NCC Skills Ltd v Ascentis

On 22^nd April 2016 “Ascentis”, an organisation that awards educational qualifications, wrote to NCC Skills Ltd (hereafter “NCC Skills”), an independent training provider, informing them that their recognition as a centre able to deliver such qualifications was being withdrawn.

The two companies had worked together since NCC Skills was established in 2009. Their relationship has been governed by written agreements, the latest of which is dated 1 August 2015 and is entitled “The Ascentis Centre Agreement”, (hereafter “the Agreement”). NCC Skills commenced proceedings against Ascentis on 7 July 2016 alleging that Ascentis’ actions were in breach of that Agreement.

NCC Skills now applies for summary judgment on two elements of its claim, namely whether, on its proper construction, the Agreement provided that Ascentis might only impose a sanction where it has complied with the implied and express procedural safeguards provided for in the Agreement, and whether the sanction imposed by Ascentis on 22 April 2016 was void for having been imposed in breach of the provisions of the agreement.

By their application, the claimant claimed, in the alternative, an interim declaration or an interim injunction. At the end of his submissions, Mr. Fionn Pilbrow, who appeared for the claimant, withdrew those two alternative applications. Accordingly I am concerned only with the application for summary judgment.

Applications for summary judgment are governed by CPR 24. CPR 24.2 provides that:

“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –

(a)

it considers that –

(i)

that claimant has no real prospect of succeeding on the claim or issue; or

(ii)

that defendant has no real prospect of successfully defending the claim or issue; and

(b)

there is no other compelling reason why the case or issue should be disposed of at a trial.”

There is no dispute between the parties as to the principles to be applied on an application for summary judgment. As was pointed out by Mr. Andrew Latimer, those principles were conveniently summarised by Simon J (as he then was) in JSC VTB Bank v Skurikhin [2014] EWHC 271 at paragraph 15.

“The principles which apply have been set out in many cases, are summarised in the editorial comment in the White Book Part 1 at 24.2.3 and have been stated by Lewison J in Easyair Limited v. Opal Telecom Limited [2009] EWHC 339 (Ch) at [15], approved subsequently (among others) by Etherton LJ in A C Ward & Son v. Caitlin (Five) limited [2009] EWCA Civ 1098 at [24]. For the purposes of the present application it is sufficient to enumerate 10 points.

(1)

The Court must consider whether the defendant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success, see Swain v Hillman [2001] 2 All ER 91 , 92. A claim is ‘fanciful’ if it is entirely without substance, see Lord Hope in Three Rivers District Council v Bank of England [2001] UKHL 16 at [95].

(2)

A ‘realistic’ prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003] EWCA Civ 472 .

(3)

The court must avoid conducting a ‘mini-trial’ without disclosure and oral evidence: Swain v Hillman (above) at p.95. As Lord Hope observed in the Three Rivers case, the object of the rule is to deal with cases that are not fit for trial at all.

(4)

This does not mean that the Court must take everything that a party says in his witness statement at face value and without analysis. In some cases it may be clear that there is no real substance in factual assertions which are made, particularly if they are contradicted by contemporaneous documents, see ED & F Man Liquid Products v. Patel (above) at [10]. Contemporary activity or lack of activity may similarly cast doubt on the substance of factual assertions.

(5)

However, the Court should avoid being drawn into an attempt to resolve those conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661 , Mummery LJ at [17].

(6)

In reaching its conclusion, the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond ( No. 5) [2001] EWCA Civ 550 , [19].

(7)

Allegations of fraud may pose particular problems in summary disposal, since they often depend, not simply on facts, but inferences which can properly drawn from the relevant facts, the surrounding circumstances and a view of the state of mind of the participants, see for example JD Wetherspoon v Harris [2013] EWHC 1088 , Sir Terence Etherton Ch at [14].

(8)

Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand the Court should heed the warning of Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116].

(9)

The overall burden of proof remains on the claimant, …to establish, if it can, the negative proposition that the defendant has no real prospect of success (in the sense mentioned above) and that there is no other reason for a trial, see Henderson J in Apovodedo v Collins [2008] EWHC 775 (Ch), at [32].

(10)

So far as Part 24,2(b) is concerned, there will be a compelling reason for trial where ‘there are circumstances that ought to be investigated’, see Miles v Bull [1969] 1 QB 258 at 266A. In that case Megarry J was satisfied that there were reasons for scrutinising what appeared on its face to be a legitimate transaction; see also Global Marine Drillships Limited v Landmark Solicitors LLP [2011] EWHC 2685 (Ch), Henderson J at [55]-[56].”

