Download - Judicial Review of Government Procurement
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CARIBBEAN PUBLIC PROCUREMENT (LAW AND PRACTICE)
CONFERENCE 2008
HYATT HOTEL AND CONFERENCE CENTRE
WEDNESDAY 19TH MARCH 2008
PAPER BY KARL T. HUDSON-PHILLIPS, Q.C.
ON
Judicial Review and Public Procurement in Trinidad and
Tobago
Is there a Public Law Remedy in the Tendering Process for
public projects?
The most vexing question facing an unsuccessful tenderer who
suspects impropriety on the part of a public procuring entity is
whether he should challenge the decision before the Courts. Any
would-be litigant must face head on the risk of high legal costsand the added disincentive of litigating against a procuring entity
with which he may wish to do business in the future. Even worse
is the fact that definitive judicial guidance appears elusive when
dealing with the jurisdiction of the courts to review public
tendering decisions.
Judicial Review is the principal method by which the courts have
exercised a supervisory jurisdiction over the manner in which
Public bodies make decisions. It is a specie of action unique to
the Public law. The Government through its various
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instrumentalities can enter into contracts with the private sector
and be subject to the jurisdiction of the private law as any other
private citizen albeit that by virtue of the public nature of the
body and its functions it may be held under the public law to
higher standards than a private citizen. The courts under the
public law through the mechanism of judicial review will look at
the manner in which decisions are made in order to ensure that
they were arrived at fairly, rationally, reasonably and in good
faith. The rationale for seeking to place on public bodies this
obligation of considerate decision making is to protect citizensfrom executive abuses.
Under the Judicial Review Act1, the grounds upon which an
applicant for judicial review is entitled to relief are set out in
section 5(3) ibid. A similar statutory formulation and basis for
judicial review exists in Barbados2. In Jamaica, although there is
no specific judicial review act, provision is made for the procedure
of judicial review by virtue of Part 56 of the Supreme Court Civil
Procedure Rules 2002.
Through the process of judicial review the litigant can obtain
orders ofcertiorari, mandamus andprohibition and judicial
review has developed as one of the most important mechanisms
for achieving public justice in common law jurisdictions and in
reducing the zone of immunity3 previously existing around a
great deal of governmental action.
1 Judicial Review Act (T&T) No. 60 of 2000.2 Administrative Justice Act 1980 and Judicial Review (Applications) Rules 1983.3 Total Justice (1985) by L. Friedman
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The reliefs of certiorari, mandamus and prohibition are unique to
the public law since private law remedies more usually take the
form of compensation in damages for provable loss. The flexible
nature of these public law reliefs is obviously more attractive to
the unsuccessful tenderer who may have enormous evidential
difficulties in a private law action to prove specific damage over
and above the cost of tendering unless he is able to prove
conclusively that he would have won the contract. The task of
proving this is increasingly more remote with the inclusion of
what are now standard clauses in the Tender Call that theprocuring entity is not bound to accept the lowest or any bid at
all. Further, even the calculation of damages on the basis of loss
of chance is arbitrary and at best a hopeful consideration since
there is no ready acceptance of this as a measure of damages
by the Courts in the region. The principal advantage therefore in
a claim for judicial review over a private common law action is the
nature of the relief which can be obtained for the former.
It should be noted, however, that it is not every decision of a
public body which is susceptible to judicial review. The Courts
have recognized that public bodies ought to be free to enter into
contracts and perform other private acts just as any other private
citizen and in such circumstances to be subject to private lawprinciples. In this regard the courts traditionally refuse to grant
judicial review of decisions where adequate private law remedies
exist or the particular activity giving rise to the questioned
decision is held to be a private law exercise.
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In determining whether to grant relief in a particular case, the
Courts historically have placed significant emphasis on the
source of the power of the decision maker. If the power to
make the decision emanated expressly from statute or the
prerogative, the Courts tended to hold that the decision was
amenable to judicial review. This preoccupation with the source
of the power test, however, has been substantially eroded and
greater focus is now placed on the nature of the power or function
being exercised.
