Jobsin Co UK Plc (t/a Internet Recruitment Solutions) v Department Of Health [2001] EWCA Civ 1241

Friday July 13th, 2001
Neutral Citation Number: [2001] EWCA Civ 1241
A2/2001/1202

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(Mr Justice Blofeld)

Royal Courts of Justice
Strand
London WC2

Friday, 13th July 2001

B e f o r e :

LORD JUSTICE THORPE
LORD JUSTICE DYSON
MR. JUSTICE ASTILL

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JOBSIN CO UK PLC
(trading as Internet Recruitment Solutions)
- v -
DEPARTMENT OF HEALTH

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(Computer Aided Transcript of the Stenograph Notes
of Smith Bernal Reporting Limited
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____________________

MR. A. LEWIS (instructed by the DLA, Birmingham) appeared on behalf of the Appellant.
MR. J. CROW (instructed by the Treasury Solicitor) appeared on behalf of the Respondent.

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HTML VERSION OF JUDGMENT
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  1. LORD JUSTICE DYSON: On 14th August 2000 the Department of Health (“DOH”) issued an Electronic Briefing Recruitment Document (“the Briefing Document”) inviting proposals for the development and management of an online recruitment service for the National Health Service (“NHS”). The website was to display job vacancies throughout the NHS and to be the vehicle for applications to fill them.
  2. A number of tenders were submitted, including one from Internet Recruitment Solutions (“IRS”). IRS is a Trading name of Jobsin Co UK Plc (“Jobsin”). The tender was submitted on 3rd October 2000. On 17th November Jobsin was informed by the DOH that its tender was not to be included in the final short list. On 5th March 2001 Jobsin started proceedings, in which it claimed that the tender process had been conducted in breach of the Public Services Contracts Regulations 1993, SI 1993 No 3228 (“The Regulations”). It short, it contended (and still contends) that the services for which tenders were invited by the Briefing Document were “computer and related services” within the meaning of Part A of Schedule 1 to the Regulations, and not “personnel placement and supply services” within the meaning of Part B of that Schedule. By the proceedings Jobsin claimed, inter alia, (i) declarations that the tender invited by the Briefing Document was in respect of a Part A service and that the tendering procedure adopted by the DOH failed to comply with the regulations, and (ii) damages.
  3. It is common ground that if the tender was properly to be classified as being for computer and related services, then the tender process was defective, in the sense that a number of the requirements of the regulations applicable to a Part A service were not complied with. On the other hand, if the tender was for personnel placement and supply services, it is agreed that all the material requirements of the regulations applicable to a Part B service were complied with.
  4. On the trial of certain preliminary issues Blofeld J held that the tender was for computer and related services, so that there had been a breach of the regulations. The DOH appeals against that decision. There was also a limitation issue before the judge arising from the application of Regulation 32(4)(b) of the regulations. It is convenient to set out the relevant parts of regulation 32 at this stage. Regulation 32(1):

    “The obligation on a contracting authority to comply with the provisions of these Regulations other than regulations 8(6), 10(7), 21(8), 23(3) and 27, and with any enforceable Community obligation in respect of a public services contract (other than one excluded from the application of these Regulations by regulation 6 or 7), is a duty owed to services providers.”

  5. Regulation 32(2):

    “A breach of the duty owed pursuant to paragraph (1) [or paragraph 1A] above shall not be a criminal offence but any breach of the duty shall be actionable by any services provider who, in consequence, suffers, or risks suffering, loss or damage.”

  6. Regulation 32(4)(b):

    “they 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.”

