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ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ
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(1989) 3A CLR 829
1989 July 26
[STYLIANIDES, J.]
IN THE MATFER OF ARTICLE 146 OF THE CONSTITUTION
J. & A. PHILIPPOU,
Applicants,
v.
THE REPUBLIC OF CYPRUS, THROUGH THE MINISTER OF
HEALTH AND OTHERS,
Respondents.
(Case No. 230/84)
Acts or decisions in the sense of Art. 146.1 of the Constitution - Tenders - Award of- The contract made as a result of such award - It is in the domain of Private Law.
General principles of Administrative Law - The Administration cannot approbate and reprobate - Tenders for preparation of architectural plans for the construction of the Paphos General Hospital - Failure by applicants and interested parties to include and name a Project Manager - Failure treated as immaterial irregularity - Tender awarded to interested party - Respondents plea that applicants do not have a Iegitimate interest to challenge the award is bound to fail.
Constitutional Law - Equality - Constitution, Art. 28.1 - Tenders - The tenders of the various tenderers cannot be treated in a manner inconsistent with the principles of free competition and with the right to equality of treatment.
Tenders - Terms and conditions - The need to adhere strictly to the terms of a condition of the tender - It is directly dependent on the materiality of the term.
Reasoning of an administrative act - It cannot be supplemented by theaddresses of Counsel.
In accordance with the terms of invitation to submit tenders for the construction of the Paphos General Hospital the tenderers should deliver two envelopes, the one, marked A. containing the declaration of interest and the other, marked 13, containing itemised financial demands and particulars.
In virtue of paragraph 6 of the relevant document, headed "selection" the declarations of interest would be evaluated and a limited number of tenderers would be pre-selected and it is only in respect of those that the envelopes containing the financial demands would be open for final selection.
Notwithstanding the above term the tender was finally awarded to the interested party who had not been pre-selected. In annulling the sub judice decision by reason of the Contravention of the said material condition and for lack of due reasoning the Court stated that it has "to safeguard the confidence of the citizen in the Administration. The Administration has to act in such a way as to protect the faith of the people in the Government of the country".
Sub judice decision annulled. No order
asto costs.
Cases referred to:
Medcon Construction and Others v. Republic Minister of Finance and Others (1968) 3 C.L.R. 535.
George D. Kounnas and Sons Ltd. and Another v. Republic (Cyprus Potato Marketing Board) (1972)3C.L.R. 542.
K. & M. Transport & Co. Ltd. and Others v. EteriaFortigonAftokiniton (EFA) and Others (1987) 3 C.L.R. 1939.
Recourse.
Recourse against the decision of the respondents whereby the tender for the preparation of the architectural plans and other studies for the construction of the Paphos General Hospital was awarded to the interested party in preference andinstead of the applicants.
L. Clerides, for the Applicants.
S. Georghiades, Senior Counsel of the Republic, for the Respondents.
GI.Talianos, for the Interested party.
Cur.adv. vult.
STYLIANIDES, J. read the following judgment. The applicants by means of this recourse seek the annulment of the decision of the respondents, whereby the tender for the preparation of the architectural plans and other studies for the construction of the Paphos General Hospital was awarded to Messrs. Laghoudis&Charalambous (architects of Limassol), (interested party), in preference and instead of the applicants.
The applicants on the day of the filing of this recourse took out a summons, whereby they applied for a provisional order restraining the defendants and/or any of them from implementing the challenged decision, pending the final determination of the recourse.
In the meantime, however, a written contact was entered between the Government of the Republic and the interested party.
The first point that arises is the affectation of this contact on the fate of the recourse.
The power and duty of this Court, under Article 146 of the Constitution, is to review the sub judice decision, i.e. to ascertain the legality of the administrative act. The subject of the examination is the decision to ward the tender to the interested party and not the contract granted as a result of such decision which is in the domain of Private Law and outside the Revisional Jurisdiction of this Court.
In Case No. 531/1949 of the Greek Council of State, 1949, vol.2, p.13, the Full Bench of the Greek Council of State at p.14Said:-
"... και αν τυχόν επηκολούθησεν η μετά του προκριθέντος μειοδότου κατάρτισις της σχετικής διοικητικής συμβάσεως, η υπόστασις της οποίας είναι ανεξάρτητος της περί του κύρους της δημοπρασίας κρίσεως."
