Doubts over IT court as Co-op challenges ICL ruling

The Co-op is pressing for a retrial in its dispute with supplier ICL, arguing that the judgement, which attacked the retailer's...

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.

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