University of Wales v London College of Business Ltd

The claimant, University of Wales (“the University”), was established by Royal Charter in 1893 and is responsible for validating undergraduate and postgraduate degrees of the University of Wales for students in the UK and overseas.

The defendant (“LCB”) is a limited company, which at the times material to this case carried on the business of a college with a view to profit. Between 2008 and 2012 the qualifications that it offered were validated by the University pursuant to a series of agreements and latterly a validation agreement dated 1 February 2012 (“the Validation Agreement”). Students enrolled on one of LCB’s validated courses would receive, upon the successful completion of the courses, undergraduate or postgraduate degrees or other qualifications from the University. The Validation Agreement provided that LCB would pay to the University specified annual fees in respect of the validation services provided by the University.

In these proceedings, which were commenced in October 2013, the University claims £42,900 in respect of payment due under the Validation Agreement, pursuant to four invoices rendered in 2012. By a letter dated 20 December 2012 the University purported to terminate the Validation Agreement on account of LCB’s failure to pay the moneys due under the invoices.

LCB denies that the invoices were properly rendered under the Validation Agreement and asserts that the University’s purported termination of the Validation Agreement was ineffective and was itself a breach of contract. It also asserts that the University acted in breach of its obligations under the Validation Agreement by twice suspending enrolments at LCB during 2012. LCB asserts that these actions have destroyed its business and purports to have accepted, by letter dated 30 October 2014, the University’s repudiation of the Validation Agreement. LCB counterclaims for damages arising from the University’s alleged breaches of contract; it values its claim at around £25m.

At the pre-trial review on 16 December 2014 I ordered that this trial should be confined to the issues of (i) liability and quantum on the claim and (ii) liability on the counterclaim, including breach of contract or other duty but excluding causation and quantification of damage.

I am grateful to Mr Ascroft, counsel for the University, and to Mr Simms, legal director of LCB, for their helpful submissions. Mr Simms’ so-called skeleton argument, which ran to 54 pages and included long passages setting out the facts of decided cases, was on that account less helpful than it might have been, for all the industry and learning that is displayed.

I shall proceed by first setting out the terms of the Validation Agreement insofar as they are relevant to the issues in these proceedings. Then I shall summarise the facts; it will not be necessary to recite all of the matters appearing from the witness and documentary evidence, although I have regard to them all. Then I shall summarise the issues arising on the claim and on the counterclaim. Finally I shall discuss the issues and state my conclusions and the reasons for them.

The Validation Agreement contained the following material provisions.

“2.

TERM

2.1

This Agreement shall come into force on the Commencement Date and, subject to earlier termination in accordance with its terms, shall remain in force for the Minimum Term and thereafter from year to year until terminated pursuant to Clause 10.2.

2.2

The Institution shall promote and organise the Course to commence on the Course Start Date in each year of the Term.”

The Commencement Date was 9 August 2011: clause 1.1 and Schedule 1. The Minimum Term was the three-year period commencing on the Commencement Date, that is, the period from 9 August 2011 to 8 August 2014 inclusive; and the Term was the period during which the Validation Agreement should remain in force: clause 1.1. The Course was the programme or programmes of academic study within the Subject intended as preparation for obtaining the Qualification (clause 1.1); the Subjects and Qualifications were set out in Schedule 1, as were the Course Start Dates for the respective Courses.

“3

. ENTRY REQUIREMENTS

3.1

… the Institution undertakes in each year of the Term to:

3.1.1

advertise and seek candidates for the Course; and

3.1.2

enrol by the Course Commencement Date no fewer than the Minimum Number of candidates and no more than the Maximum Number of candidates to participate and receive tuition in the Course.

If by the Course Commencement Date in any year insufficient candidates have enrolled on the Course, the University shall be entitled in its discretion to terminate this Agreement forthwith by giving 30 days notice in writing to the Institution.”

Schedule 1 set out, in respect of each Course, the Minimum Number and the Maximum Number of candidates to be enrolled. Schedule 2 set out the minimum qualifications required of candidates for each Course.

“3.2

The minimum qualifications for candidates to apply for enrolment on the Course are set out in Schedule 2 and the Institution shall prior to the Course Commencement Date provide the University with written evidence satisfactory to the University that students enrolled by the Institution on the Course have achieved minimum qualifications.

3.3

Without prejudice to Clause 3.4, the University shall notify the Institution no later than 6 weeks prior to the Course Commencement Date of the Registration Information required in respect of each student. The Institution shall provide the Registration Information to the University no later than 1 week after the Course Commencement Date. The University is not required to enrol on the Course a student in respect of which it has not received all of the Registration Information required.

3.4

The Institution shall provide the University with the full name and details of each student enrolled on the Course as specified in the Guidelines on the Transfer of Data from time to time and shall forthwith notify the University if these details change or if a student withdraws or wishes to be admitted late to the Course. The University shall be entitled in its discretion to refuse to enrol on the Course any student admitted late by the Institution.”

Clause 1.1.1 defined “Registration Information” as “the information and returns required by the University in respect of each student as a condition of enrolment of that student on the Course”.

“4.

AWARD OF QUALIFICATION

4.1

Subject to the Institution having duly performed its obligations under this Agreement, the University agrees to award the Qualification to those students enrolled on the Course who complete the Course successfully in compliance with the University’s requirements (as notified to the Institution from time to time).”

The Qualifications were set out in Schedule 1. For the most part they were Bachelors’ and Masters’ degrees, though there was also a Foundational Certificate and a Master’s Entry Diploma.

“5.

FEES

5.1

The Institution shall pay to the University the Fees and all other sums payable under this Agreement in sterling and in accordance with the provisions of Schedule 2. Save as may be expressly set out in this Agreement, the Institution is wholly responsible for the cost and expenses of complying with its obligations under this Agreement. Payment shall be made without deduction, set-off or counterclaim.”

In fact, the Fees were set out in Schedule 3.

“6.

CONDUCT OF ASSESSMENTS

…

6.4

The Institution shall permit the Examination Board to visit the Institution on the dates specified in Schedule 1 for the purpose of finalising marks awarded to candidates by the Internal Examiners and to determine the awarding of the Qualification to assessed candidates. …

6.5

The University shall have absolute discretion in those instances that it deems appropriate to delay the procedure set out in Clause 6.4 in order to ensure the conduct of any investigation which may be deemed necessary by the University in its absolute discretion into any alleged instances of unfair practice or other irregularity at the Institution. …”

“7.

QUALITY ASSURANCE

7.1

The University will hold the ultimate responsibility for the academic standard of the scheme.

7.2

The Institution agrees to implement fully the quality assurance procedures made known to it annually by the University. This includes (but is not limited to) compliance with:

7.2.1

the appropriate Regulations and Standing Orders of the University governing the Course;

7.2.2

appropriate administrative procedures relating to the registration of students and the conduct of examinations;

7.2.3

appropriate administrative procedures relating to the registration of students and the conduct of examinations;

7.2.4

Clause 6.9 (annual meeting of the Joint Board of Studies).

7.3

The University from time to time conducts reviews of its validated courses. The Institution agrees to participate fully in any University review of the Course in accordance with the written instructions of the University.

7.4

The Institution agrees to participate fully in all quality assurance and review exercises carried out by any person (including without limitation the UK’s Quality Assurance Agency) who is entitled to or required to carry out such exercise whether by operation of law or otherwise.

7.5

Where review by the University or by any person pursuant to Clauses 7.3 and 7.4 indicates the existence of, or the university becomes aware of, any actual or potential issue which in the University’s opinion (acting reasonably):

7.5.1

impairs or may impair the Institution’s academic quality and standards;

7.5.2

might adversely affect the reputation and integrity of the University and/or the Qualifications awarded by it

then (at the University’s discretion)

7.5.3

the University may require the Institution to take appropriate action at the Institution’s own cost to resolve any problem or issue within such timescale as the University may impose and in the event of the Institution failing to take action or implement changes to the satisfaction of the University, the University shall be entitled to terminate this Agreement forthwith; or

7.5.4

the University shall be entitled to terminate this Agreement forthwith by notice in writing.”

“10.

TERMINATION

10.1

The University shall be entitled to terminate this Agreement forthwith by notice in writing:

10.1.1

if the Institution fails to make any payment due under this Agreement (including without limitation any payment of the Fees or any part of them) on the due date for payment;

10.1.2

if the Institution becomes insolvent or unable to pay its due debts …

10.1.3

if diplomatic relations between the United Kingdom and the country or state in which the Institution is located are for any reason severed …

10.1.4

if the Institution is in material or persistent breach of the terms of this Agreement and, where the breach is capable of remedy, the Institution has not remedied the same within 28 days of the date of service of any notice pointing out the breach and requiring its remedy;

10.1.5

if unfair practice is established by the University …

10.1.6

if the University … is not satisfied … that … the Institution has sufficient resources …; and

10.1.7

pursuant to Clauses 7.5, 12.4 and 13.3.

10.2

Either party shall be entitled to terminate this Agreement for any reason by giving the other 12 months notice in writing to expire no earlier than the end of the Minimum Term or on any subsequent anniversary of the Commencement Date.

10.3

Termination of this Agreement for any reason shall not affect any rights or liabilities which have accrued prior to the date of termination.

10.4

This Clause 10.4 shall survive the termination of this Agreement as shall any other provision so required to survive either by express provision or by necessary implication.”

“11.

