'Messy period': cancelled contract with CIT left consultancy company 'flat-footed' over lost work

The aftermath of a controversial contract break-down was a “messy period” and a “very confusing time”, a court has heard.

Patrick Hollingworth is suing Canberra Institute of Technology (CIT) for more than $3 million on claims the training organisation broke a $5 million contract with his consultancy company Redrouge Nominees.

Mr Hollingworth alleges that CIT breached a contract with Redrouge Nominees (trading as Think Garden) and that it has suffered loss and damage as a result.

According to a statement of claim previously lodged in the ACT Supreme Court, Think Garden is claiming $3,383,327. This is the balance of the contract after CIT’s initial payment of $1,666,663 and approximately $50,000 in legal costs sustained in the cancellation of the agreement.

While giving evidence on Monday (28 October), Mr Hollingworth, on the first day of a civil hearing in front of Supreme Court Justice David Mossop, who had previously been described as a “complexity and systems thinker”, called himself a scientist and director of Think Garden.

The consultancy company used complexity science to respond to “how organisations are essentially managed and how they go about trying to deal with the various stresses they face from external environments”, he said.

The two organisations began working together in 2016.

Mr Hollingworth described Think Garden’s work for CIT as “quite reactive” and involved dealing with “things the executive might not have seen coming”.

“CIT had been our largest and most committed client, I guess, for a number of years before that,” he said.

The training organisation hired Think Garden on a fresh two-year contract on 28 March 2022, though the agreement was paused indefinitely on 27 June.

The $5 million contract was the latest and most lucrative in a series of contracts that brought the total won by the consulting company to nearly $9 million.

In court, Mr Hollingworth said he was “very proud” of an “18,000 word” tender document he and staff worked on as his company sought the contract.

A lawyer for CIT questioned him about the language used in the tender, which described himself and his company as world-leading.

“I’m a relatively humble person,” he said.

“Those kind of statements, I can understand [that] they sound really confident and so forth, but I had been criticised by some members of CIT executive and board chair that we weren’t forthcoming enough about where we were at.

“We were encouraged to project ourselves in that way.”

The field of complexity science was very small, he told the court, agreeing with the suggestion that this meant Think Garden was “at the forefront” as it was “applying and re-recombining [ideas] in novel ways”.

By June 2022, questions were being raised about the contracts and the nature of the services.

The cancellation of the contract had left the company “flat-footed”, Mr Hollingworth said, facing a position where the “Canberra work [had] evaporated”.

“[The aftermath] felt quite messy,” he said.

“To begin with, I had to essentially decide what am I going to do. What are my options here?”

After July 2022, Mr Hollingworth said Think Garden then went on to work with three other companies.

During the hearing, lawyers gave submissions about one of the contract’s clauses, which dealt with terminating it.

This clause allowed it to be cancelled in the event of insolvency or a material breach.

Mr Hollingworth’s lawyer said his client was entitled to the full price of the contract, even though it was planned to be paid in instalments.

“That is entirely conventional, and these parties intended that there be both a contractual right and a common law right – obviously not allowing for double compensation,” he said.

However, a lawyer for CIT called this argument “absurd”.

“What are you going to do? Terminate and get [paid for] the whole contract price?”

An Integrity Commission Special Report found former CIT CEO Leanne Cover was “guilty of serious corrupt conduct” regarding the contracts. No findings have been made against Mr Hollingworth.

The hearing over the contract’s cancellation continues before Justice Mossop and is scheduled to run until Thursday (31 October).