England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		29/04/2010

The Hon. Mr. Justice Ramsey:

Introduction

1. By their application Durham County Council ("the Council") seek to vary the terms of an Order dated 26 March 2009 by which these proceedings by the Claimant, a partnership called Community Care North East ("CCNE"), were stayed. The application raises an issue of the extent to which a Tomlin Order can be varied by the Court and whether such circumstances exist in the current case. At the hearing of the application the Council also raised an alternative contention and sought a declaration as to the effect of the terms of the Tomlin Order.

Background

2. By a Contract Notice in the Official Journal of the European Union in October 2008, the Council invited tenders in respect of the provision of domiciliary care services for adults, children and young people. The tenders were to provide such services across a number of "zones" in the Council area and a number of care providers would be required for those zones.
3. The Council sent out a document by way of an Invitation to Tender ("ITT") setting out the basis of the tender which included a requirement that the tenderers should complete a "Pre-Qualification Questionnaire" ("PQQ") and provide method statements. In addition there was an interview which formed part of the tendering process. By a notice dated 26 February 2009 the Council informed CCNE that it had not been successful in its tender. During the statutory standstill period CCNE requested information from the Council which was provided by letter dated 6 March 2009.
4. On the basis of the information provided, CCNE contended that the Council's approach to the interview stage did not comply with the principle of transparency in relation to public procurement under EC Law, in particular, under Regulation 4(3) of the Public Contracts Regulations 2006 ("the 2006 Regulations"). It was anticipated that the Council would enter into contracts with the relevant care providers on or shortly after 16 March 2009. As a result, on 14 March 2009 CCNE applied for an injunction and before the return date for the substantive hearing of the injunction CCNE and the Council compromised the proceedings by an order dated 26 March 2009 ("the March 2009 Order").
5. That order was in the form of a Tomlin Order, as suggested by Tomlin J in Practice Note [1927] WN 290, following the decision in Dashwood v Dashwood (1927) 71 SJ 911. The March 2009 Order referred to the fact that the parties had agreed terms attached to the order, referred to as "the terms" and stated that, by consent, it was ordered that: "These proceedings be stayed save for the purpose of giving effect to the terms, for which there be liberty to apply."
6. The terms in the Tomlin Order were contained in four paragraphs. The relevant paragraphs being 1, 2 and 4, paragraph 3 providing that the Council would pay CCNE a sum by way of costs. The relevant terms provided as follows:

1 The Defendant will undertake not to enter into any contract or contracts with any tenderer in respect of its tender process for the provision of domiciliary care service for adults, children and young people until the process outlined at point 2 below has been conducted;

2 The Defendant will set aside the results of the interview stage of the said tender process and invite all those who were previously invited to attend those interviews to attend for interview again, the detailed arrangements for which shall be announced in due course. The interview process will be carried out in accordance with all current legislation and any other enforceable Community obligations;

3 ...

4 The Defendant confirms that neither Marion Usher nor Louise Lyons, from whom witness statements were served, will be included on the future interviewing panel in respect of this tendering process. The Defendant confirms that the Head of Adult Commissioning and the Director of Adult and Community Services will not be involved in the conduct of the interviews themselves although they may need to remain involved in the oversight of the remainder of the procurement process.