CONSEQUENCES OF TERMINATION

11.1

Upon termination of this Agreement, the University and the Institution shall co-operate in good faith (without creating a binding obligation) to seek and find ways in which students enrolled on the Course may be permitted to participate in an appropriate alternative programme of study at another higher education institution recognised by the Academic Board of the University from time to time.

11.2

Upon termination of this Agreement the Institution shall continue to meet all its outstanding obligations under this Agreement and further shall transfer all records information data and documentation relating to the Course or any student enrolled on the Course as requested by the University and do all such acts as reasonably requested by the University to enable the University to perform its non-binding obligations under Clause 11.1.

11.3

Termination of this Agreement shall be without prejudice to all other rights and remedies of the parties.”

“17.

LIABILITY

…

17.3

Neither party shall be liable to the other under this Agreement to the extent that it is prevented from complying with its obligations because of any negligence, failure or default on the part of the other. Neither party shall have any liability whatsoever to the other whether in contract tort or otherwise for any losses or damages:

17.3.1

which were not reasonably foreseeable by the parties or either of them at the date of this Agreement; or

17.3.2

to the extent to which they are attributable to any intervening act, omission or event; or

17.3.3

which represent loss of any anticipated or future business, revenue, goodwill or profit.”

“18.

ENTIRE AGREEMENT

18.1

This Agreement constitutes the entire agreement and understanding of the parties and supersedes any previous agreement between the parties relating to the subject matters of this Agreement.”

“21.

WAIVER

21.1

The failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not constitute a waiver of the right or remedy or a waiver of other rights or remedies.

21.2

A waiver of a breach of any of the terms of this Agreement or a default under this Agreement does not constitute a waiver of any other breach or default and shall not affect the other terms of this Agreement.

21.3

A waiver of a breach of any of the terms of this Agreement or of a default under this Agreement will not prevent a party from subsequently requiring compliance with the waived obligation.

21.4

The rights and remedies provided by this Agreement are cumulative and (subject as otherwise provided by this Agreement) are not exclusive of any rights or remedies provided by law or in equity.”

Finally, it is necessary to refer to some of the provisions of Schedule 3 to the Validation Agreement, which made provision in respect of Fees.

“Part 1

1.

For the first three years of the Term, and subject to paragraph 2 below, the Fees for each year shall be the greater of:

i.

£15,000 per annum (per cohort of students enrolled on all years of the Course) and

ii.

a sum which is set out in clause 1 iii of this Part of Schedule 3 multiplied by the total number of candidates enrolled on and who have commenced the Course (for all cohorts i.e. if there are 15 students in the first year, 15 in the second and 10 in the third, this will give a total of 40).

iii.

Foundation Certificate - £350 in total

Master’s Entry Diploma - £360 in total

BA (Hons) in Business Administration (including all pathways) - £300 per annum

Master of Business Administration (including all pathways) & Master of Business Administration (on-line) - £660 in total.

…

Part 2

1.

The Institution shall provide the University within 30 days of the commencement of each intake of each Course with a transfer showing all candidates commencing or remaining on each Course. The University shall be entitled to invoice the Institution for the Fees at any time following receipt of this transfer. …

2.

The Institution shall pay to the University the Fees due in accordance with the University’s invoice within 30 days of the date of the invoice. The University shall be entitled to terminate this Agreement forthwith by notice in writing to the Institution if the Institution breaches the provisions of this Clause 2.”

The University had for many years been engaged in the validation of degrees in respect of programmes of study delivered to students in the UK and abroad by institutions or centres that had been approved for the purpose by the University. One such institution was LCB, which had been incorporated in 2005 and operated at locations in Barking and elsewhere. The business relationship between the University and LCB commenced in 2008, after the University had carried out a thorough vetting procedure to satisfy itself, among other things, as to the quality of the education offered by LCB and as to its good financial standing. The first validation agreement between the parties was made in January 2008, and after the range of courses offered by LCB had been increased a further validation agreement was made in June 2010. The agreements made in 2008 and 2010 were in materially identical terms to the Validation Agreement, save for differences in respect of courses, campuses and fees in the schedules to the various agreements. Subject to such variable matters, the agreements were in the terms of the standard specimen that the University included in its pack for prospective client institutions.

On 18 March 2009 UK Border Agency (“UKBA”) granted LCB a Tier 4 Sponsor Licence (Grade A). On 19 November 2010 UKBA granted LCB Highly Trusted Sponsor status.

In May 2011 the University undertook a validation exercise for additional courses that LCB proposed to offer. Those additional courses were approved by the University on 9 August 2011, which was to become the commencement date of the term of a revised agreement. On 26 January 2012 the University sent the draft of that agreement to LCB for execution.

While the discussions for extending the relationship between the parties were ongoing, the University was revising its policy regarding the validation of courses provided by third parties. In October 2011 it developed a strategy whereby, over the course of several years, it would bring to an end its validated service activities. And on 24 January 2012, just two days before the University sent the copy of the new Validation Agreement to LCB for execution, its Vice-Chancellor had written to LCB confirming its decision to bring to an end all of its current validation programmes and formally giving notice that the 2010 Validation Agreement would not be extended after the minimum three-year term ended on 31 May 2013.

Nonetheless, both LCB and the University executed the new Validation Agreement, dated February 2012, which is agreed to have had effect in accordance with its terms as from 9 August 2011. No doubt, as suggested by the University’s witnesses in evidence, the University felt honour-bound to stand by the approval it had given to LCB’s new courses at that earlier date, which was before it decided to bring to an end its validation activities. For LCB, Mr Simms invited me to view the Vice-Chancellor’s letter of 24 January 2012 as a mark of systemic incompetence on the part of the University, but I am unable to see that it has any such significance.

On 2 February 2012 the University issued invoice No. 508333, in the sum of £46,860.

On 12 March the University issued invoice No. 508509, in the sum of £26,400.

On 21 March LCB made an electronic payment to the University of £6860. The payment was not accompanied by any instructions or request regarding the allocation of the moneys.

On 27 March 2012 Sky News contacted the University in connection with a story that it was intending to broadcast that day. (In fact the story was not broadcast until 29 March 2012.) Precisely what information Sky News provided to the University is unclear. However, it is clear that it told the University that its story would include the allegation that students at LCB were being sold dissertations for use towards their degrees. The University appears also to have been told of a distinct allegation to the effect that LCB was assisting overseas students to obtain visas by selling them the necessary qualifications, thereby contravening the immigration system.

Internal emails on 27 March 2012 suggest that the initial reaction of the University’s senior management was to suspend intakes at LCB with immediate effect. However, I accept the evidence of Mr John McInally, who at the time was the Director of the Academic Registry of the University, that though the possible need for suspension was recognised from the outset no immediate decision to suspend was made. It was arranged that an officer of the University, Dr Neil Strevett, would attend at Barking on 28 March to carry out a preliminary investigation. The results of that investigation, which was carried out before the story was broadcast, were reported orally to senior management of the University on 29 March and were subsequently circulated in a written report of the same date, which included the following passages.

As Dr Strevett’s report indicated, the Sky News story had been broadcast between his visit to the college and the production of his report; in fact, it was initially broadcast on the morning of 29 March 2012. Some extracts from the Sky News webpage give a sufficient indication of the allegations that were being made:

“Staff at a college ranked as ‘highly trusted’ by the UK Border Agency are helping foreign students cheat the immigration system, a Sky News investigation has found. The investigation discovered that diploma certificates and dissertations were for sale inside the London College of Business in Barking.

As ‘highly trusted’ by the UK Border Agency, the college can sponsor visa applications for foreign students and help them towards post-study work visas if they get their applications in by April 6.

But we found foreign students desperate to obtain visas can buy themselves the necessary qualifications without attending any classes.

It should take nine months to get a postgraduate diploma from the college but its marketing consultant [named in the story as Dr Javed Akhtar] has been secretly filmed by Sky News telling students they can have one in a week if they pay £1,000.

…

Master’s degree dissertations are also for sale. A student working for us was told by Dr Javed if he wanted the qualifications quickly he could pay someone at the college £500 to provide his coursework. That dissertation is then sent to be externally marked at the University of Wales.”

On 29 March Dr Strevett gave an oral report to Professor Palastanga, who was the Head of the University’s Validation Unit and Chair of the University’s Taught Degrees Board. The oral report was probably in effect and substance much the same as the subsequent written report, which appears to have been circulated on 2 April. Professor Palastanga in turn reported to a meeting of the senior management of the University, which also took place on 29 March. Mr McInally, who was present at the meeting, recorded its outcome in an internal email that he sent at 3.47 p.m. that afternoon. It confirmed that Professor Medwin Hughes, the Vice-Chancellor, in his capacity as Chair of the Academic Board, had given approval to a recommendation by the Taught Degrees Board that there be an urgent Interim Review of LCB “in line with the protocol in place in the Quality Handbook (Appendix 59)” and that no further intakes at LCB would be permitted pending the outcome of the review. Professor Linden Peach was appointed to chair the Interim Review Panel.

In his witness statement Mr McInally said that it had been noted at the meeting that the University was entitled to terminate the Validation Agreement immediately pursuant to clause 7.5, but that it was considered instead that LCB should be given an opportunity to respond to the allegations and that an Interim Review should be carried out and new student intakes suspended pending the completion of the review. “We felt that the suspension was necessary to limit the University’s exposure until the Interim Review could be completed. LCB had to be considered to be in good standing if we were to be confident that it would deliver appropriate learning experiences to students. It would be impossible for us to permit registration of further cohorts until we were satisfied of this.” In his oral evidence, Mr McInally relied on the University’s Charter as giving a general power to suspend an institution from validation, in circumstances where there was a risk to quality and standards of the University’s qualifications. (The contents of the Charter may be material to the corporate powers of the University, but they were not relied on at trial as establishing any contractual basis for the suspension.) Mr McInally said that the University had been unable to run the risk of its academic qualifications being undermined. In the light of those concerns, the withdrawal by UKBA of the college’s Highly Trusted status and the decision by QAA to delay publication of its anticipated report (see Dr Strevett’s report), LCB was, said Mr McInally, treated very leniently by being subjected to no more than a moratorium on the registration of new students.

