THE CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS v FUJITSU NEW ZEALAND LIMITED [2023] NZHC 3598

THE CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS v FUJITSU NEW ZEALANDLIMITED [2023] NZHC 3598 [8 December 2023]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-423[2023] NZHC 3598BETWEEN HIS MAJESTY THE KING IN RIGHT OFNEW ZEALAND ACTING BY ANDTHROUGH THE CHIEF EXECUTIVE OFTHE DEPARTMENT OF CORRECTIONSPlaintiffAND FUJITSU NEW ZEALAND LIMITEDDefendantAND DASSAULT SYSTÈMES AUSTRALIAPTY LIMITEDThird PartyHearing: 11 September – 5 October 2023Appearances: M G Colson KC, K J Dobbs and M R M Gale for PlaintiffC L Elliott KC, M B Wigley and J Kohu-Morris for DefendantC F Finlayson KC, A J Horne, H M Jaques and C Hoeft for ThirdPartyJudgment: 8 December 2023JUDGMENT OF COOKE JTable of ContentsFactual background [5]The Registrations of Interest phase [7]Provision of information [17]Fujitsu's RFP response [23]Demonstrations of Quintiq [38]Further information [46]Dassault's concerns [53]SOW23 [66]Revised pricing [71]Gap between out of the box and required functionality [83]Problems develop [97]What went wrong? [105]Breach of contractual warranties [113]The warranties [114]The nature of warranties [120]What was warranted? [124]Customisation v configuration [132]Out of the box [136]Seamless integration [139]The price [143]Other matters [146]Representations during negotiations [149]Warranties qualified [151]Were the representations untrue? [155]Out of the box with no customisation [156]SAP integration [158]Price [162]Mr Driessen's analysis [165]Conclusion [173]Department's other claims against Fujitsu [174]Additional contractual obligations [175]Misrepresentation [182]Fair Trading Act [191]Criticisms of the Department [197]Loss [198]Assumption of responsibility [201]Exclusion clause [205]SOW23 costs [208]Third party costs [209]Admissibility of new spreadsheet [214]Has the Department proved the claimed loss? [219]Work reusable [232]Conclusion [240]Fujitsu's claims against Dassault [242]Does the CCA apply? [244]Claims under the FTA [254]Liability under the CCLA [265]Exclusion of FTA liability [276]Interpretation issues [277]Application of s 5D [282]Destruction of documents [290]Conclusion [297][1] The Department of Corrections (the Department) manages a significantworkforce in order to operate the prison system over approximately 18 prisonsthroughout New Zealand. In December 2018 it entered a contract with FujitsuNew Zealand Ltd (Fujitsu) under which Fujitsu was to provide new software for theDepartment to manage the rostering of its staff in a more efficient way. Fujitsu'sproposal involved software provided by its sub-contractor, Dassault SystèmesAustralia Pty Ltd (Dassault) and a Dassault product called "Quintiq". The Departmentpurchased the licence for the Quintiq software in December at a cost of $1.8 million.The contract with Fujitsu involved the analysis and design phase for theimplementation of Quintiq as the rostering solution. The contracts were enteredfollowing an earlier Request For Proposal (RFP) issued by the Department in March2018. In its RFP response Fujitsu had stated that the Department's requirements couldbe met "out of the box" by Quintiq without the need for customisation, that it couldbe implemented seamlessly with the Department's existing payroll systems inaccordance with the Department's timeframes, and for the approximate total cost of$716,000 over and above the licence costs.[2] In June 2019, following a period of substantial work by all parties under theanalysis and design phase, the Department brought this contractual arrangement withFujitsu to an end. This followed Fujitsu supplying a revised pricing proposal that putthe cost of the total project at closer to $7 million in addition to the licence cost. TheDepartment subsequently contracted with another company to provide a rosteringsolution.[3] The Department now sues Fujitsu for breach of contractual warranty and othercontractual terms, for misrepresentation under the Contract and Commercial Law Act2017, and for misleading and/or deceptive conduct under the Fair Trading Act 1986.It says that Fujitsu's warranties and representations about Quintiq were untrue. Fujitsuin turn sues Dassault under the Fair Trading Act and the equivalent Australianlegislation (the Competition and Consumer Act 2010), and for misrepresentation underthe Contract and Commercial Law Act, for any liability arising by virtue of theDepartment's claims on the basis that any untrue or misleading statements about theQuintiq product originated from Dassault.[4] The Department sues Fujitsu for a total of approximately $4.3 million for thewasted expenditure it says it incurred on the project. This involves approximately$640,000 that it paid Fujitsu for work before the contract was ended, $1.8 millionwhich it paid for the Quintiq licence, and approximately $1.9 million for other coststhat the Department says it incurred as part of the project.Factual background[5] I begin by outlining the facts. This will include making factual findings,although it will also be necessary to make additional findings when addressing theparticular claims.[6] I observe from the outset that the primary source for making findings is thecontemporaneous documentary record. Whilst some of the oral evidence has been ofassistance I found the contemporaneous records to be the most reliable source ofevidence. The events occurred some years ago, before the COVID-19 pandemic, andI generally considered that much of the oral evidence involved an attemptedreconstruction of events, albeit based on the contemporaneous documents, rather thantrue recollection.The Registrations of Interest phase[7] The new rostering system was intended to be implemented by the Departmentas part of a wider project for reforming the Department's approach to the rostering ofprison staff which it initiated in 2016. This was called the "Making Shifts Work"project. An important aspect of this project was a desire to allocate staff moreefficiently, and in a way that it was hoped would improve the rehabilitation ofprisoners. Steps were taken in late 2017 to identify firms who might be able to providea new software for rostering as part of that project.[8] Fujitsu was already a contractual partner with the Department. Pursuant to aMaster Services Agreement dated 22 December 2015 (the MSA) a contractualrelationship had been established. The MSA had been entered so that Fujitsu couldprovide development and maintenance support associated with the use of applicationsby Department staff (such as those associated with mobile devices and Microsoftproducts) but the MSA contemplated that other services could be brought within theterms of the MSA.[9] On 10 November 2017 the Department called for Registrations of Interest(RoI) for the rostering solution through the New Zealand Government's ElectronicTender Service. The RoI explained that the Department needed a new rostering systemfor 6,000 staff across 18 operational prison facilities and other sites which changed itscurrent shift patterns so it could more effectively operate the prison system in a mannerthat would better rehabilitate offenders. In it it said:What we do not wantThe Department is not looking for a solution that is onerous to the business,places current operations under strain, and does not integrate with existingsystems. The aim here is for the Department to implement a solution thatincreases operational efficiency, is flexible, scalable and can be adaptedfurther in future.[10] It also said:Integration RequirementsAny rostering solution should seamlessly integrate with our current SAPPayroll system. Considering the complex requirements of shift patterns andsignificant data exchange occurring between systems, it is critical that anysolution can facilitate improved operational performance rather than being aburden on the business.We are interested to hear how Respondents interface patterns can integratewith existing systems to enable a more integrated end-to-end solution.[11] The SAP system was used for the Department's payroll. So the rosteringsolution needed to integrate with SAP, which was a commonly used payroll system,and deal with the complex requirements the Department said were involved.[12] Dassault saw the RoI and gave its own consideration to seeking to contractdirectly for the project. But its assessment was that it appeared a small project, andthat it would be better to engage in the work as a sub-contractor to Fujitsu who had anexisting relationship with the Department. Dassault and Fujitsu had been involved inother tender bids in New Zealand. For its part Fujitsu also wanted to be the contractorwith Dassault as its sub-contractor.[13] Even at this early stage Dassault foresaw that the project would only be aprofitable one for it if there was greater complexity. In emails in November 2017 fromMs Kate Gayner (a manager at Dassault who subsequently supervised the pre-salesteam) to Mr Nigel Deans (who became the lead-manager for the project) and othersMs Gayner advised that what was being sought was "cheap" and "basic" and she asked"how are we going to extend the complexity to make this worthwhile responding to?"In any event Dassault and Fujitsu agreed that Fujitsu would respond to the RoI, andthe subsequent RFP, and Dassault would be Fujitsu's sub-contractor.[14] The Department received eight responses to the RoI. Fujitsu's response wasdated 29 November 2017. Under its response Fujitsu would be the Department'scontracting party, and Fujitsu would sub-contract Dassault to provide Dassault'sQuintiq product, which came to be known as the "Quintiq solution". On 13 March2018 Fujitsu and Dassault entered a "Teaming Agreement" to record the terms of theirarrangement.1[15] Fujitsu said to the Department in the RoI response that contracting with it usingthe Quintiq product supplied by Dassault would mean that it could "deliver an off-the-shelf, integrated solution that can support all of [the] Department['s] requirements".It also said that amongst the key points were that the solution could meet theDepartment's "core functionality out of the box" with "minimal requirements [for]customisation" and "seamless integration" with the Department's SAP payroll system.At trial there was debate about what some of these expressions meant. I will addressthis debate in greater detail below. But in essence these statements conveyed that theQuintiq software could easily integrate with the Department's existing SAP payrollsystem in order to provide the Department's core requirements, and that limitedchanges would need to be made to the Quintiq standard product to do this.[16] The Department was using the services of the accounting and consultancy firmDeloitte throughout the wider Making Shifts Work project. Deliotte evaluated the RoIresponses on the Department's behalf, and Fujitsu was assessed as being one of the1 Fujitsu and Dassault later signed another agreement dated 10 April, called a "System IntegratorAlliance Agreement" which also appears to regulate the agreement between them, but which wasnot specific to this project.top four potential vendors. Deliotte then recommended, and the Department approved,a "lean" RFP process. Under this approach the Department would not have fullydocumented business requirements which it would issue to the market as part of theRFP, but it would describe its requirements in more general terms, and then worktogether with the proposed vendors it would choose through the RFP process. Theexpert witness called by Dassault, Dr Kenneth Tan, was critical of this approach. Inhis view it almost guaranteed that there would be changes in scope and increases incost. He referred to examples of such projects he had been involved in in Australiawhich had ended badly. But he accepted that he had no experience of the New Zealandmarket. I accept the evidence of the other witnesses, including the expert evidencefrom Mr Mark Peach called by the Department, that a lean RFP is a standard approachin New Zealand and that it does not necessarily lead to greater cost in delivering asolution.Provision of information[17] Two vendors, including Fujitsu, were identified by the Department as the topcontenders after evaluation of the RoI responses. On 18 January 2018 the Departmentadvised Fujitsu that it had been short-listed, and was invited to proceed to the nextstage. On 9 February the Department's sent 30 "use cases" to Fujitsu as a part of thelean RFP process. These were 30 scenarios where Fujitsu was invited to demonstratehow the Quintiq product would be used to address the scenarios. On 26 February theDepartment then issued its Solution Requirements, and the RFP itself was released on1 March 2018.[18] It is important to record an issue about the Department's requirements at thisstage. As had been indicated in the RoI there were complications with the way theDepartment undertook rostering. The roster had more simple requirements — prisonofficers being scheduled to work shifts reporting to senior officers within a particularprison. But there were also complexities. Such officers could also work some of theirtime at other prisons in the same region reporting to different senior officers.Moreover within each prison there were separate "units", such as a high security unit,or a part of the prison used only for remand prisoners.2 Units needed to be able to beseparately managed. Prison officers could also be required to move prisoners betweenprisons, or to participate in other tasks such as bringing prisoners to court for hearings.This kind of activity could also be allocated to different "cost centres" — that is, somestaff activities needed to be managed and recorded to different budgets. Sometimesofficers would be allocated tasks normally performed by more senior officers, andentitled to higher pay. Information needed to be sent to the payroll system to recordsuch activities. For example prison officers might be required to take a prisonercurrently on remand in a prison van to a court for a hearing, and then transport thatprisoner back at the end of the day to a different prison to a unit for sentencedprisoners. Such a scenario might involve the prison officers being under the authorityof different more senior prison officers at different times, and their activities requiredto be allocated to different cost centres and/or at higher rates. This might all occurduring a single shift for the prison officer. These kind of features created morecomplex rostering requirements.[19] This means that the information provided about the Department's operations,and what was said about Quintiq's capabilities is important. As indicated, the RoIreferred to the "complex requirements of shift patterns and significant data exchangeoccurring between systems". On 28 February, two days after the Department hadreleased its Solution Requirements Fujitsu/Dassault then attended a meeting inNew Zealand to gather more information about these requirements. Ms NicolaHorwood the manager at Fujitsu who had lead responsibility for the tender made anote of the meeting. There was no other substantial note made of the meeting availablefrom Dassault or the Department, although Ms Horwood sent her note toMessrs Deans and Moran of Dassault for comment (with no response received).Ms Horwood's note confirms the evidence that some of the complexities of theDepartment's rostering requirements were either identified, or greater potentialcomplexity was at least foreshadowed when the Department explained its operations.This included the following explanations:2 Remand prisoners are those in custody yet to face trial who are kept separate from sentencedprisoners and subject to different conditions (such as limited rehabilitation programmes).(a) That the Department's roster requirements operated at the prison level,but it could also have regional rostering requirements. For example inthe Auckland region staff could move around prisons in the same regionunder the control of different senior officers. In addition staff could bemoved across regions.(b) Each of the prisons had a number of separate units which involveddifferent compositions of officers. There were three main categories ofofficer, a Principal Corrections Officer (PCO), a Senior CorrectionsOfficer (SCO) and a Corrections Officer (CO). Even when an officerworked in a single unit for an eight hour shift they could do varioustasks in that unit which needed to be allocated to different cost centresin the Department's system. The Department also wanted the capabilityto "cross-charge" costs to other units.(c) There were various other rostering complexities, including an officerbeing paid at a higher rate when fulfilling a more senior role (that is, aCO doing the job of a SCO), and situations where shifts were "gifted"from one officer to another.[20] Mr Moran of Dassault attended this meeting. He subsequently had asignificant role in demonstrating the Quintiq product to the Departmentrepresentatives at subsequent meetings in New Zealand. His role was essentially insales. He attended to obtain information for the purpose of these demonstrations. Hegave evidence that the information received at this meeting was of some assistance forhis demonstrations of Quintiq, but that it "went beyond the level of detail that wouldtypically be incorporated into a product demonstration in the sales cycle".[21] The Department's Roster Solution Requirements issued on 26 February did notinclude details of all the complications discussed at the meeting two days later. Forexample the Requirements did not identify the need to allocate activities to cost centresbased on particular tasks. But the purpose of the meeting was to provide furtherinformation, and I accept that Fujitsu/Dassault were put on notice of the potentialcomplexities. For example, the Requirements referred to there being different costcentres associated with the rostering, and it had been explained at the meeting that thetasks officers were to undertake on particular shifts were to be allocated to differentcost centres.[22] Various other steps were taken before the RFP responses were required. Inaddition to the release of the Roster Solution Reports on 26 February, and the meetingon 28 February, Dassault conducted its first product demonstration on 7 March, andthere was an implementation workshop on 9 March. The Department also issuedclarifications on 5 March to enable all tenderers to obtain further information aboutthe Department's requirements. These included clarifications issued to Fujitsu on14 March.Fujitsu's RFP response[23] Fujitsu submitted its RFP response to the Department on 16 March. Thisdocument is of central significance to the Department's claims as it is largely the basisfor the Department's claims of misrepresentation and breach of contractual warranties,and it is also a key aspect of the alleged misleading and deceptive conduct. In additionFujitsu's claim against Dassault is based upon the information Dassault provided toFujitsu for the purposes of this RFP response.[24] The document is lengthy and includes a number of statements about theQuintiq solution, including by addressing the listed requirements set out in thedocument issued by the Department on 26 February. I accept the arguments for Fujitsuand Dassault that the RFP response needs to be read as a whole, and that it is importantnot to read individual statements without understanding the full context of what wasbeing said about the Quintiq solution, including in the context of more precisestatements in the main body of the document. But a key element of the claimsadvanced by the Department arises from statements made in the executive summary.This stated:SummaryThe Department can be confident that in selecting your existing partnerFujitsu, and our advanced technology partner Quintiq, you will be providedwith a solution that is designed to:• meet all of the Department's core functionality requirements;• require no customisation and is 'out of the box';• be delivered with a trouble free implementation;• meet the Department's tight timeframe for delivery of a fully-functionalsolution that is ready for internal testing by 15 February 2019;• integrate well with SAP;[25] Earlier in that summary Fujitsu also stated that the Quintiq solution wouldinvolve "seamless implementation".[26] The RFP response also addressed 97 more detailed requirements. These werebroken into functional requirements, and non-functional requirements, identified thosewhich were "must have" requirements and those that were not, and also cross-referenced the use cases that had been issued. The response indicated that Fujitsucould meet the listed functional and non-functional requirements in full with theexception of three non-functional requirements which it indicated it "partially met".For example functional requirement number 11 contemplated information beingprovided to the SAP payroll system involving a number of details, including that thecosts of an allocated work could be allocated to a different unit, and an ability to makechanges to this retrospectively. When responding that this requirement was "fullymet" the response stated:Quintiq has a wealth of experience in integrating Time & Attendance datafrom the rostering system to payroll systems such as SAP. A number of thoseexperiences involving integrating with SAP Payroll (via Substitutions andAttendances) include the fully costed pay data. Additionally, Quintiq Time &Attendance [provides] a means to retrospectively change time entries. Someconfiguration may be required depending on the payroll period and period inwhich changes can be made.[27] The last sentence is the kind of more particular statement that is a reflection ofwhat was said in the executive summary. Some configuration (or changes) might havebeen needed to allow Quintiq to make retrospective changes to time entries if thechanges related to longer periods of time, or needed to be made at some later date. Butotherwise the product could meet the Department's needs "out of the box" — that is,it could be met by Quintiq's standard functionality.[28] There are other similar statements in relation to the more particularrequirements. Read as a whole I accept that the executive summary was an accuratesummary of what the body of the document also represented about the Quintiqsolution. Put another way, a reader of the document would not understand thesubsequent more particular content provided in relation to each of the functional andnon-functional requirements to materially qualify what was said in the executivesummary in a substantive way. The only qualifications, or assumptions, were thosethat were expressly set out in the RFP response. I address those below.[29] Representations were also made in relation to the price. For that purpose theresponse indicated what the Department's core requirements were by reference to thefollowing table:[30] The price provided was for "release 1", being the core requirements,encompassing those tasks shaded in green in the middle of this table and summarisedon the right hand side. The pricing schedule provided with the response identified aprice on a time and attendance basis estimated at $716,000.[31] As indicated the RFP response also set out assumptions, including thoseassociated with this price. It was said to remain valid up until 26 September 2018, andthat it was based on the "high level" requirements provided by the Department withthe final scope of the project to be agreed as part of the statement of work.[32] Other assumptions were expressly set out including that:All business requirements, process mapping and rostering rules have beendocumented prior to commencement of the project.[33] It is of significance that the RFP response did not state that what Fujitsu saidabout Quintiq depended on the business requirements not being more complicatedthan what Fujitsu/Dassault assumed for the purpose of the RFP response. Neither didit include any other qualification of that kind — for example an assumption that theDepartment sought only Quintiq's out of the box functionality. Rather, it proceededon the basis that all the Department's requirements could be met by the Quintiqsolution. The only relevant assumption was that the detailed business requirementswould be provided before the work started — it was only an assumption relating tothe timing of their provision. The RFP had expressly required that responses included"all assumptions and qualifications made about delivery of the Requirements".Fujitsu's RFP response also stated that it was provided based on "all informationprovided by the Department of Corrections to Fujitsu regarding the RosteringProgramme 2017 requirements" which includes the information provided at additionalmeetings as well as the formal information provided in the Rostering SolutionRequirements.[34] There was, however, one significant and overriding qualification in the RFPresponse. It was made clear that the response was not an offer capable of acceptance,that it was based on what the Department had disclosed, and only so that theDepartment could form a view on whether Fujitsu would be invited to participatefurther in the process. It stated:In the event that the Department amends its requirements in the RosteringProgramme 2017 or otherwise as they apply to the Response, Fujitsu reservesthe right to amend the Response accordingly, including scope, pricing andother related information or requirements.Any pricing that has been submitted by Fujitsu is only indicative. Fujitsu willprovide to the Department clear and binding pricing and other detail onceFujitsu responds to a more specific document containing the relevantinformation needed to provide such pricing.[35] Given this qualification and other statements to the same effect much dependson what happened after the RFP response was sent and the contracts were later entered.Even if the RFP response contained misrepresentations — which for reasons I addressbelow I consider that it did — these might only give rise to legal liability because ofwhat happened after the RFP response was sent. That is because it was expresslypremised on Fujitsu's ability to confirm the position for the purposes of enteringcontractual arrangements at a subsequent point.[36] The RFP response was evaluated by a panel selected by the Department.Clarifications were sought by that panel in March and April. Reference checks werealso undertaken. A due diligence report was provided in June leading up to Fujitsubeing appointed preferred vendor in July.[37] I accept the point emphasised by both Fujitsu and Dassault that theDepartment's requirements as provided in the RFP were very high level. The responseto those high level requirements also made it clear that the legally binding obligationscould change with further information. I also see force in Dassault's point that well-resourced and sophisticated commercial parties cannot reasonably rely on generalimpressions that may be given in pre-contractual documents. But these points onlytake Fujitsu and Dassault so far. The nature of their response to the high levelrequirements nevertheless included a clear representation — that Fujitsu/Dassault hadan out of the box solution which could meet these requirements without the need forsignificant changes to it. That representation was not qualified — for example bysaying it could do so provided that the Department's detailed business procedures didnot reveal complexities. So the high level request for a proposal was met by a highlevel representation of what Fujitsu/Dassault could provide. If Fujitsu/Dassault wereto qualify that representation they needed to do so squarely before any contracts wereentered. For the reasons addressed below I consider that the representations wereconfirmed rather than qualified by Fujitsu and Dassault's statements and conductthrough to the entry of the contracts, including the main contracts entered in December2018.Demonstrations of Quintiq[38] A key aspect of the reiteration of the statements made in the RFP arose fromthe product demonstrations given by Dassault. These were primarily provided byMr Moran. The first of these presentations was on 7 March shortly before Fujitsu'sRFP response, and there was a further presentation on 20–21 August at a rostertechnology workshop after the RFP response.