England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House, 133-137, Fetter Lane, London, EC4A 1HD
		15 July 2003

HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)


 
H.H. Judge Richard Seymour Q. C. :

Introduction

1. The main issue in this action is simply the proper construction of the provisions as to the basis of charging for services under a contract ("Contract 38118B") made between the Claimant, Vogon International Limited ("Vogon"), and the Defendant, the Serious Fraud Office ("SFO").
2. The nature of the activities of SFO is tolerably well-known. An aspect of the performance of its function of investigating serious or complex fraud cases can be the need to consider material maintained in electronic form either on computer or on media which can be read by computer. That was an aspect of the investigation in what was called internally within SFO "the CSG02 case", but to which I shall refer simply as "the Case". The detail of the Case is not material to any issue which I have to decide, but in the course of the investigation by SFO it came into possession of a number of floppy disks, tapes and the like. SFO needed to obtain an understanding of the material contained on those disks and tapes. It has, as an available internal resource, what is called "the Forensic Computer Unit" ("FCU"). Employees in FCU have the necessary skills to access material maintained in electronic form, but, depending upon the workload of FCU, on occasion work of the sort which it would otherwise undertake is put out to outside contractors.
3. In July 2001, when FCU was already fully committed to other work, it was decided that it was necessary for the material in electronic form which had been received in the Case to be put into an accessible format for consideration by the investigators assigned to the Case by 31 August 2001 if the overall case timetable was to be maintained. That decision meant that the services of an outside contractor would have to be engaged to undertake the task of putting the material into an accessible format. Quotations were sought from four organisations considered competent to perform the services required, but only one, Vogon, indicated that it was able to complete the task by the date desired.
4. Vogon was invited to quote for a number of items of work, one of which was described in its quotation numbered 38118 dated 3 August 2001 as:-

"To restore data from tape in accordance with forensic procedures

31 assorted tapes."

The tapes referred to, of which in the event there proved to be 33, and to which I shall refer in this judgment as "the Tapes", were believed to contain, and were in due course found to contain back-ups of data from an e-mail server. Actually two e-mail servers were involved. One was called "Glaston" and the other was called "Glaston 2". In this judgment I shall refer to those servers collectively as "the Servers". Each of the Servers operated on the Microsoft Exchange software, to which I shall refer in this judgment as "Exchange".

5. An agreement ("Contract 38118") was made between SFO and Vogon for the provision by Vogon for SFO of the services to which the quotation numbered 38118 dated 3 August 2001 related. No issue arises in relation to Contract 38118.
6. Having made a preliminary assessment of the material delivered to it under Contract 38118, Vogon, by Mr. John Warner, wrote a letter dated 10 August 2001 to SFO. Enclosed with the letter was a note of Vogon's understanding of what it was that it was required to do. That note concluded with this paragraph:-

"The tapes that contain MS Exchange Server Backup will have MS Exchange Server files in it. We will restore these files for you. However if you need the individual PST files recovering from these files it will involve recreating the Exchange Server and extracting the appropriate files. We estimate an initial set-up charge of around £2,000.00 and approximately £500.00 per back-up set processed. If you would like a quotation for this work we are more than happy to provide one."

As matters turned out, SFO did require the recovery of the individual PST files. The work necessary to do that I shall call in this judgment "the Work". The Work was the subject of Contract 38118B.

7. Following the despatch of the letter dated 10 August 2001 written by Mr. Warner there were a number of exchanges between Mr. Warner and various employees of SFO, principally Mr. Neal Astle. In an e-mail to Mr. Astle dated 16 August 2001 Mr. Warner wrote:-

"We are unclear whether [sic] how you want us to proceed with these tapes.

The options are as follows:

1. to extract only the NT backup sessions from the tapes [work already covered by Contract 38118] and to ignore the Exchange Database sessions

2. for us to requote for the extraction of the Exchange Database files (mentioned in previous correspondence).

As time is short please let us know as soon as is practical which option you wish to pursue."

8. Mr. Astle's substantive response to the request contained in Mr. Warner's e-mail dated 16 August 2001 was in an e-mail dated 20 August 2001 in which he wrote:-

"Please also deal with the Exchange Server Agent aspect of the tapes that you possess."

That was treated by Vogon as an invitation to quote for the carrying out of the Work.

Contract 38118B

9. Following the invitation to submit a quotation for the undertaking of the Work Vogon, by Mr. Warner, prepared a quotation numbered 38118a dated 20 August 2001, which was sent to SFO under cover of a letter dated 20 August 2001. The letter dated 20 August 2001 was in these terms:-

"Further to our e-mail correspondence, we are able to quote for the processing of the Microsoft Exchange Databases from the tapes that are in bags 377, 384 and 387.