Appendix 59 of the University’s Validation Unit Quality Handbook: Policies and Procedures 2011/12 was headed “Interim Reviews”. It made provision generally in that regard, with terms regarding such matters as the composition of the panel that would carry out a review. The following passages deal with the nature and scope of interim reviews:

“Where the student learning experience is perceived to be at risk, under the terms of its Agreement with Collaborative centres, the Taught Degrees Board has the authority to hold an Interim Review (IR). This decision may be made on the basis of concerns raised in external examiner/moderator reports, or as a result of the annual monitoring process, student/staff complaints or other relevant evidence received by the University.

…

The panel’s focus will be on the current and potential risks associated with operation of the validated programme(s), particularly those identified as the rationale for the IR; the collaborative centre will be informed of the key areas for consideration in advance of the visit.

The IR event will take place at the Institution and will normally involve private meetings with key groups: senior management, teaching staff and students.

The outcome of the Interim Review may range from continuation of validation (perhaps with conditions/recommendations which will be developmental in their nature and focus) through to withdrawal of validation. The review panel shall submit a detailed report to the Taught Degrees Board for approval.”

By email on the evening of 29 March Mr McInally gave informal notice to Dr Ana-Maria Pascal of the decision to instigate an Interim Review and, pending completion of the review, to suspend registration of further intakes of students. Dr Pascal replied by email the following morning: “Thank you for your message. We have taken notice and are waiting for further details regarding the Interim Review.”

Formal notification of the decision to carry out “an Interim Review of students’ learning experiences at the Centre” and to suspend any further intake of students at LCB until the outcome of the review was given by Professor Hughes by letter dated 29 March 2012. The letter, which was sent by email on 30 March, said that the review would take place in accordance with the University’s own procedures for such investigations and that arrangements would be made for the review visit, which it was hoped would be conducted “in the next few weeks.”

Two further events happened on 29 March 2012. First, UKBA wrote to LCB, suspending its Tier 4 Sponsor Licence and Highly Trusted Sponsor status; these steps were not taken in response to the Sky News story; they related to alleged failures of LCB to comply with UKBA’s sponsorship guidelines. Second, the University issued invoice No. 508553, in the sum of £9,240.

The review meeting was originally scheduled for 12 April 2012. On 5 April Jenna Williams, a Validation Officer providing support to the panel, sent an email to Dr Pascal asking for specified documentation (the UKBA report, the QAA report, the internal mark sheet for dissertations, and LCB’s internal admission policies) to be emailed to her. On 10 April Dr Pascal replied: “Thanks for this, we’ll have all documentation ready.”

On 11 April Professor Peach contacted Dr Pascal to postpone the review meeting. The ostensible reason for the postponement was the indisposition through illness of Jenna Williams. However, I accept that the members of the panel also wished to take further time to obtain and review significant additional documentation before the meeting could take place. That documentation, including the email and letter correspondence between LCB and Sky, UKBA and the QAA regarding the allegations, as well as documentation relating to recruitment/marketing consultants, was requested by emails on 12 April.

On 12 April, in the course of making arrangements for the new date, Dr Pascal enquired by email of Jenna Williams:

On 13 April the review meeting was rearranged for 9 May.

On 16 April LCB provided to the University its relevant correspondence with the QAA and said that, because of issues of confidentiality and prospective litigation between LCB and Sky and UKBA, Dr Basha would personally decide what to do about the other documentation. A substantial amount of the documentation requested by the University was provided by email on and shortly after 16 April. On 27 April Jenna Williams requested documentation that had not been supplied; it was provided by LCB on 1 May.

On 16 April, the University’s Validation Department sent an email to LCB, demanding immediate payment of £40,000 in respect of invoice no. 508333.

On 9 May Jenna Williams notified Dr Pascal by email that the review meeting would take place on 23 May. She attached to her email the panel’s Terms of Reference for the interim review, which showed that it would concern the following matters:

“1.

Recruitment practices onto University of Wales programmes at LCB

•

Initial screening process for students

2.

The role of recruitment agents in recruiting students onto the MBA programme

•

How LCB recruits and appraises recruitment agents

3.

English Language admissions policies

4.

Policies for dealing with Unfair Practice

•

How students are informed of these policies and to what extent do LCB minimise opportunities for unfair practice in assessment

•

Induction processes for students

5.

Procedures relating to dissertation supervision and assessment

6.

The organisation and implementation of pastoral care”.

On 14 May the Validation Unit wrote to LCB by email, requiring immediate payment of £41,200 in respect of invoices nos. 508333 and 508456.

On 15 May LCB’s accounts department responded to the University’s latest request for payment. LCB places considerable reliance on the response, which I shall set out at length.

“[A]gainst the stated invoices a sum of £6860 has been paid on 21 March 2012 towards fee due for the following list of students. Hence this payment may please be accordingly adjusted as detailed below.

- Invoice no. 508456 for £1200 paid in full – in respect of 4 students in the list

- Invoice no. 508508 for £300 paid in full – in respect of 1 student in the list

- Invoice no. 508509 for £26,400 – out of which an amount of £1320 in respect of following 2 students in the list

[Two students were then identified; £660 was marked against each.]

- Invoice no. 508333 for £46,860 – out of which an amount of £3300 in respect of following student in the list

[Five students were then identified; £660 was marked against each.]

Thus the total payment to be adjusted for all of the above is £6120, which leaves an excess payment of £740 (£6860 paid less £6120 adjusted). This excess payment amount may further be adjusted against future invoices.

In regard to the remaining students fee payment, based on the advise (sic) of our University Moderator and subsequent events in the college, we have been advised to suspend/withdraw enrolment of many students. This fact has already been informed to Caroline Walker (Caz), Institution Officer, as well. In view of this, we are revising the list of students that need to be finally enrolled. The revised student list is expected to be sent out to you in the next couple of days.

We therefore request you to condone this undue delay and would request you to credit/cancel the invoice numbers 508509, 508553 and 508333.

Based on the revised list of students to be enrolled, which we will be sending over to yourselves and Caroline, we hope you will raise an updated invoice, to enable us to make the payments due.

Thanks for your understanding and cooperation.”

By email on 16 May the Validation Office enquired of LCB’s Moderator as to the exact nature of the advice he had given to LCB regarding the suspension and withdrawal of enrolment of students. He replied that day:

“After the Sky story broke I suggested that they urgently review all students introduced by that agent specifically [that is, Dr Akhtar] and any other locally based agent they had used.

I have also rejected a number of students through the APEL and Work Experience process and this may be what they are thinking of.”

On 23 May LCB sent to Caroline Walker and Jenna Williams an email with a list of students attached. The email said: “Please find the list for those registered in Jan[uary 2012]. Those highlighted in red are being terminated so there is no need to matriculate them—those in black are still with us.” Caroline Walker forwarded the email to a superior, Stuart Evans; she wrote: “Shall I go ahead and withdraw the ones in red on our system? I still will wait for a definitely go ahead (sic) from you/Jenna with regards to processing the black ones or any in the Jan intake batch that are not mentioned as being withdrawn.” Stuart Evans replied: “Please hold onto this and do not process until you hear back from the interim review panel.”

The University did not respond to LCB in respect of its emails of 15 May and 23 May and did not give any indication of having paid any attention to them. Thus on 30 May it sent a request for payment of £77,140 in respect of “all invoices which now exceed the due date of settlement, as specified in the University’s terms of credit”; these were listed as invoices nos. 508333 (£40,000), 508456 (£1200), 508508 (£300), 508509 (£26,400) and 508553 (£9240). A further demand to the same effect was sent on 18 June 2012. For its part, LCB did not follow the matter up or send any further communication regarding invoices, whether in response to further requests by the University for payment or otherwise, before the University purported to terminate the Validation Agreement for non-payment by letter dated 20 December 2012.

Meanwhile, the review meeting was held on 23 May 2012. Thereafter the panel had to produce its report. Professor Peach, a thoughtful and plainly truthful witness, gave evidence that as the review progressed it proved more complex and less amenable to a quick resolution than he had initially anticipated. The review of the documentation before the meeting had raised issues and set alarm bells ringing. Then the meeting itself gave rise to additional concerns; by way of example, the information provided by LCB’s management did not at all points agree with the information provided by LCB’s teaching staff in respect of such matters as the number of dissertations that any one tutor would have to supervise. The panel felt that the problems so raised were capable of resolution, but they were nonetheless complex to resolve. Further, the panel was anxious to be thorough, because it did not know whether Sky had any additional information up its sleeve, so to speak, and was afraid that serious damage would be caused to the University’s reputation if the review failed to identify matters that subsequently came to form the basis of further allegations. Accordingly, after Jenna Williams had produced a draft report for the panel’s consideration on 30 May there was a further process of deliberation and revision. The final report was produced some three weeks after the meeting on 23 May, that is, in mid June 2012, though it was not published at that stage.