[39] Evidence was given by the Dassault personnel involved in the demonstrations,the Departmental personnel to whom they presented, and the Fujitsu personnel whowere also present. These demonstrations were either undertaken "live" — where theQuintiq product would be displayed and the rostering tasks it could undertakedemonstrated — or they were pre-recorded and then spoken to at a presentation. Oneof the recordings of the demonstrations was produced in evidence, and the Court wasprovided with a series of screenshots from it as well as having the presentation played.[40] The demonstrations were intended to show the Quintiq product in operation.They involved a projection of a computer screen showing how the Quintiq rosteringsolution would be portrayed to a user making rostering decisions. The roster waspresented in the form of a table on the screen. The table would have prison sites/unitsdown the left hand side and staffing requirements for time periods across the top. Theuser could drag and click listed employees into the roster for the site/unit to meet therostering requirements. This included allocating employees to particular shifts atparticular places for particular times. It took into account complications such as split-shifts and when an employee was working in a higher duty capacity. Thedemonstration also dealt with more complex tasks, such as the allocation of equipmentto the employees for those tasks, again by a drag and click process.[41] These demonstrations were very effective from a sales perspective. Mr Moransaid he took pride in his demonstrations, and I consider that they played a significantrole in the Department confirming that it would contract with Fujitsu for the supply ofDassault's product. I generally accept the evidence of the Department witnesses,which was not significantly disputed by the Dassault witnesses and confirmed by theFujitsu witnesses, that the demonstrations suggested that the Quintiq solution couldmeet the Department's requirements with its existing functionality, and that it couldintegrate with the Department's existing payroll system. It portrayed the Quintiqsolution as a highly attractive product that would meet the Department's needs. It isapparent that the Department (and indeed Fujitsu) was very impressed by thedemonstrations.[42] The evidence also establishes, however, that the Quintiq product as presentedhad been worked on by Dassault for the purpose of the demonstrations and did notsimply involve its standard (or "out of the box") functionality. Mr Moran gaveevidence that for ten of the use cases he was demonstrating Quintiq needed to beconfigured so that it could address what was required. He explained that doing suchwork on the Quintiq product prior to the demonstration cost time and money. So hehad addressed the nature and extent of this work with Ms Gayner. She supervised thepre-sales team, including Mr Moran. They dealt with this issue before thedemonstration in March. They agreed to Mr Moran making changes so that theQuintiq product could deal with features that could not be met with out of the boxfunctionality. An example was the higher duties allowance — when an officer was tobe paid more for acting in a more senior role. This was addressed by enteringadditional data into the demonstration as it was a feature that the standard functionalitydid not address. In her internal communication with Mr Moran about this changeMs Gayner referred to this as doing something "dodgy with the data". She said incross-examination that this was simply a poor use of words. Other more complextasks also required the demonstration to be altered as the standard Quintiqfunctionality could not achieve the tasks.[43] Mr Moran said under cross-examination that he would have told theDepartment's representatives that the Quintiq product had been configured for thepurposes of the demonstrations, and that he was not simply demonstrating standardfunctionality. That is not consistent with the evidence of the Department witnessesand I do not accept that he provided a qualification in those terms. I agree that it wouldhave been apparent that information had been entered into Quintiq in order to producethe demonstration — for example, the demonstrations listed particular New Zealandprisons and involved the Department's categories of prison officer. So thedemonstration was obviously not the Quintiq product without any customer specificinputs — it was apparent that information would have been entered into it in order thatDassault would demonstrate how it would work for the Department. But it wasnevertheless reasonably understood to be portraying Quintiq's standard functionality.[44] Mr Kathiresan, Fujitsu's project manager, attended the presentation on 20–21August. He gave evidence that everyone was amazed by how Quintiq performed, andthat he understood that what was being demonstrated was its "out of the box"functionality. He also said that the fact that this turned out not to be so was a majorissue as it fundamentally changed the principles that the parties were working on. Iaccept his evidence in this respect. If Mr Moran did say anything of the kind hesuggested in cross-examination it was not, and would not reasonably have beenunderstood to be a qualification upon the attributes of Quintiq that he wasdemonstrating. Mr Moran struck me as a polished and effective salesman, and anycomment he made did not qualify, or diminish the capabilities of the standard Quintiqsolution that he had the goal of selling. Mr Moran also explained that the purpose ofthe presentations, including those on 20 and 21 August was to get the Department'steam " excited about upcoming changes to their rostering, as this would help theProgramme to be a success" — that is, to achieve the sale. This accurately capturesDassault's approach to the demonstrations.[45] I accept the Department's argument that the demonstrations reiterated the RFPrepresentations, and they then suggested that the Quintiq standard functionality coulddo the tasks shown at the demonstrations (such as addressing the high dutiesallowance) with standard functionality.Further information[46] Further information was provided to the Department in the RFP process whichalso confirmed the representations.[47] On 28 March the Department issued a list of clarification questions whichincluded, in relation to one of the non-functional requirements, whether "duringdiscussions and review of our Requirements, did you note the need for anycustomisations?" The response dated 3 April stated:During discussions and review of your Requirements, we have not identifiedthe need for any customisations.Fujitsu has provided a solution that leverages out of the box product capability.In certain cases, configuration may be required to meet specific requirements.[48] This effectively repeated what was said in the RFP response. It conveyed thatchanges to the Quintiq product might be required in relation to particular matters, butwhat the Department was being provided was a solution based on Quintiq's standardfunctionality. The reference to "discussions" made it apparent that this assessmentwas based on what had been addressed at meetings with the Department and was notlimited to the formal documentation.[49] Customisation was something the Department wished to avoid. In July 2018the Department's Technical Advisory Council approved the Reference Architecture foradoption of the Quintiq solution. In doing so it recorded "customisations in a sense ofsystem modification must be avoided at all costs and some customisations might needto be approved ". This is clumsily worded, but meant that customisation was to beavoided, and may need to be approved by this body if proposed.[50] There were two related reasons why the Department wished to avoidcustomisation. The first was that it was likely to be more expensive — the morechanges that are made to a standard product the more work and time it would take.Secondly such changes potentially compromised the ability to upgrade the product inthe future. The Department wished to stay with the standard product so that it wouldremain upgradeable.[51] I accept that through the further processes the Department became aware thatchanges would be needed for implementing the Quintiq solution particularly forintegrating the solution with the Department's SAP system before it entered thecontracts in December 2018, however. Integration with SAP was likely to be morecomplex and expensive than Fujitsu had portrayed in the RFP response. This becamea material qualification on what Fujitsu had represented. I address this further below.But this was the exception. The Department otherwise understood that the Quintiqsolution could be implemented without significant adjustments in the way that hadbeen portrayed in the RFP response. The Quintiq solution would remain a standardproduct which was upgradeable, and which avoided the expense of a customisedsolution.[52] Between April and June 2018 the Department undertook the reference checks,which were with certain New Zealand or Australian companies that had used theQuintiq product. There was no focus on the extent of any changes required to thestandard product in these checks. After doing so, however, Fujitsu was appointed asthe preferred vendor on 9 July 2018. The parties then had an initial scoping workshopon 24 July. Initial drafts of the contract for the analysis and design phase were thenprepared and exchanged.Dassault's concerns[53] During this period Ms Gayner began to look more closely at what had beenstated in the RFP response, and she became concerned. On 14 May she had an emailexchange with Mr Deans and Mr Moran to confirm that she understood that what wasbeing provided in stage one was for "basic rostering only and implementing our outof the box solution" for the price indicated. But she had checked the RFP responseand she realised that what was represented was not just basic rostering but also fullpay code calculations — that is that it transmitted additional information to allow SAPto make the required payments — and that "that's going to be a major problem". Thiswas the first indication of concern that the RFP response had misrepresented thestandard functionality of Quintiq being provided for the indicated price.[54] She then looked at the RFP further. On 15 July she then sent Messrs Deansand Moran a further email stating:I am feeling a little sick looking at the NZ Corrections tender. Based on thelatest tender response there is no functional scope assumptions linked to ourestimates. At this stage we will be on the hook to deliver everything for thepricing we have submitted.The timeline of 4 weeks analysis, 4 weeks modelling and 4 weeks ID looksfine for a rostering out of the box solution, but this also includes T&A, whichmay cause a lot of problems.I remember at the time pushing for a list of functional assumptions and I wastold these would be completed and added to the RFP but I can't see themanywhere. Our only god-send is Nicola added the assumption from the MPItender stating we are only integrating to HR and Payroll as part of the firstrelease. Just so you know the SOW is stating they want integration toBI/Finance and a whole lot of other systems in the first release.There are also no assumptions around reporting/audit trail etc and their RFPis full of requirements around this. We need to find out who wrote this tenderresponse as [there] has been no pricing assumptions in the individual response,just that we do everything basically.[55] The reference to Nicola is to Nicola Horwood, and to a change to the RFP usingwords from another tender document involving the Ministry of Primary Industries, sothat only more basic integration with SAP was required at stage one rather than fullpay code calculations as proposed in the draft statement of work (although the timeand attendance issue was foreseen by Ms Gayner as still likely to later cause a majorproblem). Ms Gayner's focus at this time was based on the price of the stage onefunctionality being provided — that what was being stated in the RFP response couldaddress the core requirements described in the RFP at the price indicated. The"auditing" and "reporting" functionalities were in addition to the "pay codecalculations" functionality she had initially raised. Her concern was that theDepartment's stage one needs would involve more than out of the box functionality,that Dassault could not provide this for the indicated price, and in addition that furtherwork on the time and attendance issue would reveal "a lot of problems".[56] Mr Deans responded to the email with the suggestion that they should "manageour way through it". I am satisfied that this is what Dassault decided to do. Thisapproach involved seeking to reduce the functionality being provided to theDepartment for the stage one and adding it back in later as additional functionality ata greater price. For example on 19 July Ms Gayner made changes to the draftcontractual documents — the Statements of Work — for the project "to try and pullback scope". This included identifying elements that were said to be out of scope.[57] These email exchanges involved a recognition by Dassault that the RFPresponse had misrepresented Quintiq's standard functionality. Even the stage onefunctionality would require work and was not "out of the box". Dassault decided notto tell either the Department or Fujitsu that the RFP response had misrepresentedQuintiq's out of the box capabilities. While Ms Gayner's focus was on what Dassaultwas providing for the stage one indicated pricing, the underlying issue was that the outof the box/standard functionality did not meet the needs the Department had outlinedand that problems would be revealed once more detailed work was undertaken. I alsoaccept that Dassault decided to address this problem by seeking to increase the pricethat would be sought on the basis that the Department had changed the scope of theproject to encompass more than originally indicated, indicating that the Departmentwas responsible for the cost increases.[58] Further information was then provided by the Department to Fujitsu/Dassault.On 13 August 2018 the Department provided the Making Shifts Work ReferenceArchitecture. In addition the Department's level one processes and businessrequirements were sent at the same time. This included further identifying some ofthe complications with the Department's requirements, including that officers couldwork across different units with different cost centres as well as the potential fordifferent reporting officers, and complications with leave or overtime requirements.[59] On 16 August 2018 Ms Stewart then sent Ms Gayner an email concerning theDepartment's organisational structure and how it would fit into Quintiq's unit structurewhich she said was "a gnarly requirement" and a "possible challenge". Ms Gaynerresponded by indicating that it could fit into Quintiq "automatically" although aconfiguration change would be needed if more than one person had to sign off arostering decision. This response again effectively reiterated the RFP response thatsuch matters could be addressed by Quintiq's standard functionality with configurationonly needed for particular issues.[60] In closing submissions counsel for Fujitsu emphasised a further exchange ofinformation in which the Department had asked particular questions, and Dassault hadprovided answers. On 28 August 2018 the Department asked a list of questionsincluding:For the customisation of the product, what tools are required to customise theproduct? OR are there tools bundled into the product itself. If so what arethey?[61] In its answer Dassault said:Quintiq is proposing that zero customisation be made to the Quintiqapplication. We are proposing that configuration shall be required of theWorkforce Planner industry solution. Regarding configuration, Quintiqprovides four levels of configuration [62] The four levels of configuration then described matters that could be regardedas significant changes, and as "customisation" in the eyes of those with technicalknowledge. I consider that this answer does not greatly assist Fujitsu and Dassault,however. The answer expressly stated that there was no customisation proposed forthe Department. Whilst it also said that there would be some configuration, there isnothing in the answer that identified for the Department that significant configuration,or significant cost, was involved in providing Quintiq to the Department. That isbecause none of the examples of more significant "configuration" were linked to workto be done for the Department.[63] It is also apparent that a policy decision had been made by Dassault whendealing with potential customers to use the word "customisation" in a particular way.The Quintiq solution involved three layers — the base layer, a second layer involvinga Dassault standard product (in this case a product called Workforce Planner), and athird layer which involved integration with the customer. It reserved the word"customisation" for changes to the base layer. It is also apparent that Dassault nevermade changes to its base layer, or may only have done so on one occasion. It had apolicy of referring to changes to the layers above the base layer as "configuration",even if there were substantial changes. That was so even if there were changes to itsstandard product — here Workforce Planner — in the second layer. By adopting thispolicy it was able to say that its products involved no customisation at all — therepresentation it made and repeated here.[64] This policy was expressly employed when formulating the information givento the Department. By internal email dated 5 September Mr Moran commented onDassault's answers to the long list of questions the Department had sent. In it heprovided some "brief guidelines with respect to answering these customer questionsas we are still operating in a sales cycle". This included the advice to "refrain frommaking reference to customisation" in the answers, but to refer to configurationinstead. He confirmed in cross-examination that the word customisation was to belimited to the base layer, and that they would never make changes to the base layer.He also confirmed this was an instruction to be followed by the technical people whowere preparing the answers.[65] That approach had the capacity of being misleading, and was so misleadinghere. As Ms Gayner's email exchanges show the Department's requirements, even forstage one functionality, could not be met by the out of the box functionality andchanges to the Quintiq product were required. Yet the representations were that theQuintiq product met all of the functionality requirements out of the box with nocustomisation. I address further below the potential technical means of theexpressions "customisation" and "configuration".3 Whilst they have a technicalmeaning, I accept Dr Tan's evidence that the differences between the expressionsbreak down when used in particular contexts, and the difference between them isultimately a matter of degree. I accept that the representations in the RFP, andsurrounding the RFP, that no customisation was required for the Quintiq solutionconveyed the meaning that no substantial changes to the standard functionality of theQuintiq product was required. That is so whether or not Dassault had an internaldefinition of the word "customisation" that it adopted to make it seem that its productcould be provided without significant changes to its functionality. When a party usestechnical language when dealing with another party it is what the language means toa reasonable recipient that matters.4SOW23[66] The first contract between the parties relating to the Quintiq solution wasentered on 3 September 2018. This was a contract between the Department and Fujitsucalled SOW23. The pre-existing MSA between the Department and Fujitsucontemplated that particular statements of work (SOWs) could be entered into forother work, and SOW23 was one such statement of work. It was a contract for a statedprice of $128,501 (plus GST). The price was on a time and attendance basis, but itwas recorded that it was not expected to exceed the amount indicated. Two days later,on 5 September 2018 Fujitsu and Dassault entered DS SOW23, being an effectiveback-to-back contract between those parties.[67] The purpose of SOW23 was to obtain a better understanding and elaborationof the functional requirements of the Department, and also to undertake technicalworkshops to determine the feasibility of integrating SAP and Quintiq. Pursuant tothe arrangements, workshops were held in the week of 10 September 2018, and furthertechnical workshops were held in October 2018. The work in SOW23 revealed there3 See [132]–[134] below.4 See Gunton v Aviation Classics Ltd [2004] 3 NZLR 836 (HC) at [244]; West v Quayside TrusteeLtd (in Rec and Liq) [2012] NZCA 232, [2012] NZCCLR 16 at [30]; Anderson v De Marco [2020]NZHC 2979 at [84].was some greater complexity with SAP integration. By the time of the Department'sTAC meeting on 25 October it was noted that:Quintiq does not have an out of the box SAP integration. Due to this, someintegration points will need to be built. Both SAP and Quintiq will providethe tools to complete the builds.[68] The position had been addressed at the integration workshops. TheDepartment became aware through these processes that the integration with SAPwould involve greater complexity and cost and that the full scope of the complexitywould not become apparent until the analysis and design phase of the contract wasundertaken. The Department also became aware that Dassault did not have SAPspecific integration tools notwithstanding that the RFP response had stated that"Quintiq has a wealth of experience regarding the integration of Rostering Master Dataand Time & Attendance Data to SAP payroll". Given that SAP was a leading payrollsoftware system and what the RFP stated, it would reasonably be expected the Quintiqsolution would have a "out of the box" product to integrate with SAP. Dassault had apolicy of not telling customers that it did not do so. In an email sent in January thefollowing year one of its technical personnel, Mr Lee Ong referred to the fact thatDassault did not have an out of the box interface to SAP as "our internal fact". Mr Ongconfirmed in cross-examination that this was something they knew internally but thatDassault told customers something different. I accept that this was part of themisrepresentation of Quintiq's out of the box functionality. Having said that,Dassault's integration tools, whilst more generic, would allow SAP integration tooccur. And in any event, the Department became aware that Dassault did not havespecific SAP integration software at this stage.[69] In addition, and again as a consequence of greater knowledge gleaned throughthe work, the Department contemplated purchasing additional "modules" associatedwith the Quintiq product. In particular:(a) An "equipment/asset" module. This was additional functionality thatallowed equipment to be allocated to officers when they were allocatedto tasks in the roster. Whilst this had been shown in the demonstrationsit was not part of the first stage functionality that had been part of theRFP price for that stage.(b) An "advanced leave management" module. This allowed the roster tobe managed in light of the different types of leave entitlements held byofficers.[70] The fact that additional "modules" were identified for purchase reiterated therepresentations, however. That is because they further confirmed that Quintiq was an"out of the box" solution. That is because the additional modules suggested thatadditional out of the box functionality could be obtained by purchasing the additionalmodules.Revised pricing[71] In October 2018 Ms Stewart for the Department asked Mr Kathiresan ofFujitsu for updated pricing. She asked that this be provided by 16 October. She didso because the Department needed to know if there was any need to increase theoverall MSW budget that would have to be approved at Ministerial level. This requestwas passed on by Fujitsu to Dassault.[72] As Ms Gayner's earlier email exchanges show Dassault had planned to managethe expected increase in price. Mr Deans responded to the request for revised pricingin an internal email saying "we will have to justify the change in price" and askingMs Ginevra Morgan to prepare a list of reasons why the price had increased.Ms Morgan had not been involved in the original RFP response but she then provided"a high level list of the non-out of the box functional requirements" as the priceincrease justification. Ms Gayner then revised the list. She stated in her emails thattwo kinds of additional statements needed to be made to the Department. First, shesaid that assumptions about the functionality needed to be added to Dassault's pricingand "this must be sent to Corrections to protect us down the track". The second wasthe explanation Mr Deans had suggested to justify the price increase from the originalRFP.[73] Ms Morgan's initial list included items that were not departures from theoriginal RFP. For example it included "organisation to working unit mapping" whichis a reference to the Department's use of working units in its operations. The fact thatthis could not be addressed by out of the box functionality is significant. But thisfeature of the Department's operations had been an issue that had been identified evenbefore the RFP, including at the meeting on 16 February.[74] Ms Gayner's revised list was then converted into a PowerPoint presentation.This stated, when describing the suggested changes to the proposed services that theDepartment was seeking:The original RFP submission assumed an "out of the box" delivery approachwith minimal configuration. After an initial kick off in recent workshops, it isnow recognised that a significant amount of additional configuration has beenrequested in the following areas The list was then provided. This PowerPoint presentation was sent by Dassault toMs Horwood and Mr Wills of Fujitsu on 17 October 2018. Ms Horwood thenconverted what was in the PowerPoint presentation back into a word document. The"ballpark" revised figure associated with these documents involved the new priceestimate of $1,825,811.20. This increase included the two additional modules that theDepartment had indicated it wanted to purchase.