In Rollinson v Dudley MBC [2015] EWHC 3330 (QB) Haddon-Care J held that local highway authorities do not have a duty under Section 41(1) of the Highways Act 1980 to ensure that its roads, pavements and footpaths are clear of moss, algae, lichen or similar vegetation. The Judge summarised the relevant principles as follows (paragraph 24): (1) the Section 41(1) duty, to maintain the highway, is properly to be understood as being to “repair” and “keep in repair” the highway; (2) the duty does not include a duty to remove surface-lying material, accretions, obstructions or spillages, whether or not dangerous; and (3) the duty does include a duty to keep the drains and substructure of the highway clear and in good repair. The Judge held (paragraph 27) that none of those applicable principles or criteria applied in the case before him: (1) moss or algae is, by its nature, to be regarded as transient rather than permanent; (2) the presence of moss or algae cannot be said to amount to, or comprise, material “disturbance or damage” to a road, pavement or pathway or the surface thereof; and (3) moss or algae cannot be said to have become part of the “fabric” of the road, pavement or pathway.
Disability Discrimination
December 11th, 2015 by James Goudie KC in Human Rights and Public Sector Equality DutyAs is well known, the relevant law on disability discrimination is now found in the Equality Act 2010, which replaced provisions formerly contained in the Disability Discrimination Act 1995. The Equality Act gives effect to the United Kingdom’s EU obligations under Directive 2000/78/EC (“the Equality Directive”). The principle of equal treatment prohibits discrimination on certain prescribed grounds, such as race, sex and sexual orientation, and these include disability. The structure of the Act is that it defines the meaning of discrimination and then identifies the circumstances when it is unlawful. There are four forms of disability discrimination: direct discrimination (Section 13), indirect discrimination (Section 19), discrimination arising from disability (formerly called disability-related discrimination) (Section 15), and a failure to make reasonable adjustments (Section 20). The direct and indirect discrimination principles apply to all the prescribed characteristics, but the reasonable adjustments duty and the duty not to commit discrimination arising out of disability are unique to disability cases. They are a recognition of the fact that the difficulties faced by disabled workers are very different from those experienced by people subjected to other forms of discrimination. These two duties unique to discrimination therefore secure more favourable treatment and are closely interrelated.
Section 20 of the Act, the duty to make reasonable adjustments, which requires affirmative action in certain situations, was relied upon in Griffiths v Secretary of State for Work and Pensions [2015] EWCA Civ 1265. The effect of Section 21 is that a failure to comply with the Section 20 duty to make reasonable adjustments amounts to an unlawful act of discrimination.
From paragraph 22, Elias LJ addressed the relationship of Section 20 to other forms of disability discrimination. He drew attention to various matters, including that the definition of discrimination arising out of disability does not involve any comparison with a non-disabled person; it refers to unfavourable treatment, not less favourable treatment; and that it is perfectly possible for a single act of the employer, not amounting to direct discrimination, to constitute a breach of each of the other three forms.
Elias LJ, at paragraph 48, ruled that it was an error to assume that the ruling of the House of Lords in Lewisham LBC v Malcolm [2008] UKHL 43, (2008) 1 AC 1399, which was concerned with the nature of the appropriate comparison under the old concept of disability-related discrimination, is applicable to the obligation to make reasonable adjustments. That comparison is inapt in the case of the adjustment duty.
Pension Liability
December 11th, 2015 by James Goudie KC in Judicial Control, Liability and LitigationWhen is there an entitlement to early payment of an unreduced pension pursuant to Regulation 19 of the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007, SI 2007/1166, as amended? Regulation 19(1) provides that where a LGPS member is dismissed, either by reason of redundancy or because his employing authority has decided that, “on the grounds of business efficiency”, it is in their interests that he should leave their employment, and, in either case, the member has attained the age of 55, he is entitled to immediate payment of retirement pension, without reduction. What is meant by “grounds of business efficiency”? In Ascham Homes Ltd v Auguste [2015] EWHC 3517 (Ch) Hildyard J held that, in the absence of a settled definition, it fell to the employing authority to decide whether the grounds for the cessation of employment constituted “grounds of business efficiency”. If the employer did not make any determination, then the true grounds of its decision to terminate the member’s employment had to be investigated. The test whether the appellant’s decision was on grounds of business efficiency was whether it was made pursuant to some change in the way of conducting the business with a view to ensuring that its resources could be more efficiently deployed, without regard to personal or subjective characteristics or the performance of the post-holder. Although Regulation 19 did not require the cessation of service to be exclusively on the ground of “business efficiency”, that had to be the preponderant reason.
