Blackpool_and_Fylde_Aero_Club_Ltd_v_Blackpoo

All England Law Reports/1990/Volume 3 /Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council - [1990] 3 All ER 25 [1990] 3 All ER 25 Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council COURT OF APPEAL, CIVIL DIVISION STOCKER, BINGHAM AND FARQUHARSON LJJ 24, 25 APRIL, 25 MAY 1990 Contract - Invitation to tender - Contractual obligations arising out of invitation - Tenders solicited from selected parties known to invitor - Prescribed common form of tender - Envelope provided to preserve anonymity of tenderer - Tenders required to be submitted by deadline - Invitee submitting tender by due time but tender not considered - Whether implied contractual obligation on invitor to consider tender if conforming with conditions of tender. The council owned and managed an airport and raised revenue by granting a concession to an air operator to operate pleasure flights from the airport. The plaintiff club was granted the concession in 1975, 1978 and 1980. Shortly before the last concession was due to expire in 1983 the council sent invitations to tender to the club and six other parties, all of whom were connected with the airport. The invitations to tender stated that tenders were to be submitted in the envelope provided and were not to bear any name or mark which would identify the sender, and that tenders received after the date and time specified, namely 12 noon on 17 March 1983 would not be considered. Only the club and two other tenderers responded to the council's invitation. The club's tender was put in the Town Hall letter box at 11 am on 17 March but the letter box was not cleared by council staff at noon that day as it was supposed to be. The club's tender was recorded as being received late and was not considered. The club brought an action against the council claiming damages for breach of contract, contending that the council had warranted that if a tender was received by the deadline it would be considered and that the council had acted in breach of that warranty. The judge held that the council was liable in damages to the club for breach of contract and negligence. The council appealed. Held - In certain circumstances an invitation to tender could give rise to binding contractual obligations on the part of the invitor to consider tenders which conformed with the conditions of tender. Since tenders had been solicited by the council from selected parties, all of whom were known to the council as invitor, and since the council's invitation to tender prescribed a clear, orderly and familiar procedure, which included draft contract conditions available for inspection but not open to negotiation, a prescribed common form of tender, the supply of envelopes designed to preserve the absolute anonymity of tenderers and an absolute deadline, it was to be implied that if an invitee submitted a conforming tender before the deadline he would be entitled as a matter of contractual right to have his tender opened and considered along with any other tenders that were considered. It followed that the appeal would be dismissed (see p 30 h to p 31 a e f and p 32 a b f to h, post). Notes For invitations to tender, see 9 Halsbury's Laws (4th edn) para 230, and for cases on the subject, see 12 Digest (Reissue) 69-70, 351-356. Page 1 Cases referred to in judgments American Express International Banking Corp v Hurley [1985] 3 All ER 564, DC. Caparo Industries plc v Dickman [1990] 1 All ER 568, [1990] 2 WLR 358, HL. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, [1891-4] All ER Rep 127, CA. CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] 2 All ER 484, [1988] AC 1013, [1988] 2 WLR 1191, HL. [1990] 3 All ER 25 at 26 Harris v Nickerson (1873) LR 8 QB 286. Heilbut Symons & Co v Buckleton [1913] AC 30, [1911-13] All ER Rep 83, HL. Hispanica de Petroleos SA v Vencedora Oceanica Navegacion SA, The Kapetan Markos NL [1987] 2 Lloyd's Rep 321, CA. Lavarack v Woods of Colchester Ltd [1966] 3 All ER 683, [1967] 1 QB 278, [1966] 3 WLR 706, CA. Liverpool City Council v Irwin [1976] 2 All ER 39, [1977] AC 239, [1976] 2 WLR 562, HL. Ministry of Housing and Local Government v Sharp [1970] 1 All ER 1009, [1970] 2 QB 223, [1970] 2 WLR 802, CA. Ross v Caunters (a firm) [1979] 3 All ER 580, [1970] Ch 297, [1970] 3 WLR 605. Spencer v Harding (1870) LR 5 CP 561. Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1985] 2 All ER 947, [1986] AC 80, [1985] 3 WLR 317, PC. White & Carter (Councils) Ltd v McGregor [1961] 3 All ER 1178, [1962] AC 413, [1962] 2 WLR 17, HL. Cases also cited Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Good Luck [1989] 3 All ER 628, [1990] 2 WLR 547, CA. Banque Financiere de la Cite SA v Westgate Insurance Co Ltd [1989] 2 All ER 952, sub nom Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1989] 3 WLR 25, CA. Page 2 China and South Sea Bank Ltd v Tan [1989] 3 All ER 839, [1990] AC 536, PC. Reid v Rush & Tompkins Group plc [1989] 3 All ER 228, [1990] 1 WLR 212, CA. Appeal The defendant, Blackpool Borough Council, appealed against the judgment of his Honour Judge Jolly sitting as a judge of the High Court on 17 April 1989 whereby it was ordered that judgment be entered for the plaintiff, Blackpool and Fylde Aero Club Ltd (the club), for damages to be assessed in respect of the council's failure to consider a tender received in accordance with its standing orders. The facts are set out in the judgment of Bingham LJ. Roger Toulson QC and Hugh Davies for the council. Michael Shorrock QC and M P Sylvester for the club. Cur adv vult 25 May 1990. The following judgments were delivered. BINGHAM LJ (giving the first judgment at the invitation of Stocker LJ). In this action the plaintiff (the club) sued the defendant (the council) for damages for breach of contract and common law negligence. It was in issue between the parties whether there was any contract between them and whether the council owed the club any duty of care in tort. These issues of liability came before his Honour Judge Jolly sitting as a judge of the High Court in the Queen's Bench Division and he decided them both in favour of the club (all questions of quantum being deferred). The council appeals, contending that the judge was wrong on each point. The council owns and manages Blackpool airport. For purposes of raising revenue the council has made it a practice to grant a concession to an air operator to operate pleasure flights from the airport, no doubt largely for the entertainment of holidaymakers. The club (one of whose directors was and is a Mr Bateson) tendered for and was granted this concession in 1975 and again in 1978 and again in 1980. In 1983 the most recently granted concession was due to expire. The council accordingly prepared an invitation to tender. This was sent to the club and to six other [1990] 3 All ER 25 at 27 parties, all of them in one way or another connected with the airport. This document was headed and began as follows: BLACKPOOL BOROUGH COUNCIL BLACKPOOL AIRPORT PLEASURE FLYING CONCESSION Page 3 INSTRUCTIONS TO TENDERERS The Council do not bind themselves to accept all or any part of any tender. No tender which is received after the last date and time specified shall be admitted for consideration. The concession will be for a period of three years commencing on the 1st day of April 1983. Tenderers should note that the concession is NOT to be a sole concession and the Council may accept all or any of the tenders submitted in respect of each class of aircraft. Tenderers may tender for both classes of aircraft or one only. Successful tenderers will be required to execute an Agreement prepared by the Town Clerk for the time being of the Council. A specimen form of agreement may be examined on application to the Airport Director and it will be assumed that tenderers are aware of the covenants and conditions contained therein. FORM OF TENDER I/We the undersigned hereby take the following offers for the privilege of operating pleasure flights from Blackpool Airport for a period of three years from the 1st day of April 1983.' There then followed provision, with blank spaces to be filled in by the tenderer, for alternative offers for different sizes of aircraft and for the naming of willing sureties. The invitation then continued: 'This form of tender, fully completed and enclosed in the envelope provided endorsed "TENDER FOR PLEASURE FLYING CONCESSION" and not bearing any name or mark indicating the identity of the sender, is to be received by:-- THE TOWN CLERK P.O. BOX 11, TOWN HALL BLACKPOOL FY1 1NB. not later than 12 o'clock noon on Thursday 17th March 1983. PLEASE NOTE THE ATTACHED NOTICE PRINTED IN RED' 'The attached notice in red' was an extract from the Council's Standing Orders in these terms: 'IMPORTANT NOTE The Council's Standing Orders with respect to Contracts include the following provisions:-- Page 4 1.--Tenders shall be submitted in a plain, sealed envelope bearing the words "Tender ... (followed by the subject to which it relates) ... " and shall not bear any name or mark indicating the identity of the sender, and 2.--No tender which is received after the last date and time specified shall be admitted for consideration. STRICT COMPLIANCE WITH THESE STANDING ORDERS IS REQUESTED. [Signature] Town Clerk.' [1990] 3 All ER 25 at 28 The envelope provided to the selected tenderers was printed and addressed to the town clerk at the post office box number given in the invitation. The envelopes also bore the printed words 'Tender for' and 'Due in' to which the council's employees had added in manuscript 'Pleasure Flying Concession' and '12 noon Thursday 17 March 1983'. Only three of the selected tenderers responded to the council's invitation. One put in a low bid for the lighter size of aircraft only. The second, Red Rose Helicopters Ltd, submitted a larger bid, also for the lighter size of aircraft. Mr Bateson