If This Doesn’t Make You March

at

Denis-O’Brienphilhogan00141769From top: Denis O’Brien of GMC/Sierra; Phil Hogan, former environment minister who awarded the water meter contract to GMC/Sierra and a water meter.

Nothing will

Catherine Murphy TD in her Dail speech last week drew attention to the fact that GMC/SIERRA, the company which was awarded the water meter installation contract for the Dublin City, Midlands, South East and North West regions, did not come into existence, legally, until July 15, 2013.

Fifteen days after the closing date for bids.

Ms Murphy posed the question: how is it that an entity that did not exist when the deadline closed was awarded a contract?

We asked Legal Coffee Drinker, what’s it all about.

Broadsheet: “Legal Coffee Drinker, what’s it all about?

Legal Coffee Drinker: “Legally, it is possible for a company to be bound by, and benefit from, contracts entered into before it came into existence. This is because of Section 37(1) of the Companies Act 1963 which provides as follows:-

“Any contract or other transaction purporting to be entered into by a company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by it and entitled to the benefit thereof as if it had been in existence at the date of such contract or other transaction and had been a party thereto.””

Broadsheet: “So a company doesn’t have to be incorporated at the time of a tender made on its behalf to claim the benefit of that tender?”

LCD: “Correct. It just has to ratify it post-incorporation.”

Broadsheet: “So nothing to see here?”

LCD: “Not exactly. There are two issues here. First of all, whether or not there is a contract with GMC/Sierra (which it appears there is) and, secondly, whether or not the award of that contract complied with the relevant public procurement law.”

Broadsheet: “Public procurement law?”

LCD: “A set of legal rules, originating in EU Directives, governing the competitive process for public contracts. They’re summarised here. Under these rules, public contracts can only be awarded to tenderers whose treatment of their employees complies with statutory employment guidelines, who are not in a conflict of interest position and, who have tax clearance certificates.”

Broadsheet: “And the significance of this from point of the GMC/Sierra tender?”

LCD: “Well, all these requirements pre-suppose a public contract tenderer who is in existence at the date of the tender. A company still to be incorporated is not in a position to provide evidence of compliance with statutory requirements or to provide a tax clearance certificate.”

Broadsheet: “But surely a body yet to be incorporated wouldn’t owe any tax anyway?”

LCD: “Maybe, but the rules still require a tax clearance certificate. And even if they didn’t, there would be serious and very fundamental difficulties in considering the merits of a public tender by a company, which had yet to be incorporated. Look at the terms of Section 37(1) above. Where a tender bid is made by a company which has yet to be incorporated, the bid, and subsequent contract, is deemed to have been made with the promoters of the proposed company, unless the company ratifies it when incorporated, in which case the company can claim the benefit of the contract. How is it possible to assess the merits of any tender bid, in circumstances where the identity of the ultimate tenderer is not known – and cannot be known until a company yet to be set up decides whether or not to ratify the tender bid?”

Broadsheet: “So what you’re saying is that the difficulty goes deeper than the mere absence of a tax clearance certificate?”

LCD: “Yes. For the public procurement rules to be applied properly to pre-incorporation tenders there would arguably need to be a provision in these rules dealing specifically with this issue and identifying the deemed tenderer in such a case. The current rules simply don’t contemplate pre-incorporation tenders as being part of the public procurement process and because they don’t contemplate it it’s extremely difficult even on the most generous interpretation to fit them within the scheme.”

Broadsheet: “What implications does this analysis have for GMC/Sierra?”

LCD: “Well, if the public procurement process does not permit the submission of tenders by pre-incorporation companies, this means that the contract with GMC/Sierra was not reached in accordance with the public procurement process. This raises questions both about the possible judicial reviewability of the contract – although it should be noted that the time limits for judicial review are quite strict, and may be past at this stage – and about compliance by the Irish State with its public procurement obligations under EU law – something which may be of concern to the European Commission.”

