England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		09/02/2017

Ms Lesley Anderson QC :

Preliminary

1. This is my judgment following the trial of: (a) preliminary issues in a Part 7 Claim brought on 27 March 2015 ("the Part 7 Claim") and (b) a Part 8 Claim brought by Claim Form on 12 May 2016 ("the Part 8 Claim") by Jomast Accommodation Limited ("Jomast"), the Claimant. Both claims concern a sub-contract agreement made on 3 July 2012 between Jomast and G4S Care and Justice Services (UK) Limited ("G4S"), the Defendant, for the provision of accommodation services to asylum seekers ("the Agreement").
2. By the Part 7 Claim, Jomast seeks: firstly, damages for fraudulent misrepresentations which it claims were made to it by G4S in order to induce it to enter into the Agreement and, secondly, declarations as to the proper construction of a warranty (paragraph 4.8 of Schedule 5) in the Agreement and an account and damages in respect of sums which it says are due on that construction. By the Part 8 Claim, Jomast seeks a series of further declarations as to the proper construction of the Agreement, in particular as to the extent to which it is obliged to accept asylum seekers (or "Service Users" as I shall more generally refer to them).
3. By his order dated 14 June 2016, Nugee J. ordered the trial of the following issues in the Part 7 Claim:

a) Whether G4S is liable to Jomast in fraudulent misrepresentation as alleged in paragraphs 38 to 42 of the Particulars of Claim; and

b) Whether on the correct construction of paragraph 4.8 of Schedule 5 and having regard to the relevant surrounding circumstances or "factual matrix":

i) in circumstances where G4S itself provides services and where the actual cost to G4S of providing the services exceeds £8.10 per service user per night, G4S is liable to pay Jomast an increased sum measured by reference to the difference between £8.10 per service user per night and the cost incurred by G4S in carrying out "Compliant Services" (as that term is defined in paragraph 30.3 of the Particulars of Claim) the same or similar to those supplied by Jomast (with or without a profit margin) as alleged at paragraph 37.2.2 of the Particulars of Claim;

ii) in circumstances where G4S provides services itself which are not Compliant Services the same or similar to those supplied by Jomast, G4S is liable to pay Jomast an increased Service sum measured by reference to the difference between £8.10 per service user per night and the cost that would have been incurred by G4S in providing the services had such services been Compliant Services, as alleged at paragraph 37.3 of the Particulars of Claim;

iii) in circumstances where a sub-contractor of G4S carries out services which are not "Compliant Services" (as that term is defined in paragraph 30.3 of the Particulars of Claim) the same or similar to those supplied by Jomast, G4S is liable to pay Jomast an increased Service Charge measured by reference to the difference between £8.10 per service user per night and the price that would have been charged by G4S's sub-contractor had its services been Compliant Services" as alleged at paragraph 37.3 of the Particulars of Claim;

iv) If the answer to (ii) and/or (iii) is in the affirmative, how such cost or price of providing Compliant Services is to be ascertained?

4. I am not otherwise presently concerned with issues of breach or quantum on the Part 7 Claim.
5. In the Part 8 Claim, Jomast seeks 11 declarations as to the meaning and effect of a statement of work ("the SOW") which was agreed between it and G4S pursuant to clause 3 of the Agreement and which forms part of the Agreement. G4S disputes Jomast's entitlement to the declarations sought and by its Acknowledgment of Service in the Part 8 Claim dated 27 May 2016, seeks two alternative declarations as to the proper meaning and effect of the Agreement. By his order dated 14 June 2016, Nugee J. ordered, by consent of the parties, that the Part 8 Claim would be heard at the end of the trial of the preliminary issues in the Part 7 Claim. In the end, it was more convenient for the Part 8 Claim to be heard following the conclusion of the evidence on those issues, but before closing submissions in the Part 7 Claim.
6. Save that it arises out of the same contractual relationship and, for the reasons already stated, it has been ordered that aspects of them are tried together, the Part 8 Claim is unrelated to the Part 7 Claim but it is nevertheless convenient to deal with both in this judgment rather than giving separate ones.
7. Jomast was represented before me by Michael Todd QC and Philip Gillyon and G4S was represented by Duncan McCall QC and Matthew Lavy. I am grateful to them and to their respective instructing solicitors for the helpful manner in which they conducted their cases.

Factual Background

8. Much of the factual background was not contentious. To the extent that it was, in setting it out below, these are my findings as to those facts.
9. Until its dissolution in 2013, the UK Border Agency ("UKBA") was part of the Home Office and responsible for providing accommodation, transport and related services to asylum seekers. The responsibility now lies with UK Visa and Immigration ("UKVI"). Between 2005 and 2012, UKBA discharged that responsibility by contracting with numerous contractors under a model known as "Target". Under Target, there were in excess of 20 contracts across 12 regions. Between 2009 and 2012, Jomast (then known as Jomast Property & Finance Co. Limited) supplied, to UKBA, accommodation services for asylum seekers in the North East of England. Jomast, which is a family run business, also owns and rents residential and commercial property and is part of a group of companies known as the Jomast Group. Between January 2009 and 2012, the number of service users per night accommodated by Jomast rose from c. 800 to c.2000.
10. In April 2011, UKBA commenced, and advertised in OJEU, a competitive tender process to replace Target with a new model of contracting known as Commercial and Operating Managers Procuring Asylum Support Services ("COMPASS"). COMPASS was the largest Home Office contract under procurement in 2011 and was valued at £1.7bn. At the time there were 24,000 destitute applicants for asylum. UKBA's stated strategic aims included: the delivery of better value for money; to build in sufficient flexibility to vary services in line with changing demands in terms of volume, Service User type and location and greater transparency. A primary objective of COMPASS was to reduce the UKBA's costs of providing asylum seeker accommodation services by £140 million over the seven year (5 plus 2) term of the COMPASS contracts.
11. COMPASS aimed to streamline the system by using a regional aggregator model across only 6 regions: London and South of England; North East, Yorkshire & the Humber; North West; Midlands and the East of England; Wales; and Scotland and Northern Ireland and using fewer and larger providers. A single provider was to provide a turnkey service in each region, the performance of which would be monitored by UKBA using key performance indicators ("KPIs"). The turnkey solution included the provision of initial accommodation (short term hostel accommodation for service users on their arrival into the UK); dispersal accommodation (longer term self-catering accommodation in houses across the region); and transport and management. This dispute is concerned only with dispersal accommodation which is the most significant from a financial and logistics perspective. Providers were obliged to provide services to single asylum seekers ("Single Service Users") and family groups ("Family Member Service Users") which were paid for on a per Service User Per Night ("PSUPN") basis.
12. The tender process involved various stages. In May 2011, UKBA issued Requests for Information ("RFI") to potential service providers who had registered an interest in being awarded a COMPASS contract. Potential bidders were invited to submit information regarding their financial stability, technical capacity and business capacity for evaluation by the UKBA. Both Jomast and G4S submitted tenders to be service providers to UKBA. Unlike Jomast, G4S had not previously provided social housing services but it had provided transportation and was keen to enhance its role in the supply chain.
13. On 17 June 2011, the UKBA confirmed to G4S that its tender was to be taken forward to the Request for Proposal ("RFP") stage of the procurement process. On the same day, Jomast was told that its bid had been unsuccessful because it did not meet the financial criteria on turnover. Although Jomast sought to challenge that decision by judicial review proceedings, the challenge was unsuccessful. However, shortly afterwards, it entered into a teaming agreement with Serco Plc ("Serco") and, for some time, it assisted Serco, as a principal partner, with its bid.
14. The tender process culminated with an e-auction for qualifying bidders which took place over several days in late October 2011. The e-auction was a computer-based reverse auction whereby, in a sequence of time-limited windows, bidders were invited to lower the price at which they were prepared to provide the services. Although UKBA did not rank bids on price alone, price was an important factor, and the final bid price was to be the contract price for the winning bidder.
15. G4S reached the e-auction stage of the process for each of the six UK regions and was awarded contracts in two regions: the North East Yorkshire and Humberside ("NEYH") and Midlands and the East of England ("MEE"). This dispute is concerned only with NEYH Region where, for practical purposes, services were delivered through three local immigration teams ("LITs"). On 9 December 2011 UKBA confirmed that G4S was the preferred bidder for the NEYH Region.
16. The relevant main contract is dated 9 March 2012 and made between the Secretary of State for the Home Department and G4S for "the provision of accommodation, transport and related services in North East Yorkshire and Humber Region" ("the COMPASS Contract"). UKBA entered into the COMPASS Contract pursuant to its powers contained in the Immigration and Asylum Act 1999. The COMPASS Contract is extensive comprising 50 clauses and 26 separate schedules. It is neither necessary nor practicable for me to set out its terms in full. So far as material, it included Schedule 2 (Statement of Requirements) and Schedule 5 (Service Charges). Recital B described the key strategic aims to be to:

"i) meet the accommodation and essential living needs of eligible asylum seekers; and

ii) have available, through appropriate contractual agreements a range of services to be provided to eligible asylum seekers;

iii) have available, through appropriate contractual agreements, a transport service available to eligible asylum seekers."

17. Appendix D of Schedule 5 provided that the Volume related Payments for Accommodation Services would be:

Volume of Service Users	Single SU per night	Family SU per night
0 – 1000	£9.40	£8.84
1001 – 3000	£9.20	£8.63
3001 – 7500	£9.08	£8.50
7501+	£9.00	£8.42

18. G4S did not have the in-house capacity or expertise to provide dispersal accommodation services and, at least at the outset, intended to do so through an accommodation and support supply chain model. Prior to the e-auction, on 22 August 2011, it had already entered into a teaming agreement with one proposed sub-contractor, United Property Management Limited ("UPM"), an established sub-contractor under the Target model, in relation to services throughout the UK. Successive bids placed by G4S during the e-auction itself were based on discussions with UPM, who were present in the room, and adjustments to its pricing model. G4S approached several other sub-contractors including, in November 2011, Jomast.
19. The precise content of the discussions and negotiations which took place thereafter is contentious and forms the subject matter of the Part 7 dispute and I will return to them below. However, it is not in issue that on 3 July 2012, Jomast and G4S entered into the Agreement. The Agreement comprises 51 clauses and 26 Schedules and, to a significant extent, mirrors the structure and terms of the COMPASS Contract.
20. So far as is material, the Agreement provides as follows:

i) Recital A was in substantively identical terms to Recital B of the COMPASS Contract;

ii) By clause 3.1 that the Agreement governs the relationship between the parties in relation to the Services provided by [Jomast] to [G4S];

iii) By clause 3.2 that [G4S] shall be entitled at any time to require the provision of any or all of the Services from [Jomast] in accordance with the SOW;

iv) By clause 3.3 that a SOW shall not enter force, be legally binding or have any other effect unless it is first signed by [Jomast] and countersigned by [G4S];

v) By clause 3.6 that [Jomast] was to provide the Services to [G4S] in accordance with the terms and conditions of the Agreement (including, without limitation, the provisions of any SOW, Schedule 2 (Statement of Requirements) and Schedule 13 (Performance Regime));

vi) By clause 3.8 that [Jomast] was to commence provision of the Services described in the SOW on the date specified in such SOW ("the Commencement Date") and from which date [G4S] was entitled to issue Accommodation Requests Orders, which are issued to [Jomast] in respect of Service Users;

vii) By clause 3.10 that if so requested by [G4S], [Jomast] would provide the Additional Services and [G4S] would pay for the same at the rates set out in the SOW;

viii) By clause 3.11 that [G4S] made no representation as to the number or type of Service Users which would be allocated to [Jomast] and [Jomast] confirmed that it had no expectation of and should have no claim against [G4S] in respect of, a minimum number of Service Users (or a particular type of Service User) to be allocated to it by [G4S] under the Agreement or any SOW. [Jomast] thereby acknowledged that the number of Service Users may increase and decrease from time to time;

ix) By clause 5.1 that in consideration of the provision of any Services by [Jomast] on the terms of the Agreement [G4S] would pay the Service Charges in accordance with the charging arrangements set out in the SOW and in Schedule 5 (Service Charges) (and for the avoidance of doubt, such Service Charges were payable during the Transaction Period where appropriate). The Service Charges were subject to adjustment as set out in such Schedule;

x) By clause 5.6 that save as expressly provided for in the Agreement, [Jomast] was not entitled to levy any charge or receive any payment in respect of its performance of the Agreement, compliance with its terms and/or costs of engaging any of its suppliers and/or its sub-contractors (including without limitation those referred to in Schedule 24 (Material sub-contractors) in connection with such performance/compliance;

xi) By clause 19.3 that save where the claim relates to the death or personal injury of any person or arises as a result of any fraud, fraudulent representation; the maximum financial liability of [Jomast] in respect of all claims (whether caused by negligence or otherwise) pursuant to the Agreement, for any breach of the Agreement or for any tort, breach of statutory duty, misrepresentation, misstatement in connection with the Agreement would in no event exceed the sum of £500,000; except where [Jomast] has valid insurance in place directly in respect of such claim in which case the liability was to be limited to the amount paid out pursuant to such insurance policy;

xii) By clause 19.4 that subject to clauses 19.5, 11.31 and 11.32 and the Service Charge provisions and notwithstanding clause 19.3, neither party would be liable to the other party for: (a) any indirect special or consequential loss or damage; (b) any loss of profits, turnover, business opportunities, damage to goodwill (whether direct or indirect) or anticipated savings;

xiii) By clause 39.1 that the Agreement constituted the entire understanding between the parties relating to the subject matter of the Agreement and supersedes all prior agreements between the parties and relating thereto;

xiv) By clause 39.2 that neither party had relied on any warranty or representation of any party (except for the Warranties) and each party irrevocably and unconditionally waived any right it might have to claim damages for any misrepresentation or breach of any warranty not contained in the Agreement and/or to rescind the Agreement unless such misrepresentation or warranty was made fraudulently.

