Countryliner Ltd v Surrey County Council [2011] EWCA Civ 373

Tuesday March 8th, 2011

Neutral Citation Number: [2011] EWCA Civ 373
Case No: A2/2010/2023

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(HHJ SEYMOUR QC)

Royal Courts of Justice
Strand, London, WC2A 2LL
8 March 2011

B e f o r e :

LORD JUSTICE LONGMORE
LORD JUSTICE ETHERTON
and
SIR RICHARD BUXTON
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Between:
COUNTRYLINER LIMITED

Appellant

– and -

SURREY COUNTY COUNCIL

Respondent

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(DAR Transcript of
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Mr Michael Bowsher QC (instructed by Anthony Collins Solicitors) appeared on behalf of the Appellant.
Mr John Howell QC (instructed by Head of Legal and Democratic Services, Surrey CC) appeared on behalf of the Respondent.
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HTML VERSION OF JUDGMENT
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Crown Copyright ©

Lord Justice Longmore:

This is an appeal by the claimant against an order of HHJ Seymour QC striking out its claim. The claimant has in the past provided a number of bus services for Surrey County Council (“the Council”). In March 2010 the Council decided to invite tenders for the provision of local and school services for the next year or so and issued an invitation to tender (an “ITT”) for contracts for the supply of services which they expected to award in June 2010 to begin on or about 28 August 2010. This being a public contract it was of course subject to the Public Contract Regulations 2006 (as amended).

The ITT included a description of how tenders would be evaluated by reference to criteria set out in a number of tables and explained that the tenderers who achieved the highest combined ranking in the evaluation process as described would be assessed according to what was described as “factual evaluation”. That depended in part upon provision of information in response to questions in the policy, technical and service section of the ITT, particularly paragraph 3(b)(i), “capability to resource and implement contract” and, more importantly, in what was called a “qualification envelope”. Question 14 in that envelope said:

“Please confirm and provide evidence of compliance with all planning, regulatory and other consents necessary for the purposes of performing the services you are tendering for. Please attach any supporting evidence in this envelope.”

The answer given by Countryliner to that was as follows,

“Operating depot and workshops in Guildford. We propose to operate from our Merrow location, although property consultants have identified another suitable site on an industrial site in the Guildford area which we would occupy at the end of the current lease of Merrow earlier or as relevant. We have a PCP operator’s licence No. PK1011041. Also we have access to other group vehicles and respective licences.”

No evidence was attached to that answer. Accordingly the Council then asked Countryliner to supply the missing material by sending an email message in the following terms,

“The response submitted to question 14 section 3 qualification envelope is not satisfactory as the question requires evidence to be submitted. … In order that your tender can be properly considered please remedy this omission by submitting evidence through the messaging system no later than 1500 Wednesday 26 May 2010.”
Countryliner answered that by sending (1) copies of public service vehicle operators’ licences; (2) a notice of intention to execute works at the Merrow depot dated August 1968, describing the existing permitted use to be the use of the depot for vehicle maintenance; and (3) a letter of 29 January 1976 from the County Council to the officer of Guildford Borough Council (“Guildford”) responsible for planning permission status to the effect that the proposed works then contemplated might be regarded as permitted development. What was not included was any planning consent for the operation of a bus depot. That was because no such planning permission existed, although the Merrow site had in fact been used as a bus depot for a number of years. However, both Guildford and Surrey County Council had been asserting for two-and-a-half years that there was a breach of the permitted use and indeed Guildford was to serve an enforcement notice on 8 June 2010.

In the event, when the Council made its decision on 2 June 2010, no contract was awarded to Countryliner. When its solicitors complained the Council explained that the planning consent submitted only showed permitted use as a vehicle workshop and not for operational use as a bus depot.

On 14 July 2010 Countryliner issued proceedings for breach of the 2006 regulations and an application for an injunction preventing the Council entering into any contract arising out of the procurement process because of such breach. Regulation 47G of the Regulations provides that, where proceedings have been started and no contract has been entered into, the starting of the proceedings requires the relevant authority (here the Council) to refrain from entering into any such contract unless and until the court brings that requirement to an end by an interim order made under Regulation 47H(i)(a). The Council responded by requesting such an interim order and also asked for summary judgment against Countryliner or for its claim to be struck out.