[75] The Department alleges it was not sent this increased price estimate or thereasons for it. There is no evidence that the PowerPoint presentation prepared byDassault was sent by email to the Department. Neither has it been shown that anyother document, such as Ms Horwood's word document, was sent. Ms Stewart gaveevidence for the Department that she was not provided with any revised pricing byFujitsu other than an estimated increase in licence costs. Ms Horwood did not giveany evidence that she provided the revised pricing to the Department. Mr Kathiresan,who had been copied into Ms Horwood's email, confirmed that he did not do so.Mr Wills was not called as a witness by Fujitsu. Late in the trial Fujitsu applied forleave to call Mr Wills as a witness. I declined the application for reasons set out inmy minute of 27 September.5 Given Ms Stewart's evidence, the lack of anydocumentary record of revised pricing being provided, and the lack of any evidencefrom Ms Horwood, Mr Kathiresan or any other witness from Fujitsu that revisedpricing was provided I accept Ms Stewart's evidence that the revised pricing estimatewas not provided to the Department.5 The Department of Corrections v Fujitsu HC Wellington CIV-2021-485-423, 27 September 2023.[76] There was, however, a separate PowerPoint presentation prepared by Dassaultthat Mr Wills sent to Ms Stewart dated 16 October in response to the request forrevised pricing. This PowerPoint presentation was limited to outlining the twoadditional modules that the Department wished to purchase. It does not includerevised pricing or explanations for increases in pricing overall. In addition by emaildated 15 October Mr Wills sent Ms Stewart a list of revised prices for the Dassaultlicence, including a number of options. The fact that a document trail exists showingthese exchanges further confirms that the revised pricing for stage one implementationthat Dassault had prepared, and the explanations for it, was not passed on to theDepartment. In closing Fujitsu advanced a number of complicated arguments basedon other contemporaneous documents to suggest that Ms Stewart's evidence shouldnot be accepted. I do not accept these arguments in the absence of morestraightforward evidence or documentation.[77] I note that there is an internal Fujitsu email authored by Mr Wills which wasput to Ms Stewart when she was recalled suggesting that an indication of an increasedprice was provided by Mr Wills orally. This document was not discovered until latein the trial, and I declined leave for Mr Wills to give evidence for the reasons addressedin my minute. Ms Stewart denied she had been provided with an oral update and Iaccept her evidence. The document alone does not show the revised pricing was soprovided.6 In any event, even if some oral advice of a price estimate increase had beengiven, it would have been short of what was required. Fujitsu had an obligation toprovide both the increased price, and the suggested reasons for it, to the Department.Fujitsu do not suggest that Dassault's PowerPoint presentation with the increased priceand the explanations for it were provided. Its only argument was that the price increasewas passed on by Mr Wills to Ms Stewart over coffee — an argument I do not acceptgiven the lack of any evidence to show this. The explanations that had been advancedfor the increase in pricing were significant. Some of them could have been debated.[78] The evidence shows that Fujitsu had its own view on how the price increasescould be managed with the Department, which explains why the pricing information6 Taylor v Asteron Life Ltd [2020] NZCA 354, [2021] 2 NZLR 561 at [68].was not provided at all at this time. So I accept that both Dassault and Fujitsu hadstrategies for dealing with the anticipated pricing increase.[79] The Department was nevertheless aware that the likely costs were increasing.Ms Horwood had indicated in August 2018 that the costs were increasing from theRFP response. Ms Stewart was doing her own work on the overall budget, and sheused the information she was provided by Fujitsu in that process. Her own revisedpricing was set out in spreadsheets that were created and amended in October 2018.In those spreadsheets the cost attributed to installing Quintiq was increased from theapproximate figure of $700,000 from the RFP response to $1 million. Her figures alsoincluded the revised licensing costs.[80] What the Department's own assessments demonstrate is that each of theDepartment, Fujitsu and Dassault knew that the project would cost more thanestimated in the RFP response. If the claims that are made in this proceeding hingedon the difference between the Department's estimates at this time compared with thosethat had been prepared by Dassault, a more detailed assessment of the differencesbetween the assessments might be required. But, in any event, the real cost of Quintiq,as shown by the pricing estimates provided by Fujitsu/Dassault in 2019 arefundamentally higher than even Dassault's revised pricing in October 2018. So thecase does not depend on such a comparison.[81] Dassault's PowerPoint presentation with the price estimate increase accuratelydescribed the RFP response as involving an out of the box solution with minimalconfiguration. It said, however, that this was an assumption notwithstanding it wasnot recorded as an assumption in the RFP response. It then recorded the suggestedcomplexity that had developed leading to the higher price estimate, but even this wassignificantly lower than what proved to be the true cost of this project.[82] The more significant issue arising from the revised pricing estimates inOctober 2018 is the way in which price escalation was being managed by bothDassault and Fujitsu. Both of them were less than full and frank with the Department.Dassault's presentation was part of an attempt to justify a price increasenotwithstanding what had been represented in the RFP, and Fujitsu did not pass on theprice estimate increase or the justifications for it for similar reasons.Gap between out of the box and required functionality[83] The key issue for Dassault was that there was a greater gap between its standardor out of the box functionality stated in the RFP response and what the Departmenthad sought. A further emerging issue was that the Department had not yetcontractually committed itself to the Quintiq solution. There had been a contract forpreliminary work (SOW23) but the Department had not yet signed a contract for theimplementation of the Quintiq solution, or purchased the licence for the Quintiqsoftware. For Dassault the licence, in particular, was commercially significant. Acontract for implementing the Quintiq solution involved charging on a time andmaterials basis for the work, but a contract for the licence involved no associatedexpenditure and represented a very significant element of Dassault's potential profitfrom the project.[84] These two issues became related. The contract for implementation of theQuintiq solution was also a statement of work — SOW27. It was being drafted by theparties during September and October 2018. By email dated 18 SeptemberMs Morgan suggested to the Dassault personnel, including Mr Deans and Ms Gaynerthat Dassault provide to the Department the Quintiq Product Description Document or"PDD". This was a detailed document that described Quintiq's product, including itsout of the box functionality. It would potentially identify what was not in the standardoffering, and accordingly what would need to be configured/customised. WhenMs Morgan suggested it be provided to the Department she said providing it "wouldreduce risk and be very clear". Ms Gayner responded in the following way:Typically we would attach the PDD and then articulate the customer's gaps inthe SOW. We would then lock down the modelling effort etc on those gaps.Once you attach a PDD they will review it and be calling out everything thatis a gap that is not included in the SOW.My concern with Corrections is we do not know the gaps yet as we have notlocked down all of the process and done a full review as things are stillmoving. Locking down anything too tight especially with government cansignificantly cause delay and put the project at risk. We did this at Qld Policeand spent 6 months in an SOW review cycle for putting in too much detail. Sogiven this SOW will only be for analysis (not modelling where the risk willrise) and it's a T&M engagement, my preference would be to not lock downthe scope in too much detail in the SOW to ensure we get the license acrossthe line which has already been extremely tough to achieve.[85] The references to getting the licence "across the line" and to putting "theproject at risk" were references to the Department committing itself to purchasing theQuintiq licence. The issue was that identifying the gap between standard functionalityand the Department's requirements prior to the licence being purchased created a riskthat the Department would not wish to proceed as the gap was too great and the costof bridging it too high. In evidence Ms Gayner confirmed that the example she hadreferred to, Queensland Police, involved the customer withdrawing and not purchasingthe licence when the position was investigated. Dassault wanted to avoid theDepartment also doing so.[86] This was a further aspect of the strategy to manage the concern arising fromthe RFP response. Given the representations that have been made in the RFP response,and reiterated in the demonstrations and the associated materials, I accept theDepartment's argument that following this approach involved a conscious decision notto correct the misrepresentations by allowing the Department to identify the extent towhich the Quintiq solution was not out of the box, and that it would require work ofunknown scope to adapt it to meet the Department's requirements.[87] I note that Dassault provided other technical documents concerning Quintiqduring this period. They included what were described as "white papers" which wereprovided to the Department on 10 September. But I was not provided with evidencethat explained the significance of these documents, or how they may have addressedthe out of the box attributes of Quintiq.[88] During this period the Department also asked if Dassault would be prepared toallow the Department to enter a contract to implement the Quintiq solution withoutfirst purchasing the Dassault licence, or come to some other arrangement to defer thepurchase of a licence cost, or part of that cost. From the Department's perspective itwas still to learn more about the Quintiq product and how it would be implemented,and it was expected that this would become clear in the analysis and design phase ofthe project contemplated by the draft SOW27. Its preference was to defer committingto the substantial licence cost until such matters were clearer.[89] The original RFP response had stated that the Dassault licence would need tobe purchased prior to such implementation work, however. There was somesuggestion during the discussions that Dassault might be prepared to come to somearrangement, but this ultimately came to nothing. It was generally a key aspect ofDassault's commercial operations to secure the licence payment as soon as possible.Moreover, in this particular situation, Dassault was faced with the problem of theapparent gap between what had been said in the RFP response and the true position.Exposing that gap before the licence was purchased could jeopardise the sale. In thosecircumstances Dassault made it clear that they were not prepared to depart from therequirement for the Department to purchase the licence before work began. Dassaultalso stated that its licence price would increase if a contract was not entered inDecember.[90] The Department's lean RFP response had contemplated it having "off-ramps"where it could avoid contractual commitment as a consequence of what becameapparent in the process, and there was an expectation all round that more detailed workwould be done as part of contractual performance. But Dassault's insistence on theDepartment committing to the licence cost meant that contractual commitment wasrequired, and the Department was no longer able to rely on any "off-ramps".[91] Dassault's policy of avoiding providing information to the Department thatwould reveal the potential gap between its out of the box product and the Department'sneeds was reflected in other ways. The draft contractual documents for what becameSOW27 were being worked on by the parties at this time, and Dassault's strategy oflimiting the scope of the first release was reflected in the terms. In the back-to-backagreement between Fujitsu and Dassault — DS SOW27 — the clause identifying thescope of the services covered by the agreement stated:[Dassault] assumes the Department will be following the Workforce plannerproduct solution out of the box. Therefore, minimal configuration will berequired.[92] Such an assumption was not recorded in SOW27 between Fujitsu and theDepartment, however. Ms Gayner was not able to explain why the agreements weredifferent.[93] Neither do I accept that the draft SOW27 documentation otherwise correctedthe misrepresentations that had earlier been made. It was formulated, particularly byMs Gayner, in an attempt to reduce the scope of the stage one product the Departmentwas obtaining, but it did not correct or withdraw the previous incorrect representationsabout Quintiq's out of the box functionality. Emphasis was placed on one line includedin the draft contract which stated that one of the assumptions was that "eachDepartment correctional facilities sites will be mapped one-to-one as a working unit".That assumption had earlier been recorded in a document recording the outcome offunctional workshops in September. Fujitsu and Dassault argued that this added aqualification, or assumption, on the standard functionality of the Quintiq productwould provide, and that accordingly that it did not deal with the more complex issuesarising from units within the prisons. I do not accept this. It is not clear enough tooperate as a significant qualification in this way. If this was an intended qualificationof what had been a significant element of what was previously represented it neededto be more expressly raised. Moreover SOW27 was subject to the MSA, andaccordingly it was subject to the representations in the RFP response.[94] It is apparent that the assumption was added at Mr Robertus Driessen'ssuggestion given that it was foreseen that complications could arise. He was the seniortechnical architect at Dassault. But the fact that each prison site would be "mapped"in this way did not mean that Quintiq could not also address the units within thoseprisons with standard functionality. An important matter of this kind could not beaddressed by such an oblique reference to a key feature that the solution was toaddress. It is of significance that Dr Tan, Dassault's expert, gave evidence that hewould have come close to "pulling the handbrake" on the project when it becameapparent that the units issue was going to create complexity and greater cost.[95] The relevant contracts were then signed in December 2018. This included:(a) The Department and Fujitsu signing contracts varying the MSA toinclude the work described in the RFP response (involving Quintiq forthe rostering solution for the Making Shifts Work programme) on 12December 2018.(b) Fujitsu and Dassault entering a "one-time reseller agreement" dated12 December 2018 to enable Fujitsu to sell the Dassault licence, andthe Department then acquiring the licence from Fujitsu.(c) The Department signing a licence agreement with Dassault for theQuintiq licence and associated maintenance and support dated12 December 2018.(d) The Department and Fujitsu entering SOW27 for the analysis anddesign phase on 18 December 2018.(e) Fujitsu and Dassault entering the back-to-back DS SOW27 on20 December 2018.(f) Fujitsu and Dassault entering a further sub-contractual agreement forthe provision of application development services on 21 December2018.[96] It is through these contractual documents that the Department contractuallycommitted itself to the Quintiq solution by purchasing the Dassault licence, andentering the contract for the analysis and design of implementing it in the Department'ssystems. Although the Department entered a licence agreement with Dassault itpurchased the licence from Fujitsu at a cost of $1,596,531 (plus GST), and the contractin SOW27 involved an agreement for the Department to receive the analysis anddesign services on a time and attendance basis for an estimated total of $439,893 (plusGST).Problems develop[97] When the parties sought to implement their contractual arrangements a numberof problems emerged. Attempts were made by all parties to remedy the position.Fujitsu elevated the project status to red in its status report dated 5 March 2019. Anescalation meeting was held on 24 April. No formal changes were made to thecontract in accordance with the change request process in the MSA, however. Suchchanges were contemplated by SOW27. The Department also conducted referencechecks on two other Dassault customers, Spotless and Falck in May and both reportedcomplexities with integration issues. A further meeting between the parties was heldon 8 May.[98] The extent of the problems ultimately led to the contractual arrangements beingbrought to an end on 21 June 2019 by the Department exercising its contractual rightto remove the project as work under the MSA. There are a number of reasons whydifficulties developed, but ultimately the key reason why the contract was brought toan end was the revised price estimates that Fujitsu provided on 28 May 2019.[99] I accept that there were other contributing factors, although for reasons Ielaborate upon below I do not consider these matters to be significant to the claimsthat are made in this proceeding. In particular:(a) Dassault's approach, which Fujitsu was implementing, involvedfollowing what was called the Quintiq Project Life Cycle (QPLC). Thiswas a methodology that Dassault applied to efficiently engage in thework required to implement Quintiq as required by the customer. Forexample it anticipated a customer representative be present at themeetings who would make the relevant decisions required forimplementation. The expectations under the QPLC methodology wasthat the customer, here the Department, would follow the methodology.The QPLC process was referred to in the RFP response. I accept thatthe Department did not follow the QPLC methodology. I also conclude,however, that the methodology was destined to fail given the significantissues that had not yet been worked through by the parties, and theunderlying significant gap between what the Department was expectingand what Fujitsu intended to deliver for the estimated price that were tobe confronted. The reality was that the parties were only just beginningthe process of fully understanding both the Quintiq product and theDepartment's requirements, and what was being revealed was asignificant gap.(b) The Department sent a large number of representatives to attend therelevant meetings. This involved a larger number than the QPLCmethodology contemplated, and there was a lack of a singleDepartmental person then able to promptly make decisions at themeetings. The Department was sending a larger number of personswith operational knowledge in order to get a fuller understanding ofQuintiq, to explain how the Department operated in practice, and inorder to make decisions with workforce buy-in. Many of theDepartment representatives who attended had not undertaken the"learning modules" which were online exercises that suppliedinformation about the Quintiq solution, how it worked, and how itwould be implemented.(c) Fujitsu's project management, largely undertaken by Mr Kathiresan,was not as active or as solution focused as Dassault had expected. Heacted more in an administrative capacity by making arrangements forthe project, but as the substantial issues developed they became beyondhis ability to manage. There was some criticism of him. There may besome validity in those criticisms — for example, I agree it is surprisingthat he had not undertaken the learning modules himself. But therewere inherent problems with the project in any event. These inherentproblems ultimately manifested themselves, and they were not due to afailure of project management.(d) Work on SAP integration was delayed because the Department hadfailed to appoint an SAP integration contractor to address the issue froma SAP perspective. Integration with SAP required expert input by SAPspecialists. During 2018 it was anticipated that this would be anexternal party, but the Department was unable to find one. Ultimatelyit brought individuals in-house who had SAP experience to deal withSAP integration. This approach was less than ideal, and also involveddelays. These were significant given the problems that SAP integrationinvolved. In the end, however, whilst the Department can legitimatelybe criticised for this approach it was the underlying complexity withSAP integration that was a core problem rather than the delays infinding SAP expertise to assist in addressing them.[100] On 28 May 2019, following requests by the Department, Fujitsu providedrevised pricing estimates. These were many times more than expected, or earlierrepresented. This involved the following prices:(a) a "release one" price of $5,392,263 (with $1,652,651 being fixed price,and the remainder a "high level estimate"); and(b) a "full scope" price of $7,158,149 (with $2,064,630 being fixed, andthe remainder a "high level estimate").[101] Ms Stewart gave evidence that many of the functional elements that wereexcluded from release one involved functionality that was included within the RFPproposal including:(a) the requirement for work to be allocated to different cost centres;(b) reporting functionality; and(c) public holiday management.[102] Neither estimate compares precisely with the $716,000 price estimate in theRFP response. I consider the relevant comparison is significantly more than the$5,392,263 price but not as high as the $7,158,149 price, which includes functionalityover and above what was said in the RFP response. It is not possible to be more preciseon the evidence available. But in any event the new estimated price was well beyondwhat had originally been estimated in the RFP response, and it was also significantlygreater than the Department had assessed before it entered the contracts in December2018, or even Dassault's revised pricing that it had provided to Fujitsu in October 2018($1,825,811.20).[103] It is to be noted that the May 2019 price estimates involved significant Fujitsumargins. The release one price estimate from Dassault was $3,338,761 and the fullscope price was $4,544,807. But a Fujitsu margin was always contemplated, includingin the original $716,000 price. In any event, the prices were well in excess of theprevious estimates.[104] It was these revised prices estimates that ultimately led the Department to bringthe project to an end by "de-scoping" it under the MSA by email dated 21 June 2019.Bringing such work to an end was contemplated by cl 8 of the MSA.What went wrong?[105] Given the significant price estimates referred to above, which resulted in theproject being brought to an end, it is clear that there was a major problem with usingQuintiq as the Department's rostering system. An important question is why that wasso? That question is relevant to the claims of misrepresentation, false and misleadingconduct, and breach of warranty.[106] Perhaps surprisingly the precise reasons why the Quintiq product did not workwell with the Department's systems and business practices, and required significantwork to make it so operate, was not covered in much detail in evidence. Each of theparties called independent expert evidence. The experts had expertise in majortechnology projects of this kind. But none of them had expertise in the Quintiqproduct, or detailed knowledge of the Department's systems. They accordingly couldnot give expert evidence on why the Quintiq solution did not work well for theDepartment.[107] Dassault called evidence from Mr Driessen the Senior Services Manager andSolution Architect at Dassault. He managed the group of approximately 30 technicaland functional consultants and architects at Dassault. He was qualified to address thisissue. But he did not do so in the evidence he was asked to give for Dassault. Ratherhis evidence was in the nature of expert evidence directed to whether the statementsin the RFP response misrepresented Quintiq. When he gave evidence, however, hewas asked why Quintiq was not a good fit with the Department's systems, particularlyin the context of the Department's use of working units within prisons for rosteringpurposes. This appeared to be a major part of the problem. He said that all he hadbeen able to work out from the material he had analysed is that it didn't fit, but he wasnot able to work out why. But he agreed that his colleagues had concluded that theQuintiq solution didn't work, or couldn't work for the Department without significantconfiguration. That is as far as his evidence went, and he was the main witness withsufficient technical expertise to address the issue in any detail.[108] It is plain that Quintiq required extensive work before it could operate as theDepartment required for its rostering needs. The increased price estimates aloneevidence this. Moreover it was not seriously disputed that Quintiq's standardfunctionality could not meet the Department's needs. This is reflected in the 2019revised price estimates. Doing the best I have with the evidence available it seems tome that this problem was a consequence of a combination of factors relating to theway the Department undertook rostering of its staff and what the standard Quintiqfunctionality was able to do. In particular:(a) Individual prisons did not operate solely as a simple workingenvironment. Each prison also had different units with rosteringrequirements, and the rostering solution needed to operate at both aprison level, and at a working unit level. There might be severalworking units at an individual prison with different more senior officersrequired to sign off rostering solutions for each unit.(b) Prisons in the same region could also utilise officers across the region.So Mount Eden and Spring Hill prisons in Auckland, or Rimutaka andArohata prisons in Wellington could have staff moving between theprisons. The Corrections Officers who moved between the prisons alsocould report to different senior officers in the roster. So the solutionneeded to cope with these complications.(c) The position was further complicated by the need to manage the staffacross different cost centres so that tasks undertaken on individualshifts were attributable to different budgets, potentially with differentmanagers. For example, when two prison officers were required toescort a prisoner from Mount Eden prison to the Auckland DistrictCourt for a hearing during the day, and then back again, their workmight need to be allocated to different cost centres for different tasksduring a single shift.(d) There were further complications arising from the need to keep a recordof when officers were to be paid more than usual. This occurred, forexample, when officers acting in higher duties (i.e. a CO doing the workof a PCO). There were also complications when shifts occurred partlyover a holiday period given that officers worked 24 hours a day, andwith the issue of "mondayisation" — when a public holiday fell on aweekend and needed to be recognised on the following Monday.(e) In addition, some of the prisons had more than 600 employees whichwas greater than Quintiq's standard planning unit size, andcomplications arose from the Department's desire to operate "cyclic"rosters. These scenarios could also create complications with theinformation that needed to be sent to SAP for payroll purposes.(f) The requirement that the Department keep rostering data for reportingand auditing purposes dealing with the above matters added a furtherlayer of complication.