Payzone Ireland Ltd v National Transport Authority

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian O'Moore
• Judgment Date: 24 March 2021
• Neutral Citation: [2021] IEHC 212
• Date: 24 March 2021
• Docket Number: [2020/369 JR]
• Court: High Court

Between

Payzone Ireland Limited

Applicant

and

National Transport Authority

Respondent

[2021] IEHC 212

[2020/369 JR]

THE HIGH COURT

Eligibility – Contract – European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 – Respondent seeking to dismiss the proceedings – Whether the applicant was an eligible person

Facts: The respondent, the National Transport Authority (the NTA), brought a motion to dismiss the proceedings on the ground that the applicant, Payzone Ireland Ltd (Payzone), was not an eligible person within the meaning of Regulation 4 of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (the Utilities Regulations) or Regulation 4 of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (the Public Contracts Regulations). The proceedings related to a tendering process conducted by the NTA in respect of a contract for the operation, maintenance and administration of the ‘Leap Card’, a contactless smart card used for public transport services in Ireland. Payzone did not itself tender for the contract. Instead, Payzone agreed to participate in the tender of DXC Technology and a separate tender by Cubic Transportation Systems Ltd (Cubic). However, when Cubic was awarded the contract, it then informed Payzone that the latter was not, after all, part of the successful tender and would therefore play no part in the contract. Immediately on receiving this news, Payzone agitated with the NTA the issues which lead to the proceedings. The primary relief sought by Payzone was an order pursuant to Regulation 8(1)(b) and Regulations 9(1) and/or Regulation 9(5) of the Public Contracts Regulations and/or the Utilities Regulations setting aside or permanently suspending the decision of the respondent to award the contract for the provision of Leap Operations Services to Cubic. The claim was brought under Order 84A of the Rules of the Superior Courts.

Held by the High Court (O’Moore J) that it did not think that, either on a literal or purposive reading of Article 1(3) or Regulation 4, Payzone qualified as an eligible person. O’Moore J held that this conclusion was consistent with all of the authorities (both European and Irish). O’Moore J also noted that, despite a passing remark in Payzone’s submissions, there was no challenge in this action to the transposition of any European Directives into Irish law. O’Moore J held that the NTA was entitled to an order in terms of paragraph (3) of the Notice of Motion. While O’Moore J had expressed the view that an order in terms of paragraph (3) leads naturally to an order in terms of paragraph (4), it occurred to him that the terms of paragraph (4) might profitably be clarified; for example, nothing ordered by him in this action should determine the Order 84 claim and he would not intend to do so.

O’Moore J listed this action for 11am on the 25th of March 2021 to finalise the orders to be made in the motion.

Motion granted.

JUDGMENT of Mr. Justice Brian O'Moore delivered on the 24th day of March, 2021.

1 This is my judgment on a motion brought by the Respondent (‘the N.T.A.’) to dismiss these proceedings on one ground alone, namely that the Applicant (‘Payzone’) is not an eligible person within the meaning of Regulation 4 of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (‘the Utilities Regulations’) or Regulation 4 of the European Communities (Public Authorities' Contracts) (Review Procedures) Regulations 2010 (‘ the Public Contracts Regulations’).

2 The proceedings relate to a tendering process conducted by the NTA in respect of a contract for the operation, maintenance and administration of the ‘Leap Card’, a contactless smart card used for public transport services in Ireland.

3 Payzone did not itself tender for the contract. Instead, Payzone agreed to participate in the tender of DXC Technology (‘DXC’) and a separate tender by Cubic Transportation Systems Limited (‘Cubic’). However, when Cubic was awarded the contract, it then informed Payzone that the latter was not, after all, part of the successful tender and would therefore paly no part in the contract. Immediately on receiving this news, Payzone agitated with the NTA the issues which have lead to these proceedings.

4 The NTA accepts that, for the purpose of this application, it must accept the facts as set out by Payzone. I will therefore summarise the relevant facts as described in a very lengthy affidavit of Jim Deignan, the C.E.O. of Payzone. I will then set out the law, the arguments and my decision.

