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

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

		Royal Courts of Justice
		30th August 2013

MR. JUSTICE AKENHEAD:

1. The claimant has issued an application dated 20 August 2013 which due to its urgency I fixed for hearing today. It seeks specific disclosure under CPR 31.12 and in the alternative, although this has not been pursued at the hearing of the defendant's application, that the 23 and 24 September date fixed for the hearing of the defendant's application be vacated.
2. The background is that this is a public procurement dispute and the defendant sought tenders round about 2007. It seems to be common ground (although nothing I say should be treated as findings of fact), that the tender process was to be conducted by what is known as the "competitive dialogue procedure". This was to be a substantial contract relating to the design, construction, financing and operation of waste facilities in the Merseyside area. It was a contract which when let would run for the best part of 30 years and possibly, by extension, for more than that. Therefore it was an important tender relating to important facilities to be provided for the residents and Local Authorities of the Merseyside area.
3. That competitive dialogue seems to have gone on for a number of years. It was as recent as late 2012 or early 2013 that tenders were more finally submitted. In February 2013 it was apparently resolved by the defendant that the preferred bidder was a group of companies referred to as "SITA" being one of the key components of that tenderer but by April 2013 a final decision was made by the defendant that SITA was broadly to get the job and that Covanta would not get the job.
4. Proceedings were issued in terms of a claim form on 15 May and Particulars of Claim were served on or about 12 June 2013. Unusually, in some respects, for a public procurement case, at least in this court, the particulars of claim not only run to 109 pages but they also contain, as far as I can tell, a very thorough exposition of what its case against the defendant is. Obviously and necessarily that is on the basis of the information and facts which it has or can reasonably infer. Thus it is that it makes its case effectively saying that the decision not to award the contract to it was a breach of the Regulations, or otherwise unlawful, and/or broadly that it has not been treated fairly or transparently.
5. Again, slightly unusually in this court's experience, that has been met by a Defence which runs to 133 pages of prose. There is no suggestion that there is any slack or waste in that, but it also appears to contain a very thorough exposition of the defendant's defence as to why it is not liable in respect of any of the complaints made against it; apart from specific factual challenges, points of law were made as to why the defendant suggests that it has acted appropriately and within the law.
6. This is an application by the claimant for early disclosure, i.e. disclosure before the time broadly fixed by the rules for standard disclosure. There remains to be served by the claimant a Reply. Following that, in the usual way, one would expect the parties to come to court for directions to be given through to trial. The substantive issues are likely to involve a long trial because there are substantial factual issues between the parties as to what went on in the dialogue period with Covanta asserting that in a number of material respects it was told that what it was proposing would or might be acceptable, or would not necessarily be unacceptable, whilst the defendant is asserting, as a matter of fact, that that is not the case and that in the material respects relied on it did not indicate effectively that what was being put forward was likely to be acceptable or not unacceptable. There are more issues than that, however.
7. The context of this hearing today was the application issued on 8 August 2013 by the defendant in effect seeking a declaration that earlier procurement rules or regulations applied which did not lead to an automatic suspension of the contract placement process that would normally follow. Since the 2009 Regulations have come into effect there is a statutory suspension of the placing of the contract with the successful tenderer if an unsuccessful tenderer issues and serves proceedings within a relatively short period (now 30 days). There was no automatic suspension under the old Regulations - and again nothing I say should be treated as a finding of law, but that is my understanding.
8. Of course, if the 2009 Regulations do not apply to this procurement, then it would be open to the claimant to apply for an injunction in effect to prevent the defendant from placing the contract with SITA pending at least the resolution of the issues by the court. At the moment, with about three weeks to go, no such cross-application has been issued, but I am assured by Mr. Giffin QC for the claimant that such an application will be issued very shortly. If I may say so, it needs to be issued very shortly so as to ensure that the defendant has sufficient time to respond to any evidence which may be lodged and in terms so that the claimant may file responsive evidence to that in sufficient time for both parties to prepare for the hearing of the defendant's application, which has been listed for the third full week of September of this year before Mr. Justice Coulson.