(g) In addition the integration of the above complex rostering requirementswith SAP was accordingly much more complicated, and well beyondthe standard functionality of the Quintiq product.[109] It was a combination, or overlap of these factors that caused the issue ratherthan any one factor by itself.[110] When these problems revealed themselves in 2019 they were much greaterthan even Dassault had earlier anticipated. In 2018 Dassault had become concernedthat it had misrepresented the extent to which its out of the box functionality couldmeet the Department's core functionality at the price indicated. That led to the strategythat Dassault decided to employ to attempt to seek to descope what Dassault wasproviding for the stage one core functionality in SOW27. When doing so Dassaultwas aware there was a potential problem on the horizon. Ms Gayner had thought thatit would be a major problem which would eventually reveal itself. Her concernfocussed on the information that the Quintiq rostering solution would need to transmitto SAP for payroll purposes, and also the reporting and auditing requirements.[111] The problems ultimately became apparent during early 2019. When it wasbecoming apparent that the costs of the project were much greater than had been statedin the RFP response Mr Jeff Lovell, a Dassault project manager, sent an email toMs Ellen Venema, a Senior Services Manager, dated 26 April 2019. Ms Venema hadbecome involved in the project in February 2019 when it became contentious.Mr Lovell said:NZ looks like a tough one – they want out of the box, while being fit forpurpose. And that RFA response "some configuration required" is one thatALWAYS comes back to bite us. They put it in there to give the customer theimpression that it's not much even if we know it's huge. See it all the time.[112] The reference to "they put it in there" is to the Dassault employees responsiblefor the RFP response. Mr Lovell was referring to the representations in the RFPresponse when Dassault/Fujitsu were seeking to secure the contract. Mr Lovell didnot give evidence but Ms Venema did. When this document was put to her in cross-examination she indicated that Mr Lovell was expressing a level of frustration. Shedid not agree with this being an issue that "always" occurred. But she accepted it wasa common problem. In any event I accept that the email correctly identified theproblem that had arisen in this case.Breach of contractual warranties[113] The Department's first claim against Fujitsu is for breach of contract. On22 December 2015 the Department and Fujitsu had entered the MSA which was anoverarching contractual arrangement that regulated the nature of the relationshipbetween those two parties. On 12 December 2018, in the context of the othercontractual arrangements then entered between the parties at this time, the Departmentand Fujitsu entered into a variation of the MSA to bring the implementation of theQuintiq solution with the Department's systems under the MSA. The Department'sclaim for breach of contract is based on the terms of the MSA so varied. There areessentially two key categories of claim:(a) a claim for a breach of contractual warranties; and(b) a claim for a breach of other contractual terms of the MSA.The warranties[114] Included within the representations and warranties set out in the MSA was thefollowing:18.2 [Fujitsu] also represents and warrants:(c) the information given in the Proposal (except as expresslyamended by written agreement between the Parties during thecourse of the contract negotiations over the course ofNovember 2015 to January 2016) and during any negotiationwith the Department is correct, and has not changed in amaterially adverse way, and is not likely to mislead theDepartment in assessing the Service Provider's ability toprovide the Services or to perform its obligations under thisAgreement, or of its financial position;[115] Clause 18.3 also provides:18.3 Each and every warranty given under this Agreement shall be:(a) interpreted separately from the others and not limited byreference to any of the others; and(b) regarded as being given on the Effective Date and throughoutthe duration of this Agreement, in each case with reference tothe facts then existing.[116] As part of the variations to the MSA agreed on 12 December was a variationof the definition of "Proposal" in the following terms:"Proposal" means either the proposal prepared and submitted by the ServiceProvider in response to the Request for Proposal dated 24 August 2015 andannexed to Schedule 9, or the proposal prepared and submitted by the ServiceProvider in response to the Rostering Solution Request for Proposal dated1 March 2018 and annexed to Schedule 11, whichever is relevant to theStatement of Work or Schedule.[117] The parties also agreed to vary the MSA so that it stated:7The Parties acknowledge that, during the course of the contract negotiationsfor the Rostering Solution (December 2018), a decision was made by theDepartment to purchase Software (including associated maintenance) basedon [Fujitsu's] response to the RFP and its Response to Department ofCorrections Contract Follow up Questions provided by [Fujitsu] and includedin schedule 11.[118] As a consequence Fujitsu was warranting that the information given in the RFPresponse was correct, had not changed in a materially adverse way and continued tobe true. It also warranted that any information provided during negotiations with theDepartment was correct and not changed in a materially adverse way. There were thenfurther warranties that this information was not likely to mislead the Department inassessing Fujitsu's ability to provide the services or perform the obligations.[119] The Department alleges that the statements made in the RFP response, and thenthe negotiations, involved untrue statements about the ability of the Quintiq solutionto meet the Department's needs.The nature of warranties[120] The claims for a breach of contractual warranty involve important features thatdistinguish it from the claims for misrepresentation or for misleading and deceptiveconduct under the Fair Trading Act.[121] The essential purpose of contractual warranties is risk allocation. Commercialcontracts involve commercial risks associated with the promises that each of theparties are making to each other. Warranties are a technique which contractually shiftsa risk, or alters the nature of the risk as part of the contractual bargain. As the Courtof Appeal said in Ling v YL NZ Investment Ltd:87 Schedule 1 Appendix A "Support and Maintenance".8 Ling v YL NZ Investment Ltd [2018] NZCA 133, (2018) 20 NZCPR 830 at [34].The purpose of a warranty in a commercial contract is to assign risk betweenthe parties. A party provides a warranty in respect of matters which are or canbe expected to be within that party's knowledge but not within the knowledgeof the other party. [122] The person giving the warranty binds themselves to the allocation of risk thatis involved.9 As Wylie J said in Singh v Rutherford:10In general, the maker of a warranty undertakes strict liability for what he orshe warrants and a warrantor assumes the risk that his or her belief about thematter warranted might be mistaken. From the innocent party's perspective,the purpose in seeking a warranty is to protect against error.[123] The further key feature of a claim for breach of warranty arises from strictliability. Unlike claims for misrepresentation there is no need to establish reliancebefore liability arises.11 The overall position is summarised by John Cartwright inMisrepresentation, Mistake and Non-disclosure in the following way:12Breach of contractual promise as to the truth of the statement Where thedefendant has given in the contract a warranty that his statement was true, thebreach of contract is established by simply showing that the statement wasfalse. Similarly, if the defendant gave a warranty that a statement will remaintrue during the performance of the contract, the breach is established byshowing that the statement has become false. The claimant need not show thatthe defendant was fraudulent or negligent in making the statement, nor willthe defendant be able to use evidence of his innocence to avoid liability. Nor,in order to establish breach of contract, is it necessary for the claimant to showthat he relied on the statement and suffered loss. It is sufficient to show thatthe statement was a term of the contract and was broken. The obligation whichthe defendant has undertaken in the contract is strict; his liability flows fromsimple non-performance (that is, from his breach of promise that the statementwas true).What was warranted?[124] In the plaintiff's second amended statement of claim dated 11 September 2023the plaintiff identifies the matters it says that Fujitsu warranted as a consequence ofcl 18.2(c). It is first appropriate to clearly identify the specific matters that Fujitsuwarranted were true.9 Oscar Chess Ltd v Williams [1957] 1 All ER 325 at 327–328.10 Singh v Rutherford [2012] NZHC 380, [2012] NZAR 323 at [32] (footnote excluded).11 Turner v Anquetil [1953] NZLR 952 at 957.12 John Cartwright Misrepresentation, Mistake and Non-disclosure (5th ed, Sweet & Maxwell,London, 2019) at [8–23] (footnotes excluded).[125] In paragraph [42] of the second amended statement of claim the Departmentrelies on statements in Fujitsu's response to the Department's call for registrations ofinterest dated 29 November 2017. Whilst I accept that this response has relevance inunderstanding any representations subsequently made in the response to the RFP andin the negotiations, I do not accept that Fujitsu's response to the RoI can be the basisof the claim for breach of warranty by itself. It can be said that the RoI responseinvolved statements made during negotiations. But the RoI response document is notreferred to in the contractual warranty clause, so any statements referred to in it werenot agreed to be elevated to warranties in the same way as the response to the RFP. Igenerally consider that the RFP response can be taken to have superseded the RoIresponse.[126] In paragraph [43]–[46] of the second amended statement of claim theDepartment identifies the relevant statements that arise from Fujitsu's RFP response.Not all of those were pressed by the Department as part of its case. Distilling what Iunderstand to be the Department's argument I accept that the following representationswere made and formed part of the warranties:(a) That the Quintiq solution would meet all of the Department'sfunctionality requirements "out of the box", and that no customisationwould be required.(b) That all but two of the more detailed requirements that the Departmenthad specified were fully met, and the two that were fully met were notpartially met in the manner specified in the response.(c) That the Quintiq solution would integrate seamlessly or well with theDepartment's existing SAP payroll system.(d) That the approximate cost of implementation of stage one would be$716,000.[127] In paragraphs [47]–[48] of the second amended statement of claim theDepartment further alleges that further matters were represented in the negotiationsand formed part of the warranties:(a) That the Quintiq solution leveraged Quintiq's out of the box capabilitieswithout any need for customisation, although some configuration mightbe required.(b) That Quintiq's out of the box capabilities to meet particularrequirements were accurately shown in the product demonstrations.[128] As indicated at [34]–[35] above an important feature of the RFP response whenit was sent was that it was subject to significant qualifications — that it was not anoffer capable of acceptance, it was based on what the Department had disclosed, andthat the pricing was only indicative. The response stated that all such matters wouldneed to be confirmed before binding contractual arrangements were entered. But theexistence of the warranty essentially provided such confirmation on the entry of thebinding contractual arrangements. The entry of the contract on 12 December 2018also elevated Fujitsu's prior representations to warranties. This means that thequalifications were no longer relied upon. More particularly, by giving warrantiesFujitsu must be taken to have confirmed what it had earlier represented as part of thefirm contractual commitments it was giving. So the qualifications and the RFPresponse were no longer material. I consider this to be of significance.[129] It is also important that the price estimate in the RFP response was only inrelation to the Department's core functionality requirements to be addressed as stageone — otherwise referred to as the minimum viable product. But the no customisationand out of the box representations were not limited to the stage one product.13[130] I do not accept that the assumption that the scope of the payroll interface forstage one was limited to "pay code data" is as important as argued by Fujitsu andDassault however. This still proposed that the information would be transferred toSAP to allow the appropriate pay calculations to be undertaken within SAP. I accept13 This was the subject to a specific change by Dassault – see [256]–[257].that the full functionality in functional requirement number 11, and user case 404would not be required at stage one, and were not within this price. But therepresentations were that this additional functionality could be provided with onlysome configuration arising from particular matters, as referred to at [26]–[28] above.[131] There are other particular aspects of these warranties that require furtheranalysis, however.Customisation v configuration[132] There was considerable evidence, including expert evidence related to themeaning of the expressions "customisation" and "configuration", and accordinglywhat Fujitsu was representing and warranting by the use of this language.[133] I accept the views of Mr Peach and Dr Tan that customisation is a term thatnormally refers to changes made at the source computer code of a particular computerprogramme. This is to be contrasted with changes that are not to the source code.These other changes can be referred to as "configuration" which generallycontemplate changes to the input of data to perform intended functions. Dr Tan gaveexamples of configuration in the present context as inputting a list of prison sites whererostering was to be performed, and specifying the rules for access by individuals in anorganisation to the rostering system.[134] But these expressions are not mutually exclusive. As Dr Tan said in evidencethe distinction between them breaks down when the terms are used in particularcontexts. Here, for example, Dassault had a specific computer language — calledQUILL — which was used to make both configuration and customisation changes tothe product. The use of QUILL could be thought to involve changing coding in theprogramme, and accordingly customisation in a technical sense. In the end thedifferent expressions signify matters of degree. Customisation captures a situationwhere changes are made to software that are reasonably significant. Configurationrefers to more minor changes more in the nature of adjustments, usually not involvingthe underlying code. In this particular context I conclude that the representation thatno customisation was required, but there may be a need for some configuration inparticular situations, was a statement that no significant changes would need to bemade to Quintiq's standard functionality for it to work in the way that the Departmentwanted. There would be a need for changes in relation to more particular matters, butsuch changes would be in the nature of adjustments, rather than any significantchanges to its standard functionality.[135] The representation about the lack of customisation is emphasised in theexecutive summary, but is also referred to in relation to the detailed requirements. TheDepartment's first non-functional requirement was that standard functionality shouldbe used in the roster, integrate with SAP, and "avoid unnecessary customisation".Fujitsu represented in its response that it fully met this requirement and that "theproposed approach is to use the standard out-of-the-box Quintiq application. Nocustomisations have been identified or proposed." It also referred to "configuration"in the response in a manner consistent with the need to make adjustments in somecircumstances. For example functional requirement 11 quoted at [26] above, reiteratedthat adjustments — that is, configuration — would be required for some matters ofdetail only. Similar reference in relation to other functional requirements (such as 13and 14) involved similar use of the term configuration.Out of the box[136] The representation that the Quintiq solution could meet the Department'srequirements "out of the box" is closely associated and needs to be read together withthe no customisation representation. I accept Dr Tan's evidence that it is an expressionthat is commonly used in a technical context to describe software that can perform adesired function without modification of the underlying computer code, orconfiguration that alters that functionality. But it has more than only a technicalmeaning when used in this context. The expression is drawing an analogy withconsumer activity when a consumer is able to purchase an item of equipment, take ithome and plug it in so that it can be operated without the need for technical assistance.It conveys a similar meaning as "off-the-shelf" which was the expression used inFujitsu's RoI response. Here, however, the software is not a simple consumer product,so the expression is being used as an analogy. It is also not precise language, andwhether something is accurately warranted as "out of the box" is a matter of degree.Moreover the use of expression here is connected with the other statements —especially that no customisation was required.[137] Software of the nature that the Department was acquiring is not a simpleconsumer product. It would obviously require technical work to install it and make itfunction in the Department's systems. So it is not literally "out of the box". In thecontext of the other statements I conclude that Fujitsu's representation was that theDepartment's needs could be met by Quintiq's standard functionality, and thatsubstantial work would not be required to change that functionality for theserequirements to be met.[138] The representation concerning the ability for the Department's requirements tobe met by the Quintiq solution "out of the box" was primarily made in the executivesummary of the RFP response. But it was also repeated in the context of the moredetailed requirements. For example, in relation to functional requirement four (whichrequired scheduling priorities to be able to be set by the Department, at a site, or at aunit) Fujitsu said that "out of the box Quintiq Shift/Task Assignment Optimisation canbe utilised to prioritise shift and task assignment to the Department's priorities". Inthe response to non-functional requirement eight Fujitsu referred to use of the"standard out of the box Quintiq application without customisation". These moreparticular representations repeated and reiterated what was stated in the executivesummary.Seamless integration[139] The representations made about implementation with SAP involve a series ofstatements in the RFP response. In the executive summary Fujitsu said that Quintiqwould "integrate well with SAP". It also said it would be "delivered with a troublefree implementation". An earlier heading — "Seamless implementation that meets therequired timeframe" — referred to the Department's tight timeframe, stating it couldbe met.[140] The more detailed requirements also used such language. Functionalrequirements 18 and 19 specified a requirement that the solution "seamlesslyintegrate" with the existing SAP payroll systems in particular respects. Both weremandatory requirements. Fujitsu stated that it fully met both. Fujitsu further stated ithad extensive experience at this, and made other positive statements including:The Quintiq solution can integrate with SAP payroll, SAP leave managementsystem and training systems in order to update staff leave schedules,completed training hours etc.[141] When the general statements and the more particular statements are readtogether, I conclude that Fujitsu was representing that the Quintiq solution couldintegrate easily with the Department's existing SAP system in a way that met all theDepartment's requirements.[142] I do not accept the argument, to the extent that it was pursued, that therepresentations made by Fujitsu that Quintiq would integrate seamlessly with SAPwere limited to a representation about the ease with which the two systems wouldwork together once they were installed, and that they were not about the complexityof installation. They were not representations that the systems would operateseamlessly once installed. The representations related to "implementation". Thisimplementation was represented to be "seamless" and "trouble free". It may be thatthe representation that Quintiq would "integrate well with SAP" could by itself beunderstood to be a representation solely about how they would operate together onceinstalled, but the other representations were not.The price[143] It is appropriate to address the significance that can be placed on Fujitsu's priceestimate of $716,000 in the RFP response.[144] The Department did not contend that this price estimate could be taken as acontractual commitment. It was only an estimate provided with the RFP response.But the Department claimed at paragraph [46] of the amended statement of claim thatthe estimate was consistent with the representations that the requirements could be metout of the box, with no customisation, and that the Quintiq solution could beconfigured with relative ease.[145] I see the price estimate, when repeated in the context of the warranties whenthe contracts were entered in December 2018, to be significant. That is because theestimate provided further information that allowed the other representations to beunderstood. The representations that the Quintiq solution could seamlessly integratewith SAP, and provide what the Department required as an out of the box solutionwithout customisation and only some configuration, was reflected by the priceestimate. The estimate was based on a number of hours of work that would berequired. So the overall package of representations, and the nature of the costs andexpense that would be involved, was reflected in the price estimate that was thenelevated to a warranty. The price estimate accordingly reiterated the meaning of theother representations. For these reasons I accept the Department's arguments.Other matters[146] The RFP response had other representations of relevance. For example itstated:Fujitsu has been working with Quintiq in New Zealand for over five years ona number of engagements and as a result we have built up significant localknowledge and expertise that will support the proposed Solution and itssuccessful deployment for the Department.[147] But it transpires that this was only the second time that Fujitsu and Dassaulthad worked together on a RFP response, and they had not worked together beyondsales activities for a rostering project. They had never worked together to implementQuintiq in New Zealand.[148] I do not focus on this kind of representation, however, as I do not apprehend itis as material as the other representations that were the focus of the claim. I acceptthat this representation was untrue for these reasons, however.Representations during negotiations[149] In terms of the representations made during the negotiations I accept that thesealso reiterated the representations made in the RFP response.[150] The written answers to the list of clarification questions provided on 3 Apriland then 30 August 2018 effectively repeated the representations that no customisationwas required, although some configuration would be involved. The productdemonstrations provided by Dassault, as Fujitsu's sub-contractor, on 7 March and then20–21 August demonstrated how the Quintiq product would work in the Department'senvironment. I accept the demonstrations conveyed that Quintiq's standard out of thebox functionality addressed the Department's requirements for rostering. Not all thefunctionality that the Department required was shown in these demonstrations, but thefunctionality that was shown reiterated that the standard Quintiq functionality was ableto do what the Department needed, and in a user friendly way. Moreover, if there wasother functionality that Quintiq could not do, which was not addressed in thedemonstrations, then it would be necessary for that to have been raised given theoverall impression that the demonstrations conveyed. In the context of what had beenrepresented in the RFP response, and otherwise, the product demonstrations involveda reiteration of the capability of the standard functionality of the Quintiq solution toprovide what the Department needed as the RFP response had represented.Warranties qualified[151] Fujitsu argued that any representations made in the RFP response werequalified by the events that occurred after it was provided and that the claim for breachof warranty could not proceed on the basis of the RFP response alone.[152] I do not consider that this argument is open as a matter of interpretation of theMSA. Clause 18.2(c) addresses the subsequent negotiations in two material ways.First, in the first four lines it refers to an express written amendment to the Proposalas a defined exception. The RFP response was defined to be part of the Proposal. Thatexpress exception did not apply to the RFP response. So the parties turned their mindsto, and agreed not to create any exception to the representations contained in what theyhave defined as the Proposal. Secondly, the clause addresses any such changes by thewords "and has not changed in a materially adverse way" and that the warrantycontinued through the life of the agreement under cl 18.3(b). So if anything hadhappened between the RFP response and the execution of the agreement in December2018 that altered what was represented, the clause regulated the position — Fujitsuwarranted that any such developments did not involve materially adverse changes, andthe representations continued to be true. Fujitsu's argument that the subsequentdevelopments showed that the RFP representations were materially qualified isaccordingly in direct conflict with the warranties. Moreover, any waiver relevant tothe contractual promises would have needed to have been in writing under cl 31 of theMSA.14[153] These interpretation points can be further illustrated by Fujitsu's argument onthe facts on this issue. Fujitsu can say that by the time of the execution of the contractsin December 2018 it had become apparent that integration with SAP was significantlymore complex than initially expected, and that it could no longer be seen as seamlessor easy. This became apparent from the work during SOW23. I accept that this is soas a matter of fact, at least to some degree. But Fujitsu nevertheless warranted thatintegration with SAP was easily achievable in the way represented, that that positionhad not changed in a materially adverse way since the RFP response, and that thiscontinued to be true. The risk that integration was not as easy as the parties hadinitially thought was accordingly a risk taken by Fujitsu. I agree that it is odd that aparty would be warranting something it knows may not be true, but that is thecontractual bargain that Fujitsu struck.