England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		4th August 2006

1. MR JUSTICE GIBBS: For reasons known to all parties in this case, it is urgent that the hearing be concluded and the outcome known. It has been listed as vacation business and I am grateful to both counsel for compressing their submissions to enable the matter to be finished within the time allotted without in any way reducing their vigour and effectiveness.
2. The claim for judicial review brought by Gamesa Energy UK Limited against the National Assembly for Wales and the Forestry Commissioners relates to the first stage of a tendering process operated by the second defendant, the Commissioners, for the award of seven options to lease forestry land owned by the first defendant. The purpose of the proposed options is to enable wind farms to be developed within the forest. The case has been listed for a permission hearing followed by a substantive hearing if leave is given. I decided to have a full hearing on the merits in relation to all matters before making any decisions.
3. At the first or pre-qualification stage of the tendering process the Commissioners made choices which excluded the consortium of which the claimant is a member from amongst those who would be invited to bid for each of the options. It did so on the basis of its pre-qualification questionnaire ("PQQ"). Accordingly, the claimant was not to be one of the nine bidders selected to participate in the second stage and receive an invitation to tender for the projects themselves. The nine bidders chosen were subsequently increased to ten following the discovery of a mathematical error in relation to an initially unsuccessful bidder. Nothing turns on that.
4. The claimant was told of the decision on 24th February 2006. There was a period during which it sought further information and feedback about the basis for its exclusion. Then, on 23rd May 2006, the claimant brought these proceedings. In summary the claimant contends that the decisions of the defendants were flawed, irrational and unfair, and/or were taken in breach of a legitimate expectation held by the claimant about the way in which the Assembly's statutory functions would be discharged in disposing of the land and about the arrangements for so doing. The claimant brings the proceedings on four grounds. The first three grounds attack aspects of the assessment process as it was applied to the claimant's bid as contained in the pre-qualification questionnaire. The fourth ground relates to the way in which the tendering process was divided into two stages, or tiers, and how that operated in practice.
5. The allegation of irrationality is crucial to the outcome of this claim. It is submitted that there was no rational or intelligible justification for certain aspects of the marking scheme applied to the PQQ. It is said that those aspects of the marking scheme penalised the claimant. It penalised the claimant, in particular, for disclosing too many developments which it had conducted in the past and for giving details of projects which were in a relatively early stage of development. The claimant contends that it would or might have received higher marks had there been no irrationality and that such higher marks might well have brought it within the category of those who progressed to the second stage.
6. The justification given for the challenged system by the defendants is broadly that the defendants were lawfully entitled to choose such a system. It was fairly and equally applied to all potential bidders. It was designed to identify those whose approach to the pre-qualification questionnaire indicated by their selection of past development projects an awareness of the specific needs of the current project.
7. The claimant is a UK limited company with its headquarters in Newport, Wales. It is a wholly owned subsidiary of a Spanish company Gamesa Energia SA ("GESA"). Both companies form part of the Gamesa group of companies which includes a company which is a major manufacturer of wind turbines. The group itself is a very substantial developer of wind farms worldwide. Gamesa UK and GESA are the two members of the consortium which participated in the tendering process, the subject of this claim.
8. The first defendant, the Assembly, is a statutory body to whom certain powers are granted, including the power to place any land acquired for forestry purposes at the disposal of the Commissioners, the second defendant. The Commissioners have no power in themselves to dispose of land, but the Assembly have the power to dispose of land for any purpose, to let land, or to grant any interest or right in or over it.
9. However there is authorisation by statute for the first defendant to make arrangements with the second defendant for the latter to discharge the former's functions in that regard. At the same time the Assembly remains responsible in law for the arrangements in question. Public money and public assets are involved, therefore the Assembly has a duty to achieve best reasonable value for money consistent with achieving any proper purpose for which it decides to dispose of land.
10. Moving to the specifics of this case. The first defendant has a target for the generation of 800 mega watts of electricity from on-shore wind farms in Wales by the year 2010. For that purpose the first defendant caused a document to be produced (known as a technical advice note), identifying seven strategic search areas (or "SSAs") as potential locations within which wind farms might be situated. All of those areas contain forests or woodlands owned by the first defendant.
11. In or about September of 2005 the defendants agreed that the second defendants should exercise the first defendant's functions in disposing of forestry land, among other things for the development of renewable energy. Under those arrangements any proposal for disposal of land for construction of a wind farm required the prior written approval of the Assembly.
12. The second defendants adopted a National Forest Estate Wind Farm Programme to help meet the Assembly's target for wind power generation consistent with the policy set out in the document to which I have referred. That involved:

"procurement [which] will result the selection of a preferred organisation for each of the SSAs ... [which] will be invited to sign a ten year option agreement with [the Assembly conferring] the sole right to plan wind farm developments and to apply for planning permission on Assembly owned land within [the SSA]. ... Organisations who are able to meet the necessary planning permission requirements will subsequently be awarded a 25 year lease agreement."

13. The second defendants, having taken advice, decided to structure the procurement arrangements in two stages. The first stage was a pre-qualification stage, described as having the aim of:

"... enabling the Commission to short list a suitable number of bidders to ensure completion across all lots."

14. Those successful in that pre-qualification stage would receive an invitation to tender. The second stage was the selection of the preferred bidder for each of the seven SSAs on the basis of the most economically advantageous bid submitted in response to the invitations to tender.
15. In relation to the procedures to be adopted in that two-tier process the Assembly's procurement department originally advised the second defendants that OJEU procedures and the Assembly procurement procedures should be followed. OJEU stands for the Official Journal of the European Union. Those procedures are mandatory in relation to certain areas of public procurement.
16. It was thought, at the time that the advice was given, that the OJEU procedures were mandatory in relation to the present tendering process. Therefore the Commission agreed to follow such procedures. Later it was discovered that it was not legally necessary for those procedures to be adopted in the present tendering process, and on the evidence before me the Assembly agreed that those procedures need not strictly be followed. It should be said that the discussions about the procedures to be followed and whether they would or would not comply with OJEU took place between the first and second defendants and was not disclosed to the bidders, including the claimant; nor was there any obligation to disclose them.
17. On 10th September 2005 the second defendants advertised the tendering process, inviting expressions of interest and providing on the internet PQQs to be downloaded. The PQQ contained information about the process, as well as a questionnaire containing certain sections into which those interested in bidding had the opportunity to ask specific questions about the process. Those questions were collated.
18. On 20th January 2006 the questions which had been asked by potential applicants were published together with the answers. These included the following:

"11. Are the Commission able to confirm how many bidders they envisage short listing?

