Successful action for reduction of an awarded contract under the Public Contracts (Scotland) Regulations 2006

11 December 2009

Sidey Limited v Clackmannanshire Council and Pyramid Joinery and Construction Limited

The pursuer, Sidey, and the second defender, Pyramid, both submitted tenders to Clackmannanshire Council for a works contract.  The Council awarded the contract to Pyramid.  Sidey raised proceedings against the Council under the Public Contracts (Scotland) Regulations 2006, claiming that the Council's contract award decision had been based on errors, that the Council had failed to give notice of the decision to Sidey on time, and that the contract had been awarded during the standstill period.  These claims were not contested by the Council, but Pyramid defended the action.

At debate before Lord Menzies, the arguments for Pyramid and Sidey covered two main areas: (1) the applicability of the 2006 Regulations where a contract is below the threshold provided for in Directive 2004/18/EC; (2) whether Regulation 47(9) means that a contract awarded during a standstill period cannot be reduced, and whether Sidey's remedy was restricted to damages.  It was held that the 2006 Regulations did apply.  Lord Menzies also held that Regulation 47(9) does not prevent the court from ordering other remedies when a contracting authority purports to enter into a contract before the expiry of the standstill period.  To limit such an unsuccessful contractor's remedy to damages would be contrary to the underlying purpose of the Directives and the Regulalations, and contrary to the jurisprudence of the ECJ. For those reasons, his Lordship was prepared to reduce the contract purportedly entered into with Pyramid.

Sidey were represented by Morag Ross and Clackmannanshire Council by Alistair Clark QC and John MacGregor, all of Axiom Advocates.

http://www.scotcourts.gov.uk/opinions/2009CSOH166.html