A. The Facts

5 On the 3rd of November 2018 the NTA issued a contract notice advertising the competition for the provision of services in connection with the Leap Card. Payzone was interested in the provision of the EPOS network, and becoming the EPOS network operator. This position is a crucial one in the operation of the Leap Card system, and the management of the EPOS network would account for about half of the value of the main contract. Payzone was also interested in performing the Payment Gateway Services.

6 The Information Memorandum for the competition, issued by the NTA, referred under the Definitions section to ‘Candidate Member’, which included ‘the entity proposed as the EPOS Network Manager’. The full definition reads:-

• “(1) ‘Candidate Member’ means each member of the group where the Candidate is a group and for the avoidance of doubt includes any entity who it is proposed will have primary responsibility for performing the operational services under the Contract and the entity proposed as EPOS Network Manager;

• (2) ‘EPOS’ means a type of card accepting device operated by a sales agent used for topping-up or reloading other transactions involving smart cards;

• (3) ‘EPOS Network’ means an EPOS Network Manager with a network of retail sales outlets;

• (4) ‘EPOS Network Manager’ means the entity with responsibility for providing a consumer payment network (terminal devices, applications, infrastructure and payment gateways) and establishing and managing the EPOS Network. For the avoidance of doubt, the proposed EPOS Network Manager must be a Candidate Member (where not the Candidate itself) and must be named in the Submission.”

7 Equally, the PQQ and the ITN emphasise the significance of the EPOS network operator; for example, the ITN (at section 1.5.9.) provides:-

“The Contract requires that the Operator acts as the EPOS Network Operator, or subject to clause 41.4 of the Contract, appoints a third party to act as the EPOS Network Operator. For the avoidance of doubt, the proposed EPOS Network Operator must be named in the Tender. Note that where the EPOS Network Operator is not the Tenderer itself, the Tenderer should include with the Tender a confirmation from the EPOS Network Operator that they will provide the relevant services.”

8 The same documents stress the importance of the Payment Gateway Services, which Mr. Deignan days were ‘a critical part of the performance of the Contract’.

9 Mr. Deignan also outlines what he describes as the exclusivity prohibition (by which he means that the NTA prohibited any EPOS network operator from engaging with tenderers on an exclusive basis), the multiple participation requirements (where there were a number of candidate members, information on each must be provided), and the PQQ amendment restriction (while the NTA anticipated that there may be changes between the PQQ submission and the tender, in Mr. Deignan's view these changes must be done in accordance with the terms of the competition and must be otherwise lawful).

10 Mr. Deignan then summarises the progress of the PQQ stage of the competition as follows:-

“75. PQQs were originally due to be submitted on 9 January 2019. However, on 13 December 2018, this deadline was extended to 23 January 2019.

76. The PQQ results were issued on 13 May 2019.

77. Both DXC and the Successful Tenderer were successful at the PQQ stage (‘the Tenderers’).

78. The Applicant understands that no other candidates qualified to participate in the subsequent negotiation stage.”

11 Mr. Deignan then describes Payzone's participation in the competition. Its initial intention had been to partner exclusively with DXC, but DXC was told by the NTA on the 27th of December 2018 that:-

“[t]he Authority is not minded to permit any Candidate to enter into an exclusive arrangement with [the Applicant].”

12 This was forwarded by DXC to Payzone on the 4th of January 2019. Mr. Deignan describes the reaction:-

“Reasonably, my colleagues and I understood from this that the Respondent required the Applicant to engage with all candidates and tenderers, and further, that the Applicant was required by the Respondent to engage with all candidates and tenderers on an equal basis (‘the Equal Engagement Requirement’).

It appeared to the Applicant that the Respondent was concerned that there would be a lack of competition if the Applicant (as the incumbent EPOS Network Operator) were permitted to be exclusive to one tenderer.

The purpose of the Exclusivity Prohibition would have been defeated if the Applicant had been entitled to treat DXC and the Successful Tenderer differently. Accordingly, the Equal Engagement Requirement followed naturally from the Exclusivity Prohibition.

In any event, the Equal Engagement Requirement was subsequently communicated expressly and on a number of occasions to the Applicant, as I will set out further below.”

13 Payzone went on to engage further with the NTA in connection with the competition, attending an information day on the 8th of January 2019, an event in London on the 29th and 30th of January 2019, and discussions in April and May 2019. This lead to a string of correspondence in May and June 2019. I will set out the text of certain of...