Previously: Sierra Where Would You Get It

Thicker Than Uisce

91 thoughts on “If This Doesn’t Make You March

    1. Mark Dennehy

      Read the last paragraph again:

      it should be noted that the time limits for judicial review are quite strict, and may be past at this stage

      something which may be of concern to the European Commission

      If you really think this is going to be solved in the courts, you’ve not been paying attention to the way the Irish government has worked over the last few decades.

      eg. Are you with Panda or Greyhound? Even though the government lost a court case that said they couldn’t introduce bin charges? Oh, yeah, the Local Government Act rewrote the law to sidestep the court’s ruling…

      1. Unemployed Lawyer

        I suppose it might just be possible, in a democracy, not to vote for a government that did that sort of thing, making it clear that that was a factor in one not voting for them?

        1. Donal O'Byrne

          There is no provision for voting “against” a government, only for voting FOR candidats, who may or may not belong to a political party. There is also no provision, within the electoral system, for attaching an explanation your motivation to your vote.

  1. Actio Non Accrevit

    This is distracting me from my work this morning, but here goes.

    I did a stint in a Jo’burg law office me years ago (don’t ask). This issue was considered by the courts there in the context of a tender submitted on behalf of company which never subsequently came into existence, it was held that this tender could not be deemed valid.

    Harms JA in Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) at 169H-I that–

    ‘a company is, prior to incorporation, not yet in existence and cannot perform a juristic act such as submitting a tender, and . . . no one can at that stage act as its agent because one cannot act as the agent of a non-existent principal unless a pre-incorporation agreement is concluded, which is later ratified.’

    In the present case, the envisaged company to be formed, and in favour of which the tender was ostensibly awarded, had never come into existence, and there was no entity in which the contractual rights vested.

    If a company cannot perform a juristic act before coming into existence presumably it cannot be properly evaluated for public procurement purposes either…

      1. Actio Non Accrevit

        I suspect that’s more of a needling riposte to my carefully-thought out comment than a genuine query. And I should be working. But yes, it’s a very prolific surname in South Africa. As prolific as, say, Murphy, is here.

          1. Actio Non Accrevit

            I gave ‘Murphy’ as an example of a common Irish surname. It’s only an example. I could equally have given O’Brien.

  2. Legal Coffee Drinker

    Thank you. That is interesting. The decision you mention was affirmed by the Supreme Court of South Africa in 2012 here.

    http://www.saflii.org/za/cases/ZASCA/2013/62.html

    South African law appears to be similar to Section 37(1) in permitting subsequent ratification of pre-incorporation contracts. A relevant consideration is whether or not GMC/Sierra ever subsequently ratified the tender. If not, there is no contract in place with it. I am assuming it did ratify, but it would be interesting to know. It should be noted the facts in your case are different insofar as the company was never formed. It does however tie in with the point I make regarding the impossibility of properly applying the public procurement process in its current form to a tender for a company which is yet to be formed, and may never be formed, or ratify the tender.

  3. Atticus

    So essentially they didn’t, or couldn’t do a proper pre-qual (pre-qualification)?

    We’ve been refused the chance to Tender for government contracts due to pre-quals not being submitted.

    1. Action Non Accrevit

      Perplexingly *scratches head* it appears people in Irish Water do need lawyers (or somebody) to tell them this. We do serve some useful function you know…

        1. Saturday Night Newsround

          I didn’t. My mum died last year and most of the estate went on probate…. fupping solicitors.
          Won’t be paying your bill, Actio.

          1. Buzz

            @ Saturday Night – I know plenty of excellent solicitors who wouldn’t dream of ripping you off. As with supermarkets, you have to shop around. Get a recommendation from a friend who has a solicitor they trust.

          2. Saturday Night Newsround

            Thank you but that’s what my mam did…. I appreciate there are good solicitors out there but it’s like a dating site. You have to go through a lot of bad ones before you meet a good one. And how! Blind dates aren’t much better either.

          3. Buzz

            I suppose. I’m lucky that one of my oldest friends is a solicitor. I’ve recommended him to several friends and they’ve been happy too. I’d give you a link to his website but that would probably contravene BS rules.