[154] In any event, in terms of the factual position concerning SAP integration,whilst I accept that it was known by the Department that SAP integration was goingto be more complicated than Fujitsu's representations had suggested, the extent of thatcomplexity still ultimately turned out to be far greater than the Department foresawwhen it entered the contract in December. The degree to which the Departmentunderstood there was greater complexity, and accordingly greater expense, arisingfrom more work being required on SAP integration when installing Quintiq is reflectedin the change to the Department's budget. Ms Stewart increased the provision in herbudget to $1 million, which was higher than the $716,000 estimate that Fujitsu hadprovided for the project. This reflected the anticipated additional expense involved.But as it transpired the complexity was far greater than this, as reflected in the muchgreater 2019 price estimates.14 Even apart from that clause the standards for a waiver would not have been met – see Lykov v Wei[2015] NZHC 3009 at [36]–[40]; Zhou v Watson [2023] NZHC 2328 at [174].Were the representations untrue?[155] The next question is whether what Fujitsu represented was untrue, andaccordingly a breach of warranty. I address each of the categories of warranty I haveidentified as most material.Out of the box with no customisation[156] The representation that the Quintiq solution provided an out of the box solutionmeeting the Department's requirements without customisation was untrue. As I havefound above, once detailed work commenced it was identified that very substantialwork would be required to adapt the Quintiq solution so that it could address themanner in which the Department undertook rostering, even in relation to the corefunctionality within stage one. The Department's rostering needs could not be met byQuintiq's standard functionality. The changes that would have been needed weresubstantial, and went beyond configuration of only some elements. Substantialadaptions of the Quintiq product were required. These were in the nature ofcustomisation. Two examples can be referred to, although the problems were morewidespread:(a) The Department's business practices involved individual prisonshaving separate working units, employees working between prisonsand units and sometimes regions, with different officers responsible forthe roster in such situations. These complexities were beyond Quintiq'sstandard functionality. Considerable work was required on Quintiq toaddress them. Quintiq's standard "tree" hierarchy was not sufficient todeal with this business structure and operating requirements. WhilstFujitsu/Dassault had attempted to defer the problems arising from thisby introducing the one to one mapping assumption in SOW27, theunderlying problem always existed and led to considerable complexity,and accordingly considerable potential expense would have beeninvolved to adapt Quintiq to deal with it. I also note that it is notSOW27 that legally regulated this issue, but cl 18.2(c) of the MSA.(b) As Ms Gayner had contemplated, the time and attendance informationthat Quintiq needed to send to SAP caused considerable problems.These derived from the nature of the complexity of the Department'sworking practices, and the kind of information that would have to betransferred to SAP to keep correct records of information allowingcalculations of what employees should be paid. Further issues such asthe "mondayisation" of leave, the fact that officers worked 24 hours aday and accordingly across days where higher entitlements arose, thehigher duties allowances, swapping shifts, and other such complexitieswere beyond Quintiq's standard functionality. That was also so whenrecords were required to be kept for auditing purposes.[157] The evidence did not dwell on each of these issues, and explore in detail thetechnical reasons why the Quintiq standard functionality could not meet theDepartment's requirements without extensive work. But the fact that it did requiresuch extensive work is evidenced by the 2019 significant price estimates. Indeed itwas not seriously argued that Quintiq's standard/out of the box functionality couldmeet the Department's needs with only some configuration.SAP integration[158] The representations made in relation to SAP integration — by way of summarythat integration would be easy, or seamless — were also untrue.[159] SAP integration became a major issue, and a major cause of potential cost ifthe Quintiq solution had proceeded. What was represented about the ability of Quintiqto integrate with SAP was untrue. Considerable work was required in order to makethe two software systems operate together. In part that was due to complexities on theDepartment's side, and the way that SAP had been used in the Department's payrollsystems. But the fact that complications arose on the Department's side does not assistFujitsu. The point of the warranty is that it passed the risk of uncertainty about thecomplexity of integration to Fujitsu. Fujitsu warranted it would be easy, or seamless.The fact that this was not so establishes a liability whether or not that complexity canbe attributed to the Department's side. The representation was that Quintiq couldseamlessly do the job.[160] In any event the complexities of integration were not limited to problems onthe Department's side. The Quintiq standard functionality was not able to sendinformation to SAP to enable employees to be correctly paid. Its standard functionalitycould not even address the complexities with the way the Department conductedbusiness for rostering purposes, let alone for sending information to SAP for correctpayment. Quintiq would need to have been developed to address these issues. Theseissues are inherently linked to the matters referred to at [156](a) above. For exampleQuintiq needed to address officers who would work a shift that began on a normalworking day but moved into a public holiday at midnight. It also needed to deal with"mondayisation" where the higher pay rates for a public holiday falling on a weekendwould apply on a Monday. And it also had to deal with higher duties allowances andsimilar complexities. It was not able to address such rostering issues with its standardfunctionality, let alone transfer information to SAP for that purpose. As Ms Gaynerhad anticipated time and attendance became a major problem. Moreover the reportingand auditing requirements that form part of SAP integration also became a significantissue as there were limitations on what Quintiq was able to do by way of savinginformation, or providing reports with standard functionality.[161] Again it was not seriously argued that SAP integration was easy, trouble free,or seamless. The true position was that it was a matter of considerable complexity.Price[162] As indicated a separate claim for breach of warranty is not advanced by theprice estimate alone, but it is alleged that the price estimate explained what was meantby the other representations (such as what was meant by the solution being out of thebox, without requiring customisation, and with seamless implementation).[163] The evidence establishes that the amount of work required to implementQuintiq for stage one, including integration with SAP, was well beyond the levels ofwork contemplated by the $716,000 price estimate. As the 2019 price estimates showit was multiple times more expensive. That expense reflecting the hours of additionalwork that was required to implement Quintiq in the Department's systems, and theextent that Quintiq's standard functionality would have to be changed to meet theDepartment's core requirements. I accept that the evidence about price, whencompared with the original estimate, establishes that the representations about theQuintiq solution were untrue and a breach of warranty arises. In many ways thechanged price estimates speak for themselves.[164] During the trial there was considerable focus on the fact that Dassault's revisedpricing estimate of October 2018, which Dassault provided to Fujitsu, was not in turnprovided to the Department. The Department did not plead that this failure gave riseto a separate breach of warranty that the representations contained in the RFP responsehad "not changed in a materially adverse way". For that reason I do not address thisas a separate basis for a claim for breach of warranty.Mr Driessen's analysis[165] Dassault relied on the expert evidence provided by Mr Driessen to argue thatwhat was said in the RFP response was not incorrect. His view was that the RFPresponse, read as a whole, accurately described the functionality of the Quintiqsolution and its ability to meet the Department's stated requirements. He also said theresponses to each of the requirements accurately described the capabilities of theQuintiq solution. Dassault says that Mr Driessen's analysis was detailed in relation toeach of the requirements of the RFP, and it emphasises that his evidence was notchallenged in reply evidence or in cross-examination.[166] It is correct that not all of Mr Driessen's analysis was extensively challengedby way of cross-examination. But I do not accept Mr Driessen's opinions on thecorrectness of the representations made about Quintiq. Neither do I accept that hisevidence establishes that the Quintiq solution did in fact meet the Department'srequirements.[167] A central aspect of Mr Driessen's analysis was that the Department'srequirements as set out in the RFP were very high level and inadequate. For examplehe referred to the business rules which had been addressed by one line descriptions inthe RFP which he said gave "almost no information". His evidence was that in his 33years in the information technology industry he had never seen this level ofunpreparedness by a procurer, including from large government departments. Hisview was that Fujitsu's RFP response was itself necessarily high level and could onlyrespond to the level of information provided in the RFP.[168] I do not accept this starting point for his analysis. If the information theDepartment had provided was seriously deficient in this respect, and criticalinformation was absent, then Fujitsu needed to say so. It would need to say it wasunable to give clear indications of Quintiq's ability to meet the requirements, and theprice for doing so, without more information if that was the position. Indeed if theRFP was as uniquely deficient as Mr Driessen said in the context of his long career itwould be very important for the response to be qualified in this way, especially in thecontext of the MSA. But as I have said above both the initial RFP response, and thenthe statements and conduct after the response did not include qualifications of thatkind. The RFP response did say that what Fujitsu had stated would need to beconfirmed before binding agreements were entered given that the Department'sdescription of its requirements were only high level. But the representations in theRFP response were then repeated rather than qualified in the period leading up to theentry of the contracts, and were then elevated into warranties. This involved areiteration of the representations that the Quintiq solution could provide what theDepartment needed to meet its core requirements, that it could be implementedseamlessly, in accordance with the Department's timeframes, with minimumconfiguration, and for the price estimated for stage one.[169] The difficulty with Mr Driessen's approach is further reflected in his evidencethat it was reasonable for Fujitsu to have made assumptions when responding to theRFP. For example Mr Driessen gave evidence that it was reasonable to assume thatthe Department's organisational structure would fit into the standard "tree" structureused in Quintiq's Workforce Planner, and that it was also reasonable to assume that asite was a prison, and that a prison would be represented by a working unit or planningunit. These matters ultimately caused significant problems, and changes were neededto the Quintiq product to enable it to work effectively for the Department's systems. Ido not accept Mr Driessen's evidence that it was reasonable to make these assumptionswithout them being clearly conveyed to the Department. More particularly the RFPresponse and subsequent statements about Quintiq needed to be qualified by clearcommunications to indicate that the ability of Quintiq/Workforce Planner to work forthe Department would depend on the complexities of Dassault's business systems oncethey were provided. I note that cl 5.3(a) of the MSA Fujitsu was obliged to includeany assumptions or dependencies with any proposal to do work under the MSA.[170] Mr Driessen's perspective is also influenced by his senior role in Dassault,which resulted in him advancing Dassault's arguments as part of his opinions. Awitness is not disqualified from giving expert evidence because they are notindependent.15 But lack of independence can influence the value of the evidence. Iconsider that this is so for Mr Driessen's evidence which was coloured by Dassault'sperspective. For example, when addressing whether the representations that Quintiqcould seamlessly integrate with the Department's SAP systems he expressed the viewthat this did not mean that seamless integration would be achieved withoutconfiguration, and he noted that customisation would not be required. In expressingthese views he adopted the definition of customisation involving modification to thebase layer software only. That involved applying the internal marketing policy aboutthe use of the term "customisation" that did not correspond to its reasonably wellestablished normal meaning. The policy itself was misleading.[171] Expert evidence about the capabilities of the Quintiq solution could have beensubstantially helpful to the Court. More particularly, expert evidence that explainedwhy the Quintiq solution did not work well with the Department's existing systems,and why the substantial work involved in the revised 2019 price estimates wasnecessary would have assisted. That evidence could have been provided from thosein Mr Driessen's team that worked on the project. Mr Driessen's evidence did not dothis, however. His opinions about what was represented about the capabilities of theQuintiq solution were based on an assumption about the Department's existingsystems and requirements. But the importance of the representations, and thewarranties, depend on what they said about the ability of Quintiq to meet theDepartment's requirements. So the value of the expert opinion is lost by theassumption made.15 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZCA 67, [2016] 2 NZLR 750at [99].[172] It is clear there was a gap between what Quintiq could do with its standardfunctionality and the Department's requirements. There is no dispute that this was asignificant gap, as reflected by the increased costs estimates in 2019. Given thatMr Driessen's evidence did not address the gap, so that the true position was betterexplained, and for the further reasons outlined above, I do not accept his evidence.Conclusion[173] For the above reason I uphold the Department's claims that the warrantiesgiven by Fujitsu were breached as the representations were untrue.Department's other claims against Fujitsu[174] The Department also advances claims that other terms of the MSA werebreached as part of its claim for breach of contract under the third cause of action, aswell as claims for misrepresentation under s 35 of the Contract and Commercial LawAct 2017 (the CCLA) as its first cause of action, and for misleading and deceptiveconduct under the Fair Trading Act 1986 (the FTA) as its second cause of action.Given that I have upheld its claim for breach of contractual warranties I can addressthese claims more briefly.Additional contractual obligations[175] First, Fujitsu had additional relevant contractual obligations under the MSAwhich the Department contends it breached. In addition to the warranty obligationsunder cls 18.2 and 18.3 the Department contends Fujitsu breached of cls 3.4(a) and(g), 3.17, 3.4(l) and (o), 5.5 and 7.1. Of these additional clauses three seem to me tohave significance.[176] Under cl 3.4 Fujitsu promised to perform services in a particular manner. Thisincluded:[Fujitsu] agrees to provide the Services from the Commencement Date andwill:(l) act at all times on a no-surprises basis;[177] Further under cl 5.5 Fujitsu promised:[Fujitsu] shall ensure that all its responses to the Department's requests orquestions concerning Projects are fair, reasonable and, to the best of itsknowledge having made diligent enquiries, accurate. [Fujitsu] will not declineto perform any Project unless the performance of such Project is not feasible,nor seek to impose any unreasonable conditions or charges.[178] Finally under cl 7.1 Fujitsu and the Department agreed to the following mutualobligation:Each party shall keep the other party fully informed of all important issuesassociated with a Project and, in particular, each Party shall notify the other ofany Project Issue of which it becomes aware which may affect achievementof any Project Milestone as soon as that party becomes aware of the ProjectIssue. The relationship between the parties is based on a 'no surprises'approach where the parties shall disclose all potential issues as soon as theybecome aware of them to ensure that potential issues can be addressed andresolved as early as possible. Where such problems arise [Fujitsu] shallforward proposals for consideration by the Department as to the manner inwhich the problems will be resolved ("Mitigation Proposal").[179] I accept that these additional clauses set out above were breached givenFujitsu's misrepresentations. So a breach of warranty under cl 18.3 also encompasseda breach of the obligation in cl 5.5 that the information Fujitsu provided for the projectwas fair, reasonable and accurate. I do not apprehend that this additional breachadvances the Department's case, however.[180] The obligation to act on a no surprises basis arising from cls 3.4 and 7.1 mayadd an additional dimension, however. In giving particulars of its allegations theDepartment relied on Fujitsu's failure to pass on the pricing update provided byDassault to Fujitsu in October 2018.16 I accept that Fujitsu failed to pass on the pricingestimate and the reasons for it, and that the terms were breached accordingly.[181] As to the other terms of the MSA relied upon by the Department it is possiblethat there may be some argument in this respect, but I make no findings of breach as Iam not satisfied it materially adds to the findings that are relevant to determining theDepartment's claims.16 Response to Notice by Defendant Requiring Further Particulars to Second Amended Statement ofClaim dated 16 September 2023, para [7](c)(iii).Misrepresentation[182] The Department's first cause of action is for misrepresentation under theCCLA. As the Department acknowledges in its closing submissions this claim coversmuch of the same territory as its claim for breach of contractual warranties, and I canagain address the position relatively briefly.[183] I accept that there were misrepresentations within the meaning of s 35 of theCCLA. The representations arising from the RFP response, and made in thenegotiations, involved representations of fact that the Quintiq solution had theattributes to meet the Department's requirements in the manner stated. There werealso implicit representations that Fujitsu had sufficient information about theDepartment's business and operations to make the representations about the ability ofthe Quintiq software to so meet the requirements. I essentially repeat the findings Ihave made above in relation to the claim for breach of contractual warranties.[184] I also accept that the Department relied on the representations when enteringthe MSA, and that the misrepresentations induced the entry of this contract. It is self-evident that what was said in the RFP response, and during the negotiations, was reliedupon by the Department. It was following a reasonably extensive RFP process fordeciding who it would enter a contract with, and the representations made were ofsignificance for its decision to enter that contract. This was the very purpose of theRFP process, including Fujitsu's RFP response, and the Department's evaluation of it.I also accept that the representations in the RFP process, including Fujitsu's RFPresponse and the negotiations were relied on by the Department in deciding to enterSOW23 on 3 September 2018, and that the misrepresentations induced the entry ofthis contract.[185] There is one exception to my findings in relation to reliance. By the time thecontracts were entered in December 2018, including the contract that brought thisproject within the terms of the MSA, the Department knew that the integration of theQuintiq solution with SAP would not be as easy, or as seamless as Fujitsu hadrepresented in the RFP response and otherwise. It accordingly did not rely on Fujitsu'srepresentations in that respect when entering the December contracts. The Departmentwas not aware of this before it entered SOW23 with Fujitsu, however, and it relied onthis aspect of the representations when it did so. I also accept Ms Stewart's evidencethat, whilst the Department was aware that integration was more complex than Fujitsuhad represented, the Department nevertheless relied on Fujitsu's representations thatthe Quintiq solution would otherwise be out of the box, that no customisation wasrequired, and configuration would only be required in particular areas. So there wasstill reliance on the remainder of Fujitsu's representations about the ability of Quintiq'sstandard functionality to meet the Department's rostering needs. Moreover, even inthe context of integration with SAP the issues became far greater than the Departmentunderstood in December 2018. This was because of the limitations of the Quintiqsolution, which in turn made integration far more complicated.[186] Notwithstanding these findings there is nevertheless a significant difficultywith upholding the Department's claim in the alternative under the CCLA. That arisesbecause the MSA has detailed contractual machinery for dealing with pre-contractualrepresentations which regulate the implications of any misrepresentations. Section 34of the CCLA provides that whenever a contract makes express provision formisrepresentation the CCLA applies subject to the contract. Section 50 of the CCLAalso provides that when a contract contains a provision purporting to prevent a courtfrom enquiring or determining the question of whether there was a misrepresentationthe court is not so prevented unless it considers that it is fair and reasonable that theprovisions should be conclusive having regard to the matters specified in subs (3).17Fujitsu pleaded that there were such terms in the MSA in its statement of defence dated29 September 2023. It relied on cls 28, 21(2)(b) and 18(2)(c) of the MSA. I acceptthat cl 28, which is an entire agreement clause, is relevant to this question. But as theDepartment pointed out in its closing submissions cl 11 of the MSA is also important.It provides:All representations or warranties (whether statutory, express, implied orotherwise) of [Fujitsu] which are not expressly set out in this agreement oragreed under this Agreement are excluded to the fullest extent permitted bylaw.17 Subsection (3) states that the matters are all the circumstances of the case, including––(a) thesubject matter and value of the transaction; and (b) the respective bargaining strengths of theparties; and (c) whether any party was represented or advised by a lawyer at the time of thenegotiations or at any other relevant time.[187] It is unclear why Fujitsu did not expressly rely on this clause of the contract aswell. Moreover Fujitsu did not refer to this affirmative defence at all in its closingsubmissions.[188] Had it been of significance to the findings of liability this would have been anissue of significance. On the face of it this clause, read together with the entireagreement clause, particularly in the context of the machinery elsewhere spelled outin detail in the MSA, creates a situation where the parties have decided upon howclaims for misrepresentation are to be dealt with in their contract. That machineryincludes other important clauses, such as the cap on total aggregate liability under theMSA of $5 million in clause 21.2(a). It seems to me that the contractual terms coverthe field, and that an alternative claim for misrepresentation under the CCLA couldnot arise. I also consider that, on the face of it, it is fair and reasonable to apply thiscontractual machinery in accordance with s 50 to the extent that this provision needsto be applied.[189] I do not accept the Department's argument that the fact that the RFP responsehas been expressly included as a warranty in the MSA means that the claims formisrepresentation based on the RFP response were not excluded under cl 11. The factthat the RFP response was brought within the warranties given in cl 18 means that aclaim for a breach of warranty can be brought. Clause 11 means that this claim mustbe advanced as a claim for breach of warranty under the terms of the agreement, butcannot be advanced otherwise. The effect of the clause is that there is no alternativeclaim under the CCLA that could arise if the claim for contractual warranty wasunsuccessful.[190] Nevertheless, given that I have upheld the claims for breach of contractualwarranty I do not uphold any alternative claims for misrepresentation under theCCLA, and neither do I dismiss those claims because the contractual terms precludealternative liability under the CCLA for misrepresentation.Fair Trading Act[191] The Department's second alternative cause of action is for liability under s 9of the FTA on the basis that Fujitsu engaged in conduct that was misleading ordeceptive or likely to mislead or deceive whilst in trade.[192] There is no dispute that Fujitsu was in trade. Further, and for the reasonsoutlined above, I accept that Fujitsu's conduct involved misleading and deceptiveconduct while in trade given the misrepresentations it made. That is so whether theapproach applied by the Supreme Court in Red Eagle Corporation Ltd v Ellis,18 or theCourt of Appeal in AMP Finance NZ Ltd v Heaven19 is applied.[193] I also accept that the defendant suffered loss or damage by the conduct as theDepartment was actually misled and there is a nexus between the losses claimed —the contractual expenditure — and the misleading and deceptive conduct. I willelaborate on that more fully below.[194] Again Fujitsu relies, as an affirmative defence, on s 5D of the FTA in itsstatement of defence. This provision permits contracting out of liability under the FTAif the prerequisites in that section are satisfied. I set the section out more fully below.Once again Fujitsu relies on cls 18.2(c), 21(2)(b) and 28 of the MSA but not cl 11. Inote there is a reference to an entire agreement clause in s 5D(2)(a) of the FTA.[195] As with the claim under the CCLA I consider that there would be difficultiesfor the Department with this claim if, for any reason, it's claim for breach ofcontractual warranties had failed. The machinery of the MSA deals in detail with thesame kind of subject matter as the FTA and provides remedies for the Department inrelation to such conduct. In terms of s 5D of the FTA I consider that it would be fairand reasonable for Fujitsu's liability to be determined in accordance with the agreedmachinery set out in the MSA. In the present case, and having regard to theconsiderations in subs (4), that machinery provides for a fair and just result.18 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492.19 AMP Finance NZ Ltd v Heaven (1997) 8 TCLR 144.