England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 June 2016

MR JUSTICE ARNOLD :

Contents

Topic	Para
Introduction	1-2
The parties	3-4
The witnesses	5-25
Janus' factual witnesses	5-10
Missing Janus witnesses	11-13
Safeguard's factual witnesses	14-20
Missing Safeguard witnesses	21-22
Expert witnesses	23-25
Janus' disclosure	26-30
The foreign exchange market	31-45
Markets and market participants	31-34
Exchange rates: benchmark/interbank rates	35-43
Foreign exchange transaction: market practice	44
Margins and fees	45
Payroll processing and payment services	46-52
The Agreement	53-73
The facts	74-227
Negotiations between Safeguard and Travelex leading to the
Travelex agreement	74-86
Janus' processes for payroll processing and payment prior to the Agreement	87-89
The negotiation of the Agreement	90-103
Discussions following the signature of the Agreement	104-120
Implementation of the Agreement from September 2008 to February 2009	121-146
The switch from Travelex to CFX in May 2010	147-157
Communications about the rates charged by CFX in July 2010	158-167
Ms Arakaki analyses the payroll funding in September 2010	168-170
Addition of Switzerland to the Agreement in October 2010	171-177
Safeguard's knowledge of the Janus SAP rates from March 2011	178-186
Janus expresses dissatisfaction with Safeguard's service in July 2011	187
The beginning of direct funding in September 2011	188-191
Janus expresses dissatisfaction with Safeguard's service in November 2011	192-193
Addition of Taiwan to the Agreement in February 2012	194
Janus considers an alternative provider in October 2012	195
Janus' alleged discovery of its cause of action in March/April 2013	196-227
The events which prompted Janus' internal investigation	196-200
Janus' internal investigation	201-214
Communications between Janus and Safeguard	215-227
Janus' primary claim for breach of the Agreement	228-237
Janus' alternative claims	238-250
Fiduciary duties	245-249
Duty of care	250
Estoppel	253-254
Contractual limitation	255-258
Result	259

Introduction

1. From September 2008 to November 2013 the Defendant ("Safeguard", also referred to as "SGW" and "SGWI" in the contemporaneous documents) provided payroll processing services to the Claimant ("Janus") and acted as an intermediary between Janus and two successive foreign exchange and payment providers, Travelex and Corporate FX ("CFX"). Janus contends that it was overcharged by Safeguard in relation to the foreign exchange and payment services it received. Janus' primary claim is for breach of a contract between Janus and Safeguard dated 8 August 2008 ("the Agreement"). By its primary claim, Janus claims damages representing the foreign exchange margins charged by Travelex and Corporate FX (on average, almost 3%). In the alternative, Janus makes claims for (i) breach of fiduciary duty and (ii) breach of a duty of care. By its alternative claims, Janus claims (i) an account of commission payments received by Safeguard from Travelex and CFX and (ii) damages representing the difference between the foreign exchange margin it was charged and a "commercially reasonable" margin, which it says would have been in the range 0.2 to 0.5%. Safeguard denies breach of any duty, and also advances defences of estoppel and contractual limitation.
2. A key issue between the parties is whether, as Janus contends, the provision of foreign exchange and payment (as distinct from payroll processing) services by Safeguard formed part of the Agreement, or whether, as Safeguard contends, they were provided separately. In the first instance, this is a question of construction of the Agreement. Neither the pre-contractual negotiations nor the post-contractual conduct of the parties are admissible evidence on this question. If the provision of foreign exchange and payment services by Safeguard did not form part of the Agreement, however, it is necessary to analyse the basis upon which they were provided, and in particular whether they were provided pursuant to one or more separate contracts. It is common ground that both the communications between the parties prior to the point at which it was agreed that the foreign exchange and payments services would be provided and the subsequent conduct of the parties are admissible evidence on this question (see Chitty on Contracts (32^nd ed) at 13-100 and 13-129). Moreover, these events are relevant to Safeguard's defences. It follows that I must make findings of fact for these purposes even though I shall have to disregard them when construing the Agreement.

The parties

3. Janus is a part of the Janus Capital Group, a consolidated and publicly traded entity which carries on investment business, including the management of investment funds, and the provision of advisory services to individual and institutional investors. Its headquarters are in Denver, Colorado, USA. It carries on business in the USA and in other countries. At the time of the Agreement, it had employees in Australia, Belgium, Canada, Germany, Hong Kong, Italy, Japan, Singapore and the UK. Subsequently, France, Dubai, the Netherlands, Switzerland and Taiwan were added (or at least were added to the Agreement). Janus is regulated in the USA and the other jurisdictions in which it operates, it is subject to the reporting requirements of the US Securities and Exchange Commission, and it is subject to applicable US securities legislation. It was founded in 1969 and now has some $150bn under management.
4. Safeguard is a payroll company, that is to say, a business to which employers outsource their payroll function. Safeguard was formed as a result of a management buyout of the international payroll business of a company called SG World Ltd in December 2007. SG World had a well-established domestic payroll processing business i.e. payroll processing for employers with employees just in the United Kingdom. Bjorn Reynolds identified a gap in the market for international payroll processing where the employer had an international workforce. Mr Reynolds persuaded SG World to offer a solution whereby it undertook the payroll function for all countries, thereby relieving the employer of the need to deal with multiple local providers. SG World started offering this service in 2006, but the owner of the company saw it as a drain on SG World's main business. Accordingly, Mr Reynolds led a management buy-out of the international payroll business, taking 11 members of staff with him. At the time of the negotiations between Janus and Safeguard, therefore, Safeguard was a new business. Moreover, it was one which had not yet made a profit.

The witnesses

Janus' factual witnesses

5. Kristina ("Tina") Brewer is a Certified Public Accountant with a degree in Business Administration and Accounting who has been employed by Janus since November 2002, initially as a Senior Corporate Accountant. From May 2007 to January 2015 she was Corporate Accounting Manager. From January 2009 she oversaw compensation accounting, although she started transitioning to that role in September 2008. Since January 2015 she has been Senior Corporate Accounting Manager. From October 2007 to 2010 she reported to Christine Spath. Since then she has reported to Karlene Lacy. I am generally cautious about relying upon witnesses' demeanour when assessing their evidence, but in the case of Ms Brewer her body language spoke volumes about her discomfort over the evidence she was giving. It was evident that she felt compelled to try to support Janus' case on certain matters when she did not believe it. Moreover, key aspects of her evidence are difficult, if not impossible, to reconcile with the contemporaneous documents.
6. Christopher Desiato, has been employed by Janus in various procurement-related positions since July 1999. Since January 2008 he has been Director of Supply Management. Ms Desiato was an unimpressive witness who was somewhat evasive in his answers, but this matters little since his role was relatively peripheral.
7. Pamela Infiesto has been employed by Janus since 23 May 2011, initially as Payroll Manager. She replaced Kris Burke. Since January 2013 Ms Infiesto had been Senior Payroll Manager. She has always reported to Ms Lacy. As counsel for Safeguard submitted, it was clear that, like Ms Brewer, Ms Infiesto was determined to stick to the party line. While she appeared less uncomfortable than Ms Brewer, she had too considerable difficulties explaining how her evidence could be reconciled with the contemporaneous documents. Moreover, I have real concerns as to the truthfulness of some of her evidence having regard to disclosure given by Janus after the conclusion of the factual evidence (as to which, see paragraph 29 below), although I bear in mind that Ms Infiesto was not recalled to deal with those matters.
8. Andrew Johns has been employed by Janus since November 2005, initially as a Payroll Accountant. Since July 2008 he has been Senior Corporate Accountant. He reports to Kelly Harrison. As counsel for Safeguard rightly accepted, Mr Johns was the most candid of Janus' witnesses. I consider that his oral evidence was generally accurate, although it differed from his witness statement.
9. Ms Lacy is a Certified Public Accountant who has worked in the field of tax since about 1986. She has been employed by Janus since December 2005, initially as Vice President of Taxation. Since 2012 she has been Senior Vice President of Taxation and Compensation Accounting. The comments I have made in relation to Ms Infiesto are also applicable to Ms Lacy.
10. In addition to the witnesses who gave oral evidence listed above, Janus adduced evidence from Amy Stefonick, who is Assistant Vice President, Senior Corporate Counsel and Assistant Secretary of Janus Capital Group. She gave evidence about certain aspects of Janus' disclosure. She was not required to attend for cross-examination.

Missing Janus witnesses

11. A number of significant potential witnesses were not called by Janus, and in particular the following:

i) Astrid Arakaki, who worked under Ms Brewer on payroll accounting from September 2008 to 2011.

ii) Kris Burke, who was Ms Infiesto's predecessor from June 2007 to 29 April 2011.

iii) Betsy Conti, who was employed by Janus as a Project Manager in its IT Department. Ms Conti was responsible for the initial negotiations with Safeguard for the Agreement and was the Project Lead for Janus on the implementation of the Agreement.

iv) Kevin Forant, who was employed by Janus as a Commodity Manager. Mr Forant was responsible for negotiating the detailed terms of the Agreement with Safeguard.

v) Heather Kunz, who worked under Ms Brewer on payroll accounting from 2011 to February 2014, effectively replacing Ms Arakaki.

vi) Ms Spath, who was employed by Janus as Assistant Controller.

12. It appears, although it is not entirely clear, that all of these witnesses have left Janus' employment. It is far from clear from Janus' evidence what, if any, efforts were made by Janus to obtain evidence from them. It seems improbable that none of them would have been prepared to give evidence voluntarily, particularly with cross-examination by videolink so as to avoid the need for transatlantic travel. Even if they were unwilling to give evidence voluntarily, it would have been relatively straightforward for Janus, as a US company, to have obtained their testimony by means of an application under section 1782 of the US Code.
13. Counsel for Safeguard did not submit, as he might well have done, that in these circumstances I should draw an adverse inference from Janus' failure to adduce evidence from these witnesses. Accordingly, I shall not do so. In the absence of evidence from these witnesses, however, there is no reason to assume that their evidence would have supported Janus' case. In particular, there is no reason to assume that contemporaneous documents of which they were authors and/or recipients meant something other than what they appear to say.

Safeguard's factual witnesses

14. John Giles has been Chief Operating Officer (or since 2015 Executive Director) of Safeguard since its formation in December 2007. He was previously Commercial Manager at SG World, and was involved in the management buyout which led to the creation of Safeguard.
15. Julie Gregson was employed by Safeguard as Implementation Manager from December 2007 to November 2010. Since then she was been employed by CME Group as International Payroll Manager. Ms Gregson was the only independent witness of fact called by either party. For that reason I regard her evidence as particularly important.
16. Shelia (pronounced "Sheila") Porter has been employed by SafeGuard World International LLC, a wholly-owned subsidiary of Safeguard, since October 2011, initially as a Global Account Manager. From October 2012 to November 2014 she was Vice President of Operations – Americas. Since November 2014 she has been Vice President of Global Services Delivery.
17. Mr Reynolds has been Chief Executive Officer of Safeguard since its formation. He had previously been employed by SG World Ltd since 2005, and led the management buy-out as described above.
18. Richard Thomas has been employed by Safeguard since May 2008, initially as Payroll Team Leader. At the end of 2009 he was promoted to Payroll Manager, and at the end of 2010 he was promoted to Vice President of Operations. Since July 2012 he was been part of Safeguard's projects team. Mr Thomas took over managing Janus' account from Tristan Woods in the spring of 2009 and continued to work with Janus until July 2012. Mr Thomas was a somewhat diffident and nervous witness, but nevertheless a candid one.
19. Tristan Woods has been employed by Safeguard since its formation, initially as Vice President of Global Operations. He had previously been employed by SG World. In the spring of 2009 he became Head of Professional Services and at the end of 2012 he became Chief Technology Officer. Mr Woods was an impressive witness whose evidence was very clear and cogent, although it turned out that his recollection was inaccurate with respect to the peripheral issue of what happened on 24 October 2008 (as to which, see below).
20. As counsel for Safeguard submitted, there was a striking contrast between the evidence of Janus' witness and that of Safeguard's witnesses. Counsel for Janus rightly accepted that all Safeguard's witnesses had given honest evidence, but submitted that their recollection was incorrect in certain respects. I do not accept this. Unlike the evidence of Ms Brewer, Ms Infiesto and Ms Lacy, the evidence of Safeguard's witnesses is generally consistent with the contemporaneous documents, and I am not persuaded that their recollection was shown to be unreliable in any material respect during cross-examination. To the limited extent that there is a direct conflict between the evidence of Janus' witnesses and the evidence of Safeguard's witnesses, I have no hesitation in preferring the latter.

Missing Safeguard witnesses

21. A number of potential witnesses were not called by Safeguard, and in particular the following:

i) Mark Gottsberger, who was mainly responsible for negotiating the Agreement with Janus in 2008.

ii) Anneliese Beech, an International Client Services Executive employed by Safeguard in July 2010.

iii) Kevin Dougherty, who was Ms Porter's superior in March 2013.

22. No explanation was given for this by Safeguard. In my view the absence of these witnesses is much less significant than the absence of the potential Janus witnesses referred to above.

Expert witnesses

23. Janus' expert witness was Rebecca O'Brien. She was employed by Ruesch International as a Foreign Exchange Consultant from 1998 to 2000, by Comerica Bank as a Corporate Trader and Assistant Vice President from 2000 to 2005 and as Director of Global Capital Markets for Square 1 Bank from 2005 to 2013. Since 2014 she has been principal of her own advisory firm.
24. Safeguard's expert witness was Tara Little. She was employed by Ruesch International Inc as Deputy Director of Sales, Assistant Regional Manager and Head of Product Development from 1994 to 2001 and 2002 to 2005, by Ruesch International Ltd and then Travelex Payments Ltd as European Trading Manager from 2005 to 2008, by Travelex Global Business Payments Ltd as Director of Pricing and Sales Operations for EMEA from 2009 to 2011 and by Western Union Business Solutions (UK) Ltd as Director Business Performance Management and Director of Pricing and Sales Operations EMEA from 2011 to 2014. Since 2014 she has acted as consultant, initially as a sole trader and then through her own firm.
25. Both Ms O'Brien and Ms Little were good expert witnesses. It was clear from their evidence that the differences between them were mainly attributable to the differences in their experience. Ms O'Brien's perspective was that of foreign exchange and payment services in the banking sector, while Ms Little's perspective was that of foreign exchange and payment services in the non-bank sector. Ms Little's experience at Travelex and Western Union meant that she was ideally placed to answer the questions the experts were asked to consider, while Ms O'Brien's experience was less relevant. Even in the banking sector, Ms O'Brien had little personal experience of either the mechanics of payment services or of pricing payment services as opposed to foreign exchange. Furthermore, Ms Little provided more independent evidence to support her opinions than Ms O'Brien did (including a report by Accourt which Ms O'Brien located after the preparation of her report and therefore produced separately). Accordingly, I prefer Ms Little's evidence to Ms O'Brien's where they differed.

