Trowers were recently successful in the High Court obtaining a Summary Judgment in favour of the housing association Gateway Housing Association (Gateway).
Chigwell (London) Limited (Chigwell) had brought a claim against Gateway following the abandonment of a procurement exercise after the winning bidder (Chigwell) had been selected.
Chigwell's case was advanced on four heads of claim. Firstly that Gateway had breached the PCR 2015 principle of transparency, secondly, that the decision made by Gateway was irrational; thirdly, that there was a breach of contract (it being alleged that there had been a concluded contract following the sending of the standstill letter of 30 September 2021) and lastly, that there was a breach of Chigwell's legitimate expectation that a contract would be entered into.
The Judgment
On 24 November 2022 judgment was given in favour of Gateway for the reasons set out below. Chigwell's have since applied (and been granted) permission to appeal to the Court of Appeal.
Public Procurement
In his judgment Mr Roger Stewart KC made some interesting observations about public procurement. He held that at the heart of the rationale for public procurement control is economic efficiency – and thus ensure public good - by seeking to ensure that the public as a whole do not pay more for services than they have to and also to ensure efficiency and competition in the provision of such services. More specifically he said that "If procuring authorities become subject to over exacting controls or inappropriate levels of scrutiny, they will not only incur additional costs which will have to be borne by the public as a whole but may become less flexible and nimble and/or over defensive in the way in which they seek to provide public services. Every pound spent on the provision of procurement may well be one less pound available to be spent on the actual provision of services".
Transparency
In relation to the transparency obligation to provide reasons for not proceeding with the contract, it was held that this was to ensure that the court is in a position to consider whether or not the decision is irrational. It was held that it is clear that Gateway told Chigwell that the contract was not being entered into as a result of two matters. Given that it was a Summary Judgment application the Judge took Chigwell's evidence at its highest i.e. that it wasn’t given the more detailed reasoning. However, he held that these additional matters were not of a different nature from those which were explained to Chigwell. Of course, and unsurprisingly, the Judge did add that it would have been preferable for Gateway to have sent out a clear letter identifying what its reasoning was.
Irrationality
From the point of view of irrationality, which is the purpose of the transparency obligations, it was held that the decision challenged is to be judged by the reasons actually given not those which it did not give at the time. Relying on Amey Highways Ltd v West Sussex County Council [2019] EWHC 1291 (TCC) it was held it was completely clear that an authority has a broad discretion to abandon a procurement which it has commenced. Mr Roger Stewart KC stated that "Moreover, the very rationale which underlines public procurement makes it important that the courts are not overzealous in seeking to second-guess authorities as to their decisions. Public authorities are spenders of public money and, like private individuals, will and are entitled to have regard to their own resources, their own monies, and their own immediate objectives when spending such money. Moreover, the appointment of a new chief executive who changes his or her mind as to the way in which an organisation seeks to operate is, to my mind, a good reason as to why, if contractually permitted, a public authority may decide to stop a tender which has been commenced."
Further Roger Stewart KC added "If this were not the case, then public authorities will be at a disadvantage compared with private individuals or corporations in relation to the way that they treat the outside world. It is to no one’s advantage that public authorities be hamstrung or otherwise handicapped in their economic dealings. Of course, if there is any kind of evidence of unlawful or irrational behaviour, such as the example given in argument where a decision is made because someone has red hair, then the courts will be swift to intervene".
Mr Roger Stewart KC held that the most that can possibly be said on behalf of Chigwell is that it was extremely disappointed by the decision which had taken place but it cannot contend that simply because it would have liked to carry on the contract, the decision to abandon was irrational.
Breach of Contract
Whilst Mr Roger Stewart KC accepted that all the material terms of contract had been agreed he held that it was plain from the tender documents that there could be no contract formed until the documents were signed and therefore no possible breach of contract.
This was because:
- The ITT, the tender, and the standstill letter all consistently identified that there would be no contract until the documents were formally signed;
- This was in a public procurement setting as and as set out in the ITT there was the requirement for any contract only to be entered into on signature; and
- The particular documents which passed between the parties, in particular, the mobilisation plans, all made provision (as you would expect) for the signature of the contracts and that was also the case at the mobilisation meeting.
Legitimate expectation
When considering whether Chigwell has a legitimate expectation of the contract, Mr Roger Stewart KC referred to the leading decision of Embassy Limousines & Services v Parliament T 203/96 which he found could be distinguished from this case. This was because from the beginning of the tender, Chigwell proceeded upon the basis that it was at risk until the signature of the contract documents (as set out above). The Judge accepted that there had been a request for a revised mobilisation plan and they had attended a mobilisation meeting. However, when one looked at the details of the mobilisation plan, it was plain that Chigwell was not going to be incurring the material expenses until sometime after that meeting and after the date of the abandonment decision. Accordingly, it was held that there was no basis for it being said that Gateway encouraged Chigwell to incur that expenditure early as alleged.
