Newlyn Plc v London Borough of Waltham Forest (Respondent/Claimant)
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Coulson,The Hon. Mr Justice Coulson |
| Judgment Date | 06 April 2016 |
| Neutral Citation | [2016] EWHC 771 (TCC) |
| Docket Number | Case No: HT-2016000029 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 06 April 2016 |
[2016] EWHC 771 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Coulson
Case No: HT-2016000029
Joseph Barrett (instructed by London Borough of Waltham Forest Legal Services) for the Applicant/Defendant
Phillip Patterson (instructed by Feltons Law) for the Respondent/Claimant
Hearing date: 6 April 2016
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.
INTRODUCTION
This is an application by the defendant, the London Borough of Waltham Forest ("WF"), to strike out the claim brought by the claimant, Newlyn PLC ("Newlyn") pursuant to the Public Contract Regulations 2015 ("PCR"). Originally there was an alternative application to lift any automatic suspension that may have been imposed preventing WF from entering into contracts with the two successful tenderers. However, for reasons which will become apparent, there is no necessity for the court to consider that application at all.
I set out the relevant facts in Section 2 and the issues as I see them between the parties in Section 3. Thereafter, in Sections 4, 5 and 6, I work my way through those issues.
THE FACTS
WF is required to take steps to collect and enforce council tax, national non-domestic business rates and business improvement district levy debts that arise within the area of the borough. Like many local authorities, WF achieves this by contracting out their collection and enforcement obligations to bailiffs and enforcement agencies. They are known as enforcement agency services. The original arrangements pursuant to which these services were provided to WF expired on 2 February 2016. Newlyn were the incumbent provider.
In order to put in place new contractual arrangements, WF commenced a procurement exercise. On 12 January 2015, YPO placed a full notice in the OJEU for a dynamic purchase system. On 16 September, they placed a simplified notice in the OJEU. On 26 October, WF issued an invitation to tender ("ITT"). Newlyn were one of a number of contractors who responded and tendered for the work. The tenders were evaluated in November and December. On 4 January 2016 WF wrote:
(a) To Equita Ltd and Marston Group Ltd, telling them that their tenders had been successful;
(b) To the other tenderers, including Newlyn, telling them that their tenders had been unsuccessful.
Newlyn were unhappy about the rejection of their tender. There were a number of exchanges of correspondence. On 29 January 2016, Newlyn commenced these proceedings. One of the consequences of Newlyn's challenge under the PCR has been that WF felt unable to enter into contracts with Equita and Marston.
THE ISSUES
The real issues between the parties arising out of WF's application did not clearly emerge until the hearing today. They can be summarised as follows:
(a) Issue 1: Do the PCR apply to this procurement exercise?
(b) Issue 2: If not, what are the consequences for Newlyn's pleaded claim?
(c) Issue 3: Is Newlyn's claim more than fanciful or better than arguable?
In deciding these issues, I have had regard to the factual material contained in the statements of Ms Gibbs of WF, dated 4 March and 29 March 2016, and the statement of Mr McCarthy of Newlyn, dated 23 March 2016. I have also been assisted by the helpful skeleton arguments from both counsel.
ISSUE 1: DO THE PCR APPLY TO THIS PROCUREMENT EXERCISE?
The sole basis for the pleaded claim against WF (as it presently stands), is said to be WF's failure to comply with the PCR. WF say that the PCR do not apply to this procurement exercise so that the entire basis of the present claim is misconceived.
Regulation 117 provides as follows:
" 117. General saving in respect of certain concession contracts
Nothing in these Regulations affects—
(a) …
(b) services concession contracts within the meaning of the 2006 Regulations,
or procedures for the award of such contracts."
A 'services concession contract' is defined by Regulation 2(1) of the 2006 Regulations as being "a public services contract under which a consideration given by the contracting authority consists of or includes the right to exploit the service or services to be provided under the contract."