  7. The judge held that the right of action arose on 17th November 2000, when the DOH informed Jobsin that it was excluded from taking further part in the tender process. It was accepted by the DOH that it could not take any point based on the failure by Jobsin to start proceedings after 12th December. This is because the DOH accept that it may have indicated to Jobsin, on or about 12th December, that it was proposing to restart the tender process, although, in the event, it decided not to do so. The judge held that there was no lack of promptitude on the part of Jobsin between 17th November and 12th December. He also considered what the position would have been if he had decided that the right of action first arose on 14th August when the Briefing Document was sent out. On that basis he held that Jobsin had three months in which to start proceedings, and that, in the exercise of his discretion, he would have extended time until 5th March. The DOH appeals against all aspects of the judge’s decision in relation to the limitation point.
  8. This appeal therefore concerns three issues: (a) what was the correct classification of the services which were the subject of the tenders that were submitted pursuant to the briefing document?; (b) when did the right of action, if any, first arise?, and (c) if the right of action arose on 14th August 2000 was the judge right to extend the time for bringing proceedings? If the right of action did not arise until 17th November, the DOH does not challenge the judge’s decision to extend time. Since the regulations apply to the award of public services contracts generally, the second of these issues raises a point of general importance as to when a right of action arises for breach of a duty owed by a contracting authority to a service provider to comply with the provisions of the regulations. Moreover, if the right of action arose on 14th August, the third issue raises questions of some general application as to the principles by which an extension of time should be granted for the commencement of proceedings in these cases.
  9. We heard full argument on the classification issue and agreed to rule on it even if we concluded that the DOH succeeded on its limitation defence. The DOH wanted, or at least did not oppose, a ruling on the classification issue. That was because it has given an undertaking that, if this court decides that the tender process was not conducted in accordance with the regulations, then, even if the DOH succeeds on the limitation issue, it will not carry the tender process forward in its present form. In view of that undertaking, Jobsin’s primary concern in these proceedings has been to succeed on the classification issue. It is not interested in pursuing a claim for damages for breach of a duty owed to it under regulation 32(1). For that reason it is not particularly interested in the limitation question. Conversely, the DOH is intensely interested in the limitation issue since, for reasons that will become clear, it contends that the judge misdirected himself, both on the question when the right of action first arose and as to the correct approach to extending time under regulation 32(4)(b). Accordingly, I shall deal with all the issues that were argued before us. The statutory material. The regulations.
  10. So far as material the regulations provide as follows:

    “2(2) For the purposes of these regulations -

    (a) ‘a Part A services contract’ is a contract under which services specified in Part A of Schedule 1 are to be provided;

    (b) ‘a Part B services contract’ is a contract under which services specified in Part B of Schedule 1 are to be provided,

    and, where services specified in both Parts A and B are to be provided under a single contract, then -

    (i) the contract shall be treated as a Part A services contract if the value of the consideration attributable to the services specified in Part A is greater than that attributable to those specified in Part B; and

    (ii) the contract shall be treated as a Part B services contract if the value of the consideration attributable to the services specified in Part B is equal to or greater than that attributable to those specified in Part A.

    5(1): Whenever a contracting authority seeks offers in relation to a proposed Part A services contract other than one excluded by virtue of regulation 6 or 7, these Regulations apply in their entirety.

    (2) Whenever a contracting authority seeks offers in relation to a proposed Part B services contract other than one excluded by virtue of regulation 6 or 7, Part 1 (General) and Part V11 (Applications to the court) apply but only the following provisions in Parts 11 to V1 apply -

    regulation 8 (Technical specifications in contract documents)

    regulation 22 (Contract award notices)

    regulation 27(2) (Statistical and other reports)

    regulation 28 (Responsibility for obtaining reports)

    regulation 29 (Publication of notices).

    21(1): Criteria for the award of a public services contract

    Subject to paragraphs (5), (6) and (7) below, a contracting authority shall award a public services contract on the basis of the offer which -

    (a) is the most economically advantageous to the contracting authority, or

    (b) offers the lowest price.

    (2) The criteria which a contracting authority may use to determine that an offer is the most economically advantageous include period for completion or delivery, quality, aesthetic and functional characteristics, technical merit, after sales service, technical assistance and price.

    (3) Where a contracting authority intends to award a public services contract on the basis of the offer which is the most economically advantageous it shall state the criteria on which it intends to base its decision, where possible in descending order of importance, in the contract notice or in the contract documents.”

  11. I have already set out the relevant provisions of regulation 32. Part A of Schedule 1 to the Regulations includes at item 7 “Computer and Related Services” and identified the corresponding CPC reference as 84. Part B of Schedule 1 includes at item 22 “Personnel Placement and Supply Services”, and it identifies the corresponding CPC reference as 872. The United Nations Provisional Central Product Classification Series MN077 of 1991 (“CPC”).
  12. Under the heading “Division 84 Computer and Related Services” appears, inter alia, the following:

    “842 Software implementation services

    All services involving consultancy services on, development and implementation of software. The term ‘software’ may be defined as the sets of instructions required to make computers work and communicate. A number of different programmes may be developed for specific applications (application software), and the customer may have a choice of using ready-made programmes off the shelf (packaged software), developing specific programmes for particular requirements (customized software) or using a combination of the two.

