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Remedies and not-for-profit bodies

Shared professionals iStock 000009503395Small Newsletter pic 146x219Stephen Pearson analyses a recent procurement case on remedies that will be of interest to contracting authorities and not-for-profit organisations in particular.

The dispute between Perinatal Institute (“PI”) and Healthcare Quality Improvement Partnership (“HQIP”) has taken a further twist in a recent Technology and Construction Court decision (Perinatal Institute v Healthcare Quality Improvement Partnership [2017] EWHC 1867 (TCC)).

Mrs Justice Jefford allowed PI’s application to amend their original claim, but then struck out the original claim. This leaves the unusual position that PI’s claim against HQIP survives as an amendment to a partially struck out claim.

Background

HQIP is an independent organisation with the function of increasing the impact of clinical audit on healthcare quality improvement. They were assigned the task by the Department of Health of commissioning a project with the goal of reducing perinatal deaths. In order to enable data collection and analysis, HQIP issued an ITT on 29 March 2016.

PI and Oxford University’s National Perinatal Epidemiology Unit (“NPEU”) submitted tenders, and NPEU’s bid was successful. PI challenged the decision awarding the contract to NPEU on the basis that the evaluation or preference of NPEU’s bid was unlawful or irrational, due to HQIP misdirecting itself on a point of law. Following a temporary stay of the contract, HQIP successfully applied to lift the stay and the contract with NPEU was entered into on 21 December 2016.

PI’s application to amend the original claim

The ITT had specified that a data analysis tool must be ready to be implemented immediately. PI learned in early 2017 that NPEU’s tool was not expected to be in operation until late 2017, and remained in the development phase. On this basis, PI argued that the contract and / or specification had been amended in breach of Regulation 72 of the Public Contracts Regulations 2015 (SI 2015/102) (“PCC”).

Rather than issuing fresh proceedings, PI applied to amend the existing claim on the grounds of “convenience”. In defence, HQIP sought to persuade the Court that the amendment was time barred under Regulation 92 PCC.

Regulation 92 provides that “proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen”. The Court retains discretion to extend this time period, and substitute the 30 days period for 3 months. PI contended that the first date on which it knew or ought to have known that such grounds existed was 13 March 2017, and therefore PI must have started proceedings within 30 days of this date.

Mrs Justice Jefford found that an application to amend did not amount to “starting proceedings” and as a result PI had not brought proceedings within the statutory 30 day period. However, the present hearing fell within the 3 month discretionary period, and if the Court were to exercise their discretion to the maximum extent available, the “time barred” defence would not be open to HQIP. She accepted on the evidence before her that the earliest date on which PI became aware of grounds for starting proceedings was 13 March 2017, and exercising the fullest extent of her discretion under Regulation 92 found that PI’s application to amend be allowed.

HQIP’s application to strike out the original claim

Due to the order in which the applications were issued and the perceived unfairness of dealing with HQIP’s application prior to PI’s, the application to strike out the original claim was dealt with following consideration of PI’s application to amend the claim.

PI made no claim for damages and during earlier hearings, contended that it had suffered no monetary losses for which it could be compensated. HQIP, relying upon Regulation 98 PCC, argued that there was accordingly no remedy which the Court could grant (including declaratory remedies). Given this fact and the consequent use of the Court’s resources, HQIP asserted that PI’s claim was therefore an abuse of process.

Mrs Justice Jefford accepted HQIP’s arguments as to the restrictive nature of Regulation 98, finding that as a result “PI had no available remedy in respect of the Original Claim”. As a result, it was ordered that that those parts of the Particulars of Claim which are not material to the amended claim be struck out.

Practical points

This judgment highlights the restrictive nature of Regulation 98 PCC. In cases where the contract has been entered into and no grounds for ineffectiveness apply (under Regulation 99), the Court is limited in awarding only damages “to an economic operator which has suffered loss or damage as a consequence of [a] breach”. This is expected to be of particular interest to not-for-profit organisations, who must now consider carefully their approach to remedies where the relevant contract has already been entered into.

The judgment in relation to whether PI’s application to amend had been brought in time is highly fact-specific, and does not set any hard and fast rules. Even though PI was successful in this application, a cautionary approach is to be preferred and a fresh Claim Form should be issued if the 30-day period under Regulation 92 is close to expiring.

Stephen Pearson is a partner at Freeths. He can be contacted on 0845 274 6900 or This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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