The processing requires that we examine the contents of each tape to determine the number of databases and identify the necessary security and system information required to allow the creation of each database.

Once this process is completed we must then, for each database, set-up the Exchange Database with the correct configuration and then populate it with the data from tape. It will then remain for us to extract each mailbox from the database as a PST (MS Outlook) file. Each of these stages of the process is costed according to the time required. The initial set up of the server and the particular database would take approximately five working days (subsequent databases would require a further three [sic] two/three days each. To process each tape would then take an additional day or two. Note that at present there only appears to be backups of one database however we cannot guarantee this without carrying out the work.

These figures and time estimates are based on the Exchange Database being in full working order and the data held on the tape being uncorrupted. We are able to extract individual e-mails from PST files and can send a quote to do that if required.

If you have any questions or further requirements, please feel free to contact any member of our forensic staff who will be glad to assist."

10. The material part of the quotation numbered 38118a for present purposes was in these terms:-

"To inspect and determine the configuration for each MS Exchange Database from each tape

£3500.00 total

Set-up and population MS Exchange Database £1500.00 per database

To process the data from each database to produce one PST file per mailbox £1250.00 per database

Terms of business: Official Purchase Order

Turnaround Standard: End September 2001

Expedite: End August 2001 +200%

Value Added Tax: please add at standard rate"

11. Also included with the letter dated 20 August 2001 to SFO was a copy of a document entitled "Vogon International Limited Terms of Business" ("the Vogon Terms"). The Vogon Terms included, within clause 2:-

"a) Unless granted a Credit Account by Vogon payment must be immediately sent to Vogon for the amount specified on the invoice for the service….

e) Vogon shall be entitled to charge interest on any overdue sums at a rate of 1.5% per month from the due date to the date of payment."

12. The reaction of SFO to the receipt of the quotation numbered 38118a was to seek to negotiate a reduction in the surcharge required to be paid if the Work was to be completed by the end of August 2001. The quotation and covering letter were received on 21 August 2001, so the desired date for completion of the Work was then only 10 calendar days away. Mr. Astle was able to negotiate a reduction in the surcharge to + 150%. In consequence of that negotation Vogon sent SFO a revised quotation, numbered 38118B and dated 21 August 2001. That revised quotation was sent under cover of a letter dated 21 August 2001, which was in identical terms, save as to heading, to that dated 20 August 2001. The quotation numbered 38118B was also identical in terms to the quotation numbered 38118a save as to the uplift required for completion by the end of August 2001. A further copy of the Vogon Terms accompanied the letter dated 21 August 2001. Mr. Astle signed and returned, also on 21 August 2001, a copy of an acceptance form relating to the quotation numbered 38118B, indicating that the expedited service was required. Contract 38118B was thus concluded.

The question of construction

13. Pursuant to Contract 38118B Vogon carried out the Work by the date required. It then raised an invoice in the total sum of £314,375 plus Value Added Tax in respect of the undertaking of the Work. That sum was calculated as an element of £8,750, being £3,500 plus 150%, in relation to "To inspect and determine the configuration for each MS Exchange Database from each tape", and these items:-

"Set-up and population of MS Exchange Database @ £1500.00 per database + 150% on a total of 49 databases £183,750.00

To process the data from each database to produce on [sic] PST file per mailbox @ £1250.00 per database + 150% on total of 39 databases £121,875.00."

The justification for those charges was said to be that each back-up file included on any of the Tapes which related to either of the Servers was a "database" for the purposes of Contract 38118B.

14. SFO disputed that, on proper construction of Contract 38118B, it was liable to pay Vogon the sum invoiced. Its position was that the word "database" in the phrase "per database", where that was the basis of charge set out in the quotation numbered 38118B, was equivalent to "per Server" in the sense of referring to the data originally maintained on one or other of the Servers. On that basis the proper charge for the carrying out of the Work was £22,500 plus Value Added Tax, which sum SFO had tendered, but had been refused. It was not in dispute that, if SFO was correct in its assertion as to the proper construction of Contract 38118B, its calculation of the sum due was correct. Equally, it was not in dispute that, if Vogon's contention as to the proper construction of Contract 38118B was correct, the sum invoiced was in fact due.
15. The parties each instructed eminent experts in the field of forensic computing to give evidence of a number of matters which it was thought were likely to assist me in resolving the issues which it fell to me to determine. Mr. Terence Bates was instructed on behalf of Vogon, while Professor Neil Barrett was instructed on behalf of SFO. In fact, but not as a result of any failings on their part, I did not find the evidence of the experts of any great assistance. The one thing upon which they did agree which helped me, if only in a negative way, was that the expression "database" has no single and invariable meaning, but, like so many words in the English language, takes its colour from the context in which it is used. On the road to their agreed conclusion that, "Thus "a database" may refer to a single large file or more likely, to a related set of files", they drew to my attention three definitions contained in dictionaries:-

