Disclosure and Barring Service v Tata Consultancy Services Ltd
Citation: [2025] EWCA Civ 380
Background Facts
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In 2012, DBS contracted TCS to modernise its disclosure and barring processes and to build a new IT system. This included transitioning from paper-based systems to digital.
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TCS brought a claim against DBS for around £125 million; DBS counterclaimed for over £100 million.
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After a long trial in 2023, the High Court decided DBS owed TCS a net payment of just under £5 million.
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A key issue on appeal related to DBS’s entitlement to claim “Delay Payments” (similar to liquidated damages), specifically whether DBS’s right was conditional on issuing a "Non-Conformance Report" (NCR) as set out in clause 6.1 of the contract.
​Judgment
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Condition precedent question:
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Clause 6.1 stated that if a deliverable failed acceptance tests or a milestone was not achieved due to TCS's default, DBS "shall promptly issue" an NCR, and "then" DBS would have options under clause 6.2 (including claiming Delay Payments).
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Court of Appeal’s decision:
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Upheld the High Court’s finding that clause 6.1 created a condition precedent: DBS could only claim Delay Payments if it had issued an NCR first.
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DBS had failed to issue any NCRs and thus could not recover Delay Payments.
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The wording (“if…then”) and structure of the clause clearly indicated conditionality. The NCR served an important contractual purpose: documenting defects, enabling corrective actions, and clarifying milestone failures.
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Outcome:
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The appeal by DBS was dismissed.
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The High Court judgment that DBS was not entitled to Delay Payments was upheld.
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General Principles Developed
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Importance of strict compliance with condition precedent clauses:
Where a contract uses “if…then” formulations and requires procedural steps (such as issuing notices or reports), failure to comply will bar related remedies.
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Construction based on language and structure:
Courts focus on the natural and ordinary meaning of the words, including punctuation and clause structure (e.g., protasis-apodosis logic). Terms like "if" and "then" signal conditional relationships.
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Purpose and function of notice mechanisms:
Contractual notice requirements (like NCRs) serve a critical role in giving the contractor an opportunity to understand and potentially rectify issues contemporaneously. They are not mere technicalities.
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No need for express "condition precedent" wording:
The absence of explicit words ("condition precedent") does not preclude a clause from having that effect if the language clearly indicates conditionality.
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Consistency with overall contractual framework:
Where similar notice-based conditions apply to one party (here, TCS in clause 5), courts are likely to interpret similar mechanisms symmetrically for the other party.