Legal victory by Garelochhead Minibuses and Coaches forces council to retender school transport contract

In a landmark ruling at the Edinburgh Court of Session, Argyll and Bute Council has been found to be in breach of the law in its conduct of tendering and contracting school transport for the Helensburgh and Lomond area.

Not only has it been found to be in breach of the law, but it has judged to be so markedly in breach that the Judge in the final court session made what we understand to be the first order of its kind seen in Scotland.

Judge Lord Woolman ordered that Argyll and Bute Council shorten the five year contract awarded to McColls Coaches of Dumbarton to terminate on 31st December 2012.

Retendering for the duration of the term of the contract will be conducted to allow for a seamless provision of school transport to the area concerned.

The man who did go to law

The case against the council was raised by Garelochhead Minibuses and Coaches whose owner Stuart McQueen literally risked everything to pursue the righting of a manifest wrong.

At every point what he has done has clearly been motivated by an insistence upon compliance with the law, justice, fairness and integrity.

The council knew that its conduct was non-compliant but was untroubled, certain that complainants almost never actually go to law because the whole process is intimidating and stacked against them. The party raising a case, even if they win – and in this case a wrongly awarded public contract had never previously been shortened – cannot be awarded damages and cannot be awarded more than 80% of their own costs.

However, Stuart McQueen decided that it was time to make a stand against a council whose conduct was very clearly unlawful. This should give many others in a similar position to Mr McQueen food for thought.

The finale of the case

Judge Lord Menzies made his judgment known to counsel on 30th March, in a situation which gave Mr McQueen a difficult decision. The Judge was unequivocal that the council had breached several of its obligations under the 2006 Public Contracts (Scotland) Regulations Act. He was at that stage unconvinced of minor pleas made by Mr McQueen.

The thrust of the case from Mr McQueen’s company was that the contract improperly awarded should be shortened and the remainder retendered.

The evidence that could be brought to sustain non-compliance in the minor please (but big enough issues) was such that Mr McQueen felt that the case could be made. However, pursuing these would have delayed the ultimate judgment until well into 2013, which would have defeated his primary aim of getting the disputed contract shortened.

He took the strategically intelligent decision to drop the minor pleas and stick with the major issue on which the judge had already pronounced.

19th April 2012 was set as the day on which another Judge, Lord Woolman, would rule on the outcome of the Note of Argument Mr McQueen’s counsel would present and on the costs to be awarded – unless the parties had come to an agreement between 30th March and 19th April.

Mr McQueen made an offer to the council to which it made no response.

Late on 18th April, the evening before the final judgment was to be delivered, the council made a counter offer. By that time, Mr McQueen’s lawyer had gone home and Mr McQueen himself was on his way from Garelochhead to Edinburgh for the hearing on the following day.

When he arrived at the Court of Session on 19th April his counsel informed him of the council offer that had come in the night before. Mr McQueen refused to entertain it.

As with all other hearings during the case, there were no representatives of the Council present in court. This meant that when Mr McQueen rejected their offer, their counsel had to phone Kilmory (who exactly?) for instructions.

The indefensible aspect of this conduct is that, after Judge Lord Menzies advice to council of both parties on 30th March, the council knew it had lost on the main count. So why did it not accept Mr McQueen’s offer in good time? That would have saved the Argyll taxpayer the cost of retainers to counsel and another day in court.

As it is, in the eventually uncontested issue of breach of the 2006 Public Contracts Regulations Act, Mr McQueen was awarded costs of around £25,000 – less, as expected, than it had cost him to take the action; and the council had its own legal costs to pay as well. The action will have cost the taxpayer little shy of £100,000.

This has been the cost of incompetence at a level beyond belief and a lack of basic competent legal advice. In any private sector business, these would be sacking matters and, in a local authority operating with public money and trust, they should, in all propriety, be no less.

Judge Lord Woolman’s order, made on 19th April, was as follows:

‘The Lord Ordinary, having heard Counsel, on the unopposed motion of the Pursuers makes an order in terms of Regulation 47A(3) of the Public Contracts (Scotland) Regulations 2006 to shorten the duration of the contract between the First and Second Defenders to a period expiring on 31 December 2012; assigns 30 May 2012 between the hours of 9.00am and 9.30am as a By Order Hearing, under qualification that said By Order Hearing will be discharged if a joint minute and motion settling the action are lodged by 4pm on 18 May 2012.’

So what had the council done?

• They had issued a tender – for a contract worth £2.5 million – that did not adequately specify the detailed terms they eventually arranged with McColls between 16th September 2011, when they decided to prefer that company’s bid and 4th and 5th October 2011, when they concluded the contract. This meant that competitors were given no opportunity to bid for the service finally contracted. Mr McQueen’s Note of Argument to court said that, had he been bidding for that service agreed between the Council and  McColls, his tender price would have been around £300,000 lower.
• They did not comply with the requirements of the law to let the losing bidders know exactly why their bid had not been preferred. This requirement is designed to give losing bidders reason and time to consider whether or not they have a case for asking for the procedure of the contract to be stilled while they present their case.
• They did not comply with the statutory obligation to inform the losing bidders of their rights and of the implementation, start date and closing date of the required ‘standstill period’ designed to allow time for any queries on the decision from other bidders to be raised and addressed before any contract is awarded.
• They held discussions with the preferred bidder between their selection and the completion of the contract – discussions which materially amended the nature of the contract, which had not been available to other bidders to tender for. In a bizarrely illegal double jeopardy, they did this during a period supposed to be set aside  as a limbo in which objections from losing bidders might be addressed.