21. It is also not in issue that G4S issued the SOW pursuant to the Agreement. The SOW is dated on page 1 as having been issued on 1 July 2012. On the same page at clause 1.2 it refers to it as having been issued pursuant to [the Agreement] which was originally signed on 1 July 2012 (by G4S) and on 3 July 2012 (by Jomast). The SOW was signed on behalf of G4S on 26 July 2012 and on an unknown date on behalf of Jomast. Nothing turns on the point but it is likely that the SOW took effect only from 26 July 2012.

The Witnesses

22. I heard evidence from the following witnesses:

i) Stuart John Monk ("Mr Monk"), the Managing Director of Jomast, with overall responsibility for strategy and operations including the provision of asylum seeker services;

ii) Gordon Paul Greer ("Mr Greer"), a Chartered Accountant and Finance Director at Jomast, responsible for the financial management of the Jomast Group including the Agreement;

iii) Stephen Small ("Mr Small") who was employed by G4S as Managing Director of Detention & Escorting from January 2010 until June 2011 and as Managing Director of Immigration & Borders until his retirement in April 2015 and responsible for running the COMPASS Contract;

iv) Andrew David Gray ("Mr Gray") who was employed by G4S from March 2012 until June 2014 as Accommodation Director and from June 2014 to December 2015 as Partnerships Director for the COMPASS Contract;

v) Stella Margaret Gutteridge ("Ms Gutteridge") who was engaged as a consultant by G4S from December 2011 to December 2012 as Mobilisation Director for the COMPASS Contract.

23. In connection with the Part 8 Claim, I also read and considered the following further witness statements:

i) First witness statement of Mr Monk dated 12 May 2016;

ii) Witness statement of Armel Elaudais, an associate solicitor at Clyde & Co LLP, solicitors on behalf of G4S dated 27 May 2016;

iii) Second witness statement of Mr Monk dated 10 June 2016.

24. Although he did not give evidence before me, it is convenient here also to mention Stephen Monk, who is the son of Mr Monk and Head of Residential at Jomast ("Stephen").

The Law on Proper Construction of the Agreement

25. The parties agreed that the Agreement falls to be construed by me in the manner set out in recent authorities at the highest level on the principles governing the interpretation of commercial contracts, the most recent of which are the decisions of the Supreme Court in Marks & Spencer Plc v BNP Paribas Securities Services Trust Company Ltd [2015] UKSC 72, [2016] AC 742 (concerning implied terms) and Arnold v Britton [2015] UKSC 36, [2015] AC 1619 (concerning the construction of express terms).
26. First, in construing a contractual provision, regard is to be had to the purpose of the provision and the circumstances in which it was agreed.  The principle was stated by Lord Nicholls in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251 (HL) as follows at [26]:

"The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made".

27. Second, it has often been said that in cases of ambiguity (such as where there are two possible meanings of the words to be construed), the court is entitled to prefer the construction which is most consistent with business common sense.  In Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900 Lord Clarke stated the principle as follows at [21]:

"… the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has 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, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other".

28. These principles were considered and endorsed in Arnold v Britton. Lord Neuberger (with whom Lords Sumption and Hughes agreed) considered the proper approach to contractual interpretation at [14]-[23].
29. At paragraph [15] he said:

"When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to 'what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean', to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focussing on the meaning of the relevant words … in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the [contract], (iii) the overall purpose of the clause and the [contract], (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions…".

30. Lord Neuberger went on to emphasise seven factors (although the seventh was concerned with service charge clauses and so is not set out below): 

"17. First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focusing on the issue covered by the provision when agreeing the wording of that provision.

18. Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. That is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.

19. The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG [1974] AC 235, 251 and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191, 201, quoted by Lord Carnwath at para 110, have to be read and applied bearing that important point in mind.

20. Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.

21. The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.

22. Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council v Stewart Milne Group Ltd [2011] UKSC 56, 2012 SCLR 114, where the court concluded that "any … approach" other than that which was adopted "would defeat the parties' clear objectives", but the conclusion was based on what the parties "had in mind when they entered into" the contract (see paras 17 and 22)".

31. Although it was common ground before me that I was entitled to have regard to the admissible factual matrix, Mr McCall QC for G4S stressed three further points on construction which, in principle, seem to me to be correct:

i) Although the factual matrix surrounding the agreement of a contract can be relevant, it is the language actually used that is paramount – see Lord Neuberger at [17];

ii) The admissible factual matrix consists only of facts known to both parties, and not facts known to one party alone – see Lord Neuberger at [21];

iii) Although generally a court will seek to give meaning to every part of a contract or clause (the so-called presumption against superfluous language) it should not strain to do so, particularly where a contract is poorly drafted – see ENER-G Holdings Plc v Hornell [2012] C.P. Rep 47, per Gross LJ at [59].

32. However, the parties were not able to agree what constituted the admissible factual matrix or how these principles applied to the facts of this case. I will return to this when considering the issues of construction.

The Law on Deceit

33. Although there was a degree of agreement between the parties as to the legal test for the tort of deceit or fraudulent misrepresentation, they put the arguments slightly differently. The starting point is the decision of the House of Lords, in particular the speech of Lord Herschell, in Derry v Peek (1889) 14 App Cas 337 at 374.
34. The Derry v Peek approach was reviewed recently by the Court of Appeal in Eco 3 Capital Ltd and others v Ludsin Overseas Ltd [2013] EWCA Civ 413.  Jackson LJ (with whom McFarlane LJ and Arden LJ agreed) held that the tort of deceit contains four ingredients rather than three:

"76. On the basis of these authorities all the appellants contend that intention to deceive is an element of the tort of deceit. The judge failed to address this element. She did not find that it had been established. On the contrary it is clear that the defendants did not have an intention to deceive.

77. I do not agree with the analysis of the authorities which the appellants advance. What the cases show is that the tort of deceit contains four ingredients, namely:

i) The defendant makes a false representation to the claimant.

ii) The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false.

iii) The defendant intends that the claimant should act in reliance on it.

iv) The claimant does act in reliance on the representation and in consequence suffers loss.

Ingredient (i) describes what the defendant does. Ingredients (ii) and (iii) describe the defendant's state of mind. Ingredient (iv) describes what the claimant does.

77. I do not accept that "intention to deceive" is a separate or free standing element of the tort of deceit. The phrase "intention to deceive" is merely another way of describing the mental element of the tort. It is a compendious description of ingredients (ii) and (iii) as set out in the preceding paragraph."

35. It is clear from this analysis that, being a tort, deceit is only actionable if the claimant establishes that he has suffered loss. Mr McCall QC described this as a fifth element and it seems to me that this is correct. Although the Court of Appeal in Eco 3 did not identify it as a distinct, fifth element, it is clear from the passages above that it is a necessary element. Subject to this point, it seems to me that Eco 3 is a correct statement of the law which I should follow.
36. As will become apparent, a specific issue arises in this case as to whether the alleged false representations are capable of being understood in more than one sense and, if so, whether (as submitted by Mr McCall QC) the representor must have intended the representation to have the false meaning alleged by the representee. For Jomast, Mr Todd QC described the proposition as novel and one which departs from the long-established elements of an actionable deceit (set out most recently in Eco 3) and which was not supported by the principal authority relied on by Mr McCall QC.
37. As to the alleged representation and its falsity (the first, second and third limbs of the requirement), I accept the following submissions made by Mr McCall QC:

i) The relevant representation has to be identified with clarity, and understood in its context – per Rix LJ in AIC Ltd v ITS Testing Services (UK) Ltd ("The Kriti Palm") [2007] Lloyd's Rep 555 at [252].

ii) Where a statement is capable of being understood in more than one sense, it is essential to liability in deceit that the party making the statement should have intended it to be understood in its untrue sense, or at the very least that he should have deliberately used the ambiguity for the purpose of deceiving the claimant – see Clerk & Lindsell on Torts, 19^th ed, 2006 at [18-25].

iii) Put another way, the requisite mental element compendiously described as "intention to deceive" and comprising elements (ii) and (iii) implies some coincidence between the knowledge on the part of the representor that the representation bears the false meaning in element (ii) and his intention that the claimant should act on it in that same sense in element (iii).

iv) The question is not whether the defendant in any given case honestly believed the representation to be true in the sense assigned to it by the court on an objective consideration of its truth or falsity, but whether he honestly believed the representation to be true in the sense in which he understood it albeit erroneously when it was made - Akerheim v Rolf de Mare [1959] AC 789 (PC) per Lord Jenkins at 805.

v) The test for dishonesty remains as set out in Derry v Peek per Lord Herschell at 374:

"First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (i) knowingly, (ii) without belief in its truth, or (iii) reckless, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a statement from being fraudulent, there must, I think, always be an honest belief in its truth. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made."

vi) Knowledge for the purposes of fraud is explained in Armstrong v Strain [1951] TLR 856, per Devlin LJ:

"A man may be said to know a fact when once he has been told it and pigeon-holed it somewhere in his brain where it is more or less accessible in case of need. In another sense of the word a man knows a fact only when he is fully conscious of it. For an action of deceit there must be knowledge in the narrower sense; and conscious knowledge of falsity must always amount to wickedness and dishonesty. When Judges say, therefore, that wickedness and dishonesty must be present, they are not requiring a new ingredient for the tort of deceit so much as describing the sort of knowledge which is necessary."

vii) Recklessness is not to be equated with even an extreme form of negligence; recklessness entails having a dishonest state of mind implying a degree of moral obliquity – see Angus v Clifford [1891] 2 Ch 449 per Bowen LJ at 471.

viii) Where it is alleged that a corporate entity acted fraudulently, it is necessary to identify the individual who made the representation and to establish that that individual (or, if not that individual, the person who directed or allowed the representation to be made) had a dishonest state of mind – see Man Nutzfahrzeuge AG v Freightliner Ltd [2005] EWHC 2347 (Comm) per Moore-Bick LJ at [156].

ix) The representor should intend that the representation is acted upon by the claimant in the sense in which it caused damage to him – (per Morritt LJ in Goose v Wilson Sandford & Co (No.2) [2001] 189 Lloyd's Rep PN 189 at [48] citing the speech of Lord Maugham in Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 205 at 211).

38. As to the requisite inducement, which is an issue of causation, in Hayward v Zurich Insurance Company plc [2016] UKSC 48 the issue was whether a claimant alleging deceit must show that he believed the misrepresentation. The Supreme Court held that in a claim for deceit, reasonable belief in the truth of the representations is not an independent ingredient of the tort. Adopting in part Mr Todd QC's helpful summary, I agree that the following relevant points were made by the Supreme Court:

i) It is not necessary, as a matter of law, to prove that the representee believed that the representation was true. However, the representee's state of mind may be relevant to the issue of reliance. If the representee does not believe that the representation is true, he may have serious difficulty in establishing that he was induced to enter into the contract or that he has suffered loss as a result (per Lord Clarke at [18] and [40]-[42]; per Lord Toulson at [67]).

ii) Materiality is evidence of inducement because what is material tends to induce (per Lord Clarke at [29]).

iii) Where there are multiple causes, it is sufficient for the misrepresentation to be an inducing cause and it is not necessary for it to be the sole cause (per Lord Clarke at [33], citing Chitty on Contracts, 32^nd ed, Vol 1 at [7-37], Barton v Armstrong [1976] AC 104, Standard Chartered Bank Ltd v Pakistan National Shipping Corp Ltd (Nos 2 and 4) [2003] 1 AC 959 at [15]-[16] and Gould v Vaggelas (1984) 157 CLR 215 (HC of Aus, Wilson J) at 236).

iv) Lord Clarke (at [32]) rejected the analysis of the Court of Appeal that for a claimant to be able to rescind a contract for misrepresentation, it must show that it was induced into making the contract by a perception that the relevant statement was true rather than false.

v) In relation to the presumption of inducement, this is not a presumption of law but an inference of fact (per Lord Clarke at [34]). The authorities were not entirely consistent as to what was required to rebut the presumption. However, it was not strictly necessary to address those differences in Hayward because, however precisely the test was worded, the presumption was not rebutted on the facts of that case (per Lord Clarke at [36]).

vi) Although the court did not need to address the issue of what is required to rebut the presumption, Lord Clarke made the obiter comment that the authorities seemed to support the conclusion that it is very difficult to rebut the presumption in cases of fraud. In his view, the orthodox view was contained in Sharland v Sharland [2015] UKSC 60, [2016] AC 871, [2015] 3 WLR 1070 where the Supreme Court held that a party who has obtained a benefit by fraud, cannot deny its materiality or that it actually played a causative part in the inducement (per Lord Clarke at [37]). That view was supported by Downs v Chappell [1997] 1 WLR 426 per Hobhouse LJ at 433D-E and BP Exploration Operating Co Ltd v Chevron Shipping Co [2003] 1 AC 197 per Lord Millett at 244H-245A (per Lord Clarke at [38]).

vii) Lord Clarke agreed with the appellant claimant (Zurich) that there is no duty upon a defrauded representee to exercise due diligence to determine whether there are reasonable grounds to believe the representations made. A representee has no duty to be careful, suspicious or diligent in research (per Lord Clarke at [28(v)] and [39]).

viii) As Zurich only suspected fraud, it was not necessary for the court to express a final view on whether it always follows from the fact that the representee knows that the representation is false that he cannot succeed. However, Lord Clarke nevertheless expressed the view that, as causation and inducement are questions of fact, it seemed to him that there may be circumstances in which a representee may know that the representation is false but may be held to rely upon the misrepresentation as a matter of fact (per Lord Clarke at [44]).

ix) Only if there had been no influence at all could the agreement have stood and the representor succeed (see Clerk & Lindsell on Torts, 21^st ed, 2^nd Supplement at [18-50]).