The [Commission] is not able to confirm at this stage how many bidders will be short listed for each Lot. Once the level of interest in each Lot has been established it is [the Commissioner's] intention to short list a suitable number of bidders to ensure competition."

It follows that the answer indicated that not all suitable bidders would necessarily be short listed, only "a suitable number".

19. A further question was posed at 19 in the list:

"Questions 3.5; Section 4 and Form 2: Please can you confirm that it will be acceptable to put forward specific project details as required on a small selection of those projects we have successful developed say between 5-10 in total, rather than for all projects within our portfolio?

Questions 3.5 relates to the past three years and section 4 and Form 2 relate to the past five years. If within these periods you have been involved in an extremely high number of projects you may choose to refer to a selection of those projects only in your response."

That question and the answer to it are germane to potential bidders, such as the claimant, who are large commercial concerns with a substantial number of projects either completed or in train.

20. The preliminary stage involving PQQs and their assessment was a purely paper exercise. There was no follow-up, checking or investigation of the answers given.
21. The claimants submitted its completed PQQ on 24th January 2006. It sought to bid for all seven SSAs. There were some 30 or more other potential bidders in respect of one or more of the SSAs.
22. With regard to the method of assessment, the PQQs were assessed by the commissioners according to the sections contained in the PQQ form. The categories in which they were scored, so far as relevant to the present claim, were weighted as follows: section 3, financial and economic information, 40 per cent of marks; section 4, project specific experience, 25 per cent of marks; section 5, technical capacity, partnership working, 35 per cent of marks. There was in fact a division of responsibility in the process of assessment. Section 3 was scored for the commissioners by KTS Owens Thomas Limited, as I understand it a company of accountants. Section 5.3, which comprised technical issues and issues relating to the woodland, was scored by Sgurr Energy, a body technically competent in those fields. The Commission's own officers themselves scored section 4 and the other parts of section 5 not scored by Sgurr.
23. The second defendant's officers scored section 4 and the part of section 5 for which they were responsible as an entirely separate exercise and without reference to the information in or the scoring upon the other sections of the questionnaire. In practice the scoring was in the hands of Mr Westlake, who has provided detailed evidence in the case, and a colleague known as Sally Tansey. They, certainly Mr Westlake and possibly Miss Tansey, are experts in the field of forestry. Criticism is made by the claimants of their competence to conduct the exercise of evaluation in relation to the relevant sections of the PQQ.
24. The objective of the pre-qualification procedure, as stated, was to ensure that only organisations which were capable of meeting the necessary requirements would be invited to bid. The system of scoring or evaluation indicated that a mark of 5 out of 10 would meet the expectations of the questionnaire, that which came above 5 proportionately exceeded expectations, below 5 were below expectations.
25. As I have already said, the notification that the claimant had not been successful was received on 24th February 2006. A few days later the claimant was told that in relation to each of the seven SSAs they were ranked between seventh position at the highest and 12th position at the lowest. A feedback spreadsheet was sent which set out the claimant's overall scores for the various PQQ sections. Among other things, that indicated as follows. The claimant had been scored only 3.7 out of 10 under section 4 for project specific experience. Section 4 included the submission by the claimant of details of its past and current projects. Those were completed on a form known as Form 2 in relation to each project. It was also disclosed that the claimant had been scored only 3.1 out of 10 under section 5.1 for working with the Commission and public sector land owners. In relation to section 5.2, 5.1 out of 10 for managing community relationships and community and stakeholder consultation. All those assessments were scored by the second defendant's officers. The claimant noted that, in contrast, it had been scored relatively highly in categories assessed by the external consultants. It had been given 6.7 out of 10 in relation to section 3 and 8.5 out of 10 in relation to section 5.3.
26. There were requests thereafter for further disclosure and feedback regarding the basis of exclusion. Ultimately a meeting took place between representatives of the second defendant and the claimant on 26th April 2006. At that meeting further documentation was produced and details of the PQQ process were discussed. It emerged from a further spreadsheet produced that under section 4 the claimant had been scored only 16 out of 40 in relation to the Form 2s which comprised details of earlier projects. It had received nought out of 11 under the heading "woodlands" and "big turbine" and 2 out of 11 for "policy". In section 5.1 it had scored no marks for "health and safety, "forest users, "press and PR, "examples and detail".
27. The claimant was also provided with some additional detailed material. That showed that in ranked overall results the claimant's submission lay in 13th place with a score of 57.75. There was a break point used to separate successful and unsuccessful bidders which came between candidates 9, scored at 64.50, and 10, score 61.60. It was confirmed by the further information that the assessment in section 5.3 had been particularly favourable. The precise marking criteria and evaluation applied to section 4 was at a later date submitted to the claimant in a document entitled "the Commission evaluation procedure". Comparative scores of unidentified competing potential bidders were also disclosed.
28. In relation to all parts of the material disclosed by the second defendant to the claimant, I have been taken through those materials, considered them and read them in detail.
29. The claimant's concerns about the methods of scoring and the exercise that had been conducted were not met by the feedback meeting, or the further materials. Accordingly, a letter before claim was sent on Friday 12th May, and then, following response to that letter, the claim form was filed on 23rd May.
30. I turn now to the statutory framework which is applicable to the claim. The Welsh Assembly is a statutory body under the Government of Wales Act 1998. By section 21 of that Act it is provided as follows:

"The Assembly shall have functions which are --

(a) transferred to, or made exercisable by the Assembly by virtue of this Act, or.

