ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE UNDERHILL
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE DAVIS
LADY JUSTICE GLOSTER
| THE QUEEN ON THE APPLICATION OF NASH
|- and -
|BARNET LONDON BOROUGH COUNCIL
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DINAH ROSE Q.C. and IAIN STEELE (instructed by Trowers & Hamlins LLP) for the Respondent.
Crown Copyright ©
Lord Justice Davis :
"The scope of the potential changes covered by the Future Shape Programme will require an extensive set of consultation and engagement activities. Clearly the nature and extent of consultation required will change depending on the proposals being considered, the group which will be affected by any proposals and the statutory requirements that may need to be taken into account."
"…to commence the procurement process to identify a strategic partner for the delivery of the Development and Regulatory Services Project."
The proceedings and witness statements
"1. Barnet LBC's decision to award an [sic] contract ('the New Support and Customer Service Organisation Contract') and
2. Barnet LBC's intended decision to award a contract ('the Development and Regulatory Services Contract)."
The dates of the decisions are given as 13 December 2012 and "Expected 31 January 2013" (13 December 2012 was the date of publication of the decision of 6 December 2012, the decision having in the interim been called in and confirmed by the Council's Overview and Scrutiny Committee). The relief sought was extensive declaratory relief and also an order quashing the decision of 6 December 2012 to award the NSCSO contract.
i) First, that the Council had failed to comply with its statutory obligations under s.3(2) of the Local Government Act 1999 ("the 1999 Act") and statutory guidance.
ii) Second, that the Council had unlawfully denied a legitimate expectation that it would carry out consultations with "stakeholders".
iii) Third, that the Council had failed to discharge its public sector equality duty.
iv) Fourth, that the Council had failed to discharge its fiduciary duty.
v) Fifth, that the Council had breached its obligations under Regulations 18 and 30 of the 2006 Regulations to award the NSCSO contract to the tenderer submitting the most economically advantageous tender.
The issues before the judge
"I do not see how it is possible to consult for the purpose of deciding whether to undertake a major outsourcing programme without inviting views on the proposal to undertake that programme…. It is hard to see why authorities should be entitled to fulfil their duty to consult in a way which avoided seeking views on the central issues raised by the substantive duty."
He said that consultation generally about "priorities" and expenditure did not suffice. His conclusion (paragraph 76) was that he would have held that the Council had not complied with its obligations under s.3(2) of the 1999 Act had the application for judicial review been made in time. Having so indicated, he went on to say, however, that he would have "wished to give serious consideration" to the argument that, even if the claim had been in time, relief should be withheld under s.31(6) of the Senior Courts Act 1981.
The legal background
"3.–The general duty.E+W
This section has no associated Explanatory Notes
(1) A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
(2) For the purpose of deciding how to fulfil the duty arising under subsection (1) an authority must consult—
(a) representatives of persons liable to pay any tax, precept or levy to or in respect of the authority,
(b) representatives of persons liable to pay non-domestic rates in respect of any area within which the authority carries out functions,
(c) representatives of persons who use or are likely to use services provided by the authority, and
(d) representatives of persons appearing to the authority to have an interest in any area within which the authority carries out functions.
(3) For the purposes of subsection (2) "representatives" in relation to a group of persons means persons who appear to the authority to be representative of that group.
(4) In deciding on—
(a) the persons to be consulted, and
(b) the form, content and timing of consultations,
an authority must have regard to any guidance issued by the Secretary of State."
"18.—(1) In this regulation—
'particularly complex contract' means a contract where a contracting authority is not objectively able to—
(a) define the technical means in accordance with regulation 9(7), (8) and (9) capable of satisfying its needs or objectives; or
(b) specify either the legal or financial make-up of a project or both; and
'participant' means an economic operator selected by a contracting authority using the procedure referred to in paragraph (2) to participate in the competitive dialogue procedure.
(2) Where a contracting authority wishes to award a particularly complex contract and considers that the use of the open or restricted procedure will not allow the award of that contract, the contracting authority may use the competitive dialogue procedure.
(3) A contracting authority using the competitive dialogue procedure shall comply with the following paragraphs of this regulation.
(4) The contracting authority shall publicise its intention to seek offers in relation to the public contract by sending to the Official Journal, as soon as possible after forming the intention, a notice in the form of a contract notice in Annex II to Commission Regulation (EC) No 1564/2005 inviting requests to participate and containing the information therein specified.
