Supreme Court Justice Glenn Martin has spiked the Queensland government’s attempt to sue IT contractor IBM over its role in the $1.25 billion failure of its health payroll replacement project.
Justice Martin today sided with the IT giant, agreeing that a 2010 waiver of liability signed by both parties was ‘properly constructed’ and the state’s latest attempt to drag IBM through the courts was therefore legally invalid.
“The history of attempts to improve the efficiency of government services in Australia is not one of consistent outcomes. There have been many successes, some indifferent results and a few spectacular fiascos," Martin said in handing down his judgment this afternoon.
“The attempt that gives rise to this case belongs firmly in the last category."
Almost two years ago to the day, then-Queensland premier Campbell Newman announced that the state would go ahead with legal action against IBM, alleging it intentionally misled the government about its capabilities during the tendering stages of the payroll replacement project.
Lawyers for the Queensland government argued that IBM’s conduct put it in breach of the Trade Practices Act, and filed a claim for compensation in the hundreds of millions of dollars, covering system remediation expenses, the cost of staff overpayments, fees paid to IBM beyond the original completion schedule, and court costs.
The lawsuit survived a change in government in January this year, with Annastacia Palaszczuk’s Labor taking up the cause despite panning it as a waste of money in opposition.
However, today's ruling puts an end to Queensland's long-running battle against its former IT contractor.
IBM launched its bid to halt the proceedings against it in February.
The waiver
Central to the case was a September 2010 waiver of liability signed by IBM and the state government.
The IBM legal team argued that the waiver was intended to absolve it from a broad range of claims, including the misleading and deceptive conduct accusations leveled against it in the court proceedings.
Justice Martin today agreed.
He concluded that reference to “all claims” in the release document must be read broadly as releasing IBM from the current damages suit being pursued by the state government.
He rejected assertions by the government’s legal team that the waiver should be read in the context of discussions and correspondence leading up to its signing.
However, Martin stopped short of making a permanent injuction against the claims.
“I do not expect that the state would, following this decision, seek to prosecute that proceeding and, in the absence of any expressed intention to do so, an injunction is unnecessary,” he said.
IBM’s application also asked the judge to rule in favour of Queensland paying its legal costs in mounting the defence.
Martin said he would hear both parties claims on costs and make that judgment in the future. If it loses this next round, the Queensland government could find itself many millions of dollars out of pocket.
A spokeswoman for IBM said the company is "pleased by today's judgment," which it says "confirms that these issues were resolved and settled between IBM and the Queensland Government in 2010, notwithstanding the Government's continued attempts to rewrite history and shift blame to IBM for their own failings on the project".
The Queensland/IBM saga dates back to 2007, when IBM beat competitor Accenture to win the job of replacing Queensland Health’s ageing LATTICE payroll system.
The new, heavily customised SAP/Workbrain system famously collapsed after being rushed in completion in 2010, leaving nurses and other health workers across the state out-of-pocket or overpaid for years afterwards.