Janus' disclosure

26. During the course of the trial Safeguard raised a number of issues as to disclosure given by Janus in these proceedings, and a certain of amount of time was spent exploring these questions with the witnesses. Counsel for Safeguard pursued these issues in Safeguard's closing submissions and raised two new issues which had arisen out of late disclosure by Janus after the conclusion of the factual evidence (and in one case after the conclusion of all the evidence). Counsel for Janus pointed out that both parties had given late disclosure in this case, and submitted that, although Janus' conduct in giving late disclosure might have been regrettable, it was no more reprehensible than that.
27. In my view Safeguard was entirely justified in raising the questions that it did, and I am not satisfied that Janus has fully answered those questions. I am particularly concerned about three matters. First, Janus gave disclosure in two stages: in May 2014 it gave disclosure in answer to a request for further information about Safeguard's limitation defence and in May 2015 it gave disclosure in the ordinary way. There are two significant differences between the documents disclosed at these different stages. The first is that on the first occasion Janus failed to disclose Ms Brewer's email dated 27 July 2010 (see paragraph 165 below), but this was disclosed the second time round. The second is that different versions of a Word document with the file name "fund_requisition_flow.doc" which dates from March 2013 (see paragraphs 210-211 below) were disclosed at each stage. The first version was disclosed solely as a hard copy, while the second version was disclosed as an electronic document. The first version omits important wording which appears on the second version. Janus has not been able to provide a satisfactory explanation as to how the first version came into existence, and it is at least possible that the first version is an artefact compiled from two different versions of the document (which, from further disclosure given by Janus during the trial and explanations given by Ms Stefonick, appears to have gone through at least four versions in total).
28. Secondly, Janus disclosed an additional document entitled "International Payroll Funding Process" dated 8 September 2010 (see paragraph 168 below) after the conclusion of the factual evidence. No satisfactory explanation has been provided as to why this document had not been disclosed previously, particularly given that Janus provided several tranches of late disclosure before and during the trial and given its obvious relevance.
29. Thirdly and most seriously, Janus disclosed a call log created by Ms Infiesto. The evidence of Ms Infiesto and Ms Lacy was that this document was an approximately contemporaneous record of communications in March and April 2013. Both Ms Infiesto and Ms Lacy relied upon the document in their evidence as supporting their recollection of the communications in question. After the conclusion of the factual evidence, Janus' solicitors disclosed further versions of the document and stated, on instructions from Ms Infiesto, that the version which had previously been disclosed had been re-created by Ms Infiesto in September 2013 from an earlier version created in March 2013, which had been printed but the electronic copy of which had been "lost", with a material addition. If that were not bad enough, after the conclusion of all the evidence, Janus disclosed an email from Ms Infiesto to Ms Lacy dated 24 September 2013 which strongly suggests that, in fact, Ms Infiesto created the document for the first time in September 2013.
30. I accept the submission of counsel for Safeguard that these concerns reinforce the need to treat the evidence of Janus' key witnesses with caution and to place primary reliance upon the documentary evidence where one can be confident of the authenticity and date of the documents.

The foreign exchange market

Market and market participants

31. The foreign exchange or FX market consists of the trading or exchange of currencies, and the settlement of those trades by payment. Currencies are divided into three categories: majors (USD, GBP, EUR, JPY, CHF), minors (such as AUD and CAD) and exotics. This distinction reflects trading volumes, and it translates into, amongst other things, a difference in the bid/ask spread as between the categories. This is narrow for the majors, wider for the minors and wider still for the exotics. The foreign exchange market is very substantial in terms of volume.
32. There are various participants in the market:

i) At the top are the large institutional traders, or dealers, mostly at "money centre banks" (non-retail banks dealing with governments, substantial companies and other banks and financial institutions, but not consumers), who account for the majority of the trades in number and value and are market makers in major (and most minor and exotic) currencies.

ii) Next are other banks, together with non-bank foreign exchange providers. Although they may trade in large volumes, their primary function is to provide foreign exchange services (trade and settlement) to corporate and retail clients.

iii) Next are the foreign exchange brokers, who offer speculative trading to individuals, and also some foreign exchange-related services to both corporate and retail clients.

iv) Finally, there are the money service businesses that typically focus on employees' remittances and other small non-speculative foreign currency transactions.

33. This case involves two non-bank foreign exchange providers falling within category (ii) above: Travelex and CFX. As is apparent from their involvement, both offer the currency exchange and international payment services required by a payroll function with an international dimension. Both are authorised in the UK for the provision of payment services.
34. The foreign exchange market is lightly regulated and de-centralised. Although regulation is light, there exist codes of conduct for market participants which have been endorsed by the authorities. In the US, codes have been published by the Foreign Exchange Committee which is an industry group sponsored by the Federal Reserve Bank of New York. In the UK, the current code is the Non-Investment Products Code, which was drawn up by market participants in November 2011, with input from the Bank of England and the Financial Services Authority. Its contents represent good market practice and it applies to brokers as well as dealers.

Exchange rates: benchmark/interbank rates

35. Information relating to exchange rates at any given point of time is freely available from a number of sources. The two pre-eminent benchmarks in the global market during European trading hours are (i) the WM/Reuters (WMR) 4pm London fix, produced by the WM Company, which is the dominant benchmark, and (b) the European Central Bank's reference rates, which are the euro foreign exchange rates set by the ECB at 2.15pm Central European Time. The rates they publish are loosely referred to as "interbank" rates, which are intended to represent as closely as possible the prevailing rate at which currency is transacted on the wholesale market.
36. The WMR fixes are based on transactional and quote data obtained from the two main wholesale foreign exchange trading platforms, EBS (which is part of ICAP) and Thomson Reuters Matching. The fixes are based on trades, and active bids and offers, taking place in a one-minute window (since 15 February 2015 extended to five minutes in accordance with one of the recommendations of the Financial Stability Board in its report Foreign Exchange Benchmarks dated 30 September 2014).
37. In addition to the London 4pm fix, WMR provides spot, forward and non-deliverable benchmark rates at fixed points daily (spot rates are for spot trades, that is, trades for settlement within two business days; forward rates are for trades for settlement at a specified date more than two business days in the future). In particular:

i) For the 21 "trade currencies", a spot interbank rate at 30 minute intervals between the hours of 6am (Hong Kong/Singapore time) on Monday to 10pm (UK time) on the following Friday. The spot interbank rate is based upon bids, offers and trades over a one-minute window from +/- 30 seconds either side of the specified fix time from a single trading platform. What is published is a median mid-rate and calculated interbank bid and offer rates around the mid-rate.

ii) For the 139 "non-trade currencies", a spot interbank rate at one hour intervals during the period identified above, based on information taken over a two-minute window.

38. These benchmarks, or "interbank" rates, and in particular the WMR London 4pm fix, are used by market participants for a variety of purposes. Notably, they are used by asset managers for valuing, transferring and rebalancing multi-currency asset portfolios, and by index providers in the construction of indices tracking bonds, equities or credit instruments. In addition, they can be used for trading purposes, with prices being determined by the benchmark fixes. This gives the comfort of transparency around the fix price, although it has two drawbacks. First, trading at the fix price will not necessarily secure the best possible price for the customer, because the price is fixed by transactional and quote data derived from a limited window of time. Secondly, the customer is exposed to price movements, genuine or the product of rigging, taking place at the time of the fix.
39. It should be noted that there is no single benchmark or "interbank" rate for a given currency pair at any given point in time, since there is no single authoritative provider of such data (which is, in any event, market-driven).
40. When pricing for the sale of currency by spot transactions (which is what this case is concerned with – forward rates were never used), FX providers and other market participants use the spot interbank bid rate as their benchmark, and apply a percentage margin to that rate. That margin is conventionally referred to as the "FX margin". So, for example, if the GBP/USD interbank bid rate for spot trades stood at 1.5000, and the FX provider offered a bid rate of 1.5030 for a spot trade, then that FX provider would be applying an FX margin of 0.2% (1.5030 – 1.5000/1.500). If the FX provider offered a bid rate of 1.5075 for a spot trade, then that FX provider would be applying an FX margin of 0.5% (1.5075 – 1.5000/1.500). And if the FX provider offered a bid rate of 1.5450 for a spot trade, then that FX provider would be applying an FX margin of 3.0% (1.5450 – 1.5000/1.500).
41. Margin is not the same as spread (although the expression "spread" is sometimes loosely, and somewhat confusingly, used as a synonym for margin in the sense described above). "Spread" in the foreign exchange market is the difference between the bid and ask prices, or the price at which a dealer is prepared to sell, and the price at which it is prepared to buy, a given currency.
42. The FX margin offered by a dealer (and hence the spread in its rates) will in practice be dependent on the type of currency (major, minor, exotic), the volume traded, the nature of the counterparty (bank, corporate customer, retail consumer, etc) and other relationship considerations such as the duration of the relationship, the frequency and overall volume of trades, and the perceived business potential of the relationship.
43. In addition to the sources mentioned above, interbank rates are published by a well-known foreign exchange services and trading company called XE.com and institutions such as Bloomberg.

Foreign exchange transactions: market practice

44. There is no particular magic to a foreign exchange transaction, but there are some terms of art. The provider can provide a quote, which the client can accept or reject; or the client can simply request the provider to buy or sell the requisite currency or currency. In the first case, the trade is completed when the client accepts the quote; in the second, it is completed when the provider accepts the request. Following the trade, a confirmation will be issued to the client containing details of the trade and of settlement instructions, if they have been provided. It is normal practice (and in accordance with the UK and US codes of practice) for individual foreign exchange trades (other than kiosk trades involving cash settlement) to be carried out against the background of a written master agreement.

Margins and fees

45. A provider will ordinarily levy a charge for carrying out its exchange service, and this will take the form either of a fee or fees, or a percentage of the amount of the trade (the application of an FX margin to the amount traded), or a combination of both. To that will usually be added a charge for carrying out the transactions involved in settlement – in a case such as the present, the cost of the individual payments to employees and others. This too will take the form of a fee or fees, or the application of an FX margin, or a combination of both.

Payroll processing and payment services

46. Payroll processing involves the calculation of all the employer and employee costs associated with the employment of a client's employees. This includes the calculation of amounts which the client will have to pay directly to its employees (such as wages, bonuses, season ticket allowances, accommodation allowances, etc.), as well as sums which have to be paid to government departments (such as income tax and national insurance (or equivalent)) or to other payees (such as contributions to pension schemes or insurance providers).
47. When an employer operates in several different countries, payroll processing can be very complicated. The calculation of the payroll for each different jurisdiction will be affected by the local laws concerning tax and other contributions to be made by employers and employees and those local laws are constantly changing. Safeguard (usually with the assistance of an in-country partner or "ICP") uses computer software which is specific to each relevant country to calculate its client's payroll for each relevant country using the information provided by the employer about each employee's gross wages, bonus entitlements, and other employment benefits.
48. Once Safeguard has carried out the necessary calculations to process its client's payrolls, that information is presented to the client in a form which shows all of the payments which the client will have to make in respect of each employee. Safeguard, and the ICP, also generate payslips which can be provided to the client's employees as a formal record of their salary and other payments.
49. The processes described above are managed by Safeguard through its Global Payroll Management System or "GMPS", as it was known at the time.
50. Payment services involve the actual distribution of payments in the appropriate currency (including currency exchange where necessary) from the employer to the various payees who need to be paid.
51. Once a client's payroll has been processed, the client can then use the data provided by Safeguard to make all necessary payments through its own bank, or it can use a third party service provider to manage the process of transferring funds. Where payments require currency conversion and/or international transfers, it can be time-consuming and complicated for an employer to arrange payments through its own bank, because the employer has to take on the burden of the problems commonly associated with making international payments. For this reason, some employers who need to make international payments prefer to use a third party payment service provider to make their international payments.
52. A third party payment service provider is able to track payments and resolve difficulties which arise if payments go missing or are late to arrive, which frequently happens. They can also carry out other necessary procedures such as OFAC (Office of Foreign Assets Control) checking. Thus, third party service providers deliver a centralised management of the issues which arise when making international payments. This helps to ensure not only that the money arrives in the payee's bank account without deductions, but also that it arrives on time, which is very important bearing in mind that the majority of payments are salary payments that employees need to live on.

The Agreement

53. The Agreement is based upon a Safeguard standard form, but subject to certain modifications. Its provisions are divided into Article I and Article II. A number of schedules and exhibits are annexed to the Agreement. Again, these are based upon standard forms, but the content of some – for example, Exhibit A, which deals with pricing – are more contract-specific than others.
54. Because of the subject matter of the Agreement and the services to be provided, the Agreement contemplates that there will be a "discovery and implementation" period during which the requisite systems would be established, data transferred, tests run and so on. This is not a straightforward process, and the requisite period and starting dates might vary from country to country. In fact, the implementation period for the original nine countries listed in Exhibit A lasted for a period of about six months after the Agreement was signed. After implementation, payroll processing was to take place on a monthly cycle. It will be appreciated that such processing is largely repetitive, but there are certain exceptions. Thus an employee might be recruited or made redundant or might incur expenses which require reimbursement. In addition, Janus paid substantial bonuses in February each year.
55. Article I of the Agreement is headed "General Terms and Conditions". Clause 1 contains a number of definitions, including the following:

"1.2 'Agreement' means this agreement, together with all schedules and exhibits thereto.

1.6 'Country Specific Supplement' means a schedule in the form of Exhibit B attached hereto that is signed by each of the Parties where additional services are added after initial cont[r]act signing.

1.10 'Fees' means the fees payable by Client to SGW for the Services, as described on Exhibit A hereto, as may be amended or updated from time to time by mutual agreement of the Parties and for any additional services requested by Client as described in clause 4.

1.15 'Pricing Schedule' means Exhibit A attached hereto setting forth the applicable prices and fees to be paid by the Client in respect of one or more Service, as may be revised from time to time by mutual agreement of the Parties.

1.16 'Services' means, collectively, all the services to be provided by SGW to Client under this Agreement, as more specifically described in Section 3 of Article II, and any relevant Country Specific Supplements ….

1.18 'SGW Contractor' means any person who is not a Party or an employee of SGW, with whom SGW contracts to assist with or perform any part of the Services.

1.22 The terms 'including' and 'includes' shall, wherever they appear in the Agreement, be deemed to be followed by the statement 'without limitation'."

56. Clause 2.1 provides:

"Services to be provided by SGW hereunder shall be provided either directly by SGW or through a qualified SGW Contractor. SGW shall be liable for all acts and omissions of its SGW Contractors, and Client shall deal exclusively with Safeguard and its Designated Representatives with respect to any matters relating to the Services provided hereunder. However, Client may contact the SGW Contractor's to address specific country related questions or concerns, subject to clause 8.2.3."

57. Clause 2.4 provides:

"Any additional work or services provided by SGW to Client at Client's request but not specifically identified in this Agreement may incur additional charges and will be detailed in writing signed by a duly authorized representative of each party, and function as an addendum to and be incorporated in this Agreement, namely a change request process (CRF). …."

58. Clause 3.1.1 provides that the Agreement shall continue for the initial term set out in Exhibit A, namely three years. Clause 3.3 provides that the Agreement may be terminated in various ways, including by 90 days' written notice served by either party at any time after the initial term (clause 3.3.1). Clause 3.3.4 provides that the Agreement may be terminated:

"immediately by the Client, if SGW or one of SGW's in country payroll providers fails to distribute the funds on time to the Client's employees, subject to the Clients compliance with SGWI schedules. This does not include any delays caused by any banking institution or Travelex."

59. Clause 4.1 provides:

"Client will pay the Fees set forth in the Pricing Schedule attached hereto as Exhibit A or in any applicable Country Specific Supplement …".

60. Clause 4.2 provides:

"Fees for agreed additional work will be invoiced in accordance with the mutually agreed documentation…".

61. Clause 4.4 provides:

"Client shall, in addition to all Fees owing hereunder, reimburse SGW for all reasonable pre-approved expenses … incurred in connection with the implementation and provision of the Services".

62. Clause 4.6 provides:

"All Fees are payable in the currency stated in the relevant Pricing Schedule and shall be remitted to SGW in that currency. If remitted in another currency and/or from outside the country of issue of the relevant invoice, sufficient funds must be remitted such the net sum received by SGW in the requisite currency after foreign exchange, bank and other third party charges is that stated on the relevant invoice."

63. Clause 8.1 provides:

"SGW represents, warrants and covenants to Client as follows:

…

8.1.2 it will use reasonable care and skill in accordance with industry practice in the course of performing this Agreement.

…

8.1.5 the Services will conform to the applicable requirements and specifications for the Services at the service levels and according to the requirements stated in the proposal and the attached exhibits."

64. Clause 8.2 provides:

"Client represents, warrants and covenants to SGW as follows:

…

8.2.2 it will comply with its obligations as set out in this Agreement, including any associated Country Specific Supplements, and will provide all reasonable cooperation to SGW in the performance of this Agreement; and

8.2.3 during this Agreement and for a period of one year following expiration or termination of this Agreement for any reason, Client will not contract directly with any SGW Contractors for the supply … of any service that is similar in any way to the Services provided by SGW hereunder, to the extent SGW provides Client a list of SGW Contractors in each country contracted in this agreement. …"

65. Clause 9.1 provides (upper case in the original):

"SUBJECT TO SECTION 9.2 BELOW, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, CLIENT AGREES THAT SGW'S MAXIMUM CUMULATIVE LIABILITY … TO CLIENT AND ITS AFFILIATES ('AGGRIEVED PARTIES') FOR ALL CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTIONS, REQUESTS, LAWSUITS, JUDGMENTS, DAMAGES, LIABILITIES, COSTS, EXPENSES, OR LOSSES (COLLECTIVELY, 'CLAIMS') ARISING OUT OF THIS AGREEMENT OR THE PROVISION OF ANY OF THE SERVICES (WHETHER ARISING IN TORT OR CONTRACT, STRICT OR STATUTORY LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY) SHALL BE LIMITED TO THE AGGRIEVED PARTIES' ACTUAL DIRECT DAMAGES … "

66. Clause 15 includes the following provisions:

"15.3 No action under this Agreement may be brought by either Party more than one year after the cause of action has been discovered.