(20) The contracting authority shall open with the participants selected in accordance with regulations 23, 24, 25 and 26, a dialogue the aim of which shall be to identify and define the means best suited to satisfying its needs.
(22) The contracting authority may provide for the competitive dialogue procedure to take place in successive stages in order to reduce the number of solutions to be discussed during the dialogue stage by applying the award criteria in the contract notice or in the descriptive document.
(23) Where the contracting authority provides for the competitive dialogue procedure to take place in successive stages in accordance with paragraph (22), it shall ensure that the number of economic operators to be invited to participate at the final stage is sufficient to ensure genuine competition to the extent that there is a sufficient number of economic operators to do so.
(24) The contracting authority may continue the competitive dialogue procedure until it can identify one or more solutions, if necessary after comparing them, capable of meeting its needs.
(27) The contracting authority shall assess the tenders received on the basis of the award criteria specified in the contract notice or descriptive document and shall award the contract to the participant which submits the most economically advantageous tender in accordance with regulation 30(1)(a)."
Regulation 30 then sets out the criteria for the award of a public contract.
"(1) The claim form must be filed –
(a) promptly; and
(b) in any event not later than 3 months after the grounds to make the claim first arose.
(2) The time limits in this rule may not be extended by agreement between the parties.
(3) This rule does not apply when any other enactment specifies a shorter time limit for making the claim for judicial review."
The judgment of Underhill LJ
"33. Viewing the question as one of principle, and without reference to authority, I would regard the claim based on failure to consult as out of time. In my view it is clear that if the Council was under the duty relied on by the Claimant it should have consulted prior to the decisions taken in 2010/2011 to proceed with outsourcing and to initiate the procurement procedures accordingly; and if it was in breach of that duty that breach crystallised when those decisions were taken without any consultation having occurred. It seems to me, on an ordinary reading of the words of CPR 54.5, that that was when "the grounds to make the claim first arose". Mr Giffin says that there was a continuing breach of the duty, in the sense that at any time before it was finally contractually committed the Council could have decided, however belatedly, to institute consultation and could have reconsidered its decision in the light of that consultation. That may be so, but it does not help: time runs from when the grounds first arose.
34. I accept that, in so far as the decision of 6 December 2012 and the impending decision in relation to the DRS contract might involve distinct questions on which there was an obligation to consult which had not been complied with, the Claimant would be in time to complain of that breach. But it seems clear that they do not involve any such questions: whatever the precise scope of the duty to consult, which I discuss at paras. 61-76 below, it can only be concerned with questions of policy and approach and not with such specific operational matters, important though they may be, as the identity of the outsourcing "partner" or the detailed terms of the contract to be entered into.
35. That approach also seems plainly right as a matter of fairness and good administration. In the year or more following the 2010/2011 decisions the Council has invested, on the evidence of Mr. Cooper, over £4.5m in developing the NSCSO and DRS projects. It has planned and proceeded on the basis that the functions and services in question would be outsourced from 2013/14. That assumption, which was entirely legitimate on the basis of the decisions taken, was built into the MTFS adopted in 2011 and renewed in 2012. Big savings are anticipated from the outsourcing: Mr Cooper quantifies them for the first year at £12.5m from the NSCSO contract and (a minimum of) £1.5m from the DRS contract. Under both contracts the partners are also committed to making very substantial investments (principally, though not only, in IT provision) of which the Council will get the benefit. If the Claimant is permitted at this stage to challenge the outsourcing decisions, and does so successfully, the least that will happen is that the benefits which are anticipated from entering into the contracts will be deferred during the time taken to conduct a proper consultation, which will inevitably cause significant disruption to the Council's finances; and if the result were, as I have to assume is a real possibility, that some or indeed all aspects of the outsourcing did not proceed the disruption to the Council in having to re-think its strategy from the start would be enormous, and the sums invested in developing the proposals would be wasted. I was given no evidence about the resources invested by the Interested Parties, but it is plain that these too will have been very substantial. It is in order to avoid precisely this kind of uncertainty and disruption that CPR 54.5 and its predecessor rule were made."
