The Queen (on the Application of Hersi & Company Solicitors) v The Lord Chancellor (as Successor to the Legal Services Commission)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 31 October 2017 |
| Neutral Citation | [2017] EWHC 2667 (TCC) |
| Docket Number | Case No: HT-2016-000150 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 31 October 2017 |
[2017] EWHC 2667 (TCC)
The Hon Mr Justice Coulson
Case No: HT-2016-000150
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Martin Westgate QC and Professor Pavlos Eleftheriadis (instructed by Hersi & Co) for the Claimant
Mr Simon Taylor (instructed by Government Legal Department) for the Defendant
Hearing dates: 16, 17 and 18 October 2017
Judgment Approved
The Hon.
INTRODUCTION
In 2009/2010, the defendant conducted a public procurement exercise for the award of contracts to provide publicly-funded legal services relating to immigration and asylum and mental health work. There were 10,000 individual bids. For the immigration and asylum work, there were more than 400 applicants, and for the London region, the defendant was one of 218 firms who bid for that work. 127 of those firms were successful; however, the claimant was not.
On 6 July 2010, the claimant appealed against the decision not to award it a contract. On 5 August 2010, that appeal was refused. On 9 November 2010, the claimant commenced judicial review proceedings in the Administrative Court.
I do not propose to set out the procedural history at this stage because, ultimately, it is irrelevant to any consideration of the merits of the claimant's claim. However, I do deal with it in Section 11 below, in the hope that, in setting out the sorry saga of this case between 2010 and 2016 (when the case was transferred to the TCC), it will come to be regarded as an example of how not to conduct a public procurement challenge.
The substantive issues could not be more straightforward. As part of the tender, there were 7 particular questions, grouped under the heading 'Selection Criteria', which all applicants were required to answer. The claimant answered the first three, but then left blank the answers to Questions 4, 5, 6 and 7. In consequence, the defendant awarded the claimant no points for its answers to those questions and the claimant's tender failed to gain the required points to justify the award of a contract. The claimant now argues, either that the defendant should have sought clarification of their non-answers, and/or that the answers to the questions were plain from other parts of the claimant's tender and should have been scored accordingly. In addition, the claimant has a wider case in which it seeks to compare the defendant's treatment of numerous other applicants on other aspects of their tenders, so as to allege inequality of treatment.
I deal with the issues that arise in this way. In Section 2, I set out the relevant legal principles. In Section 3, I set out the relevant facts. In Sections 4–7 inclusive, I address the claimant's complaints about the defendant's treatment of their failure to answer Questions 4, 5, 6 and 7. There is a short summary of my conclusions on the merits of the claimant's specific claims at Section 8. In Section 9, I go on to address the claimant's wider case on its alleged comparators. I deal briefly with the damages claim at Section 10. Thereafter, as noted above, I deal in Section 11 with the procedural history. I identify my conclusions and the consequential matters that will have to be dealt with following the handing down of this Judgment in Section 12. I am grateful to both counsel for their clear and concise submissions.
RELEVANT LEGAL PRINCIPLES
General
The applicable version of the Public Contracts Regulations in this case was the version which came into force on 31 January 2006. Relevant regulations for present purposes were:
"4(3) A contracting authority shall (in accordance with Article 2 of the Public Sector Directive)—
(a) treat economic operators equally and in a non-discriminatory way; and
(b) act in a transparent way.
…
47(1) The obligation on—
(a) a contracting authority to comply with the provisions of these Regulations, other than regulations 14(2), 30(9), 32(14), 40 and 41(1), and with any enforceable Community obligation in respect of a public contract, framework agreement or design contest (other than one excluded from the application of these Regulations by regulation 6, 8 or 33); and
(b) a concessionaire to comply with the provisions of regulation 37(3);
is a duty owed to an economic operator.
…
47(6) A breach of the duty owed in accordance with paragraph ( 1) or (2) is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage and those proceedings shall be brought in the High Court."
