Sere Holding Ltd v HSE

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 14 March 2023
• Neutral Citation: [2023] IEHC 133
• Court: High Court
• Docket Number: Record No. 2021/408JR

Between

Sere Holding Limited

Applicant

and

Health Service Executive

Respondent

and

IAS Medical Limited

Notice Party

[2023] IEHC 133

Record No. 2021/408JR

THE HIGH COURT

COMMERCIAL

Costs – Tender – Award of contract – Respondent seeking costs – Whether the costs of the respondent should be reduced due to its alleged failure to consider mediation

Facts: The applicant, Sere Holding Ltd (Sere), was placed in eighth place in a tender process conducted by the respondent, the Health Service Executive (the HSE), for emergency air ambulance services. The tender process was won by the notice party, IAS Medical Ltd (IAS), and the HSE awarded IAS the contract for emergency air ambulance services on the 26th April, 2021. The HES estimated the contract was worth €9.5 million over four years, which it said was a considerable saving to the taxpayer on the previous contract. Sere challenged the award of the contract on the grounds that IAS did not satisfy the selection criteria for entry into the tender competition. The High Court (Twomey J) delivered the principal judgment in the matter on 10th February, 2023: [2023] IEHC 63. A supplementary judgment followed a hearing on 24th February, 2022 and considered, amongst other things: (i) whether an unsuccessful challenger (Sere) to a tender process should have to pay the costs, not only of the State agency (the HSE) which organised the tender, but also the costs of the notice party (IAS), which chose to join the proceedings; (ii) whether the costs of the successful party, the HSE, should be reduced due to its alleged failure to consider mediation; (iii) whether Sere should be compensated (by paying less costs to the HSE) because the HSE allegedly misled Sere into believing the contract with the winning tenderer (IAS) would not be signed; and (iv) whether Sere, having considered the Court’s decision in the principal judgment on the ‘interpretation issue’, still wanted the Court to prepare a reserved judgment on the ‘verification issue’.

Held by Twomey J that the Court would award the HSE its full costs. The Court concluded that the HSE did consider the resolution of the dispute by mediation or other alternative means and so there was no basis for a reduction in the costs for an alleged failure to do so. In addition, Twomey J held that the alleged misconduct of the HSE, whether before or during the proceedings, was not sufficient to merit a reduction in the HSE’s cost. Twomey J found that there was no evidence to suggest that the HSE’s conduct caused a waste of court time or led Sere to incur additional legal costs, which it would have otherwise not incurred.

Twomey J held that IAS had no prima facie entitlement to costs from Sere in respect of IAS’s decision to be joined as a party to proceedings, which proceedings concerned the HSE’s legal interests, and not IAS’s legal interests. The Court would not award IAS its full costs in deciding to be fully represented at the hearing, which it did to protect its commercial, rather than legal, interests. However, as affidavit evidence, which would not have been within the HSE’s knowledge, was provided by IAS, which was relevant to the issues to be decided by this Court, Twomey J held that it was appropriate for the notice party to be paid the costs of applying to be joined as a notice party and the costs of preparing and filing affidavits. In addition, since this was a Commercial Court case regarding a contract worth €9.5 million, the parties provided for overnight transcripts and accordingly, Twomey J held that it was appropriate to make an order for IAS’s costs in respect of those overnight transcripts and for reviewing same.

Costs awarded to the respondent. Costs awarded to the notice party in part.

JUDGMENT OF Mr. Justice Twomey delivered on the 14 ^th day of March, 2023

INTRODUCTION

1 . The principal judgment in this matter was delivered on 10 ^th February, 2023 ( Sere Holdings Ltd. v. HSE [2023] IEHC 63 (the “Principal Judgment”)) and defined terms which are used in the Principal Judgment are also used herein.

2 . This supplementary judgment follows a hearing on 24 ^th February, 2022 and considers, amongst other things:

• • whether an unsuccessful challenger (Sere) to a tender process should have to pay the costs, not only of the State agency (the HSE) which organised the tender, but also the costs of the notice party (IAS), which chose to join the proceedings? To put it another way, if Sere is ordered to pay the notice party's costs would this amount to ‘doubling the costs’ which Sere has to pay for taking this judicial review ( per Clarke J. in Telefonica O2 Ireland Ltd v. Commission for Communications Regulation [2011] IEHC 380 at para. 3.6)?