Mr. Latimer lays particular stress on principles (8) and (9) in Simon J’s list. As he correctly points out the claimant has sought summary judgment in the present case before an acknowledgement of service or the defence has been filed and before standard disclosure has been completed. As he observed “the claimant has chosen to make an exceptionally early …… application based on its particulars of claim. If the hearing shows that the claimant cannot establish at this stage that the defence has no real prospect of success then the claimant fails and the application is dismissed.” I agree.

I also agree with Mr. Latimer in his observations about what this summary judgment application is not. It is not a rectification claim; it is not open to the claimant to re-word the Agreement between the parties as a means of advancing its claim. It is not a trial of a preliminary issue; instead the strict limits imposed by Part 24 CPR apply. And it is not a judicial review hearing; accordingly public law concepts of legitimate expectation or procedural fairness have no application. This application turns essentially on the proper construction of the contract.

NCC Skills is a company incorporated in England and Wales. It was established in January 2009. It is an independent training provider of “funded learning”. It offers qualifications made available by Ascentis.

Ascentis is a company incorporated in England and a registered charity. It is regulated by the Office of Qualifications and Examinations Regulation (“Ofqual”). It is also approved and regulated by the Quality Assurance Agency for Higher Education. It has been operating since 1975 and has 300 approved centres around the country.

The Agreement between the parties with which I am concerned is dated 1 August 2015. The relevant clauses of the Agreement are considered below.

On 6 October 2015, Ms Liz Cook, Head of Compliance and Quality Assurance at Ascentis, emailed NCC Skills indicating that a number of NCC Skill’s students (or “learners” as they are called in the correspondence) were under investigation in relation to certain irregularities identified during the marking process of English and maths assessments.

On 24 November 2015, Ms Cook wrote to Mr Harvey Young at NCC Skills setting out the outcome of that investigation. She indicated that “the irregularities are indicative of learner plagiarism and or tutor intervention, and as such has led to a development of and required actions for both NCC Skills and Ascentis which are detailed below.” Ascentis required NCC Skills to review the processes in relation to the administration and management of external assessment and the training provided to the tutors in relation to the topic. This was to include invigilation practice, the tracking of post and learner preparation regarding examination techniques. The letter ended “These actions will be monitored through the external verification process and reporting. The Quality Assurance Manager will monitor the reporting with specific attention to these actions.”

By letter dated 20January 2016, Ms Alison Curryer, Head of Quality at NCC Skills, wrote to Ms Cook at Ascentis. She referred to certain “additional evidence” with which NCC Skills had been provided by Ascentis in relation to the investigation into irregularities in the English and maths assessments of October 2015. Ms Curryer asked for further evidence, in particular, “the lead examiner’s reports…. and conclusions drawn from the interview” with a named tutor. She went on :

“With reference to the additional evidence we have received it is very difficult for me to draw conclusions based on the extracts taken from the externals assessments. I am unable to see the questions asked of the learner and the information they are provided with to enable them to calculate/formulate their response. In the absence of this information I cannot judge whether learners have provided specific responses due to the information they have been given or whether malpractice has actually occurred.”

Ms Curryer went on to identify a series of other questions about Ascentis’s investigation and concluded:

“NCC Skills are extremely disappointed with how Ascentis have dealt with this investigation from the outset. The timescales involved and the lack of information from Ascentis, both at the time the investigation was being carried out and during the weeks following the investigation is unacceptable….”

On 21 January 2016 a meeting took place between Ms Curryer and Mr Phil Wilkinson of Ascentis. Following that meeting Ms Curryer wrote to Mr Wilkinson complaining about the way the Ascentis investigation had been carried out.

On 26 Jan 2016 NCC Skills wrote a letter to its tutors:

“Dear Tutor

We have recently identified instances of malpractice within the enrolment and assessment of QCF certificates in English and maths and the Functional Skill qualification. The malpractice discovered includes:

•

Assessment papers being submitted for learners that have been produced fraudulently;

•

Learners not being given the appropriate support expected from our tutors to enable them to complete their qualifications

•

Functional Skills test being completed by someone on a learner’s behalf

•

Enrolments being submitted for learners who have no knowledge of enrolling onto a course with NCC Skills, or any other college/training provider

•

Encouraging falsification of learner details on enrolment forms.

