Letting International Ltd v Newham LBC

JurisdictionEngland & Wales
JudgeLord Justice Moore-Bick,Lord Justice Ward
Judgment Date21 December 2007
Neutral Citation[2007] EWCA Civ 1522
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A2/2007/2841
Date21 December 2007

[2007] EWCA Civ 1522

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

(MR JUSTICE ROYCE)

(LOWER COURT No. HQ07X04065)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Moore-Bick and

Lord Justice Ward

Case No: A2/2007/2841

Between:
Lettings International Limited
Appellant
and
London Borough of Newham
Respondent

Mr N Giffin QC (instructed by Messrs Bowling & Co) appeared on behalf of the Appellant.

Mr P Woolfe (instructed by London Borough of Newham) appeared on behalf of the Respondent.

(Approved by the court)

Lord Justice Moore-Bick
1

On 27 November 2007 Openshaw J granted an interim injunction on the application of the claimant Lettings International Limited (“the contractor”) against the London Borough of Newham (“the council”) restraining it from entering into any contract or framework agreement pursuant to its tender procedure for the procurement, management and maintenance of private sector leased accommodation. On 13 December Royce J discharged that injunction on the application of the council, but continued it pending this application for permission to appeal. This is, therefore, the contractor's application for permission to appeal against the order of Royce J, which Sir Henry Brooke directed should be made orally with the appeal to follow if permission were granted.

2

The claim arises out of the operation by the council of a tender process for the procurement, maintenance and management of housing leased from the private sector. The contractor is a property management company which carries on the business of procuring, updating, maintaining and managing properties leased to local authorities in order to enable them to meet their statutory housing obligations. It currently manages a number of properties for the council and wishes to continue doing so. The value of its current business with the council is very substantial. For the year 2006/2007 it was worth approximately £22 million.

3

On 15 March 2007 the council advertised, by means of a formal contract notice, its intention to enter into two framework contracts, one for the procurement, management and maintenance of private sector leased properties; the other simply for the management and maintenance of private sector leased properties. Each was divided into separate lots, for which separate bids were invited. The contracts are described as framework contracts because they are intended to do no more than establish the terms on which the council will procure such services of the kinds described in the contract, as it may need during the lifetime of the contract, which will run for three years. Whether the council will in fact require such services, and if so to what extent, is at present unknown.

4

In section IV.2.1 headed “Award Criteria” the contract notice identified the criteria by reference to which the contracts would be awarded as follows:

“The most economically advantageous tender in terms of the criteria stated in the specifications, in the Invitation to Tender or to negotiate or in the descriptive document.”

5

The contractor expressed an interest in tendering for the contract and duly received a form of Invitation to Tender. It submitted its tender on 7 September 2007. The closing date for the submission of tenders was 10 September. The tenders were marked later in September and a report was prepared for a meeting of the council's housing department on 18 October. On 8 November the contractor was informed that its tender had not been successful. It immediately asked for an explanation, as it was entitled to.Correspondence then followed between the contractor and council, in which the contractor sought, and eventually obtained, information which, it contends, shows that the council had failed to act in a fair and transparent manner in handling the tender process and had failed to comply with the requirements of the Public Contracts Regulations 2006. These regulations, which govern the procedures for awarding public contracts of all kinds, provide, so far as is material to this case, as follows (Regulation 30):

“30

(1)……….

(2) A contracting authority shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous including quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost effectiveness, after sales service, technical assistance, delivery date and delivery period or period of completion.

(3) Where a contracting authority intends to award a public contract on the basis of the offer which is the most economically advantageous it shall state the weighting which it gives to each of the criteria chosen in the contract notice or in the contract documents…”

6

Section 8 of the Invitation to Tender, which was headed “Tender Response Requirements,” provided as follows:

“8.0.1 Tenderers are required to provide the following specific responses as part of tender:-

A. Schedule A – Method Statements

Method statements should be provided for the following areas of the contract

For Part 1 submissions only, the following

Procurement of accommodation, specifically in respect of the acquisition pathway

For Part 1 and Part 2 submissions the following

Customer Care, particularly with regard to receiving and inducting new tenants andobtaining feedback on service improvements

Responding to Service Users with emphasis on responding to out of normal hours emergencies, carrying out repairs and behavioural management and the way in which it relates to the Council's policies

Resource Allocation detailing the numbers and ratios of staff allocated to property management and the administration of financial matters i.e. invoicing to ensure clarity, thereby reducing the need for protracted enquiries

Management and Monitoring outlining arrangements for responding to the Council's enquiries, the collection of statistics and the flexibility of the format for information retrieval systems

The above explanations against each of the method statements required is for guidance only. Submissions should look to go beyond this in ensuring a full explanation is given as to how the performance specification is to be fully met. Please also comment upon the Performance Management standards contained in the specification.”

7

Section 9 of the document headed “Tender Evaluation Criteria” set out the criteria by reference to which tenders would be evaluated. It provided as follows:

“9.0.1 The Contract will be awarded on the basis of the most economically advantageous tender;

9.0.2 Evaluation of the tenders will be based on the detailed written response within the Method Statements, pricing and site visits. The evaluation criteria is:- [and then there follows a table which identified three criteria by reference to which tenders would be marked, compliance with specification carrying 50% of the score; price carrying 40% of the score, and premises carrying 10% of the score].

9.0.5 All relevant submitted evidence and visits will be assessed/ merit rated against predetermined criteria.”

8

Correspondence between the council and the contractor after the tenders had been marked disclosed that the assessment of compliance with the specification, which carried a 50% weighting, had been conducted by reference to the five aspects on which method statements had been required, to each of which there had been assigned a specific proportion of the mark allocated to that criterion as a whole. The proportions varied between 5% for procurement of accommodation to 17% for customer care. It appears likely that these weightings had been established after the tender document had been published, but before any tenders had been received. The contractor submitted that, in effect, the overall criterion of compliance with specification, had been broken down into five sub-criteria, each carrying its own proportion of the marks, but without that degree of transparency which is called for by the regulations. It has also become apparent from a letter written by the council to the contractor on 6 December 2007 and from evidence subsequently filed by the council in support of its application to discharge the injunction, that when marking each of the sub-criteria a system was adopted by those evaluating the tenders under which full compliance with the specification was awarded less than the full number of marks available – the highest marks being reserved for tenders which exceeded the specification. The contractor complained that that also involved a failure to administer the process fairly and transparently in breach of regulation 30, because bidders were entitled to assume that the specification represented the mark at which they had to aim and that full compliance with the specification would therefore be awarded full marks.

9

These were the principal grounds on which the contractor maintained that the council was in breach of the duties imposed upon it by the regulations. It also contended, however, that the council was in breach of contractual duties similar to those imposed by the regulations. On 27 November the contractor issued proceedings against the council in the High Court alleging a breach of the regulations and immediately made an application without notice to Openshaw J for an order preventing the council from entering into any contracts with the successful bidders pending the trial of the action.

10

At this point it is necessary to refer to some of the other provisions of the regulations. Regulation 47 deals with the enforcement of obligations. By virtue of paragraph...

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