Counted4 Community Interest Company v Sunderland City Council
| Jurisdiction | England & Wales |
| Judge | Mrs. Justice Carr |
| Judgment Date | 18 December 2015 |
| Neutral Citation | [2015] EWHC 3898 (TCC) |
| Docket Number | Case No. HT-2015-000392 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 18 December 2015 |
[2015] EWHC 3898 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
Rolls Building
Fetter Lane
London EC4A 1NL
The Hon Mrs. Justice Carr DBE
Case No. HT-2015-000392
Miss F. Banks (instructed by Addleshaw Goddard) appeared on behalf of the Claimant.
Mr. S. Taylor (instructed by DAC Beachcroft LLP) appeared on behalf of the Defendant.
Introduction
This is an application by the Defendant for an order lifting the automatic suspension imposed pursuant to regulation 95 of the Public Contracts Regulations 2015 ("the Regulations"). The court has the power to make an order bringing the suspension to an end pursuant to regulation 96(1)(a) of the Regulations.
The claim arises out of a procurement conducted by the Defendant, a local authority, and a contracting authority for the purpose of the Regulations. The procurement was for the provision of substance misuse treatment and harm reduction services for substance users in Sunderland. The Claimant is a not-for-profit community interest company which provides substance misuse services to facilitate the recovery of those suffering from substance misuse in and around Sunderland. It was indeed established for the sole purpose of providing these services to the Defendant, something which it has been doing since 2008. It is the incumbent provider to the Defendant of the clinical aspect of the substance misuse services, working alongside Turning Point and Lifeline, pursuant to the current contract between the parties dated 1st August 2013 ("the existing contract"). The Claimant participated, but was unsuccessful, in the procurement process carried out this year. The successful party was Northumberland Tyne and Wear NHS Foundation Trust ("NTW") which was in fact the immediate previous provider to the Defendant before August 2008.
On its application, by reference to the well known principles laid down in American Cyanamid v Ethicon Limited [1975] AC 396 (" American Cynamid"), the Defendant submits that the claim raises no serious issue, alternatively, is very weak. Damages would be an adequate remedy for the Claimant and would not be an adequate remedy for the Defendant. Further, the Defendant's evidence shows that there is an urgent need to lift the suspension in order to protect the interests of vulnerable service users in Sunderland. The Claimant, on the other hand, submits that on any view there is a serious issue to be tried and that the balance of convenience lies squarely in favour of maintaining the suspension until expedited trial early next year. The parties are agreed that an expedited trial can (and should) take place then and there appears to be agreement that such a trial could take place in the spring of 2016.
Summary of relevant facts
The relevant timeline of the procurement is as follows:
(a) the procurement was advertised by the issue of a notice in the Official Journal of the EU on 20 th June 2015. The services in question are social care services and thus fall within s.7 of the Regulations which provides for flexibility over the manner in which authorities go out to tender. In particular, regulation 76 provides:
" Principles of awarding contracts
76(1) Contracting authorities shall determine the procedures that are to be applied in connection with the award of contracts subject to this section, and may take into account the specificities of the services in question.
(2) Those procedures shall be at least sufficient to ensure compliance with the principles of transparency and equal treatment of economic operators….".
(b) the Defendant issued an invitation to tender on 22 nd June 2015;
(c) responses to the invitation to tender had to be submitted by 24 th July 2015, the deadline having been pushed back. The Claimant submitted a bid by that revised deadline, doing so with three other consortia members through a special purpose vehicle company. Each member of the consortium committed to be liable under the proposed contract jointly and separately and thus underwrote the Claimant's financial standing, which was assessed as part of the overall bit evaluation;
(d) by letter dated 19 th October 2015, the Claimant was informed by the Defendant that its bid had been unsuccessful and that the Defendant intended to award the new contract to NTW. The Claimant received a score of 78.14 and came fifth out of six. NTW had a total score of 87.50. There was a delay of some six eeks in the tender process, the Defendant submits as a result of the thoroughness and robustness of the exercise.
