High Court of Justice in Northern Ireland Queen's Bench Division Decisions

The background facts

The legal principles

(i) The general power afforded to the High Court under Section 91 of the Judicature (Northern Ireland) Act 1978 is specifically available in these proceedings by virtue of Regulation 32(5) of the 1993 Regulations which provides that:

"(5) Subject to paragraph (6) below 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 in relation to which the breach of the duty owed pursuant to paragraph (1) above is alleged, or suspend the implementation of any decision or action taken by the contracting authority in the course of following such procedure;"

(i) Errors concerning Decant Issues

One of the requirements of WP 2010 was that bidders should provide temporary office space or "decant hubs" to be used at relevant locations while offices were being refurbished. In its bid documents the applicant specified proposals for both the Derry and Belfast decant hubs. The Department asked the applicant for clarification of its proposals and such clarification was provided on 7 February 2007. At the debriefing meeting on 1 May 2007 the applicant was informed by a representative of one of the external consultants who had been responsible for appraising, inter alia, the decant hub provisions on behalf of the Department, that the applicant had not made any proposals for a Derry decant hub. On 3 May 2007 the applicant wrote to the defendant expressing its concern about a number of matters and drawing particular attention to this apparent error and on 25 May 2007 the Department confirmed that the statement of the representative at the meeting of 1 May 2007 had been mistaken. The Department's letter explained that the mistake had resulted from an erroneous quality report but that no error had actually been made by the evaluation team and the applicant's score had remained unchanged under the relevant sub-sub criterion. In support of this explanation Thomas James O'Reilly, Programme Director for WP 2010, swore an affidavit on 10 October 2007 referring to a memorandum which he claimed had been circulated to the Department's evaluators following receipt of clarification from the applicant before the scores were finalised. Mr O'Reilly also emphasised that the Derry recant hub was only relevant to two scores out of 38 for quality evaluation and pointed out that there were a substantial number of other considerations relevant to those two scores. In such circumstances he explained that the location of the Derry decant hub was neither the sole consideration nor was it the most important: it was but one of many, and there were others that were considered more significant. The applicant also complained that at the meeting of 1 May 2007 the Department seemed to be unaware of the alternative property put forward by the applicant to substitute for the applicant's Belfast decant hub which would not be ready within the timescale.

(ii) Errors in the evaluation of the financial proposal

It appears that the Department adjusted the price of the applicant's bid upwards to take account of four critical areas, namely, TUPE risk, corporation tax and stamp duty assumptions, compliance with Required Accommodation Standards and provision for Regional Jobs and Benefits Offices. The applicant claims that such adjustment led to the bid submitted on behalf of the applicant being wrongly inflated by a figure in excess of £90m in net present cost terms equating to around £140m in real terms. The applicant claims that it had undertaken to assume the risk for each of these items but that the Department did not appear to have accepted such an undertaking in respect of at least the first three items. By way of response it appears that the Department does not accept that the applicant confirmed either verbally or in writing that it would accept the tax risk and that the Financial Evaluation Team advising the Department "applying its substantial expertise and experience to the information before it" concluded that there was a real risk that the applicant's bid price did not fully reflect the assumptions in relation to the TUPE risk. The Department further maintains that similar adjustments were applied consistently across the bids of all four bidders.

(iii) The applicant also alleges that, contrary to the Department's claims, the applicant did provide a fully comprehensive table setting out a timeline in the bid documents.

(iv) The applicant claims that, contrary to the Department's assertion, the regional decant was fully detailed and properly explained in the applicant's bid.

"It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial."

In the course of his affidavit Mr O'Reilly identified as the memorandum said to have been circulated to the evaluators following receipt of clarification from the applicant in relation to the Derry decant hub a document which is headed "Appendix 3 – Extract from Note of Team Leader for Moving to the New Environment Dealing with Clarification Matters". No evidence has been forthcoming as to how or when it is claimed that this document was placed before the evaluators or of the evaluators reaction thereto whether by way of reassessing the scoring or otherwise. At this stage the basis upon which the principles of equality and non-discrimination in relation to pricing led the Department to make adjustments to the applicant's financial proposals remains to be clarified as does the basis upon which the expertise and experience of the Financial Evaluation Team led it to conclude that there was a real risk that the bid-price submitted by the applicant did not fully reflect the assumptions of risk that the applicant had undertaken. In addition, the applicant has questioned as to how the Department's conclusion that the applicant's proposal for the regional decant was not fully detailed can be a matter of judgment as opposed to a matter for specific reasons. The applicant has raised similar questions with regard to the assertion by the Department that the timeline proposed by the applicant for the decant moves was not comprehensive. The applicant also questions how a lack of detail in the regional decant programme and/or in the timeline could be within the Department's "margin of discretion". On behalf of the Department, Kenneth Swarbrick, currently Finance Director of WP2010, has produced a calculation which purports to demonstrate that the applicant would have been excluded even if its claims had been established. However this exercise, subsequently amended, was carried out upon the instructions of and after discussion with the Department's solicitors in September 2007. Mr Swarbrick's original document indicated that detailed workings were available to support his conclusions but the Department's solicitors subsequently refused to disclose any correspondence relating to it on the ground of privilege. Regulation 23(1) places an obligation on the Department to inform an unsuccessful service provider of the reasons for the lack of success and it seems to me arguable that the general EC obligations of objectivity, transparency and non-discrimination should ensure that such reasons include such information about the successful bid or bids as would permit a well informed and diligent tenderer to understand the relative advantages and disadvantages of the respective bids In the circumstances, after careful consideration, I am satisfied that the applicant's claim is neither frivolous nor vexatious and that there is a serious question to be tried.