7. The Council then re-ran the interview stage and by letter dated 21 July 2009 CCNE was informed of the Council's intention to award it contracts in respect of four of the ten zones, being zones 1, 2, 3 and 4.
8. However on receipt of their letter dated 21 July 2009 three other tenderers who were less successful on the basis of the re-run interview stage sought to challenge the Council's decision and commenced proceedings. Those three sets of proceedings by Croft House Care Limited, Orchard Home Care Limited and Kelly Park Caring Agency Limited were proceeding in the TCC in Newcastle District Registry. Directions were given for a trial for 10 days commencing on 10 May 2010. Because of the importance of the public procurement aspects of the case it was decided, in consultation with the TCC Judges in Newcastle, that the case merited case management and trial by a High Court Judge under paragraph 3.7.5 of the TCC Guide.
9. Various issues arose in relation to disclosure and inspection of the Council's documents which led to hearings in those cases and to an order and a judgment Croft House Care Limited v Durham County Council [2010] EWHC 909 (TCC) which dealt with those issues.
10. Following that decision the Council say that it has now become clear that the trial date in May 2010 cannot be maintained and as explained in the witness statement of Claudine Freeman dated 13 April 2010 the Council are concerned that the delay resulting from any adjourned trial date would have an adverse impact on their ability to deliver domiciliary care services. The Council is also concerned about the possibility of being subject to heavy cost liabilities at the end of the trial and, in all the circumstances, they state that it would be appropriate to seek to settle the proceedings in Newcastle District Registry and to undertake a fresh procurement for domiciliary care services. The Council say that, if those proceedings cannot be settled, an application will have to be made to adjourn the trial date.
11. The Council was also concerned that a potential obstacle to the settlement of those proceedings is the March 2009 Order. They therefore issued this application in this case brought by CCNE in which they seek to vary paragraph 2 of the terms in the schedule to the Tomlin Order by deleting the existing paragraph and substituting it with a paragraph which would read as follows: "The Defendant will commence a new procurement process which will be carried out in accordance with all current legislation and any other enforceable community obligations". The Council submit that the variation of the terms in this way is a clarification to take account of circumstances which the parties cannot have had in mind when entering into the March 2009 Order.
12. The Council have also set out in their skeleton argument a contention that the Council have a right to terminate this "tender process", that they would not be precluded from doing so on the basis of the varied paragraph 2 of the term, alternatively would not be precluded from doing so under the original paragraph 2 of the terms.
13. CCNE contends that to the extent that the Court has jurisdiction to vary the March 2009 Order, it should not do so in the circumstances of this case. CCNE says that if the Council has complied with paragraph 2 and carried out the re-run interview process in accordance with the obligations in that paragraph, there is no basis for seeking to vary the terms of that paragraph. Conversely, if the Council considers that it has not complied with the process described in paragraph 2 of the terms, CCNE contends that it is incumbent on the Council to carry out that process again before proceeding to award a contract or contracts for domiciliary care services.
14. Accordingly CCNE contends that it is not open to the Council, on the terms of the March 2009 Order, to exercise any powers they would otherwise have to terminate the current tender process and start afresh. CCNE therefore opposes any variation of the March 2009 Order to alter that position. If the Council does have the power to terminate the current tender process and start afresh, CCNE reserves its position to contend that any decision to do so would be open to challenge on the basis that the Council would not be acting rationally and lawfully but it accepts that this is not an issue which can be dealt with at present but will depend on the decision of the Council to act in this way in the light of all the circumstances.
15. Whilst there is a degree of overlap, there are, essentially, three issues which have to be determined:

(1) Whether the Court has power to vary the terms of the March 2009 Order and, if so the basis for that power.

(2) If the Court has power to vary the terms of the March 2009 Order, whether it should do so in the circumstances of this case.

(3) Whether in the absence of any variation to the terms of the March 2009 Order the Council is precluded from exercising any powers they would otherwise have to terminate the current tender process and start afresh.

Power to vary the terms of the March 2009 Order

16. Prior to the introduction of the Civil Procedure Rules, there had been a number of cases where the court had considered the extent of its powers to interfere with consent orders. In Ropac Limited v Inntrepreneur Pub Co (CPC) Limited [2001] L&T R 10 there had been a consent order in the terms of an unless order giving the landlord an order for possession unless the tenant paid sums by a certain date, time being of the essence. The order was not complied with and the tenant applied for a retrospective extension of time to comply with the order. Neuberger J reviewed a number of decisions dealing with the position under the Rules of the Supreme Court, in particular Tigner Welsh London Company Limited v Spiro (1992) 126 SJ 525; Siebe Gorman & Co Limited v Pneupac Limited [1982] 1 WLR 185 and Purcell v FC Trigell Limited [1971] 1 QB 359.
17. Observing that in some respects the cases did not speak entirely with one voice, Neuberger J identified the approaches which the court had followed in relation to its power to extend time in respect of a consent order. He said at [20]:

"First, at least in general, if the order was a genuine consent order, that is representing a contractual agreement between the parties, and stated that, if a party did not do something within a specified time, then his claim or defence would be struck out or that there would be some other sanction, that represented a contract with which the court had no power to interfere, save in circumstances in which the court has power to interfere with a contract. That seems to me to be the effect of the judgments in Purcell v FC Trigell Limited [1971] 1 QB 359 - see at 365G per Winn LJ and 366D per Buckley LJ ."