39. Finally, it is common ground that the tort of deceit is only actionable if the claimant establishes that he has suffered loss (Diamond v Bank of London and Montreal Ltd [1979] QB 333 per Stephenson LJ at 349).
40. So far as concerns the requisite evidential burden, I consider that the correct position is:

i) If a fraudulent statement is proved, there is a presumption that the statement induced the claimant to enter the contract (per Lord Clarke in Hayward at [34]).

ii) The burden of proof to rebut that presumption shifts to the defendant to prove that, on a balance of probabilities, the misrepresentation did not influence the claimant to enter the contract. It is very difficult for a defendant to rebut the presumption (per Lord Clarke in Hayward at [37]).

iii) Although the standard of proof is the same as in any civil case, where fraud is alleged, cogent evidence is needed to prove it, because the evidence must overcome the inherent improbability that people act dishonestly rather than carelessly – per Lord Nicholls in Re H and Ors (Minors) (sexual abuse: standard of proof) [1996] AC 563 at 586 and per Lewison J (as he then was) in Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [3].

41. Because an allegation of dishonesty is a serious one, it is well established that:

i) Neither parties to litigation, their counsel, nor judges should make serious imputations or findings unless the person against whom they are made have been given a proper opportunity of dealing with them (per May LJ in Vogon International Ltd v The Serious Fraud Office [2004] EWCA Civ 104).

ii) Any allegation of dishonestly against an individual must be put clearly and directly to that witness – see Briggs J (as he then was) in Dempster v HMRC [2008] EWHC 63(Ch) at [26]:

'Secondly, it is a cardinal principle of litigation that if a serious allegation, in particular allegations of dishonesty are to be made against a party who is called as a witness they must be both fairly and squarely pleaded, and fairly and squarely put to that witness in cross-examination'.

42. I turn now to assess the evidence.

The Alleged Fraudulent Misrepresentations

43. It is common ground that the alleged fraudulent misrepresentations must be assessed in the factual context in which they are alleged to be made. Although motive is not any element of the tort of deceit, common-sense suggests that a party is unlikely to make knowingly or recklessly false representations with the intention that another will rely on them unless there is a reason to do so and both parties addressed me in their written and oral submissions on matters of context.
44. Jomast's position can be summarised by reference to its closing submissions at [3]-[7]:

i) As evidenced by a series of emails dated 4 October 2011 sent to other potential sub-contractors namely: Mantel Estates Limited ("Mantel"); LMG (EM) Limited ("Live"); Leena Homes Limited ("Leena") and Transpluscare ("Transplus") G4S was very keen to win the COMPASS contract for many regions;

ii) As the successful bidder in the MEE and NEYH Regions, G4S was bound to supply services to the UKBA at its e-auction bid prices;

iii) G4S bid for, and won, the COMPASS contract without sub-contractors being bound to supply sub-contract services to it;

iv) In particular, G4S had not reached any binding agreement with any sub-contractor on the sub-contract price;

v) G4S was determined to achieve a margin (profit) of 7% on the COMPASS contract;

vi) The COMPASS contract price was hopelessly low and G4S knew (as evidenced by emails sent on 13 or 19 December 2011 to Target Housing Limited ("Target"); Horton Housing Association ("Horton"); Openmoves ("Openmoves") and Metropolitan Housing Partnership ("Metropolitan") that it might lead to them withdrawing;

vii) To achieve the margin, G4S had to drive down the sub-contract costs (ie price);

viii) G4S had no flexibility, except to reduce the sub-contract prices;

ix) This caused some sub-contractors, namely Excell Lettings & Management Limited ("Excell") to refuse to proceed, and others to withdraw, namely Metropolitan and Openmoves on 19 December 2011, and later, Leena, on the ground that the price was unworkable which left G4S with few and weak suppliers;

x) The misrepresentations were part of the strategy to engage suppliers at a low price;

xi) In particular, G4S falsely used the price it had negotiated to receive from the UKBA as a tool to drive down the sub contract price and also to bring Jomast within its supply chain;

xii) G4S's overall strategy was: (i) to win the COMPASS contract at the best price achievable; (ii) then to negotiate the sub-contract price; and (iii) to force down the sub-contract price to achieve its desired main contract margin.

45. Against this factual context, Jomast alleges that G4S made eleven false representations to it on 6 occasions:

i) Orally, at a meeting on 17 January 2012;

ii) In writing, in an email sent on 29 February 2012;

iii) Orally, in a telephone conversation on 21 March 2012;

iv) In writing, in an email sent on 21 March 2012;

v) In writing, in an email sent on 29 March 2012;

vi) Orally, in a meeting on 4 April 2012.

46. For its part, G4S stresses that Jomast's case is not about misrepresentation: it is about fraud and that fundamental to that case is whether Mr Small, Mr Gray and Ms Gutteridge were dishonest in their dealings with Jomast between January and April 2012. Although not pleaded as a case of conspiracy, it says Jomast's case has at is heart allegations that they colluded together (and with others in G4S) to defraud Jomast, a situation which, it says, is inherently improbable.
47. I will consider each of the alleged misrepresentations in turn. In order to do so, and to make the necessary findings as to those facts, it is necessary to pick up the narrative account of the facts from where I left off in paragraph 21 above.
48. It is common ground that Mr Monk met with Mr Gray and Mr Small sometime in November 2011 to discuss the possibility of G4S and Jomast working together. Mr Monk's unchallenged evidence was that he said at the meeting that the e-auction process appeared to have resulted in undeliverable prices but, notwithstanding that, Jomast was prepared to work with G4S but only at a fair price.
49. It is also agreed that a second meeting took place on 21 December 2011 between Mr Monk and Mr Gray at the Queens Hotel in Leeds. Mr Gray told Mr Monk that G4S needed its sub-contractors to provide services at £7.90 PSUPN because of the position reached at the end of the e-auction. Mr Monk made clear that Jomast was unwilling even to contemplate a sub-contract at that price.

The First Representation: 17 January 2012 Meeting

50. The allegation (raised for the first time in the Re-Amended Particulars of Claim) is that at a meeting on 17 January 2012 attended by Mr Gray, Mr Small, Mr Monk and Mr Greer, G4S represented that "G4S's other sub-contractors had agreed to deliver asylum seeker support services at a price of £7.90 per service-user per night".
51. It is not disputed that Mr Gray made such a statement. The principal issue is whether it was false and misleading because it is common ground that, as at 17 January 2012, G4S had not entered into any contractually binding sub-contracts with its sub-contractors. As part of their closing submissions, Mr Todd QC and Mr Gillyon produced an analysis of the agreements with various sub-contractors, which I accept as broadly accurate, which shows that Target did not sign a teaming agreement until 23 February 2012 and that the teaming agreement with Live was not entered into until 8 March 2012 and related to the MEE region.
52. Jomast claims that the statement was also false and misleading because G4S failed to disclose that (a) it referred only to Target and Live; (b) Target's proposed participation was very small (up to only 250 service users); (c) Live was a newly incorporated company without significant assets or parental support and (d) other sub-contractors had rejected the £7.90 price as set out above.
53. I am unable to accept these submissions. First, I am unable fairly to construe the admitted representation as meaning that G4S was representing that there were binding sub-contracts in place at that time or that Jomast understood it in that sense. Mr Monk accepted in cross-examination, as must have been obvious, that at such an early stage of the negotiations, G4S's supply chain was "not fixed, it was still fluid". Given that he knew that the relevant main contract, the COMPASS Contract, had not yet been executed, it would be most surprising if negotiations with sub-contractors had gone beyond informal, in principle, agreements as to price. He said only that it would have been "possible" to have sub-contracts in place and he accepted that did not take that figure to be a reference to all potential sub-contractors. Secondly, it seems to me that there is nothing surprising about the fact that Live was a new-start company or that, taken together, Live and Target represented a small part of the overall sub-contract business. If Jomast was to become a sub-contractor it envisaged it would become a key player. Certainly, there is nothing in those facts which renders the admitted statement false and misleading.
54. In short, I accept the submission that the representation was true when made because Target, Live and UPM had agreed, in principle at least, to provide services at a price of £7.90. Target had agreed to work to the price of £7.90 in an e-mail dated 5 January 2012. The draft teaming agreement with Live for MEE reflected agreed rates of £7.80 or £7.86. Although that related to the MEE region, it was sent under cover of an email from Jules Bickers (G4S's Accommodation Director) ("Mr Bickers") dated 11 January 2012 which referred also to the NEYH region in which he said "For now, I've shown what the teaming agreement would look like for the MEE region. I know you are still interested in providing in the NE but as we're further away from finalising the supply chain here we'll address this in the next couple of weeks". Draft 7 of the Live teaming agreement, which included the NEYH region, was sent to Live by Mr Bickers on 6 February 2012 and so was in the process of mature negotiation. In any event, the admitted representation did not refer to any specific area. So far as concerns UPM, Mr Small's evidence was that, although Jomast was not told about it then, by this time, the relevant "in principle" agreement with UPM was to pay a price of £8.10 PSUPN plus a balancing payment of 20p per night PSUPN for every service user that was allocated to another supplier because it had become apparent that UPM would not be able to fulfil the initial agreement to meet 100% volume in NEYH. This is sufficient to dispose of this part of the claim.
55. However, it was not put to Mr Gray (or Mr Small who was also present) that they knew the statement to be false at the time or had no honest belief in its truth at the time it was made. Even if I had been persuaded that the statement was false and misleading, I would not have been prepared to find that G4S had behaved dishonestly. On the contrary, the position with Target, Live and UPM which I have described was such that Mr Small and Mr Gray had reasonable grounds for believing that what Mr Gray said was true. Finally, even if I had otherwise been persuaded on those points, I am unable to see how a statement made in January 2012, at such an early stage of the negotiations, was relied upon at the time of the Agreement in circumstances where, by the end of May, Jomast knew that other suppliers had not agreed to provide services at £7.90. I deal with this point below.
56. It is not disputed that, in an email sent on 30 January 2012 at 16.53, Mr Greer sent to Mr Gray a breakdown of the price using a table which had been provided by G4S. This shows a blended price for Single Service Users and Family Members Service Users of £10.70 PSUPN which Mr Greer described as having been reached after a review of all costs and efficiency savings which would entail significant redundancy costs. Mr Gray responded to the email the next day noting that they were "still a little way away from the price we need" but noting that the main difference related to the rental figure.
57. A further meeting took place between Mr Gray, Mr Bickers, Graham Farrow (G4S's Head of Finance) and Mr Monk and Mr Greer on 7 February 2012. The purpose of the meeting was to discuss how, if at all, the price of £7.90 could be achieved and the breakdown of the price into individual costs but it is common ground that, after debate, there was no movement on either side. Mr Monk says, and I accept, that he asked G4S to disclose the price at which G4S had won its contract in the e-auction but that G4S was not prepared to disclose it.
58. Although Mr Gray was unable to remember it, I also accept (because he made a note of it and because it is referred to in an email sent the next day) Mr Greer's evidence that there was a telephone call from Mr Gray to Mr Greer on 28 February 2012 in which Mr Gray proposed a price of £8.00 PSUPN. The note describes Mr Gray as saying that it will be unfortunate if they can't agree and they would "draw a line and move on" and that G4S "Don't have anything up sleeve and £8 is their figure".
59. Accordingly, close to the end of February 2012, the parties were either £2.70 apart based on the price of £8.00 PSUPN or £2.80 apart based on the price of £7.90 PSUPN.

The Second Representation: 29 February 2012 E-mail

60. On 29 February 2012 at 11.55, Mr Gray sent the following email to Mr Greer entitled "Pricing" and attaching a further version of the pricing schedule:

"Further to our conversation yesterday as promised I attach a schedule showing the breakdown of how we (our supply chain) believe we can achieve the price we have agreed with UKBA.