"41. Mr Giffin developed those points clearly and cogently, but I do not accept them. I do not believe that Burkett is authority for the proposition that in every situation in which a public-law decision is made at the end of a process which involves one or more previous decisions – what I will refer to as "staged decision-making" – time will run from the date of the latest decision, notwithstanding that a challenge on identical grounds could have been made to an earlier decision in the series. In my judgment it is necessary in such a case to analyse carefully the nature of the latest decision and its relationship to the earlier decision(s). I believe the true position to be as follows. If the earlier decision is no more than a preliminary, or provisional, foreshadowing of the later decision, Burkett does indeed apply so that the later, "final", decision falls to be treated as a new decision, the grounds for challenging which "first arise" only when it is made. But if the earlier and later decisions are distinct, each addressing what are substantially different stages in a process, then it is necessary to decide which decision is in truth being challenged; if it is the earlier, then the making of the second decision does not set time running afresh. I accept that the distinction may in particular cases be subtle, but it is in my view nonetheless real and important."
"49. Applying that approach, in my view the 2010/2011 decisions plainly constituted distinct substantive decisions, namely decisions to outsource the functions and services identified, and for that purpose to commence the formal procurement procedure under the 2006 Regulations by the placing of notices in the OJEU. They were not preliminary, provisional or contingent in the sense discussed in Burkett. They were not simply proposals for consultation or declarations of principle: they involved action, and the expenditure of the Council's resources in preparing for and engaging in the procurement process. They are thus clearly distinguishable from the conditional resolution in Burkett: they had immediate legal effect. No doubt it was possible that the process might prove abortive for some reason; but, as Eady J held in the Unison case, that did not make the decision any the less "final". The decisions made in December 2012, or impending in January 2013, are, or would be, different decisions, namely decisions to award a particular contract to a particular contractor. On that basis, it is clear that the Claimant's challenge is in truth to the earlier decisions, on grounds that existed from the moment that they were made."
"There has been nothing covert about the Council's proceedings. The 2010/2011 decisions were formally taken and recorded. They have been common knowledge to interested persons in the borough and on the evidence have been controversial since they were first proposed."
Submissions and disposition
(1) The decisions by reference to s.3 of the 1999 Act
(2) The application of the decision in Burkett
"39. As a matter of language it is possible to say in respect of a challenge to an alleged unlawful aspect of the grant of planning permission that "grounds for the application first arose" when the decision was made. The ground for challenging the resolution is that it is a decision to do an unlawful act in the future; the ground for challenging the actual grant is that an unlawful act has taken place. And the fact that the element of unlawfulness was already foreseeable at earlier stages in the planning process does not detract from this natural and obvious meaning. The context supports this interpretation. Until the actual grant of planning permission the resolution has no legal effect. It is unlawful for the developer to commence any works in reliance on the resolution. And a developer expends money on the project before planning permission is granted at his own risk. The resolution may come to nothing because of a change of circumstances. It may fall to the ground because of conditions which are not fulfilled. It may lapse because negotiations for the conclusion of a section 106 agreement break down. After the resolution is adopted the local authority may come under a duty to reconsider its decision if flaws are brought to its attention: R v West Oxfordshire District Council, Ex p C H Pearce Homes Ltd (1986) 26 RVR 156. Moreover, it is not in doubt that a local authority may in its discretion revoke an outline resolution. In the search for the best contextual interpretation these factors tend to suggest that the date of the resolution does not trigger the three-month time limit in respect of a challenge to the actual grant of planning permission."
He went on to say in the course of paragraph 42 of his judgment:
"The court has jurisdiction to entertain an application by a citizen for judicial review in respect of a resolution before or after its adoption. But it is a jump in legal logic to say that he must apply for such relief in respect of the resolution on pain of losing his right to judicial review of the actual grant of planning permission which does affect his rights. Such a view would also be in tension with the established principle that judicial review is a remedy of last resort."
He disapproved of the approach of Laws J in R v Secretary of State for Trade and Industry, ex parte Greenpeace Ltd  Env LR 415 – and in substance endorsed by the Court of Appeal in Burkett itself – to the effect that a judicial review must move against the decision which is "the real basis of complaint" and should not wait upon something consequential and dependent on it. He thought such an approach could lead to uncertainty. He also noted (paragraph 50) that it was unreasonable to require an applicant to apply for judicial review when a resolution might never take effect.