15.4 No delay or indulgence by either Party at any time, to enforce any of the provisions of this Agreement, or any right with respect thereto, shall be construed as a waiver of such provision or right, nor shall it prejudice or restrict the rights of that Party. …

15.7 In the event of any conflict between any provision of Article I or Article II of this Agreement, and the express provisions of any Pricing Schedule or Country Specific Supplement, the provisions of the relevant Pricing Schedule or Country Specific Supplement shall govern.

15.10 This Agreement and the NDA constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior or contemporaneous agreements and understandings regarding the subject matter hereof. … Any amendment to this Agreement must be in writing and signed by authorized representatives of both Parties. …"

67. Article II is headed "Responsibilities of the Parties". Clause 2.1 provides as follows:

"As a condition precedent to SGW's obligations to implement and provide the Services in accordance with the terms of this Agreement, Client shall:

…

(ix) ensure that all relevant bank accounts contain sufficient cleared funds to cover all payrolls processed by SGW hereunder, and timely approve all requisite payment authorizations therefor;

…."

68. Clause 3.1 provides as follows:

"The Services to be provided by SGW hereunder shall include the following services, together with any specific additional services identified on any Country Specific Supplement attached hereto, and any ancillary or related services necessary fully to implement the Services as contemplated by the terms of this Agreement:

(i) supply data collection templates to Client prior to implementation in order to assist Client in identifying and collecting all of the employee-related and other data required for implementation of the Services in each relevant Country;

(ii) reconcile relevant historical year-to-date financial data provided by Client;

(iii) prepare processing schedule(s) on an annual basis for the forthcoming calendar year based upon Client's reasonable requirements;

(iv) confirm that all payroll systems utilized are compliant with relevant legal payroll and tax requirements in each Country in which Services are provided hereunder;

(v) review each payroll input data transmission from Client for completeness and promptly notify Client of any apparent errors;

(vi) arrange for timely processing of payroll input data received from Client as required to meet established payroll schedules;

(viii) calculate employee and employer payments and deductions in accordance with Client's processing schedules and payroll parameters and in accordance with all applicable laws, rules and regulations;

(ix) timely issue payroll output in accordance with the agreed processing schedules, such output to consist of the following;

(A) standard reports and payslips in the local language to satisfy local payroll regulations;

(B) details of all employee payments and deductions (e.g., gross and net pay, social charge deductions for employer and employee, etc.);

(C) a breakdown of payments to be made by the Customer to the relevant taxing authorities;

(D) a breakdown of payments to be made by the Customer to other governmental authorities in accordance with deduction notifications agreed with Client during implementation;

(x) review any payroll discrepancies or errors with Client and cooperate with Client in all reasonable respects to agree upon appropriate remedial action;

(xi) deliver payslips and standard reports in agreed format in respect of each processed payroll to one location per Country promptly upon completion of processing; and

(xii) timely provide Client with relevant tax-year-end documentation and/or electronic files for submission to the relevant taxing authorities in each relevant Country."

69. Clause 4.0 provides that each party "shall cooperate in good faith with the other Party from time to time in any manner reasonably requested by such other Party (consistent with the terms of this Agreement) to enable such other Party more effectively to discharge its obligations under this Agreement".
70. At the end of Article II is a section headed "SGWI Internal use only" which contains a box headed "Client details" provides for various details to be entered, including "Who will pay employees/tax authorities – SGW or Client?" None of these details has been filled in.
71. Exhibit A is the Pricing Schedule. Fees are set out on the second page, which can be divided into four categories:

i) discovery and implementation, for which a fixed fee of $10,000 is payable;

ii) set up fees for each country;

iii) payroll run fees for each month and for end of year for each country;

iv) charges "for payments to employees/in-country authorities" as follows:

"The costs (per transaction) are as follows:

Transaction cost

Eurozone 2.5 Euro

ROW (Incl GB) £3

Priority payments £25

Money management fees 2 Euro per transaction (£100 GBP monthly minimum)".

72. Exhibit D is headed "Key Performance Indicators". It sets out certain criteria against which Safeguard's performance of its obligations is to be measured. The third is "Employee payments to schedule" and this is "Measured as number of late payments against total employees paid in month". The target is given as "100%", but this must be understood as meaning 0% given the measure.
73. There are a number of addenda to Exhibit A which constitute Country Specific Supplements and which contain similar lists of fees. I shall refer to two of these addenda below.

The facts

Negotiations between Safeguard and Travelex leading to the Travelex agreement

74. The Travelex group acquired the Ruesch International group in 2007. The integration of the two groups took some time and was not completed until in 2009. Perhaps partly for this reason, the negotiations between Safeguard and Travelex for Travelex to provide a foreign exchange and payments service to Safeguard's clients were quite protracted.
75. The negotiations between Safeguard and Travelex started in January 2008, which is well before the negotiations between Janus and Safeguard started. Mr Giles was principally responsible for these negotiations on behalf of Safeguard. Mr Giles' evidence was that he requested the provision of what he referred to in a document he sent Travelex on 28 January 2008 as "corporate exchange rates", an expression which was also used by Travelex in a presentation to Safeguard on 22 February 2008. He did not recall discussion of what exchange rates would be charged by Travelex, however. It appears from the documents that at that stage there was little, if any, discussion of what exchange rates would be charged, and in particular what FX margin would be applied. The Travelex presentation did, however propose that Travelex would reimburse Safeguard with 30% of the gross revenue derived from margin together with 50% of the amount of any fee over £2.50.
76. On 25 February 2008 Andrew Valentine of Travelex sent Mr Giles by email a document setting out answers to various questions which Safeguard had raised. One of the answers read as follows:

"The price that Travelex issue, is not a quote. It is a contractual offer that requires to be settled by your customer. If SGWI send a file to Travelex 6 days before payment needs to be rec[e]ived by employee, then Travelex will price and return the file within agreed time frame. …"

Counsel for Janus submitted, and I accept, that it is evident that the word "offer" in the second sentence of this answer subsequently found its way into the Safeguard Payments Methodologies document referred to in paragraph 99 below.

77. On or shortly after 5 March 2008 Safeguard completed, executed and returned to Travelex a Travelex Commercial Foreign Exchange Application for services to be provided by Travelex Payments Ltd subject to the terms and conditions printed on the form. It appears that this enabled Safeguard to obtain foreign exchange from Travelex upon request, but it did not provide for the provision of payment services by Travelex. It is not clear to what extent, if at all, Safeguard purchased foreign currencies from Travelex pursuant to this facility between then and September 2008.
78. By 30 June 2008 Safeguard and Travelex were negotiating the terms of a contract for the provision of international payment services the first draft of which had been prepared by Travelex. At this date, the draft provided for Travelex to apply an FX Margin to the exchange rates charged, but did not specify what the FX Margin was to be. The draft also provided for revenue sharing between Safeguard and Travelex, according to a formula set out in Schedule 2 to the draft which corresponded to what Travelex had proposed on 22 February 2008.
79. On 14 July 2008 Mr Valentine sent Mr Giles by email the standard terms and conditions of Ruesch International Ltd ("Ruesch"). It appears that, by this date, the parties were discussing the possibility of using these as the basis for the contract between the parties rather than the draft contract previously prepared by Travelex. Mr Giles replied making certain comments on the terms and conditions. One of Mr Giles' requests was to amend the settlement terms to provide that:

"If the customer (of SGWI) does not deliver funds within 5 days, then Ruesch have the right to re-sell the funds elsewhere. Ruesch and SGWI will use all reasonable endeavours to make the impact on each party as low as possible."

80. At some point between 14 July and 14 August 2008 Mr Giles amended this proposal to read as follows:

"In the event that the SGWI customer does not pay the funds within 3 days, then Travelex will resell the funds elsewhere and any costs incurred (not loss of profit) will be shared between SGWI/Travelex."

81. On 18 August 2008 Mr Valentine sent Mr Giles an email attaching a draft contract between Safeguard and Ruesch for the supply of international payments services incorporating the Ruesch standard terms and conditions. This draft provided for revenue sharing in accordance with the same formula as the Travelex draft. Although the draft contract did not itself specify the FX Margin to be applied, Mr Valentine also sent an addendum specifying an FX Margin of 1.75% and certain transaction fees for payments made on behalf of Safeguard's customers. It also provided for Travelex and Safeguard to agree the spread on foreign exchange. Mr Valentine explained in his covering email that Ruesch was not prepared to agree the amendment to the settlement terms requested by Mr Giles for the following reasons:

"The end customer is an SGWI client and therefore the small risk must remain with SGWI. Ruesch will cut out the deal after 3 days and will make all best endeavours to ensure the exposure risk is as low as possible, but this risk ultimately depends on the FX market which is beyond the control of Ruesch. The exposure between the price bought at and the price we sell at will sit with SGWI. The risk for SGWI should be minimal, particularly in the currencies that SGWI are dealing in."

82. On 16 October 2008 Safeguard and Ruesch entered into an agreement for the supply of international payment services ("the Travelex agreement"). The duration of the Travelex agreement was for an initial term of one year, to be renewed automatically for further one year periods unless either party gave notice to terminate (clauses 3.1 and 3.2). The agreement stipulated that Safeguard and Travelex contracted with each other as "independent contractors" (Terms and Conditions clause 14K). It provided that Travelex would apply an "FX Margin" of 1.75% to exchange rates on the international payments made by Travelex (clause 1). It also provided that Travelex would pay Safeguard a revenue share (clause 4.1) calculated as set out in Schedule 1, consisting of:

i) 30% of the "FX Revenue", which was the revenue derived by Travelex from applying the FX Margin; and

ii) 50% of the "Transaction Fees Revenue", which was the revenue derived by Travelex from fees charged per transaction, after deduction of the first £2.50.

83. On 5 May 2009 Ruesch changed its name to Travelex Global Business Payments Ltd. On 14 September 2013 the company changed its name again to Western Union Business Solutions (UK) Ltd. In the remainder of this judgment I shall follow the parties' example of referring to it simply as "Travelex".
84. Mr Giles accepted that, apart from an exercise in March 2010 described below, he did not at that stage compare the rates of exchange provided by Travelex with those charged by other providers. There is no suggestion that anyone in Safeguard did either.
85. Mr Giles estimates that £103,517.90 was subsequently received by Safeguard (or its subsidiary) from Travelex in respect of payments for Janus.
86. It is common ground that Safeguard did not show Janus the Travelex agreement at any time during the negotiation or operation of the Agreement. Nor did Janus ask to see it during that time. Janus first saw the Travelex agreement as a result of disclosure in these proceedings.

Janus' processes for payroll processing and payments prior to the Agreement

87. Prior to entering into the Agreement, Janus' arrangements for payroll processing and payment were as follows. For employees in the USA, Janus processed the payroll in-house using its SAP human resources, payroll and accounting system, paid the employees directly and used an external provider called ADP to facilitate tax payments. For international employees, Janus had a number of different payroll providers covering different geographic regions. Thus Janus engaged Jeffreys Henry LLP to cover the UK and some other European countries. Each month Janus would transmit the necessary funds to its providers in the relevant local currencies. Then each provider would pay the employees and the tax authorities. At least in the case of Jeffreys Henry, the provider maintained individual accounts for each relevant currency. Jeffreys Henry made the payments through Barclays Bank.
88. Ms Lacy gave unchallenged evidence that Janus experienced significant problems dealing with these multiple providers, and therefore decided to replace them with a single international payroll supplier who could provide Janus with a single point of contact. Janus also wanted to fund the payroll in US dollars and to have the new vendor arrange for currency conversion and then pay the employees and tax authorities in the local currencies.
89. From the fourth quarter of 2007 to June 2008 Janus negotiated with a potential provider, but was unable to agree terms. After the termination of those negotiations, Janus looked for an alternative provider.

The negotiation of the Agreement

90. It appears that the initial discussion between Janus and Safeguard about the possibility of Safeguard providing services to Janus took place during a telephone conversation between Ms Conti on behalf of Janus and Mr Gottsberger on behalf of Safeguard on 1 July 2008.
91. After the telephone conversation Mr Gottsberger emailed Ms Conti an RFQ (Request For Quotation) for Janus to fill in and a PowerPoint presentation outlining Safeguard's services. Among the questions asked in the RFQ were whether the client required Safeguard to make payments to employees and whether the client required Safeguard to make payments to statutory authorities. The presentation included a schematic overview of Safeguard's international payroll process which included as a step "SGWI pay employees and taxes where applicable".
92. Later the same day Ms Conti emailed Mr Gottsberger the completed RFQ together with Appendix A – High level reporting requirements and Appendix B – High level business and technical requirements. The completed RFQ answered the questions about whether the client required Safeguard to make payments to employees, and whether the client required Safeguard to make payments to statutory authorities, "yes" in relation to each country. Appendix B contained various references to the supplier being required to make payments to Janus employees in their home country currencies. It also listed the participants in the project on the Janus side. Ms Conti was described as "Project Lead", Ms Burke as "Project owner – Payroll" and Ms Lacy as "Project sponsor – Tax".
93. On 3 July 2008 Mr Gottsberger emailed Ms Conti a copy of Safeguard's standard form of contract. Shortly afterwards, Ms Conti sent Mr Gottsberger an email asking a number of questions to which Mr Gottsberger replied the same day, saying in answer to one question:

"We do not have any problems with delivering payroll funding directly to employees. We do not use the ICP to fund the employees. We use a different system than the ICPs for employee funding. …"

94. It appears that there was a telephone conversation between Mr Gottsberger and Ms Conti on the same day, which Mr Gottsberger reported by email to Mr Reynolds and Mr Woods. His report included the following passage:

"What they would like is to collect all of the data from the different companies and submit to us one export for us to process. Then they can submit one payment to travelex and then we can make the payments to the employees, put funds in their local account if needed for the ICP to pay taxes (after they get a power of attorney) and we can then get back them reports showing the finite details of what happened."

95. On 7 July 2008 there was a conference call between Ms Conti and Simon Repton for Janus and Mr Gottsberger, Mr Woods and Julius Ranta for Safeguard. The discussion was mainly focussed on technical matters. Mr Woods did not recall exactly what he said on this occasion, but he was confident that he would have explained how Safeguard's payroll processing services worked, and also the options available to Janus with respect to payments.
96. On 8 July 2008 Ms Conti sent Mr Gottsberger an email attaching a list of questions from Janus business users, among which were "Walk us through your monthly payroll cycle; from payroll submission to the employee receiving funds", "Walk us through your process for paying a Janus employee in a new country (to Janus)" and "Walk us through your process for funding payroll?".
97. On 11 July 2008 Mr Gottsberger replied to Ms Conti attaching a number of documents. The first attachment contained answers to the list of questions posed by Janus. Safeguard's answers to the questions quoted above were as follows:

"Typically client will provide information/data downloads which SGWI will receive, check and then effect the changes to our system with. In line with a payroll schedule that we will produce with the customer, data is sent to our In Country Partner (ICP) who will then process the payroll and provide reports back to SGWI. Data is then fed back into a Payroll Technology before being consolidated (once all countries data processed) and sent to client. Client approves payroll, Request for Funds (RFF) sent to client, Client sends monies, SGWI receive monies and payout to employees/Social Security/Tax agencies/authorities as appropriate.

SGWI utilise the largest non bank Foreign Exchange provider – Travelex (Reusch) – to make payments. Upon receipt of payroll approval we will raise an order with Travelex based upon the country monies are being sent to and the currency with which Janus whishes [sic] to used to pay the employee. The order is priced and sent to the client who then forwards required money (in USD for example) before we then send this out to employees and Tax/Social Security agencies where possible. This means Janus has the most efficient management of its foreign exchange exposure and a quicker route to employees than other methods can deliver.

Two options: 1) Customer pays employees directly, either through their bank or via Safeguard/Travelex. 2) Customer funds our local in country partners (again can be funded via Travelex to minimise foreign exchange liabilities). Please refer to attached Travelex workflow and additional document."