[196] But given that the claim under the FTA is only pursued in the alternative, andthat the Department's claim for breach of contractual warranty has succeeded, I do notneed to uphold the Department's second cause of action, and neither do I dismiss itbecause of the application of s 5D of the FTA.Criticisms of the Department[197] Before leaving the Department's claims against Fujitsu I briefly address thearguments advanced by both Fujitsu and Dassault which generally criticised theDepartment. Both contended that the Department embarked upon this projectsignificantly underprepared (as illustrated by the lack of documented businessprocesses) and then handled the project in a highly inefficient way (illustrated by itsfailure to contract a SAP provider, and the number of personnel who attended theimplementation meetings). There may be validity in some of these criticisms, but Imake no findings about them. As I remarked during the hearing, it is not the Court'sfunction to conduct a commission of inquiry into this matter, but to address the legalelements of the pleaded causes of action and defences. An inefficient party is stillentitled to pursue causes of action for breach of warranty, misrepresentation, andbreach of the FTA. It is possible that criticisms of this kind could affect issues suchas reliance, or the level of loss, and to the extent that they do I have taken them intoaccount. But it does not mean that the warranties and representations were not untrue,or that the conduct was not misleading.Loss[198] I now address the Department's claims for damages. They are in four maincategories:(a) $1,836,010.65, being the amount that it paid to Fujitsu for the licencefor the Quintiq software (including maintenance and service fees).(b) $476,242.07 that the Department paid Fujitsu for the work underSOW27.(c) $161,305.99 that the Department paid to Fujitsu for the work underSOW23.(d) An amount of $1,925,294, being expenditure that the Departmentcontends is other wasted expenditure it paid to third parties on theproject.[199] There is an important initial point to make about the Department's claims. TheDepartment has elected to recover its losses based on the wasted expenditure incurredon the project. Theoretically it might have been able to recover damages on anexpectation basis — that is recovering damages on the basis that would have put theDepartment in the position it would have been in had Fujitsu performed the contractby providing a rostering solution as warranted for the estimated cost. A party isnevertheless entitled to elect to recover wasted expenditure, rather than damages basedon the loss of a bargain.20 The Department has exercised its rights under the MSA to"de-scope" the work of this project (effectively terminating the contract for theproject), and then recover its wasted expenditure. I address the disputes in relation tothe claims against that background.[200] Fujitsu admitted that the expenditure in paragraphs [198](a)–(c) above relatingto the licence fees and the two SOWs was incurred by the Department. But it advancedtwo arguments that it was not liable for these amounts, namely:(a) That it did not assume any responsibility for the licence fee, which wasa cost that did not flow from the contract under which Fujitsu providedthe warranties.(b) That cl 21.2(b) of the MSA excluded liability for all these categories ofloss.20 Anglia Television Ltd v Reed [1972] 1 QB 60 (CA); Soteria Insurance Ltd v IBM United KingdomLtd [2022] EWCA Civ 440; James Edelman (ed), McGregor on Damages (21st ed, Sweet &Maxwell, London, 2021) at [4–025].Assumption of responsibility[201] Fujitsu argued that contractual liability must be linked to the breach of theparticular contractual obligation, here the breach of warranty. It submitted that it mustbe objectively ascertained that the defendant would bear the risk of that loss. It saysthat reasonable foresight of the loss is not the sole determinant of whetherconsequential losses are recoverable for breach of contract, relying on the decision ofthe House of Lords in Transfield Shipping Inc v Mercator Shipping Inc (theArchilleas),21 the dicta of Cooke P in McElroy Milne v Commercial Electronics Ltd,22and the views of Professor David McLaughlan.23 It argues, in particular, that Fujitsudid not assume liability for the Dassault licence fees as Fujitsu merely operated as aconduit, and that any liability should be for Dassault alone.[202] I do not accept these arguments. It may be that reasonable foresight is not theonly consideration when deciding whether consequential losses are recoverable forbreach of contract. But that issue does not arise in the present case. There could beno clearer example of losses that would be contemplated to be the responsibility of adefendant than payments made directly to that defendant for performance of theparticular contractual obligation that the defendant has breached. These are notindirect or consequential losses suffered by the Department. They are direct paymentsmade to Fujitsu under the particular contract in question. Fujitsu's liability for breachof warranty must include the monies the Department paid to Fujitsu under that contractwhen it has been legitimately terminated because matters that were warranted werefalse.[203] Fujitsu's argument may be a little stronger in relation to the costs paid to thirdparties. I deal with that expenditure more fully below. But if those costs are attributedto the contractual project, and that the project was legitimately terminated as aconsequence of Fujitsu's breach of warranty, then the plaintiff is entitled to recoverthe costs as wasted expenditure. It is not an indirect or consequential loss which raisesthe more difficult questions. It is direct wasted expenditure under the contract.21 Transfield Shipping Inc v Mercator Shipping Inc (the Archilleas) [2008] UKHL 48, [2009] 1 AC61.22 McElroy Milne v Commercial Electronics Ltd [1993] 1 NZLR 39 (CA).23 David McLaughlan Some Damages Dilemmas in Private Law (2021) 52 VUWLR 875 at 878.[204] It is true that Fujitsu can be seen as being a conduit in relation to the licencefee and associated expenditure. But the way that the contractual arrangementsbetween the three parties was established meant that Fujitsu acted as Dassault's agentin selling the licence, it entered the contract so selling the licence, and it billed theDepartment for this cost. The Department then paid Fujitsu accordingly. That was thecontractual bargain that Fujitsu and the Department struck. That contract was not theMSA under which the warranties which were breached were given. But all thecontracts were inextricably interlinked and the varied MSA expressly stated that theDepartment was relying on the representations in purchasing the licence. Fujitsu alsocollected its margin on the overall project under the contracts. I see no basis to excludethis amount from Fujitsu's liability for breach of warranty.Exclusion clause[205] Fujitsu relies on cl 21.2(b) to exclude its liability for all the wasted expenditureclaimed. This provides:Neither party will be liable for any indirect, consequential, special, oreconomic loss, or loss of profits or savings, or business revenue. This clause21.2(b) shall be subject to clause 21.2(c):[206] Exclusion clauses are interpreted in terms of normal contractual interpretationprinciples, although the contention that the parties intended to limit the remedies forimportant contractual obligations would usually require clear contractual wording.24There is some debate in the authorities on the dividing line between direct, and indirect(or consequential) losses.25 But irrespective of that debate, the exact dividing linebetween direct and indirect losses, and the test to be applied, I do not see that thisclause assists Fujitsu. In the present case the Department's claim is not close to thedividing line.[207] The claim by the Department against Fujitsu is not a claim for indirect,consequential, special, economic loss, loss of profits or savings, or business revenue.24 See Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract inNew Zealand (7th ed, Lexis Nexis, Wellington, 2022) at [7.3.1]; Dorchester Finance Ltd v Deliotte[2012] NZCA 226 at [32]–[33].25 See Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA) at [140]–[154]; Oceania Furniture Ltd v Debonaire Products Ltd HC Wellington CIV-2008-485-1701, 27August 2009, at [120]; Haines v Herd [2019] NZHC 342.It is a claim to recover the direct expenditure that the Department paid to Fujitsu andthird parties under this contract. It is simply direct expenditure that the plaintiffincurred by making payments to the defendant and third parties. It is recoverable aswasted expenditure incurred under a contractual project that has been terminated forbreach of warranty.SOW23 costs[208] There is additional complexity with the Department's claim in relation to thecontractual expenditure under SOW23. This was expenditure incurred during thethree month period before this project was expressly brought within the terms of theMSA. There are three reasons why this expenditure is nevertheless recoverable underthe Department's breach of warranty claims:(a) First, cl 5.7 of the MSA provided that whenever a statement of workwas agreed between the parties it was deemed to form part of the MSA.That was so here. That was the very reason why this contract was called"SOW23" — it was the 23rd item of work that had been agreed betweenthe Department and Fujitsu after they had entered the MSA. This wasfurther reflected in the terms of the variation agreement which theparties entered on 12 December 2018. The effective date of thevariation agreement was 1 September 2018, a few days before SOW23was entered. As a consequence SOW23 formed part of the contract theparties had agreed upon under the MSA for this project, and in whichthe warranties were provided.(b) Secondly, as a matter of law, a party can recover pre-contractualexpenditure in a claim for breach of warranty if they establish that theexpenditure was incurred for the contract.26 I accept that this was sohere.(c) Finally, the Department would be able to recover the expenditureincurred for SOW23 as a consequence of its claims for26 See authorities at fn 20 above.misrepresentation under the CCLA or for the breach of the FTA. Thoseclaims could be pursued if, for any reason, the expenditure underSOW23 was treated as being incurred before the entry of the contractin December 2018 and accordingly not attributable to the expenditurearising from the contract to which the warranties relate.Third party costs[209] The Department makes a reasonably substantial claim for expenditureassociated with monies paid to third parties which it says was also wasted expenditureon this project. The amount claimed was $1,925,294.00, although in closing it reducedits claim to $1,810,352.07.[210] The evidence relied upon by the Department to establish this head of loss waslimited. In Ms Stewart's evidence she said that these third party costs were attributableto the project and provided a spreadsheet identifying the calculation of these amounts.She also put in evidence all the relevant invoices. Under cross-examination it becameapparent that the amount claimed as identified in the spreadsheet did not correspondto the amount of the invoices in a number of cases.[211] In closing submissions the Department provided a revised spreadsheet in theform of a pivot table, and it addressed the inconsistency between Ms Stewart'sspreadsheet and the copies of the invoices by adopting the lower amount in any suchcase.[212] Both Fujitsu and Dassault objected to the revised spreadsheet provided withclosing submissions on the basis the Department was seeking to introduce newevidence to remedy its case. In those circumstances I granted leave for Fujitsu andDassault to file supplementary submissions addressed to the spreadsheet.[213] The disputes in relation to the Department's claims in this respect involve threeissues which I will address in turn:(a) Whether the new spreadsheet involves the attempted admission of newevidence that should be disallowed.(b) Whether the Department has proved that the items of expenditure arerecoverable as wasted expenditure in the amounts claimed.(c) Whether these amounts should be disallowed on the basis that therelevant work of the third parties could be reused by the Department toits advantage.Admissibility of new spreadsheet[214] Fujitsu and Dassault objected to the new spreadsheet provided in closingsubmissions on the basis that it involved new evidence which had not been properlyreceived by the Court.[215] To the extent that the new spreadsheet introduces information that had notalready been received in evidence by the Court I accept these submissions. AsDassault argued the principles are clear. Rule 9.5 of the High Court Rules 2016relevantly provides:9.5 Consequences of incorporating document in common bundle(1) Each document contained in the common bundle is, unless the courtotherwise directs, to be considered—(a) to be admissible;(4) A document in the common bundle is automatically received intoevidence (subject to the resolution of any objection to admissibility)when a witness refers to it in evidence or when counsel refers to it insubmissions (made otherwise than in a closing address).(5) A document in the common bundle may not be received in evidenceexcept under subclause (4).(6) The court may direct that this rule or any part of it is not to apply to aparticular document.[216] The document here was provided by the Department only in closingsubmissions. It would appear that it was also added to the common bundle during thelast week of trial, although I was unaware that that had occurred. In any event r 9.5(4)is plain that such a document is only received in evidence when it is referred to by awitness, or in submissions other than closing submissions. This document was notreferred to by any witness and was only referred to in closing submissions. To theextent that it contains any new evidence that evidence is inadmissible. No applicationto introduce new evidence after the closure of the case was made under s 98 of theEvidence Act 2005.[217] I also accept Dassault's argument that it would appear that this new spreadsheetcontains information that was not referred to in Ms Stewart's evidence or in the earlierspreadsheet she had provided. As a pivot table it contains additional information inelectronic format underneath each of the entries. Having said that, I also acceptDassault's point that the additional information it so includes has not been explainedin any way that would make it helpful.[218] I have not considered any information behind each of the entries in this tablein addressing the Department's claims in those circumstances. The underlyinginformation does not appear to be of assistance, and in any event it is inadmissible asevidence and could only be treated as a submission.Has the Department proved the claimed loss?[219] The second point is whether the Department has proved that the expenditure inquestion as a recoverable head of loss, and the amount of that loss.[220] Ms Stewart explained that she managed the overall project and she kept arecord of all the costs incurred on the project in spreadsheet form. She then producedan adapted form of that spreadsheet in evidence. She said that the amount of$1,925,294 represented the Department's payments to progress Fujitsu's rosteringsolution. She described four of the entries in a little more detail, and then alsoproduced the relevant invoices.[221] Under cross-examination the difficulty was revealed. The amounts reflectedin her spreadsheet did not correspond to the invoices for some of these claims. Sheinitially suggested that this might be due to an accruals approach that had beenfollowed by the SAP software that generated the spreadsheet she produced. There alsoappeared to be a suggestion that some of the entries may have involved someprovisioning for anticipated costs. But the position was not satisfactorily explained.[222] It also emerged in cross-examination that one of the reasons for thediscrepancies may have been that not all expenditure covered by invoices rendered byparticular third parties had been attributed to the project. The Department had a widerprogramme of work associated with reforming the way it undertook rostering — thiswas the broader Making Shifts Work project. When individual contractors did workon that wider project it was not all attributable to the installation of the Fujitsu/Dassaultsoftware. Only some of the work covered by such invoices were allocated to thisproject. Ms Stewart explained this in relation to one of the contractors, Ms JackieClark. The original claim was for $75,249.93 (which was revised to $36,152.03 inclosing) whereas her relevant invoices totalled $146,910.59.[223] The Department suggested that it would be open to the Court to discount someof its claims if the Court continued to have concerns about them. That approach waseffectively supported by Fujitsu and Dassault, who also suggested the claims neededto be discounted. But Dassault also argued that the claims should be disallowed intheir entirety for these reasons.[224] I do not accept that disallowing the claims in their entirety is the appropriateapproach. In addition, whilst there is some attraction in the discounting approach, Iconsider it more appropriate to focus on the individual costs that are claimed.[225] I accept that the Department has provided evidence meeting its burden to showthat particular costs were incurred as part of the project. I do not accept, however, thatit has provided any evidence of the apportionment it has apparently engaged in. Wherethere has been some apportionment applied to determine which part of the expenditureis attributable to this project no evidence was provided that explains theapportionment. Ms Stewart was not able to do so. I simply do not know, for example,whether it is accurate to say that $36,152.03 of the $146,910.59 billed by Ms Clark isproperly attributable to this project. It may be that the apportionment occurred whenthe fees were first rendered, or it was apportioned when the invoices were paid, butthe Court has no evidence of this. The Department sought to support the apportioningin closing submissions, but in the absence of evidence there is a difficulty in the Courtassessing what should be allowed in relation to costs that the Department says requireapportionment.[226] I consider the Court should disallow, in their entirety, all claims where therehas been unexplained apportionment. But with respect to the claims where there is noapportionment issue I consider the claims should be allowed. Ms Stewart gaveevidence that these costs were incurred as part of the project, and her evidence in thatrespect was not challenged. Some of the persons who rendered the invoices also latergave evidence and were available to be questioned in relation to Ms Stewart'sevidence. There is the calculation issue arising from the difference between theinvoices and the spreadsheet, but that is adequately addressed by the Departmentclaiming the lower of the two amounts in all such cases.[227] That approach means that the following claims are disallowed in their entirety:(a) Ms Jackie Clark — amount claimed $36,152.03 (amount invoiced$146,910.59).(b) Lisa Calder — amount claimed $110,396.42 (amount invoiced$129,647.46).(c) Rick Stewart — amount claimed $10,618.67 (amount invoiced$197,971.84).(d) Bryce Newman — amount claimed $29,177.07 (amount invoiced$197,173.33).[228] The following amounts are recoverable on this basis:(a) Deliotte for SAP architecture — $258,516.79.(b) Deloitte charges for Ms Stewart herself — $265,497.85.(c) Rowena Humphrey — $171,334.40.(d) Raj Kant — $248,548.35.(e) Gilli Bates — $100,833.42.(f) Andrew Hood — $193,532.24.(g) Darren Lily — $61,361.07.(h) Oxygen Business — $102,699.52.[229] There is then a category of claims for costs that are not supported by invoices,but which are said to be supported by timesheets. These are said to relate to internalstaff at the Department based on what employees have recorded for their time. Theinternal time of employees can be included in a claim based on wasted expenditure,but the position is different from third parties who have rendered invoices which havebeen paid by the Department. There is some authority for the proposition that the timeof managers/employees is not recoverable because the relevant salaries would havebeen incurred in any event.27 That approach fails to take into account the opportunitycost of those employees failing to engage in activities contributing to the costs of theenterprise. As a matter of principle there is a cost to the claiming party. This can becalculated on an internal charge out rate that recovers the cost of capital of theenterprise. Such a rate covers salary costs and overheads.28 It may be more difficultto calculate the relevant amount for a government department, but a reasonableanalysis can still be put forward. The Court has allowed such claims simply byassessing whether the amount claimed is reasonable, and that may be appropriate.29But if a party fails to provide evidence to show how the cost of internal managementor employee time is reasonably calculated the claims have been disallowed.30[230] Here Ms Stewart simply said that these were internal staff costs, but gave noevidence about how these costs were arrived at. More evidence would be required tosupport a claim for the cost of internal employees. I accordingly decline to make anaward associated with these costs for a similar reason as I declined the externalexpenditure where apportionment issues arose — I do not have any evidence to27 Admiral Management Services Ltd v Para-Protect Europe Ltd [2002] EWHC 233 (Ch), [2002] 1WLR 2722; Carisbrooke Shipping CV5 v Bird Port Ltd [2005] EWHC 1974 (Comm), [2005] 2Lloyd's Rep 626 at [159].28 Nationwide Building Society v Dunlop Haywards [2009] EWHC 254 (Comm), [2010] 1 WLR 258at [18].29 Detection Services v Pickering [2020] NZHC 2705 at [16]–[25].30 Tate & Lyle Food and Distribution v Greater London Council [1981] 3 All ER 716, [1982] 1 WLR149 at 152.consider to assess to correctness or reasonableness of the figure claimed (which totalssome $72,314.90).[231] For these reasons, and subject to the next issue, I allow the Department's claimin the amount of $1,402,323.64. Given that the above approach has required me toengage in some calculations I reserve leave for all parties to apply to amend this figurefor errors.Work reusable[232] The final issue raised by Fujitsu and Dassault is that much of the cost relatedto work that the Department was able to utilise when the Department appointed areplacement supplier to address its rostering solution. Both allege that the claimsshould be disallowed, or discounted for that reason. This would include workundertaken by Fujitsu/Dassault. I do not accept that submission for two interrelatedreasons.[233] First I accept the Department's submissions on the legal principles that applyto this issue. If a defendant is going to resist an award in relation to expenditure thatthe plaintiff has incurred under the contract the defendant has a burden to show thatsuch an award puts the plaintiff in a better position than it would have been had thecontract been performed.31 I consider that the relevant principles were correctlysummarised by O'Farrell J in Royal Devon and Exeter NHS Foundation Trust v AtosIT Services UK Ltd. She said:32It is open to [a defendant] to defeat the claim for wasted expenditure byestablishing that the expenditure exceeded any benefit to be gained from theContract.An award of damages for breach of contract should not put the claimant in abetter position than he would have been in had the contract been performed:C&P Haulage v Middleton [1983] 1 WLR 1461 per Ackner LJ at pp. 1467–1468.If the defendant can establish that the claimant's expenditure would have beenwasted in any event, because it made a "bad bargain", the wasted expenditure31 Soteria Insurance Ltd v IBM United Kingdom Ltd, above n 20.32 Royal Devon and Exeter NHS Foundation Trust v Atos IT Services UK Ltd [2017] EWHC 2197(TCC) at [65]–[68]. This rebuttable presumption was applied by the Court of Appeal in Ti-LeafProductions Ltd v Baikie (2001) 7 NZBLC 103, 464.will not be recoverable as damages: [Omak Maritime Ltd v MamolaChallenger Shipping Co [2010] EWHC 2062] per Teare J at paras. [44] to[47]; [Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC111] per Leggatt J at para. [186].The burden of proof lies on the defendant to show that the expenditure wouldnot have been recouped and would have been wasted in any event: CCC Films(London) Ltd v Impact Quadrant Films Ltd [1985] QB 16 per Hutchison J atp. 40; Omak (above) per Teare J at para. [47]; Yam Seng (above) per Leggatt Jat para. [187]. In the case of a contract where no financial gains wereexpected, the recoupment in question would not be payments but alternativegains, such as use or enjoyment. To establish a bad bargain in such a case, thedefendant would have to show that the value of the asset or other performancepromised was less than the expenditure incurred by the claimant.[234] The same approach applies to an argument that the expenditure was not wasted,and would have been incurred irrespective of the contract. A defendant does not defeatthe plaintiff's claim simply by demonstrating that some of the things the plaintiff paidfor under the failed contract could have been used in another way by the plaintiff.Neither would a plaintiff be defeated because it derives some other benefit from thefailed contract, such as by ascertaining how it could go about the task of contractingsuch matters better in the future. In order to defeat a claim a defendant needs toestablish that the plaintiff is profiting from the claim — that is that the award puts theplaintiff in a better position than it would have been had the contract been performed.[235] Here the Department seeks to recover wasted expenditure in relation to acontract that Fujitsu warranted would cost approximately $716,000 where the trueposition, on Fujitsu's assessment in 2019, was that the true cost was more than $5million.33 In those circumstances Fujitsu has not proved the award of wastedexpenditure puts the Department in a better position than it would have been had thecontract been performed.[236] The second related point is a factual one. In its closing submissions Dassaultreferred to some of the core documentation that had been prepared as part of thisproject, and contending that this core documentation would have been available to usefor any alternative supplier of a rostering system. It referred to a number ofdocuments, and areas of work which would be reused with a replacement supplier. Totake but one example Dassault refers to a workshop held on 24 August 2018 to develop33 I acknowledge that the additional modules were part of the revised pricing.business rules relating to the additional hours and allowances (and time off in lieu)arising from public holidays. Dassault contends that this time was included in theproject, and points out that Ms Stewart accepted in cross-examination that suchbusiness rules would have been needed for any rostering solution, not just the oneprovided by Quintiq.[237] The difficulty with this, as a matter of fact, is that the Court is unable to reachconclusions on the extent of any ability to reuse such work in any subsequent projecton the basis of this evidence alone. The Department may have been in a better positionto deal with the project with a subsequent provider, but based on this evidence it isunclear how much of the work was reusable, or the extent to which it was still neededfor a new supplier. That is so with all the other categories of documentation, and otherwork that Dassault relies on in closing.