(b) conferred or imposed on the Assembly by or under this Act."

It is further provided that the Assembly's powers may be exercised by the relevant minister.

31. The Forestry Act of 1967 governs the duties and the powers of the second defendants. It is provided by section 1(2) of the Act as follows:

"The Commissioners shall be charged with the general duty of promoting the interests of forestry, the development of afforestation and the production and supply of timber and other forest products ... and in that behalf shall have the powers and duties conferred or imposed on them by this Act."

32. Amongst those powers are included the acquisition and disposal of land:

"39. Power of Minister to acquire and dispose of land.

(1) Subject to the provisions of this Act, the Minister [as regards England and Wales, and the Scottish minister as regards Scotland] may acquire (by purchase, lease or exchange) land which in his [or their] opinion is suitable for afforestation or for purposes connected with forestry, together with any other land which must necessarily be acquired therewith, and may place any land acquired by him [or them] under this section at the disposal of the Commissioners.

2. Subject to subsection (2A) below, the minister ... may dispose for any purpose of land acquired by him [or them] under this section."

...

3. The minister ... shall have power, in the case of land acquired by him ... under this section, --

(a) to manage and use the land for such purposes as he thinks fit ... and

(b) to let the land, or grant any interest or right in or over it."

By virtue of the 1998 Act the first defendant assumed these powers.

33. The tendering process in this case was intended to lead to the grant of options for 25 year lease of areas of woodland known as SSAs.
34. The combination of those provisions of the Forestry Act 1967 and the subsequent Government of Wales Act 1998 provides the source of power and authority for the processes carried out by the first and second defendants in this case, including the challenged tendering process.
35. The first question which falls to be determined is whether the challenges made to the process are amenable to judicial review on the grounds of challenge put forward in the present case. That issue has been labelled the issue of "jurisdiction". Arguments on that issue, which is, of course, vital to the outcome of the case, were developed by both counsel first in their submissions.
36. As regards the principles to be applied to the exercise of statutory powers and in particular the statutory powers being exercised in this case, Mr Howell relies on the basic tenets of administrative law. He begins with a citation of the classic exposition of those tenets in Sir William Wade's textbook on administrative law. These tenets include the following principles. When an administrative act is challenged the question must be asked is it within the limits of the powers granted: is it lawful or unlawful? The principles to be applied include that the court will intervene if a power is exercised unreasonably in a Wednesbury sense; in other words "irrationally". There is no such thing as an unfettered discretion, even where that discretion is exercised, on the face of it, within the ambit of the statute.
37. Those propositions are no more than my brief summary of the principles relied upon by Mr Howell.
38. They were approved by the House of Lords in several cases: R v Tower Hamlets ex parte Chetnik Developments [1988] 1AC 858, R v Lord President of the Privy Council ex parte Page [1993] AC 682 at 701C to 702B. They were approved again in the speech of Lord Steyn in Boddington v British Transport Police [1999] 2AC 143 at 171E to 172D. Mr Howell submits that when there are grounds for alleging the unlawfulness of an administrative act the court may intervene to put right the public wrong and a wide range of people and bodies may seek judicial review of such decisions. He relies on R v Somerset County Council and ARC Southern Limited ex parte Dixon Env LR 111 and in particular the section of the judgment of Sedley J, as he then was, at page 121. Thus far I think in general terms Mr Howell's propositions of law are uncontroversial.
39. In the case of R (Tucker) v Director General of the National Crime Squad Court of Appeal [2003] ICR 599 the court was concerned with a decision summarily to terminate the secondment of an officer to the National Crime Squad. The following citations from the judgment of Scott LJ are illuminating:

"Is the decision amenable to judicial review?

12. If the decision to end the applicant's secondment is not amenable to judicial review, that is the end of the matter. He has no remedy. Questions of fairness do not arise. Harrison J however concluded that judicial review is available but went on to reject the applicant's case on fairness. The judge's conclusion that judicial review is available is challenged in a respondent's notice and it is convenient to deal with this issue first.

13. The boundary between public law and private law is not capable of precise definition, and whether a decision has a sufficient public law element to justify the intervention of the Administrative Court by judicial review is often as much a matter of feel, as deciding whether any particular criteria are met. There are some cases that fall at or near the boundary where the court rather than saying the claim is not amenable to judicial review has expressed a reluctance to intervene in the absence of very exceptional circumstances: see, for example R v British Broadcasting Corporation ex parte Lavelle [1983] ICR 99.

14. The starting point, as it seems to me, is that there is no single test or criteria by which the question can be determined. Woolf LJ said in R v Derbyshire County Council ex parte Noble [1990] ICR 808, 814:

'Unfortunately in my view there is no universal test which will be applicable to all circumstances which will indicate clearly and beyond peradventure as to when judicial review is or is not available. It is a situation where the courts have, over the years, by decisions in individual cases, indicated the approximate divide between those cases which are appropriate to be dealt with by judicial review and those cases which are suitably dealt with in ordinary civil proceedings.

15 Sir John Donaldson MR in R v Panel on Take-overs and Merges, ex parte Datafin plc [1987] QB 815, 838 having referred to a number of different situations in which the court had asserted its jurisdiction, said:

'In all the reports it is possible to find enumerations of factors giving rise to the jurisdiction, but it is a fatal error to regard the presence of all those factors as essential or as being exclusive of other factors. Possibly the only essential elements are what can be described as a public element, which can take many different forms, and the exclusion from a jurisdiction of bodies whose sole source of power is a consensual submission to jurisdiction.

