Student Transport Scheme Ltd v The Minister for Education and Skills and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 27 May 2016
• Neutral Citation: [2016] IECA 152
• Date: 27 May 2016
• Court: Court of Appeal (Ireland)
• Docket Number: Record No. 2014/665 [Article 64 transfer]

[2016] IECA 152

THE COURT OF APPEAL

Hogan J.

Record No. 2014/665

[Article 64 transfer]

Ryan P.

Peart J.

Hogan J.

BETWEEN/

STUDENT TRANSPORT SCHEME LIMITED

APPLICANT/APPELLANT

AND

THE MINISTER FOR EDUCATION AND SKILLS

RESPONDENT

AND

BUS ÉIREANN

NOTICE PARTY

Contract - Procurement - Public tender - Appellant seeking to tender for a contract - Whether contract ought to have been put out to tender under EU procurement rules

Facts: The appellant, School Transport Scheme Ltd (STS), is a limited liability company which was incorporated in July 2011. STS commenced proceedings in October 2011, the gravamen of its complaint being that there existed a concluded contract in writing between the respondent, the Minister for Education and Skills, and the notice party, Bus Éireann, for the supply of the school transport service and that it was entitled under EU procurement rules to tender for that contract. Its specific complaint was that there existed a contract between the Minister and Bus Éireann for the school year 2011-2012 which ought to have been put out to tender under EU procurement rules, but which was not in fact made subject to the tender process. The appellant commenced Ord. 84A review proceedings on 27th October 2011 seeking to challenge the failure to hold a tender. The proceedings were then admitted to the Commercial Court. Following a lengthy exchange of affidavits, the matter was resolved adversely to the appellant by McGovern J in a reserved judgment delivered on 23rd October 2012 ([2012] IEHC 425). The appellant then appealed that decision to the Supreme Court. That appeal was remitted to the Court of Appeal in accordance with Article 64 of the Constitution following the establishment of the Court of Appeal on 28th October 2014.

Held by Hogan J that, in light of the decision of the Court of Justice in Case C-159/11?Azienda Sanitaria Locale di Lecce EU:C:2012: 817??(which was delivered some months after the judgment of McGovern J), it was clear that if there was a contract, the fact that the payment was based on a cost recovery basis did not mean that it was not a contract for pecuniary interest within the meaning of Article 1(2)(a) of the Public Procurement Directive 2004/18/EC. Hogan J held that even if there was a contract, it was a contract of indefinite duration coming within the scope of the?exemption in Case C-454/06?Pressetext Nachrichtenagentur GmbH?[2008] ECR I-4401. Hogan J held that while it was true that the scheme has evolved and changed in the last fifty years or so since its initial inception, STS have not identified any material change within the six month period immediately prior to the commencement of the proceedings in October 2011; this was in itself a reason why the appeal must fail as such contracts of indefinite duration fall outside the scope of the 2004 Directive. Hogan J held that, in light of the reasoning of the Court of Justice in?Case C-523/03?Commission v Ireland?[2007] ECR I-11353, it was clear that the scheme is an administrative arrangement between the Minister and Coras Iompair Éireann/Bus Éireann. Specifically, Hogan J held that there was no concluded contract in writing between the parties for the purposes of Article 1(2)(a) of the 2004 Directive; this finding was in itself also fatal to the STS's claim that there was such a contract and that it should have been put out to public tender.

Hogan J held that McGovern J was correct in the ultimate conclusion which he reached. The Court accordingly dismissed the appeal.

Appeal dismissed.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 27th day of May 2016

1 The applicant, School Transport Scheme Ltd. ('STS'), is a limited liability company which was incorporated in July 2011. STS commenced these proceedings in October 2011. The gravamen of its complaint is that there exists a concluded contract in writing between the Minister for Education and Skills and Bus Éireann for the supply of the school transport service and that it was entitled under EU procurement rules to tender for that contract. Its specific complaint is that there exists or existed a contract between the Minister and Bus Éireann for the school year 2011-2012 which ought to have been put out to tender under EU procurement rules, but which was not in fact made subject to the tender process.