As a result the Senior Management Team have given careful consideration to our current quality assurance and performance management systems so that we can be assured that these are robust enough to prevent this from happening in the future….. Whilst we would like to re-assure tutors that we do not believe assessment malpractice is widespread throughout the organisation, it is important that tutors are aware that malpractice of any kind will not be tolerated and action will be taken against any tutor where malpractice is proven, which may result in dismissal and a criminal investigation….. ”

Ms Cook replied to Ms Curryer’s letter of 20 January 2016 in her letter of 10 February 2016. That letter included the following :

“Unfortunately Ascentis cannot provide any more evidence in addition to that which has already been provided. It is not standard practice to disseminate evidence to a centre during an investigation and regrettably we have provided everything we are able to….. All information in relation to candidates’ scripts that can be supplied …… has already been supplied….. ”

On 12 February 2016 NCC Skills emailed Ascentis identifying a number of concerns about Ms Cook’s investigation and suggesting a meeting between the two companies. A meeting was eventually fixed for 17 March 2016, but before it could take place Ascentis effectively suspended NCC. An email dated 25 February 2016 from Ms Cook informed Amanda Fisher of NCC Skills that:

“Ascentis are in receipt of a whistle blowing allegation in relation to NCC Skills. The allegation is one of malpractice and maladministration. As a result the centre’s access to RHOMBUS has been removed. This means no further registrations will be accepted and no further results will be processed until further notice. ”

Some further details were provided the following day. Ms Cook wrote as follows :

“I am contacting you in relation to a case of alleged malpractice and maladministration of English and maths QCF Functional Skills qualifications at NCC Skills.

Ascentis has received the allegation from a whistleblower, and due to the serious nature of the allegation in accordance with regulatory requirements, Ascentis is obligated to investigate and examine these allegations. The investigation will be carried out in accordance with the Ascentis malpractice and maladministration process, which is enclosed for your reference. The investigation will include a visit to NCC Skills carried out by the Ascentis Investigations Team on Monday 29 February at 11am. ”

No further details were provided about the alleged malpractice and maladministration.

Following the Ascentis visit on 29 February, Ascentis sought further documentation from NCC Skills. NCC Skills apparently supplied the requested documentation. In an email to Ms Cook from Ms Curryer dated 11 March 2016 Ms Curryer explained that she had “spent time with the investigation team explaining what each of the documents were and both (investigators) said… that they had received the evidence they had requested for these learners.”

On 17 March 2016 Ms Cook emailed Ms Curryer to provide her “with an update regarding the status of the investigation; that it is ongoing. As soon as the investigation is concluded, the outcome will be communicated to NCC Skills.”

On 20 March 2016, NCC Skills made a formal complaint to Ascentis in relation to the conduct of the investigation. NCC Skills complained about alleged failures by Ascentis to provide detail as to the nature of allegations against NCC Skills and to comply with Ascentis’ “Malpractice and Maladministration policy”, in particular in relation to putting the allegations and supporting evidence to NCC Skills and allowing them an opportunity to respond.

On 8 April 2016 that complaint was rejected by Ascentis, who indicated that it had “acted in accordance with its own policies, procedures and contractual obligations and with the requirements imposed on it from time to time by the regulators.”

On 22 April 2016 Ascentis wrote to NCC Skills informing them of their conclusions that maladministration and malpractice were proven. As a result, the letter concluded “the outcome is that centre recognition is withdrawn from NCC Skills. This sanction will take place from 22 April 2016.” The letter explains that the investigation team have found evidence in relation to 11 incidents of maladministration and four incidents of malpractice.

On 20 May 2016 NCC Skills filed a lengthy notice of appeal against the imposition of the sanctions. Those grounds indicated that NCC Skills had not had access to the evidence relied upon by Ascentis in reaching its decision and had not received adequate particulars of the allegations against it.

On 27 May 2016 Ascentis emailed NCC Skills in response to the appeal. That email indicated that a review of the information had been completed. The email went on “Ascentis can confirm that no new information has come to light which requires an immediate consideration of the original decision at this stage.” NCC Skills were asked to indicate whether they wished to proceed to Ascentis’ “formal appeals process”. That same day, solicitors for NCC Skills replied indicating that they did indeed intend “to proceed immediately to Ascentis’ formal appeals process”.

On 16 June 2016, Ascentis emailed NCC Skills indicating that the appeal had not been upheld. That email attached a “Report of Independent Appeal Review” setting out the findings of an independent reviewer. (That reviewer was not identified in that document but was subsequently identified in a letter dated 7 July 2016.)