The proposed new contract is for a period of three years. A three month mobilisation period is required. The existing contract, which terminates in January 2016, will thus need to be extended. In practical terms, were the suspension to be lifted now, NTW would be up and running in March 2016. If the suspension is not lifted now and maintained to trial, and the claim fails, NTW would not be up and running until perhaps the summer of 2016.
Proceedings were issued and served on 17 th November 2015, thus bringing into effect the automatic suspension under regulation 95(1) of the Regulations. Particulars of Claim were served on 26 th November 2015 and have since been amended by consent. A full Defence was served on the eve of the hearing.
The Claimant's case
It is the Claimant's case that the procurement was conducted unlawfully in breach of the Regulations and/or general principles of European law and/or in breach of an implied tender contract. By way of summary only, the Claimant alleges that the Defendant breached those obligations:
(a) in particular, by breaching regulation 24.1 of the Regulations and failing to take any measures to effectively prevent, identify and remedy the conflict of interest of a Mr. Seale, a member of the Defendant's evaluation panel. Mr. Seale was the Defendant's employee with responsibility for managing the existing contract at all times and whose competency in that role had repeatedly been challenged by the Claimant and indeed, as a result of those challenges and complaints, investigated internally by the Defendant;
(b) by failing in its scoring to follow the published award criteria and/or applying undisclosed criteria or methodologies and/or acting in a discriminatory manner and/or committing manifest errors in respect of the method statement questions. In particular, it is alleged that —
(i) the bid was marked inconsistently against the method statement questions;
(ii) the bid was marked inconsistently against the references to the specification;
(iii) the Defendant misunderstood or misinterpreted the bid; and
(iv) the Defendant ignored aspects of the bid.
The Claimant seeks, amongst other things, declarations that the Defendant acted unlawfully and an order that the new contract should be awarded to the Claimant and/or damages.
Application to lift the suspension
The Legal Framework
The suspensory effect of the issue of proceedings is to be found in regulation 95 which provides materially:
" Contract-making suspended by challenge to award decision 95(1) Where—
(a) a claim form has been issued in respect of a contracting authority's decision to award the contract,
(b) the contracting authority has become aware that the claim form has been issued and that it relates to that decision, and
(c) the contract has not been entered into, the contracting authority is required to refrain from entering into the contract."
Regulation 96 empowers the court to lift the suspension:
" Interim Orders
96. (1) In proceedings, the Court may, where relevant, make an interim order —
(a) bringing to an end the requirement imposed by regulation 95(1);
(b) restoring or modifying that requirement;
(c) suspending the procedure leading to —
(i) the award of the contract, or
(ii) the determination of the design contest, in relation to which the breach of the duty owed in accordance with regulation 89 or 90 is alleged;
(d) suspending the implementation of any decision or action taken by the contracting authority in the course of following such a procedure.
(2) When deciding whether to make an order under paragraph (1)(a) —
(a) the Court must consider whether, if regulation 95(1) were not applicable, it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract; and
(b) only if the Court considers that it would not be appropriate to make such an interim order may it make an order under paragraph (1)(a)."
The effect of regulation 96 is that the court will determine an application to lift a suspension according to the same American Cyanamid principles that the court applies in determining applications for interim relief. This approach has been confirmed by the courts, and notably in this particular jurisdiction, on numerous occasions. It is important to note that the exercise is not weighted in some way in favour of maintaining the suspension. The court will lift the suspension unless it would have been appropriate to grant an injunction under American Cyanamid principles: see, for example, the judgment of Akenhead J. in Exel Europe Limited v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332 (TCC) at paragraph 28.
In recent cases the approach has tended to be expressed as a two-stage test: that is, (i) to identify whether or not there is a serious issue to be tried; and if so (ii) then to assess the balance of convenience. Matters relating...
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