98. Also attached to Mr Gottsberger's email were the two documents referred to in the last answer set out above. The first document was entitled "SGWI Payments Workflow – Travelex – v.1.01" ("the Travelex Workflow document"). It broke down the payment process into a series of steps that would be carried out by Safeguard, Travelex and Customer respectively, starting from the moment when the payroll had been processed.
99. The second document was entitled "SGWI Payment Methodologies" ("the Payment Methodologies document"). Since the Payment Methodologies document is central to the dispute between the parties, I must quote it in full:

"Please Note: This applies to customer salary/wage payments to employees and Authorities payments for taxes and social security.

We have partnered with Travelex for global payments, which offers our customers the following key benefits:

1800 correspondent banks around the world means funds arrive faster (many within 3 days) and more cost effectively than the commonly used banking networks

Excellent foreign exchange rates – normally better than a bank spot rate

Payments can be quickly tracked and audited throughout their life cycle

As a market leader Travelex have strong systems, stringent procedures and controls in place

Excellent costing structure across many routes, with option of priority payments

How it works

Safeguard provide the payroll output to the customer

Once this is approved, SGWI will obtain an 'offer' from Travelex and provide to the customer

The customer will transfer the required amount, in one currency using the unique contract reference provided on the offer sheet

SGWI/Travelex will send those payments directly to the beneficiaries on a 3 day (typically) payment cycle, e.g. a payment being sent to South Africa due on a Friday, monies would be sent on Wednesday by Travelex/SGWI

If a payment were for any reason not to arrive, tracking is initiated to check payment progress, and repair the payment if appropriate to make sure it reaches the beneficiary without further delay

SGWI can arrange for employees to be e-mailed to let them know their monies are on their way

Costs per transaction

Eurozone €2.5

ROW (incl GB) £3 or Euro equivalent

Priority payments £25 or Euro equivalent

Money management fees €2 (€125 monthly minimum)"

100. Also attached to Mr Gottsberger's email was a document entitled "International Payroll Services Proposal" dated 11 July 2008 setting out Safeguard's proposal to provide international payroll services to Janus. This included a page headed "Pricing Structure" which quoted a fee for discovery and implementation, and set up and monthly fees per country. This page also stated:

"Prices in all countries, in general, do not include:

Bank charges payable for funds transfer if needed

… "

101. From 14 July 2008 onwards, Kevin Forant was responsible for negotiating the terms of the Agreement on behalf of Janus. Mr Gottsberger was principally involved in negotiating the terms of the Agreement on behalf of Safeguard, guided by Mr Giles. It is not necessary to go into the details of these negotiations.
102. On 15 July 2008 there was a conference call between Mr Woods and Mr Gottsberger for Safeguard and Ms Conti, Mr Repton and two others for Janus. Mr Woods did not recall what he said, but thought it was likely that he had explained much of the information contained in the documents attached to Mr Gottsberger's email of 11 July 2008 before answering questions. He was confident that, at this stage, Janus had still not decided what payment method to use. This was his last involvement prior to the signature of the Agreement.
103. The Agreement was signed by Ms Lacy on behalf of Janus and Mr Giles on behalf of Safeguard on 8 August 2008.

Discussions following the signature of the Agreement

104. It is common ground that, as the Agreement envisaged, there was an extended implementation period following the signature of the Agreement. The first country in respect of which Safeguard provided services was the United Kingdom, followed by the Asian countries and then the remaining countries.
105. On 14 August 2008 there was a conference call between Ms Conti, Mr Gottsberger and Mr Woods to discuss implementation. Although Ms Gregson had been scheduled to participate in the conversation, as the responsible implementation manager, she was unavailable due to other commitments.
106. On 15 August 2008 Ms Conti sent Mr Woods and Ms Gregson an email attaching a revised version of the business requirements document and two process maps detailing Janus' "as-is" processes for international payroll and benefits. In her covering email Ms Conti asked:

"Can we do the following?:

1 – Schedule meeting early next week with Tax, Payroll, & SGW on the payment method? …

2 – Proposed to-be process mapping Monday 25/8 8:30 MST. Does this work for you?"

107. On the same day Mr Woods sent Ms Conti an email, copied to Mr Gottsberger and Ms Gregson, saying among other things:

"As discussed, please could you complete the attached which helps us gather some initial information about the project – the attachment 'Implementation initial discovery.xls'. I know some of this detail, such as the payments, will be pending further internal discussions before you have the right information but this helps us build a picture of the current position.

…

We should also have a conversation about payments to ensure that what we can offer is a tax efficient proposition for Janus and this may be something you will wish to ratify with your Tax folks."

108. Mr Woods' evidence, which is supported by the two emails and which I accept, was that the background to the reference to Janus having "further internal discussions" about "the payments" was that Ms Conti had told him during the conference call on 14 August 2008 that Janus had not yet decided what payment method to use. As set out in the first attachment to Mr Gottsberger's email dated 11 July 2008 there were three options available to Janus: (i) to use Safeguard and Travelex to make the payments in the manner described in the Payment Methodologies document, (ii) to use its bank to make transfers to the employees' bank accounts, which Safeguard would facilitate by providing a "bank file" i.e. a file of instructions to the bank as to what sums should be paid in what currency to what account by what date, and (iii) to use Safeguard's network of ICPs.
109. On 19 August 2008 Ms Conti emailed Mr Woods a PowerPoint presentation entitled "2008 International Payroll Implementation Project Kick Off" in anticipation of a conference call which took place on 20 August 2008. Shortly before the conference call, Ms Conti emailed Mr Woods and Ms Gregson a revised version of this document. Page 4, headed "Scope", listed a number of activities, including "Making payments to employee's [sic] and tax authorities on behalf of Janus". Page 5 set out a schedule for various milestones in the project including "9/15 Live UK Travel & Expense reimbursement" and "9/30 Live UK Payroll!!". The conference call was attended by Mr Woods and Ms Gregson on behalf of Safeguard. Mr Woods explained, however, that the conference call was primarily an internal presentation by Ms Conti to various colleagues in Janus. Apart from being introduced, Mr Woods and Ms Gregson played little part in it.
110. On 21 August 2008 Mr Woods emailed Ms Conti and Ms Gregson another copy of the Travelex Workflow document shortly before a telephone conversation between Mr Woods, Ms Gregson and Ms Conti. Mr Woods' and Ms Gregson's evidence was that the purpose of the call was so that Mr Woods could run through with Ms Conti how the Travelex service would work if Janus decided to use it and specifically to talk her though the Travelex Workflow document so that she could understand how it worked in practice. Mr Woods remembered finding it a little frustrating that he had to explain the Travelex service to Janus for at least the third time over the telephone because Janus had still not been able to reach a decision about what payment method to use. Ms Gregson remembered that she was hoping that Janus would make a decision about the payment method they would use sooner rather than later because she was due to be on annual leave the next week as it was her daughter's birthday. She wanted to make progress on the Janus implementation before she went away, but matters were being held up while Janus decided what to do about payments. Ms Gregson also recalled that Mr Woods explained to Ms Conti that, if Janus opted for the Travelex option, Safeguard would obtain quotes from Travelex for making Janus' payments and then pass the quotes on to Janus so that Janus could decide whether or not to accept the quote on each occasion.
111. On 22 August 2008 Ms Conti sent Mr Woods and Ms Gregson an email saying:

"We will be meeting with our Corporate Controller [Ms Spath] on Monday to confirm the payment method. I would like to meet with you and discuss the project schedule. Do you have time early next week?"

112. On the same day Ms Conti sent Ms Spath an email, copied to Ms Lacy, attaching a copy of the Travelex Workflow document and a document created by Mr Johns to show the journal entry (JE) accounts that he proposed to use to account for the payroll payments that would be made using the various steps outlined in the Workflow document. In her covering email Ms Conti said:

"Attached are documents for our International Payroll funding meeting Monday. Just as a reminder we need your approval or decline during this time.

If possible, please review prior to the meeting and let me know if you have any questions."

113. Although the document created by Mr Johns proceeds on the basis that the payments would be made via Travelex, Mr Johns fairly accepted that it would have been possible for him to have prepared this document upon a hypothetical basis i.e. as showing how Janus would account for the payments if it decided to adopt that method. He also accepted that he did not know what had been agreed by 8 August 2008.
114. Shortly afterwards, Ms Spath forwarded the email and attachments to Ms Brewer saying in her covering email:

"This is the process for the new international payroll vendor. There is a meeting to go over the process today. I will send you the meeting invite as well."

115. On Monday 25 August 2008 there was an internal meeting at Janus attended by Ms Conti, Ms Spath and Ms Brewer. Curiously, both Ms Lacy and Mr Johns gave evidence about this meeting even though on their own accounts they did not attend the meeting. Thus the only participant who gave evidence was Ms Brewer. As noted above, there was no evidence from Ms Conti or Ms Spath.
116. Later the same day Ms Conti sent Mr Woods and Ms Gregson an email saying:

"We have confirmed the payment process through TravelEx.

We have four questions/items that we would like your response, however this does not impact our decision.

1. After you send us the USD amount to fund your account for payroll, what is the time (in hours) required to fund this amount?

2. What happens if an account funding fails (i.e. account closed etc…) from Travelex to our employee?

3. What is the time it takes for notification if an employee funding fails?

4. Can you send us a sample of the customer reconciliation report from Travelex? This is just so we can see what it will tell us."

117. Mr Woods replied with answers to these questions on 26 August 2008. His answer to the first question was as follows:

"You will have a couple of days and we can normally extend that by 24 hours if needed. If we send the funding request on say a Monday morning US time and you instruct transfer same day, funds will most likely be in our account Tuesday morning our time."

118. An agenda for a Janus internal meeting on 27 August 2008 which was scheduled to be attended by Ms Lacy and Mr Johns among others contains a list of action items including the following:

"Task Assigned to Status Due Date

Confirm payroll funding process Johns, Andrew Completed 8/15/2008

create a GL mapping to each Johns, Andrew In progress 8/29/2008

expense type from payroll

create gl for payment Johns, Andrew In progress 8/27/2008".

119. On 28 August 2008 Ms Conti sent Ms Burke an email saying:

"I gave Tristan the approval on the funding process after we received it from Christine on Monday. He knows to move forward with that. It should be extremely simple (especially since its one country to start). You will approve it through AP just like you do today. There are workflow diagrams and journal entry mockups on the Sharepoint site. Karlene was all over it."

120. Ms Brewer's evidence was that the purpose of the meeting on 25 August 2008 was purely to obtain Ms Spath's approval of the accounting process illustrated in Mr Johns' document. This evidence is difficult to reconcile with the terms of Ms Conti's email following the meeting, with the list of action items and with Ms Conti's email to Ms Burke. Furthermore, it conflicts with the evidence of Mr Woods and Ms Gregson that the email following the meeting was the first occasion on which Janus had told Safeguard that it wished to use Travelex for this purpose. Their evidence is supported by the documentary record, and I accept it. Accordingly, I do not accept Ms Brewer's evidence on this point. Nor, to the extent that it is relevant to this question, do I accept the evidence of Ms Lacy.

Implementation of the Agreement from September 2008 to February 2009

121. As noted above, implementation of the Agreement started with the UK. As part of this process, on 9 September 2008 Mr Wood sent Ms Conti and others an email setting out an update on various milestones in the project, to which was attached a Processing Schedule 2008 for the UK which identified the steps required to effect payment and the dates by which those steps had to be completed if payments were to be made on time for each of the months from January to December 2008 (the months prior to September 2008 were of course historic by that point, but no doubt part of the point was to illustrate how the process would work in 2009). The Schedule included six columns headed "Input to SGW", "Input to ICP", "Reports from ICP", "Output to Client", "Money due to Bank Account" and "Employee Pay Day". The time allowed between Output to Client and Money due to Bank Account varied from two to four calendar days.
122. A test run of the payments process was carried out on 9 September 2008, when the expenses of three UK employees amounting to £219.50 were paid. On that date Ms Gregson sent Ms Burke an email requesting that Janus transfer $393.53 to Safeguard's account the same day, so that the funds were available by 11 September 2008 at the latest. Attached to the email was a Travelex deal confirmation consisting of a "Spot Order Detail" print-out from Travelex's FXPaynet system. This recorded that Mr Woods had submitted an order earlier that day. It showed the GBP amount as 219.50, the exchange rate as 0.657786 and USD amount as 393.52 (hence it appears that Ms Gregson's email contained a typographical error). Fees were stated to be nil.
123. This is a convenient juncture at which to consider two features of the payments process which are in dispute. First, Safeguard says that, as the documents referred to in the preceding paragraph illustrate, the order of events was that Safeguard would place a spot order for foreign currency with Travelex, and then pass the price back to Janus for acceptance in the form of a Spot Order Detail. If Janus was content for payment to be made at the USD price specified in the Spot Order Detail, it would then pay the USD amount to Safeguard, which would then pay it on to Travelex. The currencies were purchased in this way. It is common ground that, as between Safeguard and Travelex, each spot order was a concluded contract once it had been submitted by Safeguard. Safeguard says that, in principle, the process left open the possibility that Janus would not accept the USD price in the Spot Order Detail, in which case Safeguard would have been left with a contract with Travelex for foreign currency that Safeguard did not want. Safeguard says that this was a commercial risk which Safeguard was prepared to run. In practice, however, Janus always did pay the prices set out in the Spot Order Details. As counsel for Safeguard pointed out, this analysis was supported by the evidence of Janus' own expert witness, Ms O'Brien.
124. Janus nevertheless contends that it was obliged to accept the USD price in the Spot Order Detail. In so far as this is a legal question, I will consider it below. At this stage I will consider Janus' contention that it had no practical alternative because there was insufficient time available in the processing schedule in which to arrange payment in any other way. It is notable that Janus led no evidence to support this contention. In any event, the evidence of Safeguard's witnesses, and in particular the evidence of Ms Gregson, was very clear that it would have been possible for Janus to arrange payment in another way, albeit that quite a lot of work would have been required to be done quite quickly. Furthermore, even if Janus had no practical alternative with respect to the payment of one month's payroll, if it was dissatisfied with the prices quoted, it would have had ample time in which to arrange an alternative payment process before the due date in the following month.
125. The second feature is that, as the documents referred to in paragraph 122 also illustrate, the prices that were charged by Travelex in processing the spot order and passed on by Safeguard to Janus were expressed purely in the form of the exchange rate between the currency that Safeguard was buying for payment to the employees (in this case GBP) and the currency that Safeguard was selling (in this case USD). Safeguard says that it was apparent on the face of the Spot Order Detail that no distinction was made between the cost of the money itself and the cost of paying it to the employees. Rather, both costs were included in the exchange rate.
126. Janus says that there was nothing on the face of the Spot Order Detail to disclose that a charge was being levied on the sums exchanged in the form of a margin. Janus does not seriously dispute, however, that it should have appreciated that Travelex was charging a margin of some kind over the interbank rate. Rather, Janus' complaint is that there was nothing on the face of the Spot Order Detail, or indeed any other document passing between Safeguard and Janus, which disclosed the level of the margin applied by Travelex, or subsequently CFX. Safeguard does not dispute that, but contends that Janus was well able to work out for itself what the margin was, and did in fact do so. I will consider this last point below.
127. Following the test run, the process went live with effect from the end of September 2008, when Janus' UK employees were paid in Safeguard's first payroll run for Janus. On this occasion, the funding request, in the sum of $442,794.43, was made by email from Ms Gregson to Ms Burke, copied to Ms Conti, on 23 September 2008. It was again accompanied by a copy of the Spot Order Detail from Travelex, this time showing an exchange rate from USD to GBP of 0.529707. The requested funds were transferred and payments due to employees were duly made. A funding request for sums due to HMRC, in the sum of $306,925.50, was made on 30 September 2008, the sums were transferred and the tax was duly paid.
128. For each payment run, Safeguard submitted a fee invoice. Over the life of the Agreement, hundreds of these invoices were submitted and paid. There is no issue as to the amounts invoiced and paid, but Janus points out that the amounts invoiced included the charges for payments to employees and in-country authorities listed in Exhibit A to the Agreement, including the money management fees (sometimes referred to as a "money transfer management fee" or similar).
129. During a "Post Go-Live" meeting on 1 October 2008 the parties agreed that it would be sensible for Janus to fund the payroll payment by using preliminary estimated figures, plus 5% in case of under-estimates. As Ms Arakaki explained to Ms Spath in an email dated 17 October 2008, this was "due to timing issues from requesting the funding to the approval and to the transfer of funds to the Travelex account in time for payroll to be paid to the non-U.S. employees". It was also agreed that it would be sensible for Janus to deposit a "cushion" of $50,000 to enable the making of "off-cycle" payments to employees. This was in order to reduce the administrative burden on Janus' side and to speed up any payments that needed to be made at short notice. Both these changes were subject to the approval of Janus' accounting department, and they were duly approved by Ms Spath on 17 October 2008. Ms Burke relayed this to Mr Woods and Ms Gregson on 20 October 2008.
130. In October 2008 Safeguard started processing the payroll of Janus' employees in Australia, Hong Kong and Singapore. Thus it was necessary for employees to be paid in Australian, Hong Kong and Singapore dollars as well as sterling. Mr Woods' recollection was that, when 24 October 2008 came around, Janus had still not approved the beneficiaries' bank details, with the result that Safeguard could not obtain a spot order from Travelex for the payments. This created a risk that some of the employees might be paid late. In order to meet this problem, Safeguard provided Janus with an estimate of Travelex's charge for making the payments.
131. The documentary evidence indicates, however, that Mr Woods' recollection was slightly mistaken. There is no mention of any problem with beneficiaries' banks details. Rather, it appears that there was a slip-up between Safeguard and Travelex. This may have prompted Mr Woods to adopt the changes which had been agreed with Janus, although in the event he only implemented the second change. (It does not appear that the 5% change was implemented at this point.) What happened was as follows.
132. At 14:22 on 24 October 2008, which was a Friday, Mr Woods sent Dan Masters of Travelex an email attaching two files of payments (one for the UK and one for Australia, Hong Kong and Singapore) asking for deals to be raised for both files. Evidently Mr Masters was away from the office that afternoon, because at 16:17 Mr Woods forwarded his email to two other Travelex employees. Not having heard back from them, at 18:17 Mr Woods sent Mr Valentine an email saying:

"Can you help? The two files attached are for one customer and based on some loose calculations for settlement in USD these equate to $711K USD. The deals have not been done yet – well I don't think so anyway. I did not hear back from the FX team on Friday.

