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SLAUGHTER AND MAY
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Date 22nd November, 1999 Total pages (inc. this) 4
Our reference JRT Writer's telephone
From Jeff Triggs
To Keith Baines, Post Office Counters Receiving fax number
Limited, London
Copy to RAC
AL376
Thank you for arranging for Tony Oppenheim’s letter of 18th November to be
forwarded.
I attach, for your ease of reference, a copy of my c-mail to you of 2nd November. This
suggested that, although the question of who caused the discrepancy is irrelevant under the
terms of the Second Supplemental Agreement, Pathway might nevertheless seek to argue that
if a discrepancy arises as a result of a breach of contract by POCL then Pathway could argue
that the damages suffered by it as a result of POCL’s breach were equivalent to the £229
charge for detecting the error and therefore that the two should cancel each other out.
Pathway seem to be adopting that approach and are seeking an obligation on POCL
_ that it may have breached.
CAR 891 appears to be a classic “agreement to agree” and therefore not to impose on
POCL a relevant binding obligation.
Whether the document “Reference Data - POCL/ICL Pathway Operational Level
Agreement” is a CCD incorporated into the Codified Agreement which imposes relevant
obligations is something we can consider if you would like us to. Please feel free to forward a
copy of the document to Robert Chaplin.
Likewise the CCD entitled “Application Interface Specification Reference Data to
Pathway”. The sentence quoted from it does not immediately strike me as particularly
relevant and in any case paragraph 5.3.2.2 of Schedule G1 incorporates from that document
into Schedule G1 only the definition of the “Contractor domain”, and then only for the
purpose of imposing an obligation on the Contractor, not POCL.
A llst of the partners and their professional quaiications is available for inspection at the above address,
The partners are either solicitors ar registered foreign I
IF YOU DO NOT RECEIVE ALL THE PAGES, PLEASE TELEPHON
“Dasciae number €A993260192
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Even if these CCD’s did incorporate into the Codified Agreement an obligation on
POCL not to cause cash account discrepancies, and POCL could be demonstrated to be in
breach of that obligation, it would still be incumbent on Pathway to demonstrate that the
relevant loss suffered by Pathway as a result of the breach (i.e. the £229 charge) was a loss
which was a foreseeable consequence of the breach at the time the contractual obligation was
accepted.
In short then, Pathway (or Masons) are somewhat scraping the barrel to find a
relevant cause of action against POCL. If you wish us to respond in detail on whether they
have succeeded could you please forward to Robert copies of the relevant CCD’s.
Jeff Triggs
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TRIGGS, Jeff
From: TRIGGS, Jeff
Sent: 02 November 1999 14:24
To: ‘keith.k.baines
Ce: Chaplin, Robert
Subject: RE: CCNs 560 and 562
Keith,
Thank you for your e-mail of ist November.
A. Suspension of Rollout
The purpose of the provisions allowing Rollout to be suspended is not to punish Pathway for its
defaults but to ensure that the system is not universally ralled out while serious problems persist. Hence
the right to suspend Rollout on failure of any Of the critelia in Part B of Schedule 4 applies irrespective of
whose fault, if anyone's, the discrepancy might be. at .
The exceptions from the definition of Data Errors in Emergency CCN 562 are irrelevant to the question
of whether Rollout may be suspended under paragraph 6.1 of the Second Supplemental Agreement.
B. TIP Integrity Checking Process
The charge payable to POCL under paragraph 7.2(ii) of the Second Supplemental Agreement is an
agreed charge for performing a service. Again the question of who caused the discrepancy Is Irrelevant.
The exceptions to the definition of Data Errors in Emergency CCN 562 are also, again, irrelevant.
Cc. But...
There is a gloss on this. . .
If POCL is in breach of contract then Pathway may have a right to claim compensation for the losses it
suffers as a foreseeable result. of POCL's breach,
.___ Ifa discrepancy arises which would not have arisen but for POCL's breach, and Pathway thereby _
incurs a £229 charge which it would not have incurred but for such breach, then POCL would prima facie be
liable {0 con ensate Pathway for that charge (and in practice Pathway would seek to set off the damages
against the charge). -
Likewise ae a result of discrepancies caused by POCL's breach, Rollout is suspended and Pathway
thereby suffers a financial loss (as a result of delay to recelpt of Rollout Payments) then Pathway may have
aclaim in damages against POCL for POCL's breach.
In this latter case, Pathway would need to demonstrate that Rollout would not have been suspended
but for Pathway's breach. In other-words, if the number of discrepancles would have entitled POCL to
suspend Rollout even after disregarding all discrepancies caused by POCL's default, then Pathway would
be unlikely to succeed in claiming damages arising from the suspension, .
in both cases, of course, Pathway would need to demonstrate not only that the relevant discrepancies
were as a matter of fact caused by POCL but that the causing of the discrepancies amounted to a breach of
contract. In other words Pathway would need to point to a clause in the Codified Agreement (as amended
and supplemented to date) of which POCL was in breach as a result of causing the discrepancy. Itis not
sufficient simply to demonstrate that the discrepancy arose other than as a result of a breach by Pathway.
On a brief perusal of Schedule G I have not discovered any contractual obligation on POCL notto
make errors in reference data. We could make a more thorough trawl of the Codified Agreement if you
wish, although it would be up to Pathway to identify any breach on which it might wish to rely.
Regards
Jeff
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Sent: 01 Nover
To; deft Teig98.
Subject: CCNs 560 and 562
Jeff,
Can you advise on the following issues regarding interpretation of CCNs 560
(the 2nd supplementary agreement) and £62 (The emergency CCN regarding Data
ore in relation to Al376, and signed at the same time as the 2nd sup.
ag.
At present there is a disagreement between POCL and ICL Pathway staff
involved at working level in operation of the provision and implementation
of reference data. ‘This is In the context of a large number of
discrepancies having been discovered in the TIP Integrity Checking which
POCL is carrying out in accordance with paragraph 7 of CCN 560,
Over the past 3 weeks, the number of errors discovered in the checking has
been 272, 367, and 424, This compares to previous error levels generally
below 10 per week. There are two issues at stake. One is In relation to the
0.6% error level to be achieved as one of the criteria to be met by 24 .
November as a condition for resuming roll-out in January 2000, POCL having
the right to delay such resumption if the criteria are not met. If all the
errors identified in recent weeks were to be counted, then is Is clear that
even perfect performance by Pathway from now onwards would be insufficient
to meet the target. The second issue Is the cost of £229 per discrepancy to
be paid by Pathway to POCL, where some £266k Is at stake.
The main area of disagreement is in relation to a change to POCL reference
data, which Pathway assert is of the type excluded by para. 3.6,1.2.2 of
CCN 562, POCL’s view is that the reference data provided by POCL was valid,
but that there is a flaw in Pathway's procedures and/or software that
resulted in Pathway not applying the data correctly.
On re-reading the CCNs, I am unclear whether or not the provisions in CCN
562 are relevant to this case at all. Is seems to me that they only apply .
to the later circumstances when Pathway have implemented the data integrity
control they are due to provide in accordance with the rectification plan
for Al376; and not the the checking performed by POCL in the meantime. If
that is the case, how would we determine the number of discrepancies
chargeable to Pathway under 7.2(li) of CCN 560? Would this include
discrepancies which, on investigation, proved to have been caused by POCL
ures’
A response by close on play on Wednesday, 3/11/99 would be very helpful.
Keith Baines
Head of Horizon Commercial
Post Office Network
First Floor, ille Street, LONDON. EC1N 8Ss.,
TD Phoni Fax:
22/11/99
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