The following provisions of the Agreement between Ascentis and NCC Skills are relevant to this application:

Under the heading “Purpose of this agreement” the following appears “This agreement is for the purpose of clearly specifying the role and responsibilities of the Centre in their dealings with Ascentis.” However, as might be expected, the Agreement also sets out, in Part B, the responsibilities imposed under the contract on Ascentis.

Part A of the agreement identifies the obligations imposed on NCC Skills (which is called “the Centre” in the agreement). Of note, in the present context, is clause 7 which requires NCC to “have in place robust policies and procedures for preventing and investigating incidents of malpractice or maladministration”.

Part C of the agreement deals with termination and sanctions. Clause 20a specifies how the Centre can terminate the agreement. The provisions of central importance to this application, are clauses 20b, 20d & 20e. I set out the relevant parts:

“20b. Without prejudice to any other rights or remedies which Ascentis may have, Ascentis may terminate this agreement immediately on giving written notice to the Centre if an event has occurred, or is likely to occur, which has or could reasonably be expected to have, an Adverse Effect, to be assessed by Ascentis on a case by case basis. Such events may include, but without limitation, the following:

Where Ascentis believes that there has been an incident of malpractice or maladministration, which could either invalidate the award of a qualification which it makes available or could affect another awarding organisation…

Where Ascentis has identified issues with the Centre through one of the three ways listed in the Sanctions Process Document…

20d. Ascentis may, in its absolute discretion and as an alternative to termination of this agreement, apply one or more of the sanctions, immediately on giving written notice to the Centre, if an event has occurred, or is likely to occur, as referred to in section 20b or if one of the events listed in section 20c has occurred provided that if Ascentis decides to apply a sanction which results in either :

withdrawal of Qualification approval, as previously granted by Ascentis and in relation to one or more Qualifications, or

withdrawal of Centre Recognition

then this is deemed to trigger termination of this agreement either in whole or, in the case of (i) above where the Centre is still permitted to deliver one or more of the Qualifications, then in relation to those Qualifications where approval has been withdrawn, and the remaining provisions of this section which relate to termination of this agreement shall apply, in addition to any other process which may be relevant under this section 20.”

20e : Where Ascentis intends to apply one or more of the sanctions as a result of identifying issues with the Centre through one of the three ways listed in the Sanctions Process Document then it shall follow the relevant process as set out in the same.”

Clause 26 contains an “entire agreement” clause. It provides that

“this agreement (and the documents referred to in the same) constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral relating to the subject matter”.

There were three schedules to the agreement. Schedule 1 reproduced Condition C2 of the General Conditions of Recognition produced by Ofqual. Schedule 2 was to contain the “Policy and Procedure for Centre Sanctions relating to the Ascentis Centre Agreement” which is referred to in clause 20b(xiii) and in clause 20e. Schedule 3 is referred to in clause 22a(iii) and contains the form to be used in collecting Personal Data

The definition of “Sanctions Process Document” in the definition section of the Agreement is “the document issued by Ascentis, and attached to this agreement at Schedule 2 which details the sanctions process to be followed in the event of Ascentis applying one or more of the sanctions”.

The definitions section says this about “Ascentis guidance”. That expression means:

“the Qualification Specification, Ascentis Quality Assurance Provision, Sanctions Process Document, Ascentis Complaints Procedure and other supporting policy requirements and guidance documents issued by Ascentis and updated, from time to time and made available to the Centre in hard copy upon gaining centre recognition and through the centre’s website, Ascentis’s Rhombus remote access portal or by email in relation to updates.”

The Particulars of Claim refer to the 2016 Sanctions Process Document. That document includes the following :

“1.

All centres recognised by Ascentis are required as a condition of recognition, to sign an enforceable agreement between themselves and Ascentis prior to commencement of delivery of its qualifications, and to comply with the agreement at all times.

Ascentis identifies issues with a specific centre through:

Internal ongoing monitoring – Qfqual accredited and QAA licensed provision

External information received from the regulators and/or other external bodies

External feedback received from concerned stakeholders.

2.

A specified procedure is followed according to the type of issue, and the outcome of the related processes may result in sanctions being applied…..

3.

A procedure for appeals against decisions made in relation to this policy is set out in the Ascentis appeals policy.”

Under the heading “External feedback received from concerned stakeholders – the process”, the sanctions policy provides as follows:

Two of the policy documents referred to in the Sanctions Policy Document are said to be relevant to this application. The first is the “Maladministration and Malpractice Policy”. At page 5 and 6 of that document the following appears:

“In all cases of suspected malpractice and maladministration reported to Ascentis we will protect the identity of the “informant” in accordance with our duty of confidentiality and/or legal duty…

In accordance with regulatory requirements, all suspected cases of maladministration and malpractice will be examined promptly by Ascentis to establish if malpractice or maladministration has occurred.”

