Administrative Court gives strong guidance on the duty of candour following failure to provide accurate instructions to legal team

The Administrative Court has emphasised the importance of the duty of candour in judicial review proceedings, and found a breach of that duty by the Secretary of State in R. (on the application of HM) v Secretary of State for the Home Department [2022] EWHC 2729 (Admin). The two joined claims concerned the Home Office’s unpublished and unlawful blanket policy in relation to the seizing of all mobile phones from migrants crossing in small boats.

Key Points

  • The court emphasised that the duty of candour imposes on the state “a positive duty” to provide accurate information.
  • This requires both clear and accurate instructions to legal teams and proper engagement with the preparation of evidence and submissions in judicial review proceedings.
  • Despite acknowledging the challenging wider circumstances presented by the pandemic amongst other factors, the court held that this was no excuse for unlawful conduct and lack of candour.

Factual Background

At the outset of the proceedings, the Home Office’s legal team understood that the unlawful policy (which had been the subject of the original judicial review claims) had been discontinued in June 2020 and replaced with a lawful policy of targeted seizing. This understanding was incorrect. Although the policy did undergo changes in the months following June 2020, aspects of it remained unlawful until November 2020. As the first of the two judicial review claims concerned a seizure which took place after June 2020 but before November 2020, the legal team erroneously believed that the claimant’s phone had been seized pursuant to a lawful policy. Holding this view, the legal team decided that it was appropriate not to disclose that an unlawful policy of blanket seizure had existed at any time, and robustly defended the case suggesting that the allegation of a blanket policy was fanciful.

Legal Background

Turning to the legal background, the court emphasised the fundamental importance of the duty of candour in judicial review proceedings, which imposes “a positive duty” to ensure that the court is “supplied with all the information necessary to determine a case accurately.” This is so that the court can “adjudicate on issues involving the state without deciding facts or engaging in disclosure processes” which, considering the nature of public law, would be onerous and time-consuming were they to be required.

Whilst the principal legal authorities on the duty of candour are well-established, the court also referred to the guidance published by Treasury Solicitors Department in January 2010 (see here) as a source of “sound advice” on the subject. In particular, the court highlighted the section confirming that the duty of candour “applies to every stage of the proceedings”, including before the permission stage.

Judgment

The court found that the principal failure in relation to the duty of candour was the decision not to disclose that there had been an unlawful policy, about which the legal team knew, thereby failing to provide an accurate and complete picture of the case to the claimants and the court. This was a “collective error of judgment“. Furthermore, the court suggested that had an accurate case been put forward, any misunderstanding in relation to the facts of the case would have been resolved much earlier.

The court commented that it was the “surprising failure to provide accurate factual instructions to the legal team” which was the origin of the subsequent failures of those acting on behalf of the Secretary of State. In particular, the court noted its surprise, given that when the challenge was brought, the government lawyers were in direct contact with the officers who were “at almost exactly the same time” involved in discussions about necessary changes to the policy. Recounting the chronology of events, the court noted a number of missed opportunities for the confusion to be resolved in which they were not. This was due to a consistent and widespread absence of clear instructions to the legal team, and a less than rigorous engagement on the part of the Home Office with the draft documents and updates being circulated by the legal team.

The court recognised the various contextual factors which may have contributed to the failings, including the great pressure the participants were under due to the migrant crisis, and the related need for events to move quickly. Furthermore, opportunities to meet face-to-face continued to be restricted by the pandemic. Under these circumstances, there was “a failure to take appropriate steps to ensure that what was done [i.e. the creation and implementation of policy] was being done lawfully, and thereafter […] to conduct rigorous enquiries to establish before making statements in the proceedings what the truth was.” In summary, whilst the court agreed that these factors offered an explanation for the origin of the unlawful conduct and lack of candour, it did not consider that they offered an excuse.

As a consequence of the breach of the duty of candour, and following an apology from the Secretary of State, the parties reached an agreement that the Secretary of State must pay some of the claimants’ costs for the linked judicial review claims on an indemnity basis.

Comment

In keeping with a line of post-pandemic judicial reviews, the court has again maintained that exceptional circumstances such as the pandemic or political crisis do not necessarily permit public bodies to dispense with rigorous internal checks and the proper following of processes. The strongly worded judgment acts as a reminder to legal teams and instructing parties alike of the importance of clear and accurate instructions and the need to stay actively and critically engaged throughout the proceedings.

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High Court considers standing of a non-economic operator to challenge procurement decisions

In R (Good Law Project Ltd) v The Secretary of State for Health and Social Care [2022] EWHC 2468 (TCC), the High Court dismissed a judicial review claim brought by the Good Law Project (“GLP“) against the Secretary of State for Health and Social Care (“SSHSC“) in connection with the awarding of contracts in the Covid-19 pandemic, and in doing so found that GLP did not have standing to bring the challenge.

Key points

  • Non-economic operator claimants in judicial reviews in the procurement area may have standing in some limited circumstances.
  • The question of standing remains heavily dependent on the facts of the case and the circumstances of the particular claimant.
  • Following a number of recent cases, claimants should be mindful that defendants may seek to raise standing arguments more frequently than before.

Background

Over the course of 2020, the SSHSC entered into three contracts with Abingdon Health plc (“Abingdon“) to develop and purchase lateral flow tests which could be used by individuals to test for Covid-19 antibodies.

GLP was granted permission to challenge the decisions by the SSHSC to enter into contracts with Abingdon on the following grounds, which rely on both public law principles and the Public Contracts Regulations 2015:

  1. The SSHSC’s decision to enter into the contracts was irrational.
  2. The SSHSC acted with apparent bias, had a conflict of interest and had an unlawful nationality preference when choosing to award Abingdon with the contracts.
  3. The SSHSC breached obligations of equal treatment and transparency.
  4. The SSHSC unlawfully granted Abingdon State aid.

