The Co-op is pressing for a retrial in its dispute with supplier
ICL, arguing that the judgement, which attacked the retailer's IT
staff, was unwarranted and not representative of the case. Bill
Goodwin reports
The Co-operative Group is pressing the courts to vindicate its
senior IT staff, after a controversial court ruling over its £11m
legal battle with IT supplier ICL called their motives into
question and effectively left their reputations in tatters.
Lawyers for the Co-op, one of the UK's largest retailers, lodged
papers with the court last week pressing for a retrial of the case
on the grounds that the judge had launched unwarranted personal
attacks on Co-op witnesses and had based parts of his judgement on
"invented" evidence that neither side had put forward during the
case.
The case will inevitably raise concerns about the effectiveness of
the Technology and Construction Court. It has already come under
fire from some members of the legal profession, who expressed
anxiety over the number of decisions that have emerged from the
court only to be overturned by the appeal court.
The dispute between ICL and the Co-operative Group - created out of
the merger of the Co-operative Retail Service and the Co-operative
Wholesale Society in April 2000 - stems from the failure of a major
project to install point of sale systems with common capabilities
throughout the organisation.
The project ran into difficulties when the Co-op accused ICL, now
Fujitsu Services, of delivering sub-standard software weeks behind
schedule. Despite reassurances, and the personal intervention of
ICL's chief executive, the relationship between the two companies
deteriorated rapidly and then collapsed. The Co-op pulled out of
the project and took legal action.
In court, judge Richard Seymour surprised both ICL and the Co-op by
deciding early in the hearing that the Co-op did not have a valid
contract with ICL - a point that was at odds with both sides' view
of the case. In effect, this left the Co-op with little legal
recourse against ICL, even if it could prove that the supplier had
missed deadlines and delivered a poor-quality product.
After an 18-day hearing, the judge dismissed the retailer's case,
ordering it to pay £1m in compensation to ICL. To add insult to
injury, when the judgement arrived it contained scathing personal
attacks on the Co-op's IT staff, accusing them of incompetence,
conspiring to plot the downfall of ICL, and deliberately lying to
the court to support the Co-op's case.
The Co-op is now challenging Seymour's conclusions. Documents
lodged with the court supporting the Co-op's application to appeal
accuse the judge of "inventing" evidence and drawing conclusions
from arguments that neither side had presented in court. In
particular, they call into question his finding that there was no
contract between the two parties.
"He constructed an elaborate conspiracy theory, whereby a senior
executive of CWS had conspired with his boss to bring about the
downfall of ICL. This allegation emerged for the first time in the
judgement. It had not been suggested to anybody at the time of the
trial," said Richard Mawrey, barrister for the Co-op.
The Co-op claimed that Seymour took a "perverse" view of evidence,
construing documents in a way contrary to their meaning, refusing
to draw the correct and obvious inferences, ignoring documents that
were inconvenient and claiming that others had not been compiled in
good faith, when they had not been challenged in court by
ICL.
"Having come to what we say is an extreme view, the judge was not
prepared to listen civilly to those who were not putting forward
that view and treated them as being incompetent idiots," said
Mawrey.
"We criticise the conduct of the trial. We criticise the case
management of the trial, and the effect on pleading. We criticise
the approach to the evidence - areas of factual evidence ignored or
discarded, and what we describe as inventing evidence."
The Co-op's arguments have won support from independent IT legal
consultancy the Best Practice Group, which analysed the 160-page
judgement and more than 3,000 pages of court transcripts for
Computer Weekly.
Managing director Allan Watton said, "It appears that the judgement
is fundamentally flawed. It does not correctly reflect the evidence
put forward in the transcripts and seems to introduce what is
effectively new evidence.
"The criticism levied at both sides' barristers, solicitors,
witnesses and the judge who originally managed the case seems
entirely without merit. There is nothing in the court transcripts
to support any evidence of lying or conspiracy.
"Even ICL's own expert acknowledged that the system had something
like 450 bugs in total. The bulk of this evidence seems to have
been ignored in the judgement. It seems to be a bizarre judgement
in the way it was constructed."
Most significantly, Watton's analysis called into question the
judge's conclusion that the two companies did not have a valid
contract. To establish a contract, he said, you need to show four
things:
- That an offer has been made by a supplier
- That the supplier's proposals have been accepted by the
end-user
- That goods and services have been delivered
- That money has been paid to the supplier.
Contrary to the findings of the court, by these commonly accepted
criteria, ICL and the Co-op did have a contract, said Watton.
Seymour is no stranger to controversy. His conclusions in a number
of recent cases, some of which have featured the sort of personal
attacks that featured in the Co-op/ ICL case, have been called into
question by the Court of Appeal.
In a case involving the Royal Brompton Hospital, the appeal court
concluded that Seymour had decided the case on issues that were not
presented in evidence.
Appeal court judges reached a similar conclusion in a dispute
between Miller Construction and James Moore Earthmoving. They
criticised Seymour for finding an arbitrator guilty of misconduct
in his judgement, when this formed part of neither sides'
case.
With the Court of Appeal now considering the Co-op's request for an
appeal hearing, there are fears that the case could dent the
reputation of the Technology and Construction Court. Lawyers have
expressed concerns about the validity of its hearings and its quick
turnaround of complex cases. "Confidence in the Technology and
Construction Court is at an all time low," said Watton.
The Co-op's Globalstore project
The Co-operative Group was formed from the merger of the
Co-operative Retail Service and the Co-operative Wholesale Society
three years ago. The CRS already had a contract with ICL to supply
electronic point of sale systems. After the merger, ICL agreed to
bring Epos systems in former CRS stores up to the same technical
level as those in CWS stores, using its Globalstore software. The
Co-operative Group claimed the new systems never really worked,
delaying plans for the merger and leading to financial losses. It
rejected the system and took legal action before finalising its
contract with ICL. Although both ICL and the Co-op argued in court
that they had an implied contract, this was rejected by the judge,
leaving the retailer with no legal recourse against ICL to recoup
its £11m alleged losses.
The judge's "unwarranted" attacks
What judge Richard Seymour said about Co-op IT staff:
Keith Brydon, General Manager for IT
Brydon was antipathic towards ICL and dealt with the firm with
reluctance. He was on the lookout for any serious opportunity to
terminate the Co-op's connection with ICL, unless ICL delivered
very swiftly. He took part in a conspiracy to plot the downfall of
ICL with the Co-op's chief executive. He was motivated by a real or
imaginary grievance with ICL over an earlier IT project.
Robert Young, project manager for the GlobalStore
project
Young had a supine attitude to delays on the project. His
general approach to any problems seems to have been simply to have
a meeting. He was completely out of his depth. He lacked the
appropriate drive and initiative for the role he was supposed to be
carrying out. Young is accused of telling lies to support the
Co-op's case that ICL's performance was lamentable.
Kevin Cook, contract software tester
Kevin Cook gave evidence of his role in a decision to reject the
ICL software, but the judge decided he was on holiday at the time
the crucial decisions were taken. The judge claimed Cook was
prepared to support the Co-op's case with evidence he knew to be
false.