Amey Highways Ltd v West Sussex County Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 24 May 2019 |
| Neutral Citation | [2019] EWHC 1291 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2018-000078 |
| Date | 24 May 2019 |
[2019] EWHC 1291 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Stuart-Smith
Case No: HT-2018-000078
HT-2018-000258
Mr Parishil Patel QC and Ms Kelly Stricklin-Coutinho (instructed by Trowers & Hamlins LLP) for the Claimant
Mr Jason Coppel QC and Mr Joseph Barrett (instructed by Acuity Legal Ltd) for the Defendant
Hearing dates: 30th April, 1st May and 2nd May 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.
THE HONOURABLE Mr Justice Stuart-Smith
Introduction
The Claimant [“Amey”] has brought two sets of proceedings against the Defendant [“the Council”] alleging failures in the Council's procurement of a contract known as “Highways Term Service Contract 2018–2028” [“the Procurement”]. The Procurement was governed by the Public Contract Regulations 2015 [“the PCR”]. The Council decided to award the contract to Ringway Infrastructure Services Ltd [“Ringway”]. Amey's overall score was assessed to be 85.48, which Ringway bettered by just 0.03. By action HT-2018-000078 [“the First Action”] Amey alleged that its score should have been higher than Ringway's and that it should have been awarded the contract.
The Council applied to strike out critical parts of Amey's pleaded case. Amey responded by applying for summary judgment on its claim. Those applications were the subject of a judgment which I handed down on 30 July 2018 [“the Interim Judgment”], dismissing each party's application for the reasons there set out: see [2018] EWHC 1976 (TCC). The Council then gave notice on 2 August 2018 that it was “terminating” the Procurement and would start again [“the Abandonment Decision”]. It was the Council's hope and intention that withdrawing the Procurement would defeat any claim that Amey might otherwise have. Amey promptly issued its second set of proceedings by action HT-2018-000258 [“the Second Action”] challenging the lawfulness and effect of the withdrawal.
At a case management hearing on 18 December 2018, the Court gave directions consolidating the two actions and directed that there should be a trial of the Second Action and of the effect on Amey's claim in the First Action of the Council's decision to withdraw the Procurement.
This is my judgment after the preliminary trial. The parties agreed a list of issues for determination, which are set out at [5] below. Put shortly, the critical issue is whether the Council was right in its hope and intention that withdrawing the Procurement as and when it did would bring Amey's claim (as articulated in the First Action) to an end.
The issues for determination
The agreed list of issues was as follows:
1. Did the Defendant act manifestly erroneously, contrary to the PCR, by taking the Abandonment Decision:
(1) On the premise that it would supersede the Claimant's claim in the First Action?
(2) By taking into account the potential costs, uncertainty, delay and disruption to highways services that it considered would arise from continuing to contest the First Action?
2. Did the Defendant act manifestly erroneously, contrary to the PCR, by taking the Abandonment Decision in a deliberate attempt to deprive the Claimant of its cause of action in the First Claim?
3. Did the Defendant breach its obligation of equal treatment imposed by the PCR in taking the Abandonment Decision because the Claimant alone had an enforceable cause of action in respect of any errors in the conduct of the Procurement?
4. Did the Defendant breach its obligation of transparency imposed by the PCR in taking the Abandonment Decision because its stated reason or reasons for the decision was not that the decision was taken in a deliberate attempt to deprive the Claimant of its cause of action in the First Claim?
5. Did any breach established by the Claimant cause loss or damage to Claimant? In particular, would the Defendant have decided to abandon the Procurement on a lawful basis in any event?
6. What relief, if any, should be granted to the Claimant?
7. What was the effect of the Abandonment Decision on the First Claim?
For the reasons set out below, I answer the issues as follows:
i) Issues 1–4: no.
ii) Issue 5: the Council would not have abandoned the Procurement in any event and, if Amey establishes that its score should be revised to be greater than 85.51, the breach established by Amey caused it to suffer loss and damage.
iii) Issue 6: Amey's claim for damages in the First Action may be pursued as indicated in this judgment. I do not grant any other relief, declaratory or otherwise.
iv) Issue 7: the Abandonment Decision had no effect on the First Claim if and to the extent that Amey is able to prove that it had an accrued cause of action before the decision was taken on 2 August 2018.
