Apcoa Parking (UK) Ltd v City of Westminster

On 20 April 2010, I heard an application by the Claimant, Apcoa Parking (UK) Ltd, for an interim injunction to restrain Westminster City Council (“Westminster”) from awarding any contract in respect of parking enforcement or street management services to any of the bidders in its current public procurement process. The proceedings were commenced on 1 April. Thereafter Westminster had been asked for an undertaking but declined. Hence the present application was issued on 9 April and served a few days later. I indicated to the parties at the conclusion of the hearing that I would refuse the injunction and give my reasons in writing, as I now do.

The Claimant is a major provider of on-street parking enforcement services for local authorities in the United Kingdom and also provides its services abroad. These consist primarily in arranging for uniformed civil enforcement officers, penalty charges, clamping and removal, ticketing and similar services.

In April 2009, Westminster placed a notice in the Official Journal of the European Union inviting tenders for the award of contracts for the provision of on-street parking and other services (which had apparently an anticipated value of approximately £50m). Public procurement in this field is governed by the Public Contracts Regulations 2006. The purpose of these was to implement Directive 2004/18/EC on the co-ordination of procedures for the award of contracts relating to public works, public supply and public services.

The Claimant was one of the bidders which committed very substantial resources and time to working its way through the prescribed stages. Its case is that Westminster acted unlawfully in the course of its procurement process. It is said, in particular, that it was unfair to the Claimant. Towards the end of the process, on receipt of complaints, Westminster came to recognise that it had indeed behaved unlawfully in a number of respects. That is why it decided to abandon the process and, having taken advice, to make a fresh start with a new one. Westminster contends that it was fully entitled to do so as a matter of contract law and also in the context of the regulatory regime.

The Claimant contends, whether Westminster was entitled to commence a second procurement process or not, that it has now “compounded the unfairness” by so arranging matters that the Claimant is precluded from competing in the second process at all. That is largely because Westminster has raised the qualifying bar in relation to the turnover requirements for prospective bidders to a level above that which the Claimant can achieve. Again, for reasons explained in evidence put forward by Mr Leith Penny, Westminster contends that it was fully entitled to do so and, moreover, that there was no specific intention to exclude the Claimant; rather, there were sound commercial and financial reasons for raising the barrier.

At all events, the Claimant, through Mr Timothy Brennan QC, summarises its complaint in these terms:

“Having failed to provide a level playing field in the first place (thereby denying the Claimant of the contracts that it would have won had the Defendant conducted the process lawfully), the Defendant has now excluded the Claimant from the game.”

The Claimant now seeks to maintain the “status quo” by obtaining an interim injunction, since Westminster declined to agree to any delay in the award of the necessary contracts pending the resolution of the Claimant’s complaints at trial. At the outset of the hearing before me, the Claimant was suggesting that there should be a speedy trial, although it was recognised that this was unlikely to be completed for several months. Once I indicated the outcome, Mr Brennan accepted that there was no longer any point in pressing for an expedited hearing.

It did not emerge with clarity what exactly is the “status quo” on the Claimant’s case (apart from the purely negative fact that contracts have so far not been awarded). Nor indeed was it clear what was the nature of the claim said to arise from the admitted illegalities or what remedies were to be sought at trial. It is certainly the Claimant’s case that damages cannot be an adequate remedy, but I was in some doubt in the light of Mr Brennan’s submissions as to the exact nature of the injunctive relief it would ultimately seek.