• • whether the costs of the successful party, the HSE, should be reduced due to its alleged failure to consider mediation? This arises, because of this Court's conclusion in the Principal Judgment that litigants, but particularly State agencies, should consciously consider the possibility of mediation, alternative dispute resolution or settlement of a dispute in which they are involved.

• • whether Sere should be compensated (by paying less costs to the HSE) because the HSE allegedly misled Sere into believing the contract with the winning tenderer (IAS) would not be signed? This caused Sere not to institute proceedings claiming that the tender process was unlawful before the contract between the HSE and IAS was signed. As a result, Sere missed the opportunity to have the tender process suspended. Even though this Court held in the Principal Judgment that Sere's claim, that the tender process was unlawful, was without merit, Sere seeks a reduction in the costs it will have to pay to the HSE because it says it was denied the benefit of having the automatic suspension of the tender process. In essence, it seeks this reduction in costs because it was denied the opportunity to prevent IAS from signing the contract until the proceedings were finished ( albeit on the basis of a claim that this Court found to be without merit).

• • whether Sere, having considered this Court's decision in the Principal Judgment on the ‘interpretation issue’, still wants the Court to prepare a reserved judgment on the ‘verification issue’? This issue arose because the effect of this Court's conclusion on the ‘interpretation issue’ in the Principal Judgment is that IAS satisfied the selection criteria for the tender. Accordingly, this Court concluded that it was not going to expend court resources on whether or not the HSE had verified that IAS had satisfied the selection criteria. This was despite the fact that Sere had indicated at the end of the hearing that it wanted the Court to deal with the verification issue even if the Court's decision meant that IAS had satisfied the selection criteria.

SAVING OF COURT RESOURCES

3 . Dealing with this latter issue first, at para. 54 et seq of the Principal Judgment, this Court explained that it did not deal in the judgment with whether the HSE verified that IAS satisfied the selection criteria because the effect of the Court's judgment on the ‘interpretation issue’ is that IAS satisfied the selection criteria. Accordingly, this Court queried whether it would be a good use of court resources for a judgment to be prepared on whether the HSE verified that IAS satisfied the selection criteria. Accordingly, it decided instead to ask Sere to consider the terms of the Principal Judgment and to confirm to the Court if it remained its position that the Court should issue a reserved judgment on the ‘verification issue’, now that this Court had decided the ‘interpretation issue’ against it.

4 . Having considered the Principal Judgment, Sere has decided that it does not in fact need a reserved judgment on the verification issue. This is because by letter dated 14 ^th February, 2023, solicitors for Sere notified the HSE that:

“Given the terms of the Judgment delivered and the concerns not to increase costs and to save Court resources, our client does not require the Court to determine the verification issue.” (Emphasis added)

5 . It is therefore a positive, from the perspective of court resources, to note that those resources, which would have otherwise been expended on preparing a written judgment on the verification issue, have now been saved, for the benefit of other litigants.

IS THE HSE ENTITLED TO ITS FULL COSTS?

6 . As regards the costs of the proceedings sought by the HSE, Sere accepted that the HSE was successful in the litigation. However, Sere argued that the HSE should not be entitled to all of its costs.

7 . In this regard, it is clear that, for the purposes of s. 169(1) of the Legal Services Regulation Act, 2015, the HSE was ‘entirely successful’ in these proceedings as it won the key issue in the case, namely the interpretation issue. As a result of winning this key issue, the verification issue did not have to be decided. Pursuant to s. 169(1) of the 2015 Act, as the HSE was ‘entirely successful’ it is ‘entitled to an award of costs’ against Sere, unless a court decides to ‘order otherwise’ having regard to, amongst other things, the conduct of the parties ‘ before and during the proceedings’. Sere makes the following claims regarding the HSE's conduct before and during the proceedings, which it says justifies a reduction in the costs payable to it.

Reduction in costs payable to the HSE as the tender document could have been clearer?

8 . First, Sere argues that the tender documentation could have been clearer and so the HSE must bear some responsibility for the resulting litigation instituted by Sere, which, it says, should be reflected in a reduction in the HSE's legal costs. In this regard, Sere refers to para. 41 of the Principal Judgment, where this Court agreed with the HSE that a RWIND tenderer would interpret the tender services as including the transport of organs and organ...