You told me to let you know when we needed more than circa 500k. So here I am, looking for a good deal please.

Give me a ring Monday so we can organize please? I'd like our client to get a good rate given the value but also for SGWI to make a good commission too."

133. At 20:23 (London time) Mr Woods sent Ms Burke an email, copied to Ms Gregson, saying:

"Please see below the approximate funding value your Payroll fund will require this month.

I have used inter-bank rates from XE.com to estimate, based on today's inter-bank rates, the required amount. Travelex deal will be done on Monday morning and you will have that for your records by the time you arrive on Monday.

The Total USD value is = $711,514.74

+ USD 50,000 buffer

Total to Wire = $761,514.74 USD …

Please make the wire ASAP to our USD account – details attached …"

134. Ms Burke replied at 20:24 asking for "back up", but saying that she would try to get the payment approved that day. Mr Woods replied at 20:37 saying:

"We are organising the Travelex amount and it will be on your desk on Monday morning first thing so you could wait until then and send that wire by fast payment route during Monday morning.

We are organising a special rate due to the fund value and that was not concluded today so given the buffer we are receiving we wanted to give you a figure today so we are moving on the funding."

135. At 11:54 on 27 October 2008 Mr Valentine replied to Mr Woods' email setting out prices for the sterling payroll file based on FX margins of 1.75% and 1.5% and the corresponding Safeguard revenue shares, offering a saving for Janus of about $1800 and a loss of revenue for Safeguard of about £330 if the margin was changed from 1.75% to 1.5%. It is not clear from the documents whether Mr Woods agreed to this or not.
136. At 14:47 and 14:29 Mr Woods submitted the two files to FXpaynet to obtain the spot orders from Travelex. The total amount charged was $711,452.82, slightly less than the estimate that Mr Woods had given to Janus. It appears that he relayed this amount to Ms Burke by telephone on the same day. At 11:03 on 28 October 2008 Mr Woods emailed the Travelex Spot Order Details to Ms Burke for her records and asked her to send Safeguard $44,938.11 in order for Safeguard to have $50,000 in its account.
137. Janus relies on this episode as having given it the impression that the rates it was being charged were close to interbank rates. Mr Woods did not say he had used interbank rates in his calculations, however, but rather that he had used interbank rates to make an estimate. I consider that it should have been apparent to Janus that Mr Woods had arrived at his estimate by applying a margin to the interbank rate. Ms Burke did not ask him what margin he had applied, however.
138. In November 2008 Safeguard took over the processing of Janus' Eurozone employees. In the following months, Safeguard started processing the payroll of Janus' remaining non-US employees in Canada and Japan. Although the evidence is not very clear on this point, it appears that, in the case of Japan, unlike all the other countries, Janus elected to use Safeguard's ICP in Japan (Talent2 KK) to make payments rather than Travelex.
139. In January and February 2009 Janus expressed concerns to Safeguard about the international payroll deadlines, and asked if there was a way to shorten these. Mr Woods suggested in an email dated 24 January 2009 to Ms Burke that pre-funding the payroll would reduce the time involved, but at that stage Janus did not take up the suggestion.
140. During the course of these discussions, Ms Lacy sent Mr Woods an email on 17 February 2009 asking for a timeline for the various tasks which explained why the lead time Janus had was necessary. On 18 February 2009 Mr Woods replied attaching what he described as a "high level summary of the steps we go through to process your payrolls and provide an accurate and quality service to clients" based on the March 2009 payroll schedule. This broke down the process into seven steps headed "Input to SGW", "Input to ICP", "Reports from ICP", "Output to Client", "Approval/Janus action wire", "Funds to SGWI account" and "Employee Pay Day".
141. The fourth step was described as follows:

"Client reports suite sent to Janus for approval. Manage any questions/queries from Janus prior to approval. Obtain approval. Generate Travelex payments file; FTP transfer of that file. Travelex raises order in online system, order executed, funding request printed/saved and control forms completed, sent to Client to send wire."

142. The fifth step was described as follows:

"Janus undertakes own internal funding approval process and confirms funds on their way."

143. As counsel for Safeguard pointed out, this document makes it particularly clear that, after Safeguard had purchased the foreign currencies from Travelex, it remained necessary for Janus to undertake its own approval process before remitting the funds. It is implicit that it was open to Janus not to approve the funding requested.

Introduction of pre-funding in May 2009

144. Janus returned to the subject of trying to speed up the payments process in May 2009. A series of emails between Ms Burke, Mr Thomas and Mr Woods from 4 to 7 May 2009 led to Janus deciding that its only option was to pre-fund the account each month with a sum that would be estimated to be sufficient to meet the cost of distributing the payments. Safeguard agreed to this. Accordingly, on 14 May 2009 Ms Burke sent Lesley Parr of Safeguard an email, copied to Ms Arakaki and Mr Thomas, saying that Janus had initiated the prefunding of the May payroll by wiring the gross payroll amount plus 20%. She added that this "may or may not cover the entire requirements for the month" and that "we will send a subsequent true-up funding later in the month if necessary".
145. From this point onwards, Janus estimated the amount of funding required for each month by calculating the US dollar equivalent of the gross payroll amount based on the exchange rates recorded in Janus's SAP system for the last day of the previous month plus 20%. This was added onto the calculation to cover a number of things, including payments to authorities, off-cycle payments and translation differences.
146. The new way of processing the payments was the same as that set out in the Payment Methodologies document save that when Safeguard placed the spot order for the payments it already had the money to meet the cost. There was therefore no need for it to pass the Spot Order Detail containing the exchange rates to Janus in order to obtain the money to pay on to Travelex. Nevertheless Safeguard continued to send the Spot Order Details showing the exchange rates to Janus, usually, but not always, before the money was sent to Travelex. Janus did not ask to be sent the rates for review before the money was released to Travelex by Safeguard.

The switch from Travelex to CFX in May 2010

147. By the end of 2009 Safeguard was experiencing problems with the payment service offered by Travelex. Travelex had become unreliable at making consistently accurate payments, particularly where there was a new payee or the relevant database needed to be amended in order to reflect changes in a payee's details. As a result, early in 2010 Safeguard began looking for an alternative third party service provider to take Travelex's place.
148. Not long before this, in October 2009, Safeguard had been approached by CFX, although at that stage nothing came of it. On 25 January 2010 Mr Giles attended a meeting with Zeb Bham and two other representatives of CFX to discuss the possibility of CFX providing foreign exchange and payment services to Safeguard. This led to CFX preparing a proposal dated 1 February 2010 which envisaged CFX paying a "rebate" on all transfers that required currency conversion according to a sliding scale.
149. It appears that there was a meeting or conversation between Mr Giles and Mr Bham in mid-late March 2010 in which Mr Giles requested some further information from CFX, and in particular some information about how CFX's exchange rates compared with Travelex's. On 26 March 2010 Mr Bham sent Mr Giles an email attaching an information pack which included a spreadsheet containing a comparison for various dates in February 2010 between CFX's rates and Travelex's rates for various currency pairs. This document showed that CFX's rates were lower than Travelex's for converting US dollars into sterling and euros, albeit less good than Travelex's rates for other currencies. Mr Giles took the view that, given the volumes of sterling and euros being traded, the CFX prices were better for Safeguard's clients such as Janus.
150. Mr Giles replied the same day saying that the rates "look ok", but asking what CFX's commission proposal would be if the rates were the same as Travelex. Mr Bham replied with a proposal on 29 March 2010. Mr Giles replied the same day saying he would think about the rates, and querying the fact that Mr Bham's proposal involved quite a large drop in commission for a relatively low drop in the rates.
151. On 14 June 2010 Safeguard entered into an agreement with Global Reach Partners Ltd trading as Corporate FX for the sale and purchase of foreign currency ("the CFX agreement"). This provided for the payment by CFX of commission in accordance with CFX's original proposal, namely 0.8% of foreign currency transactions up to £5 million, 1.0% of foreign currency transactions over £5 million up to £10 million (Schedule 1) and a percentage to be agreed over £10 million. Unlike the Travelex agreement, the CFX agreement did not specify the FX margin to be applied to CFX. Instead, it provided for the parties to agree the rates when an order was placed (clause 6).
152. In meantime Mr Thomas sent Ms Burke an email on 20 May 2010 saying:

"We are in the process of moving all our customers payment service from Travelex to Corporate FX. We would like to do this for your payroll in May (excluding Germany and Belgium). At first their [sic] will be no change to the process but Corporate FX can offer more competitive rates, a 24 hour 5 day service, improved reporting, faster payment options and they can receive funds direct from customers to save time on the schedule."

153. Ms Burke replied the same day asking number of questions, including the following:

"That's great they have better rates and better service, will those rates also be passed down to the clients?"

154. It does not appear that Mr Thomas replied to Ms Burke until 18 June 2010, presumably because of the delay in signing the CFX agreement. On that date he sent her a copy of a circular letter from Safeguard to its customers about CFX which began:

"SGWI have made a strategic decision to move their payment service from Travelex to Corporate FX. This decision has been made to enable us to offer our customers a world class payment service. Corporate FX can offer faster and more reliable payments, 24 hour service Monday-Friday and receive funds direct from you."

155. Ms Burke replied the same day repeating her question, "will the better rates be passed on to the customer as well?" Mr Thomas replied on 24 June 2010 saying:

"The better rates are the exchange rates and these will be passed onto you."

156. Both sides rely upon these exchanges, for different purposes. Janus says that the change from Travelex to CFX was presented to Janus as a fait accompli and that Janus had no choice but to accept CFX. I accept the first point: Safeguard made it clear that it was replacing Travelex with CFX. I do not accept the second point: absent any contractual provision to the contrary, if Janus was not happy with the payment service being provided by CFX, then Janus could have insisted on using an alternative payment method. Safeguard says that Ms Burke's emails shows that she understood that the cost of using Travelex and CFX was being paid by Janus in the form of the exchange rates Janus was charged. I agree with this.
157. Janus' payments were processed through CFX with effect from 28 June 2010. This did not result in any material change in the process for present purposes. Thus on 28 June 2010 Ms Parr sent Ms Arakaki an email, copied to Ms Burke, attaching a "Payment Upload" document printed out from CFX's Smart FX system showing a series of exchange transactions which had been carried out on 25 June 2010 and the exchange rates charged. It also showed the payments to be made to Janus' employees.

Communications about the rates charged by CFX in July 2010

158. As explained above, by July 2010 Janus was pre-funding its payroll payments, which were being distributed through CFX. As a result of Janus' decision to pre-fund, Janus had to form a pre-estimation of what the US dollar cost would be for making the payroll payments before the exchange rates were known.
159. At 10:48 (London time) on 26 July 2010 Ms Beech sent Ms Lacy an email attaching "the payment quote for your July payroll", i.e. the Payment Upload document from CFX, saying that insufficient money had been deposited by Janus to cover the total dollar amount and asking for the balance to be sent as soon as possible. At 8:16 (Denver time) Ms Lacy forwarded the email to Erich Schmitt, who worked in Janus' Accounts Payable Department. At 8:29 Mr Schmitt replied to Ms Lacy, with a copy to Ms Arakaki, asking Ms Lacy to approve "an additional USD 200,000 to cover unexpected payroll expenses in the UK and HK this should give us an approx $100k cushion". At 08:31 Ms Lacy replied approving this. The $200,000 was transferred later that day.
160. At 11:30 Ms Lacy forwarded Ms Beech's email to Ms Brewer and Ms Arakaki. At 12:36 Ms Brewer replied:

"Hi Karlene – In addition to the Belgium payment, it looks like Safeguard is using higher translation rates than what we would expect, which would eat into the buffer. I'm calculating a $45K difference just for the rates they used vs what Astrid would have calculated. As you can tell from the attached, the main driver is GBP. For your information, the current rate today for GBP is 1.5490, and that's the highest it's been this month.

Astrid – Can we get their source for rates, since it can vary by source, and verify that these are proper? If so, then we can use that for our double-check going forward."

161. Attached to the email was a spreadsheet created by Ms Brewer comparing the exchange rates charged by CFX as set out in the Payment Upload document attached to Ms Beech's email and two other sets of rates "As of 6/30" and "As of 7/21". Although the source of these rates was not stated in the spreadsheet, the evidence is that the June 30 rates were month-end rates obtained from Janus' SAP system while the July 21 rates were obtained from XE.com. The calculations in the spreadsheet showed a difference of $61,660.46 (about 6%) using the 30 June rates and a difference of $44,662.23 (about 4%) using the 21 July rates.
162. At 18:38 Ms Lacy forwarded Ms Brewer's email of 12:36, but omitting the part addressed to Ms Arakaki, to Ms Beech, with copies to Ms Brewer and Ms Arakaki, saying:

"As part of the reconciliation, we noticed you were using a spot rate of 1.59, when we used a rate of 1.5490. What is your source for these rates?"

To be precise, as Ms Beech could have seen both from the spreadsheet attached to the email and from the CFX Payment Upload document, the exchange rates given in the latter for GBP were 1.5945 and 1.5944 for two trades which were no doubt executed at fractionally different times.

163. At 11:34 on 27 July 2010 Ms Beech replied to Ms Lacy, with copies to Ms Brewer and Ms Arakaki:

"We are provided with an exchange rate applicable to the time of day the quote is raised.

This has always been the case when raising currency conversions.

Our current payment provider Corporate FX buys the currencies required on behalf of SGWI."

164. There was nothing in this rather bland answer that was not true, but Janus contends that the email was misleading "in stating, in effect, that the discrepancies between the exchange rate used by [Safeguard] and the exchange rate [Janus] expected should be applied was attributable to market fluctuations and in particular intra-day market fluctuations, when in fact it was wholly or mainly attributable to the uplift that was being 'wrapped' into those rates by [Safeguard]". In my view the answer was not misleading. It answered the question Ms Lacy had asked about the source of the rates. It did not provide an explanation for the differences between the rates charged by CFX and the other rates set out in the spreadsheet, but Ms Lacy did not directly ask for such an explanation. Furthermore, as noted above, the spreadsheet did not identify the sources of the other rates quoted. The answer did not say, and in my view did not imply, that the differences were due to intra-day market fluctuations.
165. At 13:02 on 27 July 2010 Ms Brewer sent Ms Lacy and Ms Arakaki an email by way of reply to Ms Beech's email saying:

"What this tells me is that the rate they show has a premium on it from Corporate FX for their fee. In the future when we are estimating funding, we will add this into our calculation to make sure we are not short."