18. He concluded that under the RSC the order in the case before him was in sufficiently clear terms to be a binding consent order with which the court would only have interfered in circumstances which would justify interference with a contract. However, he concluded that the approach under the CPR was more flexible so that the court did have jurisdiction to grant relief by extending time in that case. That conclusion, he stated, was reached with some hesitation based on the overriding objective in CPR Rule 1.1 and the Court's duty to manage cases under Rule 1.4(1). He said this at [31]:

"To my mind, the CPR therefore gives the Court rather more wide- ranging, more flexible powers than the RSC. In my judgment, those powers are to be exercised not merely to do justice between the parties, but in the wider public interest. Further, the objective to deal with a case justly must, as I see it, sometimes (albeit rarely) require the court to override an agreement made between the parties in the course of, and in connection with, the litigation. I consider that this means that the court has greater power to interfere than before. Having said that, I should add this. Where the parties have agreed in clear terms on a certain course, then, while that does not take away its power to extend time, the court should, when considering an application to extend time, place very great weight on what the parties have agreed and should be slow, save in unusual circumstances, to depart from what the parties have agreed."

19. However whilst he considered that he did have jurisdiction to extend time for compliance with the consent order in that case, he reached the clear conclusion that he should not.
20. The phrase "consent order" itself is potentially ambiguous. As Lord Denning MR said in Siebe Gorman at 189:

"There are two meaning to the words "by consent". One meaning is this: the words "by consent" may evidence a real contract between the parties. In such a case the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this: the words "by consent" may mean "the parties hereto not objecting". In such a case there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without the consent of the parties."

21. In Weston v Dayman [2006] EWCA Civ 1165 the Court of Appeal had to deal with the meaning of a consent order and an application to vary the terms of that order. In that case the order was not a Tomlin Order but the terms of the agreement were incorporated within a consent order. It was argued that the variation could be based on CPR 3.1(7) which provides that the Court has power to vary or revoke an order. It was also argued that the variation could be made under an express provision which gave "liberty to apply".
22. Arden LJ, with whom the other members of the Court of Appeal agreed, referred to the decision of Neuberger J in Ropac for the proposition that, even when the parties had come to a consent order, there was an exceptional jurisdiction under which the court could still vary the order. At [25] she continued:

"I will proceed on the basis (without deciding the point) that CPR 3.1(7) applies to paragraph 10 of the order of 23 January 2003. I would accept that the Court should accede to an application for variation where it is just to do so but in my judgment one of the aspects of justice is that a bargain freely made should be upheld. Mr Weston clearly obtained benefits under the order of 23 January 2003. It may well be that those benefits are not as great as he thought, but that is not a matter for the court. In those circumstances I do not consider it would be right for this court to exercise its discretion to vary the order as sought."

23. In this case the March 2009 Order contains, in the schedule, a binding contract between the parties compromising the proceedings. It is not a consent order made at an interlocutory stage by which a particular application is compromised on terms, including terms as to time for compliance. Nor is it a consent order which incorporates the binding contract as terms of the order. It is in the form of a Tomlin Order. In the commentary to CPR 40.6 at paragraph 40.6.2 of the White Book Volume 1 it is stated:

"Essentially, a Tomlin Order records terms of settlement agreed between the parties but those terms are not ordered by the court and are not enforceable as a judgment, at least not without a further order.

The terms contained in the schedule are not something for approval by a judge. The judge will, however, approve the order itself.

...

If it is intended to embody terms of settlement which can be enforced as an order the terms need to be in the order itself (not the schedule) and set out clearly. Such an order should not include provision for a stay of the proceedings as there would be no point in such a stay."