    8421 84210 Software and software consulting services

    Services of a general nature prior to the development of data processing systems and applications. It might be management services, project planning services, etc.

    8422 84220 Systems analysis services

    Analysis services include analysis of the clients’ needs, defining functional specification, and setting up the team. Also involved are project management, technical coordination and integration and definition of the systems architecture.

    8423 84230 Systems design services

    Design services include technical solutions, with respect to methodology, quality-assurance, choice of equipment software packages or new technologies, etc.

    8424 84240 Programming services

    Programming services include the implementation phase, i.e. writing and debugging programmes, conducting tests, and editing documentation.

    8425 84250 Systems maintenance services

    Maintenance services include consulting and technical assistance services of software products in use, rewriting or changing existing programmes or systems, and maintaining up-to-date software documentation and manuals. Also included are specialist work, e.g. conversions.

    843 Data processing services.

    8431 84310 Input preparation services

    844 Database services …

    8491 84910 Data preparation services

    Data preparation services for clients not involving data processing services.

    8499 84990 Other computer services n.e.c.

    Other computer related services, not elsewhere classified, e.g. training services for staff of clients, and other professional computer services.”

  13. Under the heading “Division 87 Business Services n.e.c. (not elsewhere classified)” appears, inter alia, the following:

    “872 8720 Placement and supply services of personnel

    87201 Executive search services

    Services consisting in the search for, selection and referral of executive personnel for employment by others. Included in this category are services provided by senior administrators and managers whose functions generally include planning, organising, directing and controlling activities of private or public sector businesses through subordinate administrators. The services may be supplied to the potential employer or to the prospective employee and may involve the formulation of job descriptions, the screening and testing of applicants, the investigation of references, and other research.

    87202 Placement services of office support personnel and other workers

    Services consisting in selecting, referring and placing applicants in employment by others on a permanent or temporary basis, except executive search services. The services may be supplied to the potential employer or to the prospective employee and may involve the formulation of job descriptions, the screening and testing of applicants, the investigation of references, etc. Included are the placement of secretaries, clerks, receptionists, book-keepers, data entry operators, typists, word-processor operators, nurses, models, maids, ship crews, etc.”

    Services Directive 92/50/EEC.

  14. The regulations were made in order to implement the Services Directive. So far as material that Directive provides. Article 8:

    “Contracts which have as their object services listed in Annex 1A shall be awarded in accordance with the provisions of Titles 111 to V1.”

  15. Article 10:

    “Contracts which have as their object services listed in both Annexes 1A and 1B shall be awarded in accordance with the provisions …”

    The classification of the proposed contract.