It is to be noted that a somewhat similar concept, termination of employment “in the interests of the efficient exercise of the employing authority’s functions” appears in Regulation 4 of the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006, SI 2006/2914.
Acts and Omissions of Returning Officer
December 3rd, 2015 by James Goudie KC in Elections and BylawsThe two issues raised by the Local Government Election Petition in Baxter v Fear [2015] EWHC 3136 (QB) were described by the Court as “important and novel”. The Petition concerned the Kinson South Ward of Bournemouth Borough Council. The problems arose owing to a printing error. “Books” or batches of ballot papers were printed and assembled in advance of election day. Whilst the cover of the Kinson South ballot books showed the correct information for that Ward, the ballot papers inside were for Kinson North; and vice-versa. This problem affected each of the nine polling stations in both Wards. Once the problem was identified prompt steps were taken to address it. By mid-morning all polling stations in Kinson North and Kinson South had been issued with the correct ballot papers. By then some electors provided with the wrong ballot papers had placed them in a Kinson South ballot box. Some, but not all, of these returned later, and completed correct ballot papers. The total number of electors affected in one way or the other by the ballot paper error to the extent that they were effectively disenfranchised was 115.
The first issue arose under Section 48(1) (b) of the Representation of the People Act 1983. No local government election shall be declared invalid by reason of any act or omission of the Returning Officer if it appears that the act or omission did not affect the result. In a three member ward the gap between the second and third candidates who had been elected and the petitioner was less than 115. It was unlikely however that the 115 affected electors would have voted in such a way as to lift the petitioner to third place.
The first issue was whether a statistical or psephological approach was appropriate, whether it was permissible for the Court to undertake an inferential analysis of how disenfranchised voters would or might have voted. There was no decided authority which directly answered the question. The Court answered it in the negative. Jay J, with whom Wilkie J agreed, said:-
“27. … By enacting section 48 of the 1983 Act, Parliament cannot be treated as somehow empowering the judicial arm of Government to peer into the voting booth, whether by drawing informed, probabilistic inferences or otherwise.
28. This conclusion supports the delicate constitutional balance which clearly exists in this domain, and achieves practical and legal certainty. … there would in principle be no constraint on the type of evidence the court might receive: e.g. psephological (on a micro or macro level), geographical and behavioural. In my view, it seems obvious that Parliament could not have intended to mandate such a potentially far-reaching, penetrating and invidious level of inquiry by the judiciary.”
“31. There are many situations where courts are prepared to draw inferences from evidence of a statistical nature, … However, in those domains the policy considerations are rather different, not least because no quasi-constitutional issues arise. … Voting behaviour can be extremely unpredictable across a Ward, and may depend on factors about which it is difficult to be precise. Ultimately, the policy of section 48(1) is that an investigation of likely voting behaviour is tantamount to an exercise in pure speculation, and must be avoided.
32. This Petition must succeed on the basis that it appears to the Court that the acts and omissions for which the Fourth Respondent is responsible, effectively disenfranchising 115 electors, affected the result of the election of the Second and Third Respondents.”
The second issue was whether the ballots of the returning electors should have been included. The legal backdrop to this issue was the relevant provisions of the Local Elections (Principal Areas) (England and Wales) Rules 2006 [2006 S.I. No. 3304] (“LEPAR”), in particular Rules 15, 16, 33 and 35 of Schedule 3. LEPAR contains a specific and detailed set of mandatory rules governing the method of poll, the form of the ballot paper, the questions to be put to voters, and the voting procedure. A number of the breaches of LEPAR were perpetrated by the Returning Officer, comprising issuing an erroneous or invalid ballot paper to 76 electors, failing to issue a ballot paper to the 160 electors who applied to vote during the interregnum, and issuing the 56 returning electors with a second ballot paper. The first two of these were common ground. It was the third that needed to be addressed. The Court held that the second ballot papers should not have been issued. Jay J said:-
“44. … LEPAR contains no mechanism for correcting errors once the ballot paper has been folded and placed into the ballot box. This is treated by the rules as a legally irrevocable act – at least until the poll closes and the ballots are scrutinised.