You may not agree with the breakdown or see how it is achieved, but it is provided in the spirit of trying to assist and in the acknowledgment that it was your expectation from our meeting.

The rent figures are market rents and the assumption is that landlords provide furnished accommodation and a repair service for the market rent.

I have to stress again that I am sending this information in absolute confidence.

Jomast must be able to confirm that you can deliver at the price we have agreed with UKBA, how the price is broken down is for you to confirm independently".

Jomast must be able to confirm that you can deliver at the price we have agreed with UKBA, how the price is broken down is for you to confirm independently".

61. The schedule had been amended by adding a line entitled "Other Suppliers" which showed a blended price of £8.00 and how that was broken down into the elements for accommodation, utilities and other costs.
62. Jomast alleges that, by this email, G4S dishonestly represented to it that the price agreed to be paid by G4S to its suppliers was the same as the price which was payable by the UKBA to G4S. It argues that this is both the natural and ordinary meaning of the words used and the proper conclusion to be taken from the email, together with the schedule, and the absence of any reference to any profit margin for G4S.
63. I am unable to accept this submission. First, it seems to me that it overlooks the significance of the reference in the early part of the email to the schedule as "showing the breakdown of how we (our supply chain) believe we can achieve the price we have agreed with UKBA". The natural and ordinary meaning of this is that the price offered by sub-contractors is merely a part of the overall price agreed with UKBA but that the two prices (that offered by the sub-contractors and the price agreed with UKBA) are clearly different. Viewed in the proper context of those earlier words, it is tolerably clear that the reference to "deliver at the price we have agreed with UKBA" means deliver by reference to that which we have agreed with UKBA.
64. Second, it is clear to me from the way in which he gave evidence that Mr Monk is a very experienced commercial man and negotiator. Although he gave evidence to the effect that Jomast thought at the time that G4S must have "loaded some money into the management charge", I consider it extremely unlikely that Mr Monk would have taken at face value the proposition that G4S was providing accommodation services without any profit margin. I reject Mr Monk's evidence that he understood G4S to be representing that the two prices were the same. If he did have that belief, then it was the product of speculation and surmise, based on his consistently held belief that G4S had bid too low at the e-auction. Moreover, as Mr McCall QC points out, there is an inconsistency in Jomast's case on this point because if Mr Monk believed there was room for movement elsewhere, he cannot have thought that the price agreed with UKBA in respect of accommodation was a true ceiling on what G4S was prepared to pay its sub-contractors.
65. Thirdly, the COMPASS Contract contained eight separate prices for accommodation because bidders were required to bid a separate price for Single Service Users and Family Member Service Users in each of four volume bands. In order to have understood the 29 February 2012 email in this way, it would be necessary for Jomast to think that G4S had bid a single, blended price in the e-auction. I heard a lot of evidence on this point. As the e-auction was a real-time event, it was not possible for me to see by reference to actual screen-shots what had been bid although, during the trial, Jomast attempted to replicate the "headline screen" in order to show that a single total contract price for accommodation was bid. There was a stark conflict between Mr Monk and Mr Small as to what actually happened at the e-auction. It seems to me that Mr McCall QC is right to say that Mr Small's evidence is to be preferred on the point because: (a) unlike Mr Monk, Mr Small actually placed bids on behalf of G4S; (b) what he describes is consistent with the e-auction rules which I was shown; and (c) given the importance of the contract for G4S it is likely that his recollection is correct. His evidence was that behind the headline screen there was a further screen where the actual bidding took place and that neither screen displayed a blended unit price. I therefore do not accept that the 29 February 2012 email, read in its proper context, constitutes the alleged false representation.
66. Fourthly, even if I had concluded that this e-mail is capable of being read to contain the allegedly false representation, I am entirely satisfied that Mr Gray was not acting dishonestly when he sent this email. I formed the view that Mr Gray was generally a careful and astute witness who was trying to help the court and who made appropriate concessions. Not least, when it became clear that his contemporaneous notes contained in a notebook had not been disclosed, he proffered them. I accept his evidence that by "price we have agreed with UKBA" he meant the price which G4S would like Jomast to provide services for because it was based on the price agreed with UPM at the end of the e-auction and that, taken in the context of the meetings which had taken place since December 2011, Jomast understood this email in that sense. I accept his denial that he was dealing in a deliberately dishonest or underhand nature with Jomast because G4S needed Jomast on board at all cost.
67. Finally, it is common ground that on 4 April 2012, Jomast increased its bid to £8.40. If Jomast had believed that the 29 February 2012 email meant that the price of £8.00 was the price agreed between G4S and UKBA, it is extremely doubtful that it would have bothered to make this further bid, which was almost certain to be rejected.
68. Jomast did not reply immediately to the 29 February 2012 e-mail and, on 8 March 2012, Mr Gray sent a short e-mail to Mr Greer noting that as he had not heard anything following his e-mail he was assuming that Jomast was unable to match the price but that they needed to meet in any event to discuss transition. This was a reference to the practical arrangements that needed to be put in place for service users to be transferred from Jomast to G4S.
69. On 9 March 2012, G4S entered into the COMPASS Contract with UKBA. This led to some immediate pressure being put on G4S. On the same day, following the first of so-called Mobilisation Meetings with UKBA for the two regions for which it had been successful (NEYH and MEE), Ms Gutteridge reported internally within G4S on the outcome. She noted that Mr Gray had "very clearly set out our position with Jomast. Jomast had clearly told UKBA that they are awaiting communication from us. UKBA are clearly expecting us to resolve this by contacting Jomast again. We need to work out how to resolve this".
70. In the words of Mr Gray in an e-mail sent to Mr Basra of Live on 14 March 2012: "UKBA are turning up the heat on us to confirm our arrangements and are pushing for evidence that we have started to procure properties".
71. As evidenced by an e-mail sent to Mr Small on 15 March 2012, Ms Gutteridge picked up on what she thought was a potential problem with UPM which was that one of the shareholders or directors might not have agreed to the underlying price agreed at the e-auction. I am satisfied from her evidence that she accepts that her concerns were broadly unfounded.
72. On 16 March 2012, Mr Greer replied to the 29 February 2012 e-mail and said that he did not think G4S's proposed price was realistic. His email was acknowledged that day by Mr Gray.

The Third and Fourth Representations: 21 March 2012 Telephone Call and E-mail

73. Jomast alleges that in a telephone call made on 21 March 2012 between Mr Small and Mr Monk, G4S represented to it that for G4S to contract with it a higher price than it was then proposing, namely £8.00 PSUPN, would cause G4S to suffer a loss. Although Mr Small could not recall any call that day in those terms, it is clear from the subsequent e-mail dated 21 March 2012 that a call took place. Mr McCall QC took the point that this allegation had not been pleaded in the Particulars of Claim although it was pleaded in the Reply at [10.2].
74. In the event, Mr Monk accepted in evidence that nobody from G4S told him that they had agreed £8.00 as a price with UKBA and that he was merely surmising, based on his firm view that the pricing at the e-auction had been so low, that anything over £8.00 would have been loss-making for G4S.
75. Given the separate allegation that substantively the same representation was made by an e-mail sent on the same day and the absence of any specific allegation of fraud or reliance in relation to the telephone call it does not seem to me to be proportionate or necessary to deal with this allegation separately in any greater detail.
76. On 21 March 2012 at 18.59, Mr Small sent an e-mail to Mr Monk and Mr Greer, copied to Mr Gray, Mr Bickers and Jennifer Robertson (Mr Small's PA) of G4S. It is clear from the evidence that before sending this e-mail, it was circulated to, and reviewed in draft by, Mr Gray and Mr Bickers. Although it was marked "without prejudice" no-one suggested that I should not look at it on that ground. It is an important e-mail which I set out in full:

"Further to our telephone conversation this morning I understand that you would like to have a further meeting with G4S with the possibility that we can reach an agreement for JOMAST to be part of G4S' COMPASS Programme. The essence of that meeting would be to have a best and final offer from you on your costs to G4S.

As we have discussed, there is currently a gap of £2.70. As I noted in that call, that whilst appreciating the current situation, G4S had agreed a supply price with UKBA that we have market tested. We are not in a position to pay more than we have indicated already. On the same basis that you have clearly articulated to me, any agreement has got to make sense commercially for both parties. Just as you would not want to enter into an agreement where that means making losses, then I am sure you will appreciate that is true for G4S also.

Therefore, I would be happy for that meeting to go ahead but, only the basis that G4S have made clear the current gap between us and that you have indicated to me that you believe that JOMAST can close that gap. Clearly, if that gap cannot be closed then any meeting would not see either of us reach any better conclusion than the one we face now and therefore, be unproductive for both parties.

As I said in our call Stuart, the day to day executive running of the contract, including budgets, costs and the procurement of suppliers sits with Andrew Gray. Andrew reports into to me and whilst I have a vested interest in the decisions Andrew makes on these matters, Andrew will make the overall call and it is my job to support and guide him only. For this meeting should we agree to go ahead, I will attend as a support to Andrew.

If you are in agreement that you can close the gap, then I will ask Jenny to organise this meeting at the very earliest opportunity that suits all.

I look forward to your reply."

77. When commenting internally on the draft, Mr Gray's position was that he did not think it was worth meeting Jomast unless it confirmed before the meeting that it could meet G4S's target price of £7.90/£8.00. He was also uneasy about the effect bringing in Jomast would have on G4S's relationship with Live. Mr Bickers agreed with Mr Gray and added his concern that the proposed letter might give Mr Monk the impression there was a deal to be done when they knew there was not. He concluded his email with the view that "it probably repays us to be resolute with Stuart and uncompromising about what we need from him in price terms". Mr Small's e-mail response to them was sent on 21 March 2012 at 18.59 in the following terms:

"Thanks for the feedback. I have no real faith that JOMAST have any ability to deliver at our price.

My main aim here is to once and for all kill of JOMAST'S continued grievances (unfounded in my view) with UKBA at senior level that we have made little effort to engage JOMAST.

I will word the email appropriately and seek his assurance that he can close the gap before the meeting takes place (I have said as much in the email thus far). Once we have his response either committing to matching our price or not, I can, with auditable evidence show any creators of noise at UKBA that we have given him every opportunity to be part of COMPASS."

78. In the Re-Amended Particulars of Claim at [25] Jomast alleges that the 21 March 2012 e-mail contains three false representations: (i) the price which G4S was negotiating with Jomast was the same price as G4S had agreed with the UKBA; (ii) to agree any increase in the price to be paid to Jomast by G4S would exceed the price which G4S was to receive from UKBA and (iii) such an increase in the sum payable by G4S would cause G4S to suffer a loss.
79. In the end, the submissions focused on two main aspects: whether the words "G4S have agreed a supply price with UKBA" equated the price that G4S was proposing to pay Jomast with the price it had agreed with UKBA and whether any increase in price would lead to G4S making losses.
80. As to the first of these, I am unable to read the email in the way advanced by Jomast. There is simply no reference in the e-mail to the "price with UKBA" being the same as the price of £8.00 then being sought by G4S. I have already rejected, in the context of the 29 February 2012 email and in my findings about the 21 March 2012 phone-call, that G4S had said anything to equate the price it had agreed with UKBA with that which it was willing to pay Jomast. On the contrary, the language used "G4S have agreed a supply price with UKBA" and the statement that "We are not in a position to pay more than we have indicated already" tends against equivalence with any figures other than those which give rise to the gap of £2.70 identified at the beginning of the second paragraph.
81. Even if I was wrong on this point, I accept Mr Small's evidence that this was not what he meant by the e-mail, that he did not intend it to be read in the way it is alleged to be false and so he was not dishonest. Far from demonstrating that G4S was desperate to have Jomast on board, the internal e-mail exchanges within G4S which preceded the 21 March 2012 e-mail suggest to me rather that G4S was resigned to not doing so but concerned to be able to demonstrate to UKBA that it had given the incumbent provider a fair crack of the whip. I am supported in this view by Mr Small's further internal email that day at 18.59 when he indicated to Mr Gray that he was happy for the content of his email to Jomast to be shared with UKBA in the NEYH region to set the record straight.
82. On the second aspect, Jomast's case is that G4S was clearly representing that it would make a loss if it agreed to anything above £8.00 because the words used imply a comparison between G4S's proposed price of £8.00 and the sum agreed with UKBA. I have already rejected that interpretation. Mr Small's evidence was that he meant instead that G4S would suffer a loss if Jomast stood its ground at its then offer of £10.70. For the reasons pointed out by Mr Todd QC in his closing submissions, Mr Small's evidence on this point was not entirely satisfactory. However, I am unable to reject out of hand, or conclude that Mr Small was being dishonest in giving his evidence, when he says that is what he meant because it seems to me that it is a permissible interpretation of the e-mail. A further permissible interpretation is that which I have suggested above. On that ground alone, I would have been very reluctant to conclude that this constituted a fraudulent misrepresentation. In any event, I accept the submission on behalf of G4S that it was not put to Mr Small that he knew that representation to be false or that he did not have any honest belief in its truth.
83. Finally, it seems to me that the impact of the e-mail of 21 March 2012 must be read in the context of subsequent events and Jomast's case that it acted in reliance on it cannot stand in the light of the later events on 29 March 2012 and 4 April 2012.
84. On 23 March 2012, Mr Monk replied stating "It does appear that until fairly recently we did not fully appreciate how keen the pricing is for you to deliver the contract" and concluding "I believe Jomast can put to Andrew & yourself a best and final offer which can meet your objectives".
85. On 28 March 2012, it is common ground that a telephone conversation took place between Mr Monk and Mr Gray during which Mr Gray said that £7.90 was the price at which G4S required its sub-contractors to provide services. Mr Gray says, and I accept because it seems consistent with the tone and content of the earlier communications, that Mr Monk asked about the price G4S was being paid by UKBA but that he did not answer that question. I have already accepted Mr Monk's evidence that he had asked this question on 7 February 2012 but was refused an answer. It seems to me entirely consistent that he would repeat that question. I also accept Mr Gray's evidence that, at this point, G4S believed that its supply chain was already in place because UPM had agreed to cover 70% of the volume at £8.10 (with the balancing payment I have described) and Live and Target had agreed to cover the remaining 30% at £7.90.
86. On the same day, Ms Gutteridge told Linda Graham of UKBA that G4S was committed to trying to reach an agreement with Jomast if it proved possible at the price point available and within the timescales available.