(See, also, Medcon Construction and Others v. Republic Minister of Finance and Others) (1968) 3 C.L.R. 535, at p.545 and George D. Kounnas and Sons Ltd. and Another v. Republic (Cyprus Potato Marketing Board) (1972) 3 C.L.R. 542.).
The salient facts of the case are as follows:-
The Council of Ministers on 8th December, 1983, after submission made by the Minister of Health, by Decision 23.934 authorized the Ministry of Health:-
(a) To invite tenders from Cyprus architectural firms for declaration of interest for the preparation of architectural plans and studies, for the construction of the new General Hospital of Paphos.
(b) To set up a Committee composed of representatives of the Ministries of Health, Communications and Works and the Planning Bureau, which would undertake the evaluation of the architectural firms, the pre-selection of the most suitable, and the preparation of the relevant report.
(c) To set up a Committee composed of the Ministers of Health, Communications and Works and Finance, to consider the report referred to above and proceed with the final selection of the firm without reference of the matter again to the Council of Ministers.
(See Appendix A.)
Pursuant to the above, the particulars for the invitation of tenders were prepared and embodied in Document Y.Y.398/83/A, headed "Architectural and other studies for thenew Paphos General Hospital" - ("Αρχιτεκτονικές και άλλες μελέτες για το νέο Γενικό Νοσοκομείο Πάφου") - (Appendix B to the opposition).
On 13th January, 1984, by publication in the Official Gazette of the Republic, under Notification 77, and in the local press, invitations were made for declaration of interest and tenders by architects for the new Paphos Hospital. This advertisement invited the suitably qualified registered Cypriot architects, who were interested, to submit to the Ministry of Health two documents: Declaration of Interest and relevant Tender. In this Notification it was stated that a document which contained all the relevant particulars on the subject and the terms and conditions was available at the Ministry of Health for everyone concerned - ("Έγγραφο που περιέχει όλες τις σχετικές με το θέμα λεπτομέρειες καθώς και τους όρους είναι διαθέσιμο στο Υπουργείο Υγείας για οποιοδήποτε ενδιαφέρεται")
According to the publication, the declaration of interest and the relevant tender should have reached the Ministry by 10.00 a.m. of the 4th February, 1984. The date was later extended to 11th February, 1984.
The document referred to in the invitation is circular Y.Y.398/83/A, to which reference was made. This document gives details in paragraph 5, p.10, of the contents of the declaration of interest, which should be placed in a separate envelope marked "A". This envelope should not contain any financial demands as fees, etc. In a separate envelope - marked "B" - the tender, containing itemized financial demands and particulars as per paragraph 5(2), should be placed.
Paragraph 6 headed "Selection" provides that the declaration of interest would be evaluated and a limited number of interested tenderers will be selected, whose envelopes with the financial demands will then be opened for the final selection:-
"6, Επιλογή
(1) Οι δηλώσεις ενδιαφέροντος θα αξιολογηθούν και θα επιλεγεί περιορισμένος αριθμός ενδιαφερομένων των οποίων θα ανοιχθούν οι φάκελοι με τις οικονομικές απαιτήσεις για τελική επιλογή. Το Υπουργείο Υγείας δε θα είναι υπόχρεο να δεχθεί τη χαμηλότερη ή οποιαδήποτε προσφορά.
(2) Ο Αρχιτέκτονας που θα επιλεγεί θα κληθεί να υπογράψει σχετική δεσμευτική συμφωνία."
A number of architects showed interest and 18 declarations of interest and tenders were submitted.
The Committee, before opening any of the envelopes of declarations of interest, set down the procedure for the evaluation and the criteria of evaluation and appraisal. (See Appendix "I").
The Committee opened the envelopes "A" and considered and evaluated the declarations of interest. Their report, dated 25th February, 1984, marked "Confidential" is Appendix "E". They pre-selected, according to paragraph 5 of the document Y.Y. 398/83/A, as set out in their Report, the following:
1. I. & A. Philippou (the applicants).
2. S. Econornou& Associates,
3. P. Georghiades& Associates,
4. Ph. Colakkides& Associates.
Thereafter, the Committee opened the envelopes "B" containing the tenders, financial demands of the four pre-selected architects or firms of architects. They presented the following picture:-
1. I. & A. Philippou £270.025
2. P. Georghiades £292.000
3. S. Economou& Associates £294.800
4. Colakkides& Associates £372 .627
The applicants and Colakkides lost marks in comparison with the other pre-selected, as they did not satisfy the term to indicate a project architect.