          4. Saturday Night Newsround

            I don’t need one at the moment but I;ll take your offer in good faith Buzz and I thank you.

          5. Buzz

            @ Mark D – that was an entertaining website and pretty accurate by all accounts. No doubt some people went overboard but that’s to be expected. Apparently Gerald Kean used to write his own reviews to counteract the naysayers! My own solicitor didn’t appear on it, which is a recommendation in itself.

        2. Saturday Night Newsround

          Why? You don’t know anything about me. Actually I could, but I don’t use lawyers who spend billable hours commenting on online websites. That would be a no-no for me. As I’m sure it would be for most clients.

          1. Saturday Night Newsround

            Also, if you’re taking from what I said about my mother that I don’t have money, i feel sorry for you.

          2. Errol Gunne

            I don’t. With a name like Suspendered Animation I suspect her hourly billable rates significantly exceed yours. And tax free too.

          3. Saturday Night Newsround

            Yes I suspect the hours of ‘ladies of the night’ are highly conducive to Broadsheet commenting.

        1. Saturday Night Newsround

          I’m not sure who you’re agreeing with but the bit on legal fees is my point, precisely.

          1. f-mong

            It was for you! :) You think one of these geniuses they’re paying would have either figured it out or buried the facts.

            Unrelated; but is it weird that if this post featured some middle aged women in pajamas getting pushed around by the Gardai it’d have 120 posts from people with names like BRIAN and JOHN saying they should shut up and pay… but an Irish Water post with fairly solid legal evidence of wrong doing slips off down the feed..

          2. Unemployed Lawyer

            It would have been sensible for them to ensure the company was set up on time, yes. A bit sloppy not to do so, even if fairly confident that pre-incorporation tenders came within the process. But a lot of legal errors get by on the ‘nod not because of any great conspiracy but simply because no one is interested in looking at them. Emotion is so much more attractive than logic.

          3. Saturday Night Newsround

            Emotion is much more attractive than logic

            In lovers YES.

            In online commenters, and the Irish public… I wouldn’t say it’s inevitable, but the percentage of emotion significantly exceeds that of logic.

            Very useful, to know how to ride that emotion.

          4. Saturday Night Newsround

            Sorry t-mong I missed your comment.

            Yes I completely agree. It is odd. Hope my rant about lawyers didn’t put people off commenting on this post.

          5. The Lady Vanishes

            This is the problem with Ireland…. everything is about venting… people get annoyed, they vent -often not about the thing they really should be angry about – then they stop, letting everything go on as normal.

            Not sure what Saturday Night (what a good name for a commenter who’s both a lovah and a fighter!) means by ‘ride the emotion’!!! but if he means what I think he means it’s about waiting it until the venting dies down and then getting away with it. Do we really care about change at all I wonder? Are we to blame for all our problems after all?

          6. Te Lady Vanishes

            The expression ‘Tears Before Bedtime’ always reminds me of that very excellent memoir by Barbara Skelton (literary London femme fatale and Cyril Connolly’s ex-wife). Now, incidentally, available on kindle. A great Christmas present for one of your mistresses, Errol.

          7. The Lady Vanishes

            The expression ‘Tears Before Bedtime’ always reminds me of that very excellent memoir by Barbara Skelton (literary London femme fatale and Cyril Connolly’s ex-wife). Now, incidentally, available on kindle. A great Christmas present for one of your mistresses, Errol.

    1. Unemployed Lawyer

      The period, as amended in 2011, is 30 days from the date of notification of the contract and knowledge, or ought-to-have knowledge of the grounds of ineffectiveness, whichever is the later. A short time frame!

      1. Buzz

        Yes, but since it has just come to the public’s attention that the company was not incorporated at the time of tender, the clock starts running NOW. So we have 30 days.

  4. Mario Balotelli

    Have been involved in tendering for public jobs in the past, and by JEEEBUS there’s some seriously heavy work involved.. and that’s for small contracts.

