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Tachie (and others) v Welwyn Hatfield Borough Council [2013] EWHC 3972 (QB)

Procurement lawyers rest easy: High Court confirms ALMOs are Teckal compliant.

In a judgment that will be welcomed by all local authorities, Mr Justice Jay has so held. In Tachie (and others) v Welwyn Hatfield Borough Council [2013] EWHC 3972 (QB), he rejected legal challenges by aggrieved homeless applicants that Welwyn Hatfield Borough Council had failed to comply with the Public Contracts Regulations 2006 when contracting out and delegating housing functions to its newly created ALMO in 2010.

Three individuals brought homelessness appeals against negative s.202 review decisions made on their applications as homeless persons under Part 7 Housing Act 1996. The review decisions had been made by the Welwyn Hatfield Community Housing Trust, an arm's length management organisation ('ALMO') set up by the Council to perform a number of its housing management functions on its behalf, including the determination of homelessness applications.

The appellants argued that the review decisions were ultra vires as the the Council had unlawfully contracted out its Part 7 functions. They argued that it was legally obliged to put the contract out to public tender in accordance with EU procurement law and the Public Contracts Regulations 2006. The Council countered that there was no requirement to do so, relying on decisions of the ECJ, including Teckal Srl v Comune di Viano (Case C-107/98), and the decision of the Supreme Court in Risk Management Partners Ltd v LB Brent [2011] 2 AC 34.

The three appeals were transferred to the High Court because of the importance of the points in issue, and were heard by Mr Justice Jay over 4 days, late last month. The appellants also challenged the construction of the Council's Constitution (which had departed from the DCLG 2001 modular constitutions) and raised a raft of other points.

Mr Justice Jay rejected the appellants' arguments, giving valuable judgments on the true scope of s.204 appeals, and on the ability of a local authority to ratifiy its actions. In particular, he held that the Teckal exemption clearly applied to the relationship between the Council and the Trust, concluding that both the 'function test' and 'control test' were satisfied. As to the latter, he said:

'it is clear on the facts of the present case – no private interests are involved, the Respondent is acting solely in the public interest in the carrying out of its public service task, and there is no contriving to circumvent the rules of public procurement' [48]

All three s.204 appeals were dismissed, and the appellants were ordered to pay the Council's costs.

Ranjit Bhose QC and Kuljit Bhogal represented Welwyn Hatfield Borough Council.