  16. It is common ground that the relevant time for classification is the time when the contract was put out to tender, ie 14th August 2000. On behalf of the DOH, Mr. Crow submits that the proposed contract can only properly be regarded as one for personnel placement and supply services. Having correctly accepted that the regulations must be interpreted in the light of the Services Directive, the judge failed to adopt that approach in his judgment. He should have concluded that “the object” of the contract, within the meaning of Article 8 of the Directive, was the supply of recruitment services. It was clear from all of the DOH’s evidence that its object was to develop a recruitment service. Mr. Crow relies on the frequent references in statements made on behalf of Jobsin to the contractors being for “online recruitment services. . . using an interactive website”, or words to that effect. This description, he submits, clearly recognizes that the substance or essence of the proposed contract was the provision of recruitment services, albeit that the chosen medium happened to be a website. He also relies on the fact that BNB Resources Plc, (a company that was to join in the procurement if Jobsin’s bid was successful), was not a computer specialist but a company with expertise in providing a recruitment service for employment in the NHS. The judge decided that the proposed contract was for the provision of a hybrid service, ie part computer services and part personnel placement and supply services, and held that it was predominantly the former. In my judgment, the judge should have held that the proposed contract was entirely for the provision of computer services and not for the provision of personnel placement and supply services.
  17. I have reached this conclusion largely for the reasons advanced by Mr Lewis. The correct classification involves comparing (a) the services which, by the Briefing Document, the DOH invited tenderers to provide to it as the contracting authority with (b) the detailed description of services under the relevant CPC heads, and deciding whether those services fell under CPC 84 or CPC 872. This exercise of comparison involves an objective analysis of the services described in the Briefing Document and the services described under the two CPC heads. No real assistance is to be derived from an examination of how various employees of the DOH or Jobsin described the services at the time, still less how they have described them in witness statements prepared for the current proceedings. Nor does Article 8 of the Services Directive help. The reference to the “object” of the contract in Article 8 does not mean that the exercise of classification is done by reference to wider considerations than those that I have mentioned. The “object” of the contract is the service to be provided to the contracting authority, as Article 8 specifically states. As Mr Lewis points out, the use of the word “object” does not mean that it is permissible for the purposes of classification to investigate the motivation behind the decision to put the contract out to tender, or the wider intentions of the contracting authority in relation to the use to which it intends to put the service that it has requested. Thus the question is simply: what were the tenderers actually being asked to provide to the contracting authority? If the approach of the DOH to the issue of classification were correct, it is difficult to see when a contract involving the provision of computer software would ever be for “computer services”, since software is always required in connection with some other function or activity. During the argument below the judge asked whether, if a bank engages computer specialists to design and manage a website which the bank staff and customers will use as part of some new banking related service, the computer specialists are providing computer services or banking services to the bank. In my view, the answer is clear. It is computer services. Although this is no more than an analogy, it is a useful pointer to the correct classification in the present case. Ultimately the answer to the problem of classification depends on a comparison between the Briefing Document and the relevant CPC descriptions. I am in no doubt that the services which the briefing document asked tenderers to supply did match the descriptions under the CPC heading “Computer and Related Services”.
  18. In what follows I have summarised the principal elements of the Briefing Document and added in parenthesis the corresponding provision in CPC 842. By the Briefing Document tenderers were asked to provide software development and implementation services by designing a website in accordance with the client’s needs, the functionality being described in section 5 of the document, and also to write the programmes to put the website into effect (842), to maintain and support (8425), and manage and operate (84390 and 844) the website and database, to work with the NHS, to input the content for the website (84310 and 8491), to train the NHS staff who would actually post vacancies on the site and receive and consider applications made over the internet (8499), and to make available documentation for those NH staff (8425).
  19. I am equally in no doubt that the services described in the Briefing Document are not “personnel placement and supply services” within CPC 872. As Mr. Lewis points out, most of CPC 872, in particular 87203 to 97209, which I have not set out above, relates to the actual provision of staff (supply services of various types of personnel); in other words, the service provider is asked to provide the contracting authority with staff who are the service provider’s employees in return for a fee. This is essentially the role of an employment agency. 87201 (Executive Search Services) and 87202 (Placement Services) cover the sort of work carried out by headhunters and recruitment agencies. It is plain from the way that these classes of services are worded that what is contemplated is the service provider creating a specific job specification, actually searching for and locating a specific individual, screening, testing and interviewing the individual, investigating the individual’s references, doing other research in relation to the individual and selecting and referring the individual for a specific job. The Briefing Document does not ask tenderers to supply it with staff; nor does it ask tenderers to supply executive search or placement services. It is not the tenderer’s role to describe the jobs or to search for and identify suitable applicants for particular jobs or to refer or to place candidates. The Briefing Document contemplates that it will be the NHS, not the service provider, who will put the vacant positions on to the site. They, not the service provider, will formulate the descriptions. The applicants can see the offers there and then that they can make online or in writing to the National Health bodies which process the applications. The health bodies, not the service providers, screen and test the applicants and investigate references. I conclude therefore that the services were properly classified as Part A services and that, although I differ from his reasoning, the judge reached the right conclusion on this issue. The limitation point.
  20. When did the right of action first arise? In its particulars of claim Jobsin alleged that the DOH had failed to comply with the regulations, but it did not identify the regulations relied on, nor did it plead the date on which the right of action first arose. At paragraph 7 of his witness statement, dated 13th March 2001, Mr. Bullivant on behalf of Jobsin said this:

    “Had the tendering process been conducted in accordance with the regulations, IRS would have been given clear criteria upon which they were to be judged. Equally they would have had the assurance that all the tenderers would be treated equally. If IRS proposal had been evaluated against the clear and proper criteria that are contained in regulation 21 of the regulations, there is every reason to believe that the proposal would not have been rejected in the apparently inexplicable way that it occurred. If the process is recommenced as it should be, this time in accordance with the regulations, then IRS will be afforded for the first time a proper opportunity to put its proposals before the DOH and to have them properly and fairly considered.”

