13 (“Why not say it?”) which makes clear that: “[s]ince almost any dispute about the interpretation of a contract involves rival meanings, it is seldom helpful to ask why parties did not adopt one of those rival meanings in their contract”.

[45]I did not understand Mr Moss to disagree with this proposition. However, he made a slightly different point, namely, that the Six Months Basis expressly refers to “six months”, putting beyond doubt that, on this calculation, the monthly fee must be calculated by reference to a period of six months. This is in contradistinction, he submits, with the 25% Basis, which, if it had meant three months (i.e. 25% of an annualised fee) it could have said three months. However, it did not do so.

[46]While I bear in mind the extract from Lewison to which I have referred, I am inclined to think that some weight is to be attached to this point, because it tends to suggest that when the parties were thinking in terms of part of a year’s worth of fees, they reflected that concept by reference to “months”. That the 25% Basis does not take the same approach, appears to me to be a small pointer in favour of the narrow construction.

[47]Second, Mr Grant takes issue with the judge’s focus on the “extreme case”. He submits (correctly) that the exercise of construction must be conducted objectively from the perspective of the reasonable person having all the relevant background knowledge which would reasonably have been available to the parties at the time of entry into the contract. He submits that, at that time, the reasonable person would have contemplated re-engagement of sub-contractors for a substantial period of time (certainly considerably more time than merely one day) and that the judge’s focus on “the extreme case” involves the illegitimate retrospective invocation of commercial common sense (see Arnold v Britton at [19]).

[48]I reject this submission. I am inclined to agree with Mr Moss that it could reasonably have been contemplated at the time of entry into the contract that the Home Office may wish to continue to use sub-contractors (who had already been working for it on the provision of services) to complete an ongoing project or to provide services of a relatively short-term nature, particularly in circumstances where there might remain uncompleted deliverables owing to the fact that the contract values were fixed. This is in fact what happened here, where, as the judge put it, the contract values had already been “maxed out”.

[49]The judge records that Ms Payne’s evidence (on behalf of the Home Office) was that the Sub-Contractors were in fact used to complete their specialist activities in respect of contract deliverables. Given the nature of the contracts, including the cap on their total value, the potential for this to happen must plainly have been in the contemplation of the parties at the time of entry into the contract.

[50]In circumstances where it could reasonably have been contemplated that ongoing direct employment may be for a relatively short period, I am inclined to agree that a payment clause which made provision for payment of a percentage of the actual fee charged makes considerable commercial sense. It has the advantage of compensating Mindful for the Home Office’s decision to employ a sub-contractor directly while at the same time ensuring that Mindful does not receive a windfall in the event that a sub-contractor is engaged only for a comparatively short period of time. As the judge said: “It caters for the protection of Mindful’s legitimate interests when identifying and providing sub-contractors…and reflects, for Mindful, a greater financial margin than would have been applied during the currency of the original contracts”.

[51]Furthermore, to my mind, this construction is not only consistent with commercial common sense, but it also fits with the purpose of Clause 5 to which I have referred above. Where there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other (see Rainy Sky at [21]). I reject the suggestion that, in taking this approach, the judge was invoking common sense retrospectively.

[52]Mindful submits that the narrow construction carries the implausible and uncommercial consequence that in many cases (not just extreme cases) Mindful would be unable to invoice for its introduction fee until a full year had lapsed (or after the direct engagement of the sub-contractor had terminated, if sooner). While I agree that this does appear to be a consequence of the narrow interpretation, I do not agree that it is a consequence which should itself be determinative on the issue of construction. Bearing in mind that one purpose of Clause 5 was to have a deterrent effect, the question of the timing of recovery of the fee is a matter of mechanics, whereas the question of the level of the fee itself is, in my judgment, much more likely to have featured in the considerations of the parties objectively assessed at the time of entry into the contract.

[53]Third, Mr Grant submits that, most important of all, the judge failed to place sufficient weight on the fact that the narrow construction is inconsistent with, or at least renders otiose, the penultimate sentence of Clause 5 to the effect that:

“[n]o refund of the introduction fee will be paid in the event that the engagement subsequently terminates”

. While this sentence has given me pause for thought (because, of course, there would not need to be any refund in a case where the Home Office is simply liable for 25% of whatever it has paid in the course of a year), I am ultimately persuaded that its position in Clause 5, after the sentences dealing with the Six Month Basis for the calculation, means that it was intended to apply only to the Six Month Basis - in respect of which it makes perfect sense.

[54]In so far as the judge expressed the view at [26.5] of the judgment that the penultimate sentence of Clause 5 applies to the 25% Basis (which is not in any event entirely clear), I consider that he was mistaken. However, that mistake does not undermine the conclusion that he arrived at. That the final sentence of Clause 5 (“VAT is payable in addition to any fee due”), was plainly intended to apply to both the 25% Basis and the Six Month Basis of calculation, as is accepted by both parties, does not appear to me to indicate that the penultimate sentence necessarily falls into the same category. As the judge correctly observed, the task of the court is to strive to give effect to a term that the parties incorporated in their dealings on the basis that it must have some commercial meaning.

