Healthcare at Home Ltd v The Common Services Agency (Scotland)
| Jurisdiction | Scotland |
| Judge | Lord Reed,Lord Mance,Lord Kerr,Lord Sumption,Lord Hughes |
| Judgment Date | 30 July 2014 |
| Neutral Citation | [2014] UKSC 49 |
| Court | Supreme Court (Scotland) |
| Docket Number | No 14 |
| Date | 30 July 2014 |
[2014] UKSC 49
Lord Mance
Lord Kerr
Lord Sumption
Lord Reed
Lord Hughes
Appellant
Craig R K Sandison QC Gordon Watt
(Instructed by Maclay Murray & Spens LLP)
Respondent
Alistair Clark QC Sean Smith QC
(Instructed by NHS National Services Scotland Central Legal Office)
Heard on 23 June 2014
Lord Reed (with whom Lord Mance, Lord Kerr, Lord Sumption and Lord Hughes agree)
The Clapham omnibus has many passengers. The most venerable is the reasonable man, who was born during the reign of Victoria but remains in vigorous health. Amongst the other passengers are the right-thinking member of society, familiar from the law of defamation, the officious bystander, the reasonable parent, the reasonable landlord, and the fair-minded and informed observer, all of whom have had season tickets for many years.
The horse-drawn bus between Knightsbridge and Clapham, which Lord Bowen is thought to have had in mind, was real enough. But its most famous passenger, and the others I have mentioned, are legal fictions. They belong to an intellectual tradition of defining a legal standard by reference to a hypothetical person, which stretches back to the creation by Roman jurists of the figure of the bonus paterfamilias. As Lord Radcliffe observed in Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728:
"The spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is and must be the court itself."
It follows from the nature of the reasonable man, as a means of describing a standard applied by the court, that it would misconceived for a party to seek to lead evidence from actual passengers on the Clapham omnibus as to how they would have acted in a given situation or what they would have foreseen, in order to establish how the reasonable man would have acted or what he would have foreseen. Even if the party offered to prove that his witnesses were reasonable men, the evidence would be beside the point. The behaviour of the reasonable man is not established by the evidence of witnesses, but by the application of a legal standard by the court. The court may require to be informed by evidence of circumstances which bear on its application of the standard of the reasonable man in any particular case; but it is then for the court to determine the outcome, in those circumstances, of applying that impersonal standard.
In recent times, some additional passengers from the European Union have boarded the Clapham omnibus. This appeal is concerned with one of them: the reasonably well-informed and normally diligent tenderer.
The RWIND tenderer, as he has been referred to in these proceedings, was born in Luxembourg. He owes his existence to the EU directives concerned with public procurement. For present purposes, the most significant directive is Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ L 134, 30 April 2004, p 114). The background to the Directive, as explained in the second recital to the preamble, is that the award of contracts by public authorities in the member states is subject to the principles of freedom of movement of goods, freedom of establishment and freedom to provide services, and to other principles derived from those, such as the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency. In particular, as explained in the forty-sixth recital:
"Contracts should be awarded on the basis of objective criteria which ensure compliance with the principles of transparency, non-discrimination and equal treatment and which guarantee that tenders are assessed in conditions of effective competition. …
To ensure compliance with the principle of equal treatment in the award of contracts, it is appropriate to lay down an obligation-established by case-law —to ensure the necessary transparency to enable all tenderers to be reasonably informed of the criteria and arrangements which will be applied to identify the most economically advantageous tender."
These general principles are reflected in the requirements laid down in Directive 2004/18. In particular, article 2 requires that "contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way". Article 41 entitles unsuccessful candidates to be informed of the reasons for the rejection of their applications. Article 53 sets out requirements governing the disclosure of the criteria for the award of public contracts.
It was in order to articulate the standard of clarity required in this context by the principle of transparency that the European Court of Justice invoked the RWIND tenderer. In the case of SIAC Construction Ltd v County Council of the County of Mayo ( Case C-19/00) [2001] ECR I-7725, where there was a disagreement between the parties as to the interpretation of tender documents, the court stated:
"41. Next, the principle of equal treatment implies an obligation of transparency in order to enable compliance with it to be verified (see, by analogy, Case C-275/98 Unitron Scandinavia and 3-S [1999] ECR 1–8291, paragraph 31)."
More specifically, this means that the award criteria must be formulated, in the contract documents or the contract notice, in such a way as to allow all reasonably well-informed and normally diligent tenderers to interpret them in the same way."
In that passage, the court explained what the legal principle of transparency meant in the context of invitations to tender for public contracts: the award criteria must be formulated in such a way as to allow all RWIND tenderers to interpret them in the same way. That requirement set a legal standard: the question was not whether it had been proved that all actual or potential tenderers had in fact interpreted the criteria in the same way, but whether the court considered that the criteria were sufficiently clear to permit of uniform interpretation by all RWIND tenderers.
The objective nature of the standard to be applied also appears from the opinion of Advocate General Jacobs in the same case:
"The national court should take into consideration not merely the literal terms of the contract documents but also the way in which they may be presumed to be understood by a normally experienced tenderer" (para 51: emphasis supplied).
That the standard is objective also appears from the opinion of Advocate General Sharpston in Lämmerzahl GmbH v Freie Hansestadt Bremen ( Case C-241/06) [2008] 1 CMLR 462. The case concerned another directive which is relevant to the present appeal, namely Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ L 395, 30 December 1989, p 33). Article 1 of the Directive requires member states to take the measures necessary to ensure that:
"… as regards contracts falling within the scope of Directive 2004/18/EC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in articles 2 to 2f of this Directive, on the grounds that such decisions have infringed Community law in the field of public procurement or national rules transposing that law."
The issue in the case was whether a national time limit for the bringing of proceedings was compatible with Directive 89/665. The time limit started to run if the alleged irregularity was identifiable on the basis of the tender notice. The Advocate General posed the question as to what was the degree or nature of knowledge of an irregularity which might be attributed to a tenderer without breaching the effectiveness principle underlying Directive 89/665. She observed:
"66. It seems to me that a requirement of actual, or subjective, knowledge on the part of the tenderer would run counter to legal certainty. Furthermore, in circumstances such as those of the present case, it could be difficult to prove that a tenderer had actual knowledge of an irregularity, and a requirement of such proof would hardly be consistent with the need for a rapid review process.
67. It therefore seems preferable to formulate the test in terms of a standard of deemed, or objective, knowledge. The court already applies an objective standard in respect of tenderers' ability to interpret award criteria against the yardstick of equality of treatment in public procurement, namely the ability of a 'reasonably well-informed and normally diligent tenderer'. The same formula seems appropriate in the context of what knowledge of an irregularity in the tender procedure it is reasonable to deem a tenderer to possess."
As the Advocate General noted in that passage, the yardstick of the RWIND tenderer is an objective standard applied by the court. An objective standard of that kind is essential in order to ensure equality of treatment, as the court explained in SIAC. In addition, as the Advocate General explained, such a standard is consistent with legal certainty: something which would be undermined by a standard which depended on evidence of the actual or subjective ability of particular tenderers to interpret award criteria in a uniform manner. Furthermore, to require proof of the subjective understanding of tenderers would be inconsistent with the need for review to be carried out as rapidly as possible, as required by article 1 of...
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