  5. Joxer

    So what can be done about this? surely there is someone who can f*cking take this to Europe and get this sorted out?

  6. Teresa

    Legal Coffee Drinker, do you really think these legal rules are ever applied fairly in practice? It seems to me that there is one rule for people in the inner circle and another for the rest of us.

    Example: I was getting out of a taxi in South William Street some weeks ago. I asked the driver to drop me wherever suited him on the street. The driver stopped half way up the street and shouted at me to get out. I tried to get out with car horns beeping outside, i couldn’t get out the right hand side because there was a bike tied to a lamppost in front of the door on that side so I opened the left hand side door (I couldn’t see behind and the driver was shooting – get out get out). A white 2014 bmw passed by as I opened the door – I couldn’t see behind because the back window of the taxi was so dirty – and it grazed the rear view mirror of the bmw, which had a small crack in the glass. The lady got out and started shouting at me, so did the taxi driver. Theyw anted me to go to the bank link to take out money to pay. When I said I didn’t have money she told me she was calling the guards. I waited in the cold for 4 hours outside, they waited in their cars. When the guards came they talked to them and then to me (I am a student and partly disabled and my mum was there at this point). They took down my details and said that I had committed criminal damage by opening the door and they could deal with this one of two ways, they could prosecute me or I could pay up. I am a law student and I tried to explain that it is only criminal damage when there is intention to damage or recklessness in the sense of conscious recklessness. The guard started shouing and wait he didn’t like my attitude. Eventually he took my name and address and said he’d be in touch with the bill and if I paid it that would be the end of it. I haven’t yet received the bill but my mum and I are worrying how much it cost. What do I do? The law says one thing very clearly but it doesn’t appear to be applied fairly in practice.

    1. Atticus

      I can’t see how this is your fault. The driver obviously told you to get out somewhere that wasn’t safe.

  7. Teresa

    Thank you for your kind words. It was a very scary experience. I told him no problem, any where on the street that was safe. I should have refused to get out but I get hervous with noise – also the street is so narrow there jus past the Powerscourt Centre there isn’t room to properly park so I never thought anyone would try to pass – I thought he was stopped in the middle of the street because of the hooting. I don’t understand how i can be charged with criminal damage in circumstances where I didn’t intend to injure anyone or damage any property (maybe I was negligent but I don’t have the money to pay so wouldn’t be worth suing). I feel this was some sort of scam to extort money. I’ve never heard of a guard saying you give me your details and I’ll send you the bill and you pay it and we won’t prosecute before. he was from Pearse St Garda station if that helps. I haven’t got any letter yet but that doesn’t stop the worry, there is little enough money round this Christmas and I don’t know what a cracked mirror glass wing mirror for a 2014 bmw is going to cost.

    1. Too big for my boots

      Typical taxi driver and BMW drivers!
      If the Garda was qualified to advise you in what is obviously a civil matter he’d be sitting in a nice warm office charging obscene amounts by the hour like our learned friends above. Instead he’s out on a cold evening talking through his hole. I’m an idiot so don’t take my advice but what I would do is let BMW driver take you to court and defend yourself. Any judge worth their salt will go easy on you.
      The question is, are there any sensible judges out there?
      Don’t worry about this it will be ok.

  8. Legal Coffee Drinker

    Hi Theresa

    I am not able to give legal advice in relation to specific fact situations.

    However as regards the question of when someone who causes a car accident is liable for criminal damage, you will be aware of the provisions of the Criminal Damage Act 1991, which state (at Section _) that in order to be guilty of the offence of criminal damage you have to foresee the risk of your actions causing damage and decide to proceed regardless. That said, there is an English criminal damage case, R v Booth (2006) in which a pedestrian who caused a car accident by walking out into the road without looking and argued he did not foresee a risk was held to have foreseen and ‘closed his mind’ to the risk. Did you in opening the car door on the side you did foresee that a car might try to pass on that side and close your mind to it? I can’t tell from your first post but it seems from your second email that you didn’t realise there was room for a car to pass. If so, it appears that you didn’t, legally speaking, commit criminal damage.

