Aew Europe LLP v Basingstoke and Deane Borough Council
| Jurisdiction | England & Wales |
| Judge | Sir Robert Akenhead |
| Judgment Date | 26 July 2019 |
| Neutral Citation | [2019] EWHC 2050 (TCC) |
| Docket Number | Claim No: HT-2015-000219 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 26 July 2019 |
[2019] EWHC 2050 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Sir Robert Akenhead
Claim No: HT-2015-000219
and
Michael Bowsher QC and Ewan West (instructed by Bryan Cave Leighton Paisner LLP, Solicitors) for the Claimants
Jason Coppel QC and Patrick Halliday (instructed by Womble Bond Dickinson LLP, Solicitors) for the Defendant
Fergus Randolph QC (instructed by Addleshaw Goddard LLP) for the Interested Party
Hearing dates: 16–17 July 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is a public procurement case which brings into focus the remedy available in certain cases of statutory infringement of a declaration of ineffectiveness of a contract entered into by a public authority required to comply with the Public Contract Regulations. A Preliminary Issue has been ordered to be heard which raises issues as to the circumstances in which the remedy of the declaration of ineffectiveness can and should be granted.
Basingstoke and Deane Borough Council (“Basingstoke”) owns Basingstoke Leisure Park (“the Leisure Park”) which for a number of years to date has hosted a number of leisure facilities, including a multiscreen cinema, swimming pools and lagoon area with various features (sometimes called the “Aquadome”), gym facilities, an ice rink, restaurants, bowling alley, bowls, a skiing and skydiving facility, bingo and the Milestones Museum. The Leisure Park is away from the town centre. The Leisure Park was set up in the 1990s with most of the larger facilities let on 100–150 year ground leases. Basingstoke in Hampshire is well located in terms of road and rail.
There came a time by 2011–2012 when Basingstoke began to consider in detail the possibility of developing (or redeveloping) and the regeneration of the Leisure Park. In that respect it retained a number of professionals including a firm called Montagu Evans who were and are planning development specialists to assist it. Because this was going to involve a public procurement which was subject to the Public Contracts Regulations 2006 as amended, a notice had to be and was posted in the Official Journal of the European Union (the “OJEU Notice”) on 21 June 2013. Although there were numerous expressions of interest for the initial stage of the tendering process (the Invitation to Submit Outline Proposals (“ISOP”) stage), only 2 bids were submitted apparently in accordance with Basingstoke's published evaluation criteria. One of those bidders was the Interested Party in this case, Newriver Leisure Ltd (“NRL”). Although both bidders were invited to proceed to the second stage which involved the submission of detailed proposals, only NRL submitted a final, more detailed bid. Negotiations proceeded with NRL and as from 2 April 2015 NRL and Basingstoke proceeded on the basis of an “Exclusivity” agreement.
Later in 2015 NRL proposed that what was described as a “more bold scheme” could be developed which would effect “a complete regeneration and expansion of the leisure offer but this would include a greater level of retail on site” (Paragraph 6.5 of Basingstoke Cabinet papers for a meeting held on 12 April 2016). Proposals for this scheme began to be developed and were submitted by April 2016. A report was prepared (the Cabinet Report) to be laid before the Basingstoke Cabinet at its meeting on 12 April 2016 which set out NRL's latest proposals in relation to the proposed development which involved the complete redevelopment of the existing Leisure Park such that the leisure facilities would double in size (presumably over and above that which currently then existed) and be restructured into a series of leisure zones and, as Paragraph 1.6 of the Cabinet Report indicates, “up to 300,000 sq ft of retail space, provided as a designer outlet centre [would] be incorporated”. The Cabinet Report indicated that legal advice from solicitors and Leading Counsel had been obtained in relation to, amongst other things, whether the proposal “remained within the procurement process” (Paragraph 15.1). As indicated in the witness statement of Mr Bovis, the Cabinet resolved to follow the recommendations of the Cabinet Report to the effect that Basingstoke would enter into Heads of Terms with NRL and into a Development Agreement and Lease in respect of the Leisure Park redevelopment. The Cabinet decision became effective from 14 June 2016 upon the decision of Basingstoke's Overview and Scrutiny Committee.