"3.1 Oxford English Dictionary, New Shorter Edition 1993: "An organised store of data for computer processing."

3.2 Oxford Dictionary of Computing Terms 4^th Edition 1996: "A body of information held within a computer system using the facilities of a database management system. All accessing and updating of the information will be via the facilities provided by this software."

3.3 Hutchinson Dictionary of Computing and Internet 4^th Edition 2001: "Structured collection of data, which may be manipulated to select and sort desired items of information." "

In his cross-examination Professor Barrett told me that he considered that the critical part of all of these definitions was that for there to be a "database" the data which had been collected had to be capable of being accessed and manipulated in the form in which it then was. Thus, in his view, a back-up file was not a "database" because it had to be restored before it could be accessed or manipulated. I am not sure that Mr. Bates dissented very strongly from that analysis, although he perhaps seemed to think that the factors which identified a "database" were less cut and dried than Professor Barrett. At all events, I accept the evidence of Professor Barrett as to the understanding within the computer industry of the indicia of a "database" and I also accept that a back-up file lacks those indicia because it has to be restored before it can be accessed or manipulated.

16. In the course of his written opening Mr. Andrew J. D. Green, who appeared on behalf of Vogon sought to support the construction of Contract 38118B for which Vogon contended with these arguments:-

"34. Vogon's primary contention in this action is that each individual back-up file/session which comprised email data from an MS Exchange Database/Server constituted a "database" within the meaning of the contract made on 21^st August 2001. Any other argument is simply untenable for the 3 reasons set out below.

35. First, there is a natural and ordinary meaning of the word "database", and a back-up file/session of email information from an MS Exchange Database/Server is self-evidently a "database" within the meaning of that definition.

a. The natural and ordinary meaning of the word database is "an organised store of data for computer processing", this being the first of the 3 (substantially similar) dictionary definitions set out by the parties' experts in their document "Areas of Agreement Between Computer Experts".

b. A back-up file/session comprises the email information from an MS Exchange Database/Server at the particular point in time when that back-up was taken. It is therefore "an organised store of data for computer processing".

36. Secondly, the wording of Quotation 38118B as a whole makes clear that the parties intended the word "database" to be a reference to each individual back-up file/session and the words "MS Exchange Database" to be a reference to the Server. In particular:

a. The Quotation set out the parties' contractual obligations and entitlements in terms of the work that was to be carried out and the payments that were to be made for that work. It did this using very general language, but that language was sufficient to enable the parties to conclude a binding contract.

b. It follows that the Quotation must contain within it the obligation imposed on Vogon to recreate the MS Exchange Database/Server and, having done that, the obligation to process the data from each individual back-up file/session so that such information could be read as PST files.

c. The 1^st entry in the Quotation is clearly the reference to Vogon's work in recreating the MS Exchange Database/Server. As stated above, this recreation had to take place if the back-up files/sessions were to be processed into PST files. So the reference to "MS Exchange Database" must be a reference to the Server.

d. The 2^nd entry in the Quotation is a reference to the work which Vogon would do in setting-up and populating the Server with the individual back-up files/sessions – ie each file/session would be placed onto the Server. Accordingly, the reference to "database" in that entry is a reference to the file/session which was to be placed onto the Server. The 2^nd entry explicitly draws a distinction between "MS Exchange Database" and "database", and that distinction is to reflect the fact that the MS Exchange Database/Server was to be populated with "databases".

e. The 3^rd entry in the Quotation is a reference to the work which Vogon would do in processing the data from each individual back-up file/session so as to produce a PST file for each of the individuals identified by the SFO. The words "each database" can only be a reference to the individual back-up files. It cannot sensibly be a reference to the MS Exchange Database/Server.

