England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Commercial Court Rolls Building Fetter Lane London EC4A 1NL
		8 July 2013

 


MR JUSTICE AKENHEAD

1. This is the judgment on the claimant's application for specific disclosure. It was issued on the 1^st July 2013 and attached to that application was a draft order which identified an extensive list of further documents that were required, and not only were required as a matter of ordinary disclosure, but were required, it was at that stage argued, for disclosure documents to be made before the hearing of the defendants' Section 47(H) application.
2. Section 47(H)(1)(a) of the Public Contractions Regulations of 2006 as amended, enables the defendant, a public authority which has conducted a tendering exercise, to apply to the court to have the statutory suspension lifted. Authorities have already established that the appropriate approach is based on Cyanamid, at least one case which decided that being the case of Exel Europe Limited v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332 (TCC).
3. Now so far as I can recall (as I was the judge in that case), although there were a substantial amount of documents before the court, having so far as I recall primarily being put there as attachments or exhibits to witness statements, there had been no issue that there had to be disclosure of documents to enable and facilitate the hearing of the application under Section 47(h).
4. So far as that case was concerned, it decided that the appropriate criteria, to be established by a public authority seeking to have the suspension lifted, was the application of the principles laid down in American Cyanamid Co v. Ethicon Ltd [1975] AC 396. Broadly, that involves two or three steps or hurdles to be overcome before the court can in such a case grant an interim injunction. Before lifting any statutory suspension, the first question to answer is whether there is a serious question to be tried and the second step involves considering whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. Insofar as balance of convenience is concerned, it is sometimes a moot point as to whether the balance of convenience covers consideration of whether the claimant will be adequately compensated by an award of damages. That is certainly, either as part of the balance of convenience exercise or as a separate exercise, another hurdle to be overcome.
5. In this case, the claimant, very sensibly and following at least a hint from the bench at the last hearing for directions last week, has substantially curtailed its application for disclosure before the hearing of the application which is listed in about two weeks' time. That is set out in paragraph 20 of Mr Caldwell's witness statement and also in the claimant solicitor's letter of the 3^rd July 2013. It is a substantially reduced application as such and I will come back to the particular documents that are sought.
6. Another authority relied on is the case of Roche Diagnostics Ltd v Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 ( TCC), [2013] All ER (D) 133, a decision of Mr Justice Coulson on the 19^th April 2013. This was not a case which involved pre-application disclosure, but it related to disclosure to be provided at a very early stage in the proceedings. It does not seem to have featured in His Lordship's judgment that there was to be any application such as the application today. His Lordship, having reviewed a number of authorities, set out some broad principles to apply to applications for early specific disclosure in procurement cases at paragraph 20 of his judgment:

"In my view, the following broad principles apply to applications for early specific disclosure in procurement cases:

(a) An unsuccessful tenderer who wishes to challenge the evaluation process is in a uniquely difficult position. He knows that he has lost, but the reasons for his failure are within the peculiar knowledge of the public authority. In general terms, therefore, and always subject to issues of proportionality and confidentiality, the challenger ought to be provided promptly with the essential information and documentation relating to the evaluation process actually carried out, so that an informed view can be taken of its fairness and legality.

(b) That this should be the general approach is confirmed by the short time limits imposed by the Regulations on those who wish to challenge the award of public contracts. The start of the relevant period is triggered by the knowledge which the claimant has (or should have) of the potential infringement. As Ramsey J said in Mears Ltd v Leeds City Council [2011] EWHC 40 (QB), "the requirement of knowledge is based on the principle that a tenderer should be in a position to make an informed view as to whether there has been an infringement for which it is appropriate to bring proceedings".

(c) However, notwithstanding that general approach, the court must always consider applications for specific disclosure in procurement cases on their individual merits. In particular, a clear distinction may often be made between those cases where a prima facie case has been made out by the claimant (but further information or documentation is required), and those cases where the unsuccessful tenderer is aggrieved at the result but appears to have little or no grounds for disputing it.

(d) In addition, any request for specific disclosure must be tightly drawn and properly focused. The information/documentation likely to be the subject of a successful application for early specific disclosure in procurement cases is that which demonstrates how the evaluation was actually performed, and therefore why the claiming party lost. Other material, even if caught by the test of standard disclosure, is unlikely to be so fundamental that it should form the subject of a separate and early disclosure exercise.

(e) Ultimately, applications such as this must be decided by balancing, on the one hand, the claiming party's lack of knowledge of what actually happened (and thus the importance of the prompt provision of all relevant information and documentation relating to that process) with, on the other, the need to guard against such an application being used simply as a fishing exercise, designed to shore up a weak claim, which will put the defendant to needless and unnecessary cost."