  21. That was the nature of the case advanced by Jobsin that the judge had to consider when deciding whether the claim was time barred by reason of regulation 32(4)(b). The judge held that regulation 21 was not complied with as it should have been if the service was properly to be classified as a Part A service. The DOH failed to apply “clear, objective and proper criteria identified in advance as to the criteria on which it intended to base its decision” (paragraph 26). He recorded the rival submissions that were made to him as to when Jobsin first suffered or risked suffering loss or damage. On behalf of Jobsin, it was argued that the relevant date was when it was excluded from the contracting process on 17th November. On behalf of the DOH, it was contended that the relevant date was 14th August when Jobsin received the Briefing Document.
  22. The judge accepted the submission made on behalf of Jobsin. With respect to him, the judge did not sufficiently distinguish between the two separate questions that fell to be determined: (a) when did the right of action first arise, and (b) if the proceedings were not brought promptly and in any event within three months from the date when the grounds for the bringing of the proceedings first arose, was there a good reason for extending the period within which proceedings might be brought? But insofar as he did address the first of these questions, the judge decided in favour of 17th November because Jobsin were unaware of the legal position until they consulted solicitors shortly after 17th November. Until that time they were tendering in response to the Briefing Document without any knowledge of the regulations at all. It was for that reason that the judge said at paragraph 29 of his judgment that he was satisfied that:

    “Jobsin did not risk suffering loss or damage as a result of a breach of duty by the defendant until their exclusion from the contracting process was communicated to them on 17th November 2000.”

  23. Mr Lewis does not support to seek this part of the judge’s reasoning. A service provider’s knowledge is plainly irrelevant to the question whether he has suffered or risks suffering loss or damage as a result of a breach of duty owed to him by a contracting authority. This was the conclusion reached by Langley J in Keymed Limited v Forest Healthcare NHS Trust [1998] ELR 71, at 92. Although that was a decision under the Public Supply Contracts Regulations 1995, there is no material difference between regulation 29(2) and (4) of those regulations and regulation 32(2) and (4) of the 1993 regulations. I agree with the reasoning of Langley J on this issue. Keymed was cited to the judge but he made no reference to it in his judgment. Knowledge will often be relevant to whether there is good reason for extending the time within which proceedings may be brought, but it cannot be relevant to the prior question of when the right of action first arises.
  24. Before this court Mr. Lewis has amplified his position as to when the right of action first arose on the facts of this case. He formulated a draft amendment to the particulars of claim in the following terms:

    “In breach of Regulations 14, 15, 16 and 21 of the Regulations, and the implied obligation on the Defendant under the Regulations to act fairly and even handedly (as set out in Commission v Denmark [1993] ECR 1-3353), the Defendant:

    (a) during November 2000 failed to afford the Claimant a fair or equivalent opportunity to present and discuss its tender with the Defendant;

    (b) during November 2000 assessed, and on 22 November 2000 rejected, the claimant’s tender on the basis of unpublished criteria which were not the criteria set out in Regulation 21(1) and (2), which were not fair and even handedly applied, and which were not grounds for exclusion of the Defendant under Regulations 14, 15 or 16.”