f. If the parties' intention was that Vogon was only entitled to charge per MS Exchange Database/Server, the Quotation would have been drafted differently. It would have been unnecessary to break down the charges for each of the 3 steps (ie £3500, £1500, £1250). Instead, the Quotation would simply have provided for "£6,250 per database". However, the fact that charges have been broken down into the 3 entries (with the 1^st entry charging a total sum for work done on the "MS Exchange Database" and the 2^nd and 3^rd entries charging for work done "per database") is a clear indication that a deliberate distinction was being drawn.

g. It follows that the Quotation only makes sense if the words "MS Exchange Database" are a reference to the MS Exchange Server, and the word "database" is a reference to the individual back-up files/sessions. Indeed, it is also clear from the correspondence leading up to the Quotation that the parties were each using the words MS Exchange Database and MS Exchange Server interchangeably. Although this correspondence may, strictly speaking, be inadmissible as a matter of law, it nonetheless provides some comfort.

37. Thirdly, this construction (ie back-up file/session = "database") is wholly consistent with the commercial purpose of the contract which was to provide the SFO with the data from each individual back-up file/session in a readable form (as PST files). The SFO had no desire to be provided with the 2 recreated MS Exchange Databases/Servers, and it was not provided with those Servers. The recreation of the 2 Servers was simply an intermediate step that was necessary in order to achieve the end result, which was the processing of the back-up files/sessions into a readable format. It would, therefore, have made little sense for payment under the contract to be determined by reference to the number of Servers recreated. The only sensible determinant for payment was by reference to the number of back-up files/sessions on which Vogon had to work. And the reason why the parties used the words "per database" was because, at the time of concluding the contract, they did not know how many back-up files/sessions were on the 33 tapes. Indeed, it is clear from John Warner's letter to Neil Astle dated 10^th August 2001 that, from the first moment when the issue of recreating the Servers was raised, Vogon made it clear that there would be a charge "per back-up set processed"(see paragraph 10 above)."