16. What are the crucial factors in the present case? In Leech v Deputy Governor of Parkhurst Prison [1988] AC 533 Lord Oliver of Aylmerton said that the susceptibility of a decision to the supervision of the courts must depend, in the ultimate analysis, upon the nature and consequences of the decision and not upon is the personality or individual circumstances of the person called on to make the decision. I regard this as a particularly important matter to keep in mind in the present case."

40. And then at 18:

"It is, of course, beyond dispute that the National Crime Squad is a public body and it is also accepted that the applicant has no private law remedy. Both of these are factors which as a starting point might suggest that the court does have jurisdiction to intervene. But it is necessary to look further and focus on what the deputy director general was doing when he made the impugned decision."

41. At paragraph 24 Scott LJ refers to a case decided in 2002 in the Administrative Court by Pitchford J:

"24. In R (Hopley) V Liverpool Health Authority [2002] EWHC 1723 Admin Pitchford J helpfully set out three things that had to be identified when considering whether a public body with statutory powers was exercising a public function amenable to judicial review or a private function that was not. These are: (i) whether the defendant was a public body exercising statutory powers; (ii) whether the function being performed in the exercise of those powers was a public or a private one; and (iii) whether the defendant was performing a public duty owed to the claimant in the particular circumstances under consideration. That was case where the Liverpool Health Authority had refused to consent to payment to the claimant of damages for personal injury by periodical payments under a with profits structured settlement made under section 2 of the Damages Act 1996. He concluded that the decision was not amenable to judicial review because the function being performed by the health authority, as it affected the claimant, was a private one."

42. In conclusion on the question of the amenability of a decision to judicial review Scott LJ said:

"37. The fact that the National Crime Squad is a public body and that the decision to return the applicant was taken against the background of Operation Lancelot and the arrest of other officers does not turn what was essentially a managerial decision in relation to the applicant into one with a sufficient public law element to trigger the jurisdiction of the Administrative Court. It is true this is not a case in which the applicant can invoke a private law remedy. That is a factor, but not in this case determinative. What is critical is whether the dispute has a sufficient public law element: see R v Lord Chancellor's Department ex parte Nangle [1991] ICR 743, 746.

38. In my judgment the decision impugned in the present case does not have a sufficient element of public law to be subject to judicial review. It was of purely domestic nature."

43. Mr Howell submits that the tendering process in this case, unlike the operational decision made in the Tucker case, does engage sufficient aspects of public law. He relies on Wheeler v Leicester City Council [1985] 1AC 1054. In that case it was held that the court could intervene, and should intervene, to put right a decision by the respondents concerning the management of land. The land in that case was the Leicester Tigers rugby ground. The basis for intervening was that the respondent's decision had been taken on grounds which were irrational and unfair. The challenged decision was motivated by a desire to conform to a policy relating to the defendant's attitude to current politics in South Africa.
44. Mr Howell also relies on the concept of a fiduciary duty which, on the authorities, is owed by bodies funded by members of the public. The fiduciary duty which arises in such cases is to have regard to the interests of those who fund them. The court, he argues, should intervene in cases where the breach of such duty can be established, such as, he would argue, the present case: see Bromley LBC v GLC and others [1983] AC 768 and Roberts v Hopwood (above).
45. Mr Howell relies, in particular, as indicative of the breadth of grounds for judicial review of the exercise of statutory powers on two Privy Council decisions: Mercury Energy Limited v Electricity Corporation of New Zealand [1994] 1 WLR 521 and Williams Construction Limited v Blackburn [1995] 1 WLR 102. From the Mercury case Mr Howell derives the proposition that in principle the exercise of statutory powers may be susceptible to judicial review on the basis of irrationality in circumstances comparable to those in the present case. That case concerned a decision by a statutory state enterprise to terminate an electricity supply contract.
46. Nevertheless, at page 529A of his speech, Lord Templeman observed:

"It does not seem likely that a decision by a state enterprise to enter into or determine a commercial contract to supply goods or services will ever be the subject of judicial review in the absence of fraud, corruption or bad faith."

47. In the Williams case the cabinet of Barbados in the exercise of a statutory function reversed a committee decision on a tender for highway works and awarded a contract not to the claimant, but to a company who had submitted a higher bid. On a claim for, among other things, judicial review of the decision on the basis of irrationality, the court held that a cause of action was disclosed by that aspect of the claim.
48. It should be noted that in both the cited cases the Privy Council was concerned with appeals against decisions to strike out claims. Both appeals failed on the merits, but Mr Howell relies on the principles enunciated in those cases to support the proposition that administrative decisions, such as the present one, are in principle amenable to judicial review on the grounds of irrationality.
49. Reliance is also placed on a paragraph in a textbook edited by Mr Clive Lewis, Judicial Remedies In Public Law, chapter 2 paragraph 126. That citation is probably not unconnected with the fact that Mr Lewis appears for the defendants in the present case.
50. In the case of Mass Energy Limited v Birmingham City Council [1994] Env LR 298 the Court of Appeal considered the amenability to judicial review of a tendering process conducted by a local authority. Criticisms were made of the award of a contract based on the tendering process on several grounds. It was said that the successful bid did not comply with the specification and brief required by the tender and it was also said that the eventual proposal of the bidder was outwith the tendering process.
51. Glidewell LJ, as reported at page 306, dealing with these complaints said as follows:

"In my view, these arguments raise matters for our consideration which I can summarise as follows: first of all, is this a proper matter for judicial review at all? It is only right to say that this issue seems not to have been raised, at least in these terms before Hutchison J, and is not raised in the skeleton arguments for the city council and Onyx. Nevertheless, it did seem to me that the court was bound to consider it.