    Your account of what happened and in particular the threat of prosecution if you didn’t pay up is interesting given the terms of this document:- http://www.garda.ie/Documents/User/adult%20cautioning%20final%20for%20publication.pdf

    You will note that it says members of the gardai should not be involved in negotiating compensation. That is in the context of the cautioning process mentioned in the document but it would appear from the terms that it applies generally.

    It does not appear that you have been formally charged with any offence yet so what I would do now is write down a careful note of what has occurred and get your mother to do the same and wait and see what, if anything, happens next. Those notes, and the document linked to above, should be shown to a solicitor in the event that you get correspondence requesting an amount which you are not happy to pay (I don’t think the guards can actually request this) or if you receive a summons.

    1. Artemis

      Coffee drinker, what would be the legal ramifications if you tore off the BMW rear mirror off the car to see if you could fix it, did a little dance on it to bend it into shape, and tried to see if you could glue it back on.. To fix it like.

      Teresa, sorry to hear of that bullying you received.
      You are under no obligation to wait around for 4 hours though, nor can you be held against your will.
      You’re wasting your time arguing with pr*cks.

      The Guards are not called to accidents to decide on culpability, unless there are serious injuries involved.. That’s what the Garda told me when they arrived out to an accident I was involved in recently. I called my insurance company, explained what happened, and the claims person told me I was in the wrong.. simple as that. I was in no way going to be arguing with the other driver, well particularly as it was kinda my fault. :)
      I’m sure the taxi driver pays extra for insurance to cover this scenario.. but didn’t want to have to cough up himself, or put in a claim. Tough titty though.

  9. Caroline

    Feel free to tut in my general direction if this is a stupid question, but is this not a case where two bodies (GMC Utilities Group and Sierra Support Services Group) bid as an unincorporated joint venture, in which case they both would have had to jointly and severally fulfil the requirements and meet the standards of the yada yada yada? If so the net point would be what effect does their incorporation subsequent to the award of the contract have, if any.

    Or am I back on the crazy pills?

    1. Caroline

      By golly you’re on to something, the real losers in this whole thing are the runners up in the bidding contest, Jambo Murphy & Sons, Honest-To-Goodness Aquatic Paraphernalia Merchants. It seems their offer to “see Irish Water right” followed by a spit and handshake was no match for the slick machinations of O’Brien and his legal drone army.

    2. Artemis

      RE: in which case they both would have had to jointly and severally fulfil the requirements and meet the standards of the yada yada yada?

      Well, it seems to me Caroline, that as the coffee fella said – “a company still to be incorporated is not in a position to provide evidence of compliance with statutory requirements ”

      Had a gander there of the summary of the EU directives on governing the competitive process for public contracts. The tenderer should be excluded if they have a criminal conviction, which O’Brien should have, in my opinion.
      http://etenders.gov.ie/Media/Default/Page/Public_Procurement_Guidelines_-_Competitive_Process_2010.pdf

      In any event, it seems to me, there isn’t much in the way of competition if the awarding of contracts are given without following the legal process.. It’s a nod and a wink and ara we’ll sort out the paper work later.

      1. Caroline

        I agree, it’s a very strong point – more so the fact of the entity to whom the award was made. I’m too lazy to check if any of the tender documentation is public. But it would be interesting to see who did provide or purport to provide the statutory bona fides, and if any reason was given. I think it’s unlikely they didn’t address the issue (although I guess it’s possible).

        1. Artemis

          FOI request for the tender..

          ” I think it’s unlikely they didn’t address the issue (although I guess it’s possible).”
          You think so? I dunno.. The cronyism ((and stupidity) seems to be pretty blatant with FG.