It is unclear to me whether the version of the report that appears in the trial bundle is the final version or an earlier draft. On balance it seems more likely to be the former; anyway, it has not been suggested that the final report differed in fundamental respects from the text that I have seen. The report summarised the relationship between the parties, the circumstances giving rise to the review, the procedure adopted by the panel and the contents of the review meetings with senior management, teaching staff and students. It then set out the conclusion of the panel:

“The Panel felt more positive hearing some of the comments and noted that students spoke warmly of LCB. The Panel commended the detailed plagiarism and administrative processes carried out by the MBA Programme Administrator.

However, the Panel retained some concerns about the quality and the security of the provision of the programmes at LCB and wished to make the following recommendations:

•

The College must revise, clarify and formalise its relationships with ‘recruiting agents’, both in the UK and overseas, to protect itself, the University of Wales and past, present and potential future students from the sort of allegations which surfaced in the media earlier this year. The College should submit documentation on the revised arrangements for approval by the University of Wales. The agents used to find academic supervisors for the online MBA need to be considered.

•

The recent rapid growth of the ‘top up’ version of the MBA and the proposed growth of the online programmes do not seem to have been accompanied by the provision of adequate resources to ensure a secure and quality programme for the students. The College should draw up costed resource development programme for both the ‘top up’ MBA and the online programmes and a detailed operational model for the online programmes and submit them to the University of Wales for approval. The Panel recommend a Top Up admissions regulatory document.

•

The dissertations are a concern. On the one hand the supervision responsibilities … seem daunting and must militate against detailed and quality supervision for all students. On the other hand, the submission of all dissertations for ‘administrative inspection’ and testing with plagiarism software before they are sent to the two internal markers suggests the College seemingly see plagiarised dissertations as the norm. The College must take steps to reduce dissertation supervision loads to more manageable proportions …, it should give more thought to vetting proposed supervisors to ensure that they have the necessary experience and it should monitor the number and the nature of the student supervision experience more closely. The Panel would like a review of dissertation arrangements and procedures, and how these will be managed.

•

The Panel noted that there are issues surrounding Advanced Standing and how the moderator approved credit transfer students. The Panel noted that the credit transfer / advanced standing processes should be internally reviewed and made clearer to moderators. The Panel noted that LCB need to have more regulated CT processes as there is a risk with Top Up students, so their previous experience should be researched.

•

The Panel noted that LCB need to formalise many of their processes, e.g. student support[,] so that they have clear audit trails.

•

The Panel noted that there needs to be more sharing of information across the admissions and administrative teams, as currently the administrative staff are not involved in or consulted in admissions.

•

The Panel noted that the research training for advanced standing students needs strengthening and [to be] made compulsory.”

Before the report could be published, it had, in accordance with the University’s protocol, to be approved by the Taught Degrees Board. As the Taught Degrees Board was not due to meet for several weeks, this occasioned a significant delay.

Meanwhile, on 5 July 2012 Mr Ian Nisbet, the newly appointed Principal of LCB, wrote to Professor Peach, making representations in support of a request that the suspension be lifted. His detailed letter summarised the steps taken by LCB to address perceived matters of concern; it said that the suspension had prevented it enrolling many students who had applied for its MBA course and that its financial situation was critical and its survival would be jeopardised by a continuation of the suspension for the September intake; and it asked that LCB be permitted to recruit new students for all its course programmes.

On 10 July LCB’s Moderator, Dr Jason Williams of Cardiff Metropolitan University, wrote to the University in support of Mr Nisbet’s request to renew enrolments.

Professor Peach was sympathetic to LCB’s request that the suspension be lifted, but he lacked the authority to make that decision and his evidence was to the effect that the senior management of the University were desirous of following due process and correct internal procedures. The University’s Taught Degrees Board met on 17 July. It endorsed the panel’s report and decided to refer its conclusions and recommendations to the University’s Academic Board, which was due to meet on 25 July.

By email on 18 July 2012 the University forwarded the panel’s report to Mr Nisbet. It informed him that it would be put before the Academic Board on 25 July and invited LCB to make an initial response for consideration by the Academic Board. The email also advised Mr Nisbet that the likely deadline for compliance with the requirements of the panel’s report was the end of September 2012. Mr Nisbet provided an initial response to the report by a letter dated 23 July 2012 (sent by email), to which were attached supporting documents.

The meeting of the Academic Board had been due to take place on 25 July but was postponed. This occasioned a delay in implementing the recommendations of the review panel and the Taught Degrees Board.

By email on 30 July Professor Peach informed Mr Nisbet that, though the Interim Review panel was impressed by LCB’s efforts to meet its conditions, it was not convinced that all the conditions had been fully met. Professor Peach followed up that email with a longer one on 8 August, which provided the panel’s assessment of LCB’s response to the report. Seven specific areas were identified in which the panel considered that more was required to be done to meet the conditions of the Interim Review. It is unnecessary to set those areas out here. On 3 September Mr Nisbet sent further information to Professor Peach and expressed the view that LCB had fully responded to the panel’s ongoing concerns. He asked that LCB be permitted to have a new intake of students in September. The email also noted that UKBA had restored LCB’s Highly Trusted status. On 7 September Professor Peach confirmed to Mr Nisbet that the panel was of the opinion that LCB had met the conditions set down in the interim review: “As Chair of the Taught Degree Board I have taken Chair’s action and have recommended to the Vice Chancellor as Chair of Academic Board that the suspension now be lifted and normal business is resumed.” However, the Vice-Chancellor declined to take Chair’s action and insisted that the matter go to the full Academic Board.

On 10 September the University rendered yet another account to LCB, claiming the same amount as in the previous accounts.

The Academic Board met on 27 September 2012 and approved the recommendation that the suspension of enrolment of new students by LCB be lifted.

The decision was notified to Mr Nisbet by email on 5 October. However, “formal confirmation of the outcome had to await the approval of the minutes of the meeting of the Academic Board, which occurred on 16 November 2012” (Professor Peach’s witness statement, paragraph 28). Accordingly that appears to be the date on which the suspension imposed on 29 March was lifted.

Meanwhile, on 7 November the University’s Accounts Department had sent another request for payment of £77,140 in respect of the same invoices as were mentioned on its earlier statements of account. And on 15 November the University issued a further invoice, no. 509156, for £5940.

Almost no sooner had the suspension on new enrolment been lifted than a question arose as to the possible provision of false certificates by three students at LCB. On learning of the possibility that false certificates had been presented, Mr Nisbet asked the ostensible provider of the certificates, Education for Business Managers and Administrators (“EBMA”) to verify the certificates. On 28 November 2012 EBMA wrote to Mr Nisbet in respect of the three named students as follows.

“Following your request for verification the following discrepancies were found. Certificate copies were provided for three students. … These candidates have previously been issued with certificates, however, all three certificates provided were found to contain false information. The dates of issue were incorrect; the EBMA reference numbers were incorrect; the font used to display results was incorrect and EBMA’s logo is displayed incorrectly.

As a result of this and the information received from your centre and in accordance with EBMA’s ‘Suspected malpractice and Maladministration Policy and Procedure’ we have determined that the certificates have been tampered with leading to a reasonable suspicion of fraud. As a result of this Malpractice all three students’ qualifications and certificates will be revoked with immediate effect and the students named are barred from entry to EBMA for the period of one year.

…

I would also ask that you inform the students that they have the right to appeal this decision.”

On the basis of the matter dealt with in EBMA’s letter (of which the University probably had a copy), on 29 November 2012 the Vice-Chancellor of the University sent the following letter by email and hard copy:

“I write to advise you that the University of Wales has reasonable grounds to believe that irregularities may have occurred with respect to the certification process at the London College of Business (‘LCB’).

As a result, we are hereby formally suspending the Validation Agreement between our institutions, (dated 1^st February 2012) regarding the registration of new students with immediate effect until such time as we are able to satisfy ourselves through an investigation that the academic and administrative processes of LCB are sound.

Colleagues from the University will be in touch to make arrangements for the review to take place; it is our intention that this will commence within the next five business days.”

On 2 December Mr McInally wrote to Mr Nisbet to confirm that the review panel, led by the Associate Pro Vice-Chancellor, would visit LCB “to conduct an investigation into various academic and administrative processes linked to certification irregularities.” He enclosed a framework document that identified a long list of the kinds of evidence that might be relevant for the review.

Mr McInally’s evidence at trial was that the review itself was not particular to LCB; all of the institutions whose courses in the United Kingdom were validated by the University were subject to the same review. However, only LCB was suspended from further enrolment pending the outcome of the review, because no allegations had been received in respect of those other institutions. He said, “The Vice-Chancellor considered it necessary to instigate a review.” Whether or not the review did indeed extend to other institutions—as to which I make no finding—there is nothing in the evidence to suggest any other conclusion than the obvious one, namely that it was a response specifically to the concerns over the three students at LCB. Mr McInally insisted that the allegations in respect of those students were extremely serious, because “we did not know whether the certificates were genuine” and the apparently false qualifications would have been used by the students towards their courses at LCB and might in due course have been counted towards an MBA awarded by the University. “We had to be satisfied that there were no students other than the three.” He was adamant that the power in clause 6.5 of the Validation Agreement would not have been sufficiently “robust” to meet the case.

An initial review meeting took place on or about 5 December 2012, but thereafter the review process was overtaken by events.

By a letter of 20 December 2012, sent by recorded delivery and marked as received on 27 December 2012, the University’s solicitors wrote to LCB giving notice of the termination of the Validation Agreement (and, indeed, of the 2010 agreement) with immediate effect, on the ground of failure to pay invoices nos. 508333, 508456, 508508, 508509, 508553 and 509156 within thirty days of each respective invoice. The total amount said to be due under all of the invoices was £83,080.