The Fifth Representation: 29 March 2012 E-mail

87. It is common ground that a further meeting was arranged which took place on 4 April 2012. On 29 March 2012 at 14.19, Mr Gray sent an e-mail to Mr Monk, copied to Mr Small. Again, it is an important e-mail which I set out in full.

"Further to our conversation yesterday and in advance of our meeting next week I2agreed to confirm our position on the 3 key issues.

As we discussed there are 3 issues we need finally to agree:

1. Price – Our price is £7.90. To clarify once and for all at the end of the e-auction, we arrived at a price with UPM (our main supplier) based on 100% volume. In order to still have a diverse supply chain we agreed, with UPM, a compensation payment for lost volume. This is 20p. Our e-auction price with UKBA is £8.10 and therefore our other suppliers have agreed to supply at the lower £7.90 price. I am sorry if the last email gave the impression of a price of £8.00.

2. Volumes – We have agreed with UKBA that the split of properties to be supplied in the North East should be around 30%. This is based on a split with the 3 LIT areas. It appears that Jomast has more than this at present closer to 45% and it would be our intention to reduce this over the term of the contract.

3. KPI's – We are flowing down the KPI's under our contract directly to the supply chain. The principle we are applying is if the fault for the KPI rests with one supplier then they are responsible for the whole of the penalty, which is calculated as a percentage of the revenue for the entire NEYH region. We are still working on the final version of this and I [sic] let you have this as soon as I can.

I hope this is now absolutely clear and look forward to our meeting next week. Can you please confirm Monday or Wednesday as the date."

88. Just as with the 21 March 2012 e-mail, prior to sending the 29 March 2012 e-mail, it was sent in draft internally within G4S, this time to Ms Gutteridge, Mr Bickers, Mr Small and Mr Farrow. It was marked "High Importance" and requested comments "asap". Although one or more of the recipients made amendments to the draft, none relate to the parts of the e-mail relied on by Jomast as fraudulent misrepresentations. The important points about that process are that, firstly, the e-mail was regarded as a significant one by G4S not least because Mr Gray was concerned to correct any misleading impression given on 21 March 2012 by Mr Small that G4S was prepared to contract with Jomast at £8.00 rather than £7.90 because of his reference to the "gap" being £2.70. For his part, Mr Small responded to say that the letter needed to be sent but noted that "I am sure you know it will cause further anxiety to Stuart (JOMAST) and he will accuse us of misleading him". Secondly, unless the intended recipients of the draft email were already privy to the intended deception of Jomast, it was an extraordinarily risky thing for Mr Gray to do because it might have elicited a response which pointed out it contained a material error.
89. Jomast's pleaded case (and in its opening Skeleton Argument) was that the e-mail dated 29 March 2012 contains five false representations. Although I will deal with the other allegations briefly below, it is clear from its closing submissions, that the principal representation relied upon is that G4S falsely represented "Our e-auction agreed price with UKBA is £8.10". It did so, Jomast submits, so as to justify its proposed sub-contract price of £7.90.
90. Amongst other things, in its Re-Re-Amended Defence at [23.6], G4S had pleaded the following in relation to this e-mail:

"The reference in the email to the "e-auction agreed price with UKBA" was a typographical error, which should have read "e-auction agreed price with UPM". UPM had been present at G4S's offices as the e-auction took place, and – as the auction price decreased – agreed with G4S the price per service-user per night that it would be willing to accept. That was explained in the email in the words: "…at the end of the e-auction, we arrived at a price with UPM (our main supplier) based on 100% volume".

91. In their Skeleton Argument on behalf of G4S at [59], Mr McCall QC and Mr Lavy realistically conceded that, read literally, the e-mail meant what was alleged and that, so read, its contents were false. Its case was that the e-mail contains an error, which would have been obvious to Jomast from the context, and that any false impression given was done entirely innocently.
92. It is convenient to refer to Ms Gutteridge's evidence in her witness statement because it was not suggested by Mr Todd QC on behalf of Jomast that she was anything other than an honest witness. I found Ms Gutteridge to be an impressive and meticulous witness and I am entirely satisfied that Mr Todd QC was right not to challenge her honesty. At [32], she said:

"I read this email in the context of the discussion that I was told was ongoing at the time with Jomast, which was focusing on how much G4S had agreed to pay other subcontractors. I understood the email to mean that G4S's eAuction bid, as agreed with UKBA, was predicated on G4S paying its subcontractor(s) £8.10 per Service User per night in the NEYH region."

93. She went on at [33] to say:

"Given the context of the email, it did not occur to me that Jomast would have understood Andrew's words "our e-auction agreed price with UKBA is £8.10" to mean that G4S was being paid £8.10 per Service User night by the UKBA" and "When I read the email, it would have been obvious to me that what Andrew was saying was that the price G4S could pay its other subcontractors was £7.90 because of the fact that it had agreed with UKBA a price which incorporated the target price to sub-contractors of £8.10".

94. That evidence was not challenged. It is a powerful counter-indicator to Mr Gray having any intention to mislead Jomast because had she perceived the draft to be misleading, I am satisfied that she was the type of person to say so. I have already referred to the fact that she had brought her misgivings about the security of the position with UPM to the attention of Mr Small.
95. In cross-examination, Mr Small he said he was unable to comment on whether there was a typographical error but that "it had become the norm within G4S, and maybe incorrectly so, was when talking about UKBA and e-auction prices that the supply chain element of that was £8.10, and it was never the intention to give the impression that the overall price agreed with UKBA was £8.10" and that this was what he meant by saying that there was an error. I accept that evidence, not least because it is consistent with what Ms Gutteridge says and it is incompatible with any dishonesty or recklessness on his part.
96. In his witness statement at [73], Mr Gray accepted that the wording of his e-mail was clumsy and suggested that the reference to UKBA was an error which should have read "UPM". His evidence as to the error was not challenged. He confirmed in cross-examination that he did not intend, because he accepted it was not true, to suggest that the price agreed with UKBA was £8.10. Mr Todd QC put squarely to Mr Gray that he was making a representation as to the price G4S was to receive from UKBA and that his purpose in doing so was to lead Jomast to believe that what was on offer was in fact the price or pretty near the price of that which it was getting from UKBA. Mr Gray firmly rejected it.
97. Mr Monk's witness statement at [144] rejected the suggestion that the reference to "UKBA" was an error or that he even contemplated it to be such because, he says, he had previously been told by G4S that the price agreed with UKBA was in the ballpark figure of £8.00. Insofar as this is a reference back to the proper interpretation of what was said in the telephone call or e-mail dated 21 March 2012 I have rejected it. I also repeat my observations as to the inherent improbability that he believed that G4S was taking no profit. His evidence during cross-examination was that he needed the alleged representation to be clarified, which he sought on 4 April 2012. I am not surprised that was his position because, as I have found, if G4S was now sharing the price agreed between it and G4S it was a significant change of position, having previously refused twice to do so.
98. My conclusions on this aspect of the 29 March 2012 email are as follows:

i) Although it is common ground that the literal meaning of the e-mail was false, I am entirely satisfied that the explanation is innocent and so not fraudulent.

ii) In particular, I reject, because it is wholly implausible and contradicted by my assessment of those I heard, as honest witnesses, the implicit strand to the submissions made on behalf of Jomast that each of Mr Small, Mr Gray, Ms Gutteridge and Mr Bickers was dishonestly seeking to defraud Jomast and had colluded or conspired together for that purpose. There is simply nothing in the internal e-mail exchanges to support such a serious conclusion and much to undermine it. It is, as G4S submitted, wholly incongruous with the stated intention to avoid misleading Mr Monk.

iii) I accept the evidence of Mr Small, Ms Gutteridge and Mr Gray that, internally, the expression "e-auction agreed price with UKBA" had become a form of short-hand for the "e-auction agreed price UKBA which was predicated on what had been agreed with UPM, namely £8.10". This is consistent with the fact that, despite its flagged importance, none of them picked up the fact that it contained an error.

iv) On that basis, although I find that the false representation was made, it was not made dishonestly.

v) In any event, given Mr Monk's evidence that he needed clarity at the 4 April 2012 meeting, I am not satisfied that he relied on what had been said in this e-mail when entering into the Agreement.

99. I can deal fairly shortly with Jomast's case as to the other alleged misrepresentations in the e-mail dated 29 March 2012. They are set out in Jomast's opening Skeleton Argument at [16.6] to [16.10] inclusive and developed in paragraphs [52] to [68].
100. First, Jomast alleges that G4S falsely represented that it had agreed with UPM for it to be supplied services at a price which included a payment of 20p PSUPN as compensation for loss of volume where UPM was not supplying 100% of the asylum-seeker accommodation required by G4S. I am entirely satisfied that this was the agreement which had been reached between UPM and G4S at that date and so that the representation was true when made. Given that it is common ground that the fact that G4S would not be proceeding with UPM was made clear, at the latest, at a later meeting on 30 May 2012, I am satisfied that Jomast did not rely on any earlier representation at the time it entered into the Agreement.
101. Secondly, Jomast alleges that G4S falsely represented that its other sub-contractors had agreed to supply services to it and to do so at the lower price of £7.90 PSUPN. It is common ground that this is the same as the first representation and my conclusions on it are the same. If anything, as Mr McCall QC observed, the supply chain as at 29 March 2012 was firmer than it had been on 17 January 2012.
102. Thirdly, Jomast alleges that G4S falsely represented that it was flowing down the KPIs under the COMPASS Contract directly to the supply chain such that the other sub-contractors would be subject to a performance regime based on KPIs which were the same as or similar to the KPIs applicable to G4S under the COMPASS Contract. Not much evidence on this point was adduced before me. Mr Todd QC did not challenge Mr Small's evidence that the KPIs in the contract between UKBA and G4S would be flowed down to the sub-contractors or put to him that this assertion was untrue. I am satisfied that Mr Small's evidence is correct.
103. Fourthly, Jomast alleges that G4S falsely represented that its other sub-contractors: (a) had agreed to supply the same or similar services to G4S as Jomast was to supply to it; (b) were obliged, and would be able, to supply asylum-seeker accommodation services to G4S in accordance with the KPIs; and (c) would be liable to G4S for penalties if and to the extent that they failed to supply asylum-seeker accommodation in accordance with the KPIs. It was not put to any of G4S's witnesses that they did not genuinely believe that the other sub-contractors would be able to perform in accordance with the KPIs. The fact that, in the event they may have been unable to do so does not make good an allegation of misrepresentation, let alone a fraudulent one. Bearing in mind the contractual and reputational risks which flowed for G4S if it engaged sub-contractors which it knew to be unable to comply with the KPIs, I am satisfied that G4S did not do so.
104. Finally, Jomast alleges that G4S falsely represented that it would make a loss if it were to contract with Jomast at the price of £8.40 proposed by Jomast. Given that the offer of £8.40 was only made at the 4 April 2012 meeting, I do not accept that this representation formed part of the 29 March 2012 e-mail.
105. On 30 March 2012 at 08.45, Mr Monk responded shortly to Mr Gray, copied to Mr Small stating: "If yourself & Stephen consider that there is no value in Jomast being a supplier then I agree there is little point in a meeting" and "If you want Jomast to be involved then I think we would agree a deal". Mr Gray replied at 10.21 confirming that G4S would like to work with Jomast but on the terms set out in the email and that "we have no scope to negotiate due to the other commercial arrangements we have in place" and "you think we can do a deal but just to be clear we have no room for negotiation on price or volumes".

