Homecare Medical Supplies Unlimited Company v Health Service Executive
| Jurisdiction | Ireland |
| Judge | Mr. Justice David Barniville |
| Judgment Date | 29 January 2018 |
| Neutral Citation | [2018] IEHC 55 |
| Docket Number | [2018 No. 46 J.R.] |
| Court | High Court |
| Date | 29 January 2018 |
[2018] IEHC 55
THE HIGH COURT
Barniville J.
[2018 No. 46 J.R.]
Contract – Regulation 8A of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 – Automatic lifting of suspension – Urgency – Bridging contract
Facts: The applicant filed the present proceedings seeking to challenge the process under which the respondent had awarded the bridging contract to the notice party pending the determination of two sets of earlier proceedings initiated by the applicant against the respondent for awarding the relevant contracts to the notice party. The respondent sought an order for automatic lifting of suspension to enable it to conclude the relevant contract with the notice party on urgent grounds.
Mr. Justice David Barniville held that the respondent was entitled for an order for lifting the automatic suspension. The Court further held that the respondent was permitted to conclude the bridging contract with the notice party. The Court stated that it would first consider whether on notional application of the interlocutory relief, the applicant had established that there was serious issue to be tried and whether the damages would be an adequate remedy for the applicant. The Court found that the applicant had established that there were serious issues for trial. The Court, however, held that the applicant could be compensated by way of damages for the losses he suffered had the suspension been lifted. The Court observed that it would not be appropriate to further extend the existing contracts in public interest as it would impact the need of the patients and end users of the products that were needed to be manufactured or sold.
This is my ex tempore judgment on an application heard by me on Friday, 26th January, 2018. The application was the HSE's application for an order pursuant to Regulation 8A of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (as amended) (the 'Remedies Regulations'), permitting the HSE to conclude a particular contract, namely a bridging contract, for the provision of storage and distribution services for disposable continence products (the 'bridging contract'), with Freightspeed for Pharmacy Ltd. ('Freightspeed'). Freightspeed had successfully tendered for the bridging contract in a procurement process undertaken by the HSE.
The applicant in these proceedings, Homecare Medical Supplies ('Homecare'), was unsuccessful in that procurement process and, on 19th January, 2018, brought proceedings seeking several reliefs pursuant to the Remedies Regulations seeking, amongst other things, to set aside the cost criterion set out in the tender documents for the competition and the competition itself, together with the decision to award the bridging contract to Freightspeed. This is the third set of proceedings brought by Homecare against the HSE in connection with the distribution of continence products. Time permits only a relatively brief summary of the background to the commencement of this, the third set of proceedings between the parties.
The HSE had originally entered into three contracts for the provision of continence products and for distribution services for those products with a company called Ontex Healthcare UK Ltd. ('Ontex') in respect of three HSE regions on the island of Ireland in 2012 and 2013. The duration of those original contracts was to be 36 months but they were extended or rolled over on four occasions, in 2015, 2016, and 2017, with the last of those extensions being made on 24th July, 2017, in respect of the period from 1st November, 2017, to 31st January, 2018. Homecare provided these services under those contracts on the ground under the terms of a contract with Ontex.
In 2016 the HSE decided to amalgamate the geographical regions and to divide up the services to be provided into a contract for the supply of products (this is the 'products contract') and a separate storage and distribution contract (that is the 'distribution contract'). The HSE conducted two procurement process for these two new contracts. Ontex was successful in the procurement process for the products contract. Freightspeed was successful in the tender process for the distribution contract. Homecare was unsuccessful in the tender process for the distribution contract. The HSE reached its decision in those processes in July 2017 and duly informed the successful and unsuccessful tenderers.
Homecare commenced two sets of proceedings arising out of that procurement process. The first set of proceedings was commenced on 10th August, 2017, (the 'review proceedings'). In those proceedings Homecare seeks various orders and reliefs under the Remedies Regulations, including orders setting aside or permanently suspending the decision by the HSE to award the distribution contract to Freightspeed, various declarations and damages by reason of the alleged infringement of public procurement law by the HSE in operating the tender process for the distribution contract.
The review proceedings were made returnable before the High Court on 23rd October, 2017. An important consequence of the commencement of the review proceedings under the Remedies Regulations, and, in particular under Regulation 8(2) thereof, was that the HSE's ability to proceed to conclude the distribution contract with Freightspeed was suspended and it was unable to conclude that contract without obtaining an order from the High Court under Regulation 8A of the Remedies Regulations.
Having brought an application to enter the review proceedings into the commercial list, and such an order having been made on 23rd October, 2017, the HSE then brought an application under Regulation 8A of the Remedies Regulations the lift the automatic suspension to enable it to conclude the distribution contract with Freightspeed. Various affidavits were directed to be exchanged and were then exchanged in respect of that application.
In the meantime, Homecare commenced a second set of proceedings on 26th October, 2015, (the 'plenary proceedings'), in which it sought various declarations to the effect that Regulation 8A is invalid having regard to Article 15 of the Constitution of Ireland and/or to the Remedies Directive, that is, Council Directive 89/665/EEC as amended by Directive 2007/66/EC and that Regulation 8A is ultra vires the provisions of s. 3 of the European Communities Act 1972 as well as damages.
The defendants in the plenary proceedings are the HSE and the Minister for Public Expenditure and Reform, Ireland and the Attorney General (the 'State'). Directions were given to enable both the application to lift the automatic suspension in the review proceedings and the plenary proceedings themselves to be heard together by me in December 2017.
They were heard over the course of three days from the 13th to 15th December, 2017. In addition to the HSE and Homecare, the State was also represented as a party to those proceedings and, in particular, the plenary proceedings, as was Freightspeed. In the course of that hearing the parties relied on an extensive range of legislative provisions, both Irish and EU, and case law from the Courts of Ireland, Northern Ireland, England and Wales and from the Court of Justice of the European Union. Not surprisingly, I reserved my judgment and indicated that I would endeavour to give that judgment as early as possible this term.
During the course of the hearing it was repeatedly stressed to me on behalf of the HSE that it was critical that the new contract, namely the distribution contract, could commence immediately on the expiry of the original contracts on 31st January, 2018, and that Freightspeed, as the successful tenderer for the distribution contract, needed approximately one month to ready itself to start with effect from then, so that the HSE would, therefore, need to be in a position to conclude the distribution contract with Freightspeed before 31st December, 2017, in order to ensure that the needs of patients and other end users of the products would not be compromised.
In response Homecare made the case that the original contract could simply be rolled over or extended until the review proceedings were determined and that, if they were, no patient welfare issues would arise. The HSE countered that it was precluded from further rolling over or extending the original contracts on public procurement grounds, that the so called ' safe harbour' provisions in Regulation 72 of the European Communities (Award of Public Authorities Contracts) Regulations 2016 (the '2016 Regulations') did not apply and that, in any event, it should not have to take the risk of infringing public procurement rules by extending the contracts. Homecare, on the other hand, disputed the contention that rolling over the original contracts would breach public procurement law, that they had already been rolled over on four occasions and that, in any event, the ' safe harbour' provisions in Regulation 72 of the 2016 Regulations would apply. These are issues that I will have to consider and decide in my judgment in the review proceedings. However, they are also relevant to the issues I have to consider in this judgment.
In the course of its submissions at the hearing in December 2017 the HSE did raise the possibility that if the stay on the conclusion of the distribution contract was not lifted by 31st December, 2017, it might be necessary for the HSE to go through an emergency procurement process to award the contract on a pro tem basis for the distribution of continence...
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