On 9 January 2013 EBMA wrote to LCB, advising that two of the three students implicated in the allegations concerning forgery of certificates had appealed and that an investigation had concluded that those students had not been guilty of malpractice. LCB promptly informed the University of the contents of the letter.

On 21 February 2013 LCB’s solicitors wrote to the University’s solicitors in response to the letter of 20 December 2012. The response said that LCB had repeatedly contacted the University in respect of errors in the invoices and was “more than happy the required amount within 30 days of receiving the accurate invoices.” It contained a detailed analysis of the invoices, and its conclusion set out what has since been a major part of its case:

“The College has been liaising with the University’s staff throughout the last year in respect of the above mentioned students and invoices.

It has been common practice for the University’s staff to liaise with the College regarding the students which have been submitted for enrolment by the University. Often the College would submit a list of students which were expected to enrol. The College would then withdraw some of these students based on the discussions and admission approval processes from the university moderator prior to the University undertaking the matriculation process. Throughout its relationship with the College under the Validation Agreements the University has agreed to withdraw these students and amended any invoices accordingly so that no fees were payable in respect of non-enrolled-non-matriculated students.

It has also been common practice since the commencement of both Validation Agreements (and indeed since the College began dealing with the University in 2007) for the College to discuss and amend the University’s invoices to reflect only students which the University has matriculated. This process has often taken longer than the 30 day payment period as stated in the Validation Agreements. It was therefore implied that payment after the 30 day period was acceptable to the University irrespective of the terms of the Validation Agreements.

…

The College therefore requests (in accordance with the conduct of the University since 2010) that the University render updated invoices and appropriate receipts to the College reflecting the correct balances due and the payments which have been made.

The termination of the Validation Agreements has caused significant hardship to the College and hindered its ability to recruit students. In light of the above, we trust that the College’s Validation Agreements will be reinstated. There has not been breach of the Validation Agreements (given the amended terms implied by the University) as alleged in your 20 December 2012 letter.”

For the purposes of this judgment it is unnecessary to refer in detail to the further communications passing between the solicitors and between the University and LCB. On 25 April 2013 the University generated credit notes to reflect payments made and necessary adjustments to the invoices. In August 2013 the University’s solicitors stated that, if payment of the outstanding balance were not received promptly, they would seek instructions to commence proceedings. LCB’s solicitors responded, denying that credit notes had been received in April and proposing immediate payment of outstanding fees upon reinstatement of the Validation Agreement. Thereafter, as no payment had been made, the University commenced proceedings in October 2013 and LCB made a counterclaim. In the course of those proceedings, on 30 October 2014 Dr Basha on behalf of LCB wrote to Professor Medwin Hughes on behalf of the University; the letter read in part:

“We have no doubt that the suspension of the Validation Agreement in March 2012 for over 6 months, the subsequent further suspension on 29^th November 2012 and the purported termination of the Validation Agreement by letter dated 20 December 2012 were unlawful and amounted to a breach of the conditions of the Agreement. As the purported termination was wholly unjustified it effectively extinguished the business of the London College of Business as then constituted as the University of Wales was our sole University collaborative partner. We regard the purported termination as a repudiation of the Validation Agreement and we now accept that repudiation without prejudice to our rights to claim damages for such repudiation and breach of the Validation Agreement.

It appears that the attempt to terminate was designed to enable the University to avoid its continuing obligations to validate our courses in order to make it free to speed up the merger with Trinity St David and to compete with our courses in the London market.”

It is common ground that the value of the services provided by the University under the Validation Agreement and for which payment has not been made is £42,900. The substantive issues arise on the counterclaim.

The amended defence and counterclaim asserts (paragraph 13) that there were implied terms of the Validation Agreement as follows:

Paragraph 15 of the amended defence and counterclaim alleges that the defendant was in breach of those implied terms (there is also a reference to negligence, but that seems to me to be inappropriate and anyway it adds nothing). The twelve allegations of breach of contract come down to these:

The parties’ agreed list of issues identifies another question, namely “whether the University was required to and did conduct the review with reasonable expedition”. Although the pleading of this issue was at best opaque (cf. paragraph 7E of the amended defence and counterclaim) it was fully argued in front of me.

Another matter arising on the statements of case is the scope and efficacy of exclusion or limitation clauses in the Validation Agreement. Although this matter does not fall strictly within the scope of the issue of liability, I made clear at trial that I considered it suitable for determination at this preliminary stage (disclosure had been given and witness statements exchanged on the basis that the trial would cover all issues), and it was subject of full argument.

The central questions are therefore the following:

Was there a power to suspend?

Mr Ascroft submitted that the University had a contractual power to suspend enrolment. His primary submission was that this power existed as a matter of the correct construction of the Validation Agreement, and in particular clause 7, in its commercial context. Alternatively, he submitted that the power was necessarily implied to give business efficacy to the contract.

These submissions seem to me, in the circumstances of this case, to be different ways of putting the same point. The principles of the construction of commercial contracts are clear. The aim is to determine what the parties meant by the language that they used. The court is not concerned with the subjective intentions of the parties but with the meaning that the language used would have conveyed to a reasonable person who had all the background knowledge that would reasonably have been available to all of the parties to the contract; the relevant background information does not include the pre-contractual negotiations. If the language of the contract, when read against the relevant background, leads clearly to the conclusion that one particular construction is the correct one, the court must give effect to it. But if there is more than one possible construction, the court is entitled to prefer the construction that best accords with commercial common sense, even though another construction would not produce an absurd or irrational result. See Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912F-913G, Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, paras 21-26, Pink Floyd Music Ltd v EMI Records Ltd [2011] 1 WLR 770, paras 16 – 23, and Rainy Sky S.A. v Kookmin Bank [2011] UKSC 50, paras 15 - 30. As for the implication of terms, I refer to Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988, per Lord Hoffmann at para 21:

“[I]n every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson’s speech [in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1WLR 601] that this question can be reformulated in various ways which a court may find helpful in providing an answer—the implied term must “go without saying”, it must be “necessary to give business efficacy to the contract” and so on—but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?”

The argument for the University was, in short summary, as follows. The University is a venerable and highly regarded academic institution; the integrity of its academic standards is of paramount importance, and clause 7.1 gives it the ultimate responsibility for the academic standards of the scheme. LCB was obliged to implement fully the University’s quality assurance procedures (clause 7.2) and to participate fully in reviews of its validated courses carried out by the University (clause 7.3) or any other relevant body (clause 7.4). Further, clause 7.5 entitled the University to require LCB to take specified action to resolve problems or issues that might impair its academic quality and standards or might adversely affect the reputation and integrity of the University or its qualifications, and the same clause even conferred a power of summary termination. The terms of the reviews carried out by the University, in which LCB was obliged to participate fully, included suspension during the course of the review. Moreover, suspension was necessary, because if LCB were able to continue enrolling students during the course of the review, there was a risk that serious damage would be caused to the reputation and integrity of the University and its academic qualifications by the time the review was completed; therefore suspension was justified either under clause 7.5.3 (as being action required to be carried out) or under clause 7.5.4 (on the basis that the greater power of summary termination implied the lesser power of suspension).

I reject the University’s argument on this point. In my judgment the University had no power under the Validation Agreement to suspend enrolment of students pending the completion of a review.

It is helpful to be clear what a power to suspend enrolment might involve. The Validation Agreement is not altogether clear in its use of the language of enrolment, and the point was not dealt with in any detail in argument. For the most part, enrolment is something that the Institution, rather than the University, does: see for example clauses 3.1.2 and 3.2. However, the word is also used of the action of the University: see clauses 3.3 and 3.4. To put the matter colloquially, the basic idea seems to be that each party was required to put the relevant students on its books; LCB would register students on its validated courses and the University, upon receipt of the Registration Information (clause 1.1.1) would register the students on its books also. So far as I can see, the University did not spell out precisely what was meant by the suspension of enrolment or intake of new students. But the point was clear enough: the University was saying that it would not enrol students during the period of suspension, and it was impliedly instructing LCB not to enrol students during that period and stating that, if LCB did enrol students, the University would not enrol them on its books.

There is no express power of suspension in the Validation Agreement. Clause 7.2 is clearly inapt to confer a power of suspension; it relates, as it says, to compliance with quality assurance procedures published annually. Similarly, clause 7.3 simply obliged LCB to participate fully in any review of a validated course carried out by the University. The words “in accordance with the written instructions of the University” relate to participation in the review; for example, participation might involve meetings with the review committee or disclosure of documents, and the review instituted in March 2012 involved both of these components. But a suspension of enrolment pending the completion of the review is quite a different thing from an instruction as to participation in the review.

Clause 7.5 concerns the position where, as the result of a review or in any other way, the University learns of an actual or potential issue that might have the specified adverse effects. In those circumstances, the University has a choice. It can specify steps that are to be taken to address the issue, and if those steps are not taken it can then terminate the Agreement. Alternatively, it can simply proceed to terminate the Validation Agreement, without giving any opportunity to the Institution to take remedial steps. The first option does not involve a power of suspension pending review. It involves the power to stipulate action by the Institution to remedy the problems that have been identified (for example, inadequate teaching methods, cheating in examinations, or lack of pastoral care for students). Suspension of enrolment, by contrast, is not directed to the correction of a problem but to the interruption of the Institution’s rights and obligations under the Validation Agreement until a decision has been made as to what problems exist and what is to be done about them. The second option under clause 7.5—immediate termination of the Validation Agreement—does not imply the lesser power of suspension. The decision to terminate requires the University to have the courage of its convictions in accordance with the opening lines of the clause. It also has the effect of releasing the Institution from its continuing obligations under the Validation Agreement. That is quite different from a suspension, which on the University’s case both permits it to put matters on hold while it makes up its mind as to what problems exist and what is to be done about them and leaves the Institution bound by the Validation Agreement in the meantime.