The Sixth Representation: 4 April 2012 Meeting

106. On 4 April 2012, the meeting took place between Mr Monk and Mr Greer for Jomast and Mr Gray and Mr Small for G4S. I have been provided with two notes of the meeting made by Mr Greer and Mr Gray. It is not in dispute that Jomast made an increased offer of £8.40 PSUPN which was rejected by Mr Small.
107. In its closing submissions, Jomast alleges that, at this meeting, G4S repeated false misrepresentations made previously that: (i) G4S had agreed a price with UKBA of £8.10 and (ii) to contract at Jomast's proposed price of £8.40 would cause G4S to suffer a loss. Jomast's case in this regard differs slightly from both its pleaded case (only the allegation at (ii) is relied upon as a false representation in the Amended Particulars of Claim although the allegation that the statement was made was set out in the Reply at [14.1] and [21.1]) and the case that had been advanced in its Skeleton Argument at [16]. Although Jomast had already had and taken the opportunity to re-re-amend its case in relation to this meeting, I disagree with Mr McCall QC that it is not appropriate to allow Jomast now to advance a case that the representation at (i) was repeated in the 4 April 2012 meeting given that the point was squarely pleaded in the Reply.
108. As to the first alleged representation, Mr Monk's evidence in cross-examination was that, right at the outset of the meeting, almost as if it had been rehearsed, Mr Gray confirmed that G4S had agreed £8.10 with UKBA. Mr Greer's evidence was that Mr Monk had asked for confirmation on the point although for his part, he did not think the point needed clarification. Mr Gray was unable to recall any reference to the price agreed with UKBA and thought he would have referred back to the price agreed with UPM but he was not very firm about it. Given his consistent position that the price agreed with UKBA was used as shorthand for the price agreed with UPM, I am reluctant to accept this part of his evidence. In his witness statement, Mr Small had been unable to recall the details of what was said at this meeting. The point was not put to Mr Small in cross-examination. On balance, I reject the evidence of Mr Monk and Mr Greer that this representation was made. Neither of the notes refers to any price having been agreed between G4S and UKBA. It seems to me inherently improbable that Mr Greer would not have made a note given that it was, as he accepted, a matter of importance especially if, as Mr Monk suggested, it was laid so firmly on the table at the outset of the meeting as a benchmark for the discussion. His explanation that he did not need to do so because of the earlier 29 March 2012 email does not make sense if the whole point of this meeting was to seek clarity. In cross-examination, Mr Todd QC put clearly to Mr Gray that he was deliberately seeking to mislead Jomast into believing that the sum payable by UKBA to G4S was identical to the sum which was to be passed on to sub-contractors and that his purpose was to get Jomast into the supply chain. He firmly rejected this. Even if I am wrong about this and the representation was made, Mr Gray's evidence on this, which I accept, is that there was no intention to mislead. That is consistent with what he said about the 29 March 2012 e-mail.
109. When assessing his honesty, I was particularly struck by the way that Mr Gray, at different points, made concessions or volunteered information which was potentially harmful to G4S's case. For example, although he could not remember it, he accepted the account of Mr Monk and Mr Greer that the 4 April 2012 meeting lasted for 45 minutes. He also told me that by late April/early May 2012 the relationship between G4S and UPM had started to sour and that some of the trust had started to erode and that he was by then beginning to wonder whether G4S had bid at the right price at the e-auction.
110. It was not disputed by Mr Small that, at this meeting, he told Mr Monk that if G4S accepted Jomast's offer to supply at £8.40 PSUPN it would make a loss. Even assuming in Jomast's favour that this can properly be regarded as a representation of fact rather than opinion, it was not put to Mr Small that he knew that statement to be false or that he did not honestly hold that view. The difference between £8.40 and the price which G4S agreed with UKBA for Family Member Service Users was 2 pence. I am not, in those circumstances, prepared to find that this admitted representation by Mr Small was dishonestly false.
111. It is necessary to complete the factual history and to make some overall observations about Jomast's case on reliance and loss. At the 4 April 2012 meeting, it is not in dispute that G4S rejected Jomast's offer to provide services at £8.40 PSUPN. To all intents and purposes, the negotiations had faltered although G4S and Jomast continued to communicate about transition.
112. I have already concluded that Jomast has not made out its case in relation to the alleged fraudulent misrepresentations. However, if I am wrong on that, in my judgment Jomast's case would have failed, on the evidence before me, to establish the necessary reliance and loss. To succeed Jomast had to establish that but for the false representations, it would have been in a more favourable position. It relied on two matters: first, that it would have negotiated a better deal with G4S; secondly, that it would have done some sort of deal directly with UKBA. As to the first of these, the overwhelming evidence is that G4S was simply not willing to contract at a price above £8.10 PSUPN and I accept the submission made on its behalf that even if, on this hypothesis, no representations had been made, Jomast would have been in the same position it faced. As to the second point, although it is clear from the documents that UKBA was keen in a general sense to keep Jomast on board, there was simply no evidence to support Mr Monk's case that they would come to its rescue if it was unable to reach agreement with G4S. In cross-examination, Mr Monk acknowledged that by late May there was no sign of that happening.
113. Two significant developments occurred towards the end of May 2012. First, from about early May 2012 a dispute had emerged between UPM and G4S as to the 20 pence balancing or compensation payment in relation to business passed to other suppliers because UPM disputed that it had ever been agreed. By 17 May 2012 the negotiations with UPM had stalled and, in due course, by the end of May, it was clear that G4S would not be contracting with it. Although in due course, G4S entered into sub-contracts with Target (on 23 May 2012) and Live (on 29 May 2012), the relevant SOWs were not issued until 16 July 2012 (for the SY, WY and H LITs) and 3 July 2012 (for the SY LIT) respectively. In the event, G4S did not sign any sub-contract with anyone other than Jomast for the North East LIT area.
114. Secondly, on 24 or 25 May 2012, unknown to Mr Monk or Mr Greer, Stephen contacted Mr Small to discuss whether, notwithstanding the breakdown in earlier negotiations, an agreement could be reached between Jomast and G4S. As Jomast's witnesses fairly accepted by this time the position was not looking good for Jomast because its entire asylum seeker business was under threat. Mr Greer told me that Jomast would have taken its properties back to the rental market, but that letting them would have been challenging. It is common ground that Mr Small's response was to indicate that if Jomast would agree to a price of £8.10 PSUPN then an agreement could be reached. Although he was annoyed that Stephen had gone behind his back, Mr Monk agreed, subject to contract, to proceed at that price and this was communicated to G4S by Mr Greer in an email sent on 25 May 2012 and confirmed as acceptable by Mr Small in an email sent on 28 May 2015. The events in May posed further difficulties for Jomast's case on reliance and loss. The overwhelming picture I have formed, having heard all of the evidence, is that Mr Monk, Mr Greer and Stephen had formed the view that it was better for Jomast to remain in the asylum seeker accommodation business than to lose it. Had they not considered the agreement with G4S to be the better option, they would not have entered into it.
115. On 3 July 2012, Jomast and G4S entered into the Agreement which was then amended by a series of e-mails the following day. On 16 July 2012, the COMPASS Contract became operational and the transition from Target to COMPASS commenced. Transition was competed on 21 December 2012.
116. For completeness, I note that in relation to the G4S's other sub-contractors:

i) In its annual accounts to 31 December 2012, Live reported net liabilities of £697,919;

ii) Mantel resigned as a sub-contractor for the MEE region on 30 January 2013 because it was unable to make a profit;

iii) On 1 July 2013, G4S took over responsibility for all of Live's previous asylum seeker accommodation services including taking a transfer of its employees.

The Warranty Claim

117. The warranty claim concerns the meaning of paragraph 4.8 of Schedule 5 to the Agreement which is in the nature of a ratchet ("the Warranty"). It is common ground that during the negotiation of the Agreement, Jomast sought confirmation that G4S would not pay any other sub-contractor more than the £8.10 PSUPN and it was agreed that Jomast would be entitled to an increased price if G4S increased the price for any other sub-contractor.
118. The matter was first raised at a meeting which took place on 30 May 2012 between Mr Gray, Mr Monk, Stephen and Mr Greer. It was then recorded in an email from Mr Monk to Mr Gray on 6 June 2012 stating: "We will require confirmation that no other contractor will receive a better contract rate by any mechanism either now or in the future. In the event of the contract rate having to be increase for other contractors then we will require a like for like increase". Mr Gray replied the same day to say "This is noted". A further meeting took place on 8 June 2012 between Mr Monk, Mr Greer, Mr Gray and Mr Bickers at which G4S agreed in principle to giving a warranty. Mr Greer's note of the meeting, which I accept to be accurate, notes: "G4S Happy to warrant, that everyone in the [NEYH] on the same price. No other inducements or side deals".
119. It is also common ground that the Warranty divides into the following three parts:

i) Part 1: "[G4S] warrants and acknowledges that the Service Charges per Service User per Night at least equal to the Company's other alternative subcontractors (including but not limited to [G4S] itself) of services the same or similar to the Services in any part of either Region ("Alternative Subcontractor");

ii) Part 2: "and if at any time the service charges due to any Alternative Subcontractor are higher than or increase above the Service Charges per Service User per Night, then the Service Charge per Service User per Night shall be immediately increased by an equal amount;

iii) Part 3: "[G4S] shall as soon as reasonably practicable notify [Jomast] if the service charges payable to any Alternative Subcontractor are higher than or increase above the Service Charges per Service User per night".

120. It is not in dispute that the clause has the effect that if G4S pays a sub-contractor other than Jomast in excess of £8.10 PSUPN, Jomast is entitled to receive remuneration at a rate PSUPN increased by the amount of the excess. G4S's case is that this is the only circumstance in which the Warranty is engaged.
121. Jomast's case is that the Warranty bears a wider meaning. The dispute concerns two matters;

i) Whether the Warranty applies where it is G4S (as opposed to a third party sub-contractor) which supplies the relevant accommodation services to asylum seekers at a cost to it in excess of £8.10 PSUPN ("the Self-Delivery Issue");

ii) Whether the Warranty has the effect that if G4S or another sub-contractor delivers the relevant accommodation services to asylum seekers which are not compliant with G4S's contractual obligations to UKBA under the COMPASS Contract, Jomast is entitled to an additional payment to reflect the cost which would have been incurred by G4S or the other sub-contractor in supplying compliant services (i.e. services which would be compliant with G4S's obligations to UKBA under the COMPASS Contract) ("the Compliant Services Issue").

122. As I have already noted, whilst the parties are in agreement that the Warranty falls to be construed in its admissible factual matrix (see Arnold at [21]) and that this consists of facts or circumstances known to both parties, they have been unable to agree on what is admissible. The parties served a detailed schedule and counter-schedule as part of their statements of case but it is more convenient for me to deal with this by reference to paragraph 76 of Mr Todd QC's opening Skeleton Argument. I accept the general submission made by Mr McCall QC that many of the matters alleged on behalf of Jomast to constitute factual matrix are inadmissible because they are either allegations as to Jomast's subjective intentions or opinions or part of the pre-contract negotiations or contentious.
123. In my judgment, the following are properly admissible on the proper construction of the Warranty (and for that matter the Agreement generally) because they are facts or circumstances which existed at the time the Agreement was made and which were either known to the parties or were reasonably available to them:

i) Jomast was an experienced provider of asylum-seeker accommodation which had provided services under Target between 2009 and 2012;

ii) Jomast had a suitable portfolio of properties and was well-placed to supply accommodation services to asylum seekers in the NEYH region but not in any other region;

iii) There had been an unknown bidder during the e-auction who made a bid but did not proceed which may have influenced bidding;

iv) G4S's bid to UKBA was predicated on a supply-chain model;

v) G4S had no experience of providing accommodation services to asylum seekers;

vi) Paragraph 4.2.1 of Schedule 2 of the COMPASS Contract required G4S to accommodate unlimited numbers of asylum seekers;

vii) Providing accommodation services involves elements of fixed costs;

viii) The COMPASS Contract included a performance regime based upon KPIs which, if not met, could cause G4S to incur financial penalties;

ix) The COMPASS Contract included provision for G4S to be financially responsible for the performance of its sub-contractors and for the satisfaction of the performance criteria;

x) G4S had been in negotiation with Jomast from November 2011 with a view to it being a subcontractor in the NEYH region but had been unable for some time to agree a price;

xi) In the course of the negotiations, Jomast had expressed concerns to G4S that it was not possible to supply compliant services at a price of £8.10 PSUPN;

xii) By late March 2012, G4S was intending to use a number of other sub-contractors and to compensate UPM for the loss of its 100% volume;

xiii) The withdrawal of UPM in late May 2012 had left G4S with an urgent requirement to find replacement sub-contractors for UPM;

xiv) On 25 May 2012, Jomast agreed, subject to contract, to supply sub-contract services at £8.10 PSUPN;

xv) Jomast sought confirmation, at the meetings on 30 May 2012 and 8 June 2012 and in the 6 June 2012 email that G4S would not pay any other sub-contractor more than the £8.10 PSUPN and that it would be entitled to an increased price if G4S increased the price for any other sub-contractor;

xvi) There was no discussion, whether at the meetings on 30 May 2012 and 8 June 2012 or otherwise, of G4S self-delivering accommodation services to asylum seekers;

xvii) The COMPASS Contract became operational on 18 June 2012.