This more recent approach is highlighted in the case ofR v Panel
on Takeovers and Mergers ex parte Datafin plc4. It was held
that, in determining whether the decisions of a particular body
were subject to judicial review, the Court was not confined to
considering the source of that bodys powers and duties but could
also look to their nature. Accordingly, although the Panel on
Takeovers and Mergers was a self regulating non public body,
because it was performing a public duty and exercising public law
functions, the Court had jurisdiction to entertain an application for
judicial review of that bodys decisions.
As the courts began to focus more on the nature of the power or
function being exercised, the emphasis was placed on searching
for a public element, flavour or character in the decision in order
to bring it within the purview of the public law.
4 [1987] 1 All ER 564
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It is against this background that, on the 17th March 2006 in NH
International (Caribbean) Ltd. v UDeCOTT5 the Court of
Appeal (Sharma, C.J., Warner and Kangaloo JJA.), upheld the
decision of Stollmeyer J. at first instance that the decision of
UDECOTT, a state-owned enterprise, to award a 140 million dollar
contract to the lowest tenderer was not amenable to judicial
review. This is considered an important judgment in the
Commonwealth Caribbean representing the latest statement on
the dichotomy between the source of the power and the
nature of the power or function being exercised. The reasoningof the Court of Appeal was not the same as that of the Court of
first instance although they both arrived at the same conclusion.
Both held that there was no public law remedy for the
unsuccessful tenderer, NH International.
The decision of both courts was in the teeth of the following
features in the case:-
The procuring entity UDECOTT was a wholly owned State
Owned Enterprise (SOE). The company was a limited
liability company and its sole shareholder was the State
whose property is held in trust by the Minister of Finance as
a corporation sole pursuant to the Minister of Finance
(Incorporation) Act Chap. 69:03.
5 CVA No. 95 of 2005 (T&T)
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The object and purpose of UDECOTT was to develop,
redevelop and rehabilitate the physical fabric of urban and
other designated areas of Trinidad and Tobago.
UDECOTT was retained by the Ministry of Health to design,
finance, construct, project manage, outfit and lease to the
Ministry a building to accommodate the Ministrys head
office and certain centralized programme units (the
project) on lands owned by the State.
The financing for the project was to be sourced by way of
mortgage of the state owned lands which would then be
repaid by way of lease payments made by the Ministry of
Health to UDECOTT after completion and handing over of
possession of the building to the Ministry.
NH International, the second lowest tenderer on the project, was
able to provide evidence to the Court that consultants hired byUDECOTT had recommended that the contract be awarded to NH
International. The consultants had pointed to the fact that even
though another tenderer was the lowest bidder there were
several discrepancies in that companys bid which would have
exposed UDECOTT to serious pricing risks and less than adequate
site management. UDECOTT however chose not to follow this
advice and proceeded to negotiate with the lowest tenderer. On
hearing of this, NH sought to obtain an order of certiorari
quashing the decision on the ground that it was unlawful,
irrational, unreasonable or an abuse/misuse of power.
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The Court of Appeal held that in Trinidad and Tobago
government procurement cases were to be considered an
exception to the general principles governing judicial review and
that, in such cases, the public law remedy was only available if
there was a sufficient public element or flavour in the decision
as a result of some policy or statutory underpinning or nexus.
There being none in this case, no public law remedy was
available.
This decision is difficult to reconcile with others. For example,
Seeballack Singh v The Agricultural Development Bank6
held that there was a sufficient public law element in a decision
relating to the wrongful dismissal of a CEO by a State Owned
Enterprise. On appeal the Court held that the Board of the State
Owned Enterprise was exercising a public law function when it
terminated the Claimants employment. It is not easy to see how
there could be a sufficient public element in a matter of wrongful
dismissal (which could have been subject to private law
employment contract principles) and yet not in the award of a
multimillion dollar contract for the benefit of a government
ministry providing health care services to the public, financed by
state funds and backed by state guarantee.