17. It is, I think, elementary that the issue of construction presented in this case is not what the word "database" is capable of meaning, but what it meant, properly construed, in the phrase "per database" in Contract 38118B. Mr. Green's first point, on analysis, was, therefore, no more than an essential pre-condition to getting to his second. Indeed the second point, as it seems to me, was the only one which seriously arose, in the sense that it merited any consideration at all. The commercial purpose of Contract 38118B, as to which there was no doubt, in my judgment shed no light whatever on the question of the basis upon which Vogon was entitled to be remunerated if the commercial purpose was achieved. Any number of bases of remuneration were theoretically possible, including, most obviously, the charging of an hourly rate or a fixed lump sum fee.
18. Mr. Green seemed to rely heavily upon the fact that the relevant rates of charge in the quotation numbered 38118B were expressed to be "per database", while references to one of the Servers were, so he contended, to "MS Exchange Database". That appears to me to be a false point. In the expression "Set-up and population MS Exchange Database £1500 .00 per database", the most obvious way of reading the reference to "database" in the phrase "per database" is as a reference back to the database in relation to which the activity specified is to be carried out, namely "MS Exchange Database". The references to "database" in the expression "To process the data from each database to produce one PST file per mailbox £1250.00 per database" are no doubt more equivocal, but again, in the context of the quotation numbered 38118B as a whole, the obvious way in which to read those references, as it seems to me, is as referring to the databases more specifically identified earlier, that is to say "MS Exchange Database". In order to grapple with the proper construction of Contract 38118B it is, therefore, in my judgment, necessary to adopt a more sophisticated approach than just to notice that the word "database" where it appears in the quotation numbered 38118B sometimes is introduced with a capital letter and sometimes is not. It is necessary to address the issue of construction in accordance with the guidelines expounded by Lord Hoffman in Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 WLR 896 at pages 912H to 913G.
19. I also reject the submission of Mr. Green that the breakdown of the scheme of charging into the three stages set out in the quotation numbered 38118B was unnecessary if what had been contemplated was that charging would be by reference to how many servers the data on the Tapes had originally been on. The first stage fixed a lump sum fee no matter how many servers there proved to be. On that basis there could not be a lump sum fee per server, for if it turned out that there were ten servers, rather than the one anticipated, the charge for the first stage would not vary. No doubt the second and third stages could have been covered by a single rate of fee on a charging per server basis, but the fact that that was not done is not of great significance, as it seems to me, when the first stage, on the charging mechanism adopted, was to be dealt with separately anyway.
20. The terms of the covering letter sent with the quotation numbered 38118B were relied upon by Mr. Duncan McCall, who appeared on behalf of SFO, as assisting in the interpretation of the charging bases proposed in the quotation. In my judgment the terms of that letter shed important light upon the proper interpretation of the quotation. All of the relevant references seem to me to point in the direction of references in the quotation to a "database" being to a server on which the data on the Tapes had originally been stored. How the quotation was described in the covering letter was as a "quote for the processing of the Microsoft Exchange databases from the tapes." The information on the Tapes themselves was not described in the letter as a "database" or "databases", but as "the contents of each tape" or "the data held on the tape". It was common ground that in the sentence, "The processing requires that we examine the contents of each tape to determine the number of databases and identify the necessary security and system information required to allow the creation of each database", the references to "database" and to "databases" were, as was obvious from the nature of the operations being described, to a server or servers. It was not suggested by Mr. Green that a server was not itself, by reference to the definitions upon which he relied, a "database". The reference in the next sentence of the letter to that just quoted to "for each database" again, from the nature of the operation being described, was accepted as being to each server. That interpretation also applied, for the same reason, to the references in the sentence, "The initial set up of the server and the particular database would take approximately five working days (subsequent databases would require a further three [sic] two/three days each." However, the single most important indicators of the intended meaning of the references to charging "per database" in the covering letter were in my judgment, first, "Note that at present there only appears to be backups of one database however we cannot guarantee this without carrying out the work" and, second, "These figures and time estimates are based on the Exchange Database being in full working order and the data held on the tape being uncorrupted". In the first of these references the word "database" was used in a context in which it could only refer to a server, but the reference was wholly irrelevant if the critical determinant of fee entitlement was not the number of servers, but the number of back-up files. SFO and Vogon would not be interested in how many servers there might be – one or more than one- if it was not the number of servers on which the relevant data had originally been stored, but the number of back-up files, which was taken into account in fixing the fees payable. Again the points made in the second of the quoted sentences as to what may impact upon "These figures and time estimates" were immaterial in relation to the "figures" element if the vital issue was how many back-up files were found.
21. Mr. McCall also relied upon the financial impact of the estimated figures given by Mr. Warner in the enclosure to his letter dated 10 August 2001 to Mr. Astle in support of the construction of Contract 38118B for which he contended. Taking the figures of £2000 per server on which data had originally been stored, plus £500 per back-up set produced, would have resulted in charges of some £23,500 plus Value Added Tax for the two servers found and the 39 back-up sets produced. Mr. Green countered that the fundamental foundation of the contemplated basis of charge was different from that in the event agreed, and the estimated figures were indicative only and to be the subject of a further quotation if SFO wished to proceed. Both of these points was sound so far as it went, but the magnitude of the difference between the charge which would have resulted had a contract been concluded adopting a basis of charging along the lines envisaged by Mr. Warner on 10 August 2001 and the charge sought to be recovered by reference to Contract 38118B did indicate, in my judgment, that the construction contended for by Vogon was commercially unlikely. A further indicator in that direction was the timescale over which it was contemplated on 21 August 2001 that the Work would be done, namely ten calendar days. It is also relevant, as it seems to me, to take into account that the Work, although important and requiring the services of specialists, was, as Mr. Mark Sear of Vogon, one of those who did it, accepted in cross-examination, relatively straightforward.
22. In the result, construed in its context, I am satisfied that Contract 38118B had the meaning for which SFO contended. It follows that Vogon is entitled to be paid for undertaking the Work under Contract 38118B £22,500 plus Value Added Tax and no more.

Mistake and estoppel

23. At paragraph 7A of the Amended Particulars of Claim it was pleaded on behalf of Vogon, so far as is presently material, that:-

"In the alternative to its primary case pleaded herein and in the Reply (and without prejudice thereto), Vogon pleads as follows:

7A.1 If (which is denied) the SFO accepted Vogon's offer (contained in quotation 38118b and the covering letter) on the basis pleaded in paragraph 11 of the Defence then the SFO accepted an offer which it knew or ought to have known (for the reasons pleaded in paragraph 17 of the Reply) that Vogon was not intending to make and in respect of which it had made a mistake, and the contract was void:

(a) for unilateral mistake; and/or

(b) by reason of there being no meeting of minds as to price and/or subject matter; and/or

(c) on the grounds of uncertainty and/or ambiguity.

7A.2 If (which is denied) the Contract did not have the meaning contended for by Vogon and/or if the SFO were not aware until 28 August 2001 of the scope of the work which Vogon considered itself authorised to carry out (in particular the number of databases to which Vogon was carrying out processing work) by its silence on and after 28 August 2001 the SFO freely accepted the benefit of services rendered by Vogon on and after that date in the knowledge that Vogon was doing work outside the scope of the Authorised Work (on the SFO's case) and was expecting to be paid for such services.