124. It is reasonably clear that something has gone wrong with the language of Part 1 of the Warranty. The phrase "… Service Charges per Service User per Night at least equal to the Company's other alternative subcontractors" is either missing the verb "are" after the word "Night" or inadvertently includes the word "to". However, this does not assist in determining the matters in issue.
125. As to the Self-Delivery Issue, in my judgment Jomast is correct to say that, having regard to the admissible factual matrix I have identified, the Warranty imposes liability on G4S in respect of the delivery by it of accommodation services to asylum seekers for the following reasons:

i) Unless I am satisfied that they are surplusage, and I am not so satisfied, it is necessary to give some meaning to the words "the Company's other alternative subcontractors (including but not limited to [G4S] itself)" in Part 1 because the Court should give effect to the language actually used by the parties.

ii) The express inclusion of reference to G4S itself in the words in parenthesis in this part of the Warranty is a powerful indication that the parties were equating G4S with other sub-contractors and I reject as unduly semantic, G4S's suggestion that the two do not sit comfortably because G4S cannot be described as a sub-contractor of itself.

iii) I reject as implausible, G4S's submission that these words mean rather that the Warranty applies to an alternative subcontractor engaged indirectly (for example by another entity in the G4S group) as well as to one engaged directly by G4S.

iv) Although G4S is correct to point to the fact that the Warranty calls for a comparison of charges payable to Jomast with charges payable to other subcontractors and not one between charges payable to Jomast and costs incurred by G4S I do not regard this as fatal. In my view, it is tolerably clear that the clause is driving at a comparison between the respective liabilities for G4S – in the case of alternative sub-contractors this refers to charges whereas in the case of self-delivery, it is referring to costs.

v) If I am wrong about this and the clause is to be regarded as ambiguous, I would accept Mr Todd QC's submission that to construe the Warranty as including self-delivery by G4S accords with common business common sense because Jomast was seeking to protect against an increase "by any mechanism" in the price from £8.10. It would significantly undermine that negotiated protection if G4S was able to self-deliver services at a price in excess of £8.10 without compensating Jomast.

126. As for the Compliant Services Issue, in my judgment, the Warranty cannot be construed in the manner contended for by Jomast for the following reasons:

i) Mr Todd QC fairly accepts that the Warranty does not provide expressly for any uplift to reflect the cost to an alternative sub-contractor of providing compliant services. The Warranty is silent on issues of quality and so rather assumes that the services supplied will be compliant services. However, I am not surprised by this as it seems to me that the core risk which the Warranty was designed to address was that Jomast should be paid at least the same rate PSUPN being paid to other sub-contractors.

ii) The Warranty refers explicitly to the provision of "services the same or similar to" the services provided by Jomast. Given that Jomast does not urge upon me a construction which has, as a premise, that it would be supplying non-compliant services, it seems to me that the comparator is also to be assumed to be providing compliant services. Unless one proceeds on this basis, the comparison is not like for like.

iii) I agree with Mr McCall QC that Jomast's construction involves reading too many words into the Warranty which are simply not there. Although this has the effect, which I accept, that Jomast is not protected from the risk that the services provided by another sub-contractor were non-compliant, I am not satisfied that a reasonable person, armed with the admissible background which I have identified, would have understood the parties to be dealing with issues of non-compliance.

iv) Not least, this is because Jomast's construction involves the comparison of the £8.10 PSUPN with a hypothetical charge representing what it would have cost the alternative sub-contractor (or G4S in light of my conclusions on self-delivery) to provide compliant services.

v) As Mr McCall QC submits, and I accept, I should be slow to accept a construction of the Warranty which countenances such an elaborate and complex exercise of comparison whenever the Warranty is engaged. Establishing the hypothetical cost of those alternative compliant services would be expensive, time-consuming and commercially unworkable especially given that, in the case of other sub-contractors, all or some of the information relating to the hypothetical additional cost would not be known to Jomast or possibly even G4S.

127. Although Jomast did not press the point in its opening Skeleton Argument or in its closing submissions, Jomast originally sought, as an alternative to its construction argument, to say that a term could be implied to the same effect on the Compliant Services Issue. I disagree. Having regard to the proper approach to implication of terms in Marks & Spencer plc v BNP Paribas Securities Services Trust Co above, I am unable to agree that such a term is necessary to give efficacy to the Agreement.
128. It is not strictly necessary for me to go on to deal with the way in which the compliant services uplift contended for by Jomast is to be calculated. However, as it was one of the issues which Nugee J. ordered to be determined, I will deal with the point shortly. Notwithstanding the criticisms levelled at it on behalf of G4S, I accept the submissions made on behalf of Jomast that the exercise is one which requires expert evidence and that the methodology is that set out in outline terms the letter dated 6 June 2016 from Kate Beckett of Dow Schofield Watts Forensic LLP.

Conclusions on the Part 7 Claim

129. By way of summary I would determine the issues ordered by Nugee J. as follows:

i) Issue 1.1 – in the negative. G4S is not liable to Jomast in fraudulent misrepresentation as alleged in paragraphs 38 to 42 of the Particulars of Claim.

ii) Issue 1.2.1 – in the positive. On the correct construction of paragraph 4.8 of Schedule 5 and having regard to the relevant surrounding circumstances or "factual matrix", G4S is obliged to pay an increased sum in circumstances where it self-delivers the services.

iii) Issues 1.2.2 and 1.2.3 – in the negative. On the correct construction of paragraph 4.8 of Schedule 5 and having regard to the relevant surrounding circumstances or "factual matrix", G4S is not obliged to pay any compliant service uplift.

iv) Issues 1.2.4 – does not arise on my findings but if am wrong and a compliant services uplift is payable, then it is a matter for expert evidence.

The Part 8 Claim

130. As I have already indicated, by its Part 8 Claim Jomast seeks declarations as to the proper construction or interpretation of the Agreement and, in particular the SOW as follows:

i) The target percentage of Service User nights in the NEYH Region to be allocated by G4S to Jomast under the SOW ("the Target Percentage Market Share") is 33.3% of the Individual Family Members and the Single Service Users allocated by the Defendant in the NEYH Region (paragraph 3.5 of Part H of Schedule 5 of the SOW) ("Declaration One");

ii) The number of (a) Individual Family Members and (b) Single Service Users which may be allocated to Jomast by G4S within the Target Percentage Market Share is (a) between 817 and 1,666 and (b) between 333 and 766 respectively (paragraph 14 of Part H of Schedule 5 to the SOW) ("Declaration Two");

iii) Jomast is not bound by the terms of the Agreement and the SOW to accept any allocation of Service Users by G4S in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW ("Declaration Three");

iv) Jomast is not bound by the terms of the Agreement and the SOW to provide any accommodation or other services to G4S in respect of Service Users allocated (or purportedly allocated) by G4S to Jomast in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW ("Declaration Four");

v) If G4S wishes to allocate to Jomast Service Users in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW, G4S is bound to invite Jomast to renegotiate Jomast's Target Percentage Market Share and the associated price for a revised volume range (paragraph 12.4 of Part H of Schedule 5 of the SOW) ("Declaration Five");

vi) If G4S wishes to allocate to Jomast Service Users in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW, but (i) G4S fails to invite Jomast to renegotiate Jomast's Target Percentage Market Share and the associated price for a revised volume range or (ii) Jomast and G4S fail to agree a revised Target Percentage Market Share for Jomast and/or an associated price for a revised volume range, Jomast is not bound

a) to accept any allocation of Service Users by G4S in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW or

b) to provide any accommodation or other services to G4S in respect of Service Users allocated (or purportedly allocated) by G4S to Jomast in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW

(paragraphs 12.4 and 12.7 of Part H of Schedule 5 of the SOW ("Declaration Six");

vii) If G4S wishes to allocate to Jomast Service Users in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW, but agreement is not reached between Jomast and G4S on a revised target market share and price

a) G4S may refer volumes of Service Users who are in excess of the Upper Limit set out in paragraph 14 to other subcontractors, alternatively to any subcontractor (including Jomast), but

b) Jomast is not bound to accept any allocation in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW

(paragraph 12.7 of Part H of Schedule 5 of the SOW) ("Declaration Seven");

viii) Paragraph 12.7 of Part H of Schedule 5 of the SOW does not entitle G4S to allocate to Jomast such number of Service Users in the NEYH Region as it sees fit, without agreement by Jomast ("Declaration Eight");

ix) Paragraph 12.7 of Part H of Schedule 5 of the SOW does not require Jomast to accept such number of Service Users in the NEYH Region as are referred to it by G4S, without limit ("Declaration Nine");

x) If (i) G4S allocates to Jomast Service Users in excess of Jomast's Target Percentage Market Share set out in paragraphs 3.5 and 14 of Part H of Schedule 5 of the SOW (namely, in excess of 766 Single Service Users and/or 1666 Family Member Service Users), (ii) Jomast accepts such excess allocation and provides services to G4S in respect of such Service Users, but (iii) Jomast and G4S do not agree a price for the volume of services provided

a) Jomast is entitled to payment by G4S of a reasonable fee in respect of the volume of services provided by Jomast and

b) G4S is liable to pay to Jomast a reasonable fee in respect of the volume of services provided by Jomast

on a quantum meruit basis ("Declaration Ten");

xi) By reason of paragraph 3.3 of the SOW, G4S may not require Jomast to provide services to G4S in any area other than the North East Local Immigration Team area ("Declaration Eleven").

131. G4S largely disputes Jomast's entitlement to the declarations sought and by its Acknowledgment of Service in the Part 8 Claim dated 27 May 2016, seeks two alternative declarations as to the proper meaning and effect of the Agreement as follows:

a) Where the total number of Service Users per night that G4S is required to accommodate in the NEYH Region pursuant to the COMPASS Contract exceeds the Service User Volume Threshold Upper Limit and the parties reach no agreement to the contrary, (i) the target market share does not apply to the excess Service User Volumes and (ii) G4S is entitled to allocate as few or as many of the excess Service Users to Jomast as it sees fit ("G4S Declaration One"); and

b) Jomast has an absolute obligation to provide accommodation services to all Service Users that G4S refers to it within the NEYH Region ("G4S Declaration Two").

132. I remind myself without repeating, the provisions of clause 3 (The Services) and clause 5 (Service Charges) of the Agreement. I am also reminded that clause 1.7 of the Agreement provides that headings to clauses, to schedules and to paragraphs or parts of or annexes to schedules shall not affect their interpretation although it is convenient for identification purposes to refer to them in this judgment. The SOW was agreed between G4S and Jomast pursuant to clause 3 of the Agreement and forms part of it. It consists of the Statement itself and three schedules referenced for consistency with the Schedules to the Agreement as:

i) Schedule 2 – Statement of Requirements;

ii) Schedule 5 - Service Charges;

iii) Schedule 13 – Performance Measurement.

133. Only Schedule 2 and Schedule 5 are relevant for present purposes.
134. So far as material the SOW itself provides as follows:

i) By paragraph 3.1 that [UKBA] will not commit to specific volumes of Service Users and therefore [G4S] is unable to commit specific volumes to [Jomast];

ii) By paragraph 3.2 that [G4S] will use reasonable endeavours to allocate a target percentage of Service User nights in the Specified Region to [Jomast]. This target will be measured periodically and will endeavour to be within a "percentage points" tolerance of that will be agreed periodically at the Contract Management Group meetings;

iii) By paragraph 3.3 that [G4S] requires [Jomast] to deliver the Services in the following LIT area: North East;

iv) By paragraph 3.4 that [Jomast] shall allocate Service Users to properties within the LIT areas with due consideration of:

a) The target proportional allocation of Service Users between the LIT areas, as defined by [G4S] periodically [3.4.1];

b) Limits defined by [G4S] for Service Users within Local Authority Cluster Areas or within specific post codes [3.4.2];

c) Any Service User geographical requirements defined by [G4S] [3.4.3].

v) By paragraph 3.5 that it is at the discretion of [G4S] to allocate Service User referrals to [Jomast], which will be made taking account of:

a) Specific requirements made by [UKBA] to [G4S] in relation to the particular Service User(s) [3.5.1];

b) The location of existing Service Users and therefore accommodation availability as well as capacity in specific Local Authority Cluster Areas, specified sub-regions and the Specified Region as a whole [3.5.2];

c) [G4S] being able to balance the allocation of Service User nights across its Service Subcontractor portfolio through allocating Service User referrals [3.5.3].

vi) There is then a Table which provides that Jomast's Target % Market Share (Service User Nights) is 33.3% Individual Family Members and 33.3% Single Service Users. Although the relevant box marked "Specified Region" is empty it is common ground that it relates to the NEYH region.

vii) By paragraph 3.6 that the target market share allocation may be suspended where any of the following events occur:

a) During any periods of transition where Service Users are transferred between Incoming and Outgoing subcontractors within the Specified Region and for a period of up to 3 months before and after such transition period to allow [G4S] to balance the market share across the Specified Region [3.6.1];

b) During periods of remedial action or default (clauses 16 and 17 of the Agreement) [3.6.2];

c) In the event of outgoing KPI failure by [Jomast] (Schedule 13) [3.6.3];

d) During periods leading to termination (clause 21 of the Agreement) [3.6.4];

e) Where [Jomast] is otherwise in breach of the Agreement [3.6.5].