45. … there is no provision in LEPAR for errors of any sort to be corrected by the delivery of a second ballot paper to the voter. Indeed, the tenor of Rules 33(l)(b) and 35(l)(c) is to the contrary effect, because these provisions are predicated on there being one vote, not two. …
46. The upshot is that LEPAR, properly construed and applied, leaves no room for discretionary decision-making by returning officers, let alone for “self-help” remedies which entail ascertaining who has voted incorrectly, and then making contact with them. However well-intentioned, what happened here had the tendency to undermine rather than to safeguard the integrity and secrecy of the whole voting process: the philosophy of LEPAR is to regulate and constrain contact between presiding officers (or their agents) and voters, and to postpone dealing with errors and irregularities until after the closing of the polls.
47. … the consequence … is that voters only had one bite at the metaphorical cherry in circumstances where they could have no responsibility for the initial printing error. …”
Ownership Rights of a Highway Authority
December 3rd, 2015 by James Goudie KC in Environment, Highways and LeisureWhat one might call the “normal” or “traditional” ownership rights of a highway authority lay at the heart of the dispute in Southwark LBC v Transport for London [2015] EWHC 3448 (Ch). A Vesting Order, SI 2000 No 1152, provided for the vesting of certain highway property in TfL, in connection with the re-ordering of responsibilities for highways in the creation of TfL and its assumption of responsibility as a highway authority for certain roads in Greater London. The Order, by Article 2(1)(a), provided broadly that there were thereby transferred to TfL in relation to each GLA road “the highway, in so far as it is vested in the former highway authority”.
The dispute was as to the extent of the vesting by virtue of the expression “the highway”. Southwark LBC and The City of London were highway authorities for what are now GLA roads in their respective areas. The Vesting Order was obviously intended to have some vesting effect in relation to those roads. The dispute was as to its extent. In the case of some parts of some of the highways the local authorities owned not merely the top part of the soil, but have full title to the whole of the freehold. The relevant dispute was as to whether, in those circumstances, TfL acquired any more than the relevant part of the surface that it would normally have as a highway authority.
Mann J observed (para 5) that it is well established where a highway is maintainable at public expense the highway authority which is responsible for it has not merely the obligation to maintain it, it also has a limited ownership (unless it has acquired ownership rights by conveyance). That principle is set out in statute and in authority. He referred to the current statutory provision (which succeeds others) i.e. Section 263 of the Highways Act 1980, which provides, broadly, that every highway maintainable at the public expense, together with the materials and scrapings of it, vests in the authority who are for the time being the highway authority for the highway.
Mann J concluded (paragraph 54):-
“In all the circumstances I do not consider that the arbitrator erred in law in proceeding on the footing that Article 2(1)(a) carried with it the freehold, or other estate, vested in the local authorities as highway authorities, and, in the vertical plane, that it was not confined to what I am calling the surface. …”
Reasons
December 3rd, 2015 by James Goudie KC in Decision making and ContractsThe procedural question, whether the reasons given for a decision, when reasons are required, are adequate, and the substantive question, whether the reasoning in support of the decision is adequate, to make for demonstration of a reasonable decision, continue to arise with considerable frequency, including in two cases decided on 2 December 2015, one in our Court of Appeal and the other in the EU General Court.
The Court of Appeal case is Jedwell v Denbighshire County Council [2015] EWCA Civ 1232, concerned with Environmental Impact Assessments (“EIAs”) and Screening Opinions (“SOs”) The Council’s planning officer had issued a negative SO, stating that no EIA was required. A resident argued that an EIA should have been obtained and that the SO was inadequately reasoned, making the grant of planning permission in February 2013, for wind turbines, unlawful.
In May 2013 the resident wrote to the Council asking for contemporaneous reasons for the SO. The Council sent him the covering letter that had accompanied the SO and indicated that it had nothing further to add.
There were three main issues: (1) whether the SO itself was adequately reasoned; (2) whether the Council’s response to the May letter discharged its duty to give reasons; and (3) if not, whether the planning officer’s witness statement saved the Council. The Court of Appeal decided all three issues against the Council. In order to discharge its duty, the Council had to supply reasons before the issue of proceedings against it.
