Circle Nottingham Ltd v NHS Rushcliffe Clinical
| Jurisdiction | England & Wales |
| Judge | Sir Antony Edwards-Stuart |
| Judgment Date | 17 June 2019 |
| Neutral Citation | [2019] EWHC 1315 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2019-000013 |
| Date | 17 June 2019 |
and
[2019] EWHC 1315 (TCC)
Sir Antony Edwards-Stuart
Case No: HT-2019-000013
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Fionnuala McCredie QC and Mr Simon Taylor (instructed by Blake Morgan LLP) for the Claimant
Mr Jason Coppel QC and Ms Ligia Osepciu (instructed by Gowling WLG (UK) LLP) for the Defendant
Mr Michael Bowsher QC (instructed by Browne Jacobson LLP) for the Interested Party
Hearing date: 15 th 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.
Introduction
This is an application by the Defendant to lift the suspension on entering into a contract imposed by regulation 95(1) of the Public Contracts Regulations 2015 (“the PCR”).
In 2018 the Defendant carried out a procurement for the provision of medical services at the Nottingham Treatment Centre (“NTC”). The Claimant was the incumbent provider of the services at the NTC, and had been since 2008. The NTC provides a range of elective (that is, non-emergency) day case and patient treatments across a range of specialities, including gynaecology, rheumatology, dermatology, trauma and orthopaedics and gastroenterology.
On 22 January 2018, the Defendant commenced a competitive re-procurement of the services provided at the NTC under the contract between the Claimant and the Defendant, but this was abandoned following a challenge by the Claimant. Instead, the Claimant and the Defendant entered into a one year contract for the continuation of the provision of the services at the NTC, which is due to expire on 28 July 2019 (“the Contract”).
A further procurement exercise was commenced by the publication of a Contract Notice in the Official Journal of the European Union (“OJEU”) on 2 October 2018. The contract period was to be five years. Bids were submitted by 1 November 2018 and Standstill Letters under regulation 86 of the PCR were issued on 4 December 2018 informing the unsuccessful bidders (including the Claimant) that the contract would be awarded to the Nottingham University Hospital NHS Trust (“the NUH Trust”).
The Claimant questioned the result and issued a claim form on 10 January 2019, thereby triggering an automatic suspension under the PCR (“the suspension”). However, matters then took an unusual turn. On 16 January 2019 the NUH Trust notified the Defendant of a material change in its financial circumstances pursuant to section 18.1 of the Invitation to Tender (“the ITT”), which included the fact that it was forecasting an £18.9 million deficit variance from the control total for the year ending 1 April 2019 (the “Notified Material Change”).
The Notified Material Change then gave rise to a further re-evaluation of the bids in which the Claimant was again unsuccessful. The details of this process are described in more detail below. In the meantime, the suspension has continued.
At the hearing of the application the Defendant was represented by Mr Jason Coppel QC and Ms Ligia Osepciu, instructed by Gowling WLG (UK) LLP, the Claimant was represented by Ms Fionnuala McCredie QC and Mr Simon Taylor, instructed by Blake Morgan LLP, and the NUH Trust was represented by Mr Michael Bowsher QC, instructed by Browne Jacobson LLP.
Subsequent events and the issues between the parties
The Particulars of Claim served on 17 January 2019 alleged multiple breaches of the PCR, including (according to the Defendant's skeleton argument which has not been suggested to be an inaccurate summary):
(1) Failure to provide adequate debrief information and/or to maintain proper records of the evaluation process. However, the Defendant now contends that any defects in the information provided in the Standstill Letter have since been cured by the provision of early disclosure.
(2) Failure to disqualify the NUH Trust by reference to Qualification Question E1a concerning financial standing, which required bidders who chose Option A to provide evidence that their financial standing showed a “ positive, in-profit trading position” over the last two financial years. In the light of the Notified Material Change the Defendant concluded that the NUH Trust failed to meet this requirement, but nevertheless exercised its discretion under the relevant sections of the ITT to accept the NUH Trust's bid. This has given rise to an issue as to whether the Defendant's exercise of discretion in favour of the NUH Trust was manifestly erroneous or irrational.