  25. Mr Lewis accepts that it is also part of his case that the DOH acted in breach of regulation 21(3), in that, on the footing that the basis on which the contract was to be awarded was the “most economically advantageous” bid, it failed to publish the criteria by which such a bid was to be assessed. This breach occurred when the briefing document was issued. Mr Lewis also accepts that this breach was what he described as one of the “building blocks” of his case, namely that Jobsin suffered loss or damage or the risk of loss or damage when it was not treated equally, fairly and in a transparent manner, in the way that the DOH approached the presentation by Jobsin of its case in November. But he submits that the breach of regulation 21(3) that occurred on or about 14th August did not cause Jobsin to suffer loss or damage or the risk thereof. That only occurred when it was excluded from the tender process.
  26. I cannot accept that the right of action alleged by Jobsin first arose on 17th November. In my view, it arose on or about 14th August. It is clear that, as soon as the Briefing Document was issued without identifying the criteria by which the most economically advantageous bid was to be assessed, there was a breach of regulation 21(3). I do not understand Mr Lewis to dispute this. Moreover, it was a breach in consequence of which Jobsin, and indeed all other tenderers too, were then and there at risk of suffering loss and damage. It is true that it was no more than a risk at that stage, but that was enough to complete the cause of action. Without knowing what the criteria were, the bidders were to some extent having to compose their tenders in the dark. That feature of the tender process inevitably carried with it the seeds of potential unfairness and the possibility that it would damage the prospects of a successful tender.
  27. Mr Lewis submits that neither the loss nor the risk of loss was caused by the breach of regulation 21(3) until Jobsin was excluded from the tender process on 17th November. I reject that submission for the following reasons. First, it gives no meaning to the words “risks of suffering loss or damage” in regulation 32(2). It seems to me that those words are of crucial significance. They make it clear that it is sufficient to found a claim for breach of the regulations that there has been a breach and that the service provider may suffer damage as a result of the breach. It is implicit in this that the right of action may and usually will arise before the tender process has been completed.
  28. That brings me to the second reason. It would be strange if a complaint could not be brought until the process has been completed. It may be too late to challenge the process by then. A contract may have been concluded with the successful bidder. Even if that has not occurred, the longer the delay, the greater the cost of re-running the process and the greater the overall cost. There is every good reason why Parliament should have intended that challenges to the lawfulness of the process should be made as soon as possible. They can be made as soon as there has occurred a breach which may cause one of the bidders to suffer loss. There was no good reason for postponing the earliest date when proceedings can begin beyond that date. Mr. Lewis suggests that there is such a reason. He points out that if, in a case such as this, the limitation period runs from the date of publication of the tender documents, it will be possible for the contracting authority to rule out any real possibility of a challenge by issuing an invitation in breach of the regulations and then not taking any further steps in relation to tenders until after the three months period has expired. I confess that I find this an unlikely state of affairs, but I can see that it might conceivably happen. If it did, a service provider who wished to bring proceedings might have a good case for an extension of time: it would all depend on the facts. In my view, this cannot affect the plain meaning of regulation 32(2). I would therefore hold that the right of action which Jobsin asserts in the present case first arose on or about 14th August 2000. The essential complaint which lies at the heart of the proceedings is that there was a breach of regulation 21(3), in that the Briefing Document did not identify the criteria by which the DOH would assess the most economically advantageous bid. Extension of time.
  29. On the basis of his finding that the right of action first arose on 17th November, the judge had no difficulty in deciding that there were good grounds to extend the time for commencing the proceedings from 17th November to 5th March. I have explained why it was accepted by the DOH that there were good reasons for not starting the proceedings between 12th December 2000 and 5th March 2001. It could not seriously be argued that the failure to start proceedings between 17th November and 12th December was the result of a lack of promptitude on the part of Jobsin, but since, for the reasons that I have given, I consider that the judge was wrong to decide that the right of action first arose on 17th November, his decision to extend time on that basis is no longer of any relevance.
  30. The judge went on to consider the question of an extension of time on the alternative basis, that the right of action first arose on 14th August. Even on this hypothesis, he said that he would have exercised his discretion to extend time from 14th August 2000 until 5th March 2001. His reasoning appears in the following passage in paragraph 30 of his judgment:

    “I first asked myself if the claimant had a reasonable objective excuse for coming late. His excuse is that until he went to see his solicitors on 23rd November 2000 he had no idea that he could bring these proceedings. Should he have made such enquiries earlier? … I have come to the conclusion that it would be unreasonable to expect him to do so in the circumstances. So I find that he has a reasonable objective excuse for bringing proceedings out of time. I ask myself what if any is the damage in terms of hardship or prejudice to third party rights. Here there is none because the court having ruled that this is a Class A Services Contract the Department has accepted that it will have to start again in any event. Consequently third party rights are not prejudiced by extending time. I next ask whether this exercise of my discretion would be detrimental to good administration by the DOH. Again having ruled this to be a Class A Services Contract I do not consider this applies. I also take into account that having ruled that this is a Class A Services Contract, on the main issue before the court the claimant has succeeded. Finally I bear in mind that the effective period of extension is from 14 November till 12 December, which is just under one calendar month. In these circumstances I would have exercised my discretion in the claimant’s favour, even if the starting date was 14 August 2000.”