On page 7 is set out the “fundamental principle of all investigations”:

“The fundamental principle of all investigations is to conduct them in a fair, reasonable and legal manner, ensuring that all relevant evidence is considered without bias. In doing so, investigations will be based around the following broad objectives: to establish the facts relating to allegations/ complaints in order to determine whether any irregularities have occurred

To identify the cause of the irregularities and those involved

To establish the scale of the irregularities

To evaluate any action already taken by the centre

To determine whether any remedial action is required to reduce the risk to current registered learners and to preserve the integrity of the qualification

To ascertain whether any action is required in respect of any certificates already issued

To obtain clear evidence to support any sanctions to be applied to the centre or the members of staff in accordance with our Sanctions Policy

To identify any adverse patterns or trends.”

On page 8 of the policy document under the heading “Investigation Report” the following appears :

“If we believe there is sufficient evidence to implicate an individual/centre in malpractice and/or maladministration we will:

Inform them (preferably in writing) of the allegation

Provide them with details of the evidence we found to support our judgment

Inform them of the possible consequences

Inform them that information in relation to the allegation and investigation may be or has been shared with the regulator and other relevant bodies (e.g police)

Provide them with an opportunity to consider and respond to the allegations and our findings

Inform them of our appeals policy should they wish to appeal against our decision.

After an investigation we will produce a draft report for the parties concerned to check the factual accuracy. Any subsequent amendments will be agreed between the parties concerned and ourselves. The report will identify where the breach, if any, occurred

Confirm the facts of the case (and any mitigating factors if relevant)

Identify who is responsible for the breach (if any)

Contain supporting evidence where appropriate (e.g. witness statements)

Confirm an appropriate level of remedial action to be applied.

We will make the final report available to the parties concerned and to the regulatory authorities and external agencies as required.”

The Appeals Policy provides for an initial view of the appeal details “to ensure the application is complete and to ascertain if this issue can be resolved before it goes to a formal appeal.” It then sets out the procedure to be adopted if a Centre “decided to proceed to the independent appeal stage”. In such circumstances, the policy provides that Ascentis:

“will arrange an independent review to be carried out. This will be carried out by someone who is not an employee of ours, an assessor working for us, or otherwise connected to our organisation. They will also be someone with relevant competence to make a decision in relation to the appeal and will not have a personal interest in the decision being appealed. The independent reviewer will review all the evidence which took place in the above stages and review if we’ve applied our procedures fairly, appropriately and consistently in line with our policy. The independent review process may involve:

A discussion with the appellant or the learner and Ascentis personnel

A request for further information from the appellant, learner or Ascentis personnel

A centre visit by authorised Ascentis personnel.

The independent reviewer’s decision is final in relation to how Ascentis will consider such appeals and we’ll let you know the outcome of the review within twenty days of receipt of the appeal. If the Centre/Learner is still unhappy with the outcome at this stage they are entitled to raise the matter with the relevant qualification regulator (e.g. Ofqual in England).”

The Particulars of Claim are dated 7 July 2016. It is apparent that the claimant has moved very quickly indeed to get this application before the Court.

The Particulars of Claim set out what the claimant alleges are the critical parts of the agreement of 1 August 2015. Clauses 20d and 20e are set out in full as are the relevant parts of a version of the Sanctions Policy produced in January 2016. That version refers to the two documents from which I have quoted above. It is contended that by those references, the two policy documents are incorporated into the Agreement. There are lengthy quotations from the two policy documents in the pleading. The breaches of contract alleged are breaches of the two policies.

It was pointed out during the hearing that the version of the Sanctions Policy included in the bundle of papers before the court, and referred to in the pleadings, was the January 2016 version. I enquired whether the version exhibited to the Agreement of 1 August 2015 was available. I was told it was not available in court. However, by an email dated 26 July 2016 (the day after the hearing) the Claimant produced a scan of an email dated 6 August 2015 from Ascentis to NCC Skills, along with an original electronic copy of the attachment to that email, which was the Agreement. Included as schedule 2 to that Agreement, and forming parts of the same, single electronic document, was a version of the Sanctions Process Document. It can be inferred that that had been attached to the original Agreement.