The matter came before HHJ Seymour QC on 21 July 2010 for a two-hour hearing as one of considerable urgency. The parties agreed the criteria applicable to the questions were those set out in the American Cyanamid Co v Ethicon Ltd [1975] AC 396 and the first question was whether there was a serious question to be tried. This was said by counsel then appearing for Countryliner to depend solely on the question of whether the Council had made clear in the ITT the significance of the presence or absence of planning permission for use of the Countryliner bus depot as a bus depot. The judge decided that that was clear in the tender documents and therefore Countryliner’s application for an injunction must fail and that the Council’s application that the requirement imposed by the regulation (that once proceedings had started no contract should be signed) should be brought to an end.

The question then arose as to the future course of any proceedings. The defendants had an outstanding summary judgment application, not as we understand on the basis that the whole action should be dismissed, but it was not clear what Countryliner hoped to gain if they were unable to stop the tendering process. The following exchange then took place between counsel and the court. Mr Howell, who was appearing for the Council:

“My Lord, that leaves the question of our summary judgment application which your Lordship has not dealt with.
Judge Seymour: I was going to invite you and Mr Heppinstall [who was then appearing for Countryliner] to address me further on that. Having come to the conclusion that there is no serious question to be tried, I am inclined in my own motion simply to dismiss the action.
Mr Heppinstall: My Lord, that of course is open to you I think under Part 3. You can strike out of your own motion. You will not be able to under Part 24 because you have to give me notice and I have to have time to prepare. It is certainly open to you under Part 3.
Judge Seymour: Yes.
Mr Heppinstall: And I have to say that I can see how, your Lordship, it follows from your findings under the serious issue to be tried and also why there may be a basis upon which to seek permission to appeal was obviously on the injunction matter it would be slightly difficult to have made alternative findings … whereas if you take your serious issue question to be tried points to its logical conclusion as I can see you might, the strike-out of Part 3 matters would be slightly different. So I obviously urge you not to strike out your own motion because those are my instructions, but I can see how, your Lordship, it follows from your findings that I have to disturb elsewhere. I cannot disturb now on the serious issue to be tried. I am not sure there is more I can say. I think you have to strike out under Part 3 because from memory the court, to do it of its own motion, has to set up the applications.
Judge Seymour: Yes.
Mr Heppinstall: Which has not been done and has not been done by the claimant properly in time.
Judge Seymour: No.
Mr Heppinstall: I do not think I can say anything further in the circumstances.
Judge Seymour: Right.
Mr Howell: My Lord, I think, given what your Lordship has said, to let the claimant linger on is not going to help anyone.
Judge Seymour: There is just no sense in it.
Mr Howell: Absolutely.
Judge Seymour: Full argument has been addressed to me. I have reached a clear conclusion and the logic I think is incontestable.
Mr Howell: My Lord, I would invite your Lordship to do that.
Judge Seymour: Right.”

From this interchange it seems to me to be clear that Countryliner’s counsel was given every opportunity to make submissions as to why the action should not be dismissed but did not do so. Accordingly an order was drawn up recording, fairly enough, that the court found of its own motion that the particulars of claim disclosed no reasonable grounds for bringing the claim and paragraph 3 of the order itself provided that:

“Of the court’s own motion, the claim be dismissed under CPR Part 3.”
That of course was a reference to the provisions of Part 3.4(2) providing that the court may strike out a statement of case if it appears to the court that the statement of case discloses no reasonable grounds for bringing the action.

From this order there are effectively four grounds of appeal. First, that the judge dismissed the action without hearing argument as to whether it was appropriate to strike out the action. The passage from the transcript, however, (which I have read) reveals that counsel was given the opportunity to make any argument he wished but did not do so. There is therefore nothing in the first ground of appeal.

The second ground of appeal is that the judge did not consider whether Countryliner had no reasonable grounds for bringing the claim, but he did consider that very question inasmuch as he concluded that there was no serious question to be tried and since no other issue had been put forward other than the question which he had already decided against the claimants, he dismissed the action. There is, therefore, nothing in the second ground of appeal.

Thirdly it is said that there were in fact reasonable grounds for bringing the action, partly because the judge had come to the wrong conclusion and should have held that the Council had not made it clear in the ITT that if evidence of planning permission for intended use of a bus depot did not exist the application would fail and partly (and this is what I will call the fourth ground) for six other reasons, numbered (b) to (g) in the grounds of appeal, which were not submitted to the judge at the time. The question therefore arises whether this court should entertain these arguments on appeal when they have not been made to the judge.

