High Court judge rejects bid for summary judgment, lifts automatic stay in procurement challenge over number plate recognition contract

A High Court judge has dismissed an unsuccessful bidder's application for summary judgment against three councils over the award of a contract to provide a system for automatic number plate recognition (ANPR) in the Tyneside area.

The judge, Mr Justice Kerr, also lifted the automatic suspension of the contract award by Newcastle City Council.

The ANPR system is needed to enforce a forthcoming mandatory Clean Air Zone (CAZ) in Tyneside. It is used to detect and enforce infringements or non-payment of charges.

The contract covers parts of the geographical areas of two other councils, Gateshead and North Tyneside. These two local authorities put in defences denying any part of the procurement.

The claimant, Neology, contended that all three defendant councils were responsible for the procurement and liable to Neology for Newcastle having conducted it wrongfully. Amongst other things it argued the council’s evaluation panel had fundamentally erred by penalising the company for its responses.

Neology had come third after Siemens Mobility Limited and Systems Engineering Limited (SEL).

Newcastle said the summary judgment application and the claim as a whole were weak and without merit; that damages would be an adequate remedy for Neology but not for the defendants; and that the balance of convenience and justice, including the public interest, favoured lifting the stay.

In Neology UK Ltd v The Council of the City of Newcastle Upon Tyne & Ors [2020] EWHC 2958 (TCC) Mr Justice Kerr said he was satisfied that the case was “wholly unsuitable” for summary judgment.

He said he agreed with counsel for the local authorities (Joseph Barrett of 11KBW) that the criticisms made by the claimant were, on closer observation, more in the nature of disagreements with the scoring and with the reasoning underpinning it than instances of breach of principles of equal treatment, transparency and proportionality.

“Neology comes nowhere near administering the knock-out blow to the defence necessary to obtain summary judgment. There is no obvious unfairness or manifest disparity of treatment as between tenderers.”

The judge noted that that the court was, at this stage, essentially looking at (i) the nature of the procurement (ii) the evaluation criteria and their weighting (iii) the wording of the questions asked in the invitation to tender (iv) the claimant's response to the questions asked (v) the numerical scores awarded and (vi) the narrative comments on the claimant's answers, expressed at the time in the feedback letter and later in the outcome report.

“An examination of those matters in the present case reveals no obvious flaw in the conduct of the procurement. [Counsel for Neology’s] eloquent submissions do not persuade me otherwise. Nor does it assist Neology to emphasise, as it did, that disclosure has not yet taken place. Summary judgment must stand on its own two feet, unaided by disclosure.”

For those reasons, the judge dismissed the application for summary judgment.

In relation to Newcastle’s application to lift the automatic stay, Mr Justice Kerr said the claim, while not nearly strong enough for summary judgment, did surmount the low hurdle that there were serious issues to be tried.

However, he said it would not be unjust to Neology to confine its remedy to damages in the event that the claim succeeded at trial.

A claim in evidence from Neology’s managing director that loss of this contract would drive the company out of the CAZ market completely, was “unconvincing”, the judge found. “It was not supported by any financial documents such as business plans or projections. The economies of scale to which he attested did not adequately explain, with concrete evidence, why loss of this contract would of itself imperil Neology's business in the CAZ market.”

The judge said he accepted it was not easy for the court to quantify Neology’s damages claim, though Neology itself had put it at slightly in excess of £1m. “It is often difficult to assess the quantum of a damages claim for loss of a business opportunity or lost future profits. That difficulty does not absolve the court from quantifying the claim as best it can, if liability is established. Nor does the difficulty, alone, mean that damages are inadequate as a remedy.”

Mr Justice Kerr said he accepted Mr Barrett's contention that the amount of business at issue here was modest, as were the sums involved and the quantum of the claim. “I agree with him that those sums and this contract are in no way comparable to the business that stood to be lost in cases such as Alstom Transport, NATS (Services) Ltd and Bombardier.”

He also pointed out that this contract was not the only CAZ contract which Neology could, potentially, obtain.

The judge said: “I conclude without any great difficulty that this case falls the other side of the line from the cases where the procurement is prestigious and internationally famous and involves vast sums of money on a different scale from the sums at stake in the present case. In my judgment, and essentially for the reasons submitted by Mr Barrett, Neology does not persuade me that it is unjust to confine it to its remedy in damages.”

Mr Justice Kerr said that was sufficient to dispose of the application to lift the automatic stay.

However, he added that, if it were necessary to do so, he would also have accepted Newcastle’s arguments in support of its proposition that damages would not be an adequate remedy for it, Newcastle; and that if the balance of convenience and justice was considered, the public interest in achieving implementation of the mandatory CAZ on Tyneside was the decisive factor supporting the lifting of the stay.

“I think it is more likely than not that leaving the stay in place would delay the CAZ, i.e. that it will be implemented more quickly if the stay is lifted. I think that is in the public interest for a very obvious reason; the sooner the CAZ is implemented, the cleaner the air will be in the Tyneside area, even if some of the nitrogen dioxide is relocated rather than eliminated altogether.”