The SSHC challenged GLP’s standing to raise any of the grounds set out above.

The judgment

In a lengthy judgment of over 100 pages, the court (Waksman J) dismissed all of GLP’s grounds of challenge, finding that:

  1. There was no evidence to suggest that the decisions to enter into any of the three contracts were taken without conducting adequate enquiries (or were otherwise irrational);
  2. The allegations of apparent bias, conflict of interest and unlawful nationality preference were not made out on the facts;
  3. On the facts, there was also no breach of the principles of equal treatment and transparency and notably, GLP could not identify another company as being “unlawfully treated”; and
  4. Neither the grant of the contracts nor any assistance provided by the Government to Abingdon constituted State aid.

Although having dismissed the claim, the point was academic, Waksman J addressed the question of standing fully in his judgment.

The law on standing

Section 31 (3) of the Senior Courts Act 1981 provides that an applicant for judicial review must have “sufficient interest in the matter to which the application relates.  This is often straightforward, on the basis that a claimant will have a direct interest in the decision (for example in the case of an economic operator who has unsuccessfully competed for a contract). However, standing can be a live issue in public interest cases, where decisions affect society generally but there are no particular affected individuals.

Describing the issue of standing as a “multifaceted one“, Waksman J identified the following six factors which he considered to be relevant when making a decision on standing:

  1. Merits: The merits of the case are relevant to the question of standing, although not a determinative factor because, if the claim fails (as it did in the present case), it does not necessarily mean standing cannot be found.
  2. Particular legal context: In this context (which concerned procurement decisions) it was not disputed that the “natural” claimants would be relevant economic operators. However, Waksman J emphasised that this does not mean that a person other than an economic operator can never bring a public law challenge against a procurement decision.
  3. Effect on the claimant: The court held that this factor is “clearly relevant” when considering standing. In the present case GLP was not affected by the alleged unlawfulness any more than any other member of the public.
  4. Gravity: Waksman J found that the “gravity” of the issue in dispute is a further way of showing a basis for standing (even for a non-economic operator in a procurement dispute), albeit again not a determinative one.
  5. Other possible claimants: Waksman J emphasised that, while the absence of claims brought by the “natural” claimants (in this case being the economic operators) “is not wholly irrelevant“, the court should not focus too heavily on this but should instead “concentrate more” on the questions of gravity and the effect on the claimant.
  6. The position of the claimant: While it is well accepted that, if a claimant is a “busybody” or has an “ulterior motive“, this can be enough to disqualify them, this must be assessed in the context of the case as a whole.

While focussing on these six factors, Waksman J also identified a number of other points (including the relevance of a public interest in the decisions in question) which might be relevant and noted that overall, the question of standing is case sensitive.

GLP’s standing in this case

Having considered the factors described above, Waksman J found that GLP did not have standing for any of the challenges pursued.

The starting point is that, as a non-economic operator, it could not be said that GLP was affected in any “tangible way” by the award of the contracts. Neither was it “acting as a surrogate for operators”. In addition, Waksman J did not consider the claim to be “grave” as it concerned a single operator in contracts worth £15 million (as opposed to the fact pattern in a previous case whereby contracts involving billions of pounds had deliberately not been publicised) and ultimately no findings of unlawfulness had been made.

As to the position of GLP itself, the court found that while it had a “particular interest” in the matters pursued, in the circumstances “very limited weight” could be attached to GLP’s “experience and expertise” in procurement-related claims.

Comment

This case, which is the latest in a succession of recent cases involving GLP which have considered standing (see here for our blog on an earlier case), provides some helpful clarity and guidance on the factors which are taken into account by the court when deciding standing, in particular in circumstances where the applicant is not the “natural” claimant in a case.

It also clarifies the question of standing for non-economic operators with no commercial interest in a procurement process, which was described as “ripe for review” in R (Good Law Project) v Minister for the Cabinet Office [2022] EWCA Civ 21.

This case leaves open, however, the question of whether recent decisions reflect a tightening of the law on standing and it will be important for claimants and defendants alike to keep a close eye on developments in this area going forward.

Andrew Lidbetter
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Government formally establishes COVID-19 inquiry

The UK Government has published the final terms of reference (“ToR“) for the COVID-19 inquiry (the “Inquiry“), which has now begun work. Unprecedented in its size and significance, the Inquiry will consider over a two-year period the impact of the pandemic on the UK, and how the UK Government, devolved administrations, local government, and many other parts of the state responded.

Key points

Chaired by Baroness Hallet DBE, the Inquiry will:

  • Examine the COVID-19 response and the impact of the pandemic in England, Wales, Scotland and Northern Ireland, and produce a factual narrative, including:
    • The public health response across the whole of the UK;
    • Response of the health and care sector across the UK; and
    • The economic response to the pandemic and its impact, including governmental interventions.
  • Identify the lessons to be learned from the above, to inform preparations for future pandemics across the UK.

Background

The Inquiry was announced on 12 May 2021 and the draft ToR published on 10 March 2022, with the subsequent four-week consultation attracting responses from over 20,000 organisations and individuals. The Chair’s recommendations and report were published on 12 May 2022. The ToR were published and the Inquiry formally established under the 2005 Inquiries Act on 28 June 2022. 11 QCs have been appointed to lead the Inquiry’s investigations alongside the Chair, alongside 49 junior counsel.

The Terms of Reference

The Inquiry will scrutinise an expansive range of the Government’s decision-making and public functions, including in relation to the availability and use of data; preparedness and resilience; legislative and regulatory control and enforcement; the safeguarding of public funds and management of financial risk.

Also under examination are the wide range of interventions impacting different sectors of the economy, including the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme, loans schemes, business rates relief and grants, and the role of cost-benefit analysis in decision-making when introducing such measures.