24. As set out in that passage, the schedule to a Tomlin Order sets out an agreement which has been made between the parties as to the terms on which the proceedings have been settled. In general once the parties have entered into an agreement the ability to set aside or vary that agreement depends on there being a remedy in relation to that contract. Otherwise the court is only concerned with the meaning of the agreement in the schedule and this depends on normal principles. As Lord Steyn said in Sirius International Insurance Company (Publ) v FAI General Insurance Limited [2004] 1 WLR 3251 at [18] "The settlement contained in the Tomlin Order must be construed as a commercial instrument."
25. In my judgment where the terms are contained in a schedule to the Tomlin Order the position is different from the terms being incorporated as part of a consent order. As set out in the commentary to the White Book a party can settle a case and seek a court order in one of two ways. First it can seek to incorporate the terms of the settlement within the body of the order so that those terms are part of the court order. The alternative way is by way of a Tomlin Order under which the parties seek a stay of the proceedings on terms that the parties will comply with the agreement in the schedule, with liberty to apply to enforce those terms. The court approves and orders the consent order in the first case but only approves and orders the terms of the order but not the terms of the schedule in the second case.
26. In the case of a Tomlin Order a stay is given on the basis that the agreement is complied with. The terms of the schedule are not ordered by the court. Frequently the terms of the agreement in the schedule to a Tomlin Order are detailed and contain matters which go beyond the scope of the original dispute in the proceedings.
27. As a general rule, I cannot see that the provisions of the CPR either in the overriding objective in CPR 1.1 or in the requirement for active case management under CPR 1.4, as referred to in Ropac, have any application to the terms of the agreement in the schedule to a Tomlin Order which have been freely entered into by the parties as a binding contract. As set out in Weston v Dayman CPR3.1(7) gives the court power to vary or revoke an order and Arden LJ proceeded on the basis that it applied to the consent order in that case, without deciding that it did. In principle, it would seem that the provisions of the CPR might permit the court to vary or revoke a consent order but, even in that case, a major and often determinative factor in the exercise of that power would be the fact that there was an agreement: see Ropac and Weston v Dayman. Equally, I see no reason why that same principle would not apply to the order part of the Tomlin Order.
28. In relation to the terms of the agreement incorporated in the schedule to the Tomlin Order, other considerations apply. The terms of the schedule are not an order made by the court. The court obviously has the ability to interpret that agreement on well known principles of interpretation, as set out in Sirius and would have to do so when it was asked to take any enforcement action under the standard liberty to apply for that purpose in the Tomlin Order. Likewise the court has the ability to deal with the terms of that agreement in the same way as any other contract. That would include, for instance, a claim for rectification or a claim that the agreement was unenforceable for some reason. If the court decided that the agreement should be rectified or that it was unenforceable then the court may well take the view that they would vary or revoke the terms of the order part of the Tomlin Order, to take account of that determination. To what extent, though, would the court otherwise vary the terms of the agreement incorporated as the schedule to the Tomlin Order?
29. First, if the terms of the consent order part of the Tomlin Order included an express liberty to apply to vary the terms of the Schedule either generally or in particular circumstances, the court would have the power to do so. However the scope of the liberty to apply would have to be clearly defined. I was referred to the case of Cristel v Cristel [1951] 2 KB 725 in which there was a dispute between the husband and wife and an agreement was made for possession of the matrimonial home, suspended until the husband provided suitable alternative accommodation. The order gave liberty to apply. The husband wished to vary the order as to the type of accommodation which had to be provided. The Court of Appeal held that the liberty to apply did not allow for the variation of the order in the manner applied for.
30. In dealing with the scope of the express liberty to apply, Sommervell LJ said this at 728:

"'Liberty to apply' is expressed, and if not expressed will be implied, where the order drawn up is one which requires working out, and the working out involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied."

31. Denning, LJ said at 731:

"If there were an unforeseen change of circumstances, for instance, if the wife were left by will another house, or if she took an adulterer to live with her in this house, I should have thought that the 'Liberty to apply' would enable the court to remedy the position."

