NHS 24 sues company over call handling software contract dispute

A judge in the Court of Session allowed the Scottish medical advice service a proof before answer in its dispute with Capgemini UK Plc over two key performance requirements in the contract.

Lord Woolman heard that in 2010 NHS 24, which deals with almost 1.5 million enquiries each year – many of which are made “out of hours” when the surgeries of general practitioners are closed – decided to obtain a new computer system.

Following a lengthy procurement exercise, in March 2012 it awarded the software contract to Capgemini and the parties signed a formal agreement which contained a highly technical specification for bespoke software.

The parties also agreed that it would evolve after further negotiation and testing, and that the revised specification would be encapsulated in a “business blueprint”.

The parties continued to collaborate on the design and installation of the new system, but a dispute arose in relation to two performance requirements – one relating to the number of calls that the system can handle at any one time and the other relating to response times.

Both requirements were contained in the “output based specification” (OBS) issued by NHS 24 at the outset of the negotiations, but neither was contained in the agreement.

In its action for declarator, NHS 24 contended that the omission of both requirements from the agreement, as modified by the business blueprint, was an “obvious error”.

It was submitted that a reasonable person seized of the facts, including the background circumstances, would regard it as “patently nonsensical” for the medical advice provider to enter into a software contract without detailed performance requirements in respect of response times and concurrent calls, as that would be “contrary to commercial sense”.

Capgemini sought dismissal of the action, arguing that on a proper construction neither performance requirement was incorporated.

The judge observed that “the court is slow to hold that parties have made linguistic mistakes in formal documents” and concluded that “a reasonable person would not have concluded that something had gone wrong with the language”.

In a written opinion, Lord Woolman said: “Looking at the terms of the agreement itself, in my view a reasonable person would have been struck by an important fact.

“The specification was not a static document. In due course it would be replaced by the business blueprint, following a prescribed sequence of events. They would negotiate further in the light of the revision of the requirements and further software testing.

“In that context, the omission of detailed performance requirements at the outset is not surprising. A reasonable person would not have concluded that something had gone wrong with the language. Instead, he or she would have thought that this was something yet to be agreed.”

He added that the “commercial sense” point was “a different shade of the same argument”.

“I accept that NHS 24 intended the two performance requirements to be part of the final contract. Equally, however, Capgemini did not intend to be bound by requirements that it could not meet,” he said.

“That was not in its commercial interests. It could result in Capgemini being in breach of contract and being unable to purge its breach. I therefore conclude that approaching the matter from the perspective of commercial sense does not yield a different construction.”

Alternatively, NHS 24 sought an order for rectification, maintaining that the parties had a “common intention” to include both requirements.

It accepted that it could only establish rectification by leading evidence and submitted that if its construction arguments did not prevail at debate, the court should remit all the averments for a proof before answer.

Capgemini argued that there was no relevant case of rectification.

It was contended that the parties had no common intention, and the agreement was incapable of being rectified, therefore this branch of the case should also be dismissed.

However, the judge disagreed and held that NHS 24 had made out a relevant case in terms of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985.

Lord Woolman said: “It offers to prove that the parties agreed many matters in the months leading up to the execution of the agreement, that they intended the signed document to reflect those matters, and that the two performance requirements were omitted because of a proofreading failure. In my view it is best to explore those matters by way of a proof before answer.”