Abandonment of Contract

March 5th, 2020

Ryhurst Ltd v Whittington Health Trust (2020) EWHC 448 (TCC) is a procurement case in which the Claimant challenged a decision by the Trust to abandon a procurement exercise for a 10 year strategic estates partnership contract, in circumstances where the Trust had previously made a decision to award this contract to the Claimant.  The challenge failed.

The central reason for the challenge under the Public Contracts Regulations 2015 was that the Trust’s decision to abandon was in response to pressure exerted on the Trust by a local campaigning group, by the Trust’s Regulator, and by others.  The Claimant alleged that this pressure was exerted solely or primarily because it is part of a group of companies one of which had responsibilities in relation to Grenfell Tower. The Claimant sought damages from the Trust.

The Judge had to determine what was the real reason, or the real reasons, for the Trust’s decision to abandon its procurement, and, if the real reason, or one of the real reasons, was the Claimant’s connection with Grenfell, whether the Trust acted unlawfully in abandoning the procurement on that ground.

The Judge concluded that the Claimant had not succeeded in making out its case on liability.  Had he found in their favour on liability, the Claimant would have succeeded in establishing both causation and “sufficiently serious” breach.

The Judge ruled, at paragraph 25, that in principle a public authority may decide to abandon a procurement by reference to reasons connected with the individual circumstances of the tenderer concerned; but that it must also be considered whether or not that decision was contrary to the fundamental principles of EU procurement law.

The Judge began, from paragraph 28, with the transparency obligation; next, from paragraph 33, with the equal treatment obligation; then, at paragraph 45, with the allied non-discrimination principle, and, from paragraph 46, the proportionality principle. Finally, in his review of the fundamental EU procurement obligations, the Judge addressed, from paragraph 52, “manifest error”.

From paragraph 67, the Judge considered the facts, until paragraph 243. At paragraph 245 he stated that he could take together the allegations of breach of the obligations of equal treatment, non-discrimination, proportionality, and avoiding manifest error, because they all essentially involved the same enquiry as to whether or not the abandonment decision was one which the Trust, as a public authority having to balance a wide range of relevant factors and interests, could properly have arrived at in compliance with its fundamental EU obligations. The Judge answered, at paragraphs 246-249 inclusive, that there was no breach of these obligations. The Claimant had failed in its core case that the reason for the abandonment was political pressure based solely or primarily on the Grenfell connection. There were a number of rational reasons for the Trust abandoning the procurement which the Trust was entitled to and did take into account in reaching its decision.

Nor, paragraph 250 and following, was there a breach of the transparency obligation.

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