The Town & Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 1999, which remained in force in Wales, obliged the local authority to give reasons only where the SO concluded that an EIA was required. They did not require reasons to be given for a negative screening opinion. However, EU law did, either in the decision itself or in a subsequent communication following a request from an interested party. The reasons had to demonstrate that the author had understood and considered the issues, and that proper consideration had been given to the possible environmental effects of the development. They also had to be sufficient to enable the interested party to understand why the decision had been made and to decide whether to challenge it. The instant SO stated its conclusion but contained no reasoning at all. It did not indicate why the planning officer thought that no EIA was needed, and it did not demonstrate that she had applied her mind to the relevant questions. The Council had not provided any proper reasons in response to the May letter. When the claim form was issued, it was in breach of its duty to give adequate reasons. The planning officer’s witness statement could not cure that deficiency. One of the purposes of requiring the local authority to give reasons for a negative SO was to enable the interested party to decide whether to challenge it in legal proceedings. Reasons had to be given within a reasonable time of the request. However, if a reasonable time had elapsed but proceedings had not been commenced, the local authority might still cure any deficiency by supplying further reasons before the commencement of proceedings. However, in the instant case, the contents of the planning officer’s witness statement had not been disclosed before the resident issued his claim form and could not rescue the local authority from its breach of duty.
The General Court case is Case T-553/13, European Dynamics v European Joint Undertaking for ITER and the Development of Fusion Energy, in which the claimant’s challenge to the defendant’s tendering procedures with respect to IT services failed. The principle of non-discrimination had not been infringed, and the obligation to give reasons had not been breached. The reasoning of the award decision was adequate. It allowed the claimant to understand why other tenders were selected as being superior to their tender.
The Court said that, according to well-established case-law, the obligation to state reasons in respect of public contracts is fulfilled when the contracting authority informs unsuccessful tenderers immediately of the reasons for the rejection of their respective tenders and then, subsequently, if expressly requested to do so, provides to all tenderers who have made an admissible tender the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer. In addition, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom the measure is of direct and individual concern, may have in obtaining explanations However, it is apparent from the case-law that a contracting authority cannot be required to communicate to an unsuccessful tenderer, in addition to the reasons for rejecting its tender, a detailed summary of how each detail of its tender was taken into account when the tender was evaluated and, in the context of notification of the characteristics and relative advantages of the successful tender, a detailed comparative analysis of the successful tender and of the unsuccessful tender. Furthermore, the contracting authority is not bound to supply the unsuccessful tenderer with full copies of the evaluation report and the successful tender.
Conduct of Members
December 2nd, 2015 by James Goudie KC in StandardsThe Welsh Government has issued a Consultation, for response by 10 January 2016, seeking views on the contents of two Statutory Instruments, both to be made under Part III of the Local Government Act 2000, in relation to the conduct of councillors in Wales. They are the Local Government (Standards Committees, Investigations, Dispensations and Referral) (Wales) Regulations 2016 and the Local Authorities (Model Code of Conduct) (Wales) (Amendment) Order 2016.
The draft Code Amendment Order amends paragraph 15(2) of the Model Code to put it beyond doubt that all personal interests disclosed under paragraph 11 of the Code, not just those financial and other interests falling within a category mentioned in paragraph 10(2)(a), should be entered in the register of members’ interests. The draft Code Amendment Order omits from the Model Code the requirement to report a potential breach to the Ombudsman. The requirement to report a breach to the Monitoring Officer is retained. This does not prevent a member from quite properly reporting a potentially serious breach of the Code to the Ombudsman.
Paragraph 10(2)(b) of the Model Code provides that a member has a personal interest in a matter if a member of the public might reasonably perceive a conflict between their role in taking a decision on that matter on behalf of the authority as a whole, and their role in representing the interests of constituents in their ward or electoral division, as appropriate. This aspect of the Code has given rise to unintended consequences in its practical application. The equivalent provision in the 2001 Model Code of Conduct was framed so as to apply to an executive member acting alone in taking a decision on behalf of the authority. The wider wording of the provision in the 2008 Code has been read by authorities as applying to members when acting collectively, e.g. on a planning or licensing committee, and has been seen as potentially precluding members from participating in any decisions affecting their ward. Paragraph 10(2)(b) is also potentially in conflict with Section 25 of the Localism Act 2011, which aims to clarify the law covering predetermination in England and Wales.
The draft Code Amendment Order omits paragraph 10(2)(b) from the Model Code in order to overcome the practical difficulties encountered with respect to constituency interests. However, a member taking a decision on a matter should keep an open mind until they are in full possession of all relevant facts and act objectively and in the public interest in accordance with paragraph 8 of the Model Code.