7. It does seem to me that one needs to consider, in a case like this, whether it is fair and just for disclosure to be made prior to the application under Section 47(h) by the defendant. It is quite clear that there is some concern on the part of the claimant that there is not a level playing field between the claimant and the defendants as Miss McCredie QC has pointed out emphatically. It is the defendant who has got all the documents which tell it how it went about the process which it did, which involves the selection of another tenderer as the successful tenderer and the rejection of the claimant. It seems clear that the claimant has received little or no contemporaneous documentation, indicating how the process was handled and what was involved in the process on the defendant's side.
8. As a matter of timetabling, it has already been agreed and indeed ordered that the defendants will have to provide standard disclosure some two days after the hearing of the Section 47 application. There are no arguments particularly about relevance here, or whether the types of documents which are sought by the claimant are documents which fall within the standard disclosure requirements. I am therefore going to assume that all the documents which are sought fall within the standard disclosure requirements.
9. The real question is whether they should be provided before the hearing as opposed to several days after it and the claimants as I said are concerned, because they feel that there may be and probably are documents, they think, which would support not only their case, but their response to the application under Section 47(H) that has been made.
10. At first blush at least, there is some support for that view. When one looks at the primary witness statement of Mr Nicholas David Carter of the Driving Standards Agency, whose statement has been submitted as the primary evidence in support of the defendants' application under Regulation 47(h) 1(a), Mr Carter has identified why the four primary grounds of complaint pursued by Pearson are unsustainable. He sets out his evidence and to some extent his views on the four grounds at paragraphs 42 to 54 of his statement. I will just take by way of example the first ground, which he addresses, which relates to the successful tenderers' financial standing. Since it has been agreed that there can be permission to amend the particulars of claim, I will take the points from the amended particulars of claim.
11. Complaint is made that there was a requirement in the tendering process as it turned out, for the successful tenderer's parent company to give an appropriate guarantee. There has been expressed concern as to whether the parent company of LD, the successful tenderer, was of appropriate economic and financial standing. It is argued that some requirements in the tender documentation were the sort of factors that were to be taken into account. Thus it is said that various factors in relation to companies should have been taken into account and so it is the claimant feels in effect that not all the criteria were applied in relation to LD's guarantor and therefore a level playing field was not maintained.
12. Mr Carter says at paragraph 42, put forward at least by him in part as grounds for the complaint about LD's financial standing being unsustainable:

'The first is that LD's proposed guarantor was not evaluated prior to LD being passed to the tender evaluation stage. That is factually incorrect'.

I can understand concern about a straight factual statement like this: it may be true or not and it is not for me to decide whether it is true or not. I can however understand the sensitivity that where a witness in support of an application under Section 47(H) makes factual assertions, they may be true, they may not be. This factual assertion is unsupported by any documentation which might well be necessary to substantiate it if it is to be relied upon as justifying non-sustainability of a ground of claim, it is argued that the party putting that forward should provide disclosure to support it or not as the case may be.

13. Mr Carter goes on to say:

'The issue of LD's financial standing has now been exhaustively considered."

That is another factual assertion'. Again, it may be right, it may be wrong as a matter of fact. He goes on:

'Not only does LD's guarantor pass the necessary indicators. It is also the case that had there been a proper application of sound business judgment at the time of the pre-evaluation stage, LD itself would have passed the test of economic and financial standing and would not require a guarantor'.

14. All these are assertions of fact and it does seem to me (and it is at least partly if not entirely acknowledged by Mr Bowsher QC for the defendant), that whether or not what Mr Carter says factually is true, at least to the extent that it is not supported by contemporaneous documentation; or to the extent that it is uncontroversial as between the parties to these proceedings, there can be no reliance on it as such to justify an argument that there is not a serious issue to tried at least so far as LD's financial standing is concerned. That, it seems to me, was the proper concession to make.
15. The court, on the application of Section 47 (H), will simply not be in a position to find facts which are controversial or at the very least, which are not supported clearly by uncontroversial, contemporaneous documentation. Therefore, insofar as there is reliance by the defendants on those sorts of facts, those are facts which cannot properly be deployed as grounds for deciding that there is no serious issue to be tried.
16. It is clear from the Defence and this is an example where there is what, on the face of it at least, might appear to be an admission which is made in paragraph 38.7, where this is pleaded:

"LD offered to provide a guarantee from its parent company, PIMCO Holdings Limited'. PIMCO holds through two wholly owned subsidiary companies, the entirety of the shares in LD and JHP Group Limited. Having considered the combined turnover of LD and JHP, the defendants determined that the turnover indicator was amply met".