Whilst the scope of the Inquiry did not materially change as a result of the consultation, the following differences between the draft and final ToR are worth noting:

  • The unequal impact of the pandemic: The final ToR obliges the Inquiry to, in all aspects of its work, consider the disparities evident in the impact of the pandemic on different categories of people, including, but not limited to, those relating to protected characteristics.
  • The impact upon mental health: The final ToR includes an expanded focus on the impact of the pandemic on the mental health and wellbeing of the population, and in particular, the impact on children and young people, including health, wellbeing and social care.
  • Transparency and record keeping: The final ToR encompasses investigation of ‘how decisions were made, communicated, recorded and implemented’ (emphasis added). The addition of ‘recorded’ reflected concerns raised during the consultation process regarding record keeping, in particular that ministerial decisions were being made via private email accounts and WhatsApp messages and were not being recorded in official departmental records.

Gaps in government record-keeping during by the pandemic have been highlighted by the courts: in R (Gardner and Harris) v Secretary of State for Health and Social Care and others [2022] EWHC 967 (Admin), the High Court observed that “where there is no record at all of an important issue being raised with the Secretary of State nor of his response we cannot simply assume that everything relevant was taken into consideration“.

The ToR are not definitive and the scope of the Inquiry is expected to evolve.

Next steps

The Inquiry intends to convene a ‘listening exercise’ in Autumn 2022 and public evidential hearings in 2023. The Chair is expected to set out the approach for the next stage of the Inquiry’s work in July 2022.

A separate public inquiry has also been established by the Scottish Government to examine the pandemic response in Scotland.

Comment

The ToR make clear that the Inquiry is not limited to the response of the health and care sectors but will examine the wide-ranging social, economic and political impact of the pandemic on the UK and COVID-19 response. The Inquiry has extensive powers to investigate the Government’s preparation and response to the pandemic, hold decision-makers accountable and make recommendations.

The courts have considered several cases concerning the exercise of public powers during the pandemic (see out blog posts on Gardner and R (Good Law Project and Runnymede Trust) v Prime Minister and Secretary of State for Health & Social Care [2022] EWHC 298 (Admin)). However, in considering claims for specific breaches of alleged legal duties, the courts have been constrained by public law principles and have been careful not to opine on government decision-making more generally. It will be interesting to see the Inquiry approaches the question of hindsight and the level of discretion afforded to decision-makers operating at a time of immense pressure.

Andrew Lidbetter
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COURTS CONSIDER LEGALITY OF PROCUREMENT DECISIONS TAKEN DURING THE PANDEMIC

Two recent judgments have been handed down, relating to allegations of breach of procurement rules by campaign organisation The Good Law Project against the Government. Both judgments related to procurement decisions made during the first wave of the Covid-19 pandemic:

Key points

  • Where a contracting authority considers bids from more than one economic operator, there is no obvious rationale for disregarding the principle of equal treatment in terms of the criteria used to decide which bidders should be awarded a contract. Dispensing with a competition does not justify arbitrary or unfair selection criteria where more than one economic operator could satisfy the demand.
  • In a case concerning decisions made by a public body where it is required to make a complex evaluation of a wide range of overlapping criteria, all of which involve difficult and technical judgments, the purpose of which is to safeguard front line workers in a public health crisis, the Court must accord proper respect to the fact that the decision-maker is much better placed to carry out the assessment than the judiciary by way of judicial review.
  • Consideration of allegations of bias, actual or apparent, requires an assessment of whether a fair-minded and informed observer would conclude that there is a real possibility of bias. The central context for an assessment of the fair minded and informed observer’s belief is the emergency conditions arising out of the pandemic which, in turn, lead to the engagement of regulation 32 of the PCR, which allows for relaxation of the usual procurement rules where “strictly necessary” and for reasons of “extreme urgency brought about by events unforeseeable by the contracting authority“.
  • A claimant may have standing to challenge the award of a government contract despite not being an economic operator if it has a sufficient interest in the public procurement process, and there are no obviously identifiable disappointed bidders who might otherwise be in a position to identify causation and loss. However, the issue of standing in procurement claims is “ripe for review“.

R (GLP) v Secretary of State for Health and Social Care

Background

The judicial review claim, brought by The Good Law Project and doctors’ organisation EveryDoctor, related to the award of contracts for the supply of PPE during the first wave of the Covid-19 pandemic between March and April 2020. The urgency of the health emergency meant the Secretary of State abandoned the usual competitive procurement process in favour of an “open source” approach to purchase over £14 billion-worth of PPE procured through more than 1,000 contracts. Nine of these contracts were awarded to three companies: Ayanda Capital Limited (“Ayanda“) for a value of £252 million, Crisp Websites Limited t/a PestFix (“PestFix“) for a value of £342 million, and Clandeboye Agencies Limited (“Clandeboye”) for a value of £123 million.

The Secretary of State established a ‘high priority lane’ for companies referred by Ministers, MPs and senior officials, which had their offers considered sooner than rival bids and thus increased their chances of being awarded a contract. A National Audit Office report found that companies within the high priority lane were ten times more likely to succeed in their bids.

The claimants sought judicial review on three grounds:

  1. The Defendant was in breach of the EU principles of equal treatment and transparency by:
    1. Failing to identify the contract selection criteria or guidance.
    2. Operating a high priority lane which significantly increased a bidder’s prospects of being awarded a contract.
  2. The Defendant failed to provide proper reasons for its decisions.
  3. The decision to award the contracts to PestFix and Ayanda was irrational because no sufficient financial or technical verification was carried out in respect of their offers due to the operation of the high priority lane.