There appeared to me to be material differences between the two versions of the Sanctions Policy Document and I invited further written submissions from the parties on the point. Most significantly, the correct version of the Sanctions Process Document does not refer to the appeals policy. It does refer (on page 22 of 23) to a “Malpractice” policy but I have not been provided with a copy of that policy and do not know if it is materially different from the one pleaded.

The Claimant very properly conceded in the email of 26 July, there are “numerous changes throughout every part of the document”.

Both parties provided detailed and helpful skeleton arguments. I then had the benefit of detailed oral submissions from Mr Pilbrow, for the claimant and Mr Latimer, for the defendant. I record here my gratitude for these clear and helpful submissions.

It was Mr Pilbrow’s arguments at the hearing that Ascentis were asserting that it had been alerted to the possibility that there was malpractice or maladministration as a result of information received from concerned stakeholders. That, he said, was one of the three ways listed in the Sanctions Process Document and accordingly this case fell also under clause 20b (xiii).

Mr Pilbrow contended that clause 20d gave Ascentis a discretion, as an alternative to terminating the agreement, of applying one or more of the sanctions for which the agreement made provision. If Ascentis contemplated applying such a sanction then Ascentis was contractually obliged to apply the Sanctions Process Document in determining whether or not to apply a sanction. That necessitated, said Mr Pilbrow, compliance with the malpractice and maladministration policy and the appeal policy

Mr Pilbrow contended that Ascentis were in breach of the process set out in the malpractice and maladministration policy in that the investigation was not conducted in “a fair, reasonable and legal manner”. Furthermore, he said, the investigation report failed to comply with the requirements of the policy as are set out at paragraph 42 above. In particular, he said, Ascentis failed to provide NCC Skills with an opportunity to consider and respond to the allegation and to Ascentis’ findings.

Mr Pilbrow also contended that Ascentis were in breach of their appeals policy. In particular, he argued, the independent reviewer adopted the wrong test in conducting her review.

Mr Latimer contends that there is a distinction to be drawn in construing clause 20b between cases falling in sub paragraph (vii) and cases falling within (xiii). He maintains this case fell in (vii) and not (xiii). Clause 20d, he argues permits the defendant, in its absolute discretion, and as an alternative to termination, to apply one or more sanctions if an event has occurred as referred to in clause 20b. Mr Latimer contends that it is plain from the email of the 25 February 2016 and the decision letter of 22 April 2016 that the defendant was imposing a sanction under 20b (vii) for malpractice and maladministration, and not under 20b (xiii). He says that clause 20e is entirely irrelevant because the defendants were not choosing to terminate the agreement under clause 20b (xiii). The net effect, he argues, is that the defendant had an absolute discretion to impose a sanction when it concluded that malpractice or maladministration had occurred.

The appeals policy and the malpractice and maladministration policy, Mr Latimer argued, were not part of the contract. Whilst the contract itself refers to the Sanctions Process Document it makes no mention of the other two policies. As Mr Latimer puts it “indirect incorporation upon incorporation will not do”. He contended that the appeal policy and the malpractice and maladministration policy are not contractual documents and are not drafted so as to create legal relations between the parties. They may be important from a regulatory point of view, he says, but they cannot found the claimant’s claim in contract. In any event, says Mr Latimer, even if the appeal policy was contractual, failure to follow it would not render void the decision of the defendant.

After the discovery of the 2015 Sanctions policy, I received further written submissions from both parties. Essentially it was Mr Latimer’s argument that the Claimant’s reliance on the wrong version of the Sanction Process Document fatally undermined the Claimant’s case. He said that the fact that the appeals policy and the malpractice and maladministration policy were not referred to in the version of the Sanction Process Document annexed to the Agreement meant the Claimant’s argument that they were incorporated in the Agreement could not run.

Mr Pilbrow’s answer was that the reference to the policy detailing ‘the sanctions process to be followed in the event of Ascentis applying one or more of the Sanctions’ makes clear that what is being referred to is “the process in place at the time that Ascentis come to be applying (or considering whether or not to apply) a sanction, and not the process as it once stood in a policy that was in place but is no longer”. The promise given by Ascentis to NCC Skills, he argues, was to follow the process set out in its Sanctions Process Documents as updated from time to time and as in force at the material time.

A proper analysis of this application requires consideration of four issues. First, the purported basis of Ascentis’ investigation; second, the suggested incorporation of the two policy documents; third the suggested breaches of contract; and fourth the effect of a breach of a policy term.