They go on to plead this.

"The defendants did not consider whether PIMCO would itself meet the gearing indicator".

The gearing indicator was something which I will not decide at this stage was an absolute requirement in the invitation to tender or pre-qualify documents. Nonetheless it, certainly on the face of at least one of those documents, indicated that a gearing indicator needed to be identfied.

17. Now it may well be that the claimant is in a position to argue that, given that sort of concession, it has a very strong case. I am afraid I cannot decide today whether it is a strong case, but certainly on the face of the pleadings, there appears to be acceptance that one specific indicator was not paid attention to by the defendants and indeed there is a further one which is simply not pleaded to at all, as to whether any regard was had to it.
18. Now I am not going to decide the Section 47H application now, but it does seem to me that there is more than adequate ammunition and evidence to support the claimant's argument, at least, that there is a serious issue to be tried in relation to this first head of claim. Whether that is the final decision or not, I do not know, because I have not heard all the argument, but there is clearly something there to support the claimant. It is clear just on the face of the pleading, let alone anything else.
19. The question then arises as to whether it is really necessary, and whether it is fair and just, for there to be any further documentation. I have formed the view that it is not really necessary at this stage. The defendant is not going to be in a position to rely on what I might call controversial facts to justify an argument that there is no serious issue to be tried in this case. Therefore, the claimant can rest assured that that will be the position on the hearing of the application. There may of course be uncontroversial facts which the parties have not referred me to yet in the relatively voluminous documents with which I have been provided for this application. Nonetheless it seems to me that there is more than sufficient information to at least enable the claimant to make the argument that there is a serious issue to be tried.
20. Now I cannot say that, in respect of all of the other three heads of claim, there will not be issues which can be taken by the defendant as to whether there are serious issues to be tried. There may be an argument for instance in respect of the second head of claim dealt with by Mr Carter, the use of sub-contractors. This area of complaint relates to the extent to which LD should have, but may not have put into their tender, details of specific types of sub-contractor, namely the providers of individual test centres. I have not set out in this judgment all the details and the facts or the history relating to this matter, but they can be found from the pleading.
21. There are likely to be several hundred and maybe more test centres around the country at which certain types of driving tests can be invigilated for people who want to pass their driving test. This is the written test that potential drivers have to take and it is said that LD cannot have satisfied that requirement to identify the providers of individual test centres, because it was only shortly before the date of submission of tenders that LD itself issued public procurement documentation with a view to securing. I put in parenthesis, "sub-contract" tenders from providers of such individual test centres.
22. Now that may or may not be the case as a matter of fact, but essentially as I understand it, there is to be an argument that in effect the providers of the individual test centres do not or cannot sensibly be described as relevant or material sub-contractors whose details and involvement had to be described within the tender. Now that may be a matter of law in the terms of interpreting what the invitation to tender type documents required. I hasten to add that I have simply not applied my mind as to whether the argument is a good one or not, but, if it was the case that as a matter of law, they should have been identified or not, then the point will be made out or not.
23. The court could decide not to decide the issue; it could decide (and I do not know whether it will) the other way, but if it is a straight matter of law, it is much more easily dealt with. Again, that is something in respect of which it seems to me, the claimant does not need the documents. It may have raised, it seems to me, on the evidence as it stands, sufficient inferentially at least to suggest that there is a good chance that LD did not provide these details of these test providers of individual test centres and it may or may not be the case that they did. Insofar as the facts are concerned, it seems to me that the claimant does not need any more before the application and it is not desirable or fair that it should necessarily have them.
24. The third head is the "abnormally low tender". There is in the contract documentation a range of price in the document which was marked 'theory test contract schedule 7.1, charges and invoicing'. There was a foot note written in the documentation that went to tenderers:

"The authorities expect that the range of costs per test minute will be in the region of 14p to 17p per test minute, this is indicative only at this stage".

Now the facts seem to suggest (and there may be no issue about this) that Pearson themselves tendered at something slightly below that range and lower than the range of test minute costs that they are currently working to, but that LD tendered at something like 20% less. So it is that the claimant says: 'Well given that information of which the claimant is aware, that is an abnormally low tender'. There is EU guidance and legal authority in Europe which suggests that steps should have been taken by the defendant to investigate and consider this and I am putting in parenthesis again, an 'abnormally low tender'.

