After a “two horse race”, Lancashire instead awarded the lucrative contract to SITA UK Ltd in December 2007 – even though EWC's bid was “significantly lower” than its rivals.
Earlier this year, a judge opened the way for EWC to sue the council for profits it would have made on a three-year contract after ruling that Lancashire had wrongly taken into account “concerns as to EWC's financial standing”, which should have been treated as irrelevant (see letsrecycle.com story).
Condemning the tendering process as unfair, Judge Hegarty QC said there had been “a serious and manifest error” on the council's part in weighing up the competing bids.
The ruling left Lancashire facing a potentially enormous damages and legal costs bill.
However, the council can now breathe a sigh of relief after Appeal Court judges today (December 7) said it had done nothing wrong and the decision to award the contract to SITA UK – after a “carefully devised” tendering process – had not been “infected by reliance on an irrelevant consideration”.
Overturning Judge Hegarty's ruling, Lord Justice Pill, sitting with Lord Justice Jackson and Lord Justice Patten, said EWC had not been treated unfairly, nor had the company suffered any loss, in the form of a lost chance of being the successful tenderer.
Observing that all decision-makers “are human”, Lord Justice Jackson said council officials were well aware that concerns over EWC's financial standing were irrelevant and the courts should not speculate on claims that “subconscious influences” may have played a part in the contract award.
“The decision makers in this case did all that could properly be expected of them. I would therefore allow the county council's appeal,” the judge concluded.
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