166. Ms Brewer's evidence was that what she meant by the reference to "a premium … for their fee" was CFX's cost of acquiring the currency on the spot market. That is not what the email says and I found Ms Brewer's evidence on this point wholly unconvincing. In my judgment Ms Brewer meant precisely what she said. She appreciated that the CFX rates were higher than the rates she had obtained from SAP and XE.com, and she appreciated the difference was a premium which constituted CFX's fee for the services it provided. Moreover, her reaction to this appreciation was that future funding estimates needed to take this into account. As for Ms Lacy, her evidence was that she understood Ms Brewer's email in the same way. Again, her evidence was unconvincing. But even if that was how Ms Lacy read it at the time, that does not alter my conclusion as to what Ms Brewer meant.
167. It is not clear from the evidence precisely what Ms Brewer was referring to in the part of the email at 13:36 on 26 July 2010 addressed to Ms Arakaki which mentions "our double-check going forward". It seems clear that Ms Brewer was envisaging some kind of check on the exchange rates charged by CFX. It does not appear, however, that this plan was implemented by Janus until January 2011.

Ms Arakaki analyses the payroll funding in September 2010

168. As noted in paragraph 28 above, after the conclusion of the factual evidence Janus disclosed a document entitled "International Payroll Funding Process" dated 8 September 2010. It is evident that it was prepared by Ms Arakaki. It sets out two flow charts and descriptions of the process for funding Janus' international payroll, one for all countries except Japan and one for Japan. Part of the description of the first process reads as follows:

"The Payroll Manager then calculates the total month's employer costs in USD with a 20% cushion for all countries but the UK, which is actual – no additional 20%, to cover any potentially large currency translation rate differences between Janus' prior month-end exchange rates (which is typically used in the funding calculation) versus what SGW receives, and also to cover any possible one-off items."

169. It is not entirely clear who the Payroll Manager referred to was, but it appears likely that it was Ms Burke. At all events, this document shows that Ms Arakaki was aware that there were "potentially large … differences" between the month-end exchange rates available from Janus' SAP system and the exchange rates Safeguard received from CFX and passed on to Janus.

Addition of Switzerland to the Agreement in October 2010

170. On 14 September 2010 Ms Lacy signed an addendum to the Agreement extending it to Switzerland with effect from October 2010. (The copy of the addendum in evidence is not signed on behalf of Safeguard, but I do not understand it to be in dispute that this variation was agreed by both parties.)

Ms Arakaki and Ms Kunz prepare Translation Difference spreadsheets from January 2011 to February 2013

171. At the beginning of January 2011 daily exchange rates, rather than month-end exchange rates, became available via Janus' SAP system. It is not clear precisely what source the SAP system obtained these daily rates from, but it appears to have been a source like XE.com. This was an important development from Janus' perspective, because it enabled Janus to make a more accurate estimate of the funding required than using month-end rates as previously.
172. Perhaps prompted by this development, in January and February 2011 Ms Arakaki prepared monthly spreadsheets which compared the amounts which Janus had paid Safeguard by way of pre-funding ("fundings") with the amounts actually paid to employees as shown in the CFX Payment Upload documents ("payroll postings") in both USD and the applicable local currency ("the Translation Difference spreadsheets"). For each trade, she entered into the spreadsheets the exchange rate charged by CFX and the exchange rate given by the SAP system. The spreadsheets then calculated the "Translation Diff[erence]" between the two. From March 2011 the preparation of the Translation Difference spreadsheets was undertaken by Ms Kunz, who continued to prepare them monthly until February 2013.
173. From February 2011 onwards, it appears that someone undertook the exercise of checking each of the translation differences, because the Translation Difference spreadsheets include the letters OK inserted beside almost all of the entries. It is not clear who this was, but it seems probable that it was Ms Arakaki at first and then Ms Kunz.
174. The differences shown in the Translation Difference spreadsheets were often substantial. For example, the January 2011 spreadsheet showed a translation difference of $50,286.49 just for GBP. Moreover, the differences were always due to the CFX rate being higher than the SAP rate. In no case was the SAP rate higher than the CFX rate. Thus the Translation Difference spreadsheets always showed that Janus made a loss due to the differences in the exchanges rates, and never a gain.
175. It was Ms Brewer's evidence that the SAP exchange rates used in the Translation Difference spreadsheets were those applicable on the day that Janus sent the funds rather than the day that CFX traded the currencies i.e. a difference of a day or two. Although this is not apparent from the spreadsheets, I am prepared to accept that it is correct. It would have been entirely straightforward for Ms Arakaki and Ms Kunz to have used the SAP rates for the day of trade if so desired, however.
176. Ms Brewer accepted that Ms Arakaki had given her the Translation Difference spreadsheets to review each month. She gave evidence that she used the analysis contained in the spreadsheet to ensure that the payments were accounted for correctly. That evidence I am prepared to accept. She also gave evidence that she did not notice that Janus was sustaining a substantial loss on the exchange rate differences month in, month out. That evidence was completely incredible and I do not accept it.
177. Given that the spreadsheets always showed that Janus sustained a loss as a result of the exchange rate differences, and never a gain, Ms Arakaki, Ms Kunz and Ms Brewer must have appreciated that the exchange rate differences were not merely attributable to movement in the exchange rates between the relevant dates, but rather were due to CFX charging a materially higher exchange rate than that given by the SAP system.

Safeguard's knowledge of the Janus SAP rates from March 2011

178. On 7 March 2011 Ms Burke sent Ellen McAll of Safeguard an email saying:

"I am trying to run the multiperiod pay element report for UK and convert it to USD. It gives me an error and says there are no conversion rates for all months (except September). Does the conversion part not work?"

179. Ms McAll replied at 11:54 the next day:

"The conversion part does not work on iiPay [Safeguard's own accounting system], however [to] get this to work, Janus would need to provide a conversation [sic] rate/s to be used either a rate set for the year or on a monthly basis, Catherine would then input this either once for yearly or on a monthly basis, you could then use this facility on the software."

180. At 15:54 Ms Burke replied:

"So it doesn't use the conversion rates that you use each month for the payroll funding? I would have thought that would be more accurate?"

181. At 15:57 Ms McAll replied:

"You can use the CFX exchange rates i[f] this is what you prefer, however we cannot input these on the system until payment has been raised, Please advise if you require this each month?"

182. In the course of further exchanges on 8 March 2011 Ms Burke confirmed that she did want Safeguard to put exchange rate data into its system because Janus had a new Compensation Manager who wanted reports in both local and US currency. Ms McAll then confirmed that Safeguard would start inputting the CFX exchange rates into their system "on a monthly basis, from this month onwards".
183. On 17 March 2011 Amy Adlington of Safeguard sent Ms Burke an email saying that, in order to input the exchange rates to iipay, "we will need the exchange rate used for JPY after each Payroll run from yourselves". Ms Burke replied the same day saying:

"Attached is a worksheet that tracks the exchange rates we use each month. Is this something you can use to load into the SGW system? It would be great if all countries could be updated with these particular rates as these are the ones we use at Janus for accounting and payroll purposes."

184. The exchange rates on this worksheet were those given by Janus' SAP system. Thereafter, each month Janus sent Safeguard the SAP rates and Safeguard inputted them into its system, as Janus had asked it to do.
185. There was a small sequel to this episode on 11 May 2011, when Ms McAll replied to two emails, one from Ms Lacy and one from Suzanne Smith of Janus querying a problem which Ms Adlington had notified them of concerning a CFX Payment Upload form. In her reply, which she also copied to Ms Arakaki, Ms McAll said:

"The exchange rate's [sic] used [to make payments] have to be those supplied by CFX we cannot use an exchange rate you supply they are for iipay records only."

186. As the recipients of this email must have appreciated, the CFX rates used to make payments were different from the SAP rates supplied by Janus to Safeguard for accounting purposes. As at least Ms Arakaki knew, the CFX rates were materially higher.

Janus expresses dissatisfaction with Safeguard's service in July 2011

187. By 13 July 2011 Janus was dissatisfied with Safeguard's service. It appears that Ms Lacy requested a meeting with Safeguard, and that Janus was sufficiently re-assured by Safeguard as to its future performance that no further action was taken at that stage.

The beginning of direct funding in September 2011

188. In September 2011 Safeguard experienced difficulties with delayed payments because US banks started to hold up funds for up to three days before transferring them, because of compliance and money laundering checks. On 2 September 2011 Joanne Pace of Safeguard sent Ms Lacy and Ms Infiesto an email, copied to Ms Arakaki, Ms Kunz and Ms Smith, explaining the issue that had arisen and recommending that Janus should, instead of sending the money to fund the distribution of its payments to Safeguard, transfer the funds directly to CFX in order to speed up the payments process.
189. On 6 September 2011 Ms Infiesto replied, saying that she would discuss the matter with Ms Lacy, but that she did not anticipate that it would be a problem for Janus to send money directly to CFX. On the next day, she sent another email, confirming that Janus would make payments directly to CFX.
190. This then gave rise to a question whether CFX would accept money that was a mere estimated cost of a future payment (i.e. the pre-funding approach that Janus had adopted in May 2009), rather than the precise amount to be paid out by CFX. After some discussion, CFX was able to accommodate pre-funding by Janus, and Ms Adlington confirmed this to Janus by email on 13 September 2011.
191. Accordingly, direct funding took place from September 2011 onwards. Janus was kept abreast of the state of its balance with CFX by a twice-monthly bank reconciliation.

Janus expresses dissatisfaction with Safeguard's service in November 2011

192. By 21 November 2011 Janus was again dissatisfied with the service provided by Safeguard. On that date Ms Infiesto sent an email to Lisa James of Safeguard, copied to Ms Lacy and Ms Porter, saying:

"Thanks for your time today. As discussed, and confirmed on our previous call, as well as today's call, I can be honest with you in sharing that we are looking at other vendors. We have not yet come to a decision, but we have received pricing from two vendors. One vendor's pricing is significantly lower, but the other was insignificant and will not even be considered. I appreciate your candidness and I hope you can appreciate ours.

…

I hope you can appreciate my honesty in me saying that, I feel like all I have done the last 6 months was chase issues. I want us to get to a place where we are working together in harmony and in partnership. … "

193. It appears that these communications had the desired effect, because Janus took no further action at that stage.

Addition of Taiwan to the Agreement in February 2012

194. On 15 February and 16 February 2012 respectively Ms Lacy and Mr Giles signed an addendum to the Agreement extending it to Taiwan with effect from May 2012. On 18 October 2012 Ms Infiesto signed a further addendum respect of Taiwan headed "Payment Disclaimer" which provided:

"Janus requires funds to be paid directly to our agreed ICP (In Country Partner) to enable payments to authorities to be made on Janus behalf.

These funds will be transferred directly by Janus via CFX to the agreed ICP bank account for ongoing payment of payroll costs, commencing October 2012.

Janus accepts total responsibility and all liabilities without exception, at all times, for all transmission of such funds through CFX to the in-country partner for onward payment to payees in Taiwan.

SGWI accepts no responsibility where monies are handled outside their direct control.

Janus will ensure that the full requested value of all funds meet the full needs of the payment value required by the ICP and Janus will pay any bank fees required."

Janus considers an alternative provider in October 2012

195. By 17 October 2012 it appears that Janus was again dissatisfied with Safeguard's service, because by that date it was discussions with an alternative provider called Patersons. Nevertheless Janus did not pursue the matter at that stage.

Janus' alleged discovery of its cause of action in March/April 2013

196. The events which prompted Janus' investigation. Curiously, Janus' witness statements did not explain in detail the circumstances give rise to the investigation carried out by Janus in March 2013 described below, and this only emerged in oral evidence. Ms Infiesto said that in February 2013 Janus received four requests for extra funds because the buffer was too low to make payments. Her recollection was that there were two telephone calls requesting additional funds, the first from Jennifer Fitzpatrick of Safeguard, and the second from either Ciarán Moss or Danielle Allan of Safeguard. In addition, there was an email from Len Walker of Safeguard to Ms Infiesto, copied to Ms Lacy, on 15 February 2013, informing her there were insufficient funds in the buffer account to cover a particular payment. Ms Infiesto also referred to an email she sent to Mr Walker on 20 February 2013, saying that an additional payment of $250,000 had been sent to CFX to cover February payments.
197. Ms Infiesto's evidence is supported by Janus' bank reconciliation, which shows that there were five payments by Janus to CFX in February 2013: a payment of $200,000 on 4 February; a payment of $250,000 on 19 February; a payment of $250,000 on 20 February; a payment of $7,358,727.45 on 22 February; and a payment of $6,505.85 on 28 February. As with any wire transfer, Ms Lacy's approval was required to effect these transfers. She said that, in her experience, payments of that kind would not be made without a request of some form.
198. A separate issue was that Janus' Hong Kong employees were not paid on time that month. This seems to have been due to a problem between CFX's bank (Lloyds) and the employees' banks. On 4 March 2013 Ms Lacy sent an email to Gigi Chan, a Janus employee in Hong Kong, explaining the situation, saying that she expected the problem to be resolved that day and apologising. She went on:

"We expect that this issue may result in a change to a different payroll vendor."

199. It appears that this episode prompted Janus to re-consider replacing Safeguard with Patersons. On 13 March 2013 John Stringer of Janus sent Ms Infiesto an email saying:

"… I understand you would like to terminate with Safeguard for all countries at the same time.

I would suggest we start the implementation with Patersons and 1 month in then give our termination notice."

200. Ms Lacy denied, however, that Janus had decided to replace Safeguard by that stage. I accept that evidence, not least because some time elapsed before Janus raised a notice of dispute and even longer before Janus served a notice of termination. Nevertheless, I consider it likely that the Hong Kong episode coloured Ms Lacy's attitude to what she discovered in March 2013.
201. Janus' internal investigation. On 14 March 2013 Ms Brewer sent Ms Kunz an email saying:

"We would like to document and quantify the impact of what we're expensing related to Safeguard's rates vs what the actual translation rates are.

I did a comparison a few years back to see what the financial impact is at [document reference]. Can you please updated this for January and February of this year so we can see what the impact of the translation is? I'd also like to document the process to see it if we should change how we book our entries (ie, should the variance between the two rates should be going to fees vs translation).

I also have a document showing how we currently book accruals and its impact on translation at [document reference].

I'd like to show Karlene something early next week …"

The first document referred to in this email was Ms Brewer's spreadsheet of 26 July 2010 (see paragraph 161 above).

202. Ms Brewer's and Ms Lacy's evidence was that Ms Lacy asked Ms Brewer to arrange for this exercise to be undertaken and that Ms Lacy made this request because she was concerned about the multiple requests to replenish the buffer in February 2013.
203. On 14 March 2013 Ms Kunz emailed Ms Brewer a spreadsheet she had created. This used data from the Translation Difference spreadsheet for January 2013 (see paragraph 172 above). On 15 March 2013 Ms Kunz emailed Ms Brewer a revised version which included data from the Translation Difference spreadsheet for February 2013.
204. It appears that there was a meeting between Ms Lacy, Ms Infiesto, Ms Brewer and Ms Kunz on 19 March 2013 at which Ms Kunz's spreadsheet and the Agreement was discussed. Thus there is a hard copy of the spreadsheet in evidence which bears manuscript annotations in what appears to be Ms Lacy's handwriting. Also on 19 March 2013 Ms Infiesto sent an email to Ms Lacy, Ms Brewer and Ms Kunz saying that all she had found in the Agreement regarding exchange rates was clause 4.6 which she set out. Later the same day Ms Kunz replied saying:

"… I don't see anything else on exchange rates either. And I think the paragraph below is specifically talking about invoices."

205. At 9:32 on 20 March 2013 Ms Infiesto sent an instant message to Anh Sylvain of Janus, who was a payroll administrator, saying:

"Everything is okay. I have been in meetings on Italy and the stupid CFX file thing … Karlene is super mad at Heather and Tina right now. I am sure you heard her talk to them yesterday."