Instinctively something seems wrong with this decision. - not on
an assessment of the merits of the substantive claim brought by
NH International, but on the ostensible shutting of the procedural
door by the courts to unsuccessful tenderers seeking to review
6 HCA S430 of 2003
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decisions made by the government or its agents relating to the
expenditure of millions of tax payers dollars.
The question that arises is
If this is not a case with a sufficient public element or
flavour, (A public body, a project financed by the public
purse, performing a public function on behalf of the
State) then WHAT IS?? Why was the decision of
UDECOTT to award a 140 million dollar contract to
construct the Ministry of Health Headquarters on state
owned land, financed by a mortgage of state owned lands
not subject to the principles of public law under judicial
review?
Even more puzzling was the assertion by the judge at first
instance that UDECOTT was not a public body! This contention,
that a wholly owned state owned enterprise is not a public body
merely because it is incorporated under the Companys Act 1995,
appears to be patently inconsistent with earlier decisions of both
our local courts and the Privy Council.
In 1982, Deyalsingh J. in a compelling judgment in Surujrattan
Rambachan v TTT7 had this to say on whether TTT a wholly
owned state enterprise could be subject to public law principles:-
7 HCNo. 4789 of 1982
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To limit the constitutional issue raised in this
motion to the personality test can very well
offend against one of the underlying principles of
the Constitution .Power without responsibility is a
concept alien to our constitutional framework. To
the Government is given very wide powers.
Where in its wisdom therefore, it brings any
activity within the public portfolio and retains
some substantial control, whether actual or
potential, over those activities then it must inconstitutional law and in my view also in common
sense, retain the responsibility for the legitimate
performance of those activities. To hold otherwise
(and particularly in developing countries where
the traditional checks and balances to political
power are not yet fully developed or are ignored)
is to court constitutional disaster. This can easily
lead to a situation where an Executive can by
establishing various non-traditional governmental
entities, retain to itself the power but without the
responsibility, thus negating the underlying
constitutional concept; and in a case like the
instant one, negating the fundamental rights of
the individual by the device of creating legal
entities to which is committed power to offend
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against those rights without any redress by the
individual
The Court accordingly held that The Trinidad and Tobago
Television Company (TTT) was a public body for the purpose of
allocating time for political broadcasts and in so doing it was
indulging in state action. The fact that the plaintiff came by way
of constitutional motion and not judicial review does not weaken
the argument on the point.
This judgment seems prophetically to have applied to present
circumstances where, in this jurisdiction for example and that of
other developing countries, the Executive chooses to create
special purpose companies through which to conduct its major
procurement activities ostensibly with the goal of achieving
greater commercial expediency. (The purchase of an executive
jet aircraft to facilitate the movement of members of the
executive is presumably not state action because it is done
through a wholly owned state company.) In so doing, it is
important not to ignore the potential loss of public law
accountability which may result even though these entities are
undertaking the public function of pursuing the Governments
development goals. Despite the powerful reasoning in the
Rambachan judgment, one still sees arguments being made,
some gaining judicial support, that incorporated state owned
enterprises are not public bodies and therefore should not be
subject to public law principles and discipline. Another twist to
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the same question is the virus which seems to have crept into the
argument about who should be required to make declarations
under the integrity in public life legislation. Leaving aside the
question of entitlement to proceed with a claim for judicial review,
in 1994, the Privy Council8made it clear that in New Zealand:-
a state enterprise is a public body; its shares are
held by Ministers who are responsible to the
House of Representatives and accountable to the
electorate. The defendant carries on its business
in the interest of the public. Decisions made in
the public interest by the defendant, a corporate
body established by statute, may adversely affect
the rights and liabilities of private individuals
without affording them any redress. Their
Lordships take the view that in these
circumstances the decisions of the defendant are
amenable in principle to judicial review both under
the Act of 1972 as amended and under the
common law.