As Mr Latimer correctly observes, the email dated 25 February 2016 and the letter dated 26 February 2016 identify as the reasons for the start of the investigations were allegations of malpractice and maladministration. The decision letter of 22 April 2016 similarly makes clear that what is proven as a result of the investigation is maladministration and malpractice. However, the source of the allegation referred to in the 25 February email is “a whistle blowing allegation”, a point repeated in the letter of 26 February. The decision letter of 22 April 2016 repeats the observation that Ascentis had received an allegation from a whistle blower. In my judgment the expression “external feedback received from concerned stakeholders”, which is one of the three ways of identifying issues listed in the Sanction Process Document is entirely apt to cover complaints from whistle blowers..

It follows that the event which might be thought to have an adverse effect within clause 20b could reasonably be said to be either the occurrence of an incident of malpractice or maladministration under sub paragraph (vii) or identification of an issue through one of the three ways listed in the Sanctions Process Document under (xiii), or both.

One looks in vain in the correspondence to find any indication of the precise basis upon which Ascentis proposed proceeding. However, it is, in my judgment, of some significance that in her letter of 26 February 2016, Ms Cook indicated that the investigation which she said Ascentis were obliged to carry out would be “carried out in accordance with the Ascentis published malpractice and maladministration process” and that she enclosed a copy of that document with her letter. In my judgment, that is a firm indicator that Ascentis took the view that the malpractice and maladministration process document applied to the investigation they were about to commence.

In my view, that is entirely consistent with a proper reading of the contract. There is nothing in clause 20b which would lead to a conclusion that only one “event” can be taken to have triggered entitlement to terminate; in fact the overwhelmingly likelihood is that the parties would have contemplated more than one ‘event trigger’ occurring on any one occasion. As Mr Pilbrow correctly observed, it will often be the case that where an event concerning a Centre has occurred Ascentis will learn of it through one of the three ways listed in the Sanctions Process Document.

In any event, if as a matter of fact Ascentis identified issues with NCC Skills via one of the three routes listed in the Sanctions Process Document, then regardless of whether the nature of the issue arising happens to fall into another sub paragraph of clause 20b, clause 20e applies and as a result Ascentis was required to follow the process identified in the Sanctions Process Document.

That that is the correct conclusion on this issue seems to be perfectly plain. I see no real prospects of the defendant succeeding in persuading a court to the contrary.

Mr Latimer accepts that the Sanctions Process Document is incorporated into the contract because it is referred to in the Agreement. He is plainly right that it is referred to. But he says it would be illegitimate to say that any documents referred to in that Sanctions Process Document are themselves incorporated into the Agreement. He refers to clause 26a and makes what, in my judgment, is a valid point that the expression in parenthesis in that clause, namely “and the documents referred to within the same”, make it clear that only the terms of the Agreement itself and of those documents referred to in that Agreement are part of the Agreement. It is important, therefore to identify what the “Agreement” consists of.

If it could properly be argued that the Sanctions Process Document was simply a document referred to in the contract, as Mr Latimer suggested was the case, it would be impossible to conclude that there was no real prospect of the defendant establishing that documents referred to in that Sanctions Process Document were extra contractual.

In my judgment, however, it is perfectly clear that the Sanctions Process Document is incorporated not because it is referred to in the Agreement, but because it is an integral part of the Agreement. It is referred to repeatedly within the Agreement and is included in the definition section. It is annexed to the Agreement. Its pages are numbered consecutively to those of the main part of the Agreement. Accordingly, in my judgment, “this agreement” in clause 26a includes the Sanctions Process Document and the expression “the documents referred to within the same” refers to documents referred to in both the main body of the agreement and the schedules.

What has emerged since the hearing, however, is that neither the malpractice and maladministration document nor the appeals policy was referred to in the version of the Sanctions Process Document annexed to the Agreement. Mr Pilbrow advances a sophisticated and ingenuous argument that what is being referred to is the process in place at the material time, not that in place at the time the contract was signed. However, the definition of Sanctions Process Document does not contain the words “from time to time” or the equivalent. Instead, it refers to ‘the document issued by Ascentis, and attached to this agreement at Schedule 2. It is true that the definition of “Ascentis Guidance” in the definitions section of the Agreement refers to a number of documents issued by Ascentis as “updated, from time to time and made available to the centre”. But that list does not include either of the two documents now relied on

In any event, this argument is unpleaded. It may be that if the issue was pleaded and was then ventilated at trial, or at trial of a preliminary issue, Mr Pilbrow’s sophisticated argument would succeed. I say nothing one way or the other about its prospects. But in my judgment, it cannot be said, at this stage, that the defendant has no realistic prospect of resisting that argument. It was an argument that emerged at the latest possible stage. The defendant has had very little time to respond to it. I am, in reality, being invited to give summary judgment on the basis of a new and entirely untested contention.