[55]Standing back from the arguments and considering Clause 5 from a textual, contextual, and purposive perspective, I consider that the judge’s approach of preferring the narrow construction was plainly right. It recognised that the concept of an annual fee could have two meanings, but it adopted the meaning that was more consistent with commercial common sense having regard to the intentions of the parties objectively construed at the time of entering into the contract. For these reasons, I dismiss Ground 2. Ground 3

[56]Mindful contends that Clause 7.11 of Part B of the Call-Off Contract provides a mechanism that must be followed if the Home Office wishes to dispute an invoice raised by Mindful, namely, a 10 working day period within which the Home Office was required to provide a covering statement with proposed amendments to the invoice together with reasons. Mindful submits that, in the absence of compliance with this process, the invoice is taken as not disputed and must be paid. The Home Office is then precluded from raising any defence to the invoice which it did not raise timeously and in accordance with the agreed dispute procedure.

[57]As I have already indicated, the judge held that the Home Office was not precluded from disputing the Invoices because the Invoices were “outwith the scope of Clause 7”. Mindful contends that this was an error of law. In addition, it contends that the Home Office is bound by an admission in its pleaded case that Clause 7 of Part B of the Call-Off Contract applied to the Invoices and that it is not entitled to resile from that admission, just as it was not open to the judge to ignore a relevant concession.

[58]As to the question of the scope of Clause 7, I have already indicated that I am in agreement with the judge that Clause 7 does not determine the approach to be adopted to an invoice levied pursuant to Clause 5.

[59]Clause 7 of Part B of the Call-Off Contract (as its heading makes clear) is concerned with “Payment, VAT and Call-Off Contract charges”. Clause 7.1 provides that:

“[t]he Buyer must pay Charges following Clauses 7.2 to 7.11 for the Supplier’s delivery of the services”

. Clause 7.2 provides that the Buyer will pay the Supplier within the number of days specified in the Order Form on receipt of a valid invoice. Clause 7.3 provides that “[t]he Call-Off Contract Charges include all Charges for payment Processing”. It goes on to say that “[a]ll invoices submitted to the Buyer for services will be exclusive of any management charge”. Clause 7.5 provides that “[t]he Supplier must ensure that each invoice contains a detailed breakdown of the G-Cloud Services supplied” and that the Buyer “may request the Supplier provides further documentation to substantiate the invoice”.

[60]Part A of the Call-Off Contract contains the specific provisions applicable to the relevant Call-Off Contract. Under the heading “Call-Off Contract Charges and Payment” it sets out the charges and payment details in a table. It refers to Schedule 2 “for a full breakdown”. The table includes two relevant rows, the first headed “Invoice Information Required” and the second headed “Call-Off Contract Charges”. In respect of the “Invoice Information Required”, the table identifies information (in 11 bullet points) which must be included in “all invoices”, including the unique purchase order number and the services detailed in the Statement of Work to which the invoice relates. In respect of the “Call-Off Contract Charges”, the table states that the “breakdown of the Charges is attached in the excel workbook - C18578”. Mr Moss also showed me a spreadsheet identifying the services that were being provided under the Call-Off Contracts together with the total value of those services.

[61]In my judgment, it is plain from the contractual provisions to which I have referred that the invoices referred to in Clause 7 of Part B are intended to be the invoices to be raised by the Supplier under the Call-Off Contract in respect of the provision of the services, and that the reference to charges is to charges for the provision of those services, i.e. the contract deliverables. Those charges were capped at a specific sum for each Call-Off Contract, and I cannot see how a fee falling under Clause 5 could possibly have been intended to fall within those services.

[62]During his oral submissions, Mr Grant suggested that the introduction fee provided for by Clause 5 must be taken as a fee that falls within the services, and he showed me the definition of G-Cloud Services in Schedule 6 to the Call-Off Contract, namely:

“The Cloud services described in Framework Agreement Section 2 (Services Offered) as defined by the Service Definition, the Supplier Terms, and any related Application documentation…”

. He submitted that, owing to the reference to the Supplier Terms in this definition, the services must include a fee payable pursuant to Clause 5. However, I reject that submission. To my mind, this definition does no more than provide that, to the extent that the Cloud services are defined in the Supplier Terms, they will fall within the G-Cloud services. However, Clause 5 does not purport to define the Cloud services, and indeed it appears to me to be implicit within Clause 5 that the engagement by the Home Office of a sub-contractor after the determination of the supply contract will fall outside the services under the contract. I note in this regard the distinction between Clauses 1 to 4 of the Supplier Terms (which make provision for the supply of services) and Clause 5 (which makes provision for what is to happen in the event of engagement by the Home Office after those services have ceased).

