Electric Skyline Ltd v Donegal County Council

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 02 April 2019
• Neutral Citation: [2019] IEHC 199
• Docket Number: [2018 No. 789 JR]
• Court: High Court
• Date: 02 April 2019

[2019] IEHC 199

THE HIGH COURT

JUDICIAL REVIEW

Twomey J.

[2018 No. 789 JR]

IN THE MATTER OF THE REVIEW OF THE AWARD OF A PUBLIC CONTRACT PURSUANT TO THE EUROPEAN COMMUNITIES (PUBLIC AUTHORITIES” CONTRACTS) (REVIEW PROCEDURES) REGULATIONS 2010 (AS AMENDED) AND ORDER 84A OF THE RULES OF THE SUPERIOR COURTS (AS AMENDED)

BETWEEN

ELECTRIC SKYLINE LIMITED

APPLICANT

AND

DONEGAL COUNTY COUNCIL

RESPONDENT

Discovery – Public contract – Tender – Applicant seeking discovery – Whether the categories of discovery were required by the applicant to advance its claims against the respondent

Facts: The applicant, Electric Skyline Ltd, applied to the High Court for discovery in relation to the review of an award of a public contract by the respondent, Donegal County Council, which review had been instituted by the applicant with an address in Claremorris, Co. Mayo pursuant to the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 and Order 84A of the Rules of the Superior Courts. The contract in question was a lighting contract for Donegal County Council and included the provision of maintenance services and the supply of light fittings and was awarded to SSE Airtricity. At the time of the tender, the contract notice gave an estimated value for the contract of €3.5 million, excluding VAT. Electric Skyline challenged, inter alia, its disqualification from the tender process. The grounds provided by Donegal County Council for this disqualification were that the tender submitted by Electric Skyline contained prices/rates which were below market value. Electric Skyline also alleged that it was treated in an unequal and discriminatory manner by Donegal County Council, as the successful tender, submitted by SSE, also contained non-compliant prices/rates, but, despite this, SSE was not disqualified from the tender process. Electric Skyline sought five categories of discovery.

Held by Twomey J that, concerning categories 3 and 4, Electric Skyline would not be able to advance its case that Donegal County Council ought to have disqualified SSE’s tender for containing non-compliant rates or its case that Donegal County Council treated Electric Skyline and SSE unequally, unless it had access to all documentation in Donegal County Council’s possession regarding the evaluation of SSE’s tender. Accordingly, Twomey J held that discovery would be ordered, subject to certain confidentiality commitments to be discussed with counsel, in the following terms: “All documents referred to and/or considered by Donegal County Council in the course of its review and/or assessment and/or evaluation of documents referring to SSE’s tender, including but not limited to, all documents submitted by SSE (or its servants or agents) including its tender submission and in particular, its Pricing submission, and all communications between Donegal County Council and SSE (or its servants or agents) between the submission of the tender and the announcement of SSE as the preferred bidder, including any clarifications issued after tenders had been submitted. All documents relating to the assessment by Donegal County Council of the pricing submissions of SSE, including documents which evidence when Donegal County Council evaluated and/or reviewed SSE’s tender”. Twomey J held that category 2 was broad enough to encompass SSE’s tender and so it would be allowed in the following form: “All documents relating to the interpretation of the ITT, including, in particular, all documents relating to the interpretation of the ITT’s provisions concerning pricing submissions and Section 4.6 of the ITT and including any instructions to personnel of [Donegal County Council] or those who carried out the evaluation in so far as it relates to the SSE tender”. Twomey J held that any such discovered documents may assist Electric Skyline in advancing its case that Donegal County Council wrongfully failed to disqualify SSE’s tender. Twomey J held that categories 1 and 5 encompassed an extensive range of documents which were not required by Electric Skyline to advance its claims against Donegal County Council in light of the much more specific categories 2, 3 and 4 which were being permitted, albeit with modifications.

Twomey J held that the Court would hear from counsel before finalising the orders.

Application granted in part.

JUDGMENT of Mr. Justice Twomey delivered on the 2nd day of April, 2019

SUMMARY

1 This case is an application for discovery in relation to the review of an award of a public contract by the respondent (‘Donegal County Council’), which review has been instituted by the applicant (‘Electric Skyline’) with an address in Claremorris, Co. Mayo pursuant to the European Communities (Public Authorities” Contracts) (Review Procedures) Regulations 2010 and Order 84A of the Rules of the Superior Courts.