7A.3 Accordingly, and for the reasons pleaded above, Vogon is entitled to reasonable remuneration for the work carried out by it for the SFO at the SFO's request in respect of the Backup Tapes:

(a) from 21 August until 31 August 2001; and/or

(b) from 28 August 2001 until 31 August 2001."

24. Paragraph 11 of the Amended Defence was in these terms:-

"Based on the letter dated 20 August 2001, it was the SFO's expectation that the media contained only one Microsoft Exchange database. (The SFO subsequently became aware that the database is divided between two servers, on which basis it is arguable that there were two databases contained on the media)."

25. What was pleaded at paragraph 17 of the Reply was:-

"Further or alternatively (and without prejudice to Vogon's primary case pleaded above):

17.1 If (which is denied) the words "per database" cannot be construed with such meaning and/or if (which is denied) Vogon used incorrect terminology in the quotation 38118b then, given that Mr. Astle was a Forensic IT Technician in the SFO's Computer Forensic Unit (which, on the SFO's own case, possessed the expertise to carry out the Authorised Work itself), Mr. Astle knew or ought to have known when accepting quotation 38118b that the work which Vogon was offering to perform and the price which they were offering to charge was in fact:

17.1.1 £1500 per backup copy of each MS Exchange Database (or MS Exchange Server) for set up and population of such MS Exchange Database/Server;

17.1.2 £1250 per backup copy of each MS Exchange Database (or MS Exchange Server) to process the data from such backup copy to produce one PST file per mailbox.

17.2 In the premises, by reason of the SFO's silence and acquiescence from 20 August 2001 onwards, during which period it allowed Vogon to spend time and money in processing the Exchange Database aspect of the Backup Tapes, the SFO is estopped from denying that it accepted the offer which Vogon were in fact making.

17.3 In the circumstances, it is unconscionable for the SFO, and it is therefore not entitled, to assert that it did not agree and is not liable to pay £314,375 for the data processing services to be, and which were, provided to it by Vogon."

26. Mr. Green did not elaborate in his written opening upon the alleged alternative cases that Contract 38118B was void for mistake or that SFO was estopped from denying that the proper construction of Contract 38118B was as contended for on behalf of Vogon in his written opening. In his written opening Mr. McCall indicated that he did not understand those alleged alternative cases. That was not, in my judgment, merely a forensic lack of comprehension. Each case seemed to me to be unintelligible by reference to any established principle of law. The idea that a party which has itself prepared all relevant documents in which an agreement in writing is contained should be able to avoid his own documents if the effect of them is found, on proper construction, to be other than that which he asserts he intended is grotesque. It is flatly contrary to the objective theory of contract formation in English law. Equally bizarre is the notion that a party which has entered into a contract on terms proposed by the other party, which terms have been construed by the court to mean one thing, should be taken to have understood that the terms were in fact intended to mean something else, to have owed a duty to the party proposing the terms to point out what was the proper construction of the terms, and thus to be estopped from relying upon the correct meaning of the terms if he did not point out the error. If the party entering into a contract upon terms proposed by the other did in fact appreciate that that other had made some error there may be scope for some estoppel or the grant of some equitable relief, such as rectification, but it was not even suggested to Mr. Astle in cross-examination when he gave evidence before me that he actually appreciated that Vogon wished to charge SFO for the Work on the basis now contended. He did robustly refute the suggestion that a back-up file on one of the Tapes was itself a "database". He made plain his view that, in the context of Contract 38118B it was the data on the Servers which were the "databases". I accept his evidence that that was both his present view and the opinion which he held at the time Contract 38118B was made. Each of the alleged alternative cases of Vogon therefore would have failed had it been pursued. In fact in closing his client's case Mr. Green abandoned each of them.