206. Ms Infiesto's evidence was that she had heard Ms Lacy talking to Ms Kunz and Ms Brewer in an "elevated" voice "right outside my office". Ms Infiesto initially agreed that Ms Lacy was "super mad" at Ms Kunz and Ms Brewer "because they were the people who had been monitoring the difference between the CFX exchange rates and the SAP generated exchange rates", but then said she did not know what Ms Lacy was mad about. Ms Brewer's evidence was that Ms Lacy was "super mad" because of "other compensation related items in accounting" which she could not specify, but said were "somewhat routine". When pressed on this explanation, she ultimately said that she did not remember why Ms Lacy was mad. Her evidence on this point was deeply unconvincing. Regrettably, counsel for Safeguard failed to put the instant message to Ms Lacy, and therefore I do not have the benefit of any explanation she might have been able to give. Nevertheless, I consider it probable that Ms Infiesto's first answer represents the truth. I think Ms Lacy was "super mad" because she realised that Ms Kunz and Ms Brewer had been aware that Janus was making a substantial loss on the exchange rates charged by CFX compared to the SAP exchange rates, when in Ms Lacy's opinion there was no basis in the Agreement for Janus to be charged such a foreign exchange margin.
207. It appears that, during the meeting on 19 March 2013, Ms Lacy requested that an analysis be carried out using the SAP rates for the actual date of payment, no doubt in order to make sure that the differences in the dates did not explain the translation differences. At 10:33 on 20 March 2013 Ms Kunz emailed Ms Brewer a revised version of her spreadsheet, together with a second spreadsheet analysing the funding payments made by Janus and the payments made to employees in January and February 2013, using these rates.
208. It appears that Ms Lacy also asked for exchange rates to be obtained from Wells Fargo for comparison. At 17:45 on 20 March 2013 a representative of Wells Fargo emailed Steven Saba of Janus, with copies to Ms Lacy and another person, a set of screenshots from Bloomberg showing the daily closing rates for GBP, EUR and CHF going back to 21 January 2013. The next day Mr Saba forwarded these to Ms Kunz and Ms Brewer. Someone at Janus queried why these rates were comparable to what Janus had in its SAP system. At 9:48 on 21 March 2013 Ms Brewer sent Ms Lacy and Ms Kunz an email relaying the explanation for this:

"I just talked to Steve and he talked to his contact at Wells Fargo who said these are the rates from Bloomberg and that they may differ slightly from what we have based on the timing of when the rates was pulled for the day. Wells Fargo usually charges 0.25% - 0.50% on top of these rates for their transaction fee. He did say that he knew that payroll vendors tend to charge much more (specifically he knew ADP Canada charges 3%)."

Ms Lacy replied at 16:28 saying "Let's run with a .5% upcharge with the Bloomberg rates …".

209. Accordingly, at 16:49 on 21 March 2013 Ms Kunz sent Ms Infiesto and Ms Lacy, with a copy to Ms Brewer, another spreadsheet comparing CFX's exchange rates for GBP, EUR and CHF in January and February 2013 with the Bloomberg rates plus 0.5%. The spreadsheet showed that the CFX rates were between 3.21% and 4.69% higher, and on average about 3.5% higher.
210. In parallel with the work on Bloomberg/Wells Faro exchange rates, Ms Infiesto, Ms Kunz and Ms Brewer created at Ms Lacy's request a workflow diagram showing the international payroll funding process for countries other than Japan and Taiwan. The first version of this document, which was named "fund_requisition_flow.doc" and consisted of two pages was created by Ms Infiesto on 20 March 2013 and was emailed by her to Ms Kunz and Ms Brewer at 18:53 that day. At 13:07 on 21 March 2013 Ms Kunz sent Ms Infiesto and Ms Brewer a second version consisting of four pages (although the fourth page was blank). The third page of this version was an image of a spreadsheet headed "Example of how payroll entries flow in the GL" which Ms Kunz had added to the document (as well as making other amendments). At 15:24 on 21 March 2013 Ms Kunz sent Ms Brewer a third version containing amendments to the first and third pages. At 15:44 Ms Kunz sent Ms Infiesto and Ms Brewer a fourth version containing further amendments to the first and third pages. At 15:51 on 21 March 2013 Ms Infiesto sent another copy of the fourth version to Ms Lacy with copies to Ms Kunz and Ms Brewer.
211. As discussed in paragraph 28 above, in May 2014 Janus disclosed a hard copy version of this document which does not correspond to any of the versions described in the preceding paragraph. Rather, it appears to be an artefact consisting of the first and second pages of the fourth version and the third page of the second version. The provenance of this version has not satisfactorily been explained. In May 2015 Janus disclosed the fourth version. The first, second and third versions were disclosed during the trial.
212. In the third and fourth versions, the third page contains the following statement:

"CFX makes payments at different times throughout the month however payroll is recorded in SAP at month end for simplicity. This creates a translation variance that has been deemed immaterial and is consistent with the treatment of all foreign entities. The majority of the translation variance is between SAP and CFX which is due to their markup. Beginning in March 2013, this markup will be booked to bank fees within G&A."

213. Ms Brewer's evidence was that the words "deemed immaterial" related to Janus' accounting thresholds for materiality: "If they had been material, what we would have needed to do, instead of recording our journal entries on the last day of the month, we would have needed to record them within the system in the exact same day that the payments were made". Counsel for Safeguard submitted that this was difficult to reconcile with the wording of the document. I am inclined to agree with this, but even if Ms Brewer's evidence was correct, the point remains that the document confirms that Ms Kunz and Ms Brewer had been aware that there was a translation difference due to CFX's markup which they had treated as being immaterial.
214. For completeness, I note that, in her covering email at 15:51, Ms Infiesto said:

"My personal recommendation at this point is:

1. We fund in each currency.

2. We do the calculations for the wire funding using the current rates on the day the wire is requested, to minimize the variance.

3. Or, we keep it the way it is and add in the 4% like we did today.

I am sure that Zeb will have his recommendation, but I do think that Option 1 will be most accurate."

215. Communications between Janus and Safeguard. In the meantime, Janus had raised the issue with Safeguard in a telephone call on 18 March 2013. The primary purpose of the call was to discuss the problem that had arisen in connection with the payment of Janus' Hong Kong employees in February, and the call had been proposed by Mr Bham in order to discuss that issue. Ms Lacy, Ms Infiesto, Ms Porter participated in the call as well as Mr Bham.
216. There is a conflict of evidence as to what was said in the course of that call. The account given by Ms Infiesto and Ms Lacy was that when "confronted" with the differences in exchange rates that Janus had observed, Ms Porter and Mr Bham said that intra-day fluctuations in rates caused the differences. Ms Porter's evidence was that the matter of rates was raised toward the end of the call, most of which was taken up in dealing with the Hong Kong problem, and that she merely said, in answer to a question whether Safeguard charged any uplift on top of what CFX charged for its services, that Safeguard did not do so.
217. Ms Infiesto's call log records Ms Porter as having said that "she was not aware of upcharge" and Mr Bham as having said that "the rate differences we were seeing was 'due to volatility in the exchange rates and has not been favourable to USD'". Even on its face, this is not entirely supportive of Ms Infiesto's and Ms Lacy's account. Moreover, for the reasons given in paragraph 29 above, I am not prepared to accept that this is an accurate contemporaneous record of the conversation. In those circumstances I prefer the evidence of Ms Porter as to what she said. As for what Mr Bham said, there is a manuscript note in Ms Lacy's handwriting which indicates that Mr Bham did say something about exchange rates having been extremely volatile in January and February 2013. This does not mention intra-day fluctuations, and accordingly I am not satisfied that Mr Bham attributed the differences between CFX's rates and those seen by Janus elsewhere to intra-day fluctuations.
218. On 20 March 2013 there was another telephone call between Ms Infiesto, Ms Lacy and Ms Porter. Mr Bham was expected to participate, but did not do so because he was unwell. There was no detailed account from Janus' witnesses of this call, and the call log records only Ms Porter's attempts to contact Mr Bham. Janus pleaded that in the course of this call Ms Porter said that "the exchange rates applied by [Safeguard] were commercial rates of exchange", but there does not appear to be any evidence to support this allegation, which was disputed by Ms Porter.
219. At 17:28 on 21 March 2013 Ms Infiesto sent an email to Ms Porter and Mr Bham, copied to Mr Giles and others, saying:

"… We have uncovered a huge issue with CFX. Obviously, there will always be exchange rate differences unless we are using the exact same rates, but what we have uncovered is that CFX is passing on their margin to us. Just January and February alone, the amount comes to $227,100.00 USD!! Our service fee was supposed to have covered payment distribution. CFX is not only being paid by SGWI, but also collecting this from SGWI's client. I am attaching our analysis for your reference.

THIS IS OF HIGHEST PRIORITY and must be addressed ASAP! If we do a historical analysis, I believe the data will prove out that CFX has been paid on an average of $60,000 a month, with each February being $170,000! I do not see anywhere on the contract that stipulates that we would pay a third party vendor for administrating the payment distribution."

She attached the spreadsheet comparing CFX's rates with the Bloomberg/Wells Fargo rates. I would observe in passing that there is a striking contrast between this email and Ms Infiesto's internal email at 15:51 that day (see paragraph 214 above).

220. Ms Porter sent a reply at 13:54 on 22 March 2013 based on a draft provided by Mr Giles. Having briefly explained the services provided by Safeguard and FX, she said the CFX exchange rate "takes into account that this is a fully managed foreign exchange service and is highly competitive with similar solutions operated by banks and other foreign exchange and transmission services".
221. Ms Infiesto replied at 16:41 on 22 March 2013:

"No, this email does not explain the services provided nor does it answer my questions!!!!

… The difference is the margin mark-up which CFX is charging us. The question was, when we compare the market exchange rates on those dates (Wells Fargo's, not our SAP rates to do a fair comparison), the margin comes to an average rate of ~3.5%

Please point me to the clause in the contract that stipulates that we will pay the 3^rd party vendor, who manages payment distribution, and pay them 7 times the going margin (.25 - .5%) …"

222. Ms Porter's evidence, which is supported by the documentary evidence apart from the call log, was that on 28 March 2013 Mr Dougherty of Safeguard telephoned Ms Infiesto to arrange a telephone conference later that week. This was initially planned to take place on 2 April 2013, but in fact took place on 3 April 2013. Mr Dougherty, Ms Porter, Ms Infiesto and Ms Lacy participated in this call. Janus wanted Mr Bham to participate in the call on 3 April, but Safeguard decided not to involve him. During this call Janus said that CFX was charging a margin of about 3% and asked Safeguard to explain why this was higher than the margin available from Wells Fargo. Neither Mr Dougherty nor Ms Porter knew what margin CFX applied to the rates it charged, however. Mr Dougherty stated that he was not aware of any uplift or revenue sharing scheme with CFX. Ms Porter believed those statements to be accurate. Safeguard did not apply any uplift to the rates charged by CFX, and at the time of that call she was not aware, and believed that Mr Dougherty was not aware, of any revenue sharing scheme between Safeguard and Corporate FX.
223. The call log dates this discussion to 28 March, but is otherwise more or less consistent with Ms Porter's evidence. The account given of this conversation by Janus' witnesses, however, was significantly different from that in the call log and even that in Janus' statement of case. Ms Infiesto said that on both 28 March and 3 April Mr Dougherty without qualification "denied that there was an upcharge [and] also denied (in response to Karlene Lacy's and my question) that there was any revenue sharing arrangement". Ms Lacy said that in a call on 2 April Ms Porter claimed that "intra-day fluctuations explained the difference in exchange rates that we were seeing". I prefer the evidence of Ms Porter on this point.
224. On 3 April 2013 Ms Porter sent Mr Bham an email containing a summary of the telephone call with Janus prepared by Mr Dougherty:

"They would like us to give them visibility of how the % is derived. Janus believes that CFX is getting 3% versus 1.5% that they were able to find with Wells Fargo.

Karlene said she understands why there is an additional %, but doesn't understand why CFX is so much.

We hedged on their request to see detail, and said that we would provide the value prop on why to go with CFX."

225. On 5 April 2013 Ms Porter sent an email to Ms Infiesto and Ms Lacy saying:

"As a follow up to our meeting on Wednesday, April 3^rd you asked us what Janus is paying CFX and what the rate is – I am confirming that the percentage rate Global Reach Partners (GRP) is receiving is circa 3%. This is structured as a facility cost across all SGWI business base and not customized by client."

She went on to make proposals as to the way forward.

226. It is common ground that, at that stage, Safeguard did not reveal to Janus the revenue sharing arrangement with CFX. Janus only discovered the revenue sharing arrangements between Safeguard and Travelex, and then CFX, as result of disclosure in these proceedings.
227. On 23 April 2013 Ms Stefonick sent Ms Porter a notice of dispute under the Agreement raising six different complaints. One of these, headed "incorrect assessment of fees", was that, under the Agreement, Safeguard was responsible for paying the fee charged by CFX. On 1 May 2013 Safeguard's General Counsel Jennifer Mullins replied to this letter disputing any breach of the Agreement. After some inconclusive negotiations over a compromise to the dispute, on 7 August 2013 Janus served notice of termination of the Agreement with effect from 5 November 2013. On 13 December 2013 Janus sent a letter before claim. On 6 March 2014 Janus issued the claim form in these proceedings.

Janus' primary claim for breach of the Agreement

228. The principles of contractual interpretation have been considered by the House of Lords and the Supreme Court in a series of recent cases, including Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, Re Sigma Finance Corp [2000] UKSC 2, [2010] 1 All ER 571, Rainy Sky SA v Kookmin Bank [2011] UKSC 50 [2011] 1 WLR 2900, Aberdeen City Council v Stewart Milne Group Ltd [2011] UKSC 56, [2012] SLT 205 and Arnold v Britton [2015] UKSC 36, [2015] AC 1619. In brief summary, the interpretation of a contract is an objective exercise in which the court's task is to ascertain the meaning that the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. As noted above, this does not include pre-contractual negotiations.
229. Janus's case in summary is as follows:

i) under the Agreement, Safeguard agreed to provide not just payroll processing services, but also foreign exchange and payment services, in consideration of the fees and other charges specified in the Agreement;

ii) it follows that Safeguard was not entitled to demand, whether by itself or by any SGWI Contractor, any charges in excess of those specified the Agreement;

iii) accordingly, Janus is entitled to reimbursement of the "fees and expenses" (i.e. the FX margins) charged by Travelex and CFX.