For the moment, Mr Brennan wanted merely to have an interim order that Westminster should not award any contracts under its second and current procurement process, although he indicated that he may at some stage wish to seek a quashing order in respect of its decision to abandon the first process. That would need to be in accordance with public law principles. But the orders to be sought at trial are presently expressed in the prayer as being for (a) the setting aside of the decision to abandon the first procurement exercise and/or (b) the amendment of the decisions made in the original procurement exercise – “so as to provide for assessment of the Claimant’s tenders in accordance with the published criteria alone”. That is said to reflect the provisions of Reg. 47(8)(b), set out below, which contemplates such an order in respect of a “decision or action” where the court is satisfied that it was taken in breach of the duty owed to the Claimant. This would involve inter alia an argument at trial that the decision to abandon the procurement process was itself a breach of the duty owed to the Claimant. Yet, however it is formulated, the Claimant’s purpose would presumably be to compel Westminster to backtrack and to pick up the first procurement process at some (unidentified) stage and thereafter to conduct it lawfully. (Mr Brennan suggested in written submissions that Westminster should resume the process from the point at which the decision was taken to abandon it, but it would not be that simple. Earlier stages would have to be re-run in order to eliminate flaws.) This reasoning is all based, obviously, on the assumption that Westminster was not entitled, in its discretion, to abandon the first process or, it would follow, to launch the second process now being conducted (or, as Mr Brennan put it, “ ... the exercise of the discretion to abandon was unjustified”).

Not surprisingly, in view of the delays which have taken place, Westminster is now keen to bring the process to a speedy conclusion and to award contracts. Meanwhile, it has been compelled to arrange a six month extension of its existing contractual arrangements.

The legal basis upon which it is suggested that the decision to abandon the first procurement process should be quashed or set aside remained, as far as I was concerned, obscure.

As I have said, it came to be recognised by Westminster that, at least in the latter stages of the first procurement process, the assessment was, impermissibly, being made by reference to criteria which were unpublished and unannounced. It was made clear in the evidence of Mr Penny that this had to be done since, with the benefit of hindsight, it had been realised that it was necessary to have regard to certain additional factors in order to arrive at a proper decision as to whether any particular outcome would be “the most economically advantageous” (see Regulation 30, below). Hence the need for a fresh start.

The Claimant contends that, if the published criteria had been properly applied, this would inexorably have led to its being awarded the contracts. This is not accepted by Westminster and the rival arguments are set out in the witness statement of Mr Penny, on the one hand, and Mr Morphew on behalf of the Claimant. One could go into considerable detail, if necessary, but if the position is that Westminster was entitled to abandon the first procurement process and to launch a second, as has now occurred, then it becomes unnecessary to rehearse at any length what did happen and what should have happened during the course of the first process.

There are conflicts of evidence, or as to the interpretation of events, which it is not possible for me to resolve on an application of this kind. I do not believe it is necessary to attempt to do so. Westminster accepts that in some respects (but not in others) the Claimant is correct in saying that the first process was not carried out as it should have been. I can proceed on that basis.

Before going any further, it is necessary to summarise the regulatory background, as contained in the Public Contracts Regulations 2006. I need only refer to certain extracts.

Regulation 2 deals with interpretation. It is clear that the contracts Westminster was contemplating fell within the definition of “public services contract” (by contrast with “a public works contract” or “a public supply contract”).

It is also clear from the terms of Regulation 3(1)(i) that Westminster is a “contracting authority”. Within the terms of Regulation 4, the bidders under the relevant procurement processes would be categorised as “economic operators”: they have to be treated equally and in a non-discriminatory way, as well as “in a transparent way”: see Reg 4(3).

Other provisions which need to be taken into account, so far as relevant, are those of Regulation 30:

“Criteria for the award of a public contract

30.–(1) … a contracting authority shall award a public contract on the basis of the offer which–

(a)

is the most economically advantageous from the point of view of the contracting authority; or

(b)

offers the lowest price.

(2)

A contracting authority shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous including quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost effectiveness, after sales service, technical assistance, delivery date and delivery period and period of completion.

(3)

Where a contracting authority intends to award a public contract on the basis of the offer which is the most economically advantageous it shall state the weighting which it gives to each of the criteria chosen in the contract notice or in the contract documents or, in the case of competitive dialogue procedure, in the descriptive document.

(4)

When stating the weightings referred to in paragraph (3), a contracting authority may give the weightings a range and specify a minimum and maximum weighting where it considers it appropriate in view of the subject matter of the contract.”