[63]I do not consider the judge’s finding at [31] of the judgment, that there has been a “supply” of services for VAT purposes, alters the position. The judge was not there finding that the engagement of the Sub-Contractors by the Home Office fell within the definition of G-Cloud services under the contracts, and nor could he have done so. He had earlier explained in his judgment that there was a maximum contract value and that the contracts had already “maxed out”.

[64]Aside from the fact that an invoice raised under Clause 5 could not possibly comply with the requirements for an invoice under the Call-Off Contract, I note that Clause 5 makes no reference to the raising of an invoice in any event, suggesting that (when considered objectively), the parties did not intend a claim for payment under that clause to be treated in the same way as a claim made in an invoice for a charge in respect of contract deliverables. I consider that

the judge was correct when he expressed the view that:

“Mindful has attempted to graft onto Clause 5 the procedural provisions of Clause 7.11, which latter provisions were engaged only in respect of contractual deliverables. The sub-contractors were not themselves deliverables.”

[65]Accordingly, I reject the submission that the reference to an “invoice dispute” in Clause 7.11 incorporates a dispute in respect of an invoice raised under Clause 5 and, in my judgment, the judge was right to hold that the Invoices raised by Mindful under Clause 5 were outwith the scope of Clause 7 such that its provisions were not engaged.

[66]As to the pleading point, Mindful’s case in respect of Clause 7.11 was pleaded in paragraph 20 of the Particulars of Claim. In that paragraph it stated in the first sentence that the Invoices had been raised. It recorded the effect of Clause 7.11 in the second sentence and then, in the final sentence, it pleaded that the Home Office had not returned the Invoices within 10 days “and on a proper construction of Clause 7.11 is therefore barred from now disputing the invoice”.

[67]In its Defence at paragraph 28, the Home Office admitted the first sentence (i.e. that the invoices had been raised) but at paragraph 29 it expressly denied the second and third sentences. It went on to say this: “Clause 7.11 properly construed is aimed at disputes as to the quantum of an invoice, not to a situation in which the issue is whether an invoice is actually applicable in the first place. In the premises, the Defendant is not barred from disputing the invoice on the basis of clause 7.11”.

[68]Pausing there, I disagree with Mindful that it was implicit in the Home Office’s pleaded case that Clause 7.11 was applicable to the Invoices. On the contrary, not only had the Home Office denied the operative sentences of the Particulars of Claim, but it had also made clear in paragraph 29 of its Defence that Clause 7.11 was aimed at disputes as to the quantum of an invoice, which I understand to be a reference to an invoice as defined in the Call-Off Contract. I fail to see how or why the Home Office had there indicated an acceptance as to the applicability of Clause 7.11 to the Invoices raised under Clause 5.

[69]Mindful then points to paragraph 32 of the Defence in which the Home Office admitted a plea that the Invoices were due for payment within 30 days of their date (pursuant to the Call-Off Contract charges and payment section of the contracts, or s.4(2A)(b) of the Late Payment of Commercial Debts (Interest) Act 1998). In the same paragraph it then went on to say: “although the defendant avers that the invoices were not paid within 30 days of their date because there was a dispute as to whether the invoice was applicable”.

[70]While I agree that this plea appears to acknowledge that the Invoices were governed by the payment terms in the contracts, which included Clause 7, on a fair reading of the pleading as a whole I reject the suggestion that it in fact does so. Such an admission would not be consistent with the pleading at paragraph 29 and, furthermore, the plea at paragraph 32 makes tolerably clear that the Home Office did not consider it necessary to pay the Invoices within 30 days of their date “because there was a dispute as to whether the invoice was applicable”. I certainly do not read this as a clear admission that Clause 7 governed the approach to be taken to the Invoices.

[71]Although I agree with Mr Grant that the way in which the Defence has been pleaded certainly leaves scope for confusion as to what is and what is not being admitted, on a fair reading I do not consider the Defence to have clearly or unequivocally admitted that Clause 7 (including Clause 7.11) applies to the Invoices. Accordingly, I reject the suggestion that the judge was not entitled to find that the Invoices fell outside the scope of Clause 7.11. In so doing he was making a finding on a pure question of law, which he was entitled to do even if that question of law had not been fully articulated until closing submissions at trial.

[72]Accordingly I dismiss Ground 3.

CONCLUSION

[73]For all the reasons given I dismiss the appeal. There is no need for me to go on to consider Ground 4, which Mindful accepts need only be addressed in the event of success on one of the other three grounds. The judge’s order will stand. There is no need to remit any further matters to the judge for determination.

[74]I repeat my thanks to counsel for their helpful submissions. - - - - - - - - - - - - - - Digital Transcription by Marten Walsh Cherer Ltd 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com