High Court expedites hearing of contract dispute between Cornwall and BT

The High Court will in December hold an expedited hearing of a dispute between Cornwall Council and BT over whether the local authority was entitled to terminate a major contract for material breach.

The move comes after the company last month applied for an injunction preventing the council from terminating the service delivery agreement for the BT Cornwall Strategic Partnership.

The ten-year outsourcing deal for principally back office services was signed in March 2013 by BT, Cornwall, Peninsula Community Health and Cornwall Partnership NHS Foundation Trust.

A report to Cornwall’s Resources Policy Advisory Committee this week details how the dispute has unfolded in recent months:

  • On 24 June 2015, the council formally notified BT Cornwall in writing of its intention “to seek the necessary approvals to terminate the Service Delivery Agreement for material breach particularly in respect of KPI’s (performance) and Jobs (guarantees)”.
  • On 8 July 2015, Cornwall’s Cabinet gave authority to the Corporate Director for Communities and Organisational Development, in consultation with the Leader, the Cabinet Member for Resources, the Head of Business Planning and Development and the Head of Governance and Information, to terminate alone or in combination with the other public sector partners the Service Delivery Agreement with BT Cornwall Limited and bring the services back in-house.
  • On 20 July 2015, the council entered into a standstill agreement with BT Cornwall, for a period up to 4 August 2015, “in order to facilitate negotiations for an amicable termination”. This agreement preserved the council’s ability to terminate, and in return the council undertook not to do so during this period.
  • Two meetings took place between BT Cornwall senior executives and senior council officers during the standstill period; “however an amicable termination could not be negotiated at that time”.
  • BT Cornwall filed an application with the High Court during the standstill period in order to seek an injunction on 12 August 2015, preventing the council from terminating the agreement. “The council submitted evidence in response to defend such an action and requested that the full future trial was expedited “as soon as possible to prevent any delays”.
  • A hearing took place on 12 August 2015 in the High Court (Commercial Courts) and the outcome was that the Court agreed to the request to have an expedited trial, which is now listed to take place on 1 December 2015, "to determine if the council has the right to terminate the agreement or not".

Cornwall said there were two likely outcomes to the hearing: “either the contract will continue or part of the contract will be terminated and services and relevant staff will transfer to the council”.

The local authority added that some telecare services are currently provided under the contract.  “Whilst it is not anticipated that there will be any change to these services, the council expects BT Cornwall to inform service users of any changes and will work hard to ensure that there is minimal disruption.”

The council said the dispute did not involve the telehealth services which are delivered in partnership with the two health bodies.

“Whilst the dispute is being determined, the council hopes and expects BT Cornwall to maintain service delivery and support affected employees,” the local authority said.

In a statement BT said: “BT has commenced legal action to ensure fair and proper handling of the issues which have arisen about BT Cornwall and, whilst this is taking place, it would be inappropriate for us to comment.”

The company has previously maintained that after initial difficulties with the partnership it was meeting the KPIs.