In a fully pantomimic display of incompetence, a templated letter the council sent to Mr McQueen – a template ironically created to allow local authorities to protect themselves against possible litigation – was not only based on out of date legislation but was actually headed ‘Not to be used after December 2009′.

In a modus operandi many will recognise with painful familiarity, the council were consistently late in fulfilling Freedom of Information requests.This delaying obstructed Mr McQueen’s efforts to investigate an improper action that has very nearly cost him his business and has seen him having to lay off local workers in the small town of Garelochhead that, as an employer, he has long supported.

One of the documents he eventually obtained showed that the Council internally dismissed him as a ‘poor loser’ who had ‘lost out on a fair and properly conducted tendering round’. This was not how the Court of Session saw the matter.

In fact, the distance between the plain reality of what the council had done and its interpretation of it as delivered by its counsel, was so great that at one point it caused Judge Lord Menzies to inquire caustically: ‘Are we looking at the same document?’

In a memorably perceptive analysis, Mr McQueen’s counsel described the council’s reaction to his expressed concerns thus:

‘Rather than treat the inquiries of the pursuer seriously and carefully, it would appear that officers of the first defender (Ed: Argyll and Bute Council – the ‘second defender’ was McColls) dismissed the pursuer’s (Ed: Mr McQueen’s) concerns, and failed to ask themselves whether they had conducted the process properly.’

Every defender of the 26 or so rural schools pursued on false and legally unable premises by Argyll and  Bute Council over 2010 and 2011 will find this account immediately recognisable.

Questions to be asked

Who, exactly, advises, scrutinises and signs off on the legal compliance of each aspect of a specific procurement procedure?

Who should have been up to date with changes to the governing legislation? The council was 18 months out of date in its knowledge of it legal obligations.

Who was so legally ill-informed that they wrote an email to Mr McQueen dated 21st September 2011, advising that it was writing ‘as a matter of courtesy’ and not therefore fulfilling its statutory obligation to put the Mr McQueen in possession of facts vital to his rights under the Regulations and Directives?

Who advised the council that it was legally and financially sustainable to put forward a defence to Mr McQueen’s company’s action?

Who decided on a ‘strategy’ not to respond to Mr McQueen’s offer following the 30th March 2012 transmission of Judge Lord Menzies’ view of the council’s breaches of the law?

Who advised on the ‘strategy’ to make a late counter-offer the evening before the final hearing before Judge Lord Woolman on 19th April?

While external sources may be responsible for some of these failures, as with previous instances of flatly wrong legal advice given to council, there is a manifest need for a clearing of this particular stable of officers at Kilmory.

Who helped Mr McQueen?

This is easy. No one helped Mr McQueen except Councillor George Freeman who was actively supportive of his constituent’s predicament.

Councillor Freeman wrote to every Councillor at Argyll and Bute Council, informing them of the details of the tender and of Mr McQueen’s position. This was also sent to all senior executives including the CEO Sally Loudon, Executive Director responsible for legal issues, Douglas Hendry, Executive Director for Transport and Infrastructure, Sandy MacTaggart and Executive Director for Education, Cleland Sneddon.

He had two bare acknowledgements of receipt – from other ward Councillors Petrie and Kelly – and then silence. This is how ‘management’ is done at Argyll and Bute Council.

And it should not be forgotten that this legally improper process awarded a £2.5 million contract out of Argyll – an action by a council proclaiming its commitment to making the Argyll pound work for Argyll jobs and businesses. Did councillors not care about that?

The precedent set

The precedent set by the landmark ruling in Mr McQueen’s action in shortening a contract judged to have been wrongly awarded, might well be brought to bear in action by Clyde Marine against  Strathclyde Passenger Transport in the award of the contract for the Kilcreggan Ferry. There are several obvious similarities between the respective conducts of the two cases.

The other – and arguably the more important precedent set in this action, is that Mr McQueen actually raised it and stuck with it.

He is realistic in saying that anyone, even if successful, cannot but lose money in such an action – with access to justice a compound area in urgent need of reform.

But he maintains that justice matters and that the only way to ensure its rule is for more to do as he has done.

We endorse that in its totality.

What Stuart McQueen has done has been – important, with all of the real weight of that word.

He has laid down a marker for the need to refuse to accept wrong, to stand against it even at personal cost. That cost is not only monetary – he will have chewed over and absorbed every syllable of every document – and he has seen hundreds over the past six months. Sleep will have been fleeting and endlessly invaded by thought and argument.

But he won what counted – the judgment, the legal precedent – and he won for right conduct.

We salute him.

Note: The following selected documents relating to the case reward reading:

• Pursuer’s Note of Argument on Shortening and Damages This was the final presentation by Mr McQueen’s counsel and was commended by the Judge for its succinct summary.
• Revised draft letter to Council 7 October This was from Mr McQueen’s lawyers to Argyll and Bute Council advising them of the action being raised against them.
• Former template letter This is the glorious one written under the header saying’ Not to be used after December 2009′. And you couldn’t make it up.
• New template standstill notice This has the same amusing heading but a different text.
• iMan_Docs_12873828_1 This was obtained under Freedom of Information and is an unpleasant smear job.
• Current Operators This is the Tender document. It may surprise you in it basic nature.

Note 2: The photograph at the top, of bus seats, is by SteveCof00 and is reproduced here under the Creative Commons licence.