Southwark loses case against IBM

30 March 2011

30 March 2011 | Angeline Albert  

A High Court judge has thrown out a local authority’s claim it was mis-sold software by IBM.

London Borough of Southwark had contracted the computer firm to provide software and IT services. It later complained the product manufactured and installed by Orchard, but contractually supplied by IBM, was not suitable, because it did not reduce duplication in the council’s data as efficiently as it expected.  

The deal was among three software and services contracts completed between the authority and IBM in 2007.

In his judgement, Mr Justice Akenhead said the housing management software, called Arcindex, was demonstrated to the council before the contract was signed.

He said: Southwark primarily failed in the litigation because it did not establish that its requirements, as communicated pre-contract, were for anything other than those which the Arcindex software could and would provide.

“The clear inference at that stage, therefore, was that Southwark's key staff knew exactly what they were likely to get from Arcindex and were happy with that.”

The judge said it was surprising that Southwark did not call as a witness any one of six possible people who were involved in the pre-contract period for or on behalf of the council. “Southwark, therefore, had no oral evidence to support its claim that there was an oral over-arching contract, or that, if there was a material misrepresentation anyone of relevance within Southwark had relied upon it.”

The judge pointed out that by mid-January 2011 at the latest, Southwark was aware that over half of its complaints about unsuitability were unsupported by the expert it brought in to assess the system.

The council’s case relating to misrepresentation, negligence and collateral warranty “were, at best, very weak”, he said.

A Southwark council spokesman said: "This case refers to the acquisition of software back in 2006 which, in our view, was not fit for purpose. We're disappointed with the judgement, but we took this action because we believed we had been mis-sold a product. Our duty is to have IT systems that work and that save the council and the council taxpayer money.

"We will not appeal. We will now have an internal review to make sure we get the software we need so that we are able to cut running costs for the organisation, and will look for suitable partners to help us deliver this."

Commenting on the case, IBM said: “We are pleased with the judgment, which found that claims asserted have no merit, and that IBM met all its obligations to Southwark.”

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