The High Court has ruled that, in certain circumstances, a non-party to procurement litigation can be liable for some or all of the challenger's costs of bringing the claim. As the court recognised, the judgment has potentially far reaching implications for non-parties, who will often be, as in this case, a successful tenderer.
Bombardier Transportation UK Ltd ("Bombardier") had initially brought a challenge against Merseytravel's decision to award contracts worth circa GBP 460 million to a rival tenderer, Stadler Bussgang AG ("Stadler") as part of its rolling stock programme, including the replacement of 52 trains and improvement works to platforms and tracks. Stadler beat four bidders, including Bombardier, to the contract. Following a successful application by Bombardier to amend a consent order in April 2017, it fell to the court to award costs.
Despite being the named defendant in the claim, Merseytravel had adopted a neutral stance towards Bombardier's application throughout proceedings. Stadler had taken a more aggressive stance in opposing Bombardier's applications. The Court held that, in circumstances in which Merseytravel was in attendance only in its capacity as the contracting authority, it was inappropriate to award costs against it. Instead it was Stadler, the "real party" to the proceedings, whom the Court adjudged to be the appropriate subject of the order.
In awarding costs against Stadler, Coulson J drew heavily on Stadler's unreasonable conduct, and in particular that:
- Stadler was prima facie responsible for the costs incurred by Bombardier (for instance, it ought to have conceded on the majority of points and raised what were vexatious allegations of fraud);
- it was not necessary for Bombardier to demonstrate exceptional or unreasonable behaviour on the part of Stadler (this was not an established legal test); and
- Stadler was the genuine party to the proceedings; whereas Merseytravel was "studiedly neutral" in the particular proceedings.
Whilst the Court was eager to qualify the decision that an order against a non-party will always turn on the facts, there is a costs risk to successful bidders (or any other non-party) where the contract award procedure is challenged and where that party's conduct is unreasonable.
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