There is no need at all to imply into the Validation Agreement a unilateral power of suspension on the part of the University in order to give it proper commercial sense. I return to the simple point made above: the Validation Agreement does not provide for a power of suspension. At para 17 of his opinion in the Attorney General of Belize case Lord Hoffmann said: “The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so.” It would have been easy to provide for a power of suspension, but the parties did not do so. The Validation Agreement works perfectly well without such a power. If the University learns of matters that, in its view, threaten its academic reputation, standards and integrity, the courses open to it are clear. It may immediately require that steps be taken to address the problems; if they are not taken, it may terminate the Agreement. Or it may investigate further and then require that steps be taken, on pain of termination if those steps are not taken. Or it may simply terminate the Agreement. This last course might be attractive if it is thought that the matters in question are beyond remedy or that any delay might be ruinous to the University’s reputation.

I would go further. It seems to me that the suggested implied term is contradictory of the express terms of the Validation Agreement. They provide that for the term of the Agreement certain courses are approved, certain numbers of students with the requisite qualifications must be enrolled on those courses, and the Agreement can be terminated in certain circumstances; if it is terminated, provision is made for taking care of students who have been enrolled; cf. clause 11. The practical effect of what the University sought to achieve is a hybrid, which involves the partial de-validation of courses without regard to the scheme of the Validation Agreement.

Waiver, estoppel etc

In paragraph 7C(4) of the amended reply and defence to counterclaim, the University advances the alternative case that, if the suspension of enrolment was a breach of the Validation Agreement, “the defendant consented to the suspension pending the outcome of the claimant’s review and thereby waived any such breach.” That is as far as the pleading goes. In paragraph 40 of his skeleton argument Mr Ascroft submitted that by its conduct LCB “is to be taken as having waived … any claim for damages. Alternatively, the defendant’s conduct gave rise to an equitable forbearance rendering the defendant’s enforcement of any right to claim damages as inequitable.” In his oral submissions, he said that during the course of the suspension LCB had not complained that the suspension was a breach of contract, and he suggested that, if both parties operated on the assumption that there was a power to suspend enrolment, there might be an estoppel by convention.

I reject the University’s contentions on this matter. In doing so I observe that the absence of anything more than a cursory pleading meant that the facts and matters relied on were never clearly articulated and was no doubt a significant reason why Mr Simms did not address this aspect of the case in his otherwise detailed submissions.

As regards “waiver”:

Although estoppel by convention is a distinct legal doctrine, the foregoing remarks concerning waiver are sufficient to show that it can have no application in this case. An estoppel by convention arises when the parties have proceeded on the basis of a shared understanding or assumption (or an understanding or assumption held by one party and acquiesced in by the other party) in circumstances where it would be inequitable to permit either of them to go back on it. “It seems, however, that the assumption resembles the representation required to give rise to other forms of estoppel to the extent that it must be ‘unambiguous and unequivocal’; and this common feature can make it hard to distinguish between these two forms of estoppel” (Chitty, op. cit. at paragraph 3-107, citing Smithkline Beecham plc v Apotex Europe Ltd [2006] EWCA Civ 658, [2007] Ch. 71, at [102]). If LCB’s conduct does not amount to an unambiguous and unequivocal representation of waiver of its rights, it is hard on the facts of this case to see how it could unequivocally and unambiguously signify acceptance of or acquiescence in the legitimacy of the University’s conduct. Further, for reasons already indicated, the University has not established matters that would make it inequitable for LCB to assert the true contractual position.

The exercise of the power to suspend

In view of my decision on the first two issues, this third issue, which relates to the exercise of the power to suspend, does not fall for determination. I shall therefore deal with it only briefly.

LCB makes two arguments. First, if as a matter of the true construction of or necessary implication in the Validation Agreement the University had a power of suspension, it was entitled to exercise that power only on reasonable grounds—cf. paragraph 62(c) above—but in fact exercised it unreasonably. Second, any such power of suspension pending review was subject to an implied obligation to carry out the review with reasonable expedition—cf. paragraph 64 above—but in fact failed to carry out the first review with reasonable expedition. Neither point was pleaded very clearly, to say the least, but the matter was dealt with in argument by both parties.

If I had considered that the University had a power of suspension, I should have held that such a power could only be exercised on reasonable grounds. Without such an implied limitation, the power would permit arbitrary conduct capable of undermining the parties’ agreement. (By way of analogy, see the case of employment contracts, where suspension is capable of constituting a breach of the employer’s implied obligation not without reasonable and proper cause to act in a way which seriously damages the relationship of confidence and trust between the parties: Gogay v Hertfordshire County Council [2000] EWCA Civ 228, [2000] IRLR 703, at [52-9].) I should also have taken the view that there were no reasonable grounds for either suspension. As to the first suspension, Dr Strevett’s preliminary investigation found no evidence of fraudulent sale of qualifications, which was the gravamen of the initial story on Sky News. It did express concern over the procedures relating to the qualifications of students with advanced standing and, somewhat casually, recommended immediate suspension of LCB. However, I find it difficult to see that suspension of new registrations achieved anything other than a public relations statement for the University; see Mr McInally’s reference to limiting the University’s exposure (paragraph 22 above). If students who had already been enrolled were shown not to have the qualifications they claimed to have, they could be dealt with on a case by case basis; suspension of new enrolments would do nothing for such cases. If newly registered students in the April and September intakes were shown on investigation to lack their claimed qualifications, they too could be dealt with; the fact that they had been enrolled did not mean that they were entitled to remain on the courses and graduate if they were shown to have achieved their places on false grounds. Suspension was not necessary for the purposes of investigation. If LCB were shown to be complicit in bad behaviour, or to have jeopardised the integrity of the University’s academic qualifications by lax procedures, the University had ample powers to deal with the matter under clause 7.5. So far as I can see, the only positive reason for suspension was to distance the University from unwelcome publicity. Against this must be set the numerous factors relied on by Mr Simms, among which are that the preliminary investigation had found no evidence of wrongdoing, that LCB was subject of a positive QAA assessment, which the University had seen in draft before deciding to suspend, that the parties had a longstanding and productive relationship, that suspension was not required for the conduct of the review, and that suspension of enrolment had the effect of preventing LCB from taking on new business. As to the second suspension, similar observations apply. The information available to the University related to three students; they had the right of appeal and the University had the right to carry out any necessary review and investigation. Any problem was capable of being investigated promptly. The University had very recently conducted a full review of LCB’s admissions procedures. Mr McInally’s evidence (paragraph 55 above) explains why the University was concerned to ensure that students had the necessary qualifications but does not provide a reasonable justification for suspending further intake.

I should also have held that the University was in breach of an implied obligation to conduct the first review within a reasonable time (or, which amounts to the same thing for practical purposes, to maintain the suspension only for a reasonable period).

Did the University validly terminate the Validation Agreement?

Clause 5.1 of the Validation Agreement provided for the payment of the Fees in accordance with the relevant schedule “without deduction, set-off or counterclaim”. Part 2 of Schedule 3 entitled the University to invoice LCB for the Fees at any time after the receipt of the information there required from LCB, and it provided that LCB should “pay to the University the Fees due in accordance with the University’s invoice within 30 days of the date of the invoice.” Clause 10.1.1 entitled the University to terminate the Validation Agreement forthwith by notice in writing if LCB “fail[ed] to make any payment due under this Agreement (including without limitation any payment of the Fees or any part of them) on the due date for payment”. These are the provisions on which the University relies as establishing its right to terminate the Validation Agreement by the letter of 20 December 2012.

Mr Simms submitted that this purported termination was ineffective, for three alternative reasons: (1) it was a condition precedent to the obligation to pay the Fees that the University had delivered an invoice in the correct amount, and it had not done so; (2) time for payment was not of the essence of the contract; (3) the provision for payment without set-off or deduction was an unreasonable limitation clause for the purposes of the Unfair Contract Terms Act 1977. I shall consider these reasons in turn and then say something about one further possible reason, which was mooted rather unclearly at the trial.

With respect to the first reason (condition precedent), Mr Simms submitted that, where incorrect invoices were submitted, the obligation to pay did not arise until corrected invoices charging the correct amount of the fees were rendered. “An obligation to pay Fees due in accordance with the University’s invoice must be construed as an obligation to pay an invoice in respect of which the Fees claimed were correct.” In fact, he submitted orally that the payment obligation arose in 2013, before the commencement of proceedings, when the University rendered credit notes in respect of the previous invoices.

As a matter of construction, I reject the contention that the payment obligation arose only when an invoice in the correct amount was rendered. That interpretation of the payment obligation in Part 2 of Schedule 3 to the Validation Agreement is not required by even the most literal invocation of the words “in accordance with the University’s invoice” and is contrary to commercial commonsense. The invoice is rendered after the provision of the “transfer” showing the candidates on the course. It is the rendering of the invoice that triggers the payment obligation. If for some reason the invoice misstates the amount properly due, the institution has an obligation to pay what is due and will not be liable for non-payment of what is not due. LCB was perfectly able to identify what was due and owing; there is no question of it having been unable, without a corrected invoice, to ascertain the correct amount of the fees. But it apparently decided that it would not pay what was due until an invoice in that amount was rendered.