9. I fixed this hearing in light of the fact that the claimant was seeking to assert that it needed this application to be brought on to enable it to deal with the defendant's application or perhaps more particularly to deal with its own cross-application (if and when it issues it) for an injunction, in case it loses on the defendant's application that the pre-2009 Regulations regime applied. So it was that, when I fixed this hearing, which I did about 10 days ago, I did it on the basis that it was urgent business which should properly be dealt with in the vacation to enable the court to form a view as to whether the documentation that was being sought by the defendant would be reasonably necessary to enable the claimant to deal either with the application of the defendant, or with its own cross-application if that is what it ultimately decided to do.
10. First of all, I can deal simply with the defendant's application - not, I hasten to say giving any view as to what the final outcome would be. The defendant's application is essentially one of law as to whether transitional arrangements applicable under the 2009 Regulations in some way bite upon this procurement so as to bring them within the purview of the 2009 Regulations. If it is right about this, that is primarily, on what are likely to be substantially agreed facts, a point of law. None of these documents are necessary, as far as I can see, for that.
11. Therefore what the Court is concerned about is whether these documents are necessary in connection with an application which has not yet been issued but which I am going to treat as about to be issued by the claimant, which is a straight application for an injunction seeking to prevent the defendant from placing the contract at least for the time being with SITA.
12. I hope that it would be common ground that the law applicable in either circumstances, leaving aside possibly questions of onus of proof, is that American Cyanamid principles apply with regard to applications concerning the lifting of the suspension, or otherwise the injunction that may be granted to prevent the placing of the contract. American Cyanamid principles are well-known and broadly they require three aspects to be fulfilled. First of all, to enable an injunction or quasi-injunctive relief to be granted there must be a serious issue to be tried. Secondly, there must be demonstrated, on the balance of convenience, that it is or is not, as the case may be, appropriate for an action to be enjoined. Thirdly, although it is arguable as to whether this is a separate head, there may be an issue as to whether damages are an adequate remedy. I leave it open to the parties to decide whether they want to argue that American Cyanamid does not apply either in its full glory or otherwise, but that is my understanding, there being a number of authorities which support that. Certainly it has not been argued today that any other basis would be the appropriate basis.
13. It has been accepted, as I understand it, by the defendant that it will accept that at the final hearing before Coulson J. there is a serious issue to be tried. That perhaps is not altogether surprising given the very thorough and articulate Particulars of Claim that have been drafted. It will of course be open to the parties to argue, if they so wish, and this may go to the balance of convenience, that either the claim by the claimant or the defence of the defendant is at the weaker or stronger end of the spectrum, as the case may be. However, the reality is that this is unlikely to apply to contested issues of fact. For instance, again I think there is no real issue about this today, the factual area of dispute that I have already described will involve a detailed consideration of who said what and in what circumstances, either at meetings or in other conversations, possibly in writing, in emails, letters and meetings and the like. It is extremely unlikely that the court is going to form a view about the relative strength or weakness of the case or the defence on the basis of clearly contested factual issues.
14. What one is left with is, largely, potentially legal issues which the parties may wish to deploy to show, if they really wish to do so, that the claim or the defence, as the case may be, is weak or strong. That is something which the court can do by reference to the law rather than by reference to disputed facts.
15. I therefore think it is necessary not to treat today's application as if it was some sort of application for early disclosure. What I treat this application as, and certainly it is the basis on which this was fixed by the court, is whether it is reasonably necessary for the 14 or 15 different classes of documents which have been sought to be disclosed to ensure that there is a fair hearing before Coulson J. dealing with the defendant's application and the cross-application, depending on the terms on which it is formulated that is due to be issued I understand very shortly.
