Openview Security Solutions Ltd v The London Borough of Merton Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 28 September 2015 |
| Neutral Citation | [2015] EWHC 2694 (TCC) |
| Docket Number | Case No: HT-2015-000274 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 28 September 2015 |
[2015] EWHC 2694 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Stuart-Smith
Case No: HT-2015-000274
Calum Lamont (instructed by Hewitsons LLP) for the Claimant
Azeem Suterwalla (instructed by South London Legal Partnership) for the Defendant
Hearing dates: 18 September 2015
Approved Judgment
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
1. The Defendant Local Authority ("Merton") applies under Regulation 47H of the Public Contracts Regulations 2006 (as amended) to set aside the automatic suspension that has been in place since the issue of proceedings on 21 July 2015. Merton's application was issued on 19 August 2015. Evidence was filed on both sides, consisting of witness statements from Mr Tom Davies, Merton's Parking and Infrastructure Manager, and Mr Mark Ingleson, OpenView's Managing Director.
2. The hearing of the application was on 18 September 2015. On 21 September 2015 the parties were informed that Merton's application was successful and that reasons for my decision would follow later. This judgment sets out my reasons.
3. The dispute arises out of a procurement competition run by Merton for the provision of an integrated CCTV and automatic number plate recognition systems in the Borough of Merton, together with ongoing maintenance. The primary function of the system is to police and enforce road traffic infringements such as driving in bus lanes, stopping in junction boxes and so on. Merton says that one of its aims is to improve traffic flows, improve road safety and reduce pollution. Merton has an existing CCTV system but it is out of date, unreliable, and unable to capture as many infringements as the new system should. The new system will therefore lead to an increase in revenue for the Council, which it is very keen to have and which it has incorporated into its budget projections. When the results of the procurement were announced, Merton declared its intention to enter into a contract with OpenView's competitor ("Tyco"). OpenView came second in the assessment of tenders. Although not formally conceded by Merton on this application, all available information suggests that if Tyco had been disqualified for submitting a non-compliant tender or had been marked in the way that OpenView contends should have happened, OpenView would have got the contract.
4. It is common ground that the principles to be applied are those established by American Cyanamid Co v Ethicon Ltd [1975] AC 396, which have been subject to observation, adaptation and application in public procurement cases by the lower courts on a regular basis. It will, however, be necessary to look at the applicable principles and the factual background in rather more detail below, in order to explain the parties' submissions and place them in context.
The Factual Background
5. The essential chronology is as follows:
i) On 18 November 2014 Merton published its notice in the OJEU advertising the procurement. At that stage it was hoped that the system would be implemented by April 2015;
ii) On 19 January 2015 OpenView and Tyco pre-qualified;
iii) On 2 March 2015 Merton issued the ITT to five companies including OpenView and Tyco. By the time that the final version of the tender specification was provided in April 2015, it was hoped that implementation would be achieved by November 2015;
iv) On 8 May 2015 tenders were submitted;
v) On 1 July 2015 Merton informed the tenderers that Tyco had been successful;
vi) On 21 July 2015 OpenView issued these proceedings and the automatic suspension took effect;
vii) On 27 July 2015 the Particulars of Claim were filed and served;
viii) On 19 August 2015 the present application to lift the automatic suspension was issued;
ix) On 24 August 2015 the defence was filed and served;
x) On 25 August 2015 OpenView gave a cross undertaking in damages in support of the maintenance of the automatic suspension;
xi) On 18 September 2015 this application was heard.
The Principles to be Applied
6. As originally enacted, the Regulations did not provide for automatic suspension of the contracting process where an aggrieved party brought a claim that there had been a breach of the duty owed to him by a contracting authority. It was therefore up to the aggrieved party to apply for an injunction if it wished to interrupt the contracting process. The Public Contract (Amendment) Regulations 2009 introduced the notion of automatic suspension by Regulation 47G (which I set out below). Where the automatic suspension is in place, it is for the contracting authority to apply to the Court to set aside the automatic suspension, if it wishes to do so.
7. The regulations that are most directly relevant to this application are regulations 47A, 47C, 47E, 47G and 47H, which provide as follows:
"Duty owed to economic operators
47A.–(1) This regulation applies to the obligation on–
(a) a contracting authority to comply with–
(i) the provisions of these regulations, …;
…
(2) That obligation is a duty owed to an economic operator.
…
Enforcement of duties through the Court
47C.–(1) A breach of the duty owed in accordance with regulation 47A … is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage.
(2) Proceedings for that purpose must be started in the High Court, ….
…
Contract-making suspended by challenge to award decision
47G.–(1) Where–
(a) proceedings are started in respect of a contracting authority's decision to award the contract; and
(b) the contract has not been entered into,
the starting of the proceedings requires the contracting authority to refrain from entering into the contract.