Stollmeyer J however appeared not to have considered these
decisions. In reliance on the Datafin principle, after dismissing
UDECOTT as a private body, he went on to hold that there was
nothing inherent in a construction contract to give it a public
flavour. He further held that there was no statutory underpinning
for the tender procedure by which UDECOTT went about
8Mercury Energy Limited v Electricity Corporation of New Zealand Limited (1994) 1 WLR 521
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considering the bid and accordingly the decision was not
susceptible to review. The Court of Appeal disagreed on this
point and found that UDECOTT was a public body and therefore
prima facie its decisions were amenable to judicial review.
However, the Court went on to consider whether in inviting
tenders for the award of the contract, UDECOTT was performing a
public as opposed to a private function. After reviewing the
relevant case law, the Court of Appeal held that judicial review of
the decisions of a public body will not be appropriate where
(1) The decision is commercial in nature, such as
the purchase of goods or services or in
consequence of a tendering process
(2) Where its decisions are not subject to duties
conferred by statute
(3) There is no allegation of fraud, corruption orbad faith
It should be noted that it is accepted that in cases of fraud,
corruption or bad faith the Courts will exercise its power to review
the decision and grant public law relief. This was in fact held by
the Privy Council in the Mercury Energy Case.9
Interestingly enough, the approach of the Court of Appeal in the
NH International case appears to be in line with the traditional
approach of the courts in other Commonwealth jurisdictions.
This demonstrated reluctance of common law courts to grant9 supra
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public law remedies in what is viewed as a private contract
matter between the procuring entity and the tenderer can be
seen in several cases. In R v Lord Chancellors Department
ex parte Hibbits & Saunders (a firm) and Another10 , Rose
LJ held that:-
(1) The Lord Chancellor is susceptible to Judicial
Review
(2)The susceptibility exists only in relation to
those of his decisions which are either in some
way statutorily underpinned or involved some
other sufficient public law element as to which
there is no universal test.
(3) The test to be applied is to look at the
subject-matter of the decision which it is
suggested should be subject to judicial reviewand by looking at that subject-matter then come
to a decision as to whether judicial review is
appropriate. Per Woolf L.J. in ex parte Noble
[1990] 1 CR 808
However, judicial equivocation on this issue is also apparent from
the authorities which recognize the public element in the
tendering function. For example in R v Legal Aid Board, ex
10 March 12, 1993, The Times Law Report
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parte Donn & Co (a firm),11 a case dealing with the award of a
contract by the Legal Aid Board to solicitors to represent generic
plaintiffs in a multi party action it was held that:
(1) the decision making process of a legal aid
committee in awarding a contract to solicitors for
the conduct of a multi-party action was justiciable
in public law. Treating the nature and purpose of
the selection process and its consequences as
one indivisible whole, the function exercised by
the committee, the purpose for which they were
empowered to act and the consequences of their
decision making process all clearly indicated that
it would be wrong to characterize the matter for
review as one of private law; and irrespective of
whether there was a remedy in private law, the
public dimensions of the matter were of a quality
which made it justiciable in public law
As recognition grows worldwide on the strategic importance of the
function of procurement in the attainment of a Governments
developmental objectives, more and more we see courts in other
commonwealth jurisdictions acknowledging the public element in
the tendering process and allowing such decisions to be
amenable to judicial review.
11 [1996] 3 All ER
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For example, in R v Lewisham London Borough Council, ex
parte Shell UK (1988)12 the Court held that a decision not to
deal with firms having South African connections which was
motivated by political considerations was unlawful because it
was made for a purpose not contemplated by the state conferring
the contract powers in question. Also in R v Enfield London
Borough Council, ex parte Unwin (1988)13 a decision by a
local authority to suspend a contractor from its approved lists was
held subject to the public law principles of natural justice. And in
Jones v Swansea City Council (1990)14
the Court of Appealdoubted the wisdom of the view that contract powers are prima
facie outside the scope of public law and held contracting to be a
public power for the purpose of the tort of misfeasance in public
office.