16. In that context it is legitimate for the court to pay important regard to the decision of Coulson J. in April of this year of Roche Diagnostics Limited v Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 (TCC) in which he was dealing not with early disclosure being sought to enable there to be a fair hearing of an application to lift the statutory suspension or an equivalent injunction to in effect impose such a suspension, but generally in a particular case whether early disclosure was called for. He set out at paragraph 20 the broad principles running to five at (a) to (e) which he drew from earlier cases, in particular from Vos J. in Alstom Transport v Eurostar international Ltd [2010] EWHC 32 (Ch) and Arsenal Football Club v Elite Sports Distribution Ltd [2002[ EWHC 3057 (Ch) and several other cases as well. I am going to run through those without setting them out, but paragraph 20 in its entirety is

as follows:

"20. 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."

17. So far as (a) is concerned, it goes without saying that, in many public procurement tenders, the unsuccessful tenderer knows that it has lost but finds it very difficult in some cases to find out the basis on which it has lost. There are provisions under the Regulations which require the public authority to provide some reasoning as to why the loser has lost. Therefore there may be cases in which very little information is provided. There may be other cases in which a substantial amount of information is provided. So it is said, and I do not begin to suggest Coulson J. is anything other than 100% right in saying that a claimant such as the claimant in this case ought to be provided promptly with essential information and documentation relating to the evaluation process "so that he can take an informed view of its fairness and legality." I would only say this. Certainly in this case a substantial amount of information has been provided. Undoubtedly that falls short of complete standard disclosure, unsurprisingly. However, certainly what has been provided has enabled the claimant to provide, as I have said, a very thorough, articulate and lengthy exposition of the specific respects in which it seeks to assert that the defendant did not comply with the procurement regulations.
18. Sub-paragraph (b) of paragraph 20 is important but it underlines what Coulson J. says in (a). He refers to what Ramsay J. says in Mears and one of the needs for early disclosure in procurement cases is sometimes - and I do not say invariably - that the tenderer should be able to "make an informed view as to whether there has been an infringement". It is impossible to say in this case that the claimant has not been able to make an informed view as to whether there has been an infringement or a series of infringements for which it is appropriate to bring proceedings. I do not rely simply on the length of the Particulars of Claim, but it is a very thorough exposition of its case as to why it thinks it has been let down by the defendant.
19. Sub-paragraph (c): of course, one needs to consider applications on their individual merits and one factor the court can take into account is the stage at which the early application is sought. As I said, in this case, it is being sought because it is said that it is reasonably necessary for this information to be provided in time so that it might have a material impact on the proceedings which are due to be heard by Coulson J. in just over three weeks' time. Coulson J. draws a potential distinction between cases where a prima facie case has been made out, but further information or documentation is required, and cases where an unsuccessful tenderer aggrieved by the result appears to have little or no grounds for disputing it. Certainly it is the case that the claimant has made out (what the defendant is prepared to accept for the purposes of the hearing before Coulson J. is) a serious case, so one would have thought that in those circumstances, broadly, that enough had been provided. I will come back to the categories of documents sought shortly.
20. Sub-paragraph (d) states an important requirement - that the request "must be tightly drawn and properly focused". It is important that the defendant is not put to early expense and avoidable expense by producing documents which are not necessary to be disclosed at an earlier stage. In this particular case it is likely, with a Reply due relatively shortly, that the parties will be getting to the disclosure stage in October or November, so they are not far off that stage. As to the question of whether or not in the circumstances of a potentially complex trial like this which will not be tried, I suspect until the end of 2014 (if not in 2015) I doubt that a difference of a month or two is going to matter in the overall scheme of things.
21. Finally in (e) he says "Applications ... must be decided by balancing ... the claiming party's lack of knowledge ... with ... the need to guard against such an application being used simply as a fishing exercise..." I hasten to say that I am not in a position to find that the application for documents that are being sought are designed to shore up a weak claim. But there are certain aspects of it which I do regard as a fishing exercise at this stage.