The Report of the Committee was sent to the Minister ofHealth with accompanied letter, dated 27th February. 1984 - Appendix "Δ" - paragraphs 4 and 6 of which read:-
"4. Η Επιτροπή αποφάσισε όπως υποβάλει στην εξ Υπουργών Επιτροπή τα πορίσματα της όπως διαλαμβάνονται στο προαναφερόμενο πρακτικό και να παρακαλέσει την εξ Υπουργών Επιτροπή να προβεί, το ταχύτερο δυνατό, στην επιλογή τον Αρχιτέκτονα για την εκτέλεση της εργασίας, ενόψει μάλιστα του γεγονότος ότι τα χρονικά περιθώρια μέσα στα οποία πρέπει να διεκπεραιωθεί η όλη εργασία είναι περιορισμένα."
"6. Παρακαλώ όπως διευθετήσετε την σύγκληση συνεδρίας της εξ Υπουργών Επιτροπής για την επιλογή του Αρχιτέκτονα, αναφέρω δε σχετικά ότι τα μέλη της Τεχνικής Επιτροπής είναι στη διάθεση σας και στη διάθεση της εξ Υπουργών Επιτροπής για την παροχή οποιωνδήποτε προσθέτων στοιχείων ή πληροφοριών."
On 7th March, 1984, the Director General of the Ministry of Health requested applicants to clarify a certain part of their tender which related to the eventuality of extension of the time limit for the completion of the works for a period over thirty months and the applicants complied with the request, by means of their letter sent on the following day - 8th March, 1984.
On 15th March 1984, the Minister of Health, relating to sub-paragraph (d) of the Decision 23.934 - 8th December, 1983 informed the Council of Ministers that the Ministerial Committee, mentioned in the aforesaid paragraph, decided that the final selection of the architect will be done according to the ordinary procedures of award of tenders.
On 26th April, 1984, the Ministerial Committee for Tenders, composed of the Ministers of Finance. Justice, Communications and Works and Health, decided to award the tender to the interested part' on the terms and conditions mentioned in the letter of the Chairman of the Tender Board, File No. T.283/56/52, dated 26th April, 1984 (see T.283/56/57).
The letter T.283/56/52, dated 26th April, 1984, addressed to the Director General of the Ministry of: Health, by or on behalfof the Chairman of the Tender Board, refers to the award of the tender to the interested party at a total fee of £191,378.-, on two conditions:-
(a) To name a project architect, two preferably should be one of the partners, or one of equivalent qualifications and experience to the satisfaction of the appropriate Technical Committee.
(b) To give details which will be considered satisfactory with regard to the extent of co-operation and participation of foreign experts - consultants associates of them - in every stage of the work.
Very promptly, on 28th April, 1984, the Director General of the Ministry communicated this decision of the Ministerial Committee to the interested part - (see Exhibit Y).
The applicants took knowledge of this award and in a few days this recourse was ensued.
Counsel for the Respondents submitted that the applicants lack legitimate interest to challenge the sub judice decision in that:-
(a) They failed to name a project architect; and
(b) They were allowed to complete their tender after the expiration of the time for submission - (letters) of 7th March, 1984, by the Director General of the Ministry of Health and 8th March, 1984, by the applicants).
Both the tender of the applicants and the interested party did not name a project architect.
The Technical Committee, which evaluated the tenders, reduced the marks of the applicants, but did not consider this failure was material so as to invalidate the tender.
The Ministerial Committee awarded the tender to the interested party on condition that they would comply with this requirement. So, this was not considered, either by theTechnical Committee, or by the Ministerial Committee at any stage as invalidating the tender. The Respondents cannot approbate and reprobate.
Furthermore; the Administration cannot treat differently the tenders of the applicants and the interested party, in a manner inconsistent with the principles of free competion and with the right to equality of treatment, which is safeguarded by Article 28.1 of our Constitution.
The second ground, on which this submission was based, is the fact that the applicants wrote an explanatory note to the Ministry of Health, clarifying their position in the eventuality of extension of the time limit for the completion of the works for a period over thirty months. This, in no way, amounted to a counter proposal or any alteration or modification of the tender itself.