In JBW Group Ltd v Ministry of Justice [2012] EWCA Civ. 8, the Court of Appeal had to decide whether the provision of bailiff services to magistrates courts by a third party contractor was a services concession contract and therefore outside the PCR. They concluded that it was. One of the principal reasons for that conclusion was that the contractor performing the enforcement agency services retained part of the sums recovered, which went towards its costs and profit. In other words, the contractor had the right to exploit the services being provided.
On the face of it, it did not seem to me to be possible to distinguish JBW from the present case. That is because, in the present case, it is the contractor appointed by WF who retains the monies made from the enforcement of the council tax and other similar debts. I therefore asked Mr Patterson, counsel for Newlyn, whether he said that there were any grounds for distinguishing JBW. He confirmed that there were no such grounds.
For the reasons that I have already given, I consider that this concession was rightly made. In the light of Regulation 117 and JBW, I am therefore obliged to conclude that the proposed contract for enforcement agency services in the present case was a services concession contract and therefore outside the PCR.
ISSUE 2: WHAT ARE THE CONSEQUENCES OF THAT FINDING FOR NEWLYN
On the face of it, the conclusion that the PCR do not apply to this procurement exercise is fatal to Newlyn's pleaded claim. That is because that claim is based solely on WF's alleged failure to comply with the PCR. However, despite that, Mr Patterson sought to argue, that either because Newlyn had a legitimate expectation that the PCR would govern the procurement exercise and/or in any event, the court should not strike out the claim, but instead permit Newlyn to make some, as yet unformulated, amendments, so as to bring a claim for judicial review.
I consider that as a matter of law, I cannot exceed to Mr Patterson's request. There are both procedural and substantive authorities that make plain that the court could not and should not turn this Part 7 claim into a claim for judicial review.
The procedural authority is R (on the application of Townsend) v Secretary of State for Work and Pensions [2011] EWHC 3434 (Admin). In that case, the original claim was, like the present claim, brought under CPR Part 7. The defendant said that that was inappropriate. The claimant agreed and sought to argue that the claim could be amended and then turned into a judicial review claim. Silber J refused that application and said at paragraph 13:
"I have not overlooked the submission made by Mr Townsend that I have inherent power to allow the case to proceed as an application for judicial review. Even if which I do not accept to be the case I did have such power, I would not think it appropriate to exercise it in this case. It is quite clear that the forms that are required under CPR 54.1 and the standard claim form for judicial review is a detailed document which is completely different from the information which has so far been put forward by Mr Townsend. It would be difficult to see how the pleadings could be easily amended. It is much better that the claimant starts again from the beginning with a proper judicial review claim form. I therefore conclude that notwithstanding the helpful submissions of Mr Townsend, the appropriate order is that the claim should be struck out as an abuse of process and I so order. It is very desirable that if an action is brought by means of judicial review, it is dealt with as speedily as possible."
In reaching that conclusion, Silber J paid particular regard to the well-known case of O'Reilly v Mackman [1983] 2 AC 237 in which Lord Diplock said that a private law claim could not be turned into a claim by way of judicial review and said:
"it would…as a general rule be contrary to public policy, and as such an abuse of the process of the court, to permit a person seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law to proceed by way of an ordinary action and by this means to evade the provisions of Order 53 for the protection of such authorities."
In an attempt to get round these cases, Mr Patterson relied on CPR 54.4 which provides that:
"The court's permission to proceed is required in a claim for judicial review whether started under this Section or transferred to the Administrative Court."
However it seems plain to me that this rule is of no relevance here. It is dealing with the permission stage, which is not required for a Part 7 claim like this. And the rule envisages the possible transfer of an existing judicial review claim, which does not exist here. Accordingly, I accept the general principle stated in Townsend that a claim started under Part 7 cannot be turned into a judicial review claim part way through the proceedings. There may be exceptions to that general rule, but in my judgment there is nothing to say that this is any sort of exceptional case.
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