The Secretary of State relied on regulation 32(2)(c) of the PCR, which allows for relaxation of the usual procurement rules where “strictly necessary” and for reasons of extreme urgency brought about by events unforeseeable by the contracting authority”. Regulation 18 of the PCR requires contracting authorities to treat economic operators equally and without discrimination and to act in a transparent and proportionate manner. The Secretary of State argued that the Claimants lacked standing to bring the claim because they are not “economic operators” within the meaning of regulation 18.

Judgment

On the issue of standing, the Court found that the Claimants had sufficient interest to bring the challenge on each ground.

In relation to the first ground, Mrs Justice O’Farrell found the Defendant’s open source procurement process had in place adequate selection criteria and guidance for the evaluators of bids. However, the operation of the high priority lane breached its obligation of equal treatment and it was unlawful to confer such an advantage on PestFix and Ayanda. Clandeboye was found not to have been awarded its contracts through the high priority lane and so this part of the claim was dismissed.

The Court dismissed the second ground as the Defendant had given sufficient reasons for the decisions. In relation to the third ground, the Court found there was objective justification for treating the offers from PestFix and Ayanda as high priority offers and that sufficient due diligence had been carried out in respect of these companies prior to the award of contracts, taking into account the limited time and resources.

The Court concluded that, although the Defendant’s operation of the high priority lane breached its obligation of equal treatment and was therefore unlawful, the merits of PestFix and Ayanda’s offers meant it was highly likely the contracts would be awarded regardless of their position in the high priority lane. On this basis, the Court did not grant the declaratory relief sought by the Claimants.

R (GLP) v Minister for the Cabinet Office

Background

This case is an appeal from the High Court judgment handed down on 15 February 2021. Our ebulletin on the High Court judgment can be found here.

The claim related to the award by the Cabinet Office in June 2020 of a contract for the provision of focus group and communication support services (the “Contract“) to Public First, a public policy research agency. The Contract was intended to assist the Government’s communications strategy regarding the public health risks posed by the pandemic. Both the Minister for the Cabinet Office and the then Chief Adviser to the Prime Minister (Dominic Cummings) had personal and professional connections with the co-founders and directors of Public First.

The Minister for the Cabinet Office appealed the High Court judgment that the relationship between the directors of Public First and Mr Cummings led to apparent bias. The Good Law Project put forward three submissions on a cross-appeal:

  1. It was not strictly necessary”, as required by regulation 32(2)(c) of the PCR, for the Government to award the Contract to Public First as it already had existing suppliers which could have been used instead.
  2. It was not strictly necessary for the Contract to have a six-month duration.
  3. The scope of the Contract was not strictly necessary because work unrelated to the Covid-19 pandemic was carried out in later stages.

Judgment

The Court of Appeal overturned the High Court’s finding of apparent bias. It held that a fair-minded and reasonably informed observer would not have concluded that a failure to carry out a comparative exercise between Public First and other research agencies created a real possibility that the decision-maker was biased. Equally, the fair-minded and informed observer, realising that the use of a negotiated procedure without prior publication (with Public First) was strictly necessary because of the pandemic emergency, would not have found the absence of any formal record of the decision making process indicative of apparent bias.

The Court of Appeal rejected all three grounds of the Claimant’s cross-appeal. It concluded that the Minister was entitled to exercise his judgment about which suppliers could carry out the urgently required services. Furthermore, at the point in time at which the Contract was made, it was impossible to judge whether six months was longer than strictly necessary. Finally, to the extent that work done under the Contract did not relate to the Covid-19 pandemic, this was a matter of contract performance and was unrelated to the Minister’s procurement decision.

Comment

The two judgments are significant from both a procurement law and public law perspective.

Mrs Justice O’Farrell’s detailed exposition of the requirements of equal treatment and transparency in situations of extreme urgency under regulation 32(2)(c) of the PCR will be relevant in any future challenge based on breach of these procurement rules. Her judgment also emphasises the difficulty of succeeding in judicial review claims alleging irrationality, the judge noting that “the court’s role is not to second-guess an appropriate calculation of the risks involved or substitute its own assessment as to the propriety of the contracts awarded“. The Court of Appeal’s decision in the second claim described above is likely to be welcomed by contracting authorities which awarded contracts under conditions of unprecedented urgency brought about by the first wave of the pandemic.

The approach of the High Court and Court of Appeal to the issue of standing in procurement challenges is also of interest. The High Court in R (GLP) v Secretary of State for Health and Social Care found the claimants had standing to bring the judicial review despite neither claimant being an “economic operator”. However, the Court of Appeal in R (GLP) v Minister for the Cabinet Office regarded the first instance decision on standing to be “an unprecedented outcome”, adding that “[t]he question of standing for complete strangers to the procurement process with no commercial interest both under the Regulations and on public law grounds is a question ripe for review when it next arises”. These comments are likely to encourage contracting authorities to seek to question the standing of certain categories of claimant in future claims.

Andrew Lidbetter
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Lara Nassif
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High Court finds apparent bias in contract award decision

The High Court has found apparent bias on the part of the Government in respect of its award of a contract under the Public Contracts Regulations 2015 (the “PCR“) for the provision of focus group and communication support services without public notice or competition during the early weeks of the Covid-19 pandemic (the “Contract“) (R (The Good Law Project) v Minister for the Cabinet Office [2021] EWHC 1569).  The Court found that whilst there was no suggestion of actual bias, the steps taken by the Government in awarding the Contract fell short of the objective test for apparent bias.

Key Points:

  • The test for apparent bias is whether the circumstances would lead a fair minded and informed observer to conclude that there was a real possibility or a real danger that the decision maker was biased.
  • Evidence of personal or professional relationships between the contracting parties is insufficient to establish apparent bias, but it is a factor to be considered when assessing impartiality and independence in the context of public procurement.
  • A claimant may have standing to challenge an individual procurement decision despite not being an economic operator if it has a sufficient interest in compliance with the public procurement regime in that it is affected in some identifiable way by the challenged decision, or the gravity of a departure from public law obligations justifies the grant of a public law remedy.

Background

The judicial review claim related to the award by the Cabinet Office of the Contract to Public First, a public policy research agency, in June 2020 with a retrospective effective date of 3 March 2020. The Contract arose incrementally when Public First, who had originally been engaged for a discrete unrelated task, were asked to redirect their planned focus group to conduct Covid-19 research and carry out further work in response to demand caused by unforeseen developments in the pandemic.

Regulation 26 of the PCR establishes the general rule that there must be a competition for public contracts. Regulation 32 specifies that in certain circumstances contracting authorities may award public contracts without complying with the procurement procedures in the PCR. These circumstances include where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the procedures in the PCR cannot be complied with.

The claimant, the Good Law Project, sought judicial review on the basis of three grounds of challenge:

  1. There was no basis for making a direct award of the Contract under regulation 32 of the PCR.
  2. Even if the award of the Contract to Public First was lawful, the duration of the Contract (six months) was disproportionate to the immediate need in the given circumstances.
  3. The decision to award the Contract to Public First gave rise to apparent bias, in breach of the principle of procedural fairness. The allegations of apparent bias cited “the longstanding and close personal and professional connections” between Public First’s directors and owners, the Minister of the Cabinet Office, Dominic Cummings (the then Chief Adviser to the Prime Minster) and the Conservative Party, the lack of a competition despite the availability of other contract providers, and the high price of the Contract (£840,000) for six months’ work.

Judgment

In respect of the first ground, the Court concluded that the Defendant was entitled to rely on regulation 32 of the PCR in awarding the Contract to Public First on account of the extreme and unforeseeable urgency caused by the Covid-19 pandemic which justified a departure from the usual procedural requirements and time limits.

The Court also dismissed the second ground that the Contract length was disproportionate. The Court noted that at the time no one could foresee the extent or duration of the pandemic, thereby creating a need for the greater flexibility achieved by a longer contract length.

On the third ground, the Court noted that the test for apparent bias is as set out in the Supreme Court decision of Porter v Magill [2002] 2 A.C. 357, which asks whether the “circumstances would lead a fair minded and informed observer to conclude that there was a real possibility, or a real danger […], that the [decision maker] was biased.”

The Court acknowledged that, having regard to the specialised nature of the public policy and communications research industry, it was unsurprising that those involved might have developed professional and/or personal friendships over the years working within the government departments. It accepted that such acquaintanceships did not preclude Mr Cummings from making a lawful judgment, but stated that it was a factor to be considered in the circumstances surrounding his impartiality and independence in the context of public procurement. The court suggested that it was the fact that these circumstances existed that should have prompted the Government to take careful steps to remove suspicion of favourable treatment, by ensuring that there was a clear record of the objective criteria used to select Public First over other research agencies.

The Court concluded that the Defendant’s failure to consider any other research agency by reference to experience, expertise, availability or capacity would lead a fair minded and informed observer to conclude that there was a real possibility that the decision maker was biased. The Court accordingly made a declaration that the decision to award the Contract to Public First gave rise to apparent bias and was unlawful.

Comment

The judgment in this case reiterates the objective test in Porter v Magill to consideration of allegations of apparent bias. Whilst extreme urgency (as a result of the pandemic or otherwise) can justify the need to act quickly when taking procurement decisions, there remains an overriding expectation that those decisions will adhere to fundamental public law principles. The High Court also referenced regulation 24 of the PCR, which is concerned with the avoidance of actual conflicts, as a useful indicator of the circumstances that might give rise to apparent bias. That provision refers to any situation where relevant staff members have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of a procurement procedure.

The judgment is also of interest in that the Court found that the Good Law Project had standing to bring the judicial review, despite not being directly affected by the decision to award the Contract to Public First. The Court highlighted a number of points in favour of granting standing, including that: the Good Law Project had a genuine interest in promoting good public administration, where there had been no competition there was no unsuccessful bidder who might have challenged the Contract award, and the gravity of the issues raised justified scrutiny by the Court and the grant of a public law remedy. This decision will be seen as a helpful precedent for third parties with an interest in the award of contracts with a significant public interest.

Andrew Lidbetter
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Tribunal holds that regulator must take proactive steps to investigate impact of COVID-19

In JD Sports Fashion plc v Competition and Markets Authority [2020] CAT 24, the Competition Appeal Tribunal (“CAT”) quashed the Competition and Markets Authority’s (“CMA”) final report on the Phase 2 investigation into the completed acquisition by JD Sports Fashion plc (“JD Sports”) of Footasylum plc (“Footasylum”) on the basis that the CMA had not sought to inform itself sufficiently on the impact of the coronavirus pandemic on the relevant market, the merging parties and their competitors and suppliers, resulting in the CMA having insufficient evidence for its conclusions.

Key points

  • The CAT’s decision re-iterates that a regulator may be under a positive duty to take proactive steps to conduct further enquiries and ensure they have robust evidence on which to base their decisions, particularly in relation to a matter the regulator has explicitly indicated should be taken into account.
  • A regulator cannot escape its duty to make informed decisions based on reliable evidence merely by reason of the fact that it is administratively constrained or that evidence already available to it is speculative or unreliable.

Facts

JD Sports and Footasylum are both UK-based retailers of sports-fashion footwear and clothing, conducting sales through their stores and online.

In 2019, JD Sports acquired Footasylum in a £90m deal. The CMA’s Phase 1 investigation concluded that the merger had the potential to remove one of JD Sports’ closest competitors, resulting in a worse deal for customers, through higher prices, reduced product ranges or lowering in service quality.

In September 2019, the CMA announced that it would refer the acquisition for a Phase 2 investigation unless suitable undertakings in lieu (“UILs”) were offered. JD Sports informed the CMA of its refusal to offer the UILs demanded.