Either by late 2015 or at some stage in 2016, the first named Claimant, AEW Europe LLP (“AEW”), acquired or set up various retail investment properties in Basingstoke (Festival Place) and, as it became aware of the later proposals either generally or in detail, its solicitors, Berwin Leighton Paisner LLP (“BLP”) began to contact Basingstoke from early December 2016 onwards, as is evident from its letter dated 13 October 2017 to Basingstoke. As that letter makes clear, AEW had been having concerns as to the conduct of the procurement following a statement issued publicly by Basingstoke in April 2016 to the effect that the procurement up to that time had been conducted in a compliant manner.
The negotiations which culminated in the Development Agreement which was entered into on 19 March 2018 between Basingstoke and NRL had started after the Overview and Scrutiny Committee's decision such that, as Mr Bovis said, by January 2018 there was substantive agreement in relation to Development Agreement, albeit that there were some minor and non-material alterations before it was formally entered into. This Agreement will be considered in some detail later in this judgment.
AEW and the second and third named Claimants, said in their pleadings with others to be the owners and managers of the existing Festival Place retail facility in the centre of Basingstoke, issued proceedings against Basingstoke on 17 September 2018 in this Court seeking, amongst other things, a “declaration of ineffectiveness in respect of the March 2018 Contract” as well as damages.
The Proceedings
The Re-Re-Amended Particulars of Claim, so far as is material, makes it clear that the Claimants did not seek to participate in the Procurement in the 2013/2014 period (Paragraph 16). It sets out some of the history referred to above, as well as extensive assertions relating to the disclosure or non-disclosure of certain documents. They assert that, as a consequence of the Public Contract Regulations, Basingstoke was “only entitled to entertain bids that fulfilled the requirements identified in the OJEU Notice and further is prohibited from entertaining any bid or contracting on the basis of any bid that involves any material change from the scope of works and/or services as identified in the OJEU Notice” (Paragraph 56). They assert (Paragraph 58) that they are to be considered as “economic operators” within the statutory definition to whom the statutory public procurement obligations were owed.
Although there are other complaints (such as what are said to be unlawful failures to provide information and/or documents (Paragraph 68 (a)) and the unlawful grant of state aid (Paragraphs 77–80), which are not material to the Preliminary Issue, the allegations of breach are contained in Paragraphs 74–75 relating to the “Unlawful procurement process and/or award of the March 2018 Contract”. It is these breaches which are said to give rise to the entitlement to the declaration of ineffectiveness under the 2006 or 2015 Public Contract Regulations.
In essence, and as confirmed and developed by Mr Bowsher QC on behalf of the Claimants at the hearing, the case is predicated upon the pleas that (a) the original OJEU Notice would only permit retail development at the Leisure Park which was “minor and ancillary to the construction and operation of a leisure facility” (Paragraph 74 b of the Claimants' pleading) such that retail tenants would be “anticipated to sell goods related to meeting customers' leisure needs” and that “any retail development (if included) must support the main use, which was leisure…”, (b) the OJEU Notice “did not commence procurement for the construction and/or operation of the retail facility at the Leisure Park” (Paragraph 74 c), and (c) “…the provision of 300,000 sq ft of retail space provided for in the March 2018 Contract would be a very substantial change from the terms of the procurement process initiated by the OJEU Notice”.
The original Particulars of Claim pleading was served on 24 September 2018 with the amendments coming on 28 November 2018, 9 May and 5 July 2019 and the Defence of Basingstoke was served on 21 December 2018, amended on 12 July 2019. In summary in relation to the Preliminary Issue matters, Basingstoke argued that the claim for a declaration of ineffectiveness was misconceived because the “Contract was advertised and a tender process ensued, so the first ground for ineffectiveness is inapplicable even if (which is denied) the Contract in its final form differed from what was advertised” (Paragraph 4(5)). At Paragraph 69 and following, Basingstoke effectively asserted that the contents of the OJEU Notice were sufficiently broad to cover the development envisaged by the Development Agreement.
By Order dated 17 December 2018 NRL was added as an “Interested Party”, submitting its Statement of Case on 24 January 2019, broadly endorsing the contents of Basingstoke's Defence but referring in some detail to the Development Agreement. It asserted that...
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