Although that is sufficient to dispose of the first reason for disputing the termination of the Validation Agreement, I add that the first reason lacks a sound basis in fact. The claim is based on the following invoices:

With respect to the second reason (time of the essence), Mr Simms relied on the decision of Kitchin J in Dominion Corporate Trustees Ltd and others v Debenhams Properties Ltd [2010] EWHC 1193 (Ch). Under the terms of the contract in that case, the claimant was obliged to pay £425,000 on 2 March 2009. It did not do so, and on 3 March 2009 the defendant served notice of termination of the contract pursuant to a clause that gave an entitlement to terminate “[i]f either party shall in any respect fail or neglect to observe or perform any of the provisions of this Agreement”. In line with earlier authority, including Antaios Compania S.A. v Salen A.B. [1988] 1 AC 191, Kitchin J held that when the contract was construed in accordance with business commonsense, the termination clause did not mean that a party could terminate on account of any breach, however trivial; it meant that any repudiatory breach would give rise to a right to terminate. He also held that, in the case before him, the contract did not make time of payment of the essence, so that a failure to pay on time was not ipso facto a repudiatory breach.

I do not consider that the Dominion Corporate Trustees case assists LCB. The main point in the case was that, where the literal reading of a contract would provide an entitlement to terminate for any breach, however trivial, in circumstances where the contract and its performance would involve the potential for many and varied kinds of breach of differing significance, commercial commonsense requires the contract to be understood as giving a right to terminate only for a serious breach. That is not this case. I have set out enough of the provisions of the Validation Agreement to show the limited grounds on which summary termination was justified. Breach of contract other than payment of moneys is dealt with specifically in clause 10.1.4; the mere fact of a breach does not give rise to a right to terminate. However, payment is dealt with separately under clause 10.1.1 in quite different terms. That provision is in my judgment clear on its face and impatient of any reasonable interpretation other than that, if payment is not made on the due date, the University is entitled to terminate; in other words, that time of payment is of the essence of the contract. Therefore I reject the second reason advanced by LCB.

The third reason advanced by LCB why the University’s purported termination of the Validation Agreement was ineffective (unreasonable limitation clause) raises questions under the Unfair Contract Terms Act 1977, which contains the following material provisions:

“Section 3: Liability arising in contract

(1)

This section applies as between contracting parties where one of them deals … on the other’s written standard terms of business.

(2)

As against that party, the other cannot by reference to any contract term—

(a)

when himself in breach of contract, exclude or restrict any liability of his in respect of the breach …

except in so far as … the contract term satisfies the requirement of reasonableness.”

“Section 9: Effect of breach

(1)

Where for reliance upon it a contract term has to satisfy the requirement of reasonableness, it may be found to do so and be given effect accordingly notwithstanding that the contract has been terminated either by breach or by a party electing to treat it as repudiated.

(2)

Where on a breach the contract is nevertheless affirmed by a party entitled to treat it as repudiated, this does not of itself exclude the requirement of reasonableness in relation to any contract term.”

“Section 11: The ‘reasonableness’ test

(1)

In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act … is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.

…

(5)

It is for those claiming that a contract term … satisfies the requirement of reasonableness to show that it does.”

“Section 13: Varieties of exemption clause

(1)

To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—

(a)

making the liability or its enforcement subject to restrictive or onerous conditions;

(b)

excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;

(c)

excluding or restricting rules of evidence or procedure;

…”

The first question is whether, in entering the Validation Agreement, LCB dealt on the University’s written standard terms of business for the purposes of section 3. This question was subject of only limited consideration by the parties at trial. Paragraph 8 of the amended defence relied on section 3 of the Act, as well as on section 2 (which relates to negligence and has in my view no relevance to the issues that properly arise in this case). Paragraph 8 of the amended reply admitted that section 2 applied to clause 17.3 but denied that section 3 applied on the ground that neither party was acting as a consumer. However, the relevant question was whether LCB was dealing on the University’s written standard terms of business, and this was not addressed in the pleadings or in much detail in the witness evidence.

On this question, Chitty on Contracts (31^st edition), paragraph 14-072, provides a starting-point:

“The expression ‘deals on the other’s written standard terms of business’ is not defined or explained by the Act … Since, in any event, no two contracts are likely to be completely identical, but will at least differ as to subject matter and price, the question arises whether variations or omissions from or additions to standard terms thereby render them ‘non-standard’ and, if they do not, whether all the terms then become standard terms. Where negotiations have taken place around standard terms before the contract is made, and amendments agreed, it is a question of fact whether one party can be said to have dealt on those standard terms. If it is alleged that an ostensibly ‘one-off’ contract is in fact the other’s written standard terms of business, extensive disclosure may be involved to determine the terms on which contracts have been concluded with others. The burden of proving that he dealt on the other’s written standard terms of business appears to rest on the party who alleges that s. 3 applies.”

In St. Albans City and District Council v International Computers Ltd [1996] 4 All ER 481, 490-1, Nourse LJ rejected the submission that one cannot be said to deal on another’s standard terms of business if one negotiates with him over those terms before entering the contract: “Thus it is clear that in order that one of the contracting parties may deal on the other’s written standard terms of business within s. 3(1) it is only necessary for him to enter into a contract on those terms.” He agreed with the trial judge that, as the defendant’s general conditions “remained effectively untouched in the negotiations”, the plaintiff dealt on those terms for the purposes of section 3(1). In Hadley Design Associates Ltd v The Lord Mayor and Citizens of the City of Westminster [2003] EWHC 1617 (TCC), H.H. Judge Seymour Q.C. said at [78]:

“The concept underlying the provisions of Unfair Contract Terms Act 1977, s.3, in my judgment, is that there should exist a stock of written, no doubt usually at any rate printed, contract conditions which was simply drawn from as a matter of routine and intended to be adopted or imposed without consideration or negotiation specific to the individual case in which they were to be used. That seems to me to be the force of the words ‘written’ and ‘standard’ in the expression ‘written standard terms of business’. In other words, it is not enough to bring a case within Unfair Contract Terms Act 1977, s.3, that a party has established terms of business which it prefers to adopt, as for example a form of draft contract maintained on a computer, or established requirements as to what contracts into which it entered should contain, as for example provision for arbitration in the event of disputes. Something more is needed, and on principle that something more, in my judgment, is that the relevant terms should exist in written form prior to the possibility of the making of the relevant agreement arising, thus being ‘written’, and they should be intended to be adopted more or less automatically in all transactions of a particular type without any significant opportunity for negotiation, thus being ‘standard’.”

In the present case there was limited evidence. Mr McInally’s witness statement said:

“The terms under which the University was prepared to validate a programme delivered by another institution are set out in a formal (written) Validation Agreement between the University and the institution. … The Validation Agreement is in a standard form and was drafted by the University’s solicitors.”

In cross-examination Mr McInally said that all potential collaborators were given a standard-form agreement so that they would know the University’s expectations, but he insisted that not all validation agreements were precisely the same and that special arrangements could be made about matters other than merely fees. No documentary evidence was adduced by way of example of variations to the standard form. For LCB, Dr Basha stated in his witness statement dated 21 November 2014:

“[T]he University prepared through their solicitors a Validation Agreement which was sent to the College in January 2008 (the ‘2008 Validation Agreement’). We were told by the University that the Validation Agreement was in their standard form prepared by their solicitors for use for all colleges and that the college must sign and return the agreement if we wanted to proceed. We did not consider that we had any negotiating position with the University as it was really a take it or leave it situation.”

“The College was sent the [2010 Validation Agreement] for signature and return on the basis that it was the standard form of the University drafted by their lawyers and no changes were allowed except to the schedules which related to the courses, qualifications and to the minimum and maximum number of students on the various courses. The 2010 agreement was the same as the earlier 2008 Validation Agreement except in so far as [concerned provision for the courses, the student numbers and the identification of the campuses].”

“The University Validation Department sent us the new validation Agreement on 26^th January 2012 and asked the college to print off two copies, sign and return two signed copies to the University. … Here again, we had no opportunity to negotiate the substance of the Agreement but were required to sign as suggested. Again the only discussion was on the courses and degrees to be covered by the new Agreement. … The body of the agreement was the same as the previous agreements.”

I find that the position was as follows. The University presented its form of validation agreement as a standard form that was required to be accepted by the relevant institution, subject of course to inclusion of the specific matters regarding fees and courses; and it was the University’s intention to require acceptance of the standard form, not merely to use it as a discussion document or negotiating stance. It may perhaps be that occasionally an institution would request and be granted some modification of the terms; I do not think it likely that any such modification was ever substantial. If such a modification were agreed, a question might arise as to whether or not there were a dealing within section 3. However, in the present case the Validation Agreements were simply made, without negotiations, on the University’s standard form of contract. In my judgment that form constituted the University’s written standard terms of business and LCB dealt on those terms. Therefore section 3 is engaged.

The “no set-off” provision in clause 5.1 falls within the scope of section 3 as extended by section 13: see Stewart Gill Ltd v Horatio Myer & Co Ltd [1992] 1 QB 600 and Axa Sun Life Services Plc v Campbell Martin Ltd and others [2011] EWCA Civ 133 at [52]. Accordingly the provision is effective only insofar as it satisfies the requirement of reasonableness.