22. So I come on to the specific application and the 15 categories of document are set out in the schedule attached to the draft order. I can take these, I hope, very shortly. I must make it clear that I am going to dismiss the application in its entirety. That is not to say that there cannot be an application at a later stage for specific disclosure. As such, it may well be that a number of these documents (maybe many of them) will need to be the subject matter of standard disclosure. I am going to deal with the categories in the groupings which Miss Hannaford QC and Mr. Lamont have identified in their skeleton argument, just as a matter of convenience.
23. The first category relates to SITA: SITA's final tender, the evaluation reports for SITA's bid and communications between the defendant and SITA between the submission of the final tender and the announcement of the preferred bidder. At the moment the proceedings are primarily related to allegations relating to three particular tender criteria in relation to which it is asserted in the Particulars of Claim by the claimant that the defendant did not treat their tender properly, fairly or transparently. There are parts of the Particulars of Claim which suggest that it will need to wait for disclosure before making any allegations by reference to the SITA tender and the like, before it makes any further allegations. It reserves its position, it says in this regard at a number of places in their particulars of claim.
24. It therefore seems to me that this information is not necessary or reasonably necessary at this stage. It is information which might conceivably form the basis for as yet unmade allegations of breach of the Regulations. It might be necessary to support or challenge what has been said by the defendant in relation to what it did with regards SITA's tender. I should say that there has already been provided by the defendant a substantial amount of documentation. Certainly my experience at this stage this is rather more information than public authorities often provide. One of the main documents that has been provided is a document that has been referred to as the "CRAST document" which was provided to the claimant in mid-May 2013, very shortly before the proceedings were issued. It is clearly by reference to this that a not insignificant part of the Particulars of Claim has been drafted. This is a document by which there is an analysis against all the tender criteria as to what the marking was both in relation to the claimant, Covanta, and also to SITA. Thus, on the first page in relation to "service, delivery and technical" for which the weighting is 30% and the compliance for the output specification is said to be 40% of that mark, the relative weighting as between the two tenderers happen to be 50% each. They each score 9 and there is reference to the successful tenderer's submission "demonstrating an outstanding level of experience and ability..." and with Covanta's technical proposals providing "strong evidence that the proposed solutions could meet the specified requirements..." So there are statements there which purport to demonstrate the reasons why there were differences on occasions, not always, on different parts of the two tenders, but there are some places where it is clear that a very strong view was taken, rightly or wrongly, I know not at this stage, that the Covanta tender failed to come up to the sort of standards that the defendant will argue should have been reached. An example is "legal or contractual" at page 41 of this document which purports to demonstrate that "the legal and contractual solution put forward by Covanta was fundamentally unacceptable to MWDA" whilst the successful tenderer is described as having met the defendant's "requirements and also demonstrated an adequate level of experience and ability" In that case the successful tenderer appears to have been marked 6 and the claimant, marked 0. Obviously the more lower marks there are, so to speak, for the unsuccessful tenderer, the more the explanation is provided as to why that tenderer was unsuccessful. Covanta obviously feels very strongly that its being marked down, as they were in a number of important respects, was not justified. That may or may not turn out to be the case after a full trial.
25. Therefore I can see that SITA's tender, in relation to various aspects of its marking, might turn out to be necessary for standard disclosure. I do not necessarily say all parts of these documents will need to be disclosed, but it does seem to me, however, that it is not necessary or reasonably necessary for this to be provided before the hearing in September. It does not seem to me that that is going to advance the case at the September hearing one way or the other or, alternatively, would introduce such an enormously convoluted investigation into the facts and the differences as to depth-charge the possibility of the hearing going ahead in September. I am sure, I hasten to say, that is not the purpose of the application being made, but that might be an unfortunate by-product of it. So, items 1, 2 and 7 are not reasonably necessary for early disclosure.
