11/02/2020

Successful summary judgment application against provider of plasma screens

On 29 January 2020, His Honour Judge Pearce handed down judgment in favour of the Defendant, following an application for summary judgment, in the case of Pro-Vision Systems (UK) Ltd (“Pro-Vision”) v Kent Community Health NHS Foundation Trust (“KCH”).  Bevan Brittan acted for the Defendant.  The judgment is yet to be published.

Pro-Vision is a company which installs plasma screens in NHS premises (generally in waiting areas) to (a) inform patients of key information and (b) display advertising.  The NHS organisations pay nothing for the screens, with Pro-Vision’s revenue coming solely from businesses purchasing advertising space.  The only obligations on the NHS organisations generally are to permit access to the relevant sites to enable installation and maintenance of the screens, and to provide electricity and broadband supplies.

Pro-Vision’s claim against KCH related to three different contracts for the installation of plasma screens entered into by former PCTs in Kent in 2009 and 2011. 

In respect of the 2009 contract, Pro-Vision claimed that a letter sent by KCH in September 2013 in which the Trust stated its position that the 2009 contract had expired, amounted to a repudiatory breach of contract.  This was based on an assertion by Pro-Vision that the 4-year term of the contract only commenced on the date the first plasma screen was installed under the contract, rather than on the date the contract was entered into.  In this regard:

  • The contract was signed on 30 January 2009
  • The first plasma screen was installed on 14 September 2011

Pro-Vision therefore asserted that the contract only expired 4 years after the later date, on 13 September 2015.  KCH on the other hand contended that the wording of the contract was clear that the term ran for 4 years from the date the contract was entered into, such that it expired on 29 January 2013.  As such, KCH’s case was that a letter sent in September 2013 confirming an end to the relationship with Pro-Vision could not amount to a breach of that contract, and that any alleged breaches of contract that occurred during its term were statute barred (given that the claim was issued more than 6 years after 29 January 2013). 

The relevant wording of clause 5 of the 2009 contract was as follows:

“The Agreement shall commence on the date hereof and shall remain in force for a period of four years, unless terminated earlier in accordance with this agreement and after the date that the plasma screen/s are first installed by [Pro-Vision] at the Premises.”

Importantly, clause 8 also stated the following as regards termination rights:

“ [KCH] or [Pro-Vision] may terminate this Agreement if the terms and conditions of this Agreement are breached, taking effect after the dispute resolution procedure has failed to resolve the dispute and that the cancellation can take effect after an initial twenty four month period from installation and requiring a six month written notice period.”

HHJ Pearce determined that KCH’s interpretation of clause 5 of the 2009 contract was the correct one and that therefore the contract had already expired by the time the letter of September 2013 was sent.  He relied on the fact that clause 8 supported KCH’s argument that the second half of clause 5 only related to termination and not to the contract term.  He noted that for the clause to have the effect that Pro-Vision wished it to have, it would have to be re-written given the clear wording of the first part of the clause.  He also noted that the tools available to the Court to determine the proper meaning of contract terms (e.g. whether they make business sense) are only available where there is ambiguity in the meaning, which he found was not the case here.  Finally, therefore, he confirmed that the ability to challenge any breach of contract that had occurred during its term had expired 6 years after 29 January 2013 and the claim in this respect was out of time.

Pro-Vision was seeking over £4 million in damages on a loss of chance basis to compensate for the profit it claimed it would have secured from the screens. Pro-Vision claimed that it expected screens to be installed under the 2009 contract over an 8-year term (noting that the 2009 contract had an option to extend by 4 years by agreement with KCH).  This figure was based on a stated expected profit of £22,500 per screen per annum.

HHJ Pearce expressed concerns as to Pro-Vision’s approach to asserting an entitlement to losses in these sums, noting that if a proper methodology had enabled them to arrive at that sum, they ought to have been able to explain it in the Schedule of Loss, but had not.  The Claimant in fact flagged to the Judge during the course of his judgment that the relevant documents to support this figure had now been found (having previously stated in the Schedule of Loss that it did not “currently have access to this documentation” and having failed to provide it in response to requests for pre-action disclosure). However, the most the Judge was able to say was that he accepted that, if a breach of contract could be shown to have occurred, the Claimant would merely have an arguable case for some loss.

In respect of the other two contracts, both entered into in March 2011, Pro-Vision claimed that a further email from KCH, sent in December 2013 in which KCH confirmed its intention not to continue any kind of relationship with Pro-Vision, amounted to a repudiatory breach.  Under the 2011 contracts, the term was expressed differently, as follows:

“The Agreement shall commence on the date of signing and shall remain in force for a period of four years, after the date the Screen/s are first installed by [Pro-Vision] at the premises.”

It was therefore not in dispute in relation to the 2011 contracts that the 4-year term only expired four years after the first screen had been installed.

However, KCH explained in its Defence that it had no evidence to show that when the relevant PCT wound down, the contracts had been novated or assigned to KCH.  This was not an issue in relation to the 2009 contract, as a statutory Transfer Order specifically named that contract in a list of liabilities passing to KCH on its establishment. There was no equivalent evidence  in relation to the 2011 contracts.  KCH explained to the Court that residual liabilities belonging to the PCT could have passed to a number of different NHS bodies when the PCT wound down in March 2013, but that it had no evidence to confirm that it was KCH to whom the 2011 contracts had transferred.  KCH’s position in relation to the 2011 contracts was therefore that it was not the correct Defendant.

The Judge accepted that the burden was on the Claimant to show that it was suing the correct Defendant and that this burden had not been discharged in this case.  The Judge therefore also found in favour of KCH in respect of the 2011 contracts.  Again, Pro-Vision had sought damages on a loss of chance basis in the sum of £22,500 per screen per annum under the 2011 contract, amounting to £360,000 overall.

The judgment is an important reminder that the Courts will not go behind clear contract wording to seek to find an alternative meaning that may arguably make better business sense.  The implication or rectification of terms will only happen in cases where it is clear from the words themselves that there is some ambiguity or error.  It is also a helpful judgment for other NHS Trusts who may be defending similar cases, particularly around the burden on a Claimant to properly particularise its alleged losses.

 

If you would like to discuss this case in more detail please contact Fran Mussellwhite or Emma Beynon.