Risk Management Partners Ltd v Brent London Borough Council (No 2)
| Jurisdiction | England & Wales |
| Judgment Date | 16 May 2008 |
| Neutral Citation | [2008] EWHC 1094 (Admin) |
| Date | 16 May 2008 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No.: HQ07X01934 |
[2008] EWHC 1094 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand,
London, WC2A 2LL
LORD JUSTICE STANLEY BURNTON
Case No.: HQ07X01934
John Howell QC, Javan Herberg and James Segan (instructed by Halliwells) for the Claimant in both claims
Nigel Giffin QC and Deok Joo Rhee (instructed by Brent Legal Services) for the FirstDefendant
James Goudie QC and Rhodri Williams (instructed by Weightmans Solicitors) for the Second Defendant and (instructed by Legal and Government Services, Harrow Council for the Council for the London Borough of Harrow) for the Second and Third Defendants
Hearing dates: 11, 12, 13, 14 February, 9, 10, 11 April 2008
Stanley Burnton LJ :
Introduction
In these proceedings the Claimant, Risk Management Partners Limited (“RMP”) claims damages against the London Borough of Brent (“Brent”) for Brent's alleged breach of the Public Contracts Regulations 2006 (“the Regulations”) in awarding contracts of insurance to The London Authorities Mutual Ltd (“LAML”), a mutual insurance company of which Brent is a member, and of which membership is restricted to London boroughs, outside the tender process in which RMP participated. The essential facts are set out in my judgment in the judicial review proceedings in which RMP challenged the power of Brent to participate as a member of LAML, handed down on 22 April 2008 under neutral citation number [2008] EWHC 692 (Admin).
This is my judgment on RMP's claim for breach of the Regulations. It is confined to the issue of liability: whether or not Brent acted in breach of the Regulations.
The legislative framework
The Regulations were made in the exercise or purported exercise of the power conferred by section 2(2) of the European Communities Act 1972 for the purpose of implementing this country's obligations under Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (“the Directive”). The broad object of the Directive and of the Regulations is to ensure that public bodies award certain contracts above a minimum value only after fair competition and to the person offering the lowest price or making the most economically advantageous offer.
The 2004 Directive was not the first Directive on this subject. Some of the authorities referred to below arose under the earlier Council Directives, but nothing turns on this.
The issues
It is common ground that Brent is a contracting authority within the meaning of the Regulations and as such under a duty to comply with the obligations imposed by them. It is common ground that the insurance contracts of the kind and values awarded by Brent to LAML were Part A Services Contracts within the meaning of the Regulations, to which the obligations imposed by the Regulations related. It is common ground that RMP is an economic operator to which the obligations of a contracting authority imposed by the Regulations are owed: see Regulation 47(1). RMP is similarly an economic operator within the meaning of the Directive. It is also common ground that Brent did not comply with the express requirements of the Regulations in awarding these contracts to LAML. To put it otherwise, if LAML had been an unconnected third party, it is common ground that Brent would have been in breach of the Regulations and, subject to the requirements of regulation 47(7), liable to it in damages.
The specific breaches of the Regulations alleged by RMP are of the following duties:
(1) Under regulation 4(3)(a), to treat economic operators equally and in a non-discriminatory way.
(2) Under regulation 4(3)(b), to act in a transparent way.
(3) Under regulation 12, to adopt one of the procedures stipulated in the Regulations (open, restricted, negotiated or competitive dialogue) for selecting a successful offer.
(4) Under the Regulations as a whole, to follow that procedure fully and correctly until a successful tender was selected.
(5) Under Regulation 30, to award the proposed contract (subject to abandoning the procedure altogether) to the offer which was either the most economically advantageous or the lowest price.
(6) Under regulations 30 and 31, upon making a final decision in relation to the proposed contract, to publish a contract award notice, and to inform each of the economic operators involved of the outcome.
Brent does not deny that it did not comply with the duties alleged by RMP. Brent's substantive defence is that it was not required to comply with the Regulations precisely because of its relationship with LAML, which, it submits, satisfies the requirements of the so-called Teckal exemption. The Teckal exemption was created by the jurisprudence of the European Court of Justice, and is named after the case in which it was first formulated: Case C-107/98Teckal Srl v Comune di Viano [1999] ECR I-8121.
In addition, Brent contends that RMP did not satisfy the procedural conditions prescribed in regulation 47 of the Regulations for a claim for damages under the Regulations.
Thus Brent contends:
(1) RMP did not comply with the requirements of regulation 47(7) of the Regulations, in particular because it did not bring these proceedings promptly and in any event within 3 months from the date when the grounds for bringing these proceedings first arose; and there is no good reason for extending time.
(2) That the Teckal exemption is part of English Law and is applicable to an insurance company such as LAML.
(3) That the requirements of the Teckal exemption were satisfied and it applied when it awarded the insurance contracts to LAML.
(4) Accordingly, it was entitled to place its insurance contracts with LAML without complying with the requirements of the Regulations.
RMP submits:
(1) It complied with the requirements of regulation 47(7).
(2) The Teckal exemption is not part of English Law, not having been incorporated by or in the Regulations and being inconsistent with them.
(3) The Teckal exemption is inapplicable to contracts of insurance.
(4) If the Teckal exemption is part of English Law, the requirements for its application were not satisfied when Brent awarded its contracts to LAML.
(5) It follows that in awarding the insurance contracts to LAML outside the required tender process Brent acted in breach of its duty to RMP and is liable to it in damages if RMP suffered loss as a result of breach.
Mr Goudie QC, on behalf of Harrow and LAML, adopted and supported the submissions of Mr Giffin QC on behalf of Brent.
Although the order in which I have listed the issues is logical, it seems to me to be more satisfactory for me to consider the requirements of the Teckal exemption first, and then to address the issues set out under paragraph 10 in the order (2), (3), (4) and (1). The answer to (5) follows from my findings on the other issues. I do so in part because, even if RMP did not comply with the requirements of regulation 47(7) all parties are concerned to obtain an authoritative determination of the application of the Regulations to local authorities wishing to place contracts of insurance with LAML. Even if RMP fail in these proceedings for procedural reasons, the same issue is likely to arise whenever a London borough is considering placing or renewing an insurance contract of sufficient size with LAML, and I suspect that if Brent did act in breach of the Regulations, the business of that company will cease to be viable. Secondly, it is necessary to understand the basis of the Teckal exemption in order to consider the question whether it has been incorporated into English Law.
In this judgment, references to a contract or contracts are, unless the contrary is indicated, to contracts to which, by reason of their subject matter and value, the Directive and the Regulations apply or would apply, absent any relevant exemption.
The Directive and the Teckal exemption
As mentioned above, the Directive replaced earlier Directives, referred to in recital (1):
(1) On the occasion of new amendments being made to Council Directives 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts and 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, which are necessary to meet requests for simplification and modernisation made by contracting authorities and economic operators alike in their responses to the Green Paper adopted by the Commission on 27 November 1996, the Directives should, in the interests of clarity, be recast. This Directive is based on Court of Justice case-law, in particular case-law on award criteria, which clarifies the possibilities for the contracting authorities to meet the needs of the public concerned, including in the environmental and/or social area, provided that such criteria are linked to the subject-matter of the contract, do not confer an unrestricted freedom of choice on the contracting authority, are expressly mentioned and comply with the fundamental principles mentioned in recital 2.
The general purpose of the Directive can be seen from recital (2):
(2) The award of contracts concluded in the Member States on behalf of the State, regional or...
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