The University did not in terms plead in support of the contention that the “no set-off provision” was reasonable. That omission is explained by the fact that the amended reply and defence to counterclaim simply denied that section 2 and section 3 of the Act applied to clause 5.1. The denial was correct in the case of section 2, but it was wrong in the case of section 3; the mistake occurred because it was overlooked that section 3 applied not only where a party deals as a consumer but also where it deals on the other’s standard written terms of business. However, at the trial before me Mr Ascroft made submissions in accordance with the matters relied on in his skeleton argument and Mr Simms dealt with the point without taking a pleading objection. Further, so far as evidence was concerned, the question of the reasonableness of clause 5.1 raised no matter that was not also raised by the pleaded issue concerning the reasonableness of clause 17.3, which is discussed below. It is clearly right, in these circumstances, to deal with the point. The matters particularly relied on by Mr Ascroft were the following: (1) there was not a significant imbalance in the parties’ bargaining positions; (2) LCB could have sought modification or exclusion of clause 5.1; (3) LCB could have sought validation services from another provider; (4) the same provision had been included in all three validation agreements, so LCB could and should have been well aware of it; (5) clause 5.1 is clear and simple in its terms and effect.

In my judgment, in the context of this particular contract, the “no set-off” provision satisfies the requirement of reasonableness.

A further possible reason for disputing the validity of the termination of the Validation Agreement made a somewhat shadowy appearance at the trial. In his closing submissions, after Mr Ascroft had made his submissions, Mr Simms said that, by its course of conduct, the University had “always waived strict compliance” with the payment provisions in the Validation Agreement, impliedly indicating that payment was not required until problems and queries concerning the invoices had been resolved. He referred to a schedule of invoices and payments, apparently showing that during the course of the three validation agreements payments had regularly been made considerably later than the strict date for payment. He said that, having by its conduct led LCB to believe that strict compliance with the contract was not required, the University could not simply “change the goalposts” without prior warning. This way of putting the case was not pleaded and was not raised by Mr Simms in his skeleton argument or his oral opening submission; the closest he came was in paragraph 18.3 of his skeleton argument, which said that the contractual provisions “must be read in the context of the way that payment had been dealt with in the previous five years in the dealings between the parties”, and in a similar observation in his opening submission, apparently in support of his contention that the University had never made time of the essence. Any attempt at this late stage to rely on this form of waiver, which is essentially waiver by estoppel, would in my view necessarily fail, because it has the potential to give rise to significant evidential questions. Further, in my judgment the matters relied on would be incapable of amounting to a waiver by conduct. They establish no more than that the University had not previously elected to terminate the contract on the ground of late payment. Unless that conduct amounted to a clear and unequivocal representation that late payment would not in future be treated as a ground for terminating the contract, it could not amount to a waiver. It seems to me that, by itself, the University’s previous willingness to treat the contract as afoot despite late payment could not imply any assurance that it would be willing to do so in the future. It may also be that clause 21 is sufficient to preclude reliance on the doctrine of waiver by estoppel in any event, though I do not need to decide that question.

For completeness, I should mention that Mr Simms did suggest, without conviction, that the University’s conduct after the purported termination was inconsistent with a belief that the Validation Agreement had indeed been terminated. The position, however, is that an election to terminate is final and is not reversed by subsequent conduct that would imply the continuation of the contract.

In my judgment, accordingly, the University was entitled to terminate the Validation Agreement when it purported to do so. Although questions might have arisen regarding reliance on earlier invoices, in circumstances where the University had treated the contract as being afoot after the time for payment had passed, it was clearly entitled to rely on the invoice dated 15 November and rendered on 16 November 2012.

Did LCB validly terminate the Validation Agreement?

It follows from my decision on issue (4) that LCB’s purported termination of the Validation Agreement was invalid and ineffective. The Validation Agreement had already been terminated.

Limitation of liability: clause 17.3

The damages that LCB proposes to seek include damages referable to loss of revenue and profits. Are such damages precluded by clause 17.3?

This question requires consideration of the construction of clause 17.3 and of the application of the Unfair Contract Terms Act 1977.

The normal principles of contractual construction apply to exclusion and limitation clauses as they apply to other contractual terms. “However, in cases where there is uncertainty about the parties’ intention, and therefore about the meaning of the clause, such uncertainty will be resolved against the person relying on the clause and the more significant the departure is said to be from what are accepted to be the obligations ordinary assumed under a contract of the kind in question, the more difficult it will be to persuade the court that the parties intended that result”: Whitecap Leisure Ltd v John H. Rundle Ltd [2008] EWCA Civ 429, [2008] 2 Lloyd’s Rep. 216, per Moore-Bick LJ at [20]. A clause limiting liability may be construed in a less restrictive manner than a clause excluding liability altogether, though as Moore-Bick LJ observed many of the cases dealing with strict construction were decided when the approach to construction was more literal than is now the case. The contra proferentem rule of construction comes into play only if “the words used are found to be equally capable of bearing two different meanings, and are therefore ambiguous”: ibid at [22]. However, if the application of the normal principles of construction provides a clear meaning, the court must give effect to it and is not entitled to strain the construction to avoid the result.

Mr Simms made two submissions about the way clause 17.3 works: first, that the second sentence in clause 17.3 was qualified by the first sentence; second, that clause 17.3.1 “has precedence over” clause 17.3.3. I reject both submissions. As to the first submission, I agree with Mr Ascroft that the first sentence and the second sentence are independent. It is the second sentence that engages the three particular cases mentioned in clauses 17.3.1, 17.3.2 and 17.3.3. As to the second submission, I understood it to mean that future loss of profits etc (17.3.3) were not recoverable insofar as they were not reasonably foreseeable (17.3.1) or not caused by the party in breach (17.3.2). However, without doing violence to the clause it cannot be made to say that. The sub-clauses state three different, though not necessarily mutually exclusive, cases. Clause 17.3.1 is in effect a restatement of the remoteness rules in contract. Clause 17.3.2 restates general causation rules. Attention has focused on clause 17.3.3, which purports to exclude liability for a particular kind of loss.

For the University, Mr Ascroft submitted that clause 17.3.3 was clear and unambiguous and that it simply excluded liability for loss of revenue and profits. Specifically, it excluded any claim by LCB to recover profits lost that would have been made by reason of the performance of the Validation Agreement but that were lost by reason of breaches of contract such as a wrongful suspension or a wrongful purported termination of the Validation Agreement. LCB proposes to claim damages for losses sustained during the period of the first suspension and during the period from the purported termination in December 2012 until the contractual expiry date of the Validation Agreement. Mr Ascroft submits that such losses are excluded by clause 17.3.3.

I do not agree with that submission. In my judgment, clause 17.3.3, when construed in accordance with the principles already mentioned, relates to business losses outside the Validation Agreement. This was a construction advanced orally by Mr Simms.

Accordingly, clause 17.3.3 does not prevent a party from claiming damages in respect of the loss of profits it would have made under the Validation Agreement if the other party had performed its obligations.

I have already set out the relevant provisions of the Unfair Contract Terms Act 1977 and held that section 3 applies. It is therefore necessary to determine whether clause 17.3 satisfies the requirement of reasonableness.

No issue arises as to the first sentence of clause 17.3. Nor, with respect to the second sentence, has any issue been raised as to clauses 17.3.1 and 17.3.2. I have previously described them as a re-statement of general rules of remoteness (17.3.1) and causation (17.3.2). It is right to say clause 17.3.1 is couched in terms of reasonable foreseeability rather than remoteness and that those concepts are not identical. But any loss excluded as being not reasonably foreseeable would almost certainly fail the stricter remoteness test of the reasonable contemplation of the parties. As regards clause 17.3.2, that should in my judgment be construed in accordance with general common law principles regarding the break of the chain of causation, so that the mere fact that a loss resulted from the decision of a third party would not bring it within clause 17.3.2 if the contracting party’s breach was causative for the purposes of the common law.

The issue concerns clause 17.3.3. In paragraph 8 of the amended reply and in oral submissions, the University relies on four matters as showing that clause 17.3.3 was reasonable: (a) it is a commonly found provision and is not onerous or excessive; (b) it applies to both parties equally, not just to LCB; (c) the parties had equal bargaining position, because LCB could have sought to negotiate the terms or to do business with another validating institution; (d) it was open to LCB “to cover any liability [presumably loss is meant] under the second sentence of clause 17.3 by insurance.”

In respect of clause 17.3.3:

There will be judgment for the University on the claim for £42,900. Unless the parties can agree what interest should be awarded on the judgment sum, I shall adjourn that question for further consideration.

Because the University’s judgment is in respect of moneys that were payable without set-off, it would be wrong to stay execution of the judgment in the absence of a strong reason to do so. The existence of a counterclaim that is likely to succeed is not such a reason; to hold the contrary would be to undermine the parties’ contract; see Credit Suisse International v Ramot Plana OOD [2010] EWHC 2759 (Comm). Other than the existence of a counterclaim, no reason for a stay of execution has been advanced in this case. Therefore the request for a stay of execution is refused.

In respect of the counterclaim, I hold as follows:

This judgment is handed down in the absence of the parties, to whom it was circulated in draft. As they have not agreed the terms of the order as regards outstanding matters, I shall give judgments for the Claimant and for the Defendant in accordance with paragraphs 114 and 116.2 respectively and adjourn the outstanding issues for consideration at a later hearing. However, I received from the Defendant written submissions in support of an application for permission to appeal. I am able conveniently to deal with that application on the papers, and I refuse permission to appeal, for reasons that I shall set out in the order.