25. The defendants it seems want to argue on the Section 47(H) application that it is not abnormally low. I do not see at the moment how the court can decide that as a matter of fact: it may be abnormally low, or it may not be, but it may also be that I am missing something and I am certainly not going to stop the defendant from seeking to make that argument. Insofar as the argument relies simply on facts, such as set out in paragraph 53 which is that it is said that the defendant considered LD's prices to be sustainable, that is a fact that is asserted. Whether it did consider LD's bid to be sustainable or not is another matter. Whether it did consider it to be abnormally low, or whether it is abnormally low, I suspect, but I make no finding today, that the court may have some difficulty in making any factual finding about this in the ciontext of a Section 47(H) application.
26. That is the potential keystone: it is only if it is abnormally low as a matter of fact (it seems to me) that the argument can be made, which the claimant does, to the effect that there should have been an appropriate consideration and investigation of that factor. Again, I look forward with immense interest to seeing how the defendants pursue that argument. There may, as I said, be something I am missing and, as I said, I look forward to the argument. The basic facts are that they do not particularly take issue that LD was some 20% less than the given range. It might be different if it was just a 1% difference: one might then be able to form a view in reality that that was not and could not really obviously be an abnormally low tender, but at 20%, it may be that it is much more arguable that it might be.
27. Certainly, I cannot see that the court can make any finding as a matter of fact, that the tender was not abnormally low, but again I am open to argument about that. There is a fourth rather more general head of complaint which may be more readily dealt with. Broadly, I form the view that this it is not really fair, just or necessary for there to be this disclosure prior to the Regulation 47(H) hearing. I have formed the view that there is a concern that there may be documents which may well assist the claimant's case ultimately and there is a concern that the court might be bamboozled which I am sure would not be the desire of any party in this case.
28. The court might be bamboozled into deciding the Regulation 47 application on the basis of controversial facts, but if the facts are controversial and they are challenged and it is only through such facts that the threshold as to whether there is a serious issue to be tried can be considered, then in those circumstances the claimants can rest assured that the court will not, and I consider cannot, make a decision on that aspect of the case.
29. Miss McCredie QC argues however, that because there may be such further documents, in effect her client would like to have them, because if they were to show that her client's case was very strong, not just a serious issue to be tried, but was a very strong case, that could be deployed on the balance of convenience. In this respect, I am more persuaded overall by the general submissions put forward by Mr Bowsher QC. The American Cyanimid approach is one that is well understood in the English and Welsh courts and it is based usually on uncontroversial facts or pleaded facts by the claimant or a combination of both. One of the reasons for Regulation 47(H) is to give the employing party the opportunity to come to court as soon as is reasonably necessary to seek to have the suspension lifted. There is a policy consideration here which involves consideration as to whether in effect all the steps necessary for the ultimate hearing of the case need to be gone through virtually, before such an application can be made.
30. Now disclosure can be a very substantial exercise and indeed it is going to be carried out and completed in any event fairly soon after this application is being heard. One of the problems about the listing of this application has involved the fact that many or at least some people, not least the judges, go away in August, and there is not necessarily always a judge here in the long vacation. The case managing judge (I) could only offer 24 July for the hearing, other trials and other cases having already got in the way: I thought that it was important at least that the application should be brought on. If it be the case that the defendants can establish that there are good grounds for having the suspension lifted, the sooner that is resolved the better; if they cannot, of course the suspension will not be lifted.
31. I have ordered an expedited trial in any event at the beginning of October and so liability at least will be resolved sooner rather than later. It will be open to the claimant to argue that, all things being equal on the balance of convenience, that there is no good reason to lift the suspension until October in any event and that steps can be taken to avoid potential prejudice to the defendants; whether those arguments will be successful or not, I know not.
32. There are many arguments available on the balance of convenience and it must be thought that the right to apply under Regulation 47(H) is one which can be made at a time when not all the requisite steps in the proceedings leading to final judgment upon liability at least had necessarily been gone through. In those circumstances, it seems to me that there is plenty of information already in the domain, I was going to say the public domain, but the domain between the parties in this case available to both parties; whereby they can point to the strengths, or in the defendant's case, the potential weaknesses in the claimant's case, to deploy the arguments about overall strength and weakness.
33. The whole point of Regulation 47(H) is to enable the court at an earlier stage and as a matter of urgency, if urgency comes into play as a matter of fact, to make decisions before all the requisite steps in the proceedings have been carried out. Therefore, I form the view that it would make sense for me to not have regard to that aspect of Miss McCredie's argument. I have regard to it, but I do not think that it is her strongest point.
34. I should say this finally that, if during the argument on the Regulation 47(H) application, it becomes clear that justice cannot be done without further disclosure, then that application will have to be adjourned. I am very much hoping that it will not have to be adjourned, but, if fairness and justice demands it and as the arguments emerge, it seems that some further disclosure must be provided to enable the court to reach a fair decision, then of course that will be ordered. It will almost inevitably follow that the application will have to be adjourned: when it could then be heard thereafter before the trial, I know not, but I very much hope that that will not happen.
35. Finally confidentiality issues have been resolved and Mr Williams for Learn Direct has made some short representations to the court. It appears that Learn Direct have been very cooperative and agreed matters broadly with the claimant and there has been cooperation between them and the defendants in that regard also.
36. The application for specific disclosure will be dismissed.