230. Safeguard contends that each step in this case is flawed. I agree with Safeguard, for the following reasons.
231. First, Safeguard contends that foreign exchange and payment were not services which it agreed to provide under the Agreement. In my judgment Safeguard is correct about this. The services which Safeguard agreed to provide under the Agreement are the Services defined in clause 1.16 of Article I, that is to say, those described in clause 3.1 of Article II (see paragraphs 55 and 68 above). None of the paragraphs in clause 3.1 in Article II required Safeguard to provide foreign exchange or payment services. On the contrary, they are all confined to payment processing services.
232. It is true that the Agreement contains certain terms that would be engaged if payments were made by Safeguard, which reflects the fact that the parties were contemplating the possibility that Safeguard would make payments for Janus. A prime example is clause 3.3.4 of Article I (see paragraph 58 above). But this does not assist Janus. The point can be tested in this way. I asked counsel for Janus what clause of the Agreement Janus would have relied upon to obtain specific performance if Safeguard had failed to provide foreign exchange and payment services. The only clause he relied upon in answer to that question was clause 8.1.5 (see paragraph 63 above). But that simply contains a covenant by Safeguard that the Services as defined will conform to the applicable requirements and specifications. In that regard counsel for Janus relied upon the reference to "employee payments to schedule" in Exhibit D (see paragraph 72 above). But that does not alter the ambit of the Services to be provided under the Agreement. At best from Janus' perspective it is another part of the Agreement that would be engaged if payment services were to be provided by Safeguard. But the provision is intelligible even on the basis that Safeguard will not be providing payment services. Even if Safeguard only provided payroll processing services, it would plainly be important for processing to be completed in sufficient time to enable Janus' employees to be paid on time.
233. Secondly, even on the assumption that Safeguard was obliged to provide foreign exchange and payment services under the Agreement, Safeguard contends that no provision in the Agreement regulated the FX margin charged by Safeguard or its Contractor. I agree with this. When I asked counsel for Janus which clause of the Agreement he relied upon as regulating the exchange rate, all he relied upon was the transaction costs specified in Exhibit A. But this simply says that Janus will be liable to pay Safeguard the charges specified. These are small amounts per transaction, evidently for performing an administrative function. Moreover, there is no mention in Exhibit A of exchange rates. Still less is there anything about the FX margin to be applied.
234. I would add two points. The first is that, if one regards the Payment Methodologies document (paragraph 99 above) as an admissible part of the background knowledge on the basis that it set out the foreign exchange and payment service that the parties were contemplating that Janus would use, I consider that this confirms that the way in which Janus was to be charged for that service was through the "offer" obtained by Safeguard from Travelex and provided to Janus i.e. through the exchange rate charged by Travelex. This is because the Payment Methodologies document said that it offered "customers the following key benefits: … Excellent foreign exchange rates … Excellent costing structure across many routes". Although the process was changed a number of times during the life of the Agreement, including by the replacement of Travelex by CFX, this feature of the arrangement did not change.
235. The second is that, as I understand it, Janus' case is that Safeguard (or its Contractor) was not contractually entitled to apply any FX margin at all, and was only entitled to charge an interbank rate (apart from the small transaction charges in Exhibit A). On this basis, Janus claims that it was overcharged by some $3.77 million over the duration of the Agreement (compared with the $1.2 million which Janus paid Safeguard under the Agreement, of which just $21,000 came from the transaction charges listed in Exhibit A, and about $775,000 which Safeguard received from Travelex and CFX in commission payments). In my view this is a commercially absurd interpretation of the Agreement. I see nothing in the wording of the Agreement which compels such an interpretation.
236. Thirdly, even upon the assumptions (i) that Safeguard was obliged to provide foreign exchange and payment services under the Agreement and (ii) that no provision of the Agreement entitled Safeguard to charge (whether by itself or its Contractor) anything more than the fees and charges specified in the Agreement, Safeguard contends that it does not follow that Safeguard was in breach of the Agreement. I agree. As counsel for Safeguard submitted, Janus has not identified any contractual promise which Safeguard failed to perform. In substance, Janus' claim is a claim for restitution. Indeed, it is telling that, although Janus acknowledges that its remedy for breach of contract sounds in damages, it seeks to quantify its damages by means of an account of the amounts charged by Travelex and CFX via Safeguard. It would have been open to Janus to bring a claim for unjust enrichment (see Fairfield Sentry Ltd v Migani [2014] UKPC 9, [2014] 1 CLC 611 at [18] (Lord Sumption)), but it chose not to do so, whether because it appreciated the difficulties that such a claim would face, such as a defence of change of position or for some other reason.
237. Counsel for Janus submitted that the existence of a claim for unjust enrichment did not exclude the possibility of a contractual claim, relying upon Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2015] UKSC 38, [2015] 1 WLR 1961 at [23]-[25] (Lord Mance), where a term was implied into the contract imposing an obligation to pay damages in respect of any overpayment. There are three problems with this submission, however. The first is that Janus has not pleaded any such implied term. The second is that there is no counterpart in the present case to the statutory scheme which underpinned the reasoning in the Aspect Contracts case. The third is that, absent that statutory scheme, I cannot see that such an implied term would be necessary to give the contract business efficacy or to be so obvious that it went without saying, because Janus would have remedy in unjust enrichment for any overcharging.

Janus' alternative claims

238. Janus' alternative claims are predicated upon the assumption that Safeguard is correct that Safeguard was not obliged to provide foreign exchange and payments services under the Agreement. There is an important lacuna in this aspect of Janus' case, however.
239. As noted above, it is Safeguard's case that foreign exchange and payments services were provided separately from the Agreement. In its Amended Defence Safeguard pleaded that these services were provided "on the terms of" the Payment Methodologies document. Janus appears to have understood this as a plea of collateral contract concluded by means of an offer contained in the Payment Methodologies document and an acceptance in Ms Conti's email of 25 August 2008 (paragraph 116 above), although the Amended Defence does not in terms allege a collateral contract. In fact, as counsel for Safeguard explained, Safeguard's case is not that a collateral contract came into existence on 25 August 2008, but rather that there were a series of individual contracts formed each time Janus accepted the offer from Safeguard of the trade which Safeguard had executed with Travelex and then CFX.
240. I agree with Safeguard that a series of individual contracts was formed in that way; but in my judgment that does not exclude the possibility that there was also an overarching collateral contract. Indeed, that seems to be implicit in Safeguard's own argument, which I have accepted, that certain terms of the Agreement were only engaged if and when Janus elected to use the services specified in the Payment Methodologies document.
241. Be that as it may, in its Re-Amended Reply Janus denied no less than seven times that there was any such collateral contract. Neither in its Re-Amended Particulars of Claim nor in its Re-Amended Reply did Janus plead by way of alternative case any contract between Janus and Safeguard other than the Agreement. Moreover, in Janus' opening skeleton argument for trial, counsel for Janus poured scorn on what was termed "Safeguard's two contracts case".
242. Janus' alternative claims are pleaded in paragraph 14 of the Re-Amended Particulars of Claim as follows:

"… in appointing Travelex and CFX to carry out the Exchange and Payment Function … [Safeguard] owned [Janus] the following duties, by necessary implication under the terms of the Agreement alternatively as matter of law by virtue of its position as the Claimant's agent in so appointing them:

[five fiduciary duties, including a duty not to place itself in a position of conflict of interest and a duty not to profit from its position without Janus' fully informed consent, a duty of disclosure and a duty to exercise care such that the charges applied by Travelex and CFX were set and maintained at a 'commercially reasonable level']."

243. As counsel for Janus accepted during closing submissions, the first basis pleaded is a non-starter, since ex hypothesi the foreign exchange and payment services were not being provided under the Agreement. As for the second basis, this amounts to an assertion of agency without any contract between the supposed principal and the supposed agent in this respect.
244. Having perhaps realised the difficulty with this, counsel for Janus advanced a case of collateral contract in Janus' closing submissions. But given Janus' pleaded denial of any collateral contract, that case is not open to Janus. Nevertheless, I shall deal with Janus' alternative claims. I can do so relatively briefly.
245. Fiduciary duties. As indicated above, Janus contends that Safeguard owed it wide-ranging fiduciary duties purely because it appointed Travelex, and then CFX, acting as Janus' agent. Safeguard disputes this. In my judgment Safeguard is correct. The short answer to this contention is that Safeguard did not appoint Travelex or CFX acting as agent for Janus at all. Travelex and CFX were sub-contractors to Safeguard. Moreover, they were sub-contractors for a number of Safeguard's customers, not just Janus. Still further, in the case of Travelex, Safeguard had already obtained the foreign exchange facility prior to entering into the Agreement (see paragraph 77 above), albeit that the Travelex agreement was executed subsequently. Safeguard offered the services which it obtained from Travelex and CFX to Janus by way of separate contracts between Safeguard and Janus. Janus was not a party to any contract made by Safeguard with Travelex or CFX. Safeguard was not Janus' agent, since it had no power to affect Janus' relations with Travelex or CFX.
246. Counsel for Janus tried to get round this difficulty on relying on Article 1(4) of Bowstead on Agency (20^th ed), which states:

"A person may have the same fiduciary relationship with a principal where he acts on behalf of that principal but has no authority to affect the principal's relations with third parties. Because of the fiduciary relationship such a person may also be called an agent."

In other words, where fiduciary duties exist, the fiduciary may be called an agent. But, as counsel for Safeguard submitted, Janus's argument is circular: it argues that Safeguard owed fiduciary duties because it was an agent, and it argues that Safeguard was an agent because it owed fiduciary duties.

247. In my judgment Safeguard did not owe Janus any fiduciary duties because it did not "undertake to act for or behalf of [Janus] in a particular matter in circumstances which gave rise to a relationship of trust and confidence": see the classic exposition of Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1 at 18 which was approved by Lord Neuberger of Abbotsbury giving the judgment of the Supreme Court in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 250 at [5]. On the contrary, this was an arms' length relationship between commercial parties, one of whom, with the knowledge and consent of the other, utilised the services of a sub-contractor. Each of the parties was entitled to have regard to its own commercial interests in that situation.
248. The highpoint of Janus' case on this issue is that, from May 2009 (when Janus started pre-funding Safeguard) to September 2011 (when it began to fund CFX directly), Safeguard handled money which belonged to Janus until it was disbursed to Travelex or CFX. So far as that is concerned, however, I agree with two submissions made by counsel for Safeguard. First, even if Janus retained ownership in equity of the funds that it paid Safeguard, Safeguard's sole duty was to hold the funds to Janus' order, and thus any trust would been a bare trust and would not have been given rise to the fiduciary duties contended for by Janus. Secondly, there is no suggestion that Safeguard ever dealt with those funds otherwise than strictly in accordance with Janus' instructions. Janus has no basis for contending that Safeguard took advantage of its position as temporary trustee of those funds in agreeing terms with Travelex and CFX.
249. Finally, I would also express my agreement with the point made by counsel for Safeguard that it should not have come as any surprise that Safeguard received commission from Travelex and CFX given that the Payment Methodologies document expressly stated that Safeguard had "partnered" with Travelex. If Janus had wanted to know the nature of the arrangements between Safeguard and Travelex/CFX, it could have asked much sooner than it did. For the avoidance of doubt, however, this is not a finding that Janus gave fully informed consent to those arrangements.
250. Duty of care. As indicated above, Janus contends that Safeguard owed it a duty of care to ensure that Travelex's and CFX's charges were set at a "commercially reasonable level". Safeguard disputes that it owed Janus any such duty. In my judgment Safeguard is correct, for a number of reasons. First, as counsel for Janus confirmed in closing submissions, Janus alleges a contractual, and not a tortious, duty of care. But, as discussed above, it has no case as to the contract into which such a duty of care is to be implied. Secondly, in so far as the imposition of the duty of care rests upon the allegation of agency, Safeguard was not Janus's agent for the reasons given above. Thirdly, I do not consider that the term alleged by Janus could be implied anyway, since it is neither necessary to give business efficacy to the relationship nor so obvious as to go without saying. Fourthly, even if such a term were to be implied, I do not consider that it would amount to a requirement that the charges were objectively commercially reasonable, but rather a requirement that the charges were set through an exercise of discretion which was commercially reasonable: compare Barclays Bank plc v UniCredit Bank AG [2014] EWCA Civ 302, [2014] 2 All ER (Comm) 115 at [14]-[20] (Longmore LJ).
251. I would add, even if Safeguard did owe Janus such a duty and even if the duty amounted to a requirement that the charges were objectively commercially reasonable, the evidence does not establish that Safeguard acted in breach of it. For the reasons discussed above, I prefer the evidence of Ms Little to that of Ms O'Brien on this question. As Ms Little made clear, consistently with the evidence of Safeguard's witnesses such as Ms Gregson and Mr Woods, international payment is not a simple or trivial service to provide efficiently, on time and without suffering deductions, and providers such as Travelex and CFX charge accordingly. Ms Little's evidence demonstrates that the FX margins charged by CFX, let alone those charged by Travelex, were commercially reasonable, and indeed fairly typical, for a non-bank provider of foreign exchange and payment services. As counsel for Safeguard pointed out, Ms Little's evidence is supported by the evidence emanating from the representative of Wells Fargo consulted by Janus that payroll vendors tended to charge "much more" than the 0.25 – 0.5% charged by Wells Fargo, and in particular ADP Canada charged 3% (see paragraph 208 above).
252. It is fair to say that CFX charged rather more for this service than Travelex did. Whether the service provided by CFX was sufficiently better than that provided by Travelex to merit the higher charge may be debatable, and it may also be the case that Safeguard could have bargained harder with CFX over the margin it was charging; but, even if both of those points are accepted, they do not establish that CFX's margin was not commercially reasonable.

Estoppel

253. Safeguard advances a defence of estoppel to Janus' primary claim for breach of contract. Safeguard put this defence primarily on the basis of an estoppel by convention. Safeguard contends that, even if (contrary to the conclusion I have reached) Safeguard was obliged to provide foreign exchange and payment services under the Agreement and Janus was not obliged to pay any more for those services than the charges set out in Exhibit A, there was a shared assumption of fact or law by the parties that the charges paid by Janus in respect of Travelex's and CFX's services were charges that were properly made in accordance with the Agreement.
254. Given my other conclusions, I shall deal with this contention fairly briefly. I accept that the evidence shows that this was a shared assumption of both parties prior to March 2013. Moreover, I consider that the evidence shows that this assumption "crossed the line" (as to which, see Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023 at [92] (Hildyard J)), in that it was communicated by the parties to each other by their conduct. I do not accept, however, that Safeguard has established that it would be unjust to permit Janus to go back on that assumption. The only detriment identified by counsel for Safeguard as having been suffered by Safeguard in reliance upon the shared assumption was that it continued to distribute Janus' payments at the prices charged by Travelex and CFX when it could have taken other steps, such as pulling out of its association with Janus altogether by terminating the Agreement to seeking to negotiate the prices downwards. There is no evidence that Safeguard would have taken either of those steps, however. Nor is there any evidence that either Travelex or CFX would have been prepared to agree to reduce its rates. Given that it is Safeguard's own case (which I have accepted) that the margins charged by CFX, let alone those charged by Travelex, were typical for the sector, this is unlikely. Certainly, it is unlikely that Travelex and CFX would have agreed to this unless Safeguard agreed to reduce its commission; but there is no evidence that Safeguard would have done so.

Contractual limitation

255. Safeguard relies upon clause 15.3 as a defence to Janus's claims so far as they relate to overcharging, but not so far as they relate to commission received by Safeguard from Travelex and CFX. This gives rise to two issues, first as to the proper interpretation of clause 15.3 and secondly as to when Janus acquired the relevant knowledge.
256. So far as to the first issue is concerned, Safeguard contends that "cause of action" should be interpreted in its conventional sense as a legal term of art, that is to say, a factual situation the existence of which entitles one person to obtain a remedy against another person from a court (see Letang v Cooper [1965] 1 QB 232 at 242-243 (Diplock LJ)) and "discovered" should be interpreted as meaning "acquired knowledge of". Janus contends that clause 15.3 should be interpreted as requiring knowledge that one has a legally viable claim and not just knowledge of the facts. Accordingly, counsel for Janus submitted, if Janus' Chief Executive Officer had knowledge of all the relevant facts, but negligently failed to take legal advice, clause 15.3 would not apply. Counsel for Janus relied in support of this contention upon the decision of the Court of Appeal in Hut Group Ltd v Nobahar-Cookson [2016] EWCA Civ 128. In my judgment Safeguard's interpretation is the correct one. The Hut Group case is to be distinguished from the present one, because the wording of the relevant clause differed from the wording of clause 15.3.
257. Turning to the second issue, Safeguard contends that Janus acquired the relevant knowledge more than one year before 9 March 2014, namely in late July 2010 or at latest in early 2011. In my judgment Safeguard is correct. I consider that Janus knew the relevant facts by 27 July 2010 when Ms Brewer realised, and told Ms Lacy, that the exchange rate Safeguard offered Janus included a premium from CFX for its fee. In the alternative, Janus knew the relevant facts on or shortly after 28 January 2011, when Ms Arakaki compiled the first Translation Difference spreadsheet and sent it to Ms Brewer to review, showing approximately the amount of the margin charged by CFX.
258. Janus relies upon the events of March and April 2013 as demonstrating that it only acquired the requisite knowledge then, and it makes the forensic point that, if it had known previously what it discovered then, it would have reacted in the same way as it ultimately did. I do not accept this. In my view the true explanation for the difference in the ways that Janus reacted at different times was as follows. In July 2010, Ms Brewer told Ms Lacy that the exchange rates shown by Safeguard to Janus included a premium for CFX's fee, but Ms Brewer did not investigate, nor did Ms Lacy ask her to investigate, the extent of the margin. In January 2011 Ms Brewer and Ms Arakaki (and later Ms Kunz) became aware of the approximate extent of the margin (although they did not calculate it so precisely as in March 2013 or as a percentage), but they did not reveal this information to Ms Lacy. It was only in March 2013 that Ms Lacy became aware of the extent of the margin. It was that discovery, coloured by the Hong Kong problem (and perhaps Janus' longstanding dissatisfaction with Safeguard for other reasons), which led Janus to react in the way that it then did.

Result

259. For the reasons given above, Janus' claims are dismissed.