Decision Making and Contracts

September 20th, 2013

R (Nash) v Barnet LBC [2013] EWCA Civ 1004 (“Nash”) concerned whether a decision and an impending decision by Barnet Council to outsource a high proportion of its functions and services to private-sector organisations was lawful.  The judicial review challenge was brought by a local resident.  There were three grounds of challenge: non-compliance with “best value” consultation obligations; breach of the PSED; and breach of fiduciary duty to council tax payers.  A procurement challenge was not pursued. 

The challenge failed at a rolled-up hearing: [2013] EWHC 1067 (Admin), (2013) LGR 515.  The Court of Appeal dismissed the Claimant’s appeal. 

The first question was whether the claim was in time.  The Claimant sought to rely on the House of Lords decision in R (Burkett) v Hammersmith & Fulham LBC [2002] 1 WLR 1593 (“Burkett”), where outline planning permission had been preceded by a resolution approving the award subject to certain conditions, and the resolution was subject to, amongst other things, completion of a Section 106 agreement; and where property rights were affected. 

The Court of Appeal said (para 45) that the Council “was entitled to emphasize the general importance of compliance with the time limits set for judicial review proceedings, given the various public interests generally involved in public law cases”. 

The essence of the argument on behalf of the Claimant was that even if she could have raised her challenge at an earlier stage, there was no obligation on her to do so, that Burkett permitted her to raise the legal challenge at the time of the final decision to do the act, that all the Council had decided to do in 2010/2011 was to initiate a procurement process, and thereafter move on from time to time to the next stage of the process, and that the Council had not committed to awarding any contract, let alone any particular contract, until its December 2012 decision. 

The Court of Appeal, however, ruled that Burkett, properly analysed, “simply will not bear so open-ended an application”.  They agreed with the first instance Judge as follows:- 

“I do not believe that Burkett is authority for the proposition that in every situation in which a public-law decision is made at the end of a process which involves one or more previous decisions – what I will refer to as “staged decision-making” – time will run from the date of the latest decision, notwithstanding that a challenge on identical grounds could have been made to an earlier decision in the series. In my judgment it is necessary in such a case to analyse carefully the nature of the latest decision and its relationship to the earlier decision(s). I believe the true position to be as follows. If the earlier decision is no more than a preliminary, or provisional, foreshadowing of the later decision, Burkett does indeed apply so that the later, “final”, decision falls to be treated as a new decision, the grounds for challenging which “first arise” only when it is made. But if the earlier and later decisions are distinct, each addressing what are substantially different stages in a process, then it is necessary to decide which decision is in truth being challenged; if it is the earlier, then the making of the second decision does not set time running afresh. I accept that the distinction may in particular cases be subtle, but it is in my view nonetheless real and important.” 

Burkett was concerned with a merely provisional decision.  In Nash the Council was not provisionally resolving to enter any outsourcing contract at all.  What the Council was doing was actually deciding to enter into a procurement process by way of competitive dialogue.  That process then, and in accordance with the Public Contracts Regulations (“the PCR”) 2006, proceeded in stages.  Thus, in contrast with the initial resolution in Burkett, work was lawfully and foreseeably done and money was expended precisely because of such decisions.  The decisions thus had and were intended to have legal effect: not, of course, in terms of sanctioning a binding contract in terms of authorising and causing the initiation of the procurement process, with attendant inevitable heavy expenditure and significant use of time and resources.  Without such decisions, those things could not and would not have been done.  Those decisions are thus properly to be regarded as substantive.  They are not to be regarded as contingent or provisional, even though there was no guarantee at all that any outsourcing contract or contracts might ultimately result.  A failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows. Accordingly, the right of action is complete immediately and cannot be improved by allowing the procedure to continue to a conclusion. Where there has been a failure to comply with the proper procedure the later award of the contract does not constitute a separate breach of duty; it is merely the final step in what has already become a flawed process. The approach adopted in Burkett can simply be transposed to a procurement challenge whether under the PCR or by way of judicial review. 

The Court of Appeal further observed that there was “nothing in fairness or certainty” such as to justify the Claimant not issuing proceedings until after the final decision.  The prior decisions had been made at public meetings, had been published and were widely known.  On the contrary, considerations of fairness and certainty “all weigh strongly in favour of the Council”.  The Court of Appeal added:-

“It is inconceivable that the Council (or the potential tenderers) would have gone down the very costly and time-consuming process of procurement and competitive dialogue had it been envisaged that a challenge on the grounds of lack of consultation on the whole strategy of outsourcing might at the very end of the day be made. That is quite different from the inherent and understood risk that the procurement process might not ultimately result in any concluded procurement contract.

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