On its face, this is really a commercial dispute between a successful and an unsuccessful tenderer; a situation which is not, of course, at all uncommon. If there were no statutory requirement that the city council should enter into a contract for its waste disposal operations, and particularly the construction of the incinerator to be the subject of a contract entered into by tender, but if the council had sought voluntarily to enter into a contract by tender deciding to adopt that process of its own volition, then in my view there would be no public law element in such a dispute at all. Mass Energy could then only hope to bring an action against the council on some contractual basis, for instance, if they could persuade a court that there was some sort of implied term which entitled them to recover the wasted costs of tendering. Whether they had any such right is a matter with which I do not concern myself."

52. This formulation has since been the subject of criticism as going too far and being _obiter_ so far as the Mass Energy case itself was concerned. Accordingly, Mr Howell invites me to have regard rather in the context of that case to what Scott LJ (as he then was) said. This is reported at page 313:

"The submission of a tender may constitute a contract between the tender and the invitor whereunder the invitor becomes contractually bound to observe the terms of the invitation to tender. A breach by the invitor of those terms may entitle a disappointed tenderer to some contractual remedy for breach of contract, whether damages or injunction, as the case may be. All of this may, in a particular case, result from an invitation to tender issued by a waste disposal authority pursuant to paragraph 20(4) of Part II of the second Schedule to the Act. If so, the aggrieved tenderer's remedy lies, in my opinion, in private law not in judicial review. Judicial review should be confined to dealing with breaches by the waste disposal authorities of their public law obligations. If the actions and decisions of Birmingham City Council of which complaint is made in the present case involved breaches of their public law obligations under the 1990 Act, then judicial review is the proper remedy; but, if there is no more than a complaint that the council has failed to comply with some express or implied term of the invitation to tender -- not being a term required by the statutory scheme to be included in the terms of the invitation -- Mass Energy's remedy, if it has one at all, lies, in my judgment, in private law. The case would not be one for judicial review."

53. Consideration of the Mass Energy case leads conveniently to the decision of the Court of Appeal in R (Cookson and Clegg) v Ministry of Defence [2005] EWCA Civ 811. This concerned the alleged unlawful failure by the Ministry of Defence to award the claimant a large contract for the supply of military clothing. The procedure of the award of the contract was under the Public Supply Regulations 1995 designed to implement the European Union Directive on the topic. Many specific breaches of the Regulations were alleged, but a separate free-standing claim for judicial review based, among other things, on irrationality was asserted.
54. As to that, Buxton LJ said:

"18. It is relevant to refer briefly to domestic public law and contracting processes. The most convenient source of that is the decision of this court in Mass Energy Limited v Birmingham City Council [1994] ELR 298. There also the would-be applicant for judicial review complained of the failure to award him a contract under a statutory process. At page 306 of the report Glidewell LJ said this.

'... as [counsel] urges upon us, I accept that because the statutory powers of the council not to contract by means other than those described in Part II of Schedule 2 of the Act, there is a public law element in this dispute to this extent (but only to this extent): that it is a proper subject for judicial review to consider whether the council have complied with section 51(1) and entered into a contract as a result of following the procedure laid down in Schedule 2, Part II of the Act. In my judgment, judicial review has no further place in my judgment in this dispute.'

This analysis makes a distinction between statutory fault in not following statutory rules (here, the failure to follow Regulations) on the one hand; and actions of what might be called a normal commercial nature in awarding the contract itself. I would, however, immediately agree that that analysis does not and should not exclude public law entirely from the contract-awarding process, even if there were no statutory breaches involved; for instance, if there were bribery, corruption or the implementation of policy unlawful in itself, either because it was ultra vires or for other reasons, as was the case in Roberts v Hopwood and Wheeler v Leicester City Council, both of which were cited by Elias J in Molinaro v Kensington and Chelsea Borough Council [2002] LGR 336. But it is much more difficult to fit this allegation of irrationality or unfairness into the framework of a separate application different from complaints under the Regulations. That is because the award of the contract, where the irrationality in this case is said to have arisen, as well as the tendering process, is governed by the Regulations. That is demonstrated by Regulation 21 in Part 5 of the Regulation headed 'The Award of a Public Supply Contract' ..."

55. I was also referred to R v Bristol City Council ex parte Barrett (unreported) CO/4181/1999 and a decision of the Divisional Court in R v London Borough of Enfield ex parte Unwin referred to in it. The purpose of referring to these cases was to show that decisions to strike firms off approved lists of contractors are susceptible to public law challenge on the grounds of unfairness, legitimate expectation and irrationality. Although, as to the latter, the Court of Appeal in Unwin felt it unnecessary to make a decision.
56. In R v Metropolitan Borough Council ex parte the Governors of Audenshaw High School and another [1990] (unreported) CO/813/89, the Divisional Court considered the disposal by a public authority of land under statutory powers. It observed that the exercise of an ostensible general power may by constrained by a number of limitations, including what it described as "the fundamental requirements of good faith and reasonableness".
57. On the question of the dividing line between public law and private law matters, I have also considered R v Bolsover District Council ex parte Pepper [2001] LGR 43 and R (Molinaro) v Kensington and Chelsea Royal LBC [2002] LGR 336, both decisions of this court.
58. Finally, I come to two claims against the Department of Constitutional Affairs and its predecessor, the Lord Chancellor's Department, both of which challenged the awards of commercial procurement contracts by the department. These are R v Lord Chancellor Department ex parte Hibbit and Sanders Divisional Court (unreported) 11th March 1993, CO/431/93 and R (Menai Collect Limited and Others) v The Department of Constitutional Affairs and another, a decision of McCombe J (unreported) [2006] EWHC 724 Admin.
59. The effect of Hibbit was conveniently summarised in the judgment of McCombe J in the Menai case at paragraph 28:

"... Rose LJ noted that the test to be applied is to look at the subject matter of the decision which it is suggested should be the subject of judicial review and by looking at that subject matter to come to a decision as to whether judicial review is appropriate. In applying that test the learned Lord Justice found that neither the statutory requirement for the appointment of shorthand writers nor the importance of their functions provided a framework for the appointment of persons to perform those functions. Further, while the fact that a commercial function was being performed did not take the case out of the ambit of public law, it was not appropriate to equate tendering conditions, attendant on a common law right to contract, with a statement of practice or policy in a public sphere which is in the especial province of the State and where, in consequence, a sufficient public law element is apparent.

