Community R4C Ltd v Gloucestershire County Council

Hearing dates: 2 nd to 4 th March and 24 th June 2020

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.

HH JUDGE Russen QC

HH Judge Russen QC:

This is my judgment following the trial of the two preliminary issues identified in paragraph 24 below. It is broken down into the following sections (the paragraph numbers identify the start of each section):

i) Introduction (paragraph 2)

ii) The Witnesses (paragraph 27)

iii) CR4C's Application dated 2 June 2020 (paragraph 41)

iv) The First Issue: CR4C as an economic operator which could have pre-qualified

a) Preliminary Observations (paragraph 57)

b) The Benchmark for Pre-Qualification (paragraph 79)

c) The Interpretation of Regulation 91 (paragraph 104)

d) The Concept of an ‘Economic Operator’ (paragraph 144)

e) The Pleaded Case (paragraph 168)

f) CR4C as an Economic Operator (paragraph 184)

g) CR4C's Prospects of Pre-Qualifying (paragraph 207)

v) The Second Issue: Limitation

a) The Test under Regulation 92(2) (paragraph 261)

b) The Rival Contentions (paragraph 273)

c) Analysis (paragraph 278)

vi) Disposal (paragraph 347)

Introduction

By a Claim Form issued on 18 January 2019 the Claimant (“ C4RC”) seeks damages against the Defendant (“ the Council”) in respect of the Council's alleged “ breach of the Public Procurement Regulations 2015” and/or “ directly applicable principles of EU law in relation to a waste disposal contract awarded to UBB Waste Gloucestershire Ltd in 2016”. CR4C's claim is therefore a procurement claim brought under Regulation 91 of the 2015 Regulations (“ the Regulations”).

The contract entered into between the Council and Urbaser Balfour Beatty Waste Gloucestershire Ltd (“ UBB”) on 21 January 2016 is described as an “Amended and Restated Contract”; this by reference to an earlier contract between the parties concluded on 22 February 2013. As a reflection of their rival arguments about the status of the 2016 contract, when viewed from the perspective of the Regulations, C4RC has described it in its statement of case as “ the Second Contract” whereas the Council refers to it as “ the Amended Contract”. I shall instead refer to it in this judgment as “ the 2016 Contract” and to the earlier one as “ the 2013 Contract”. Taking them both together, the Council's witness, Mr Ian Mawdsley, referred to it “ as the largest contract the Council has ever let”. When the 2016 Contract was entered into it was given a value by the Council of around £613m measured over 25 years (it has the potential to run for 30).

The subject matter of the 2013 Contract and the 2016 Contract is an Energy from Waste Plant (“ the EfWP”) which recovers energy from the treatment of municipal waste generated in the county of Gloucestershire. The EfWP is sited at Javelin Park, Haresfield, close to junction 12 of the M5 in Gloucestershire. It operates by incinerating residual waste and recovering energy in the form of electricity generated by combustion and heat. Residual waste comprises the elements of commercial or household waste which remain after recyclable or compostable elements have been removed: the ‘black bag’ rubbish at the household level. The amount of anticipated waste to be managed by the EfWP is in the region of 130,000 to 160,000 tonnes per annum. The contract is to run for 25 years from commencement of operation of the EfWP, with an option for the Council to extend for another 5 years.

The Council's position is that the 2016 Contract provided for the amendment of the 2013 Contract for the EfWP and was made in accordance with a procedure set out in Schedule 26 of the 2013 Contract.

The 2016 Contract was entered into in circumstances where, after the entry into the 2013 Contract, there was a delay of over 2 years in securing planning permission for the EfWP at Javelin Park. UBB had applied for planning permission on 31 January 2012. After an initial refusal in March 2013, the project was then “called in” by the Secretary of State on 16 July 2013 and the result was a public inquiry held between November 2013 and January 2014. When planning permission was later granted in January 2015 it was challenged by Stroud District Council. Approval for the EfWP was only finally given in August 2015. The delay meant that the “ Planning Permission Longstop Date” of 15 February 2015, specified in the 2013 Contract, had passed. That meant that the Council was required to request a Revised Project Plan from UBB in accordance with Schedule 26 of that Contract. The terms of that led to the entry into the 2016 Contract. Construction of the EfWP under the 2016 Contract began around November 2016.

CR4C makes no complaint about the procurement process adopted by the Council in relation to the 2013 Contract (which was conducted in 2009 in accordance with what were then the Public Contracts Regulations 2006). The Council advertised the procurement — for a contract for the provision of residual waste treatment capacity that would divert municipal solid waste from landfill with a duration of 20 to 25 years — in the Official Journal of the European Union on 30 January 2009. The OJEU Notice stated that the solution should include provision of treatment capacity, together with all associated infrastructure and additional services; and that this would include but not be limited to the management, storage, treatment, sale marketing, removal, recycling, transportation and/or disposal of all products (including any energy), by-products, process residues and rejects. It also stated that the Council had a “ neutral technology stance” and that the solution did not necessarily have to consist of any single technology or combination of technologies

CR4C, whose purpose and constitution I refer to further below, did not exist at the time of that initial procurement. CR4C says it set up as an informal association around July 2015. It was formally registered as a society in February 2016. I return below to the significance of the timing of the establishment of CR4C in addressing the first preliminary issue.

However, CR4C contends that the 2016 Contract was a new contract in procurement law terms. The total amount payable under it was well in excess of the threshold value under Regulation 5 of the Regulations and CR4C says its amendment of the 2013 Contract was material (for procurement law purposes) in that it changed the economic balance of the contract in favour of UBB in a manner not provided for by that earlier contact. CR4C challenges the Council's position by saying that the award of the 2016 Contract was not within any of the exceptions exhaustively set out in Regulation 72 of the Regulations and which identify the circumstances in which changes to a contract, post-award of the contract, will not require a new procurement exercise. The present claim is founded upon what CR4C says was an obligation upon the Council to ensure that such a public contract was only awarded in 2016 following compliance with the rules on procurement contained in Part 2 of the Regulations. Accordingly, CR4C claims to be entitled to the remedy of damages under Part 3 of them.

The challenge to the Council's procurement of the 2016 Contract by CR4C forms part of a wider concern about economic and environmental impacts of the EfWP which is held by those who support CR4C. Whether or not those concerns are justified is not material to my determination of either of the present preliminary issues but, if this case goes forward, they might well be relevant to CR4C's claim that its own tender either would or might well have been viewed by an avowedly technology-neutral Council as the ‘most economically advantageous tender’ (or “ MEAT”, the language of Regulation 67(1)) and the basis of being awarded its own waste treatment contract in place of UBB.

At an early stage of the hearing I asked Mr Sinclair, counsel for CR4C, about the basis of his client's claim to damages, identified in the Claim Form in the sum of £350,000. Mr Sinclair's skeleton argument mentioned that CR4C had been identified as sole claimant (to the exclusion of other members of the proposed consortium mentioned below) as the joinder of other claimants would only have increased the size of the damages claim. I therefore observed that the claim did not appear to be first and foremost one about money. Mr Sinclair confirmed as much by saying that his client was not interested in increasing the burden for ratepayers and that, instead, CR4C's interest in establishing that there had been a breach of procurement law was to establish the beginnings of a case that there had been unlawful State Aid.

His written closing submissions (in a section headed “What This Case Is About”) further clarified CR4C's position by saying that the £350,000 (or some fraction of that sum reflecting any lost chance) was nothing like the amount that might have been claimed and that:

“ C4RC instead brings this case for non-commercial reasons in the public interest.

These include:

(a) Public (judicial) recognition...