Appeal Court upholds security firm’s challenge to denial of contract under former gov’t

The Court of Appeal yesterday overturned a 2014 decision by former acting Chief Justice Ian Chang SC to set aside a High Court order which quashed a decision to deny Strategic Action Security Ltd the award of a security contract.

The judgment, delivered by Justice Rishi Persaud, who presided along with Justices of Appeal Dawn Gregory and Rafiq Khan SC, also criticised the Bid Protest Committee for not hearing the firm’s duly filed protest.

The court noted that upon rejection of its bid, the firm invoked the internal complaint procedure and lodged as required the $2 million registration fee to facilitate the hearing of that complaint. But up to the time of the filing of the appeal there was no response from the Bid Protest Committee or the National Procurement and Tender Administration Board (NPTAB).

“Such unsavoury conduct to my mind amounts to a gross dereliction of duty of those tasked with responsibility of hearing complaints duly lodged. This does little to instill confidence and transparency in the procurement process which has long been the subject of controversy and stinging criticism in this jurisdiction. Such inaction does not bode well for this process and has the potential of impacting negatively on the perception of our country as a whole,” Justice Persaud said.

The security company had sought and was granted an Order or Rule of Certiorari, directed to Colin Croal, then Permanent Secretary of the Ministry of Local Govern-ment and Regional Development (now the Ministry of Communities), to quash the decision of the said ministry to conclude the firm’s contract for the provision of security in several regions was no more. The grounds listed were that the decision was made arbitrarily unreasonably, unlawfully, unfairly, in breach of the rules of natural justice, was based in improper or irrelevant considerations, null and void and of no legal effect.

Another order was also sought to quash the NPTAB’s decision to award the contract for the said regions to Homesafe Security and Domestic Services Inc, on the grounds that the said decision was in flagrant breach of the provisions of the Standard Bidding Document produced by the ministry in August, 2013. The applicant also wanted the court to find that NPTAB’s decision was made arbitrarily, unreasonably, unlawfully, unfairly, in breach of the rules of natural justice and was based on improper or irrelevant considerations, was null and void and had no legal effect.

While the orders were granted in the High Court, on October 30th, 2013, acting Chief Justice Ian Chang discharged them on May 9th, 2014 and he found that the non-disclosure of pending criminal charges and the exclusion of VAT from the tendered bid sum were material breaches of the Procurement Act and the requirements of the Standard Bidding Document, thus disentitling the applicant of a favourable consideration of its bid to provide security services to several regions.

Alter ego

Subsequent to this ruling, the firm moved to the Appeal Court and complained that Justice Chang did not take into account that the applicant was not the alter ego of the appellant and thus came to a wrong conclusion that Richard Kanhai and the appellant (the firm) were one and the same. The firm also complained that the judge failed to take into account that it had submitted VAT inclusive bids for the tenders submitted and therefore he erroneously concluded that the bids were VAT exclusive. It also said the judge did not take into account the nature of the criminal and civil litigation and thus came to an erroneous conclusion. Additionally, the firm said Justice Chang failed to take into account that the Bid Protest Committee, to which it had protested over the award of the contract, did not meet to decide his case.

Justice Persaud said it was not disputed that the Managing Director of the firm, Kanhai, was charged with the offence of receiving stolen property and placed on bail some three weeks prior to the submission of the subject tender. It was also not disputed that the charge was not disclosed in that tender. Justice Chang concluded that according to the Procurement Act, any litigation faced by the bidder should be disclosed and failure to do so amounted to a material breach.

But the court found that the various sources consulted established unambiguously that the term “litigation” is confined to and is descriptive of civil proceedings and could not be interpreted to extend its application outside of the bounds of civil proceedings to include pending criminal proceedings.

“This court in the circumstances is not in agreement with his honour’s skewed interpretation of ‘any litigation.’ There is as a result no requirement for such a disclosure here,” Justice Persaud said in the ruling.

It was also the court’s view that the non-inclusion of VAT in the bid figure amounted to a mere technical breach. The court was not in agreement with Justice Chang’s finding of a material breach in this regard, notwithstanding the inconvenience of performing a simple mathematical calculation. It also said that such a technical breach by itself is incapable of rendering the bid unresponsive or disqualified pursuant to the Procurement Act or the standard bidding documents and it appears to be substantially responsive as required by law.  “Having regard to the circumstances of the case under review, to hold otherwise would be arbitrary, unreasonable and unfair,” the court said.

While the court overturned the first decision, the second ruling that had to do with the NPTAB was not prosecuted with any vigour and did not attract any ground of appeal before the Appeal Court and therefore the court affirmed the discharge of that order by Justice Chang.

Although the firm was awarded $150,000 in costs, given the time that has elapsed, it is unlikely to derive any other benefit from the ruling.

The firm was represented by attorney Sanjeev Datadin, while Judy Stuart-Adonis appeared for the respondent.

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