In Shell Canada Products Ltd v City of Vancouver (1994)15
on facts similar to the Lewisham case above, the Supreme Court
of Canada extensively considered the general question of the
review of procurement decision making. Both majority and
minority opinions expressly rejected the argument that
procurement powers were to be treated differently from other
governmental powers when it related to decisions taken for
improper purposes. The minority went even further andindicated that procurement should in general be subject to
12 [1988] 1 All ER 13813 [1988] C.O.D. 46614 [1990] 1 W.L.R. 55. Determined on other grounds by the House of Lords [1990] 1 W.L.R. 145315 Judgment February 12th 1994 See Comment by Arrowsmith PPLR 1994, 5, CS174-178
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judicial review just like any other government function.
McLachlin J. argued very persuasively that:-
The most important difference is the fact that
municipalities undertake their commercial and
contractual activities with the use of public
funds. Another consideration justifying different
treatment of public contracting is the fact that a
municipalitys exercise of its contracting power
may have consequences for other interests not
taken into account by the purely consensual
relationship between the council and the
contractor. For example, public concerns such as
equality of access to government markets,
integrity in the conduct of government business,
and the promotion and maintenance of
community values require that public procurement
be viewed as distinct from the purely private
realm of contract law.
A decision to remove a contractor from the tender list was
challenged on an application for judicial review on the basis that
the removal was a wrongful removal under general public law
principles. Jackson J16 stated that
as a matter of general principle, a decision by a
local authority to strike a contractor off an
16 R v Bristol City Council, ex p. D.L.Barrett (2000)
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approved list of tenderers does contain a public
law element
In R v National Lottery Commission Ex p. Camelot Group
Plc (2000)17 the tender procedure was terminated and a
decision was taken by the Commission to embark upon a new
procedure with only one of the previous tenderers. The Court
granted relief in an application for judicial review and concluded
that there had been a breach of the obligation of fairness, in the
sense of a requirement to give even handed treatment to persons
in a similar position18.
It is to be noted that none of these cases was referred to in the
Court of Appeal in NH v UDECOTT and if they were the decision
of the Court may well have been different. This is not to suggest
that the decision wasper incuriam.
Since NH v UDECOTT , two recent authorities have consideredthe amenability of procurement decisions to judicial review. R
(on the application of Menai Collect Ltd) v Department for
Constitutional Affairs (2006)19 and R (on the application of
Gamesa Energy UK Ltd) v National Assembly for Wales
(2006)20 both considered the question of immunity from review
of procurement decisions which are irrational and unfair.
However, emphasis was placed on the restrictive rather than the17 Times, October 12th 2000 (QBD)18Note that in this case, there was a significant statutory underpinning to the tender procedure and therefore cannot
be relied upon for justification of the public law jurisdiction of the courts.
19 [2006] EWHC 724 (Admin) (QBD (Admin))20 [2006] EWHC 2167 (Admin) (QBD (Admin))
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broader approach to the issue of amenability to judicial review
leaving the state of the law somewhat uncertain.
What is clear though is that, as concepts of transparency,
accountability and good governance in Government take firmer
hold, procurement decisions are coming under closer scrutiny by
the Courts. In fact, in recognition that public bodies ought to
operate fairly in respect of bidders, the private law has been
developing to provide remedies to disgruntled bidders in
circumstances where previously none existed. Developments in
contract law acknowledge a Contract A, as it was termed in the
Canadian authority ofRon Engineering, recognized in the UK as
the BlackPool contract and accepted by the Privy Council in
Pratt Contractors as a Process contract. This points squarely
to the closing of the obvious lacunae in the landscape of fair play
in the tendering process. Now, implied duties of fairness and
duties to comply with terms of the tender are being placed on
procuring entities. I understand thatmore will be presented on
this aspect in other sessions in these proceedings.