The submission that the applicants lack legitimate interest is without any merit.
The procedure and the terms and conditions governing the invitation of these tenders up to the final selection of the architect and the award of the tender were set down with particularity in the documents to which reference was made earlier on in this Judgment. The tenders were submitted on the basis of the contents thereof.
The final selection would be made out of the four tenders preselected by the Technical Committee, after opening both envelopes A and B. The evaluation and appraisal of the four should have been made before the opening of the second envelope, containing the financial aspect of the tender.
The Committee complied with. Four tenderers were pre-selected and the Council of Ministers agreed that the Ministerial Committee for Tenders had to make the final selection.
The report of the Technical Committee is detailed and reasoned. The Committee itself followed and applied the procedure set down.
The Ministerial Committee acted contrary to paragraph 6 in awarding the tender to a firm which was not pre-selected by the Evaluation Committee.
It was submitted by counsel for the Respondent that, after taking into consideration the amount of fees - that is the content of envelope "B" - the interested party was actually preferred.
This is a complete violation of the contents of the document, on the basis of which the tenders were invited and submitted.
The Greek Council of State in Case No.531/49 (supra) said Vat p.14:-
"Επειδή η Διακήρυξις των πάσης φύσεως δημοσίου συμφέροντος δημοπρασιών, αποτελεί πράξιν κανονιστικού περιεχομένου, η παράβασις των όρων της οποίας, ιδία ων εξ αυτών υπό χαρακτήρα ουσιώδη τεθειμένων, συνεπάγεται ακυρότητα της δημοπρασίας,..."
In Case No. 668/74, the same Greek Council of State said:-
"1. - Η Διακήρυξις της δημοπρασίας συνιστά το νομικόν αυτής πλαίσιον, δεσμεύουσα τόσον την επί του διαγωνισμού δημοσίαν αρχήν όσον και τους διαγωνιζομένους, η δε παράβασις των ουσιωδών διατάξεων της, ήτοι των αποβλεπουσών εις την ουσιώδη εξυπηρέτησιν του διά της δημοπρασίας επιδιωκομένου σκοπού, άγει εις ακυρότητα του αποτελέσματος της δημοπρασίας και των σχετικών εγκριτικών πράξεων."
In K. & M. Transport & Co. Ltd. and Others v. EteriaFortigonAftokiniton (EFA) and Others (1987) 3 C.L.R. 1939, the Full Bench said:-
"The principle emerging from the caselaw is that strict adherence to the terms of a condition of the tender is directly dependent on the materiality of the term: a term is essential if consequential for the decision or its observance is necessary for the sustenance of the efficacy of the administrative process."
In Case No. 1828/67 the Greek Council of State said at p.2082:-
"Επειδή η διακήρυξις δημοπρασίας είναι πράξις κανονιστικού χαρακτήρος, κατ' ακολουθίαν η παράβασις ουσιώδους όρου αυτής συνιστά παράβασιν νόμου."
Paragraph 6, governing selection (επιλογή) is very material as it affects the decision reached. The non-compliance by the Administration with the term or formality relating to the selection affected the guarantees set up for the legality of the act.
In a low tone it was submitted that the public saved £80,000.- by the sub judice decision.
I have not the slightest doubt that the Respondents acted in all good faith and in an. effort to save public funds, but where good and proper administration and the Rule of Law are concerned, the end can never justify the means, however worthwhile such end may be.
Paragraph 6 of Document Y.Y.398/83/A is very material. We have to safeguard the confidence of the citizen in the administration. The administration has to act in such a way as to protect the faith of the people in the government of the country.
The sub judice decision was taken in circumstances amounting to abuse and/or excess of power, contrary to the rules of good and proper administration.
A public authority is under a duty in selecting a tender to state their reasons for such award, which are subject to judicial review.
On the material before me I have come to the conclusion that, in the circumstances of the present case, the sub judice decision is lacking any or due reasoning.
The reasoning cannot be supplemented by the address of counsel. It has, either to be recorded in the sub judice decision,or to emerge from the material in the file.
The sub judice decision will be annulled, also, for lack of due reasoning.
In the result, the decision to award the tender to the interested party is hereby annulled.
Let there be no order as to costs.
Sub judice decision annulled. No
order as to costs.