for the club filled in the form of tender, submitting a bid substantially larger (on its face) than that of the others for the lighter size of aircraft, and also submitting a bid for the heavier size. He put it in the envelope provided by the council, took it to the town hall and posted it in the town hall letter box at about 11.00 am on Thursday, 17 March. This was about an hour before the advertised deadline expired. The town clerk's staff were supposed to empty the letter box each day at 12 o'clock. They failed to do so. The club's tender accordingly remained in the letter box until the next morning, 18 March, when the letter box was next opened. The envelope was then taken out and date-stamped 18 March 1983 by the town clerk's department. At some time thereafter the word 'LATE' was written on the envelope, because that is what the club's tender was mistakenly thought to be. On 29 March 1983 the chairman of the council's relevant committee considered which tender to accept. The club's tender had been recorded as being late, and was in accordance with the council's standing orders excluded from consideration when the chairman made his decision. He accordingly made his choice between the two tenders believed to be in time, recommending acceptance of Red Rose Helicopters' tender, no doubt because it was bigger. An indication that its tender was accepted was given to Red Rose Helicopters. The town clerk wrote to the club to say that its tender was not received until 18 March and was therefore received too late for consideration. Mr Bateson replied that the club's tender had been delivered to the town hall before the deadline. He wrote: 'You will appreciate that this matter is of some considerable importance to our company.' The council evidently made inquiries and established that the club's tender had been received in time. On 30 March the airport director accordingly wrote to Mr Bateson saying: 'Due to an error in the administration of the terms of tender for the above Concession I regret to inform you that the Page 5 tenders recently received have been declared invalid.' Amended tender documents were accordingly sent for a rescheduled tendering procedure. In a letter of 31 March the town clerk wrote to the club (and, I infer, other potential tenderers) outlining the facts summarised above and concluding: '... I trust that you will appreciate that the only course of action open to us is to go through the formalities of seeking tenders for a second time.' It seems that as a result of this second invitation further tenders were submitted. At this stage, however, Red Rose Helicopters, having taken legal advice, contended that its earlier tender had been accepted and that the council was contractually bound to proceed on that basis. Proceedings were threatened. The council then decided to disregard the tenders received in response to its second invitation and to honour the contract made with Red Rose Helicopters. The contractual argument hinges on para 4 of the club's amended statement of claim in which it was alleged that the council: '... warranted that if a tender was returned to the Town Hall, Blackpool before noon on Thursday the 17th March 1983 the same would be considered along with other tenders duly returned when the decision to grant the concession was made.' [1990] 3 All ER 25 at 29 Counsel for the club declined to put the contractual term contended for in any other way, save that he accepted that 'when' might with advantage be read as 'when or if '. It was for breach of this warranty that damages in contract were claimed. Mr Bateson was the only witness called. His examination in chief included this passage: 'Q ... when you submitted your tender before noon on 17 March, did you believe or not that that tender would be considered along with others that had been submitted? A. We were under no doubt that it would be considered as other tenders had been considered in previous years. Q. If you had known or thought that a tender submitted by you would not have been considered, would you have bothered to tender in the first place? A. It would have been very questionable whether to bother to tender, but we would have, probably pursued the matter beforehand.' Mr Bateson was not cross-examined. The judge resolved the contractual issue in favour of the club, holding that an express request for a tender might in appropriate circumstances give rise to an implied obligation to perform the service of considering that tender. Here, the council's stipulation that tenders received after the deadline would not be admitted for consideration gave rise to a contractual obligation (on acceptance by submission of a timely tender) that such tenders would be admitted for consideration. In attacking the judge's conclusion on this issue, four main submissions were made on behalf of the council. Firstly, it was submitted that an invitation to tender in this form was well established to be no more than