135. I am satisfied that some words are missing from paragraph 3.2 of the SOW. The words "and the parties" should appear between the word "and" and "will" and the word "which" should appear between "that" and "will" in the second sentence.
136. So far as material Schedule 2 of the SOW provides:

i) At paragraph 4.2.1 under the headings "Accommodation Services" and "Requirements" that [Jomast] shall provide serviced accommodation for Service Users within the Specified Region;

ii) At paragraph 4.2.1 under the heading "Related Information" that the serviced accommodation shall be within the Specified Region [1.a];

iii) At paragraph 4.2.1 under the heading "Volume of service" that [Jomast] shall be able to provide sufficient accommodation for Service Users as is required by [G4S] [1];

iv) At paragraph 4.2.1 under the heading "Performance Standards" that each Service User is accommodated within the time-scales defined in Annex A to this Schedule [1].

137. Schedule 5 Part H of the SOW is of some importance on the point. It deals with Market Size, Market Share and Pricing in the following terms:

i) At paragraph 12.1 that the market size for the entire Specified Region shall be measured periodically and quantified in terms of the numbers and types of Service Users receiving the Services;

ii) At paragraph 12.2 that the target market share percentage offered to [Jomast] by [G4S] and the price agreed by [Jomast] for single and individual family member Service Users shall remain in force within the specified Service User volume thresholds, subject to indexation adjustments (Schedule 5) and efficiency adjustments (Schedule 6);

iii) At paragraph 12.3 that the volume threshold is stated in terms of the Service User numbers relating to the whole of the Specified Region, and not just the volume relevant to [Jomast] (although this is provided as a memo in paragraph 14);

iv) At paragraph 12.4 that where the overall market size for the Specified Region is outside of the Service User volume threshold range in paragraph 14, [G4S] will invite [Jomast] to renegotiate the target market share and the associated price for a revised volume range. Paragraphs 12.5 to 12.7 set out the scenarios where agreement is reached and where it is not reached;

v) At paragraph 12.5 that where an agreed target market share and price has been reached for the new volume threshold range that will take effect from the point of agreement;

vi) At paragraph 12.6 that where agreement of target market share and price has not been reached and the overall Service User volumes are less than the lower limit set out in paragraph 14 [G4S] will continue to honour the existing target market share and [Jomast] agrees to continue to deliver at the existing agreed price;

vii) At paragraph 12.7 that where agreement of target market share and price has not been reached and the overall Service User volumes are higher than the upper limit set out in paragraph 14 [G4S] will continue to honour the existing target market share up to the upper limit and [Jomast] shall continue to deliver at the existing agreed price. [G4S] reserves the right to refer any volumes over the upper limit to subcontractors at its discretion.

viii) At paragraph 14 for a "Pricing and Volume Table" as follows:

Market Size Payment	Single Service User	Individual Family Member Service User
Price per night	£8.10	£8.10
Specified Region Service User Volume Threshold Upper Limit	2,300 Single Service Users per night	5,000 Family Member Service Users per night
Specified Region Service User Volume Threshold Lower Limit	1,000 Single Service Users per night	2,450 Family Member Service Users per night
Memo Only – indicative Service User numbers at [Jomast's] target market share	From 333 to 766	From 817 to 1,666

138. By way of explanation of the last row of the Pricing and Volume Table:

i) 333 represents 33.3% (Jomast's Target Percentage Market Share) of the 1,000 lower limit in the case of Single Service Users and 766 represents 33.3% of the 2,300 upper limit in the case of Single Service Users; and

ii) Although the figure is slightly too high, 817 represents 33.3% (Jomast's Target Percentage Market Share) of the 2,450 lower limit in the case of Family Member Service Users and 1,666 represents 33.3% of the 5,000 upper limit in the case of Family Member Service Users.

139. Although the declarations sought are ostensibly detailed and wide-ranging, the core dispute is narrower namely: in circumstances where G4S is required under the COMPASS Contract to accommodate asylum seekers in the NEYH region in volumes in excess of the Service User Volume Threshold Upper Limit, whether (as per G4S's case) Jomast is required to accommodate the additional volumes if G4S asks it to do so at the agreed contract price of £8.10 PSUPN, or whether (as per Jomast's case) it is entitled to refuse to accommodate any of the excess allocation unless agreement is reached as to volumes and price.
140. Although I have noted in paragraph 23 above the evidence filed on behalf of the parties in support of the Part 8 Claim, it is of limited assistance on what is, at heart, an issue of the proper construction of the SOW against what I have already determined to be the admissible factual matrix. However, that evidence reinforces that resolution of this core dispute is of significant commercial and practical importance for the operation of the Agreement because it was not disputed that:

i) There has been an increase in the number of asylum seekers in the UK who need to be accommodated by G4S pursuant to its obligations to UKBA under the COMPASS Contract.

ii) G4S has required Jomast to accommodate asylum seekers in greater numbers than the upper threshold limits set out in paragraph 14 of Schedule 5 to the SOW and, subject to my ruling, intends to do so in the future.

iii) On 23 February 2016, G4S invited Jomast to re-negotiate the target market share and the associated price for an increased volume range. Although a meeting took place on 2 March 2016, the parties have been unable to agree on either.

iv) Jomast has (it contends without any obligation to do so) accommodated additional asylum seekers when requested by G4S when it has had the capacity in its portfolio of properties to do so.

v) Jomast has not had the capacity to accommodate all the additional asylum seekers which G4S has sought to allocate to it.

vi) G4S claims to have suffered losses as a result of having to accommodate in hotel accommodation service users which were not accepted by Jomast.

vii) G4S claims it is entitled to withhold by way of set-off sums otherwise due to Jomast pursuant to the Agreement which Jomast has threatened to seek to restrain by interim injunction.

141. As to what I have identified as the core dispute, my findings as to the proper construction of the Agreement are as follows:

i) As to market size, this was to be measured periodically and quantified in numbers and types of Service Users receiving the Service – see paragraph 12.1 of Part H of Schedule 5 to the SOW. There would be no need for this provision if Jomast's contractual obligations were limited to the upper and lower volumes in paragraph 14 of Part H of Schedule 5 to the SOW.

ii) As to market share, G4S made no representation as to the number or type of Service Users which would be allocated to Jomast and Jomast was not entitled to any minimum number or types of Service User – see clause 3.11 of the Agreement and clause 3.1 of the SOW.

iii) G4S is entitled, at its discretion to allocate Service Users to Jomast after taking into account the factors in paragraphs 3.5.1, 3.5.2 and 3.5.3 of the SOW – see paragraph 3.5 of the SOW.

iv) The volume thresholds relate to the numbers of Service Users in the whole of the Specified Region (ie NEYH) and not just to the volumes relevant to Jomast – see paragraph 12.3 of Part H of Schedule 3 to the SOW.

v) Jomast's Target Percentage Market Share is 33.3% for Individual Family Members and 33.3% Single Service Users – see the table at the end of paragraph 3.5 of the SOW. Some meaning must be given to the description of these percentage shares as "targets".

vi) Save in circumstances where it is entitled to suspend it in the specific circumstances set out in paragraph 3.6 of the SOW (which are all circumstances where G4S are likely to want to allocate numbers in lower numbers to Jomast), G4S was obliged to use reasonable endeavours to allocate the Jomast Target Percentage Market Share (ie 33.3%) of the total volume of Service Users in the NEYH region to Jomast – see paragraph 3.1 of the SOW.

vii) Some meaning must also be given to the use in paragraphs 12.3 and 14 of Part H of Schedule 5 to the SOW of the words "memo" and "indicative Service User numbers". In my judgment, they mean to illustrate but not to define, the number of Service Users that would be allocated to Jomast if overall Specified Region Service User volumes are at the Upper Limit and the Lower Limit and Jomast is allocated 33.3%.

viii) Subject to the indexation adjustments in Schedule 5 and the efficiency adjustments in Schedule 6, the Jomast Target Percentage Market Share was to remain in force within the Specified Region Service User Volume Thresholds (being those set out in paragraph 14 of Part H of Schedule 5 to the SOW) – see paragraph 12.2 of Part H of Schedule 5 to the SOW.

ix) G4S required Jomast to deliver services in the North East LIT area – see paragraph 3.3 of the SOW. However, this does not mean that Jomast is only obliged to deliver in the North East LIT because the obligation was for Jomast to provide serviced accommodation in the NEYH region – see paragraph 4.2.1 of Schedule 2. Jomast had to deliver the services in the NEYH region but not necessarily all in the North East LIT.

x) Where the overall market size for the NEYH region falls outside the Service User Volume Thresholds in paragraph 14 of Part H of Schedule 5 to the SOW, the regime in paragraphs 12.4 to 12.7 of Part H of Schedule 5 to the SOW applies in relation to Jomast's market share. The mechanism is one to renegotiate Jomast's Target Market Percentage Share and the associated price - see paragraph 12.4 of Part H of Schedule 5 to the SOW.

xi) If agreement is then reached between Jomast and G4S as to both agreed target market share (effectively in substitution of the final row in paragraph 14 of Part H of Schedule 5 of the SOW) and price (in substitution for the first row in paragraph 14 of Part H of Schedule 5) then it takes effect from the point of agreement – see paragraph 12.5 of Part H of Schedule 5 to the SOW.

xii) If no agreement of target market share and price has been reached and the overall Service User volumes are below the lower limit set out in paragraph 14, G4S is still obliged to honour Jomast's existing Target Percentage Market Share (ie to use its reasonable endeavours to allocate 33.3% of the Service Users in the NEYH region) and Jomast is obliged to deliver at the existing price (ie £8.10 PSUPN) – see paragraph 12.6 of Part H of Schedule 5 to the SOW.

xiii) If no agreement of target market share and price has been reached and the overall Service User volumes are above the upper limit set out in paragraph 14, G4S is obliged to continue to honour Jomast's existing Target Percentage Market Share (ie to use its reasonable endeavours to allocate 33.3% of the Service Users in the NEYH region) up to the upper limits of 766 and 1,666 and Jomast is obliged to deliver at the existing price (ie £8.10 PSUPN) – see paragraph 12.7 of Part H of Schedule 5 to the SOW.

xiv) This means that above those upper limits, G4S was no longer obliged to use its reasonable endeavours to allocate 33.3% of the Service Users in the NEYH Region to Jomast.

xv) If no agreement of target market share and price has been reached and the overall Service User volumes are above the upper limit set out in paragraph 14, G4S was entitled to refer volumes over the upper limit to any subcontractors at its discretion – see paragraph 12.7 of Part H of Schedule 5 to the SOW.

xvi) However, Jomast was obliged to provide sufficient accommodation for Service Users as required by G4S – see paragraph 4.2.1 of Schedule 2 to the SOW. If G4S elected to refer volumes over the upper limit to Jomast, then, absent any contrary agreement, it was obliged to provide the services at £8.10 PSUPN – see paragraph 12.7 of Part H of Schedule 5 to the SOW.

xvii) It follows, in my judgment, notwithstanding that Part H of Schedule 5 of the SOW is headed "Market Size, Market Share and Pricing" its real thrust is to preserve and protect Jomast's share of the overall market in the NEYH region.

xviii) On this view, there is no scope for the operation of any quantum meruit in the manner suggested on behalf of Jomast.

142. I will hear the parties as to the precise form of the declarations which are appropriate in light of my judgment but in principle, it seems to me that:

i) Declaration One is no more than a re-statement of the relevant provision in the SOW and was not controversial. I am content to make the declaration but only on that basis.

ii) I decline to make Declarations Two, Three, Four, Six, Eight, Nine and Ten because they are contrary to my findings as to the proper construction or interpretation of the SOW.

iii) I decline to make Declaration Five in the terms sought because part of it is contrary to my findings as to the proper construction or interpretation of the SOW. It is uncontroversial that the effect of paragraph 12.4 of Part H of Schedule 5 of the SOW is that there is an obligation to re-negotiate the target market share and the associated price for a revised volume range where the overall market size for the NEYH is outside the Specified Region Service User Volume Threshold range in paragraph 14 of Part H of Schedule 5 of the SOW and I am prepared to make a declaration in those terms if the parties wish me to do so but it seems to me in doing so I am doing no more than re-stating the relevant provision.

iv) I decline to make Declaration Seven in the terms sought because they are contrary to my findings as to the proper construction or interpretation of the SOW. However, shaved of the preamble, it seems to me that sub-paragraph 7(a) is both uncontroversial and correct.

v) In their opening Skeleton Argument at [120.2] Counsel for G4S indicated that Declaration 11 was pointless because it was uncontroversial. In fact, in his oral closing submissions Mr McCall QC argued, and I have accepted, that G4S has a discretion to allocate Service-Users within the NEYH region as a whole, not just to the North East LIT and that Jomast is then obliged to accept them. I decline to make Declaration Eleven on the basis that it is contrary to my findings as to the proper construction or interpretation of the SOW.

vi) The two declarations sought by G4S reflect these findings.

143. G4S seeks directions for the assessment of the damages in respect of the costs that it claims to have incurred (for example, in relation to hotel accommodation) by reason of Jomast's failure in breach of the terms of the Agreement and SOW to accept Service Users allocated to it. I will hear the parties on this as part of determining matters consequential on my judgment but it seems to me that, in principle, G4S is so entitled.