The actual intentions of Vogon representatives

27. I should record that I am satisfied that the contentions as to the meaning of the expression "per database" in Contract 38118B put forward on behalf of Vogon do not reflect what those at Vogon actually believed that expression meant at the time the contract was made. I am satisfied, having heard the evidence of both Mr. Warner and Mr. Sear, that Mr. Warner, although the point of contact between Vogon and SFO, actually simply followed the instructions of Mr. Sear as to what to propose and what to agree with SFO. Mr. Sear, as technical director of Vogon, was superior to Mr. Warner in the hierarchy of the company.
28. What, having heard the evidence of Mr. Sear and Mr. Warner and having considered the contents of their witness statements, seems to me to have happened is that, once the Work was in progress, it occurred to Mr. Sear that there was an opportunity to exploit the professed urgency on the part of SFO to have the Work completed by seeking a significant upward movement in the sum to be paid for the Work. He first floated on 28 August 2001 through Mr. Warner the contention that the number of "databases" found was 41 to that date. When this suggestion did not evoke an immediate adverse reaction Mr. Sear was encouraged. On 29 August 2001 Mr. Aiden Gilbert of SFO enquired what the total sums payable under Contract 38118 and Contract 38118B were likely to be. Mr. Sear told Mr. Warner to say that the sum payable in respect of Contract 38118B was somewhere in the region of £150,000. That was a figure for which there was no justification by reference to the terms of Contract 38118B if 41 chargeable "databases" had been found. If 41 chargeable "databases" had been found the total sum payable was going to be something of the order of twice £150,000. The attraction of the figure of £150,000 to Mr. Sear, I find, was simply that it introduced SFO to a big number which Vogon would be looking to be paid. Encouraged further by the lack of any expressions of horror at that stage on the part of SFO the logic of the contention that each back-up file on one of the Tapes was a "database" was followed through in calculating the final invoice in respect of the Work. The rendering of that invoice was, in my judgment, simply an opportunistic attempt to exploit the perceived commercial naivete of SFO. It was preceded by an effort on the part of Mr. Sear to find out the likely reaction of SFO to being requested to pay the sum invoiced by first sending an e-mail to, and then telephoning, Mr. Aiden Gilbert of SFO. Once again Mr. Sear was encouraged by the lack of a robust denial on the part of SFO of liability to pay a sum of the order of magnitude which he mentioned.
29. Mr. Sear was, in my judgment, an unsatisfactory witness. He was evasive over any issue which he perceived to be damaging to the case which Vogon was putting forward in the action. Mr. Warner struck me as more straightforward, but his position ultimately on any issue of any real significance was that he simply said what Mr. Sear told him to say on any occasion upon which he communicated with SFO.
30. In his witness statement Mr. Sear dealt with the events of the period 28 August 2001 to 31 August 2001 in this way:-

"57. Once processing commenced, there was no further contact with the SFO for some days. John Warner mentioned to me on 28 August 2001 that he had spoken with Aiden Gilbert of the SFO by telephone, and that during the call John had explained that 41 databases had been identified to date and that good progress was being made in processing the MS Exchange data on the media supplied by the SFO. [This evidence was disingenous, as I find, because the information which Mr. Warner passed on to SFO, as Mr. Warner told me in cross-examination, and as I accept, came from Mr. Sear]

58. John then came to speak to me again the following day, 29 August 2001, to ask me what the provisional estimate was for the total cost of the work undertaken pursuant to quotation 38118b. Steven Allport and I were still in the middle of the ongoing processing exercise.

59. With the benefit of hindsight, I am not entirely sure how I arrived at the figure of £150,000 which I provided to John as the likely total cost. I believe that I probably approached the question by considering the extent of the work undertaken up to that point and what that was going to cost based on my memory of the quotation which had been provided. [I reject this evidence – it is simply an attempt to explain away floating a large figure to see how SFO would react]

60. It is important to bear in mind that I had been working pretty much solidly on the data for 8 days by that point and that, as a result of tiredness and giving an off-the-cuff answer when, with the benefit of hindsight I should have provided a more considered reply, I miscalculated the total cost of the work. It is entirely possible that I "over-egged the pudding" a little in terms of the amount of work done when I told John that approximately two thirds of the databases had been processed – the reality was that it was probably actually 50 – 60%, but I was trying to manage the customer's expectations. I was still confident that the job would be completed by the deadline of 31 August, but it is usually of more reassurance to the customer to be told that the work is on track and that two thirds of it has been completed, even when the reality is that less has been.

61. John was subsequently asked by Aiden Gilbert to put his estimate of the total cost of the two jobs into writing, which John did in a letter later that day, 29 August.

62. John also prepared a short breakdown of progress made on the two separate jobs, which was sent with the estimate … In respect of quotation 38118b, he reported that "the two servers have been set up with the correct server security and domain information. The two distinct bases have been prepared and approximately two-thirds of the databases have been processed". That information was taken from a conversation which he had had with me.