The best general guidance as to the scope of these duties can be found in the judgment of Morgan J in Lion Apparel Systems Limited v Firebuy Limited [2007] EWHC 2179 (Ch). By reference to a number of other authorities, Morgan J summarised the relevant legal principles to be applied to any public procurement challenge:
"26. The procurement process must comply with Council Directive 92/50/EEC, the 1993 Regulations and any relevant enforceable Community obligation.
27. The principally relevant enforceable Community obligations are obligations on the part of the Authority to treat bidders equally and in a non-discriminatory way and to act in a transparent way.
28. The purpose of the Directive and the Regulations is to ensure that the Authority is guided only by economic considerations.
29. The criteria used by the Authority must be transparent, objective and related to the proposed contract.
30. When the Authority publishes its criteria, which conform to the above requirements, it must then apply those criteria. The published criteria may contain express provision for their amendment. If those provisions are complied with, then the criteria may be amended and the Authority may, and must, then comply with the amended criteria.
31. In relation to equality of treatment, speaking generally, this involves treating equal cases equally and different cases differently.
…
34. When the court is asked to review a decision taken, or a step taken, in a procurement process, it will apply the above principles.
35. The court must carry out its review with the appropriate degree of scrutiny to ensure that the above principles for public procurement have been complied with, that the facts relied upon by the Authority are correct and that there is no manifest error of assessment or misuse of power.
36. If the Authority has not complied with its obligations as to equality, transparency or objectivity, then there is no scope for the Authority to have a "margin of appreciation" as to the extent to which it will, or will not, comply with its obligations.
37. In relation to matters of judgment, or assessment, the Authority does have a margin of appreciation so that the court should only disturb the Authority's decision where it has committed a "manifest error".
38. When referring to "manifest" error, the word "manifest" does not require any exaggerated description of obviousness. A case of "manifest error" is a case where an error has clearly been made."
Although the present case is principally concerned with the alleged failure on the part of the defendant to seek clarification from the claimant in respect of the four questions in the Selection Criteria which it failed to answer, it must be remembered that the court is ultimately concerned with whether or not there has been a manifest error on the part of the defendant. Depending on the nature of the alleged error there may, or may not, be a margin of appreciation. This was summarised by David Richards J (as he then was) in J B Leadbitter & Co Limited v Devon County Council [2009] EWHC 930 (Ch) at paragraph 55:
"55. I conclude therefore that the principle of proportionality is capable of applying to the implementation of the terms of a procurement process. In considering its application in a particular case, there are obvious factors to be borne in mind. First, as Mr Henshaw accepts, the exercise of discretionary powers necessarily involves judgment on the part of the contracting authority. The court must respect this area for judgment and will not intervene unless the decision is unjustifiable. This, I would think, is the proper meaning of a manifest error in this context. It will be remembered that in paragraph 43 of the judgment in Tideland Signal, the court stated that the Commission's decision to reject the tender without first seeking clarification "was clearly disproportionate and thus initiated by a manifest error of assessment". In Lion Apparel Systems Ltd v Firebuy Ltd [2007] EWHC 2179 (Ch), [2008] EuLR 191, Morgan J at paras 26–38 set out a number of principles applicable to procurement distilled from the decision of the Supreme Court of Ireland in SIAC Construction Ltd v Mayo County Council [2002] IESC 39, [2003] EuLR 1 and the decision of the Court of First Instance in Case T-25-/05 Evropaiki Dynamiki v Commission."
Scope of Duty to Seek Clarification
The duty of a contracting authority to seek clarification of the tender in certain circumstances developed originally out of European law (although, as we shall see, it has been affirmed by the English courts). There were a number of debates in the present case as to the nature and scope of any such obligation and the potential differences between a right and a duty. As I indicated to counsel during argument, it seemed to me that this sort of debate gave rise to a real risk of over-complication. Accordingly, I identify below the authorities which I consider to be of particular relevance and then summarise the general principles at paragraph 17 below.
In ( Adia Interim v Commission Case T-19/96, unreported)...
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