Co-op Group wins ICL case appeal

THE Co-operative Group has won the right to a re-trial in its long-running &#163 11 million legal wrangle with IT providers ICL. The Group lodged an appeal last...

THE Co-operative Group has won the right to a re-trial in its long-running &#163 11 million legal wrangle with IT providers ICL.

The Group lodged an appeal last February after Judge Richard Seymour QC said in the Technology and Construction Court that the society had no case against ICL – now known as Fujitsu – as it had failed to agree a valid contract in relation to penalty clauses, deadlines and standards of workmanship.

A claim was originally launched in November 2001, when the Group claimed substantial damages from ICL because of an alleged failure to meet targets for upgrading the IT system in 1,100 former CRS stores in the wake of its merger with CWS.

In his judgement, Judge Seymour questioned the reliabilty of three senior Co-op witnesses including the then Chief Executive Graham Melmoth; dismissed the claim and instructed the society to pay &#163 1 million of ICL&#039s costs.
 
However three Appeal Court judges have now concluded that Judge Seymour fundamentally erred in his approach to the original 20-day trial and decided his judgements were coloured by a mistaken conviction that Co-op executives were engaged in an elaborate conspiracy to undermine the project.
 
The Appeal Court&#039s 44-page decision vindicates Sir Graham Melmouth, IT director Keith Brydon and senior members of the Group&#039s IT staff who were accused by Judge Seymour of lying to support the Co-op&#039s claims.
 
The Appeal Court ruled that Judge Seymour had shown a consistent preference for ICL&#039s evidence and had consistently found the that the principal witnesses of the Co-op had lied or acted in bad faith – an approach which meant that his "objective vision was distorted".
 
"Reluctant as we are to reach these conclusions and mindful as we have been throughout this appeal of the damaging and inherently undesirable consequences of the parties having to face a re-trail, we nevertheless have decided there is no alternative," the court said.

The judgement was warmly welcomed by Co-operative Group Secretary Nick Eyre, who told the News: " We were always confident of winning this appeal. The decision vindicates the Group&#039s management team who were treated shamefully by Judge Seymour in his judgement.

"Judge Seymour chose to disregard their testimonies and instead appeared to contsruct his own theories which we felt had no basis in the evidence before him. We are of course pleased that the Court of Appeal camed to the same conclusions."

Added Mr Eyre: "The way is now open for us to revisit our grievance with ICL and we will be doing so."
 
The re-trail will re-examine the Co-op Group&#039s claim for damages against ICL for breaching a contract to supply stores with GlobalStore electronic point of sales software to an acceptable level of quality by the agreed deadlines.
 
The Co-op Group and ICL began work on the project in March 2000, but the Group pulled out in January 2001, only weeks before the final drop of the software was due to be delivered, when ICL refused to agree to penalty clauses for late delivery.
 
 
Judge Seymour decided last January that Co-op Group managers deliberately tried to undermine the project because they had a festering grievance over ICL&#039s performance over another contract in the society&#039s funerals business and wanted to avoid paying ICL nearly &#163 1 million in uplift fees.
 
The appeal judges, Lord Justice Tuckey, Lord Justice Rix and Lord Justice Jonathan Parker, said that it was highly improbable that Co-op Group managers would have been willing to place a vital &#163 12 million project at risk to save less than &#163 1million.
 
Fujitsu is understood to be considering an appeal to the House of Lords.

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