High Court judge criticises “disproportionate” £450k+ costs estimate put forward by Cabinet Office for one-day hearing of procurement legal challenge

The Cabinet Office’s £450,000 estimated likely costs for defending a legal challenge over its award of a contract for the provision of polling services during the pandemic appeared – without further explanation from the defendant– to be “disproportionate for a one day hearing, even in a complicated procurement case”, a High Court judge has said.

Mrs Justice O’Farrell’s comment came in her ruling in Good Law Project Ltd v Minister for the Cabinet Office [2012] EWHC 1083 (TCC) which concerned the claimant’s application for a cost-capping order.

The Cabinet Office had opposed the application primarily on the grounds that these were not public interest proceedings and further that the Good Law Project had, or could make available, sufficient funds for the litigation.

The claimant’s judicial review challenge concerns the Cabinet Office's decision on 30 June 2020 to award a contract to the interested party, Hanbury, for provision of online and telephone polling and ancillary services.

The grounds on which the decision is challenged, for which permission was given by the court on 5 February 2021, are firstly, that there was a lack of transparency; secondly, that there was apparent bias; thirdly, that there was no basis for making a direct award under regulation 32(2)(c) of the regulations of 2015 and fourthly, that the seven-month contract award that was made was disproportionate.

Following an indication that the Cabinet Office’s costs could reach more than £450,000, the Good Law Project said it would be unable to continue with the judicial review challenge if no cost-capping order were to be made by the court.

Mrs Justice O’Farrell found:

• She was satisfied that there was a matter of general public importance raised by the proceedings as required by s.88(7)(a) of the Criminal Justice and Courts Act 2015. “This matter concerns the direct award of a public contract without publicity or competition. The issue is whether it was unlawful to award a contract in that way, that is whether the defendant can rely upon regulation 32(2)(c) of the PCR 2015 for this purpose.”
• There was a serious issue to be tried as to whether or not there was any apparent bias. “The court emphasises that this case does not concern allegations of actual bias; the case is whether the circumstances in which the contract was awarded, the identity of the individuals making the relevant decisions, and any connections they might have had to the interested party were such as to give rise to apparent bias. Those matters go to the heart of what amounts to good governance. There is clearly a public interest in ensuring that public contracts are awarded both lawfully and in accordance with any applicable regulations requiring transparency, fairness, equality and the absence of apparent bias.”
• The existence of investigations such as those by the National Audit Office and the Boardman report “do not detract from the value of proper judicial scrutiny to determine whether the award in this case was lawful”.
• She was satisfied that there was a part for the court to play in considering the legality of the procurement procedures used in this contract that went beyond the appropriate investigation into this contract and others being carried out by, or at the behest of, the National Audit Office. “It is appropriate that there should be a public hearing at which the court will consider the evidence and make a decision on the lawfulness of this particular procurement.”
• She accepted that the number of people likely to be directly affected if relief was granted was relatively limited; likewise there would be an insignificant effect on those people. Primarily, that was because it was a one-off contract and it had since been concluded. There was no ongoing procurement process or long-term contract such as regularly comes before the court on procurement challenges that would be directly impacted by any declaration of unlawfulness. “However, as I indicated when making the cost-capping order in the PPE claims case (HT-2020-000226 and others), there is a legitimate interest by taxpayers and others in whether or not procurement on the part of the government is carried out using good governance procedures and with integrity. To that extent there is some impact on them in terms of the relief that is sought.”
• More significantly, she considered that this case raised a point of law of general public importance. “The issue concerns the ambit of regulation 32(2)(c) [of the Public Contracts Regulations 2015] and the circumstances in which it will be engaged. The regulation provides for an exception to the general procurement rules and provides that the negotiated procedure without prior publication may be used for public contracts insofar as is strictly necessary, where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restrictive procedures of competitive procedures with negotiation cannot be complied with. Whether the Covid-19 pandemic justified the government in making a direct award without competition in this case will raise an issue of law regarding the ambit of the regulation against the factual scenario that existed in respect of this contract.”
• Such issue was not the same as the issue that arose in relation to the PPE contracts, which concerned transparency obligations. It was not the same as the issue that arises in the Public First case [another Good Law Project claim concerning the direct award to another polling company].
• Regulation 32 was not limited to public health emergencies. “It is conceivable that it could apply to other emergencies, other unforeseen events.”

Mrs Justice O’Farrell said: “Therefore, in relation to regulation 32(2)(c) there is a point of law that will be of general public importance, the public interest requires the issue to be resolved and the proceedings are likely to provide an appropriate means of resolving it. For those reasons, I am satisfied that in this case the proceedings amount to public interest proceedings.”

The Good Law Project submitted that the appropriate order for the court to make would be to cap liability for each party at £100,000. The Cabinet Office’s position was that the claimant’s liability should be capped at £200,000 and that its liability should be capped at £50,000.

After consideration of both sides’ resources, Mrs Justice O’ Farrell said the Cabinet Office’s funds were not unlimited, but by comparison, the Good Law Project’s funds were very limited.

Evidence provided to the court suggested that the claimant had £830,000 available but of that sum over £500,000 would be required for the Public First and PPE claims. Potentially a further sum of between £400,000 and £600,000 would be required for the Abingdon case [concerning the award of of a contract for a rapid antibody test], although a cost-capping order is being made in that case, the judge understood.

Mrs Justice O’Farrell acknowledged that there must come a point where the court needs to consider the difficult issue of a claimant who simply says "Well, I will start as many claims as I wish and because of the large number of claims I will never be able to pay any of the costs that might be incurred by the defendant", but she said that point had not yet been reached. She said she was satisfied on the evidence produced by the director of the Good Law Project that the claimant was managing its funds in an appropriate way.

The judge said: “In this case the difficulty faced by the claimant is the very large estimate of the defendant's likely costs in this case, namely in excess of £450,000. As [counsel for the Cabinet Office] submitted, these claims can be expensive to fight, this is not a straightforward judicial review case, it is, in essence, a procurement challenge, and the nature of the allegations made mean that the defendant will incur significant costs through the necessary factual investigation and disclosure exercises. Regardless of that, these costs are still very high. Without further explanation from the defendant, I consider that they appear to be disproportionate for a one day hearing, even in a complicated procurement case.”

Mrs Justice O’Farrell said she considered that it would be reasonable and proportionate to make a cost-capping order in this case, and that the appropriate level of cost cap applied to each party should be £120,000.