JBW Group Ltd v Ministry of Justice
| Jurisdiction | England & Wales |
| Judge | Lord Justice Elias,The Master of the Rolls,Lord Justice Kitchin |
| Judgment Date | 16 January 2012 |
| Neutral Citation | [2012] EWCA Civ 8 |
| Docket Number | Case No: A2/2011/516/QBENF |
| Court | Court of Appeal (Civil Division) |
| Date | 16 January 2012 |
[2012] EWCA Civ 8
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MASTER VICTORIA McCLOUD
Royal Courts of Justice
Strand, London, WC2A 2LL
The Master of the Rolls
Lord Justice Elias
and
Lord Justice Kitchin
Case No: A2/2011/516/QBENF
Case No. HQO9X02909
Mr Peter Knox QC (instructed by Messrs St John Legal) for the Appellant
Mr Christopher Vajda QC and Mr Jason Coppel (instructed by The Treasury Solicitor) for the Respondent
Hearing date : 14 November 2011
This appeal raises a short but difficult point on the scope of the Public Contract Regulations 2006. The question is whether the particular contracts under consideration should be classified as public service contracts, in which case the Regulations apply, or as service concession contracts, in which case they do not.
The background.
The Ministry of Justice ("MoJ") put out to tender a number of contracts for bailiff services to be provided to magistrates courts, each contract relating to a particular region in England or Wales. On 29 January 2009 the appellant ("JBW") tendered for three of these contracts. JBW were unsuccessful and brought proceedings against the MoJ alleging that the MoJ had acted in breach of the Regulations in various ways, such as by leaking information and providing assistance to a rival bidder. They also alleged that there was an implied contract that the MoJ would consider tenders fairly and transparently and in accordance with the terms set down in the invitation to tender, and that the terms of this contract had been breached.
The MoJ sought summary judgment and succeeded before Master Victoria McCloud. She dismissed the claims. The Master held that the Regulations were not applicable because the contracts in issue were service concession contracts which are specifically excluded from the scope of the Regulations. In addition, the Master held that a contract could not be implied in the manner alleged by the claimant.
JBW have appealed against both these conclusions. They also initially contended that the judge must have applied the wrong test for granting summary judgment because she observed in the course of her judgment, with respect to the argument whether the Regulations applied, that there was "a real prospect of an appeal court taking a different view." However, Mr Knox QC, counsel for the appellant, conceded in argument that it would be pointless for the court merely to rule on whether there was an arguable case that the Regulations applied since there were no material disputes of fact and the court was in as good a position as the trial judge to determine that question. It would be contrary to the overriding objective for the court not to decide the matter. We therefore treat this appeal as though it raised preliminary issues of law on undisputed facts. It has come directly to us because Master Eastman ordered that a "leapfrog" was appropriate.
The relevant law.
The Regulations were designed to implement Directive 2004/18/EC on the co-ordination of procedures for the award of public works contracts, public supply contracts and public services contracts. Article 1 of the Directive defines public contracts as follows:
"(a) public contracts are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive."
A public service contract is then defined as a public contract other than a public works or supply contract which has as its object the provision of services referred to in Annex II of the Directive. Annex II catches these contracts.
Article 1(4) defines a service concession as:
"..a contract of the same type as a public service contract except for the fact that the consideration for the provision of services consists either solely in the right to exploit the service or in this right together with payment."
Article 17 provides that the Directive does not apply to service concession contracts.
The Directive replaced a series of earlier Directives including Directive 92/50/EEC which regulated the procedures for awarding public service contracts. That Directive did not contain a definition of a service concession although the ECJ held that a concession fell outside the terms of that Directive. In Telaustria Verlags GmbH v Telekon Austria AG [2000] ECR I-10745 the ECJ pointed out that the Commission had originally included public concession contracts in the Directive but these were removed from its scope by the European Council. The current Directive puts beyond doubt that they are excluded. Earlier case law on the meaning of concession in relation to the 1992 Directive remains relevant not least because the first recital of the 2004 Directive states in terms that the Directive is "based on Court of Justice case-law."
The 2006 Regulations are designed to implement the 2004 Directive. They do not precisely replicate the language of the Directive but both parties accepted that since the Regulations would have to be read consistently with the Directive (and no-one suggested that they could not be so read) we should simply focus on the terms of the Directive itself.
The terms of the contract.
The relevant contractual terms are set out in schedule 3 of the invitation to tender and the contractual specifications in schedule 4.
The vast majority of the work under the contracts consists of the enforcement of warrants of distress issued by the magistrates for the non-payment of fines. The bailiff may levy financial distress, which involves securing payment without confiscation of goods; or he may levy confiscation distress, which involved confiscating and selling goods. For that work the contractor had to identify in the tender the fee he proposed to charge to execute the warrant and it is a term of the contract that he will not exceed that sum. In practice the costs of recovery are born by the defaulters because the bailiff who executes a warrant of distress is entitled under the terms of the warrant to take sufficient to cover not only the unpaid fine but also the costs of recovery.
In addition to executing distress warrants, the bailiff will sometimes be required to execute clamping orders. There is a fixed fee in relation to enforcing these orders. Again, the costs are generally borne by the defaulters, but the financial arrangements are different than in the case of distress warrants.
Finally some courts also require bailiffs to effect arrests pursuant to financial warrants and breach of community penalty warrants. In this case the fees, which are fixed by the contract, are paid directly by the MoJ through the Court Service. However, the execution of distress warrants is by far the most significant part of the contract covering more than 90% of the work, and the parties accepted that in order to analyse the true character of this agreement, it was necessary to focus on the arrangements relating to those duties.
The following terms of the contract are, in my view, particularly relevant. Clause 1 of the contract requires the contractor to provide the services detailed in the Specification. Clause 1 of the specification states that the services are provided to the Ministry of Justice. The contractor must perform the services detailed in the specification (cl.5) and to the service levels specified (cl.6). In the event of default resulting from the fact that the services are not provided in accordance with the contract, the MoJ has certain remedies available (cl.7). These include withholding money from the contractor in certain circumstances until the default is rectified (cl.7.1.2) and ultimately even terminating the contract (cl.17).
The specification itself also confers certain powers upon the MoJ. If the contractor fails to meet the contracted performance requirements in two consecutive quarters, the MoJ can divert 20% of the warrant volumes to the reserve contractor.
Clause 5 of the specification requires the contractor to "work strategically with the Department to assist in achieving ongoing increase in performance and government targets" and to agree an annual service enhancement to support the attainment of continuous improvement and best value.
Clause 6 sets out in some detail the operational protocol. It permits the MoJ to impose certain restrictions on how the bailiff's functions are performed, such as specifying the days and times when certain orders can be enforced. Detailed information has to be provided if warrants are not executed, and the specification spells out the minimum inquiries which must be carried out before the warrant can be returned as unexecuted. The contractor must provide the Department with information to allow the Department to monitor performance (cl.13).
The payment arrangements are in large part determined by the bailiff's legal powers. Rule 52.8 of the Criminal Procedure Rules which is headed "Execution of magistrates' court distress warrant" provides, so far as material:
"(2) The warrant shall authorise the person charged with the execution of it to take as well any money as any goods of the person against whom the distress is levied; and any money so taken shall be treated as if it were the proceeds of the sale of goods taken under the warrant.
(3) The warrant shall require the person charged with the execution to pay the sum to be levied to the court officer for the...
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