"43. At this stage it is necessary to return to the point that the rule of court applies across the board to judicial review applications. If a decision-maker indicates that, subject to hearing further representations, he is provisionally minded to make a decision adverse to a citizen, is it to be said that time runs against the citizen from the moment of the provisional expression of view? That would plainly not be sensible and would involve waste of time and money. Let me give a more concrete example. A licensing authority expresses a provisional view that a licence should be cancelled but indicates a willingness to hear further argument. The citizen contends that the proposed decision would be unlawful. Surely, a court might as a matter of discretion take the view that it would be premature to apply for judicial review as soon as the provisional decision is announced. And it would certainly be contrary to principle to require the citizen to take such premature legal action. In my view the time limit under the rules of court would not run from the date of such preliminary decisions in respect of a challenge of the actual decision. If that is so, one is entitled to ask: what is the qualitative difference in town planning? There is, after all, nothing to indicate that, in regard to RSC Ord 53, r 4(1), town planning is an island on its own."
That is, in my view, very revealing of his thinking and approach. He clearly regarded the resolution to grant outline planning permission in that case as being of such a kind.
"However the opportunity to challenge [a screening opinion] does not affect the right to challenge by judicial review a subsequent planning decision. The opinion does not create, or inevitably lead, to a planning permission…"
That too is to be contrasted with the present case, where the decisions, while not inevitably leading to the grant of any particular outsourcing contracts, did inevitably lead to – and had the legal effect of authorising – the expensive and time-consuming process of procurement in accordance with the 2006 Regulations.
"Moreover, as I have already observed, a failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows. Accordingly, the right of action is complete immediately and cannot be improved by allowing the procedure to continue to a conclusion. Where there has been a failure to comply with the proper procedure the later award of the contract does not constitute a separate breach of duty; it is merely the final step in what has already become a flawed process. For these reasons I do not think that the approach adopted in Burkett can simply be transposed to a claim under the Regulations."
Those general observations – while made in a somewhat different factual context – have resonance with the present case.
"28. That brings me to the second reason. It would be strange if a complaint could not be brought until the process has been completed. It may be too late to challenge the process by then. A contract may have been concluded with the successful bidder. Even if that has not occurred, the longer the delay, the greater the cost of rerunning the process and the greater the overall cost. There is every good reason why Parliament should have intended that challenges to the lawfulness of the process should be made as soon as possible. They can be made as soon as there has occurred a breach which may cause one of the bidders to suffer loss. There was no good reason for postponing the earliest date when proceedings can begin beyond that date. Mr. Lewis suggests that there is such a reason. He points out that if, in a case such as this, the limitation period runs from the date of publication of the tender documents, it will be possible for the contracting authority to rule out any real possibility of a challenge by issuing an invitation in breach of the regulations and then not taking any further steps in relation to tenders until after the three months period has expired. I confess that I find this an unlikely state of affairs, but I can see that it might conceivably happen. If it did, a service provider who wished to bring proceedings might have a good case for an extension of time: it would all depend on the facts. In my view, this cannot affect the plain meaning of regulation 32(2). I would therefore hold that the right of action which Jobsin asserts in the present case first arose on or about 14th August 2000. The essential complaint which lies at the heart of the proceedings is that there was a breach of regulation 21(3), in that the Briefing Document did not identify the criteria by which the DOH would assess the most economically advantageous bid."
The obvious sense and force of these remarks was reflected in the approach of the judge in the context of the present case and in the approach of other judges in other procurement cases as cited to us.
"24. Delay is relied on by the defendant. Since permission was granted by Davis J on 15 March 2006, delay is only relevant under s.31(6) of the Supreme Court Act 1981 so that detriment to good administration or prejudice to a person must be shown. The claim was lodged on 3 March 2006. The decision under attack is that announced on 23 December 2005. The claimant was unaware of the decision to tender, which took place on 10 November 2005, until Christmas time. In any event, the decision of the House of Lords in R v Hammersmith & Fulham LBC ex p Burkett  1 WLR 1593 suggests that time would not begin to run until the decision was made to contract with UHE. If another route had been chosen which was acceptable to the claimant, no claim would have been needed. There is always some prejudice arising from the time and resources spent in disputing a claim. Here, the PCT has the added expense of providing the service itself while these proceedings are in being. It is said that to put the matter out to tender again would be unfair to UHE since others would now know how to amend their bids. UHE has not made any observations, and so I cannot assume anything in their favour. In any event, if other better bids result, that will be advantageous for the PCT and the patients."
But it is not clear if the point was fully argued, and the comments of Collins J in this case were not only by reference to s.31(6) but were both obiter and tentative. Overall the relevant authorities (whilst accepting that all must be read in their own context and on their own facts) are against Mr Giffin's argument.
Lady Justice Gloster:
Master of the Rolls: