GMWDA succeeds in halting SITA UK legal action

The Greater Manchester Waste Disposal Authority has succeeded in its High Court bid to halt SITA UK's attempt to secure millions of pounds of damages from the Authority over the procurement of its £3.8 billion PFI-funded waste treatment contract.

In a judgement made today (March 29 2010), Mr Justice Mann, who oversaw a four day hearing on the case in London last month (see letsrecycle.com story), concluded that SITA UK's bid for damages, which is believed to total £92 million, had been launched too late to proceed to a full court hearing.

The case was heard at London's Royal Courts of Justice last month
The case was heard at London’s Royal Courts of Justice last month
And, he said that, despite the arguments given by SITA UK for it to be allowed to pursue its claim even though it was lodged outside the three-month limitation period which UK contract regulations require an action to be launched within, there was “no good reason” to extend the period.

Explaining his decision to strike-out SITA's application, Mr Justice Mann said: “I therefore conclude that SITA's claim has been brought out of time and there is no good reason to exercise any discretion to extend it.

“I have, as previously explained, considered the extent to which it is right to reach decisions on the various points dealt with above, on an application of the kind before me. I consider that they are all sufficiently clearly established and that a trial would not produce a different result. The appropriate course is therefore to strike out these proceedings,” he added.

Costs

SITA UK had bought its original legal action in August 2009 on the basis that, as reserve bidder for the contract, it should have been allowed to resubmit a bid for the deal when preferred bidder Viridor Laing's costs rose and the project changed significantly (see letsrecycle.com story).

However, the GMWDA claimed that due to SITA UK's action not being launched until more than three months after the contract was finally signed with Viridor Laing, in April 2009 (see letsrecycle.com story), it was out-of-time and should not be allowed to proceed to a full trial, which, its legal team had warned, could involve “seven figure” legal costs.

At the hearing, SITA had claimed the legal action was not launched until August 2009 because it did not have sufficient information to base its claim for damages on until after the deal was signed (see letsrecycle.com story).

But, in his judgement, Mr Justice Mann sided with the GMWDA, stating that SITA UK knew enough to “threaten and commence” proceedings against the Authority over its alleged breach of procurement regulations in April 2009, and not based on later correspondence.

He said: “On its own correspondence, and in the light of my finding, it knew enough to threaten and commence proceedings on 8th April 2009 (or shortly thereafter). What it subsequently found out is not a fundamental addition which somehow changes the picture that SITA had.

“If it did anything, it confirmed the picture it had, and which it had already decided demonstrated an infringement,” it added.

Discretion

SITA UK had also argued that there were reasons for extending the limitation period for it to submit a claim beyond July 7 2009, which is when they would have been out of time based on them having the information to begin proceedings on April 8.

In particular, it had claimed there were extensions to the three-month period agreed in correspondence between the GMWDA and SITA in June and July 2009 over the provision of further information about the deal.

However, Mr Justice Mann concluded in his judgement that: “There was no agreed extension period within which these proceedings were started. The latest time at which the period expired was 3rd August, assuming in Sita's favour for these purposes that SITA had the benefit of the last 5 day extension.”

He also considered whether discretion should be exercised in extending the limitation on its claim beyond three months, with arguments put forward by SITA including; the public interest in scrutiny of the contract; the GMWDA's “lack of openness and conduct generally between January 2007 and 2009”; the delay in submitting the claim not cause “prejudice”, damage, to the Authority; and, SITA making its claim “promptly” after correspondence in July 2009.

Here, he decided there was no reason to extend the three-month period, explaining that: “There is, in my view, no reason on the facts for extending the time period beyond that which already operated. Any delays in starting the proceedings were attributable to the delays of SITA itself in addressing the situation. I do not exercise my discretion in its favour.”

GMWDA

Mr Justice Mann's judgement was welcomed by the GMWDA, whose clerk, Charlie Parker, said in a statement: “It is good news for the Authority. We had a duty to robustly defend any proceedings in order to protect the public purse and recover the costs incurred.

“The judgement is lengthy and we want to take the time to consider it carefully and in detail. However, I am glad we can now concentrate on delivering our world class recycling and waste management vision,” he added.

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