Locations
In this judgment, Costello J refused to grant a stay on a High Court order lifting the automatic suspension pending an appeal to the Court of Appeal. This judgment is interesting in light of the WordPerfect ruling that, from a public body's perspective, seems to make it very difficult to lift the automatic suspension, at least in High Court proceedings.
Facts:
Owens, a building contractor and an incumbent supplier, had been eliminated from a 2018 tender competition run by the Council for social housing construction works. He then appealed that decision to the High Court. As a result, the Council could not enter the new framework agreement with the successful tenderers until the end of those proceedings (i.e., the 'automatic suspension'). Owens therefore continued to provide services to the Council under the existing framework during the proceedings.
The High Court dismissed that appeal in September 2020. As a result, the automatic suspension no longer applied. Owens indicated to the Council that he would be appealing this to the Court of Appeal. However, he then tried to negotiate with the Council by asking them not to enter the new framework agreement until after his appeal to the Court of Appeal. In particular, he pointed to the Council's costs in fighting that appeal.
The Council refused to do so and signed the new framework in October 2020, after which Owens applied to the Court of Appeal for a stay on lifting the automatic suspension pending his appeal of the High Court's judgment.
Automatic Suspension – Word Perfect Ruling:
To recap, the automatic suspension is a pre-contractual remedy which prohibits a contracting authority from entering a contract with a successful tenderer until a challenge to the relevant procurement process has finished. It is up to the contracting authority to apply to the court for an order dis-applying or 'lifting' the automatic suspension.
In Word Perfect Translations Limited v Minister for Public Expenditure and Reform ([2018] IECA 35), Hogan J gave an important ruling on how applications to lift the automatic suspension are to be treated. He confirmed that the Campus Oil/American Cynanimid test – applicable to interlocutory orders in general – also applies to any application to lift the automatic suspension in procurement challenges. This test comprises three parts, namely (i) there must be a fair or serious issue to be tried, (ii) damages must be inadequate as a remedy and (iii) the balance of convenience/interests of justice must favour granting the order.
Focusing on (ii), Hogan J noted that neither EU nor Irish public procurement legislation had defined how "damages" was to be interpreted. However, citing case-law of the European Court of Justice, he found that this must be interpreted as referring only to Francovich damages (based on the Court of Justice judgment dated 19 November 1991 in Joined cases C-6/90 and C-9/90, Francovich v Italy). This is a very low level of damages, and entitlement to such damages is "highly restrained" and limited to cases of "grave", "manifest" or "inexcusable" errors (as opposed to ordinary contractual damages, for which it must only be shown that there has been an objective breach). In the circumstances, he held that damages being inadequate as a remedy was decisive and refused to grant the order sought in that case.
Judgment:
Returning to the Owens case, Costello J ruled that the adequacy or otherwise of damages is part of a broader analysis. In that regard, she noted the significant public interest in the project, which involved public/social housing and the fact that the new framework was more efficient and the pricing was more competitive. This follows the Supreme Court's judgment in Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd ([2019] IESC 6) where the court adopted a flexible approach to the three-part Campus Oil/American Cyanimid test.
The judge further noted that Owens had already benefitted from the automatic suspension during the High Court appeal and that he had clearly envisaged obtaining a negotiating advantage against the Council. She took a dim view of these tactics.
Comment:
This ruling would appear to indicate that furthering the automatic suspension will be difficult to achieve in the Court Appeal. It also shows that in considering the principles applicable to lifting the suspension, the courts may also consider public interest factors and tenderer's own conduct. It will also be of interest to contracting authorities who often face heavy-handed tactics from incumbent suppliers.