a proclamation of willingness to receive offers. Even without the first sentence of the council's invitation to tender in this case, the council would not have been bound to accept the highest or any tender. An invitation Page 6 to tender in this form was an invitation to treat, and no contract of any kind would come into existence unless or until, if ever, the council chose to accept any tender or other offer. For these propositions reliance was placed on Spencer v Harding (1870) LR 5 CP 561 and Harris v Nickerson (1873) LR 8 QB 286. Secondly, counsel submitted that on a reasonable reading of this invitation to tender the council could not be understood to be undertaking to consider all timely tenders submitted. The statement that late tenders would not be considered did not mean that timely tenders would. If the council had meant that it could have said it. There was, although counsel did not put it in these words, no maxim exclusio unius, expressio alterius. Thirdly, the court should be no less rigorous when asked to imply a contract than when asked to imply a term in an existing contract or to find a collateral contract. A term would not be implied simply because it was reasonable to do so: Liverpool City Council v Irwin [1976] 2 All ER 39 at 43, [1977] AC 239 at 253. In order to establish collateral contracts, Not only the terms of such contracts but the existence of an animus contrahendi on the part of all the parties to them must be clearly shewn': see Heilbut Symons & Co v Buckleton [1913] AC 30 at 47, [1911-13] All ER Rep 83 at 91. No lower standard was applicable here and the standard was not satisfied. Fourthly, counsel submitted that the warranty contended for by the club was simply a proposition 'tailor-made to produce the desired result' (to quote Lord Templeman in CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] 2 All ER 484 at 497, [1988] AC 1013 at 1059) on the facts of this particular case. There was a vital distinction between expectations, however reasonable, and contractual obligations: see Lavarack v Woods of Colchester Ltd [1966] 3 All ER 683 at 690, [1967] 1 QB 278 at 294 per Diplock LJ. The club here expected its tender to be considered. The council fully intended that it should be. It was in both parties' interests that the club's tender should be considered. There was thus no need for them to contract. The court should not subvert well-understood contractual principles by adopting a woolly pragmatic solution designed to remedy a perceived injustice on the unique facts of this particular case. In defending the judge's decision counsel for the club accepted that an invitation to [1990] 3 All ER 25 at 30 tender was normally no more than an offer to receive tenders. But it could, he submitted, in certain circumstances give rise to binding contractual obligations on the part of the invitor, either from the express words of the tender or from the circumstances surrounding the sending out of the invitation to tender or (as here) from both. The circumstances relied on here were that the council approached the club and the other invitees, all of them connected with the airport, that the club had held the concession for eight years, having successfully tendered on three previous occasions, that the council as a local authority was obliged to comply with its standing orders and owed a fiduciary duty to ratepayers to act with reasonable prudence in managing its financial affairs and that there was a clear intention on the part of both parties that all timely tenders would be considered. If in these circumstances one asked of this invitation to tender the question posed by Bowen LJ in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 266 [1891-4] All ER Rep 127 at 132, 'How would an ordinary person reading this document construe it?', the answer in the submission of counsel for the club was clear: the council might or might not accept any particular tender it might accept no tender; it might decide not to award the concession at all; it would not consider any tender received after the advertised deadline; but if it did consider any tender received before the deadline and conforming with the advertised conditions it would consider all such tenders. I found great force in the submissions made on behalf of the council and agree with much of what was said. Indeed, for much of the hearing I was of opinion that the judge's decision, although fully in accord with the merits as I see them, could not be sustained in principle. But I am in the end persuaded that the argument proves too much. During the hearing the following questions were raised: what if, in a situation such as the present, the council had opened and thereupon accepted the first tender received, even though the deadline had not expired and other invitees had not yet responded? or if the council had considered and accepted a Page 7 tender admittedly received well after the deadline? Counsel answered that