To determine that issue, I would have had to conduct a mini trial without pleadings, disclosure or oral evidence, contrary to principle 3 of the principles identified in JSC VTB Bank v Skurikhin (paragraph 6 above). I would have had to disregard the possibility that the defendant might have evidence to undermine this new argument, contrary to principle 6. And I would have needed to decide a difficult question of law – the incorporation of updated policies - in an area that requires detailed argument and mature consideration, contrary to principle 8. Given that the burden of proof on this application lies on the claimant, I am entirely satisfied that it cannot surmount this hurdle.

Given that conclusion, this application must fail. For the sake of completion, and in case this application were to go further, I set out briefly my views on the other two issues.

Mr Latimer took a stance in opposition to the application on the first, second and fourth issues identified at paragraph 59 above; he did not advance arguments that, if the policy documents were of contractual effect, then nonetheless Ascentis were not in breach of them.

In my judgment he was right not to do so. It is beyond argument that Ascentis did not comply with the material parts of the malpractice and maladministration policy or the appeals policy in their management of this investigation. As the independent reviewer pointed out in her report:

“it is Ascentis’ policy to provide a draft report to the parties concerned to give the opportunity to review for factual accuracy and to respond to the findings. This does not appear to have happened in this case and in this respect Ascentis has not followed its Malpractice and Maladministration Policy”.

Had the Claimant succeeded in establishing that the two policies were incorporated and that the defendant had no realistic prospect of success on the other issues I have identified, then in my judgment it would have surmounted this hurdle too. It is plain that Ascentis were in repeated breach of their malpractice and maladministration policy. It failed to provide NCC Skills with details of evidence found to support their conclusion. It failed to provide them with an opportunity to consider and respond to the allegations and their findings. It failed to produce a draft report for NCC Skills to check. The report they eventually produced failed to identify where each breach occurred; it failed in a number of respects to confirm the facts relating to each breach; it failed to identify precisely who was responsible for each breach; it failed to include supporting evidence such as written statements. In my judgment the investigation by Ascentis into the allegations in this case did not come close to a fair and reasonable investigation as was required by the fundamental principle identified in Ascentis’ own documentation.

The response of Ascentis also put it, in my judgment, in breach of its own appeals policy. Ascentis did arrange, as they were obliged to do, for an independent review to be carried out by an appropriately qualified person who, apparently, had no connection with Ascentis. However the independent reviewer was obliged to review all the evidence with a view to deciding whether Ascentis had applied their own procedures fairly, appropriately and consistently in line with their policy. As noted above the reviewer found that Ascentis had failed to provide NCC Skills with a copy of the draft report in breach of the policy. However, the reviewer failed to appreciate or record that Ascentis had failed in all the other respects noted above. Critically, the reviewer failed to appreciate or take into account the fact that Ascentis had never disclosed to NCC Skills the detail of the allegation so as to enable NCC Skills to provide a proper defence.

The reviewer regarded the failure to disclose the draft report as of no significance because in her words “NCC has subsequently had the opportunity to respond to the report during the appeal process”. That might be an adequate response if Ascentis’ report itself had disclosed what the malpractice and maladministration policy required, but it plainly did not. NCC Skills had been fighting in the dark throughout the process and Ascentis’ report threw very little light on the real issues that they had to address.

It was common ground between the parties that if I had found that the policies were incorporated in the contract, the consequence of such breaches depended on their significance. If the breaches of the new policies were trivial such breaches would not entitle the court to treat as void the decision of Ascentis to impose the sanction. If, on the other hand, the breaches of the policy were profound, they would undermine the contractual entitlement to withdraw recognition.

Mr Latimer is right to say that clause 20b and 20d of the agreement give Ascentis the power to make the decision and an absolute discretion whether or not to impose a sanction. He is also right to say that the appeals policy does not specify “voidness as the penalty for non-compliance”. In my judgment, however, a wholesale failure properly to investigate whether a potentially terminating event has occurred does render void any decision to terminate thereafter. If I had found that these policies were incorporated into the contract, I would have found that the Claimant had established that they were breached in a fundamental manner and that that deprived Ascentis of the contractual power to impose the sanction.

In my judgment, for the reasons set out at paragraph 70, the Claimant has not demonstrated that the defendant has no realistic prospect of defending this claim. Accordingly, this application is dismissed.