MISS MCCREDIE: My Lord, I--

MR JUSTICE AKENHEAD: It should be made clear that the defendants have undertaken to provide certain disclosure of the minutes of meetings which are the meetings that are referred to principally in Mr Carter's witness statement and they are to be provided. They need to be provided fairly quickly Mr Bowsher, how quickly can they be provided, 48 hours?

MR BOWSHER: I would have thought we could produce them within 48 hours. By the end the confidentiality ring will be in place, then certainly go to 48 hours.

MR JUSTICE AKENHEAD: Yes, I mean it is subject to the competent judge agreed.

MR BOWSHER: Thank you and if they can be produced within the confidentiality ring having been set up.

MR JUSTICE AKENHEAD: Yes and broadly, subject to that, 48 hours, close of business on Wednesday.

MISS MCCREDIE: My Lord, there was just one further matter which is our, Your Lordship will initial our amended particulars of claim.

MR JUSTICE AKENHEAD: Yes, yes I do not think I need to initial them do I? The order drawn up today concerning your application and on the term that you have now agreed, permission to re-amend is granted, permission to serve a re-amended, an amended defence.

MR BOWSHER: Seven days My Lord.

MR JUSTICE AKENHEAD: Seven days. I am going to reserve the question of costs of and occasioned by the amendments, because it seems to me that it has arisen out of what you plead largely, if not entirely out of what you pleaded.

MR BOWSHER: The only other matter I was going to raise was costs of the [inaudible] application. I was going to ask whether we share our costs, though we have been effectively successful and the disclosure application has been, has been dismissed, we should have our costs.

MISS MCCREDIE: My Lord, I have achieved some disclosure out of this process and, and it... In response to your Lordship's suggestion Tuesday week ago, they have, sorry last Tuesday, they have actually produced these documents and they've only done that this morning. If they had done that when they were ordered to, or when they served their witness evidence on Friday afternoon, although it should have been Thursday, we might have been able to take a different view. But we have come here and we have come away with some documents, we are not suggesting that we should have all of our costs, but a proportion of our costs. Because we have had nothing and now we have had something and my learned friend may have felt obliged to do it, given the indications given over the last week.

MR JUSTICE AKENHEAD: Mm-hmm. Well I think if the argument had been refused on the meeting notes, given that they were referred to, you might well have got that in any event. I had not dealt with that argument because it was agreed. So Mr Bowsher, what do you say about that?

MR BOWSHER: My Lord we, we did attend the first CMC. Your Lordship made that indication and we, we've produced said documents but the application is a really much more compendious, broad application which we resisted in principle and were successful in resisting in principle and we ought to have if not all, most of our costs and paid in the normal, on the, on the normal terms.

MR JUSTICE AKENHEAD: I am going to order that the claimant pay 50% of the defendants' costs, though I think the defendants have been substantially successful, but they have felt it necessary to disclose some of the documents, that was it, they were relatively limited documents. But the claimant's application went much wider in the first place and I have provisionally formed the way that it was, in its initial state, much too widely broad for free application disclosure in any event. And therefore it does seem to me that there has been substantial success on the part of the defendants. And the defendants have not helped themselves by not complying with my order to serve their witness statement on the 4th July, and I am sure there have been some additional costs incurred by the claimant as a result of that. There has been, the claimant has recovered a little bit of the documentation, but the substance is again it seems to me 50% is...

MR BOWSHER: I am not sure who won the order on the expert evidence, was that adjourned or?

MR JUSTICE AKENHEAD: I think that is adjourned, we possibly could deal with it if there is time at the end of the 47—

MR BOWSHER: 47—

MR JUSTICE AKENHEAD: Yes.

MR BOWSHER: So then costs of that would be reserved to that being—

MR JUSTICE AKENHEAD: Sure.

MISS MCCREDIE: [Inaudible] sorry My Lord.

End of judgment.