The legal framework
The legal framework for a claim arising under the PCR is now well known and I do not propose to set out the relevant provisions in full.
Where the PCR apply, contracting authorities such as the Council are required to base the award of public contracts on the most economically advantageous tender assessed from the point of view of the contracting authority: Regulation 67(1). They must treat economic operators such as Amey and the other bidders in the Procurement equally and without discrimination and shall act in a transparent and proportionate manner: Regulation 18(1). Regulation 89 provides that the contracting authority is under a duty to comply with the provisions of Parts 2 and 3 of the PCR (which include Regulations 18 and 67) and any enforceable EU obligations in the field of public procurement.
Regulation 91 provides that a breach of the duty owed in accordance with Regulation 89 is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage. The available remedies where the Court is satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with regulation 89 depends upon whether a contract has been entered into or not. Where (as here) a contract has not been entered into, Regulation 97(2) provides that the Court may (a) order the setting aside of the decision or action concerned; (b) order the contracting authority to amend any documents; (c) award damages to an economic operator which has suffered loss or damage as a result of the breach. Where a contract has been entered into, Regulation 98(2) provides that the Court may award damages to an economic operator which has suffered loss or damage as a consequence of the breach. In such a case it does not have the powers it would have under Regulation 97(2)(a) and (b) but has additional powers including, in suitable cases, making a declaration of ineffectiveness and imposing penalties.
The nature of the rights and remedies have been considered by high authority. In Energy Solutions v Nuclear Decommissioning Authority [2017] 1 WLR 1373 at [37]–[39] Lord Mance, with whom the other Justices of the Court agreed, rejected the Court of Appeal's assumption that any claim for damages under the 2006 Regulations that preceded the PCR “was no more than a private law claim for breach of a domestically-based statutory duty…”. He endorsed the earlier approach of Sir Andrew Morritt V-C in Phonographic Performance Ltd v DTI [2004] 1 WLR 2893 at [11]–[12], namely that the liability was best regarded as a breach of statutory duty but subject to Frankovich conditions.
Throughout its submissions in the present case the Council emphasised the public law aspects of breaches of duty in the course of a public procurement pursuant to the PCR. In particular, it relied upon dicta in the Court of Appeal decision in R (Chandler) v Secretary of State for Children, Schools and Families [2009] PTSR 749, [2009] EWCA Civ 1011 at [76]–[78]. Chandler was a claim for Judicial Review and the relevant passage was in response to a submission that a complaint that the public procurement regime had not been complied with was a matter for private, not public, law. That submission was rejected as an oversimplification because a failure to comply with the PCR may give rise to situations where a public body may be subject to public law review and remedies. Nothing in the passage casts doubt on the essential nature of a claim for damages for breach of the duties owed to an economic operator, as explained by the Supreme Court in Energy Solutions. Whether or not there could be a concurrent public law remedy, a claim for damages such as Amey's in the present case is essentially a private law claim for damages upon completion of the cause of action, subject only to the superimposition of the Frankovich conditions.
There was a substantial measure of agreement between the parties about relevant established principles. As articulated in Amey's opening skeleton (and agreed by the Council during the hearing), the following general principles may be relevant:
a. A contracting authority has a broad discretion in assessing the factors to be taken into account for the purpose of deciding to award a contract following an invitation to tender and therefore in respect of any decision not to award a contract and abandon a procurement (see Embassy Limousines & Services v. European Parliament T-203/96 [1999] 1 C.M.L.R. 667 at [56]);
b. The exercise of that discretion is not limited to exceptional cases or has necessarily to be based on serious grounds (see Metalmeccanica Fracasso SpA v. Amt de Salzburger Landesregierung [1999] ECR I-5697, [2000] 2 CMLR 1150 at [23]);
c. There is...
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