29. Waller J (as he then was) agreed and said.

'... it is critical to identify the decision and the nature of the attack on it. Unless there is a public law element in the decision, and unless the allegation involves suggested breaches of duties or obligation owed as a matter of public law, the decision will not be reviewable.'

A little later he said.

'it is not sufficient in order to create a public law obligation simply to say that the Lord Chancellor's Department is a governmental body carrying out governmental functions and appointing persons to public office.'

On the subject of contractual negotiations Waller J added.

'A governmental body is free to negotiate contracts, and it would need something addition to the simple fact that the governmental body was negotiating the contract to impose on that authority any public law obligation in addition to any private law obligations or duties there might be.'

Turning to 'statutory underpinning' as a foundation for judicial review, Waller J said:

'If the government body has a statutory obligation to negotiate a contract in a particular way, with particular terms, and fails to perform that statutory obligation, one immediately has the additional public law obligation ...

The point, however, is that to have a right which can then be the subject of review that right must flow from the statute if it is to a statute that one has had to look for providing the public law element. It is not enough to say that the governmental authority is acting by reference to certain statutory provisions without the additional factor that it is those statutes which impose the obligation which is said to have been broken.

31. In concluding that judicial review did not lie in that case, Waller J identified four features, three of which are material in the present context: i) Even allowing for a distinction between a government department and an ordinary businessman in approach to tendering it did not alter the nature of the tendering process.

ii) There is a possible distinction between a government department's aim in carrying out a tender procedure as compared with a commercial organisation, but the complaints were not directed to aim but at the failure to carry out procedure.

iii) The fact that the decision sought to be reviewed is the placing of a contract with a particular firm seems to me to add force to the contention that there is unlikely to be any public law element in that decision.'"

60. The case of Menai Collect was, like the present case, concerned with criticisms of a scoring procedure in relation to tenders on the basis that the defendant failed to take account of relevant information before reaching its decision, made its decision on the basis of a material mistake of fact, or by way of procedure flawed by unfairness.
61. Referring to the judgment of Waller J, as he then was, in Hibbit with approval, McCombe J said at paragraph 41:

"... Waller J's analysis is helpful in the present context pointing out that it is critical to identify the decision and the nature of the attack on it; unless there is a public law element in the decision, and unless the obligation involves suggested breaches of duties or obligations owed as a matter of public law, the decision will not be reviewable."