  31. Mr. Crow criticizes the judge’s approach. He submits that the judge was wrong to find that Jobsin had a reasonable excuse for not bringing the proceedings earlier than they did. There was no concealment by the DOH of any material factor of which Jobsin needed to be aware before it was in a position to start proceedings. Lack of legal advice is not a good reason. Next, Mr Crow submits that the judge was wrong to hold that there was no hardship or prejudice to third parties. That is to ignore the prejudice to all the bidders who participated in the tender process, whether successful or unsuccessful. Thirdly, Mr. Crow contends that the judge was wrong to hold that the grant of an extension of time was not detrimental to good administration. If a party wishes to challenge the procedure by which a proposed contract is let, he must bring that challenge promptly. It is contrary to good administration for bidders to wait and see whether they are successful before looking for grounds on which to challenge the process under which they failed. Next, Mr Crow submits that the judge was wrong in approaching this issue as if the period of extension required was no more than from 14th November to 12th December. Regulation 32(4)(b) requires the proceedings to be brought “promptly and in any event within three months…” The judge seems to have overlooked the obligation to bring proceedings “promptly”. Finally, the judge was in error in attaching much if any significance to the fact that he had decided the classification issue in Jobsin’s favour.
  32. Mr Lewis submits that it is not possible to characterise the judge’s exercise of discretion as “unreasonable”, in the sense of exceeding the generous ambit within which a reasonable disagreement is possible: per Lord Fraser in G v G (Minors)(Custody Appeal) [1985] 1 WLR 647,652. Mr Lewis supports the judge’s reasoning. He makes the following points. First, the extension of time was for a relatively short period of about four weeks, from 14th November to 12th December. Secondly, there was an objective excuse for being late. Jobsin did not know until they consulted their solicitors, after the decision to exclude them from the short list, that there had been a breach of the regulations. They had no reason to believe that they needed to take legal advice until they were excluded in circumstances which they regarded as deeply unsatisfactory and unfair. Thirdly, no evidence has been adduced to show that an extension of time would cause any particular increased detriment to the DOH or to good administration over and above the normal inconvenience that would result from having to start the process again. Fourthly, there is no evidence of damage to third party rights. The tender process had not matured into a contract with a successful bidder. Fifth, Mr Lewis submits that the judge was correct in taking into account the fact that he had decided the classification issue in favour of Jobsin, and he relies on R. v. Warwickshire County Council, ex parte Collymore [1995] ELR 217,228B to 229E, and R v Secretary of State for Trade and Industry, ex parte Greenpeace [2000] CMLR 94 at 133. Finally, he makes the point that the validity of the procurement process has a relevance beyond the confines of Jobsin’s rights. The Public Procurement Regulations implement EC law rights of all putative tenderers throughout the European Union. The underlying aim is to benefit the public by ensuring that contracting authorities’ costs are cut by their putting work out to competitive tendering. The court is under a general obligation to take EC law points of its volition if they arise. It would be strange if a process which the court had concluded was contrary to EC law, and under which no contract had been awarded, was not allowed to proceed solely by virtue of a short period of delay in starting proceedings.
  33. These arguments are formidable and were compellingly presented. But I am in no doubt that the judge was wrong to exercise his discretion to extend time in the circumstances of this case. First, I do not accept that it was unreasonable to expect Jobsin to start proceedings before they were excluded from the tender process. On or about 14th August they were aware of all the facts that they needed to know in order to start proceedings. The judge seems to have been influenced by two factors in deciding that there was a reasonable objective excuse for Jobsin’s failure to start proceedings before they were excluded from the short list. These were that (a) they had no reason to believe that there had been any breach of the regulations and therefore no reason to consult solicitors to obtain advice as to the true legal position, and (b) even if they had known that there was a breach of the regulations, there were strong commercial reasons why it would have been reasonable for them to decide not to start proceedings until the tender process had been completed. I do not accept that either of these was a sufficient reason to extend time. As regards (a), in my view the lack of knowledge of the legal significance of facts of which a bidder is aware will not usually be a good reason for extending time. Although the maxim “ignorance of the law is no excuse” is not a universal truth, it should not in my view be lightly brushed aside. Regulation 32(4) specifies a short limitation period. That is no doubt for the good policy reason that it is in the public interest that challenges to the tender process of a public service contract should be made promptly so as to cause as little disruption and delay as possible. It is not merely because the interests of all those who have participated in the tender process have to be taken into account. It is also because there is a wider public interest in ensuring that tenders which public authorities have invited for a public project should be processed as quickly as possible. A balance has to be struck between two competing interests: the need to allow challenges to be made to an unlawful tender process, and the need to ensure that any such challenges are made expeditiously. Regulation 32(4)(b) is the result of that balancing exercise. It may often be the case that a service provider is not aware of the intricacies of regulations such as the 1992 regulations, and has little or no understanding of how they should be interpreted. If ignorance of such matters were routinely to be regarded as a good reason for extending the time for starting proceedings, the clear intent of regulation 32(4)(b), that proceedings should normally be started promptly and in any event not later than three months after the right of action first arose, would be frustrated.
  34. Quite apart from this general consideration, there are features of the facts of this case which make Jobsin’s ignorance of its legal rights until after 17th November even less excusable than it might otherwise have been. Mr. Maisie is the chief executive officer of Jobsin. Attached to his first witness statement is a chronology which he has prepared. It describes what he calls the “key events”, starting in July 1999 and ending on 23rd November 2000, when he sought legal advice as a result of Jobsin’s concern over the way their tender had been dealt with. The entry for 15th July 1999 refers to Jobsin’s initial presentation. The chronology says:

