A question of judgment

It seemed to be a simple construction dispute. In February 1996, Bedfordshire council awarded a term maintenance contract for highways to Fitzpatrick Contractors. Work was due to start in June 1996. Within a fortnight the council terminated the contract claiming that Fitzpatrick had repudiated it; Fitzpatrick said the council had repudiated. The dispute went to court. The judge decided that it was the council that had repudiated the contract and a judgment was given in favour of Fitzpatrick with damages to be assessed later. That was when the real problems started.

While preparing for the later damages hearing, the council came across certain documents which, it contended, indicated that Fitzpatrick may have obtained the contract by unlawful means. In short, the council alleged serious irregularities on the part of Fitzpatrick at the tender stage. There had, it alleged, been collusion.

The council had invited Fitzpatrick, its own direct labour organisation (CCS) and John Doyle to tender. Another company, Ringway Group, assisted CCS at tender stage: a Mr Ives of Ringway produced a priced bill of quantities totalling £12.35m relating to the proposed highways contract. It was alleged that Mr Ives was given four pieces of information, including the suggestion that CCS's tender was or would be based on a turnover of £4-5m. However, before Fitzpatrick tendered, Ringway and Fitzpatrick made a joint-venture agreement; this would have led to the setting up of a joint-venture company to carry out certain projects. Four days later, Fitzpatrick submitted what turned out to be the lowest tender, for £10.695m; CCS's tender (£10.865m) was the next lowest; John Doyle's was substantially higher. All tenderers had signed an anti-collusion certificate as part of their tenders.

The council wanted to set aside the judgment because, it contended, Fitzpatrick had secured the contract in bad faith in that through Ringway's agency, allegedly, it obtained confidential information about CCS's tender and that it sought to "spike" CCS's tender by supplying it with unhelpful information. The council applied to the court to be permitted to start proceedings to set aside the judgment.

Clients often think that when they have obtained their arbitration award or court judgment, their problems are over. This is not always so

Fortunately, however, it is extremely difficult to set aside a judgment of the court. As the judge in this case, Mr Justice Dyson, said: "A litigant is not lightly to be deprived of a judgment." There have to be very solid grounds, and this would only usually arise where new and convincing information has come to light since the judgment. It is an even more difficult job if one starts to allege fraud.

The judge analysed the four pieces of information said to have been inappropriately obtained. Much of it, he decided, was trivial; some of it was not confidential at all. The judge decided that the council had only a remote possibility of proving that Fitzpatrick had used information relating to CCS's turnover in arriving at its tender figure. The council certainly had no reasonable prospect of proving that Ringway deliberately and dishonestly tried to spike CCS's tender; Mr Ives' draft priced bill of quantities (£12.35m) did not relate too obviously to the priced tender (£10.86m) that CCS actually submitted. The judge therefore dismissed the council's attempt to have the judgment set aside.