62. Those latter observations of McCombe J's seem to me to encapsulate neatly and precisely the appropriate test to be applied to this case.
63. Mr Howell submits the challenged decision is one of a public body. The basis of the challenge is one of irrationality and unfairness. The public interests engaged include the defendant's fiduciary duty to obtain best value for the public and a legitimate expectation that procedures equivalent to those under the OJEU procurement scheme would apply to this tendering process. He submits that there is no principle or rule of law that public law challenges to a tendering process should be confined to fraud, corruption or bad faith, or to the implementation of an unlawful policy. He submits that irrationality should also be available as a ground for challenge on the basis of fundamental judicial review principles to which I have already referred. He submits, for those reasons, that the challenged decisions in this case should be held to be amenable to judicial review.
64. Mr Lewis submits that on established principles there can be no valid public law challenge here. He relies on the Mass Energy case. He submits that the tendering process, the subject of this claim, has no significant public law aspect to it. Its stated aims were consistent with the defendant's fiduciary duty, in that the scheme set out to secure a financially advantageous bid. There is no challenge to those aims.
65. If the second defendant had been a private sector company, it would have been quite entitled to adopt the two tier scheme and free to adopt the pre-qualification questionnaire as a test for the first tier, applying any criteria it wished to it. The defendant was carrying out, submits Mr Lewis, an essentially similar exercise which imported no significant considerations attracting public law principles. He concedes it would be otherwise in the event of challenge on the ground, for example, of fraud or corruption, but no such bases of challenge are here put forward. He submits that this was a scheme devised in good faith with legitimate aims in mind and that the court has no power to interfere on the grounds of irrationality, unfairness, or indeed any other ground, apart from fraud, corruption and so on. He relies on Hibbit and Menai Collect, submitting that the latter, in particular, is on all fours with the present case.
66. As it seems to me the court is here concerned with deciding on which side of the dividing line the case falls between the category of decisions which have a sufficient element of public law to be subject to judicial review and those that do not, bearing in mind, also, the grounds of challenge to the decision.
67. It is not always an easy distinction to make. The word "sufficient" in relation to elements of public law is important. The fact that a public body is exercising statutory powers implies in itself an element of public law. It is a starting point. The fact that it is spending public money and preparing to dispose of interests in land again imply public elements in relation to the challenged tendering process. But are those features, together with other features relied on by the claimants, sufficient to render the process amenable to judicial review? Of course, if fraud for example were being alleged the balance would undoubtedly be tipped in favour of bringing the claim within the purview of challenge on public law grounds, but it is not.
68. It is necessary to examine the actual bases of challenge to answer the relevant question. For this reason I have found it helpful to have detailed submissions on the grounds of challenge so as to inform the decision on jurisdiction. Equally, it was helpful to hear the arguments of principle on jurisdiction separately developed by counsel on both sides, before receiving the submissions on the merits of the grounds themselves. The grounds of challenges were based on several interrelated arguments. It is not necessary for this purpose to give more than a brief summary description of them.
69. (A) The defendants did not make clear to the claimants in section 4, section 5.1 of the PQQ what information it required.
70. (B) It did not make clear the reality of the assessment under section 4, namely that no marks would be given for any uncompleted projects. Indeed, by permitting and providing for the inclusion of such projects it implied the contrary, thereby unintentionally misleading the claimant.
71. (C) It adopted a marking system in relation to section 4 which was unfair in the circumstances. The marks of all the projects were taken into consideration, including the nil marks. This was unfair and irrational because had the claimants known the criteria which the defendant would adopt they would never have included the incompleted projects at all and would, accordingly, have scored 100 per cent, or, at any rate, 80 per cent under section 4. As to the remaining 20 per cent, or one project, there is an issue about the appropriateness of discounting altogether a project included in the form, though carried out not by the claimant or a member of its consortium, but a wholly owned subsidiary of one of them. This was discounted on the ground that the subsidiary was not a consortium partner.
72. (E) Marks awarded under section 4 and section 5.1 were inconsistent with marks under other subsections and/or were inherently irrational. Examples were cited of the claimant being marked down or given no marks under a particular heading in one section of the form, whereas under an allegedly similar heading in another section they received higher marks.
73. (G) Originally under ground 4 it was suggested that the claimant could rely on an undertaking given by the second defendant to the first defendant, or an agreement between the two defendants, that the process would take place under OJEU procedures, even though, as it turned out, EU rules did not require this. Ultimately this ground was not relied upon. Had it been, it would not on the evidence have had any chance of success. The way it was put in the end reflects paragraph 82 to 84 and 89 to 93 of the claimant's written argument. In brief, the submission is that rather than impose an arbitrary number of candidates to be selected at the pre-qualification stage, all those found suitable should have been allowed to go forward to tender. Alternatively, the defendants having decided to limit the number of candidate to a particular number, they should have made that number clear to the claimants and the other bidders and told them how many they intended to select.
74. It should be remembered that the background to these criticisms is that the pre-qualification process was one which the defendants were not obliged to by statute or otherwise to carry out at all. The way in which the tendering process and specifically any pre-qualification process were carried out, provided it was in good faith and untainted by corruption et cetera, were entirely a matter for them. Essentially, therefore, the challenge is not to the stated aims of the process, which are unimpeachable; it is based on a criticism of the competence and effectiveness of the execution of those aims. As I put it to counsel in the course of argument, it is essentially an allegation that ineptitude in execution led to unintended consequences to the claimant which were both irrational and unfair.
75. I need not rehearse in full the defendant's response on the merits. It was robust. I can summarise it by saying that in terms of what the defendants were legitimately seeking to achieve by the process it was entirely rational and indeed successful. If the claimants failed to match certain criteria which the defendants decided to set then that was quite rationally, from the defendant's point of view, an indication of the claimant's unsuitability. To the extent that the criteria were not made explicit to the claimants, the defendants were entitled to expect capable and suitable candidates to appreciate from the general stated aims of the project what criteria would be applied and to have regard to them in answering all of the questionnaire. I mention the defendant's response in this context on the merits in order to define the scope and nature of the issues under challenge and in this context for no other purpose.
76. Significantly, as it seems to me, in the wider context, 30 possible bidders were included in the pre-qualification process. All were given the same explanations and advice about the questionnaire. All used the same questionnaires and Form 2s. The same scoring system was used for each of them. As mentioned, the stated aims of the pre-qualification procedure are not and could not be criticised. It follows that the complaints on the basis of irrationality and unfairness are confined to the nuts and bolts of parts of the exercise and their effect on the individual application of the claimant.
77. Under those circumstances I find that there are no sufficient public law aspects to the challenge to make it amenable to judicial review. I reach this conclusion as a matter of judgment on the facts in this case and within its overall context. I do not go so far as to say that a public law challenge to a tendering or pre-qualification process on the basis of irrationality could never be entertained. I think that the circumstances under which it could be entertained must be rare. I find that the process in this particular case is not susceptible to judicial review having regard to the subject matter of the decision challenged and the grounds of challenge and upon the application of the principles to be discerned in the authorities to which I have been referred.