26. The next categories, 3 to 6 and 9 to 11, comprise scoring records, scoring guides, minutes, notes, documents, reports, models, memoranda, calculations and the like. Again I do not see that at this stage these documents are reasonably necessary for the hearing in September. Some of them are drawn really rather widely and I do not see that they add or will add to what Coulson J. will need to decide one way or the other. I am told that in relation to item 6 that this is likely to have been disclosed already. Items 9, 10 and 11 relate to reports prepared by the professional team, Ernst & Young and SKM Enviros, who were engaged by the defendants to provide assistance in relation to the procurement process. However, particularly categoriesv9 and 10 are drawn extremely widely and I do not think that they are focused enough at the moment to justify any early disclosure let alone early disclosure prior to the hearing in September. Item 11 relates to documents prepared by Mouchel. It seems to be likely that Mouchel were not involved in the tender evaluation phase at all, having dropped out in 2010. In any event Mouchel were concerned with planning considerations and planning considerations, which, as I understand the pleadings, do not feature as a material factor at all.
27. Item 8 relates to copies of all communications between MWDA and WIDP concerning Covanta's proposed solution before final tenders were submitted. This seems to arise in consequence of part of the Defence at paragraphs 268 to 270. It may well be that this documentation will need to be disclosed ultimately in standard disclosure because it is pleaded that the defendant did communicate material features of Covanta's tender to WIDP and doubtless had discussions with them. Therefore it may well be that a number of the documents sought in this category will be needed in effect to confirm, or possibly undermine, that part of the defendant's pleading. At the moment I cannot see that it is reasonably necessary for the September hearing. It may provide some confirmation. It may provide some undermining of the assertions that are made by the defendant, but I cannot begin to see that they would form even a miniscule balance of what might be considered to be determinative by Coulson J. in September.
28. That leaves two further categories of documents, first 12 and 13. A point that Mr. Giffin QC has underlined on a number of occasions is that what his clients want are documents which go to and support or undermine, as the case maybe, the decision apparently made in February 2013 by which SITA was appointed as the provisional preferred bidder. His argument runs like this. Between mid-February and April 2013 when the decisions were finally made little, if anything, material had changed. Therefore, he argues, that in effect the decision was made in practice, as it turned out, in or by February that SITA was going to get the job. He does not imply by that as such any impropriety on the part of the defendant because it is possible that post-February material matters might have arisen which could have impacted, but, as he asserts, they did not as it turned out. So he says the information that was produced to enable that decision to be made should be provided. Again, this is documentation which is or may be corroborative of one side's pleaded position or not, as the case may be. It is not reasonably necessary for the decision to be made by Coulson J.
29. Item 14 and item 15 seem to me to fall into the "fishing" category. What they want in item 14 is internal audit reports. It may be that there are internal audit reports. It may be that they contain material which is arguably embarrassing to the defendant. One knows not. The internal audit reports may of course say that the defendant behaved in connection with this bid in a perfectly proper and legitimate way. Certainly I cannot see that the claimant knows any more than the court does about this, and it is clearly being sought just in case there is something embarrassing which might support Covanta's position. That seems to me to be a "fishing" request as it stands. I am not saying that it will necessarily be not ultimately discloseable because under the ordinary rules of standard disclosure, if it contains material which is unhelpful to the defendant's position, it would have to be disclosed in any event. But if they all say that everything the defendant did was perfectly all right, that is going to add nothing to this case, I suspect.
30. Finally, item 15: any advice relied on by the defendant including that Covanta's bid was fundamentally unacceptable, irrational or in breach of a fiduciary duty. It seems to me a catch-all point, and again that falls into the "fishing" category. Again, that is not to say that ultimately there may be such advice, if it is in written form, that will prove to be material and have to be disclosed. But at the moment it seems to me a prime example of a "fishing" request.
31. The application is dismissed and I want to give some directions as to the claimant's application. I want it issued by the middle of next week at the latest with a supporting witness statement. Covanta cannot leave it until, say, 10 days before the September hearing dates. It is an important case which the defendant, the court and the claimant has to resolve in an ordered manner.
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