Also relevant is Regulation 32(11):

“Subject to paragraph (13), a contracting authority shall as soon as possible after the decision has been made, inform any economic operator which submitted an offer, which applied to be included amongst the economic operators to be selected to tender for, to negotiate the contract or to be admitted to a dynamic purchasing system, of its decision to abandon or to recommence a contract award procedure in respect of which a contract notice has been published, in relation to–

(a)

the award of a contract;

(b)

the conclusion of a framework agreement; or

(c)

admittance to a dynamic purchasing system.”

The relevant provisions of Regulation 47 are as follows:

“Enforcement of obligations

47.–(1) The obligation on–

(a)

a contracting authority to comply with the provisions of these Regulations, other than regulations 14(2), 30(9), 32(14), 40 and 41(1), and with any enforceable Community obligation in respect of a public contract, framework agreement or design contest (other than one excluded from the application of these Regulations by regulation 6, 8 or 33); and

(b)

a concessionaire to comply with the provisions of regulation 37(3);

is a duty owed to an economic operator.

…

(6)

A breach of the duty owed in accordance with paragraph (1) or (2) is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage and those proceedings shall be brought in the High Court.

(7)

Proceedings under this regulation must not be brought unless–

(a)

the economic operator bringing the proceedings has informed the contracting authority or concessionaire, as the case may be, of the breach or apprehended breach of the duty owed to it in accordance with paragraph (1) or (2) by that contracting authority or concessionaire and of its intention to bring proceedings under this regulation in respect of it; and

(b)

those proceedings are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.

(8)

Subject to paragraph (9), but otherwise without prejudice to any other powers of the Court, in proceedings brought under this regulation the Court may–

(a)

by interim order suspend the procedure leading to the award of the contract or the procedure leading to the determination of a design contest in relation to the award of which the breach of the duty owed in accordance with paragraph (1) or (2) is alleged, or suspend the implementation of any decision or action taken by the contracting authority or concessionaire, as the case may be, in the course of following such a procedure; and

(b)

if satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with paragraph (1) or (2)–

(i)

order the setting aside of that decision or action or order the contracting authority to amend any document;

(ii)

award damages to an economic operator which has suffered loss or damage as a consequence of the breach; or

(iii)

do both of those things.

(9)

In proceedings under this regulation the Court does not have power to order any remedy other than an award of damages in respect of a breach of the duty owed in accordance with paragraph (1) or (2) if the contract in relation to which the breach occurred has been entered into.

(10)

Notwithstanding sections 21 and 42 of the Crown Proceedings Act 1947 [42], in proceedings brought under this regulation against the Crown the Court shall have power to grant an injunction.”

The claim form itself, while cross-referrng to the particulars of claim, simply asserts that Westminster acted unlawfully and in breach of the 2006 Regulations in and about its procurement of contracts. It does not identify any injunctive relief. Under the prayer in the particulars there is a claim for an order setting aside the abandonment of the first procurement exercise and an order that Westminster should “amend its decisions in relation to the original procurement exercise so as to provide for assessment of the Claimant’s tenders in accordance with the published criteria alone”. It is not suggested that Westminster should be compelled by the court to enter into a contract or contracts with the Claimant.

I should not grant an interim injunction unless the criteria identified in American Cyanamid v Ethicon Ltd [1975] AC 396 are satisfied: see also the recent exposition of these principles by Lord Hoffmann in National Commercial Bank of Jamaica Ltd v Olint Corp Ltd [2009] 1 WLR 1405. Mr Goudie QC, for Westminster, raises a challenge at each and every stage.

First, it is clear that the application is predicated upon a need for injunctive relief at trial. That, in turn, is predicated upon the proposition that Westminster was not entitled to abandon the first procurement process or to start the second. Mr Goudie submits that this is plainly wrong as a matter of law and that, accordingly, there is no relevant issue to be tried. In any event, the process has come to an end and is incapable of being reinstated. One cannot rewrite history.