Paradoxically however, this progression of the private law may
very well operate to have the unintended effect of making public
law relief even less attainable. As much was suggested by the
Court of Appeal in the NH v UDECOTT case.
PerhapsOliverin her book Common Values and the Public-
Private Divide is correct when she states that the continued
divisive approach to accountability through either public or
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private law mechanisms is illogical and not serving us. What is
suggested is that greater emphasis be placed on the similarity
between the underlying goals and values of both systems and
that the law favour inclusive approaches to fashioning remedies
as distinct from artificial exclusive approaches.
Arrowsmith goes further. In her critique of R v Lord
Chancellors Departmentex parte Hibbit & Saunders supra
she stated:
..the better view is that in principle contract
powers are subject to public law principles of
judicial review in the same manner as all other
powers of government. To insist on the need for a
public law element for review in the way that the
English Courts have done is wholly anomalous; the
criteria which the courts have developed to
determine whether such a public law element is
available have very little relevance to the policy
matters which must be applied to determine when
review is available, and what is its precise scope.
Of course, this is not to say that the content of
substantive public law principles might not be
severely limited in the commercial context in
which the principles must operate; but this
problem must be approached by fine-tuning these
principles to apply in an appropriate manner on
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the facts of each case, rather than excluding
contract powers from review according to rather
arbitrary criteria which purport to define a public
law case.21
Is there a ray of hope?
Mention must be made of a judgment of Jamadar J. in 2000 which
was not cited in NH v UDECOTT supra. Jamadar J had this to
say in Star Telecommunications Company Ltd v Ministry of
Information, Communications, Training and Distance
Learning22:
With the greatest of respect to the Divisional
Court in ex p. Hibbet, I do not agree with the
restrictive approach apparently taken in that case.
I am of the view that in a developing democracy
such as Trinidad and Tobago, where the state,
acting by the central government through one of
its Ministries, chooses to exercise its prerogative
or common law power to contract and where the
nature of that function is clearly public (as it is in
this case), it cannot hide behind the veil of thecontractual nature of the exercise of its power.
This is so, especially where (as in this case) what
21 PPLR 1993, 4, CS 104-10922 HCA No. Cv1713 of 1999
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is being challenged, are alleged criteria laid down
in advance by the Ministry and the exercise of the
Ministers powers in relation to same in the
context of procedural fairness. To my mind, the
fact that if in these circumstances there was
some statutory underpinning, there would have
been a sufficient public law element to justify
judicial review proceedings, operates in favour of
concluding that there is a sufficient public law
element in this case to bring it within the scope of judicial review proceedings. I see no good or
sufficient reason why (ex p. Hibbet apart) given
the principle that all discretionary powers
exercised by public bodies are to be exercised in
the public interest in accordance with normal
public law principles, and on the facts of this
case, including the source of the power, the
nature of the function being exercised, the
subject matter of the claim, the pre-contractual
stage of the matter and the procedural
complaints which are the subject of this
challenge, this court should hold that there is no
sufficient public law element to make these
proceedings amenable to judicial review. In this
post modern era, when the principles of
transparency, openness and accountability
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are the increasing norm for the conduct of
public affairs and the maintenance of a free
and democratic society, there is no good
reason why the exercise of central
governments prerogative or common law
power to contract should enjoy an
exemption from judicial review of
procedural impropriety, whether the
challenge is on the basis of illegality,
irrationality, abuse or excess of power orotherwise.
Before I take my seat I wish to acknowledge publicly the
assistance given to me by Margaret Rose, Chief Executive Officer
of the Caribbean Procurement Institute in the preparation of this
paper. Her focus and grasp of the subject made my task
immeasurably easier and I wish to thank her publicly.
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