AAEW Europe LLP & Ors v Basingstoke And Deane Borough Council

The first ground for a declaration of ineffectiveness under the Public Contracts Regulations 2015 is concerned with whether the required prior contract notice was published. Where a valid notice exists, the court applies a practical, broad-brush and largely mechanistic comparison between the notice and the contract ultimately awarded. A materially changed contract does not automatically become an illegal direct award if the contract remains sufficiently related to the advertised project. The remedy is unavailable where the notice was objectively capable of relating to the procedure and contract, and in fact sparked the competition. Other remedies, including damages, may remain available for procurement breaches.

The claimants, owners and managers of a central retail facility, challenged Basingstoke and Deane Borough Council’s proposed redevelopment of Basingstoke Leisure Park. They alleged that the Development Agreement entered into with Newriver Leisure Limited materially departed from the project described in the 2013 OJEU notice and required a fresh procurement process.

The court was directed to assume that the Development Agreement was materially varied and would have required a fresh process. The preliminary issue was whether those assumed facts were nevertheless capable of giving rise to a declaration of ineffectiveness.

1. Preliminary issue decided for the defendant and interested party. Even on the assumption that the Development Agreement materially departed from the contract sought by the original tender process, a declaration of ineffectiveness was unavailable.
2. The court applied the approach in Alstom Transport v Eurostar International Ltd [2011] EWHC 1828 (Ch). The relevant inquiry under the first ground for ineffectiveness is whether a required prior contract notice was published. The inquiry is substantially mechanistic, although it is not wholly formal or devoid of substance.
3. The notice must be objectively capable of being related to the procurement procedure and the contract awarded. Regard may be had to whether it sparked the competition. The court should adopt a broad-brush approach and avoid an extensive factual investigation where the issue is the availability of the remedy.
4. The 2013 OJEU notice was valid. It described a long-term regeneration partnership for the Leisure Park and contemplated leisure, restaurants, retail, hotel and conference uses. The Development Agreement retained a close relationship with that advertised project, including its leisure-led character. It was unnecessary to decide whether every aspect of the proposed retail provision fell within the precise wording of the notice or ISOP.
5. Regulation 99(2) of the Public Contracts Regulations 2015 did not require a further notice in these circumstances. The existence of a valid notice, coupled with the close relationship between the notice and the contract, meant that the first ground was not established. A procurement breach might give rise to other remedies, including damages.
6. The draconian consequences of ineffectiveness supported a pragmatic interpretation. The remedy prospectively brings an otherwise lawful contractual relationship to an end, so clarity and commercial practicality are important.