(2) The requirement continues until any of the following occurs–
(a) the Court brings the requirement to an end by interim order under regulation 47H(1)(a);
(b) the proceedings at first instance are determined, discontinued or otherwise disposed of and no order has been made continuing the requirement (for example in connection with an appeal or the possibility of an appeal).
…
Interim orders
47H.–(1) In proceedings, the Court may, where relevant, make an interim order–
(a) bringing to an end the requirement imposed by regulation 47G(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 47A … 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 47G(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).
(3) If the Court considers that it would not be appropriate to make an interim order of the kind mentioned in paragraph (2)(a) in the absence of undertakings or conditions, it may require or impose such undertakings or conditions in relation to the requirement in regulation 47G(1).
(4) … .
(5) This regulation does not prejudice any other powers of the Court."
8. These are not, however, the only relevant regulations for present purposes. The Regulations go on to prescribe in considerable detail what the Court must, may or may not do in certain circumstances, of which the following is a brief paraphrase:
i) Regulation 47I prescribes that where the Court is satisfied that there has been a breach of the duty owed under regulation 47A and the contract has not been entered into, the court may (without prejudice to any other powers it may have) set aside the offending decision or action, order the contracting authority to amend any document and award damages to an economic operator who has suffered loss of damage as a consequence of the breach.
ii) Regulations 47J, K and L prescribe that, where the Court is satisfied that there has been a breach of duty but the contract has already been entered into, it must make a declaration of ineffectiveness if one of three closely defined "grounds for ineffectiveness" applies unless regulation 47L requires it not to do so. Regulation 47L provides that the Court must not make a declaration of ineffectiveness if it is satisfied (on the issue being raised) that "overriding reasons relating to a general interest (as subsequently discussed and circumscribed by the regulation) require that the effects of the contract should be maintained. If regulation 47L requires the Court not to make a declaration of ineffectiveness (or the Court makes no declaration of ineffectiveness for specified reasons), it must either impose financial penalties on the contracting authority or order that the duration of the contract be shortened, or both. In deciding whether to do so, "the overriding consideration is that the penalties must be effective, proportionate and dissuasive."
iii) In addition to (and regardless of) the provisions about declarations of ineffectiveness and the imposition of penalties, regulation 47J provides that the Court may award damages to an economic operator which has suffered loss or damage as a consequence of the breach but must not order any other remedies (except in closely defined...
To continue reading
Request your trial
-
Kent Community Health NHS Foundation Trust v NHS Swale Clinical Commissioning Group NHS Dartford, Gravesham and Swanley
...v Sunderland City Council [2015] EWHC 3898 (TCC) described it as a helpful overview, I adopt what I said in Openview Security Solutions Limited v London Borough of Merton Council [2015] EWHC 3332 (TCC) at [6]–[40], while having regard to the other authorities that now make up the usual body......
-
Camelot UK Lotteries Ltd v The Gambling Commission
...Airport Ltd [2014] EWHC 3133(TCC) per Ramsey J at [84]–[85]; OpenView Security Solutions Limited v The London Borough of Merton Council [2015] EWHC 2694 per Stuart-Smith J (as he then was) at 95 However, I repeat what this court stated in Bombardier Transportation UK Limited v London Underg......
-
Bombardier Transportation UK Ltd v London Underground Ltd
...Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 per Coulson J at [34] and [48], OpenView Security Solutions Limited v The London Borough of Merton Council [2015] EWHC 2694 per Stuart-Smith J at [10]–[11]; Lancashire Care NHS Foundation Trust v Lancashire County Cou......
-
Sysmex (UK) Ltd v Imperial College Healthcare NHS Trust (Defendant/Applicant)
...in procurement cases: see, for example, Group M UK Limited v Cabinet Office [2014] EWHC 3659 (TCC) and Openview Security Solutions Limited v London Borough of Merton Council [2015] EWHC 2694 (TCC). 13 Although it is sometimes pointed out that the damages question is really an element of the......
-
Projects And Construction Law Update - October 13, 2015
...To view the full text of the decision, please click here. OpenView Security Solutions Limited v The London Borough of Merton Council [2015] EWHC 2694 (TCC) In this case the local authority applied to set aside an automatic suspension put in place following issue of proceedings for breach of......
-
Table of cases
...Mutual Life assoc of australasia Ltd [1992] 1 Vr 283 II.10.95 OpenView Security Solutions Ltd v London Borough of Merton Council [2015] EWhC 2694 (TCC) I.4.69, I.4.70 Oppedisano v Micos aluminium Systems pty Ltd [2012] NSWSC 53 II.6.97, III.19.41, III.24.165, III.24.206 Optus Networks pty L......
-
Procurement
...City Council [2015] EWHC 876 (tCC) at [17]–[18], per Coulson J; OpenView Security Solutions Ltd v London Borough of Merton Council [2015] EWHC 2694 (tCC); Perinatal Institute v Healthcare Quality Improvement Partnership [2016] EWHC 2626 (tCC) at [11]–[12], per Jeford J; Energy Solutions EU ......