The draft Standards Committee Regulations amend the Standards Committees (Wales) Regulations 2001, SI 2001/2283, the Local Government Investigations (Functions of Monitoring Officers and Standards Committees) (Wales) Regulations 2001, SI 2001/2281, and the Standards Committees (Grant of Dispensations) (Wales) Regulations 2001, SI 2001/2279. There are amendments to facilitate the establishment and operation of Joint Standards Committees; a change to the term of office of local authority members of Standards Committees; changes in relation to the publication of misconduct reports; provision for the referral of misconduct reports to another authority’s Standards Committee; limitation upon the period of suspension imposed by a Standards Committee so that it does not extend beyond the end of a member’s term of office; a proposed procedure for an application for permission to appeal a Standards Committee determination to the Adjudication Panel for Wales; and provision for the referral of a dispensation application to another authority’s Standards Committee.
Renaming Streets
November 30th, 2015 by James Goudie KC in Environment, Highways and LeisureAuthorities have power to alter street names pursuant to Section 18 of the Public Health Act 1925. There is an unrestricted right of appeal under Section 8 to the Magistrates’ Court against a decision to rename a street. Basildon BC v James [2015] EWHC 3365 (Admin) was concerned with the approach to be adopted on appeal.
Other than the giving of notice, Section 18 imposes no preconditions on the exercise of the power. It gives no direction as to factors to which the authority is required to have regard in making such a decision. Garnham J saw no grounds on which a Court could read into the exercise of the statutory power any requirements to be met, or matters to be considered, before the power is exercised, beyond those required by familiar principles of public law, namely to have regard to all that is relevant and to disregard all that is not.
The nature of the power in question is one that demands a subjective judgment by the authority. It cannot be governed by predetermined requirements. Essentially, Parliament has given the authority the right to choose a name.
There can be no doubt that it is the authority who makes the primary decision. The right of appeal given to “those aggrieved” by Section 8 does not change the identity of the primary decision maker.
The entitlement in the Magistrates’ Court on hearing the appeal to “make such order… as they consider reasonable” describes the remedies available to the Court in disposing of the appeal. It does not make the Magistrates’ Court the body charged with the decision whether or not to alter the street name. It follows that before determining what order is required the Magistrates’ Court must first determine whether or not the appeal succeeds; whether or not the authority’s decision was “wrong”.
The statute provides no guidance as to the test which should be applied in determining whether or not the appeal should be allowed or rejected. In those circumstances, in Garnham J’s view, it was a mistake for the District Judge here to attempt to introduce objectives of his own devising as a means of testing the adequacy of the authority’s reasoning. There is simply no basis for the Magistrates’ Court to create such a list of objectives or to treat is as decisive. The question for the District Judge was whether, according the authority, appropriate respect for its reasoning and conclusions, that decision could properly be said to be wrong.
At paragraph 43 of his Judgment, Garnham J said:-
“… Section 8 provides an unrestricted right of appeal; but a District Judge is obliged to pay great attention to the opinion of the Council as the duly constituted and elected local authority and should not lightly reverse their conclusion; his function is to exercise the Section 8 powers only if he was satisfied that the judgment of the Council could be shown to be wrong, not merely because he was not satisfied that the judgment was right; if, but only if, he was first satisfied the Council was wrong was it for the District Judge to substitute his opinion for that of the Council.”
EU funding
November 19th, 2015 by James Goudie KC in Capital Finance and CompaniesCase C-460/14, brought by the City of Wroclaw in Poland, concerns the award of a public contract for the construction of a ring road in Wroclaw. The project benefited from EU financial assistance. The City stipulated in the tender specifications that the successful tenderer was to perform at least 25% of the works covered by the contract using its own resources. The public authority in Poland competent to verify proper use of the EU funding took the view that that stipulation infringed the principle of fair competition and therefore was inconsistent with Directive 2004/18/EC. As a consequence, that authority imposed on the City a flat rate correction of 5% of the amount of eligible costs borne by public funds. The City challenged the financial correction before a Polish Administrative Court, which made a reference to the ECJ. On 17 November 2015 Advocate General Sharpston gave her Opinion.
Directive 2004/18 coordinates at EU level national procedures for the award of public contracts above a certain value. It aims to ensure the effects of the principles of freedom of movement of goods, freedom of establishment, and freedom to provide services and the principles deriving therefrom, including the principles of equal treatment, non-discrimination and transparency. It also aims to guarantee the opening-up of public procurement to competition. The Directive contains provisions on subcontracting, in order to encourage the involvement of small and medium-sized undertakings in the public contracts procurement market. Pursuant to the first paragraph of Article 25 (“Subcontracting”), in the contract documents, the contracting authority may ask or may be required by a Member State to ask the tenderer to indicate in his tender any share of the contract he may intend to subcontract to third parties and any proposed subcontractors. Under Article 26 (“Conditions for performance of contracts”), contracting authorities may lay down special conditions relating to the performance of a contract, provided that these are compatible with EU law and are indicated in the contract notice or in the specifications.