2 The applicant then commenced the present Ord. 84A review proceedings on 27th October 2011. In these proceedings it sought essentially to challenge the failure to hold a tender which proceedings were then admitted to the Commercial Court. Following a lengthy exchange of affidavits, the matter was resolved adversely to the applicant by McGovern J. in a reserved judgment delivered on 23rd October 2012: see Student Transport Scheme Ltd. v. Minister for Education and Skills [2012] IEHC 425.

3 The applicant then originally appealed this decision to the Supreme Court. This appeal was, however, remitted to this Court in accordance with Article 64 of the Constitution following the establishment of this Court on 28th October 2014.

4 As I pointed in a judgment delivered on 18th December 2015, Student Transport Scheme Ltd. v. Minister for Education and Skills [2015] IECA 303 (dealing with the admissibility of fresh evidence on this appeal), the school transport system is an essential feature of rural life, as it is by this mechanism that thousands of primary and post-primary children are brought to and from school every day during the course of the school year. The scheme is an administrative one and (so far as primary school children are concerned) may be regarded as an effectuation of the State's constitutional duty as provided in Article 42.4 of the Constitution to 'provide for free primary education', since, but for the Scheme, many children – especially those residing in outlying rural areas – might have difficulty in attending school. The Scheme thus serves the important public policy goods of promoting universal primary and secondary education on the one hand, while ensuring equal access to educational opportunity on the other.

5 The present appeal raises a number of fundamental issues regarding the operation of the procurement rules in the context of the present scheme. First, was there a contract in writing between the Minister and Bus Éireann within the meaning of Article 1 of the Public Procurement Directive 2004/18/EC ('the 2004 Directive')? Second, if there was such a contract, was it for 'pecuniary interest' in the manner in which this term is generally understood in the relevant case-law? Third, even if the first two questions are answered in the affirmative, the question then arises is to whether the contractual agreement is really a unilateral administrative measure solely creating obligations for Bus Éireann within the meaning of the case-law of the Court of Justice in cases such as Case C-295/05 Asemfo [2007] E.C.R. I-2999 and Case C-220/06 Asociacion Profesional de Emoresas ('Correos') [2007] E.C.R. I-12175. Fourth, in any event, even assuming that there was a contract in writing for pecuniary advantage, was any such contract one of the indefinite duration which ante-dated the operation of the EU's public procurement regime?

6 I propose to consider these questions in more detail presently. It is, however, necessary to observe that as these proceedings were commenced in October 2011, it is not really in dispute but that events which pre-dated April 2011 ( i.e., six months prior to the commencement of the proceedings) cannot be considered for present purposes in view of the six months limitation period which applies in procurement cases of this kind.

7 Before proceeding further, however, it is necessary to set out more detail regarding the establishment and operation of the scheme.

The establishment of the school transport scheme

8 The present scheme dates from 1967 and is operated by Bus Éireann as agents of the Minister for Education and Skills, albeit that some 90% of actual school transport services so provided are currently tendered by Bus Éireann to private contractors. The evidence in the High Court showed that some 110,000 pupils participate in the scheme each school day and that the scheme serves some 3,000 schools through the State across some 6,000 transport routes.

9 The Scheme was introduced following the establishment of the free secondary school system in 1966. The Scheme was entrusted to Coras Iompair Éireann ('CIE') because the Minister's Department did not have the capacity or expertise to administer such a complex transport scheme. By letter dated 10th February 1967, the Minister entrusted the administration of the Scheme to CIE which accepted the appointment by letter dated 13th February, 1967. In a further letter of 28th May 1969, the Minister set out the administrative and financial arrangements of the Scheme:

'1. CIE will administer the scheme as agents for the Minister for Education, and as such, will operate the scheme in accordance with his general directions and policy.

2. All school transport services will be provided in accordance with the rules for eligibility of pupils and the regulations as to the minimum number of pupils necessary before a service can be established or maintained.'

10 The financial arrangements were supplemented by a 1975 Agreement which evidenced the price for the services, the nature of the vehicles to be used and the schools covered by the scheme.

11 The Scheme is operated on the basis of the eligibility criteria prescribed by the Minister and is generally organised by reference to educational policy on the one hand and the availability of State resources on the other.

12 As might be expected, there have been changes to the Scheme over the years. Thus, for example, special arrangements are made for the transport of...