Portsmouth City Council v Ensign Highways Ltd

Portsmouth City Council v Ensign Highways Ltd

The Service Point values in Schedule 17 are maximum values, not fixed tariffs; PCC has discretion to award fewer points depending on the gravity of the breach. The duty of good faith in clause 44.4.1 does not apply to clause 24 or the Agreement as a whole. However, an implied term applies to the exercise of PCC's discretion in awarding Service Points: PCC must act honestly, on proper grounds, and not arbitrarily, irrationally, or capriciously.

Parties
Claimant: Portsmouth City Council; Defendant: Ensign Highways Ltd
Jurisdiction
England and Wales
Judgment Date
14 July 2015
Procedural Posture
Civil (contractual Dispute) / Judgment After Trial
Outcome
Declarations granted in favour of Ensign's interpretation on the Service Points issue; PCC's broader interpretation and application of clause 44.4.1 rejected.
Legal Topics
Interpretation of Contract Terms, Implied Terms, Good Faith in Contracts, Public Private Partnership (pfi) Agreements, Exercise of Contractual Discretion
Contract Law Public Procurement Interpretation of Contract Terms Implied Terms Good Faith in Contracts Public Private Partnership (pfi) Agreements Exercise of Contractual Discretion

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Parties

Portsmouth City Council

Claimant

Ensign Highways Ltd

Defendant

Procedural Posture

Civil (contractual Dispute) / Judgment After Trial

Legal Issues

  1. 1 Whether the Service Point values in Schedule 17 are fixed tariffs or maximum values within a range
  2. 2 Whether a duty of good faith under clause 44.4.1 applies to the Service Points regime in clause 24
  3. 3 What implied terms, if any, govern the exercise of discretion by PCC in awarding Service Points

Ratio Decidendi

The Service Point values in Schedule 17 are maximum values, not fixed tariffs; PCC has discretion to award fewer points depending on the gravity of the breach. The duty of good faith in clause 44.4.1 does not apply to clause 24 or the Agreement as a whole. However, an implied term applies to the exercise of PCC's discretion in awarding Service Points: PCC must act honestly, on proper grounds, and not arbitrarily, irrationally, or capriciously.

Court Disposition

Declarations granted in favour of Ensign's interpretation on the Service Points issue; PCC's broader interpretation and application of clause 44.4.1 rejected.

Orders

  • Declaration that the Service Point values in Schedule 17 are maximum values, not fixed tariffs.
  • Declaration that PCC must exercise its discretion in awarding Service Points honestly, on proper grounds, and not arbitrarily, irrationally, or capriciously.