Would damages be an adequate remedy?

The balance of convenience

(i) The applicant would be improperly deprived of its right to be fairly considered for selection as a Preferred Bidder.

(ii) A BAFO stage that involved three bidders would infringe the defendant's rule limiting such a stage to two bidders.

(iii) The applicant would run the risk of losing one of its preferred advisors, some of its decant options and would suffer the disadvantage of not having enjoyed an equal and timeous access to the Department's procurement team with the unavoidable stigma of being considered "an also-ran".

"The objective of the ITN process is to provide Bidders with sufficient information to enable fully costed proposals to be submitted such that the Authority will be able to select a Preferred Bidder whose submission represents the most economically advantageous offer which is not subject to material uncertainty in either price or risk allocation.

If the Authority considers the offers from the Bidders do not achieve best value for money or are subject to material uncertainty in either price or risk allocation a Best and Final Offer ('BAFO') stage will be undertaken. If a BAFO stage is undertaken, no more than two bidders will be taken through. The documentation and the timeline for the BAFO stage will be issued as soon as practicable after the evaluation of the bidders ITN's submissions."

"The Authority reserves the right to change, without notice, the procedures for the ITN process, or any of the ITN documentation, or any information in relation to or in respect of the Workplace 2010 Project, at its discretion."

According to Mr McCloskey QC, this power would entitle the Department, if it was appropriate to do so, to vary the BAFO stage from two to three bidders. He submitted that even if, by the date of trial, the two other bidders had completed or almost completed the BAFO stage they could have no complaint about the stage being expanded to three bidders since they would have been aware from the ITN documentation that they had been participating in an exercise which afforded the Department the power to change the procedure. During the hearing on the 22 October 2007 it was my impression that he was advancing this submission on the basis that BAFO was an optional stage within the ITN procedure which might or might not be needed depending upon the circumstances. However he subsequently furnished a helpful supplemental skeleton which somewhat clarified and refined his submission. In this document Mr McCloskey QC re-emphasised his reliance upon the power of the Department to amend the ITN documentation so as to permit three, as opposed to two, BAFO participants but also confirmed that the approach of the Department was that BAFO and ITN were two separate stages of a composite procurement process.

Variation in the dispersal policy and re-evaluation of the transferred estate

Conclusion

"The plaintiff undertakes that in the event this Honourable Court finds that the stay ('the stay') ordered on 22 October 2007 should not have been ordered the plaintiff will pay the defendant such extra costs as the defendant itself incurs in the Workplace 2010 tender process that is the subject of action 2007 No. 074919 and which is solely attributable to the delay occasioned by the stay."

While there is no strict rule of law or practice that requires a party to provide an undertaking in damages as a condition of granting an interlocutory injunction, it does seem to me that a general consideration of the authorities indicates that, unless some special feature is present, such a condition should be expected to be imposed. There are of course exceptions to this general approach and each case requires to be considered in the context of its own individual circumstances eg. in Allen v Jambo Holdings Limited [1980] 1 WLR 1252 the Court of Appeal held that legally assisted persons are as a matter of course excepted from the need to give a cross-undertaking in damages. In R v Servite Houses Ex Party Goldsmith (2000) 3 CCLR 354, a public law case relating to the closure of a residential care home, Swinton Thomas LJ considered that an injunction might be granted to a citizen without any undertaking and damages if justice required that course. In In Re DPR Futures Limited [1999] 1 WLR 778 joint liquidators, in the course of the performance of their statutory duties, sought a Mareva injunction against the former directors and shareholders but sought to limit the cross-undertaking in damages. On behalf of the respondents it was argued that acceptance of a limited cross undertaking was both unprecedented and contrary to principle and if there was any risk of under-estimating a potential loss which might result from granting an injunction which ought not to have been granted that risk should been borne by the party seeking the order. They went on to argue that by accepting a limit on the cross-undertaking in damages the court would be denying itself in advance the power to do the fullest justice between the parties. While recognising that there was force in such submissions, Millett J observed that the court could not avoid the need to make an intelligent estimate of the likely amount of any loss which might result from the grant of an injunction. He went on to say at page 786:

"There is nothing unusual in this. It is so in every case where the balance of convenience has to be considered. A plaintiff's resources are not infinite. But any such estimate can be reviewed from time to time and further fortification required if necessary. If fortification cannot be obtained this will affect the balance of convenience between granting or refusing the injunction. But the court cannot abrogate its responsibility for deciding where the balance of convenience lies."

In this case the applicant is a consortium of commercial undertakings with access to substantial assets as opposed to an individual citizen, whether legally assisted or otherwise, or a liquidator seeking to perform his statutory obligations to preserve what might be salvaged for the shareholders and creditors of an insolvent company. As I have indicated above at paragraphs 26-48 of his affidavit sworn on 10 October 2007 Mr Thompson has set out details of the impact that it is alleged that any delay will have upon the procurement process, the Northern Ireland Executive budget, achieving WP 2010 efficiency gains and future PFI projects in Northern Ireland. No attempt has been made to quantify in monetary terms the damages to which the applicant might be exposed should one or more of the developments apprehended by Mr Thompson occur, but the clear inference seems to be that the financial consequences could be so overwhelming as to effectively inhibit any would be private sector partner from seeking to obtain an interlocutory injunction in such circumstances. Accordingly I propose to make the order subject to the undertaking proffered by the applicant. As with the order itself this undertaking may always be reviewed on application to the court should appropriate circumstances arise.