32. Also in S v S (Ancillary Relief: Consent Order) [2003] Fam 1 the court had to consider the basis on which the terms of an ancillary relief order on divorce could be varied. There was a consent order and Bracewell J said as follows at [4] and [5]:

"The authorities cited before me demonstrate that the grounds for setting aside a consent order fall into two categories. (1) cases in which it is alleged there was at the date of the order an erroneous basis of fact eg misrepresentations or misunderstanding as to the position or assets. (2) cases in which there has been a material or unforeseen change in circumstances after the order so as to undermine or invalidate the basis of the consent order, as in Barder v Barder [1988] AC 20, and known as a supervening event.

In many of the decided authorities, contractual terms such as "fraud" and "misrepresentation" are used, but it is important to remember that court orders for financial provisions in matrimonial proceedings derive their authority not from the agreement of the parties but from the approval of the court and the resulting consent order: see Jenkins v Livesey [1985] AC 424 and Xydhias v Xydhias [1999] 2 All ER 386."

33. The Council seek to rely on the court's power to amend the terms of the schedule to the March 2009 Order because they say that there has been a change in circumstances which could not have been foreseen. They submit that the variation to the March 2009 Order is no more than a clarification to take account of circumstances which the parties cannot have had in mind when entering into the March 2009 order, namely that the tender process would not lead to an award after the re-run interview but the Council would decide that it should re-run the whole tender process. For reasons set out below, I do not accept that this would come within the relevant changed circumstances.
34. However, in any event, I do not consider that the court has a power to vary the agreement in the schedule to the Tomlin Order on the basis sought. The decisions in Cristel v Cristel and S v S, in my judgment, are directed at the circumstances in which the terms of a consent order can be varied. Whilst those cases relate to matrimonial proceedings where there may be other applicable principles, I accept that the principle may be extended to the power of the court to vary consent orders generally. However, when it comes to a Tomlin Order, I can see no justification for a general power for the court to vary the terms of the agreement set out in the schedule on the basis that there has been a material or unforeseen change in circumstances after the order was made which might undermine or invalidate the basis of the agreement, unless that would give rise to a power to do so as a matter of the law of contract. Such a procedural power would provide an additional remedy in cases where the agreement is incorporated into a Tomlin Order, which is not available in a case where the parties merely enter into a separate settlement agreement and leave any question of enforcement to a further set of proceedings. I do not see that this is the effect of a Tomlin Order where the agreement in the schedule does not form part of the terms ordered by the court.
35. In the current case it is also argued by the Council that the phrase "these proceedings be stayed save for the purposes of giving effect to the terms, for which there be liberty to apply" is sufficient to give rise to a liberty to apply to vary the terms of the agreement in the Schedule. I do not accept that this is correct. This is not a case where there is a general liberty to apply which gives a right to vary the agreement. Rather it is a liberty to apply to give effect to those terms. In my judgement that requires the court to give effect to the terms of the settlement agreement as set out in the Schedule. It is therefore a liberty to apply to enforce the terms not to vary them.
36. Accordingly, I do not consider that the court has power to vary the terms of the settlement agreement in the schedule to the Tomlin Order, certainly in the circumstances relied on in this case. There is no general power to do so in respect of settlement agreements and I do not consider that incorporating the agreement into a Tomlin Order changes that position.