    “Even at this early stage IRS had concerns about the process.”

  35. The entry for December 1999 says:

    “I began to have heightened concerns about the integrity of the FDOH tendering process.”

  36. In September 2000 there is the following entry: “Concerns over process”. He then gives examples. Finally, at paragraph 8 of his witness statement Mr Maisie says:

    “During the process it became clear that DOH was not following the regulations.”

  37. There is no amplification of this statement. It is not explained in what respect or when it became clear that the DOH was not following the regulations. Even if I assume in Jobsin’s favour that the breaches of regulations were not those now relied on, the picture disclosed by their evidence is not that of a tenderer who had no reason to suspect that there was anything wrong with the process and no reason to suppose that it might have a ground for complaint. They were concerned about the process from its very earliest stage. Contrary to the suggestion made by Mr Lewis, there is nothing in the evidence to suggest that Jobsin’s early concerns were allayed once the Briefing Document was issued to them.
  38. As for (b), it is a fairly startling proposition that, even where a tenderer knows that he has grounds for starting proceedings, he has a good excuse for not doing so because such proceedings may imperil his relationship with the contracting authority and may jeopardize his prospects of securing the contract. It seems to me that a tenderer who finds himself in such a situation faces a stark choice. He must either make his challenge or accept the validity of the process and take his chance on being successful, knowing that the other tenderers are in the same boat. In my view, it is unreasonable that he should sit on his rights and wait to see the results of the bidding process on the basis that, if he is successful he will remain quiet, but otherwise he will start proceedings. I do not believe that a tenderer who deliberately delays proceedings in an attempt to have his cake and eat it has good reason for an extension of time if the outcome of the process is not to his liking.
  39. For that reason alone, therefore, I consider that the judge adopted an incorrect approach to the exercise of his discretion.
  40. I would add that I see considerable force in the other criticisms made by Mr Crow. It is not necessary to adduce particular evidence of prejudice to third parties. It is inherent in the process itself that delay may well cause prejudice to third parties as well as detriment to good administration. One of the concerns of the DOH is that delay may lead to the successful bidders dropping out of the process. One has already done so. Furthermore, the judge overlooked the fact that regulation 32(4)(b) provides that proceedings may not be brought unless they are brought “promptly”. He concentrated on the words “and in any event within three months” and proceeded on the basis that the extension of time was required from 14th November. But it was not. In my judgment, promptitude required proceedings in this case to be brought considerably earlier than 14th November.
  41. Finally, I should deal with Mr Lewis’s point that there should be an extension of time because the court has ruled in Jobsin’s favour on the issue of classification, and because the court should not stifle proceedings where what is at stake is whether the process is in beach of EC law. This argument, carried to its logical conclusion, involves a proposition that the limitation provisions in regulation 32(4) are contrary to EC law. That argument was rejected by this court in Matra Communications SAS v Home Office [1999] 1 WLR 1646. In my view, therefore, the judge should have held that (a) the right of action first arose on or about 14th August 2000; (b) the proceedings were not started promptly and in any event by 14th November 2000, and (c) there was no good reason for extending the time for starting the proceedings until 5th March 2001.The conclusion
  42. For the reasons I have given I would hold that the judge reached the correct decision on the classification issue, although I differ from him in some of his reasoning, but he reached the wrong conclusion on the limitation issues. The question of what relief follows from this judgment should be the subject of submissions from counsel.
  43. MR. JUSTICE ASTILL: I agree.
  44. LORD JUSTICE THORPE: I also agree. Order: Action dismissed; appeal allowed; no order for costs either in the action or in the appeal; application for permission to appeal to House of Lords refused. (Order not part of the judgment of the court)

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