In May 2020, the CMA published its final report, concluding that the merger would result in a substantial lessening of competition (“SLC”) in the retail supply of sportswear and footwear apparel in the UK. The CMA decided that only a full divestiture of JD Sports and Footasylum would avoid a SLC.

In reaching its decision, the CMA acknowledged that the coronavirus outbreak was clearly impacting the sports-fashionwear and footwear markets, but did not see evidence to suggest that either of the parties was more negatively impacted by COVID-19 relative to each other or to other market actors. It also did not consider that COVID-19 would reduce materially the extent to which Sports Direct and Footasylum are close competitors, or decrease the probability that the merger would result in an SLC.

However, taking into account the real economic pressures brought about by COVID-19, the CMA tempered its remedies process by not including overly prescriptive conditions for divestiture and by allowing for an extension of the divestiture period beyond the usual six months. In June 2020, JD Sports made an application under section 120 of the Enterprise Act 2002 for a review of the CMA’s decision on three grounds, alleging that:

  • Ground 1: the CMA erred in law and/or acted irrationality in the manner in which it conducted its assessment of the aggregate constraints posed by suppliers and retail rivals on the combined JD Sports-Footasylum group and of whether the merger was likely to result in a SLC.
  • Ground 2: the CMA erred in law and/or acted irrationally in excluding COVID-19 from the counterfactual of Footasylum’s competitive constraints, in particular by failing to seek more information from the principal suppliers and Footasylum’s primary lender.
  • Ground 3: the CMA failed, inter alia, to provide adequate reasons and made irrational findings in concluding that the ability and incentives of suppliers (in particular Nike and Adidas) to increase their direct-to-consumer (“DTC”) operations were not so significant as to disadvantage or sufficiently discipline the merged entity.

Section 120(4) states that in determining such an application, the CAT shall apply the same principles as would be applied by a court on an application for judicial review.

Judgment

On the first ground, the CAT dismissed JD Sport’s argument that the CMA erred in the manner in which it conducted its assessment of aggregate constraints and the likelihood of a SLC. The CAT noted that the CMA had very substantial evidence on which to base a reasonable decision relating to the aggregate effects of the competitive constraints and the question of SLC, and provided substantial reasons for its assessment.

The CAT reiterated in considering this ground that where there is a rationality challenge against a merger decision of the CMA, the hurdle which the applicant has to overcome is a high one and that the CAT must be wary of a challenge which is “in reality an attempt to pursue a challenge to the merits of the Decision under the guise of a judicial review.”

On the second ground, the CAT ruled that the CMA acted irrationally in that it came to conclusions as to the likely effects of COVID-19 that were of material importance to its overall decision, without having the necessary evidence from which it could properly draw those conclusions.

Although the CMA was acting within its wide margin of appreciation in finding that the evidence it had received from the applicants and third parties was insufficiently robust to form a view on the possible or likely effects of COVID-19, the CMA’s decision not to conduct further enquiries with suppliers or Footasylum’s primary lender to see if sufficiently reliable evidence had become available prior to the publication of the final report was found to be irrational. The CMA’s decision not to conduct further enquiries was rooted in administrative constraints and the perceived futility of searching for reliable and specific evidence. However the CAT considered that it had “closed its mind to the possibility that robust information on possible impacts was available”.

The decision was also irrational judged against the CMA’s own COVID-19 guidance, which required the impacts of the COVID-19 outbreak to be factored into the substantive assessment of a merger where appropriate. The guidance mirrored the general obligation in relation to conduct of CMA investigations to ensure that there is a sufficient basis for decisions in light of the totality of the evidence available, including evidence of some probative value on the basis of which the CMA could reasonably reach the conclusion it did.

The CAT concluded that the CMA, faced with uncertainty about the impact of the pandemic, failed to make reasonable inquiries, as they were required to do. Although the CMA has a wide margin of appreciation concerning its assessment of the predictive value of the information it received, that did not absolve the CMA from ensuring that it had sufficient information available before it made predictive judgments. JD Sports’ challenge in this regard did not therefore concern the quality or correctness of the CMA’s judgement in its assessment of the relevant information. It was that the CMA had not sought to inform itself sufficiently in order to exercise its judgement.

On the last ground, the CAT reached a similar conclusion. It found that the CMA had failed to investigate fully whether, and to what extent, COVID-19 would strengthen the suppliers’ DTC offer as a result of consumers shifting towards online shopping. As with the second ground, the CMA did not have the necessary evidence from which it could properly draw such a conclusion.

It is worth noting that the CMA has applied for permission to appeal the ruling.

Comment

In the context of uncertainty surrounding the longer term impact of COVID-19, it is perhaps understandable that the CMA took the view that the evidence available to it was too generalised and speculative to shed light on its regulatory assessment.

However, this decision makes clear that public bodies must have sufficient evidence on which to base their decisions. This arises from the well-established principle of administrative law that a decision maker has to ask himself the right question and take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly (known as the Tameside duty). In circumstances where sufficient information has not been provided by third parties, particularly in relation to a matter the regulator has explicitly indicated should be taken into account, the public body may be required to take proactive steps to conduct further enquiries in order to reach a rational decision. Falling short of this obligation to ensure that their decisions are properly based on evidence provides scope to challenge the findings of a public authority decision maker.

However, as with other irrationality heads of challenge, the court will not interfere with a regulatory decision lightly and will not intervene simply because it considers that further enquiries would have been sensible or desirable. A judicial review on this ground will generally only be successful if no reasonable authority could have been satisfied on the basis of the enquiries made that it possessed the information necessary for its decision. This case must therefore be viewed in its particular context of attempting to assess the impacts of COVID-19.