So far as the law of contract is concerned, Westminster was expressly entitled to terminate the process. It was provided in paragraph 1.8.4 of the Invitation to Submit a Final Tender (‘ISFT’) that:

“The Council reserves the right to:

…

1.8.4

not award a Contract or any Contracts to the Bidder selected as Preferred Bidder or at all.”

It is also provided expressly in paragraph 18 of the same document, under the heading “The Council’s right to reject Final Tenders”, that Westminster was not committed to any course of action as a result of issuing the ISFT or negotiating with Bidders in respect of it or any other communication between the Council and any other party. In particular, there was retained an absolute discretion not to accept any Final Tender if the Council so decided. This right was acknowledged by the Claimant on 4 December 2009.

As a matter of procurement law, it is recognised that there is a right to abandon a procurement procedure. That is apparent from Regulation 32(11) of the 2006 Regulations, cited above. It is also consistent with a number of decisions of the European Court of Justice in this context. My attention was drawn to the decision of the Court of First Instance in Embassy Limousines v European Parliament [1999] 1 CMLR 667 at [54]; to Metalmecannica Fracasso SpA v Amt der Salzburger Landesregierung [1999] ECR I-5697 at [30]-[34]; to Hospital Ingenieure v Stadt Wien [2004] 3 CMLR 16 at [41]; and to Kauppatalo Hansel v Imatran Kaupunki [2004] 3 CMLR 17 at [36].

This aspect of the law is also considered in Arrowsmith, The Law of Public Utilities and Procurements (2^nd edn), at paras. 7.168-7.169. It is there acknowledged that there is a “broad discretion” to terminate a particular tender procedure and examples are cited where this might be appropriate. Two that are relevant in the present circumstances are (a) where it has become apparent that a new procedure is likely to yield a better result and (b) where there has been a mistake in carrying out the first procedure.

The matter was considered recently in Northern Ireland in the case of Federal Security Services v Northern Ireland Court Service [2009] NIQB 15, at [39]-[41] and [47], where the European cases were cited and the broad discretion to terminate once again acknowledged.

I have come to the conclusion, therefore, that the essential foundation of the Claimant’s argument is unsound in law. There is no legal basis to overturn or quash Westminster’s decision to terminate the first procurement process and thus no prospect of obtaining the only form of injunctive relief currently pleaded. Accordingly, there is no need to “hold the ring” or maintain the status quo. The claim for interim relief thus falls at the first of the American Cyanamid hurdles.

Secondly, it is argued that the Claimant has failed to demonstrate why, if an actionable wrong has been committed and loss has been incurred in consequence, damages would not be an adequate remedy. It is plainly not an answer that a monetary award would be difficult to quantify, although I have little doubt that it would be. The primary argument appears to be that the Claimant was deprived of a flagship contract and the reputational kudos that would have been attached. That is not something that could be reflected in an award of damages, but it is also difficult to envisage a form of injunctive relief that could do any better.

By contrast, Westminster argues that in view of its procurement needs, which have now become urgent, it would not be adequately protected by the Claimant’s proffered cross-undertaking in damages. Nor would it protect other bidders, whose interests should not be forgotten simply because they are not parties.

It is perhaps relevant here to cite the recent observations of Akenhead J in European Dynamics SA v HM Treasury [2009] EWHC 3419 (TCC) at [24]:

“ … One has to bear in mind that, if any procurement could be stopped by injunction because there was merely a serious issue to be tried about the procurement, without more, the public authorities would be invariably targeted by unsuccessful tenderers and public procurements would or could grind to a halt.”

In that case, it was found that even though damages might not be a perfect remedy, there should be no obviously insuperable difficulty in making an assessment (probably by way of a loss of a chance). The remarks of Akenhead J are equally apposite when it comes to the final consideration – balance of convenience. This third Cyanamid test leads to the conclusion that the balance lies clearly in favour of not imposing further delays on Westminster or further obstruction to its procurement process in relation to these important services.

These are my reasons for refusing the relief sought.