16 Mar 2017

Wylde and others v Waverley Borough Council [2017]

The recent High Court preliminary hearing decision to dismiss five individuals' claim for judicial review on the grounds that they did not have standing to bring a claim emphasises the difficulty those other than economic operators face in seeking to rely on the public procurement regime.

Background

The claim in this case related to a development contract (the Contract) for a regeneration scheme in Farnham, Surrey (the Scheme). The Contract was initially tendered in 2002 by Waverley Borough Council (the Council) and was subsequently awarded to housebuilding company Crest Nicholson (the Developer). Since the award of the Contract, the Scheme has been heavily delayed with a number of variations to the Contract being agreed. Last May, in an attempt to ensure a deal could be concluded, the Council agreed to lower the value of the long-term leasehold interest in the development site from £8.76 million to £3.19 million. Five Farnham residents argued that the variation represented a breach of the Public Contract Regulations 2006 (the Regulations) on the basis that a fresh competitive tendering exercise should have been held for the Contract. The Council and Developer denied any breach of the Regulations.

For the purposes of the preliminary hearing, High Court judge Mr Justice Dove was asked to consider whether the claimants had standing to rely on the Regulations.

The orthodox view

The orthodox view is that breaches of the public procurement regime are typically actionable by economic operators who as a consequence of such breach suffer or risk suffering loss or damage. Generally, therefore, it is thought that only disappointed tenderers affected by a breach have standing to bring an action for judicial review under the Public Contract Regulations (2006 or 2015).

This view was brought into question in the High Court ruling of R (on the application of Kim Alexander Gottlieb) v Winchester City Council [2015]. In Gottlieb a Councillor successfully applied for judicial review of a decision by his own council to vary a development contract. The Gottlieb ruling suggested that claims for judicial review are not limited to economic operators and can actually be brought by anyone with a legitimate interest in seeking to ensure that the contracting authority complies with the public procurement regime.

The decision

The High Court held that the claimants had not been able to demonstrate standing to bring the claim. Dove J explained that it was not enough for the claimants to show a mere interest in the matter but that they must establish a "sufficient" interest. 

Dove J emphasised the need to consider the policy, aims and objectives of the Regulations, referring to the test applied in Chandler v Secretary of State [2009] in which rather than considering whether the claimant had an ulterior motive (as the Council had suggested in this case) the consideration was whether there existed a clear distinction between the interests of the claimant and the purpose of the public procurement regime (to promote free trade among EU member states).

Dove J concluded that the claimants lacked standing because they could not show that any subsequent tendering exercise would produce a different outcome for the award of the contract and that there was no competing interest for the Contract.

Dove J went on to express that although the concerns and objectives of the claimants were genuine and in the public interest, this was not sufficient to satisfy the test applied in Chandler.

Conclusion

The decision provides greater clarity on what is required to invoke the public procurement regime in judicial review proceedings. Although it does not confirm the orthodox position that only economic operators have the right to challenge, it undermines the application of Gottlieb and demonstrates that non-economic operators seeking to rely on the public procurement regime must show a sufficient interest in the relevant matter and that any claim must be aligned with the intention of the Public Contracts Regulations (2006 or 2015).