          1. Artemis

            Can’t seem to find much of this elsewhere..
            Just this –
            http://www.thejournal.ie/irish-water-gmc-sierra-1830119-Dec2014/

            (Not that I trust the Journal… As Julien Mercille said : “The media serves the interests of its owners and the corporate class of which they are part. They serve an ideological function in presenting government policy and interests in a positive light”),

            But anyway, A spokesperson for Irish Water told TheJournal.ie
            hmmm
            And what the spokeperson said was –
            “They submitted a joint tender and after the tender was awarded, registered as a specific legal entity, namely GMC/Sierra, on July 15th. A condition of the award of the metering contract was that if the tenderer comprised a consortium, in this case GMC and Sierra, they would register as a specific legal entity.”

            Under EU procurement rules, it is not permissible to require groups of economic operators, bidding together as a consortium, to assume a specific legal form before a tender is awarded.

            “This is standard practice in procurement and fully compliant with EU procurement rules..”

          2. Artemis

            Legal coffee drinker, would you have any input on what the spokeman from Irish water advised, sil vous plait?

            I don’t see any reference to that in the summary of EU directives on public procurement..

          3. Caroline

            Have a look at this. It’s Recital 15 of Directive 2014/24/EU (http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0024&from=EN)

            “It should be clarified that groups of economic operators, including where they have come together in the form of a temporary association, may participate in award procedures without it being necessary for them to take on a specific legal form. To the extent this is necessary, for instance where joint and several liability is required, a specific form may be required when such groups are awarded the contract.

            Emphasis added.

          4. Legal Coffee Drinker

            Hello there.

            Yes, you are both right. If it is a consortium bid, it’s possible that the bid could have been awarded to the consortium, with a requirement that the company to be set up as a condition of the contract and that the contract be subsequently novated to it.
            Though I notice in this case the company was actually set up in advance of the award of the contract, of course this may have been in reasonable anticipation of a requirement like the above being included in the contract, if awarded.

            Whether or not this is the answer to Ms Murphy’s question depends on the terms of the tender bid and the terms of the contract, in particular whether or not this was applied for by and granted to the consortium rather than the company.

            Catherine Murphy’s question as stated in the Dail indicates that the tender/contract was awarded to the company, perhaps she has further information on this? Or perhaps she has not considered the possibility of application by a consortium and is automatically assuming that GMC/Sierra means the company? I don’t know. Would love to see the tender and contract documentation though…

          5. Caroline

            Sir, I’m now requiring you to provide a specimen of your breath to indicate the presence of alcohol.

          6. Legal Coffee Drinker

            My dear, I can assure you I am fully alert.

            Nothing like a quick reread of the EU public procurement directive helpfully linked to by you to sober one up.

          7. Legal Coffee Drinker

            You’re out of date, Ben.

            Wig-wearing hasn’t been compulsory for a long time now.

            And smart women like Caroline laugh at the likes of you…

          8. Legal Coffee Drinker

            Sorry Ben. Just a trifle stung by your remarks about corporate law above.

            Caroline, I bid you farewell, and a good evening.

          9. The Lady Vanishes

            A fight for the hand of Lady Caroline… between an apparent lawyer and an apparent detective writer, with both parties retreating in high dudgeon when the lady herself ignores their obvious attempts to ingratiate.

            My goodness!

  10. Artemis

    Was there ever any explanation either as to why O’Brien paid €45 million for control of Siteserve (which had 100million written off – Anglo debit) when a French company Altrad said they were denied putting in a bid of €60million?

    Anyone?

    I need to stop reading this sh*te.. my blood is starting to boil.

  11. Artemis

    Thanks LCD, Caroline.

    Though I notice in this case the company was actually set up in advance of the award of the contract, of course this may have been in reasonable anticipation of a requirement like the above being included in the contract, if awarded.

    Ok, so the company was set up prior to the awarding of the contract, but after the closing dates for bids?
    Reasonable anticipation?
    Hmmm, kinda like when you know you’re getting the contract, kinda reasonable?
    Competition me a*se.

    Would love to see the tender and contract documentation though
    FOI request perhaps?

Comments are closed.