[238] This is part of the reason why the burden shifts to the defendant. It needs tosatisfy the Court that making the award would make the plaintiff better off than itwould have been had there been no breach. The defendant does not deprive theplaintiff of an award simply by showing that work under a contract is reusable. AsLeggatt J explained in relation to wasted expenditure in Yam Seng PTE Ltd vInternational Trade Corporation Ltd:34 On the one hand, the general rule that the burden lies on the claimant toprove its case applies to proof of loss just as it does to the other elements ofthe claimant's cause of action. But on the other hand, the attempt to estimatewhat benefit the claimant has lost as a result of the defendant's breach ofcontract or other wrong can sometimes involve considerable uncertainty; andcourts will do the best they can not to allow difficulty of estimation to deprivethe claimant of a remedy, particularly where that difficulty is itself the resultof the defendant's wrongdoing. As Vaughan Williams LJ said in Chaplin vHicks (1911] 2 KB 786 at 792: "the fact that damages cannot be assessed withcertainty does not relieve the wrong-doer of the necessity of paying damagesfor his breach of contract." Accordingly the court will attempt so far as itreasonably can to assess the claimant's loss even where precise calculation isimpossible. The court is aided in this task by what may be called the principleof reasonable assumptions – namely, that it is fair to resolve uncertaintiesabout what would have happened but for the defendant's wrongdoing bymaking reasonable assumptions which err if anything on the side of generosity34 Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB), [2013] 1 AllE.R. (Commissioner) 1321 at [188]–[189], approved in Soteria Insurance Ltd v IBM UnitedKingdom Ltd, above n 20, at [45]. See also Carr v Gallaway Cook Allan [2016] NZHC 2065 at[75].to the claimant where it is the defendant's wrongdoing which has created thoseuncertainties....It seems to me that the (rebuttable) presumption that the claimant would haverecouped expenditure incurred in reliance on the defendant's performance ofthe contract is an illustration of this approach. Parties in normal circumstancescontract and incur expenditure in pursuance of their contract in the expectationof making a profit. Where money has been spent in that expectation but thedefendant's breach of contract has prevented that expectation from being putto the test, it is fair to assume that the claimant would at least have recoupedits expenditure had the contract been performed unless and to the extent thatthe defendant can prove otherwise.[239] That is also so when a contract is entered to further the public benefit — themore efficient operation of the prison system — rather than a financial profit. Forthese reasons I do not accept Fujitsu and Dassault's arguments.Conclusion[240] For the above reasons I uphold the plaintiff's claims against the defendant forbreach of contractual warranty for the following amounts:(a) The licence fee costs in the amount of $1,836,010.65.(b) $476,242.07 for the amount paid for SOW27.(c) $161,305.99 for the amount paid under SOW23.(d) $1,402,323.50 in relation to third party costs.[241] This involves a total award of $3,875,882.21 I reserve leave in relation to thirdparty costs for the reasons explained in paragraph [231] above. I also have anuncertainty about any awards of interest on the amounts awarded and leave is alsoreserved on the issue of interest.Fujitsu's claims against Dassault[242] Fujitsu alleges that, if it is liable to the Department then Dassault is liable to it,or it is required to contribute to the damages awarded to the Department. Its claimsfall into three main categories:(a) That Dassault is liable to it, or is liable to contribute to its liability tothe Department under the Competition and Consumer Act 2010 (theCCA), a statute of the Commonwealth of Australia35 (the first andsecond causes of action).(b) That Dassault is liable to it, or is liable to contribute to its liability tothe Department under the FTA (the third, fourth and fifth causes ofaction).(c) That Dassault is liable to it for misrepresentation under the CCLA (theseventh cause of action).[243] These claims were set out in Fujitsu's fifth amended statement of claim dated22 September 2023 filed with leave during the course of the trial.Does the CCA apply?[244] Fujitsu advances claims under the CCA as well as the FTA, being theequivalent New Zealand legislation. Unlike the FTA there are no provisions in theCCA that allow parties to contract out of liability in accordance with its provisions,and as I address in greater detail below, there are provisions in the contracts betweenFujitsu and Dassault that limit or exclude liability.[245] There is a question over whether the CCA can be applied by the Court to theconduct that is the subject matter of these proceedings. Dassault is an Australiancompany, and some of its conduct which is the subject matter of this proceedingoccurred in Australia, particularly in Victoria. The case can be characterised as a claim35 The CCA consolidates a number of competition and consumer statutes in Australia, including theAustralian Consumer Law, which was first enacted in the Trade Practices Act 1974 (Cth).that includes allegations that misleading conduct took place in Australia affectingpersons in New Zealand. It is also a case, however, where relevant conduct byDassault employees also took place in New Zealand as its employees came toNew Zealand as well — for example, when conducting the demonstrations which arepart of the subject matter of this case.[246] Dassault argues that the CCA cannot be applied in this proceeding. It says thatthe relevant conflicts of law principles effectively exclude its applicability.36 It saysthat the relevant conflict principles are either those of contract, or of tort, and in eithercase the proper law is the law of New Zealand.37 If it is contract it is the proper lawof the contract, and if it is tort it is the country where the most significant elements ofthe relevant tortious conduct occurred.38 Moreover the CCA cannot apply as unders 138 exclusive jurisdiction is conferred on the Federal Court of Australia whichmeans that the New Zealand Court has no jurisdiction.39 In support of its argumentsabout the CCA an expert report on Australian law was received by Mr WarwickRothnie of the Victorian bar.[247] I am not convinced that this issue is to be resolved by choice of law analysis.It is possible that both the FTA and CCA could apply to Dassault's conduct. When anAustralian company engages in conduct partly in Australia, and partly inNew Zealand, there is a prospect of both Australian and New Zealand legislationapplying to that conduct. So it is not a matter of determining which law applies underchoice of law principles. I consider that the answer to the issue concerning theapplicability of the CCA is resolved as a matter of interpretation of that Act, much asit is when the Court interprets New Zealand legislation with apparent extra-territorialeffect.40 This was the approach adopted by the Supreme Court in Brown vNew Zealand Basing Ltd.41 As the authors of The Conflict of Laws in New Zealand36 See Maria Hook and Jack Wass The Conflict of Laws in New Zealand (Lexis Nexis NZ Ltd,Wellington, 2020) at [4.127].37 At [6.88].38 Private International Law (Choice of Law in Tort) Act 2017, s 8(2)(c).39 Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033 at [17]–[19]; FaxtechPty Ltd v ITL Optronics Ltd [2011] FCA 1320 at [18].40 See Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300.41 Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245, especially at [4]–[9].say, such apparent conflict issues can be resolved if foreign statutes are ultimately self-limiting.42[248] The starting point for Fujitsu is promising. The CCA provides:5 Extended application of this Act to conduct outside Australia(1) Each of the following provisions:(c) the Australian Consumer Law (other than Part 5-3);extends to the engaging in conduct outside Australia by:(g) bodies corporate incorporated or carrying on businesswithin Australia;[249] Mr Rothnie explains that a decision of the High Court of Australia is awaitedin Karpik v Princess Cruise Lines Ltd (the Princess Ruby) as to whether there areimplied limitations on the interpretation of this provision, but that full effect has beengiven to its plain meaning to date.43 And in any event part of the conduct subject tothe claims here took place in Australia — for example when Dassault's employeesdrafted and approved the RFP response they did so in Australia.[250] But in my view there is an insurmountable difficulty with Fujitsu's argumentthat this Court should apply the CCA to Dassault's conduct. The CCA provides:138 Conferring jurisdiction on the Federal Court(1) Jurisdiction is conferred on the Federal Court in relation to anymatter arising under this Part or the Australian Consumer Law inrespect of which a civil proceeding has been instituted under thisPart or the Australian Consumer Law.(2) The jurisdiction conferred by subsection (1) on the Federal Courtis exclusive of the jurisdiction of any other court other than:42 Hook and Wass, above n 36, at [4.128]–[4.130].43 See Carnival Plc v Karpik (the Ruby Princess) [2022] FCAFC 149; Karpik v Princess CruiseLines Ltd (the Princess Ruby) [2023] HCA Trans 099 (No s 25 of 2023).(a) the jurisdiction of the Federal Circuit and Family Court ofAustralia (Division 2) under section 138A; and(b) the jurisdiction of the several courts of the States andTerritories under section 138B; and(c) the jurisdiction of the High Court under section 75 of theConstitution.[251] Whilst this provision is no doubt primarily directed to the question of stateand/or federal jurisdiction, it still means what it says. A foreign court has nojurisdiction. None of the exceptions in s 138(2) apply. That is the view that has beentaken in Australia. In Home Ice Cream Pty Ltd v McNabb Technologies LLC theFederal Court went as far as granting an injunction preventing a defendant inAustralian proceedings from commencing separate proceedings in the United Statesabout the same CCA issues. The defendant argued that a choice of law clause in therelevant contract allowed it to do so. The Court did not accept this, saying:44The causes of action [the defendant] seeks to litigate and the remedies it seeks,derived from prosecuting those causes of action, are not available to it in the[United States]. An exclusive jurisdiction clause in an agreement nominatinga foreign jurisdiction does not, as a matter of principle, prevail over statutoryprotective provisions of a valid law of the Commonwealth of Australia. Theonly court which is capable of determining the questions which [thedefendant] seeks to litigate (other than the High Court of Australia inexercising its appellate jurisdiction) is the Federal Court of Australia [252] This decision was only an interlocutory one determined ex-parte, but itillustrates the reach of s 138 as interpreted by the Australian Courts. The effect of theprovision is that nobody can bring proceedings under the CCA in any other Court,including any of the Courts of the States of Australia. The High Court of New Zealandis in no different position from any of the State Courts of the Commonwealth. Onlythe Federal Court of Australia can deal with these claims.[253] For these reasons Fujitsu's claims based on the CCA are dismissed.44 Home Ice Cream Pty Ltd v McNabb Technologies LLC, above n 39, at [19]. See also Faxtech PtyLtd v ITL Optronics Ltd [2011] FCA 1320 at [18].Claims under the FTA[254] Fujitsu also claims that Dassault is liable to it from breach of s 9 the FTA as aconsequence of direct or accessory liability under s 43.[255] I already addressed Dassault's conduct when making the findings in relation tothe Department's claims against Fujitsu. I essentially repeat those findings. I alsoconsider that Dassault breached s 9 in relation to its dealings with Fujitsu. In makingthat finding I focus on three central elements by way of summary:(a) Dassault's responsibility for the misrepresentations in the RFPresponse.(b) Its responsibility for the misrepresentations occurring afterwards,including through the product demonstrations.(c) Its strategy, upon becoming aware that the position had beenmisrepresented, to withhold information so that the gap between whathad been represented and the true position was not revealed.[256] Dassault played a substantial role in either drafting or approving the RFPresponse, especially the sections of the response that dealt with the attributes ofQuintiq's standard functionality and the ability to meet the Department requirements.The capabilities of Quintiq was not something that Fujitsu knew, and it depended onDassault accurately identifying them. Dassault made changes to the executivesummary of the RFP response. On 15 March 2018 Mr Deans sent the followingmarked-up changes he proposed to the executive summary to Fujitsu:SummaryThe Department can be confident that in selecting your existing partnerFujitsu, and our advanced technology partner Quintiq, you will be providedwith a solution that:• Meets all your core functionality out of the box;• Require minimal no customisation and is 'out of the box';• Delivered with a trouble free implementation• Meets your tight timeframe• Integrates well with SAP• A real time In-Memory solution• A flexible agile solution• Meets both todays requirements and any future needs with value adds• A mature product with a strong developments roadmapFujitsu looks forward to further engagement with the Department as youprogress on your selection process for the supply of the "Making Shifts Work"Rostering Solution.[257] Two of these changes are important. First the representation aboutcustomisation was elevated to a statement that none would be required. Secondly, theout of the box representation was no longer limited to core functionality, but was madein relation to the solution more generally. Both changes were significant as theymaterially added to the represented qualities of Quintiq's standard functionality. Bothstatements were untrue, however. Fujitsu did not know that these statements wereuntrue. It had never been involved in a project involving Quintiq before. I accept thatDassault's express and implied representations were made to Fujitsu, that the conductwas capable of misleading a person in Fujitsu's position, that it was reasonable forFujitsu to be misled, and that it was misled.[258] As I have found above the statements in the RFP response were, however,subject to the overriding qualification that the position would need to be confirmedbefore legally binding agreements were entered. But that does not relieve Dassault ofliability for two reasons:(a) First, a party cannot engage in misleading conduct in dealings leadingup to the point of sale, although there will be circumstances wherecustomers can be expected to make further enquiries before sale torectify misunderstandings.45 I do not consider that any suchcircumstances arise here.45 Trust Bank Auckland Ltd v ASB Bank Ltd [1989] 3 NZLR 385 (CA) at 389; Taco Company ofAustralia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 197–199; Allied Liquor Merchants Ltd vIndependent Liquor (NZ) Ltd (1989) 3 TCLR 328 (HC) at 336; Tasman Insulation New ZealandLtd v Knauf Insulation Ltd [2015] NZCA 602, (2015) 14 TCLR 220 at 256–257.(b) In any event, and most importantly, the misrepresentations werereiterated in the subsequent conduct by Dassault leading up to the entryof the contracts in December 2018.[259] As to the second point, as I have already held the product demonstrations byDassault had the effect of further misrepresenting the attributes of Quintiq's standardfunctionality, and reiterated what was in the RFP response. The productdemonstrations had involved Dassault altering the Quintiq software when showingwhat it could do. As I have already noted that this came as a surprise to Mr Kathiresanbecause it affected the whole basis upon which the parties were proceeding.46 I acceptthat the product demonstrations, occurring before and after the RFP response,conveyed the same false information about Quintiq's standard functionality and itsability to meet the Department's requirements without substantial alteration for theprice estimated. This was also reiterated in the answers formulated to theDepartment's formal questions for which Dassault had responsibility that I dealt withat [47]–[48] and [60]–[62] above.[260] Further, when Ms Gayner later looked more closely back at the RFP responseshe became aware of the misrepresentations. After she raised the problem with otherDassault personnel, including Mr Deans, a decision was made to manage the issue byseeking to reduce the scope of the first phase of the project, and not to reveal to Fujitsuor the Department the gap between Quintiq's standard functionality and theDepartment's requirements. Fujitsu was unaware of the gap, and unaware ofDassault's strategy.[261] I accept that Dassault effectively qualified its misrepresentations arising in theRFP response to the extent that it made Fujitsu aware that there were greatercomplexities with the project than the RFP response had portrayed. This is reflectedin the statements accompanying the updated price estimate provided to Fujitsu on17 October 2018. But in this Dassault had stated that the increase was due toadditional features that the Department had sought, and the increase for the resultingwork led to a price estimate of $1,825.811.20. That increase included the additionalmodules that the Department were seeking. So this information did not correct the46 At [44] above.full extent of the untrue statements made about the standard functionality of theQuintiq solution. Indeed the formulation of this document was part of Dassault'sstrategy to manage its earlier representations. For these reasons I do not consider thiscase to be analogous to that of Anchorage Capital Master Offshore Ltd v Sparkes assubmitted by Dassault.47[262] For these reasons I conclude that Dassault engaged in misleading conduct.Fujitsu reasonably relied on Dassault providing it with accurate information aboutQuintiq. Fujitsu did so by agreeing to be the prime contractor with the Department.The misleading conduct was an operative and effective cause of Fujitsu's loss. Thisarose most directly through Fujitsu providing the contractual warranties notappreciating that they were untrue. It was reasonable for Fujitsu to rely on Dassaultin this way, and Fujitsu has suffered loss as a consequence, namely the liability it nowfaces to the Department.[263] I also accept that such FTA liability could arise under s 43 as accessory liability.This liability can arise on the basis that Dassault's misleading conduct misled theDepartment, and loss has resulted to Fujitsu on the broad approach to causationcontemplated by s 43.48 But I do not consider that potential accessory liability adds toFujitsu's claims. Liability on an accessory basis does not improve the direct liabilitythat arises as a consequence of the breach of s 9.[264] Any liability depends, however, on the application of s 5D of the FTA giventhe extensive exclusion and limitation of liability clauses in the contracts betweenFujitsu and Dassault. I address this more fully below.Liability under the CCLA[265] Fujitsu's sixth cause of action against Dassault is for misrepresentation underthe CCLA.47 Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88.48 Red Eagle Corporation v Ellis, above n 18, at [29]; Body Corporate 202254 v Taylor [2009] 2NZLR 17 (CA) at [31].[266] Given my findings above there is a factual basis for finding that such liabilityarises. But s 34 of the CCLA provides:34 Remedy provided in contractIf a contract expressly provides for a remedy for misrepresentation,repudiation, or breach of contract, or makes express provision for anyof the other matters to which sections 35 to 49 relate, those sectionshave effect subject to that provision.[267] In addition s 50 provides:50 Statement, promise, or undertaking during negotiations(1) This section applies if a contract, or any other document, containsa provision purporting to prevent a court from inquiring into ordetermining the question of—(a) whether a statement, promise, or undertaking was made orgiven, either in words or by conduct, in connection with orin the course of negotiations leading to the making of thecontract; or(b) whether, if it was so made or given, it constituted arepresentation or a term of the contract; or(c) whether, if it was a representation, it was relied on.(2) The court is not, in any proceeding in relation to the contract,prevented by the provision from inquiring into and determiningany question referred to in subsection (1) unless the courtconsiders that it is fair and reasonable that the provision shouldbe conclusive between the parties, having regard to the mattersspecified in subsection (3).(3) The matters are all the circumstances of the case, including—(a) the subject matter and value of the transaction; and(b) the respective bargaining strengths of the parties; and(c) whether any party was represented or advised by a lawyerat the time of the negotiations or at any other relevant time.[268] The provisions effectively allow parties to contract out of liability under theCCLA if they make provision for misrepresentation in the manner contemplated bys 34. A question arises in the present case whether the contractual provisions betweenFujitsu and Dassault operate in this way, or whether those provisions are of a kindcontemplated by s 50. In each case there is a question whether the rights under thecontract are additional to those under the legislation, or whether they preclude theparty from the remedies available under it. This is ultimately a question ofinterpretation of the contract.49[269] The primary contract between Fujitsu and Dassault is the Teaming Agreementdated 1 March 2018 and signed by the parties on 13 and 15 March. This defined thisproject as part of the teaming activities covered by the agreement. Clause 2.2provided:If requested, Dassault Systèmes will at its own discretion submit to Partnerthe necessary technical and business data related to the Dassault SystèmesProducts and Services, including accurate, current, complete and reasonablecost or pricing data, for use in preparation of the Proposal. Dassault Systèmeswarrants that the information it provides to Partner will be true and accurateto the best of its knowledge and belief. Dassault Systems will notify Partnerimmediately if any representation made in any information provided toPartner is incorrect.[270] The agreement also provided:6 Limitation of Liability6.1 Limitation of liability. EXCEPT WITH RESPECT TO EACHPARTY'S CONFIDENTIALITY OBLIGATIONSHEREUNDER, TO THE MAXIMUM EXTENT PERMITTEDBY LAW, NEITHER PARTY'S LIABILITY UNDER THISAGREEMENT SHALL EXCEED AUD 10,000.00 (WHETHERIN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITYIN TORT OR BY STATUTE OR OTHERWISE) FOR ANYCLAIM IN ANY MANNER RELATED TO THE SUBJECTMATTER OF THIS AGREEMENT.6.2 TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NOEVENT SHALL EITHER PARTY BE LIABLE TO THEOTHER PARTY IN CONTRACT, TORT OR OTHERWISE,EVEN IF IT HAS BEEN ADVISED OF THEIR POSSIBLEEXISTENCE, FOR INDIRECT, SPECIAL ORCONSEQUENTIAL LOSSES, LOSS OF REVENUE ORPROFITS, LOSS OF BUSINESS, OPPORTUNITY ORGOODWILL, LOSS OF, DAMAGE TO OR CORRUPTION OFDATA, OR COST OF PROCUREMENT OF SUBSTITUTEGOODS, TECHNOLOGY OR SERVICES.49 Bromley Industries v Martin and Judith Fitzsimons [2009] NZCA 382, (2009) 19 PRNZ 850 (CA)at [35]–[36]; MacIndoe v Mainzeal Group Ltd [1991] 3 NZLR 273 (CA).[271] The agreement further provided:7.8 Entire Understanding. This Agreement sets forth the entireunderstanding between the parties hereto and supersedes all prioragreements, arrangements and communications, whether oral orwritten, with respect to the subject matter hereof. No other agreements,representations, warranties or other matters, whether oral or written,shall be deemed to bind the parties hereto with respect to the subjectmatter hereof. Each party acknowledges that it is entering into thisAgreement solely on the basis of the agreements and representationscontained herein, and for its own purposes and not for the benefit of anythird party.[272] There were a series of other agreements between Fujitsu and Dassault. Inaddition to the Teaming Agreement they also entered a System Integrator AllianceAgreement on 10 March 2018. On the face of its terms it would also regulate thedealings between the parties on this project. But it was a more general contract. TheTeaming Agreement was more specific to the activities on this project. In any event Inote that it has similar terms which would also exclude Dassault's liability.50[273] On 12 December 2018 Fujitsu and Dassault also entered the One Time ResellerAgreement as part of the agreements entered at that time under which Fujitsu sold theQuintiq licence to the Department. It contained the following provisions:13.1. Disclaimer of Warranties. TO THE FULL EXTENT PERMITTED BYAPPLICABLE LAW, ANY EXPRESS WARRANTY SET FORTH INTHE CUSTOMER AGREEMENT IS THE ONLY WARRANTYMADE BY DS WITH RESPECT TO DS OFFERINGS OR ANYSERVICES PROVIDED HEREUNDER BY DS. DS MAKES NOWARRANTY TO DISTRIBUTOR, EXPRESS OR IMPLIED ORARISING BY CUSTOM OR TRADE USAGE, AND SPECIFICALLYMAKES NO WARRANTY OF TITLE, NONINFRINGEMENT,MERCHANTABILITY OR FITNESS FOR ANY PARTICULARPURPOSE.13.2. Limitation of Liability. NOTHWISTANDING ANYTHING TO THECONTRARY, EACH PARTY'S MAXIMUM LIABILITY FORDAMAGES SHALL NOT EXCEED THE LESSER OF (I) THEAMOUNT PAID BY DISTRIBUTOR TO DS DURING THETWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDINGTHE EVENT THAT GAVE RISE TO ANY CLAIM OR (II) ONEHUNDRED THOUSAND EUROS (€ 100.000), AS THE CASE MAYBE.NEITHER PARTY SHALL HAVE ANY LIABILITY FOR INDIRECT,INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES,50 Particularly cls 13, 14 and 15.8.INCLUDING WITHOUT LIMITATION CLAIMS FOR LOST PROFITS,BUSINESS INTERRUPTION AND LOSS OF DATA, THAT IN ANY WAYRELATE TO THIS AGREEMENT, ANY DS OFFERING OR OTHERSERVICES PROVIDED HEREUNDER, WHETHER OR NOT IT HASBEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES ANDNOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSEOF ANY REMEDY.THE LIMITATIONS STATED IN THIS SECTION SHALL APPLYREGARDLESS OF THE FORM OF ACTION, WHETHER THEASSERTED LIABILITY OR DAMAGES ARE BASED ON CONTRACT(INCLUDING, BUT NOT LIMITED TO, BREACH OF WARRANTY),TORT (INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE),STATUTE, OR ANY OTHER LEGAL OR EQUITABLE THEORY.Distributor waives any and all claims related to this Agreement or any DSOfferings or services provided hereunder, for any direct, indirect, incidentalor consequential damages, on any basis, against any DS licensors or any DSGroup Company other than DS.[274] I consider the clauses of the Teaming Agreement is the contract that regulatesthe dealings between the parties leading up to the entry of the contracts in December2018. I also consider that the terms of the Teaming Agreement fall within s 34 of theCCLA and not s 50. That is because cl 2 of the Teaming Agreement specifies thatinformation provided by Dassault to Fujitsu was subject to a warranty, and the clausesotherwise exclude liability for misrepresentation. The contract then limits liability forbreach of warranty to AUD10,000. This is a contractual code for any issues ofmisrepresentation. These clauses do not deal with the matters referred to in s 50(1) ofthe CCLA.