Ocean Outdoor UK Ltd v The London Borough of Hammersmith & Fulham

A services concession requires a contracting authority to entrust an economic operator with services connected to the authority’s public obligations or strategic objectives, or otherwise benefiting the authority or its residents. The contract must impose a legally enforceable obligation to provide the relevant services.

A genuine lease granting exclusive possession for fixed rent falls within the land transaction exemption, even where it permits commercial exploitation of structures on the land. Advertising is not inherently outside the concessions regime, since the examples in the Directive are illustrative.

Procedural non-compliance does not automatically constitute a sufficiently serious breach for damages. Loss-of-a-chance damages still require a possible causal connection between the breach and loss.

The Council invited bids for leases of land and advertising towers beside the Hammersmith Flyover. Ocean Outdoor UK Ltd was substantially outbid by another operator. It nevertheless claimed damages on the ground that the procurement should have complied with the Concessions Contract Regulations 2016 and Directive 2014/23/EU.

O’Farrell J dismissed the claim in [2018] EWHC 2508 (TCC). She held that the leases were not services concession contracts or contracts for pecuniary interest, and that the land transaction exemption applied. She also held that any assumed breach was neither sufficiently serious nor causative of Ocean’s loss.

The appeal concerned the scope of services concessions, the need for an enforceable service obligation, the land exemption and the conditions governing damages for procurement breaches.

1. Appeal dismissed unanimously. The advertising leases were not services concession contracts within regulation 3(3) of the Concessions Contract Regulations 2016. Services entrusted under a concession are generally services which the contracting authority would otherwise provide pursuant to its public obligations or strategic objectives, or services benefiting the authority or its residents. The Council had no obligation to provide advertising. The advertising was neither requested on its behalf nor related to its public objectives. The fixed rent was consideration for possession and use of the property, rather than for advertising services.

2. A contract for pecuniary interest under regulation 3(3) requires a direct or indirect, legally enforceable commitment to perform the relevant services. The court examined the leases as a whole and according to their substance. Clause 10.8 required reasonable endeavours to market and promote the towers, but imposed no positive obligation to provide advertising of any specified nature, quality or minimum quantity. The leases therefore did not entrust the provision or management of advertising services to the tenant.

3. The leases also fell within the land transaction exemption in regulation 10(11) and article 10(8) of Directive 2014/23/EU. They were genuine leases granting exclusive possession of the land and existing towers for fixed rent. Permission to sell advertising space did not alter the transaction’s character as a rental of land.

4. The judge had gone too far if she meant that advertising could never be a service covered by the Directive. Recital 1 is illustrative. Depending on the facts, advertising may fall within the concessions regime, particularly where it is directly connected with a contracting authority’s public obligations. That conclusion did not affect the result.

5. Although damages did not arise on the liability findings, the court rejected the alternative damages appeal. Procedural non-compliance is not automatically a sufficiently serious breach under the Francovich conditions. Seriousness depends upon the circumstances. Loss-of-a-chance assessment may be appropriate where uncertainty prevents ordinary proof of causation, but the claimant must first establish a possible causal connection. Ocean’s bid was so substantially lower that it would have failed in any lawful competition.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously in [2019] EWCA Civ 1642. The court upheld the dismissal of the claim, although it disagreed with the lower court insofar as advertising had been treated as invariably outside the concessions regime.
2. High Court, Technology and Construction Court: O’Farrell J dismissed Ocean’s claim in [2018] EWHC 2508 (TCC). She held that the leases were outside the Concessions Contract Regulations 2016 and that damages would not have been recoverable in any event.