63. Again with the benefit of hindsight, the terminology used, and in particular the use of the word "database" in two clearly different contexts, was perhaps unfortunate. What I believe John was trying to convey, based upon the discussion which he had had with me, was that Steven Allport and I had successfully recreated two distinct MS Exchange servers, GLASTON and GLASTON 2, at this point these were the two servers from which back-up Information Stores had been found on the media, that the servers had been set up in such a way as to allow the back-up information stores to be processed and that approximately two thirds of those information stores had been processed and the contents rendered into accessible PST files.

64. It is clear from the wording used in the breakdown that John uses "database" to refer to two completely separate things. On a proper interpretation of John's breakdown, the second reference to "database" (i.e. "…two thirds of the databases have been processed") is the meaning which is consistent with the meaning of "database" in quotation 38118b.

65. The processing work was completed on schedule on 31 August. It was agreed by John Warner and Aiden Gilbert that the processed material would be returned to the SFO on Monday 3 September, since there would not be anyone at the SFO's offices to accept delivery of it on 31 August. The change to the original plan to deliver the material on 31 August was made to suit the SFO, not Vogon. …

68. Once the processing had been completed and the totalling of the amount payable by the SFO pursuant to quotation 38118b had been calculated, it became apparent that the charge to be made to the SFO was considerably more than the interim estimate which I had provided to John Warner. I therefore prepared an e-mail to Aiden Gilbert to let him know that total number of databases for which Vogon proposed charging the SFO was 49, and that 39 of those had then been processed to produce PST files per item 3 of quotation 38118b.

69. I then spoke with Mr. Gilbert by telephone later that day. During the course of that call, we discussed the amount of work which Vogon had undertaken and I apologised for the fact that it has exceeded by quite a large margin the estimate which had been previously provided. Mr. Gilbert replied: "we didn't think that estimate was in the ballpark". I recall the precise words which Mr. Gilbert used as the entire purpose of my call had been because I was concerned about the issue of the difference in size between the interim costs estimate and the final invoice which was to be rendered to the SFO. I took this to mean that Mr. Gilbert and the other individuals involved within the SFO had expected the total charge to be in excess of my interim estimate."

As it seems to me, the entire purpose of the call to Mr. Gilbert described by Mr. Sear at the end of the passage which I have just quoted was to see whether Vogon was likely to get away with charging SFO as much as he had in mind, and he was further encouraged by the absence of any overt negative reaction.

31. Mr. Warner's account of the events of the period 28 August 2001 to 31 August 2001 in his witness statement was this:-

"18. Once Mark Sear and Steven Allport had started work on the processing of the MS Exchange data, I had no further involvement with this project until 28 August when I received a call from Aiden Gilbert of the SFO. He was seeking a status report on the work which Vogon was undertaking for the SFO. During the course of that conversation, I explained to Aiden that good progress was being made with the processing and that we had identified 41 databases to date. No comment was made by Mr. Gilbert at that time and no issue was raised to the effect that SFO had expected Vogon to process only one database.

19. I received a further call from Mr. Gilbert the following day, 29 August. He asked me what the projected total costs would be for the two jobs which Vogon was working on, 38118 and 38118b. I discussed the matter with Mark Sear, since I was not in a position to answer that question in relation to 38118b, having played no role in the processing work.

20. Mark said that he thought the total cost was likely to be somewhere in the region of £150,000, which I duly relayed to Mr. Gilbert, together with an estimate of the total costs relating to 38118. Mr. Gilbert asked me to put the estimates into writing, which I did and faxed to him later in the day …

21. Accompanying the estimate was a breakdown of progress made on the two jobs. In relation to 38118b, I noted "The two servers have been set up with the correct server security and domain information. The two distinct databases have been prepared and approximately two-thirds of the databases have been processed ". This was based upon my conversation with Mark Sear regarding progress. [It is difficult to resist the conclusion that the terms of the report quoted were deliberately ambiguous.]

22. Again, no comment was made by Mr. Gilbert during the course of the discussions by telephone on 29 August regarding concerns about the extent of work undertaken by Vogon.

23. My involvement following despatch of the update was limited. I spoke with Aiden Gilbert again on 30 August to report that the processing work would be completed on time by the end of the following day and to make arrangements to have the processed material delivered to the SFO. It was agreed that the material would be delivered on Monday 3 September rather than Friday 31 August since there would not be anyone at the SFO to accept delivery on 31 August."

Conclusion

32. For the reasons which I have set out I find that the liability of SFO in respect of the undertaking of the Work for it by Vogon is to pay a sum of £22,500 plus Value Added Tax. I will hear Counsel as to the form of order which is appropriate in the circumstances.