As to the question which the judge did decide, it seems to me that the judge was undoubtedly right. I have recited question 14 of the questionnaire. It did require any necessary planning permission for proposed services to exist and for evidence of that planning permission to be provided. Planning permission to operate the depot as a bus depot was therefore required. That was clear enough in the tender document itself and it is not suggested that that was not a reasonable requirement. Even if there could have been any doubt about the requirement, the Council gave Countryliner a second opportunity to produce the evidence by their express reminder of 24 May that evidence had to be submitted. So the question the judge was asked to decide, namely whether the Council had made clear in tender documents the significance of the presence or absence of planning permission for use of the Merrow depot as a bus depot, was (and is) that the Council had indeed made that clear.

The next question is whether Countryliner should be allowed to take the six further points that are set out in the grounds of appeal, (b) to (g), which were not taken before the judge. Most of these could only be taken if we also allowed an amendment to the Particulars of Claim. I do not think it right at this late stage for permission to amend the Particulars of Claim to be given. Allegations of breach of the Public Contract Regulations 2006 have to be made within a short timescale, especially if the effect of making such allegations is in theory to bring the whole tendering process to a shuddering halt. Although the judge in fact allowed the process to continue, it cannot be right that more than seven months after a claim form has been issued and Particulars of Claim have been drafted new allegations can be added and that must particularly be so if it is sought to do so for the first time in the Court of Appeal after there has already been an outing at first instance.

Mr Michael Bowsher QC for Countryliner submitted, however, that the fact that a claimant had failed in an application for an interim injunction to show that there was a serious issue to be tried did not mean that his case could or should be struck out pursuant to CPR 3.4. On one view the riposte to that might be that, if the judge on such an application has held that there is no serious issue to be tried, there is little point in letting the case go to trial and that either a strikeout or at least judgment under CPR Part 24 summarily dismissing the claim would be appropriate. That would be all the more the case if counsel does not even suggest to the judge at the interim hearing that there are in fact reasonable grounds for supposing that a claimant would succeed at trial, as is this case.

I have, however, been persuaded by Mr Bowsher that in this particular case, where the impetus for striking out the claim appears to have come from the judge himself that, even though no grounds for not taking that course were submitted to the judge, we should permit Mr Bowsher to show us any reason based on the existing Particulars of Claim why the claim should go to trial. With this encouragement he then relied on paragraph 26 of the Particulars of Claim and advanced a case to the effect that the reality of this case was that there was a planning dispute between Countryliner and Guildford and that it was not right, when Countryliner had in fact been using the Merrow site as a bus depot and paying rent to, as it happens, Surrey County Council for using it as a bus depot, for the Council to use the existence of that dispute as a reason for not awarding the relevant routes to Countryliner, at any rate without making it clear in the invitation to tender that the existence of such a dispute could be detrimental to success.

This is a point not perhaps totally dissimilar to the issue decided by the judge and is no doubt worthy of consideration, if it is enough, to make the claim an arguable claim. In my judgment, however, it is not an arguable ground for claim. The tender document was clear in its terms that relevant planning permission had to exist and there had to be documentary evidence for it. For that purpose it is not enough to produce a permission for vehicle maintenance and repair and maintain that, because a bus depot has been operating on the premises for a number of years, there is a dispute as to the existence of planning permission. The Council was entitled to see evidence of permission from the relevant planning authority, in this case Guildford. They were entitled to say, as they did when communicating their decision made on 2 June to Countryliner on 11 June, that they were not satisfied that Countryliner had all necessary consents, licences and permissions to enable it to carry out the services. It is true that when Countryliner’s solicitors wrongly asserted in their letter of 15 June 2010 that their clients did in fact have the necessary permissions to carry out the services, the Council replied on 23 June not only that Countryliner did not have planning consent to run services from the Merrow depot but also that the consent produced in evidence was for use as a vehicle workshop and that Countryliner had been aware of its planning breach over two years previously and had failed to remedy the situation. However, that does not mean to my mind that the Council were relying on the existence of a dispute in order to foreclose Countryliner’s applications. The point that Mr Bowsher has made seems to me no more meritorious than that put before HHJ Seymour. There really is no point in allowing this action to continue to trial and I, for my part, would dismiss this appeal.

Lord Justice Etherton:

I agree.

Sir Richard Buxton;

I also agree.

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