[275] The legislation contemplates that the parties can deal with the topic ofmisrepresentation as part of their contractual bargain. That is what has happened here.For these reasons I conclude that Dassault's liability to Fujitsu for misrepresentationunder the CCLA is limited to the notional amount of AUD10,000.Exclusion of FTA liability[276] Whilst I have held that Dassault engaged in conduct contravening s 9 of theFTA giving rise to the potential for orders under s 43, Dassault argues that any liabilityit has is excluded.51 Under s 5C of the FTA there can be no contracting out of the Act.But that is subject to s 5D when the parties are in trade. This provides:5D No contracting out: exception for parties in trade(1) Despite section 5C(1) and (2), if the requirements of subsection (3) aresatisfied, parties to an agreement may include a provision in theiragreement that will, or may (whether directly or indirectly), allow thoseparties to engage in conduct, or to make representations, that wouldotherwise contravene section 9, 12A, 13, or 14(1); and in that case,—(a) the provision is enforceable; and(b) no proceedings may be brought by any party to the agreement foran order under section 43 in relation to such a contravention ofsection 9, 12A, 13, or 14(1).(2) A provision of the kind referred to in subsection (1) includes, forexample,—(a) a clause commonly known as an entire agreement clause:(b) a clause that acknowledges that a party to the agreement does notrely on the representations or other conduct of another party tothe agreement, whether during negotiations prior to theagreement being entered into, or at any subsequent time.(3) The requirements referred to in subsection (1) are that—(a) the agreement is in writing; and(b) the goods, services, or interest in land are both supplied andacquired in trade; and(c) all parties to the agreement—(i) are in trade; and(ii) agree to contract out of section 9, 12A, 13, or 14(1); and(d) it is fair and reasonable that the parties are bound by the provisionin the agreement.(4) If, in any case, a court is required to decide what is fair and reasonablefor the purposes of subsection (3)(d), the court must take account of allthe circumstances of the agreement, including—(a) the subject matter of the agreement; and(b) the value of the goods, services, or interest in land; and(c) the respective bargaining power of the parties, including—51 There is nothing in Fujitsu's argument that Dassault did not plead reliance on s 5D of the FTA. Itpleaded reliance on the clauses of the agreement, which is sufficient.(i) the extent to which a party was able to negotiate the termsof the agreement; and(ii) whether a party was required to either accept or reject theagreement on the terms and conditions presented by theother party; and(d) whether the party seeking to rely on the effectiveness of aprovision of the kind referred to in subsection (1) knew that arepresentation made in connection with the agreement would, butfor that provision, have breached section 12A, 13, or 14(1); and(e) whether all or any of the parties received advice from, or wererepresented by, a lawyer, either at the time of the negotiationsleading to the agreement or at any other relevant time.Interpretation issues[277] There is no dispute that the pre-requisites in s 5D(3)(a)–(c)(i) are satisfied inthis case. But there are interpretation issues concerning the provision that I need toaddress notwithstanding that they were not raised in submissions.[278] First the contractual clauses here include clauses that limit liability to a certainfinancial amount — particularly AUD10,000 in the Teaming Agreement and €100,000(or the amount paid by Fujitsu in the 12 months prior) in the One Time ResellerAgreement. I consider such clauses to be of the kind referred to in s 5D(1). That isbecause they "indirectly" allow a party to engage in contravening conduct without anorder being able to be made under s 43 beyond the stated amounts. They accordinglyexclude the application of the Act beyond such amounts. The extent of the limit wouldthen become one of the circumstances of the agreement to be considered unders 5D(4). This may be important if the limit is low. Here the limits arising under bothagreements are low. They effectively exclude any material application of the FTA.[279] Secondly, it seems to me that it is open for the Court to conclude that it wasfair and reasonable to give effect to the clauses in excluding the FTA for some elementsof a claim that is advanced, but not other elements. The section introduces a broadenquiry, and there is nothing that requires the Court to adopt an all or nothingapproach. The Court is able to conclude that it is fair and reasonable for the clause toexclude the FTA in some, but not in all respects. So the circumstances of theagreement may suggest that some elements of the claim should be protected by theexclusion clause, but there are other elements of the claim where it would not be fairand reasonable to so exclude operation of the FTA because of the circumstances.[280] Thirdly the reference in s 5D(4)(d) to a party knowing that a representationwould, but for the exclusion provided for in the agreement, be a breach of the kindidentified should be interpreted purposively. I do not consider that the party wouldneed to know that particular provisions of the FTA would otherwise be breached, oreven know about FTA liability at all. In my view it is sufficient that a party wouldknow that it has engaged in conduct that makes it potentially legally liable. I considerthe sub-section is focusing on whether misrepresentations, or other misleadingconduct, were knowing ones.[281] I also agree with the view of Gault J in Williams v Tellen Systems NZ (2013)Ltd that the factors identified in s 5D(4) are mandatory relevant considerations.52 Thelisted considerations are not exclusive, however, as the Court is required to take intoaccount "all the circumstances of the agreement" with the listed considerations beinginclusive only.Application of s 5D[282] I consider that the clauses in the Teaming Agreement apparently exclude theoperation of the FTA beyond the limit in the manner contemplated by s 5D(1). I donot accept Fujitsu's arguments that the clauses of the Teaming Agreement areinapplicable because they were only "backward looking", and did not address futuremisrepresentations. Whilst that may be so of cl 7.8 — the entire agreement clause —cl 2.2 regulated the future provision of information, and cls 6.1 and 6.2 then addressesliability for misrepresentation under cl 2.2.[283] The general approach to be applied under s 5D is relatively well settled.Although it is in the context of the similarly worded provision in s 50 of the CCLA,the Supreme Court said in ANZ Bank New Zealand Ltd v Bushline Trustees Ltd that" the task of the court is to assess whether in all the circumstances, it is fair and52 Williams v Tellen Systems NZ (2013) Ltd [2021] NZHC 1199 at [117].reasonable for an entire agreement clause to be conclusive between the parties."53Like the CCLA provision the overall purpose of s 5D is to allow parties to excludeliability in accordance with freedom of contract, whilst recognising that there will besome circumstances where it is unfair or unreasonable for a party to do so. Theprovision acts as a safety valve to ensure that the Act is not excluded when this wouldbe unreasonable or unfair, even when parties are in trade. This may be particularly sowhen the other party was in a situation of greater vulnerability.54 The factors identifiedto in s 5D(4) are indicative of that. But unequal bargaining power is not a pre-requisitefor establishing that it is fair and reasonable that the parties be bound by theirprovision. It is just a mandatory consideration. The only pre-requisites are those ins 5D(3). The fairness and reasonableness of excluding the FTA will still depend onthe overall circumstances. Nevertheless when there are arms-length commercialparties who are in an equally strong bargaining position the Courts have tended to giveeffect to the exclusion of the FTA.55[284] In terms of the factors in s 5D(4) there is nothing in the subject matter or valueof the services under the Teaming Agreement that are of particular note by themselves.These were significant commercial contracts concerning the delivery of servicesentered in the ordinary course of business. The respective bargaining position of theparties was essentially equal, and neither party was required to accept or reject theagreement in any way that suggests unfairness. The parties were both legally advised.So all these factors are generally strongly in favour of Dassault's argument that theagreement should be enforceable in its terms. Of the listed factors in s 5D(4) the onlyfactor in Fujitsu's favour is that set out in s 5D(4)(d). That is because Dassault becameaware that its conduct was misleading, and it took steps to prevent the Department orFujitsu becoming aware of this before the entry of the agreements in December 2018to ensure that the contracts were not put at jeopardy.53 ANZ Bank New Zealand Ltd v Bushline Trustees Ltd [2020] NZSC 71, [2021] 1 NZLR 145 at[132] (footnotes excluded).54 See PAE (New Zealand) Ltd v Brosnahan [2009] NZCA 611, (2009) 12 TCLR 626 at [15];Brownlie v Shotover Mining Ltd CA181/87, 21 February 1992 at 31–32; Sipka Holdings Ltd vMerj Holdings Ltd [2015] NZHC 1980 at [56].55 LSD 2017 Ltd v Landscaping Direct Ltd (In liq) [2022] NZCA 657; Williams v Tellen Systems NZ(2013) Ltd, above n 52.[285] Given these factors I accept Dassault's arguments that it is fair and reasonableto give full effect to the exclusion of liability clauses in relation to Fujitsu's claimsarising out of its liability in relation to the amounts the Department paid to it (totalling$637,548.06) and the amounts the Department paid to third parties (totalling$1,402,323.50). Fujitsu must accept the commercial consequence of it deciding to bethe prime contractor, and accordingly taking the commercial risk of this contract,including the risks reflected with the warranties it elected to give. Those risks includedthe liability of this kind, and there is nothing unfair or unreasonable in Fujitsu beingheld to the bargain that it struck with Dassault in this context. These were arms-lengthcommercial parties, with equal bargaining strength, and there is no reason for theircontract not to regulate such liability.[286] But notwithstanding that this is a very strong starting point in relation to all ofthe liability that Fujitsu faces, I have concluded that it is not fair and reasonable forDassault to exclude the FTA in one respect — that is the liability arising from thelicence fee for Quintiq which forms the Department's claim against Fujitsu. That isbecause there are factors in relation to this potential liability, and Dassault's conduct,that are of particular significance. In particular:(a) The licence fee was paid to Dassault, and it represents a completewindfall. The licence cannot be used by the Department. It is the feeto licence software that has not been installed in the Department'ssystems because the relevant installation contract has been brought toan end as a result of the misrepresentations. In effect the Departmentpurchased a licence for nothing, and there has been a total failure ofconsideration in that sense. I note that in the licence agreement betweenthe Department and Dassault the one situation where the Departmentcould have recovered in a claim directly against Dassault is if theQuintiq product had failed to operate in the Department's systems inaccordance with its documentation, in which case the Department couldterminate the licence and recover what it had paid for it.56 There is an56 Dassault Systèmes Customer Licence and Online Services Agreement dated 12 December 2018,cl 6.1.analogy between that situation, and the present situation as the licenceis unusable.(b) Unlike other payments made to Dassault there was no cost to itassociated with the licence. Unlike the work that it did on this projectwhich involved the time and attendance of its executives under SOW23and 27 the licence fee represents pure profit. The claim is simplyseeking that Dassault repay an amount paid to it for a licence that it isnot using, and a service that it does not provide.(c) The licence fee was Dassault's intended gain from its misleadingconduct. When Dassault appreciated that the RFP response had notaccurately represented what could be provided for the price indicated,it embarked upon the strategy of not disclosing this. A primarymotivation when doing so was to secure the licence payment — inMs Gayner's email to Mr Deans and others on 18 September 2018 shesuggested that Dassault not provide information that would identify thegaps "to ensure we get the licence across the line which has alreadybeen extremely tough to achieve". Dassault knew that its conduct hadbeen misleading — a factor identified in s 5D(4)(d) — and it decidednot to be open about that with either the Department or Fujitsu so thatit could secure this licence fee. It would be wrong as a matter ofprinciple, and inconsistent with the policy of the FTA, to allow Dassaultto succeed with this strategy.(d) Fujitsu is largely an innocent party in relation to the liablemisrepresentations. The untrue statements in the RFP response, and thenegotiations, are attributable to Dassault. Fujitsu is responsible forthem as the prime contractor, and because Dassault was its chosentechnology sub-contractor. I do not accept Dassault's argument that theCourt should exercise its discretion to reduce any recovery because ofFujitsu's own conduct. Any discretionary reduction for such matters isalready addressed by the reduction arising from the operation of theexclusion clauses.57 The only element of misleading conduct Fujitsuengaged in itself arises from its failure to pass on Dassault's increasedprice estimate and the suggested reasons for it. But liability for theclaimed losses arises irrespective of that feature of the case. Fujitsu isliable in this case because of Dassault's conduct, and it is not fair andreasonable that Dassault can avoid liability altogether in thecircumstances.(e) The licence fee payment arose under separate contracts involving theOne Time Reseller Agreement between Dassault and Fujitsu, and theCustomer Licence Agreement between Dassault and the Department.These involve separate considerations to be addressed under s 5D(4).Indeed it may be that it is the One Time Reseller Agreement, and itsexclusions, rather than the Teaming Agreement to which s 5D is appliedin relation to this part of the claim. Fujitsu operated as a conduit forthe licence fee under these agreements. It did not provide any servicesin connection with the licence, and it was simply operating asDassault's one-off reseller. The substantive seller of the licence, andthe party receiving the benefit for the licence payment, was Dassault.[287] Fujitsu advanced an alternative argument that Dassault was directly liable tothe Department under the FTA as a matter of accessory liability, and that there wereno exclusion clauses between the Department and Dassault that would prevent thatrecovery. Whether the Court makes such orders under s 43 is a matter of discretion.58I do not agree to exercising the discretion in this way. That approach would beinconsistent with the contractual framework agreed between the Department andFujitsu, and between Fujitsu and Dassault. It is more appropriate to address thecontractual framework chosen by commercial parties in trade in the mannercontemplated by the FTA, especially s 5D. I do not consider it appropriate to useaccessory liability to make orders under s 43 in a manner that circumvents the need toconfront this statutory framework for assessing liability. But, in any event,approaching the case in that way would lead to a similar outcome in my view. It is57 See Shabor Ltd v Graham [2021] NZCA 448, (2021) 16 TCLR 177.58 At [57].fair and reasonable that Dassault be liable for the amount of the licence fee paid to it,but not more. That is so whether applying the test under s 5D or the discretion unders 43.[288] Nevertheless for the above reasons, in relation to this particular aspect of theclaim — represented by the Department's successful claim for the licence fees in theamount of $1,836,010.65, I conclude that it is not fair and reasonable for the clausesto exclude FTA liability given these circumstances. I conclude that Fujitsu shouldsucceed against Dassault for this amount.[289] That finding is subject to one complication. The amount of the Department'sclaim may well be subject to a margin that Fujitsu included. I do not consider thatFujitsu can succeed against Dassault for the amount of its margin. The amount whichrepresents Dassault's liability to Fujitsu should be limited to the amount that Fujitsupaid to Dassault in relation to the licence the Department acquired. That amount hasnot been clearly identified, and I am unsure whether it is apparent from the evidence.I accordingly reserve leave to the parties to allow them to identify the relevant amountfor which judgment should be entered for Fujitsu against Dassault given the abovefindings.Destruction of documents[290] Fujitsu's final claim against Dassault involves an allegation that Dassaultimproperly destroyed documents associated with the project that it was obliged tokeep.[291] This allegation is based on the terms of yet another agreement entered betweenFujitsu and Dassault dated 21 December 2018 under which Fujitsu appointed Dassaultas its sub-contractor for the intended work on the project.59 Amongst the terms of thecontract were the following obligations:Information to be maintained by the Subcontractor3.5 The Subcontractor shall keep full, true and up to date records anddocumentation relating to the Services provided under this Agreement.59 Sub-contract Agreement for the provision of application to development services.3.6 The Subcontractor will, upon request, provide the Principal with copiesof or access to, proper, accurate, auditable and up-to-date records,technical information (collectively, "records") relating to the Services.For avoidance of doubt, the Subcontractor will not be obliged to provideany records which would be deemed as commercially sensitive (e.g.human resources I staffing records with respect to Personnel providingthe Services, commercial information relating to the actual costs of theServices).[292] This aspect of the claim has two relevant elements. First Fujitsu has arguedthat Dassault's defence should be struck out, or that adverse inferences drawn becauseit has admittedly destroyed contemporaneous records that were relevant to the case inbreach of r 8.3 of the High Court Rules 2016. Secondly Fujitsu alleges there has beena breach of this agreement as the seventh cause of action.[293] As to the first matter, I dealt with Fujitsu's application to strike out Dassault'sdefence prior to trial.60 I essentially repeat the findings in that judgment here.Dassault's destruction of materials was no better explained at trial. It called one furtherwitness, Mr Michael Tohu, the litigation support manager of its New Zealandsolicitors. He had no knowledge of what had happened at Dassault, and no betterexplanation for Dassault's document destruction, and why it was allowed to happen,was provided in evidence. But I have nevertheless not relied on drawing adverseinferences when making the findings above. I am satisfied that most, if not all relevantdocumentation has been retrieved in one way or another. Dassault's discovery hasincluded adverse documents. Some have been relied upon for the purpose of makingfindings. I am not satisfied that there is further information that has been unavailableto the Court because of Dassault's document destruction policies and its failure tocomply with the High Court Rules.[294] As to the seventh cause of action I am not satisfied that a breach of cls 3.5 or3.6 arises. I do not consider that materials such as email exchanges amount todocumentation "relating to the services" under the agreement as contemplated by theseclauses. The term "services" was defined to include services provided under specificstatements of work. So the obligation does not relate to all documentation generally,but rather to documents relating to the particular services under statements of work.It relates to the work that Dassault actually did under SOW27 after the contracts were60 Chief Executive of the Department of Corrections v Fujitsu New Zealand Ltd [2023] NZHC 1900.put into place in December 2018, not internal email exchanges within Dassault in theperiod leading up to the agreement, or even necessarily internal emails occurring afterthe entry of the agreement. The documentation would need to relate in some way tothe actual performance of SOW27. Fujitsu has not proved that any missing documentsare of that character.[295] In any event there has been no loss proved to have arisen from any breach theagreement in this respect. Fujitsu appears to have recognised this in closing bysuggesting the appropriate approach is to award Fujitsu indemnity costs. I amprepared to consider the relevance of this as part of the Court's discretion as to costs,but I am not prepared to award indemnity costs as a remedy for breach of contract, anddo not consider there are any principles that would result in this award.[296] For these reasons this cause of action is dismissed.Conclusion[297] The Department engaged in a major exercise to reform its system for rosteringits officers over the prison network. In its response to the Department's RFP Fujitsurepresented that the Department's rostering needs could be met by the standard, or"out of the box" functionality of a product offered by its sub-contractor, Dassault,called Quintiq. It stated that no customisation to this product would be required,although some configuration would be necessary in relation to particular matters. Itrepresented that the Quintiq solution could provide the Department with what itneeded for core functionality at an estimated price of $716,000 in addition to a licencefee.[298] The Department had only described its rostering needs at a very high levelwhen these representations were made, but Fujitsu did not qualify theserepresentations by suggesting that their accuracy depended on it having moreinformation about the Department's systems. The RFP response was subject to a veryclear qualification, however, that it could not be relied on in any legally binding sense,and that all matters would need to be confirmed before contractual commitments weremade. But in the period following the RFP response and the entry of the contracts inDecember 2018 the representations that Fujitsu and its sub-contractor Dassault hadmade were reiterated, both in product demonstrations, and in other respects, andDassault then insisted that contracts were entered. The only relevant qualification tothe prior representations was that the Department became aware that the position aboutSAP integration was much more complicated than Fujitsu had said.[299] During this period of time Dassault also realised that what had been said in theRFP response was inaccurate, and that there would likely be a gap between theDepartment's requirements and what could be provided with Quintiq's standardfunctionality. But it decided not to correct the misrepresentation as it did not want toput the contract, and particularly the significant licence fee that the Department wouldcommit to on entering the contract, at risk.[300] In any event, Fujitsu elected to provide warranties to the Department when itentered the contracts for the provision of the Quintiq solution in December 2018.Those warranties included a warranty that what had been said in the RFP response wasaccurate and had not changed in any materially adverse way. The qualification in theRFP response was accordingly no longer relevant.[301] What was stated by Fujitsu and Dassault about Quintiq was untrue. Quintiq'sstandard functionality could not meet the Department's needs, and extensive work inthe nature of customisation was required for it to do so. The contract was brought toan end when Fujitsu provided an updated estimate in 2019 that the costs of doing sowere in excess of $5 million — well beyond the $716,000 indicated in the RFPresponse for the core functionality that had induced the entry of the contract.[302] The Department succeeds in its claims for breach of warranty against Fujitsu,and is entitled to recover the amount it paid to Fujitsu for work to implement it, theamount it paid to Fujitsu for the Quintiq licence, and the third party costs it incurredin seeking to implement the contract.[303] Dassault is also potentially liable under the CCLA and FTA to Fujitsu becauseit engaged in misrepresentations and misleading and deceptive conduct. Themisrepresentations in this case originated at Dassault, and it was Dassault that adoptedthe strategy of knowingly misleading the Department and Fujitsu. But the contractualterms between Fujitsu and Dassault protect Dassault from liability. Parties are entitledto contract out of liability under the CCLA and FTA however, and Fujitsu and Dassaultdid so here. But that finding is subject to one qualification. Dassault cannot avoid itsliability under the FTA to repay the licence fee that was charged for the Quintiqproduct. It would be grossly unfair, notwithstanding the exclusion clauses, to allowDassault to keep this fee, and thereby allow it to secure a windfall gain, being the verygain it sought to achieve by knowingly misleading the Department and Fujitsu.[304] For the above reasons I uphold the Department's claim against Fujitsu in theamount of $3,875,882.35 for breach of contractual warranty, and I uphold Fujitsu'sclaim against Dassault under the FTA in relation to the amount of $1,836,010.65 lessthe amount of any margin charged by Fujitsu on that sum. I reserve leave to addressthe question of the margin, the appropriate calculation of the quantum, and in relationto interest. Those matters are to be addressed at the same time as costs if they cannotbe agreed. Given the leave reserved this judgment is an interim judgment inaccordance with r 11.2(a) of the High Court Rules.[305] I will receive memoranda of counsel in relation to costs if these cannot beagreed. It may be that there have been settlement offers that are relevant to costs. Butby way of preliminary indication it seems to me that the starting point is that theDepartment is entitled to recover costs against Fujitsu, and Fujitsu is entitled to recoveragainst Dassault. In relation to Fujitsu's recovery against Dassault, however, it wouldonly be in relation to its claim and not the full costs of trial. Whilst the Departmentwill likely be able to recover costs for the whole trial it may be that only half the trialwas attributable to Fujitsu's claims against Dassault for the purpose of Fujitsu's costsclaim. If the position is not agreed I will see memoranda from the party or partiesseeking costs within 30 working days of release of this judgment, and memoranda inresponse within 10 working days thereafter. All memoranda should be no longer than12 pages plus a schedule. No memoranda in reply can be filed without leave (whichmay be sought informally by email to the Registrar).Cooke JSolicitors:Bell Gully, Wellington for PlaintiffWigley and Company, Wellington for DefendantMinterEllisonRuddWatts, Auckland for Third Party