78. The claimants no doubt genuinely feel aggrieved at aspects of the pre-qualification process and at its outcome. They no doubt genuinely believe not only that their commercial interests are adversely affected, but also that they could do a highly competent and cost effective job for the defendants if given the chance. But there is no reason to suppose that the tendering process, which includes those firms that emerged as successful from this pre-qualification process, will produce anything other than candidates which will match the claimant's intended criteria for the contracts in question and will provide an adequate degree of competition to ensure that the financial interests of those funding the project are properly considered.
79. On a broader policy level, there may be sound reasons why matters of this sort should not generally be open to challenge on the ground of irrationality. To hold otherwise would enable challenges to be mounted on the basis of an attack on particular aspects of tendering processes by one potential bidder where those tendering processes are conducted by public bodies, such challenges being mounted on the basis that a particular aspect or aspects of such processes as they affect that bidder are unreasonable. Such challenges would be permissible even if the body were acting in good faith and as between the bidders there was a level playing field. The extension of public law into matters of that kind could be regarded as creating an unreasonable impediment to impose upon a public body in circumstances such as the present ones: circumstances under which I have found, having regard to the authorities, that no sufficient public law considerations are engaged.
80. Having reached this conclusion on the issue of amenability to judicial review, I do not need to go further and determine the other issues. I note, however, that the highest at which the claimant's case is put is that the outcome might have been different if their arguments had prevailed. It is a moot point whether a different marking system would probably have led to their inclusion in the final tender or probably not. That was in dispute.
81. As regards grounds 1 to 3 I grant permission for judicial review proceedings. It is arguable that parts of the pre-qualification questionnaire were organised and marked in such a way as to produce irrational marks in the case of these claimants. A strong defence was mounted by the defendants to the effect that the system and scores were entirely rational, as reflecting their legitimate aims in choosing a short list. I make no determination between those two contentions. But having granted permission in relation to those grounds, I dismiss the substantive claim on the basis that there is, in my judgment, no amenability of those matters to judicial review.
82. As regards ground 4, I find that that is unarguable and refuse leave. The point on the undertaking and agreement has gone and there can, in my judgment, be no arguable criticism of the two tier system.
83. On the subject of delay, I simply repeat my preliminary view, namely had there been a substantial successful ground for judicial review, delay here would not have been a bar to the claim. This is re-inforced by the lack of merit in ground 4. That is the only ground, which, if successful, would potentially have led to the defendants being substantially prejudiced by delay.
84. In the result, I refuse permission to bring the judicial review claim on ground 4, I grant leave on grounds 1 to 3, but I dismiss the claim on the ground that the claims are not amenable to public law challenge.
85. MR LEWIS: My Lord, firstly, we are grateful to your Lordship for providing a long judgment and a comprehensive judgment at such speed. From the Bar we are also grateful to our solicitors for getting this complicated matter up in short notice in the way that made it digestible. The only question is costs. I would have thought costs would follow the event. You granted permission. In any event, we have had the whole hearing and we have won and therefore I would ask for costs, my Lord.
86. MR JUSTICE GIBBS: Can you resist that, Mr Howell?
87. MR HOWELL: No, I cannot resist an order for costs. May I mention two things? Firstly, when your Lordship was referring to Mass Energy you referred to judgment given by Scott Baker LJ. It was in fact Scott LJ.
88. MR JUSTICE GIBBS: I know why I made the slip. I think that when that case took place I don't think that Scott Baker LJ was a Court of Appeal judge.
89. MR HOWELL: My Lord, I do ask for leave to appeal. I am not proposing to repeat the arguments I have addressed to your Lordship. May I make two brief points, firstly? Your Lordship has found that the respondent was under a duty to obtain the best consideration reasonably obtained for disposing of land for proper purpose, but your Lordship has found that the process of doing so cannot be impugned on Wednesbury grounds. I have to say, given your Lordship has not ruled on grounds 1 to 3, whatever are the merits of those grounds, in my respectful submission, that effectively negates the court's supervisory jurisdiction over the obligation to obtain best consideration when one cannot see whether it has been obtained rationally.
90. Secondly, your Lordship mentioned policy reasons of the court not to interfere, namely that the rationality requirements could be raised in respect of (inaudible) exercise. My Lord, in my respectful submission the only policy reason against the public procurement regime, which your Lordship referred to in Cookson and Clegg, specifically envisaged, and so on, that such rationality grounds can be invoked in public procurement exercises. That was part of the reason for it.
91. The third reason why I would respectfully invite your Lordship's permission to appeal is that this particular topic is one of considerable public importance generally. The matter should be clearly established. There have been a series, if I may put it this way, of first instance decisions, including by your Lordships, in which different views have been taken. It is desirable in the public interest that those matters should, if possible, be authoritatively resolved.
92. MR JUSTICE GIBBS: Thank you very much. Any observations, Mr Lewis?
93. MR LEWIS: My Lord, the test is a real prospect of success. Your Lordship's judgment on the question of the tendering process is firmly in line with the cases from Mass Energy to Cookson and there is no real prospect of success. There is no other compelling reason. There is a body of case law. We looked at Mass Energy to Cookson. This is not a case where your Lordship would have granted leave to go to the Court of Appeal. If they want to do that, that's a matter for them. In my submission, on the basis of the facts, and your Lordship has gone through the cases thoroughly, there is no basis for this case going further.
94. MR JUSTICE GIBBS: Yes. Thank you very much.
95. In relation to the first argument put forward by Mr Howell, namely that the decision exempts the defendants from an examination by this court of the exercise of a duty which I have, I do not think that provides the basis of an argument on appeal for this reason. The subject we are considering involves, on any view, delineating the limits on this court's supervisory jurisdiction in relation to the exercise of the powers of public bodies and the limit has to be set somewhere. It, therefore, follows that matters that fall outside the proposed limits will be excluded from jurisdiction.
96. On the second point, it is quite true that I mentioned the question of policy reasons. It may or may not be, depending upon what it looks like when I read the transcript of the judgment, that I made clear, as I intended to make clear, that in referring to that I was not basing my decision upon it. I based my decision on the matters that preceded the announcement of the decision in the judgment and I merely reflected on the policy matters in order to check whether the decision was not only lawful but apparently sensible.
97. And on the third argument, it is a topic of considerable interest, but I am inclined to accept Mr Lewis's submission that I was following established line of authority. Therefore I refuse leave. If the Court of Appeal considers the matter is of sufficient importance, I shall be very interested to hear the outcome.
98. MR HOWELL: My Lord, could I ask your Lordship for an extension of time? It's 14 days normally. Obviously we don't want to do that, but there is a problem about availability and obtaining a judgment from your Lordship if you are about to go away.
99. MR JUSTICE GIBBS: I think -- would 21 days be reasonable?
100. MR LEWIS: Well, normally in these circumstances, but the only problem is that my client is about to restart the tendering process again. The longer this goes on, and your Lordship does need to bear that in mind, not just our duties but the other tenders, and if there is 21 days for considering an appeal -- even 14 days is going to be beyond the time when the tenders will be starting work again. So I will leave it to your Lordship.
101. MR JUSTICE GIBBS: On the practicalities I am certainly prepared to direct that there be an expedited judgment if there is no problem about that. I shall be contactable to check the transcript at shortish notice.
102. MR HOWELL: That is good of your Lordship.
103. MR JUSTICE GIBBS: So I think 21 days is probably reasonable.
104. MR HOWELL: I am grateful.
105. MR LEWIS: Did you grant 21 days? Did you grant it?
106. MR JUSTICE GIBBS: Yes, because you need to -- I need to have the transcript sent to me, send it back and provide it to you and so on.
107. MR LEWIS: Can I just check that your Lordship has actually granted an order that the claimant pay the first and second defendant's costs? My learned friend did not object. I am not sure that you formally granted it.
108. MR JUSTICE GIBBS: I grant it.
109. MR LEWIS: My Lord, I am much obliged for that.