The exercise of any power to vary the terms of the March 2009 Order

37. In any event, if I am wrong about the existence of the power, I do not consider that the court should vary paragraph 2 of the agreement in the Schedule to the March 2009 Order as the Council contends. First, I do not consider that there are any relevant changed circumstances. For the reasons set out below it was contemplated that there might be no award even after the re-run interview process.
38. Secondly, the variation to the agreement proposed by the Council is intended to change the obligation undertaken by the Council under paragraph 2 of that agreement. Originally the Council agreed to run a further interview process. Now the Council seek to change that to an agreement, which was not made, that the Council will commence a new procurement process. The terms of the agreement contained in the schedule gave rise to an obligation by the Council to carry out the interview process again and for it to be carried out in accordance with al current legislation and any other enforceable Community obligations. In principle, that could give rise to accrued obligations, to the extent that the Council has failed to comply with it. I do not consider that the Court should rewrite that obligation so as to change what was agreed.
39. Thirdly, for the reasons set out below I do not see that the proposed amendment is necessary. The Council's ability to commence a new procurement process does not depend on their having to vary the terms of paragraph 2 of the agreement or having to come to an agreement in those terms with CCNE.
40. In conclusion I therefore refuse the application which has been made by the Council to vary the terms of paragraph 2 of the agreement in the Schedule to the March 2009 Order. I do so on the grounds that the court does not have power to do so; alternatively that in all the circumstances the court would not exercise any power to vary that paragraph.

Declaration as to Council's powers to terminate current tender process

41. The alternative position now put forward by the Council is to seek a declaration so that the Council will know whether, absent any variation to the March 2009 Order, they are precluded from exercising any powers they would otherwise have to terminate the current tender process and start afresh.
42. The position prior to the March 2009 Order was that the following provision was set out on page 5 of the Invitation to Tender:

"The Council reserves the right to cancel the tender process at any point. The Council is not liable for any costs resulting from any cancellation of this tender process nor for any other costs incurred by those tendering for this Contract."

43. I do not see that the terms of paragraphs 1, 2 and 4 of the settlement agreement affected whatever rights the Council had to cancel the tender process and start the process afresh. The terms agreed between the Council and CCNE were that the interview process would be re-run in a certain manner and with particular personnel. To the extent that the Council have the right to cancel the tender process and start afresh, there is nothing in the provisions of the agreement which takes away that right. It states that the Council are agreeing to re-run the interview stage but that does not alter any rights which the Council would have had, in any event, following the original interview stage of the tender process.
44. The Council also say that they have a right, in any case to terminate the tender process and start afresh. I was also referred to the decisions of the European Court of Justice in Metalmeccanica Fracasso SpA v Amt der Salzburger Landsregierung [2002] CMLR 1150 at [33] where the court held that, if there was only one tender remaining, the contracting authority was not required to award the contract to the only tenderer judged to be suitable.
45. In paragraph 16 of the Opinion of the Advocate General and by reference to the decision in Embassy Limousines and Services v the European Parliament [1999] 1 CMLR 667, it was stated "in a context different from that of the present case (there were several tenderers, not just one) the Court of First Instance stated that "the contracting authority is not bound to follow through to its end a procedure awarding a contract" observing that in that respect the contracting authority enjoys a broad discretion provided that its decision is in no way arbitrary."
46. I was also referred to regulations 32(11) and 32(12) of the Public Contracts Regulations 2006 under which various actions have to be taken in the event that the contracting authority decides "to abandon or to recommence a contract award procedure in respect of which a contract notice has been published". These provisions apply where there is an obligation to give a contract notice because the relevant services fall within Part A of Schedule 2 to the Public Contracts Regulations 2006. In this case it seems likely that the relevant services would come within "Health and social services" under Part B of Schedule 2. In that case there would strictly be no requirement for a contract notice under the Regulations although such a notice might assist the Council in complying with other regulations that would apply and also regulations 32(11) and 32(12) would not apply. It is sufficient for these purposes for me to identify the Council contention that if they could abandon and recommence a tender process for a contract for Part A services, that must also be the position for the less regulated Part B which would not apply more onerous provisions than Part A.
47. I make no findings as to the scope or extent of the Council's powers under the ITT or otherwise to re-run the tender process. There is however nothing to show that any of those powers would be excluded by anything agreed in the March 2009 Order.
48. Accordingly, in my judgment, the March 2009 Order does not preclude the Council from exercising any powers they would otherwise have to terminate the current procurement process and start afresh.

Summary

49. For the reasons given above the application by the Council to vary the terms of the March 2009 Order is dismissed. The alternative remedy sought of a declaration is granted in the following terms: "The terms of the agreement in the schedule to the March 2009 Order do not preclude the Council from exercising any powers they would otherwise have to terminate the current procurement process and start afresh".