Court of Appeal: Appeal in challenge to Eircode tendering and licence dismissed as out of time

About this case:

• Citation:
  [2024] IECA 235
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Mr Justice Senan Allen

Delivering judgment for the Court of Appeal, Mr Justice Senan Allen stated “It is perfectly clear from the pleadings — and from the replying affidavit of Mr Delaney, for that matter — that the foundation of the appellant’s claim is for damages arising out of the public procurement process conducted in 2011 for the award of the contract for the national postcode system, and the award of that contract to Capita in 2013.”

Background

In October 2009, the government’s intention to proceed with the National Postcode System (NPS) was announced.

S.66(2) of the Communications Regulation (Postal Services) Act 2011 provided for the procurement of services for the development, implementation and maintenance of a system allocating and managing the postcodes.

In January 2011, prior to the enactment of the legislation, the Department of Communications established a list of candidates and issued a pre-qualification questionnaire (PQQ) for the procurement process which would follow the ‘negotiated procedure’ set out in the European Communities (Award of Contracts by Utility Undertakings) Regulations 2007, S.I. No. 50.

The appellant company wrote to the Department in February 2011 stating that it wished to participate in the tender process, but was precluded from doing so by the PQQ which it said required that each member of any consortium should have an annual turnover of not less than €40 million.

In December 2013, the second respondent, Capita Business Support Services Ltd, was successful in its tender and was awarded a 10-year contract. The third respondent, An Post, was unsuccessful in its tender. The appellant did not participate in the tendering process.

The appellant issued proceedings in September 2022 claiming losses of €34,726,000 and relief inter alia restraining Capita from operating outside its mandate, restraining the Department from financing such operations, restraining the operation of the Eircode system without independent oversight and restraining the renewal of the licence.

The respondents applied to have the proceedings struck out on grounds that inter alia they were in substance public procurement proceedings which were out of time and were frivolous and vexatious.

High Court

In December 2023, Mr Justice Max Barrett delivered a judgment striking out the proceedings in limine.

The judge determined that the claim was for breach of public procurement law and was out of time pursuant to the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (the Remedies Regulations) and that the balance of the claims were inadequately particularised.

The High Court also considered that even if the proceedings did not fall to be struck out under the Remedies Regulations, they would have been struck out as having been brought outside the time limited by O.84 of the Rules of the Superior Courts.

The appellant appealed, contending inter alia that the judge erred in failing to allow amendments to the statement of claim and/or used its powers as the Competition Court to direct bespoke proceedings.

Court of Appeal

Mr Justice Allen determined that the core issue on appeal was whether the High Court was correct to conclude that the claim was for breach of public procurement rules, highlighting that the injunctive relief sought “clearly” conveyed a challenge to the lawfulness of the business being carried on by Capita and to the possible renewal of its licence.

In answer to the court’s questions as to the precise conspiracy alleged, the appellant submitted that the EU’s Directive requiring Ireland to have postcodes was unwanted by An Post as it would affect its “monopoly”. Accordingly, the appellant suggested that the Department and An Post entered an agreement with Capita to develop a postcode system which was contrary to s.66(2) as it was not used primarily for postal services, and which excluded SME’s such as the appellant from submitting a tender which was likely to be successful.

In this regard, Mr Justice Allen noted that the appellant glossed over “the express provision in s. 66(2) of the Communications Regulation (Postal Services) Act, 2011 that the postcode might be used for such other purposes as the Minister might consider appropriate…”

The court considered the appellant’s claim that the turnover stipulation in the PQQ breached inter alia the Remedies Regulations, observing that Regulation 7(2) thereof requires any application for remedy under the act must be made within 30 calendar days after the applicant knows or ought to have known of the alleged infringement, “which the appellant did not”.

Mr Justice Allen opined that “the case which the appellant would make is that the procurement process was conducted otherwise than in accordance with law and that but for the matters complained of it would, inferentially, have participated in the process and would likely have been successful… Like the High Court judge, I cannot see that other than as a public procurement claim.”
 
The court further considered the complaint that the Minister’s decision in October 2013 was in breach of the 2011 Act and that the expenditure was unlawful, concluding that the premise of any claim in relation to expenditure could only be that the contract awarded to Capita was not in accordance with the purposes of the Act and so, the plaintiff’s complaint concerned the validity of the licence or the grant thereof.

The judge emphasised that the appellant’s argument that it had been “shut out” by the respondents from selling its services to, for example, the ambulance service did not form part of the case pleaded and the appellant could not say how it was shut out by the licensing of Eircode for purposes other than mail delivery.

As to the appellant’s assertion that it had been assured by the Department that postal services and not navigational aspects would be concentrated upon, Mr Justice Allen stated that “the causa causans of the appellant’s claimed loss of revenue or profit is that Capita’s commercial exploitation of Eircode is not confined to the sorting and delivery of mail, and the causa sine qua non of that is that Capita has a licence to do what it is doing”.

The judge continued that “inexorably, the appellant is driven back to the proposition that the licence is invalid; whether because of an alleged breach of public procurement rules or because the licence was not one which the Minister was empowered to grant”.

Conclusion

Finding the High Court’s assessment of the substance of the action “not only correct but inescapable”, the Court of Appeal dismissed the appeal.

Loc8 Code Ltd v Department of Environment & Ors [2024] IECA 235