Article 1(1) of Council Regulation No. 2988/95 provides: “For the purposes of protecting the European Union’s financial interests, general rules are hereby adopted relating to homogenous checks and to administrative measures and penalties concerning irregularities with regard to EU law.” Article 1(2) defines “irregularity” as “any infringement of a provision of EU law resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of the European Union or budgets managed by it, either by reducing or losing revenue accruing from own resources collected directly on behalf of the European Union, or by an unjustified item of expenditure”. Article 2 provides in particular that administrative checks, measures and penalties shall be introduced in so far as they are necessary to ensure the proper application of EU law. They shall be effective, proportionate and dissuasive so that they provide adequate protection for the European Union’s financial interests.
Regulation No. 1083/2006 lays down general rules governing the Funds, i.e. the European Regional Development Fund, the European Social Fund and the Cohesion Fund, including principles and rules on financial management, monitoring and control on the basis of responsibilities shared between the Member States and the European Commission.
Advocate General Sharpston said:-
“30. Directive 2004/18 is designed not only to avoid obstacles to freedom to provide services in the award of public service contracts or public works contracts but also to guarantee the opening-up of public procurement to competition. Recital 32 in the preamble to that directive states that the possibility of subcontracting is liable to encourage small and medium-sized undertakings to get involved in the public contracts procurement market. Subcontracting enables such undertakings to participate in tendering procedures and to be awarded public contracts regardless of the size of those contracts. Subcontracting thus contributes to achieving the Directive’s objectives by increasing the number of potential candidates for the award of public contracts.
31. Accordingly, Article 25 of Directive 2004/18 not only envisages that a tenderer may subcontract part of the contract but also sets no limit in that regard. Indeed, Directive 2004/18 confirms explicitly that an economic operator may, where appropriate and for a particular contract, rely on the economic, financial, technical and/or professional capacities of other entities, regardless of the legal nature of the links which it has with them. Consequently, a party may not be eliminated from a procedure for the award of a public service contract solely because it proposes, in order to carry out the contract, to use resources which are not its own but belong to one or more other entities.
32. That said, contracting authorities do have a legitimate interest in ensuring that the contract will be effectively and properly carried out. Where an economic operator intends to rely on capacities of other economic operators in a tendering procedure, it must therefore establish that it actually will have at its disposal the resources of those operators which it does not itself own and whose participation is necessary to perform the contract. A tenderer claiming to have at its disposal the technical and economic capacities of third parties on which it intends to rely if it obtains the contract may be excluded by the contracting authority only if it fails to meet that requirement.
33. The contracting authority may not always be in a position to verify the technical and economic capacities of the subcontractors when examining the tenders and selecting the lowest tenderer. The Court has held that in such cases Directive 2004/18 does not preclude a prohibition or a restriction on subcontracting the performance of essential parts of the contract. Such a prohibition or restriction is justified by the contracting authority’s legitimate interest in ensuring that the public contract will be effectively and properly carried out. Directive 2004/18 does not require a contracting authority to accept performance of essential parts of the public contract by entities whose capacities and qualities it has been unable to assess during the contract award procedure.
34. In my view, considering the essential role subcontracting plays in promoting the objectives of Directive 2004/18, no other prohibition or restriction is permissible. …
35. It follows that a stipulation such as that in issue in the main proceedings is clearly not consistent with Directive 2004/18.”
“43. I … conclude that Directive 2004/18 precludes a contracting authority from stipulating in the tender specifications of a public works contract that the successful tenderer is required to perform part of the works covered by that contract, specified in abstract terms as a percentage, using its own resources.”
The further question therefore arose, given that the City’s project benefited from EU financial assistance, whether the infringement of the EU procurement rules constituted an “irregularity” within the meaning of Article 2(7) of Regulation No. 1083/2006, giving rise to an obligation on the part of the Member State concerned to impose a financial correction. The Advocate General’s view (paragraphs 46-56) was that it did, even if the infringement did not result in any actual quantifiable financial loss to the Funds; and (paragraphs 57-61) that the competent national authorities may apply flat-rate corrections when they identify an infringement of EU public procurement rules, provided that the corrections reflect appropriately the nature and gravity of the various irregularities to which they apply and do not result in disproportionate corrections.