2 The contract in question is a lighting contract for Donegal County Council and includes the provision of maintenance services and the supply of light fittings and was awarded to SSE Airtricity (‘SSE’). At the time of the tender, the contract notice gave an estimated value for the contract of €3.5 million, excluding VAT.

3 Electric Skyline is challenging, inter alia, its disqualification from the tender process. The grounds provided by Donegal County Council for this disqualification were that the tender submitted by Electric Skyline contained prices/rates which were below market value. Electric Skyline also alleges that it was treated in an unequal and discriminatory manner by Donegal County Council, as the successful tender, submitted by SSE, also contained non-compliant prices/rates, but, despite this, SSE was not disqualified from the tender process.

4 In order to consider whether the request for discovery by Electric Skyline from Donegal County Council is relevant and necessary for the resolution of the dispute between the parties, it is necessary to understand what is the core of the dispute between the parties.

BACKGROUND FACTS

5 Under the terms of the Instruction to Tenderers (‘ITT’), there was an instruction to submit a pricing document with the tender and Section 4.6 of the ITT provided that ‘ Tenderers must not use abnormally high or low rates or prices’. The ITT also stated that ‘[e]ach amount in the Pricing Document must cover the full inclusive value of the relevant work including market prices for plant, equipment and labour’. It also provided for the “ avoidance of doubt” that ‘ Tenderers are obliged to price all items in the Pricing document at full market value’.

6 Section 5 of the ITT provided that, if the tenderer failed to comply with the instructions included in the ITT, Donegal County Council could disqualify the tenderer concerned as non-compliant and reject any tender concerned.

Nature of the dispute based on correspondence and affidavits

7 By letter dated 13th of August, 2018 Donegal County Council wrote to Electric Skyline and stated:

‘The tender submitted by Electric Skyline does not comply with Section 4.6 of the Instruction to Tenderers since it includes a high percentage of rates, which could not possibly cover the full inclusive value of the relevant work including market prices for plant, equipment and labour.’

8 By letter dated 24th of August, 2018, solicitors for Donegal County Council go into further detail regarding the basis for disqualification at paragraph 4 of that letter. This paragraph explains, in particular, that a cost of €10 for a lantern, when other lanterns cost many multiples of that price, was one of the reasons for its decision that Electric Skyline's tender did not contain rates that reflected market values. The letter states:

‘The basis for disqualification of your clients Tender as set out in our clients said letter was that it included:-

‘A high percentage of rates, which could not possibly cover the full inclusive value of the relevant work including market prices for plant, equipment and labour.’

We attach spreadsheet herewith which highlights in brown the rates concerned. Taking the first one thereon by way of example (‘L.E.D. LANTERN ON COLUMN’) item 3.02 can be starkly contrasted with the others grouped within the red box (i.e. a rate of €10 as against rates of €215, €255 and €360 for items 3.01, 3.03 and 3.04 respectively. The only difference between all four is the size of the lantern concerned. The rate of €10 tendered for item 3.02 would not even go anywhere close to the cost of the lantern itself – even before the cost of plant, equipment and labour is factored in. For that reason as stated in our client's letter the rate could not possibly cover the full inclusive value of the relevant work including market prices for plant, equipment and labour. Similar considerations apply in relation to the other rates highlighted on the attached.’

9 By letter dated 4th of September, 2018, solicitors for Electric Skyline reply to solicitors for Donegal County Council and state:

‘Taking ‘ market prices’ in the first instance, we query your client's intentions and how it determined ‘ market prices’. A market price is usually determined as the price on which a willing seller sells to a willing buyer. Accordingly all the prices on our client's tender documents reflect market prices.

[….]

If, on the other hand, your client has compared individual items provided by our client against each other (as paragraph 4 of your 24 August letter suggests) to determine ‘ market prices’, this is an equally flawed methodology which does not take into account the existing lighting inventory managed by our client, nor its existing lantern supply or other circumstances that could apply to one item but not the other that could result in differing prices. It is not a comparison of like-for-like.

Our client priced particular items in the tender on the basis that (if successful) this tender would result in a substantial increase in work...