Andrew Lidbetter
Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
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Challenge to lockdown regulations heard by the Court of Appeal – Judgment

The Court of Appeal today handed down its judgment in respect of the proceedings brought by Simon Dolan and others (“the Appellants”) seeking to challenge the lockdown measures introduced in England in March 2020 via the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (SI 2020/350) following the outbreak of COVID-19 (see our earlier post regarding this challenge here, and the judgment here).

Although as the Court said the proceedings were now academic, it considered that it was in the public interest to have the issues determined rather than left for potential argument in defence to criminal proceedings, and bearing in mind that the Government was continuing to use the powers at issue.

Accordingly, the Court granted the Appellants permission to bring their claim for judicial review but only in respect of their argument that the Government had no power to make the lockdown regulations under the legislation on which they were relying (the Public Health (Control of Disease) Act 1984, as amended by the Health and Social Care Act 2008). However, the Court held that this legislation did indeed give the Government the ability to make a public health response such as the lockdown in the context of a widespread epidemic.

The Court refused the Appellants’ permission to appeal against the Administrative Court’s decision on their other grounds, which included: that the Secretary of State fettered his discretion and failed to take into account relevant considerations when considering easing the lockdown; and that the Regulations were unlawful because they breached human rights and were contrary to section 6(1) of the Human Rights Act 1998. In considering that these grounds were not properly arguable, the Court emphasised the wide degree of latitude that the Government must have for decision-making in respect of public health.

The Court also gave a general caution against treating judicial reviews as evolving or “rolling” proceedings, and parties filing “excessively long” pleadings. It also criticised the Appellants for taking two months to start their claim, rather than very promptly following the making of the Regulations in March 2020.

Andrew Lidbetter
Andrew Lidbetter
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+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
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Anna Eliasson
Anna Eliasson
Senior Associate
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Challenge to lockdown regulations heard by the Court of Appeal

In an earlier post, we covered a challenge brought by the entrepreneur Simon Dolan and others (“the Claimants”) seeking to challenge the lockdown measures introduced in England following the outbreak of COVID-19 (“Dolan 1”). At that stage, the Administrative Court had refused permission to apply for judicial review in July on the basis that the Claimants’ grounds of challenge were either academic or could not be reasonably argued.

The Claimants launched an appeal against the decision, and the Court of Appeal (through an order of Hickinbottom LJ dated 4 August 2020) ordered that the grounds should be considered by the court at a rolled up hearing to give the Claimants an opportunity to make their case on arguability. The matter was heard yesterday and today (29 and 30 October), and judgment has been reserved.

Proceedings in the Court of Appeal

Hickinbottom LJ’s order did not itself grant permission for the appeal to be heard on the substantive issues. Hickinbottom LJ’s order observed that the appeal raised important issues as the challenged regulations “impose possibly the most restrictive regime on the public life of persons and businesses…outside times of war…” and that “they potentially raise fundamental issues concerning the proper spheres for democratically-accountable Ministers of the Government and judges”. On that basis­, he ordered a rolled up hearing i.e. a hearing where the court would consider permission first, and if permission were granted in any aspect of the case, for the substantive arguments to be heard at the same time. Hickinbottom LJ also agreed with the Claimants that the case warranted expedition – in fact, the case was originally listed for 23 September but was adjourned to this week.

In practice, the distinction between the permission stage and substantive stage was blurred during this week’s hearing and the Court heard some substantive arguments from both sides. That is likely to be reflected in the judgment. Indeed, even if permission is refused, the Court may end up commenting on substantive aspects of the claim rather than simply giving brief reasons for refusing permission.

In the course of their written and oral submissions, the Claimants argued:

  1. That each of their judicial review grounds challenging the regulations were in fact arguable and should be upheld. A summary of these grounds is set out in our previous post and can also be found at paragraph 24 of Mr Justice Lewis’ judgment in the Administrative Court. While the original claim was filed against the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (as amended) (“the Lockdown Regulations”), the focus of the appeal is on the Health Protection (Coronavirus, Restrictions) (England) (No 2) Regulations 2020 (“the No. 2 Lockdown Regulations”) which came into force on 3 July 2020. The oral hearing also touched on the patchwork of regulations setting out the new three-tier system in England, which has superseded the No. 2 Lockdown Regulations to a large extent.
  2. That the Administrative Court erred in refusing the Claimants permission to amend their grounds to allow a challenge to the Secretary of State’s decision to instruct schools to close.
  3. That the Administrative Court erred in finding that certain grounds of challenge were ‘academic’, especially given the risks that restrictions (including a full national lockdown) could be re-imposed.

As we note above, the Lord Chief Justice, Lady Justice King and Lord Justice Singh have now reserved judgment after the two-day hearing.

Second challenge (“Dolan 2”)

In parallel, Mr Dolan has also launched separate proceedings against the Secretaries of State for Health and Social Care, the Home Department, and Business, Energy and Industrial Strategy. This claim has been brought by Mr Dolan along with Cripps Barns Group Limited (a wedding events organiser) and another individual (Lauren Monks). This claim targets specific regulations introduced by the Government – specifically the regulations introducing the ‘Rule of Six’, the 10 PM curfew, the restrictions on gatherings, the wearing of masks, and the restrictions on venues to not take bookings of more than six people and to prevent ‘mingling’. These measures were either introduced through standalone regulations or by amending the No. 2 Lockdown Regulations to introduce new provisions. It was also suggested during the proceedings in the Dolan 1 appeal that the grounds in Dolan 2 were being extended to cover the new regulations setting out the new three-tiered system in England.

The Claimants in Dolan 2 initially sought an interim injunction to prevent the Government from enforcing the two parts of the No 2 Lockdown Regulations and the associated guidance that restricts the numbers of those who may attend marriages and wedding receptions to 15. Swift J refused interim relief through an order of 15 October 2020.