(3) Failure to disqualify the NUH Trust for submitting an unsustainable or abnormally low bid. The Defendant contends that all the bids received were sustainable and that, in any event, it was under no obligation in the circumstances to investigate the pricing of the bid which might have appeared to be abnormally low.
(4) Manifest errors in the scoring of both the Claimant's and the NUH Trust's bids against 20 of the Quality/Transformation sub-criteria. The Defendant contends that this amounts to no more than disagreement with its judgement on a number of detailed matters falling well within its margin of appreciation.
On 4 February 2019 the Defendant notified bidders of its decision to re-evaluate the bids against Qualification Question E1a (this has been referred to as “the financial re-evaluation”), and later confirmed that it would consider whether to exercise its discretion under the ITT to exclude any bids on the basis that the prices set out therein were unrealistic or unsustainable (this being referred to as the “sustainability re-evaluation”). These re-evaluations were motivated partly by the Notified Material change and partly by criticisms made of the Defendant in the Particulars of Claim, which the Defendant decided to address without accepting that they were well-founded.
On 5 March 2019 the Defendant issued fresh Standstill Letters to all bidders in the procurement, which explained the outcome of the financial and sustainability re-evaluations and gave notice of a fresh standstill period which expired on 15 March 2019. On 27 March 2019 the Claimant served amended Particulars of Claim, containing fresh allegations in relation to the financial and sustainability re-evaluations. In addition, the Claimant contends that the NUH Trust is effectively guaranteed by the Department of Health and Social Care and that this amounts to unlawful state aid.
On 28 March 2019 the Defendant's solicitors wrote to the Claimant's solicitors asking the Claimant to agree to a lifting of the suspension. By letter dated 3 April 2019, the Claimant refused to do this. On 9 April 2019, the Defendant made the current application to lift the suspension.
On 1 May 2019 the Claimant informed both the Defendant and the NUH Trust that it intended to remove all moveable equipment and furniture from the NTC when it moved out, effectively leaving the building as an empty shell. Under the Contract the Claimant is permitted to remove its furniture and equipment (except for certain items of major clinical equipment), but if it wishes to sell them it must give the Defendant first refusal. The Contract makes provision as to how the price is to be determined in the absence of agreement. The Defendant describes this as “ an unexpected and commercially inexplicable position given the age of the equipment and furniture, its current market value, the costs of transport and storage and the lack of plausible alternative uses by [the Claimant]” (see paragraph 41–42 of Ms Sullivan's second witness statement dated 10 May 2019).
As is common in these applications, both the pleadings and the witness statements refer to numerous confidential documents and so a confidentiality ring was established on 3 April 2019 in the usual way. However, the Claimant wanted to have a client representative included in the ring, and following an application to the court its General Counsel, Mr Cobb, was admitted into the confidentiality ring.
To the limited extent that it may be necessary to refer to confidential information, I propose to do so either in the most general terms or by reference to the relevant part of the evidence or document containing it.
The relevant legal principles
It is common ground that regulation 96(2) of the PCR provides that in an application of this sort the approach to be adopted by the Court is to decide whether, if there were no suspension in place, it would be appropriate to grant an interim injunction to the claimant preventing the defendant from entering into the new contract. It is now well established (and again common ground) that the principles set out in American Cyanamid v Ethicon [1975] AC 396 apply to that question.
The first question for the court is whether the claim raises a serious issue to be tried. On this application, that has been expressly conceded by the Defendant so it need not be considered further. The court must then approach the matter in the following way:
(1) If the claimant were to succeed at trial, would damages provide adequate compensation for its loss? Or, putting it another way: is it just, in all the circumstances, that the Claimant is confined to its remedy in damages? If the answer is yes, and the defendant is likely to be in a position to pay any damages awarded, then an interim injunction would not ordinarily be granted and so, in a procurement case, the stay will be lifted.
(2) If damages would not provide an adequate remedy to the claimant, then the court should consider whether, if the injunction was granted, the defendant would be adequately...
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