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GMWDA "strikes-out" Sita's damages claim - UPDATE

The Greater Manchester Waste Disposal Authority (GMWDA)  has succeeded in its High Court attempt to strike-out Sita UKs attempt to secure more than £90 million in damages over the award of the Greater Manchester waste private finance initiative, claiming that the companys attempt was started too late.

Handing down the judgement in the case, Mr Justice Mann said: I therefore conclude that Sitas claim has been brought out of time and there is no good reason to exercise any discretion to extend it.

The appropriate course is therefore to strike out these proceedings.

Mr Justice Mann outlined how Sita issued proceedings against the GMWDA in August 2009 claiming damages for Sitas loss of the chance of being awarded the £3.8 billion PFI contract and for Sitas wasted tender costs.

Sita claimed that the authority breached Public Procurement Regulations on how it should let contracts to firms. There are time limits in which a firm has to start such legal proceedings and under the Public Procurement Regulations it is three months from the time a firm knows or ought to have known of an alleged breach.  The GMWDA claimed that Sita ought to have known of the infringements by April 8 2009 and commenced proceedings by July 7 2009.  On April 8, the GMWDA released a press release announcing that the contract had been signed. However, Sita claimed that it commenced its claim on time and only knew about infringements as of from July 2009 and the time bar should have counted from then. But proceedings were not undertaken by Sita until August 27 2009.                 

Sita alleged that as reserve bidder for the contract, it should have been allowed to resubmit a bid for the deal when preferred bidder Viridor Laing, which won the contract, was allowed to make material changes in its bid and was able to increase the price above the level of Sitas bid. Sita claimed it could have undercut VL if it knew about the changes.

The judgement outlined that on April 21 2009, Sita wrote to GMWDA noting the announcement of the contract and wrote for the first time suggesting that there had been a breach of the procurement regulations. 

Mr Justice Mann said: This is one of a series of very important letters, because all those letters provide the clearest possible indication of the state of Sitas knowledge and belief.
So this letter demonstrates that Sita knew that the announced deal was rather more costly, and rather different, from what had gone before.

Mr Justice Mann said Sita was an experienced player in this field and should had known that the procurement process had gone wrong from the detail it put in its letter to GMWDA.
He said the three month clock should have started to run from April 8 2009: The discovery that Sita says it made as a result of the July correspondence does not, in my view, add anything material to what it already knew. Sita can be shown to know of the infringements it identified in its correspondence in April to June 2009. Those infringements were such as to allow Sita to make the complaint it ultimately made, and its later acquired knowledge of details of earlier infringements adds nothing material, for present purposes.

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).

The judge, however, pointed to GMWDAs lack of openness and conduct generally between January 2007 and 2009.

He said that the GMWDA did not make the full necessary disclosure of what had happened after VL acquired its preferred bidder status, and to the fact that what was disclosed is said to have elements of the misleading about it.  According to the judge, GMWDAs communications were said to have been carefully crafted to supply very limited information.  He said it was a troubling point but it gave no reason to extend the time bar.

Speaking about the judgement, GMWDA clerk Charlie Parker said: 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 in detail. However, I am glad we can now concentrate on delivering our world class recycling and waste management vision.

For full judgement see http://www.bailii.org/ew/cases/EWHC/Ch/2010/680.html

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