On the substantive case, there appear to be four principal grounds of challenge:

  1. That the regulations in question contravene the Public Health (Control of Infectious Disease) Act 1984 (“1984 Act”) under which they were made on the basis that a) the Government has made improper use of the emergency procedure under section 45R of the Act; and b) the regulations impose greater restrictions than permitted under the 1984 Act.
  2. That the measures introduced are disproportionate to the objective of reducing the transmission of COVID-19, and amount to a disproportionate interference with the Claimant’s rights under Articles 8, 9, 11 and Article 1, Protocol 1 of the ECHR.
  3. That the Government is effectively fettering its discretion by setting out ‘five tests’ for imposing and removing restrictions – none of which, the Claimants argue, factor in the serious harms caused by the regulations.
  4. A supporting witness statement from the Claimants’ solicitors also suggests that the Claimants intend to argue that the decision to introduce the regulations was not made on the basis of any specific scientific evidence.

We also understand that the Speaker of the House of Commons, Sir Lindsay Hoyle, has written to the Court to express concern that hearing certain parts of the claim could result in a breach of the principles of parliamentary privilege set out in Article 9 of the Bill of Rights 1689.

Comment

Mr Dolan’s challenges to the Government’s measures to tackle the COVID-19 outbreak have attracted considerable media attention, particularly as they attack a key aspect of the Government’s response.

The fact that the appeal in Dolan 1 was heard this week may have an impact on how the Court of Appeal deals with the grounds of challenge. At the time the Administrative Court refused permission in July, the national lockdown had been eased, and the No. 2 Lockdown Regulations had been put in place which contained far fewer restrictions on individuals and businesses. It was against this backdrop that the Court found some of the grounds to be academic. However, with the potential of a second wave over the winter, the Government has since significantly amended the No. 2 Regulations and also introduced the new three-tier system. There is also a prospect of a further national lockdown.

The Court of Appeal’s decision is also likely to have implications on how the Government coordinates its response to the crisis in the coming months, especially if the Court of Appeal deals with the Claimants’ arguments in relation to the limits of the emergency powers under the 1984 Act.

We do not yet know whether the question of permission in Dolan 2 will be dealt with by a judge considering the papers or whether there will be an oral hearing.

If you have any questions on the public law aspects of COVID-19, please contact Andrew Lidbetter, Nusrat Zar, Jasveer Randhawa, or Sahil Kher.

Please also visit our client COVID-19 Hub here for insight from Herbert Smith Freehills on the wider legal issues surrounding the current outbreak.

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
James Wood
James Wood
Senior Associate
Sahil Kher
Sahil Kher
Associate
+44 20 7466 6440

Prime Minister commits to a future independent inquiry into Government’s handling of the COVID-19 crisis

Following demands from the opposition and various campaigning groups, the Prime Minister has now committed to an independent inquiry into the handling of the coronavirus pandemic. In previous weeks, the Government had been reluctant to publicly commit to an inquiry, but this pledge in the House of Commons was the first clear statement on the issue. The Prime Minister did not commit to any specific timeline for an inquiry, but noted that “now in the middle of combatting…a pandemic” was not the right time for an investigation. The structure of the inquiry is also unclear at this stage, although the Prime Minister has been urged to confirm that the inquiry would be under the Inquiries Act 2005. Downing Street has suggested that the remit would be set out “in due course”.

The issues which any inquiry will examine – which will be framed by the inquiry’s formal “terms of reference” – will depend in large part on the developing political landscape, and on how matters develop over the coming months. Some of the possible issues that we see an inquiry covering include issues around the supply of PPE, supply chain issues, the impact of the crisis on BAME individuals, and the Government’s actions in light of the scientific advice from groups such as the Scientific Advisory Group for Emergencies (“SAGE”). Some discrete aspects such as possible issues with the reporting of coronavirus deaths are already being reviewed by the Government internally, but that would not stop a future inquiry from looking at these issues.

From the perspective of commercial organisations, the inquiry could cover a very wide range of sectors and industries. For instance, pharmaceutical companies may be called on to give evidence in relation to the development of a vaccine and treatments. If the inquiry looks at the economic aspects of the crisis, large banks and financial organisations may be approached for evidence. The inquiry may also look at the role of independent advisors and organisations who are members of SAGE.

In a recent episode of our public law podcast, we discussed the possible establishment of a public inquiry into the handling of the coronavirus pandemic. The episode looked at some of the key risks to organisations, and touched on some practical learnings from HSF’s involvement in other high-profile inquiries such as the Leveson Inquiry and the Independent Inquiry into Child Sexual Abuse.

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
James Wood
James Wood
Senior Associate
+44 20 7466 2306
Sahil Kher
Sahil Kher
Associate
+44 20 7466 6448

Public Law Horizon-Scanning Podcast Series

We are pleased to share with you this three part horizon-scanning podcast series from the public law team.

In this series, Nusrat Zar and Shameem Ahmad are joined by James McBride from Hanbury Strategy, a strategic advisory firm that provides political insight and analysis. Together they will to look to the horizon and share their thoughts and analysis on the political and legal landscape after COVID-19 and Brexit as well as returning to the post-general election agenda.

Listen to the episodes using the links below and don’t forget to subscribe to the channel to receive updates on future podcasts.

We will continue to develop insights to keep you abreast of legal issues arising from COVID-19 that are affecting your business now and those you may face next. You can find further resources on our Catalyst Hub.

We welcome feedback so please do contact us (using the details below) if you’d like to discuss any of the topics in this podcast series or to suggest topics for future episodes.

Horizon-scanning: Post-COVID-19

 

Horizon-scanning: Post-Brexit

 

Horizon-scanning: Picking up the post-general election agenda

 

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
Shameem Ahmad
Shameem Ahmad
Associate
+44 20 7466 2621