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ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ
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(1989) 3A CLR 219
1989 February 18
[KOURRIS, J.]
IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION
TAMASSOS TOBACCO SUPPLIERS AND CO.
Applicants,
v.
THE REPUBLIC OF CYPRUS, THROUGH THE DEPARTMENT OF
CIVIL AVIATION (THE MINISTRY OF COMMUNICATIONS
AND WORKS) AND OTHERS.
Respondents.
(Case No. 382/87)
Tenders-Partnership submitting tender-Certificate by Registrar of Companies as to persons who can bind the partnership-Binding on the Tender Board.
Tenders-Failure to comply with conditions relating thereto-Things cannot be put right ex post facto - Estoppel-Not applicable in cases of tenders.
Tenders-Conditions relating thereto-Failure to comply with a condition -Criterion applicable for distinguishing between material and immaterial irregularities.
Legitimate interest - Constitution, Art. 146.2 - Free and voluntary acceptance of an administrative act deprives acceptor of legitimate interest - Tenders - Rejection of tender and return of letter of guarantee - Failure to return the letter of guarantee to the Tender Board - Does not amount by itself to acceptance of the rejection of the tender.
The applicants, a registered partnership, submitted a tender for the operation of the duty free shops at Larnaca and Paphos International Airports. One of the conditions relating to the tenders read:
"And all copies of the tender... shall be signed by the tenderer or a person duly authorised to bind the tenderer to the contract. The letter of authorisation shall be authenticated by written power of attorney accompanying the tender."
Applicants tender was signed by Mr. SteliosGaranis. However, a certificate issued by the Registrar of Companies showed that Mr. Garanis alone could not bind the applicants.
Following the opening of the tenders and the issue of the said certificate, the Tender Board invited the applicants to submit a power of attorney,authorising Mr. Garanis to act as he did. The applicants forwarded the power of attorney dated one day before the expiration of the period for the submission of the tenders.
Despite the fact that the applicants had been invited to forward the power of attorney, the Tender Board rejected the tender, in view of the applicants' failure to comply with the aforesaid condition.
Having reviewed the authorities, the Court concluded that for a tender to be valid, all the conditions must exist at the time of submitting the tender. It is not possible to put things right ex post facto. In the light of this principle, the principle of estoppel is not applicable. It follows, therefore, that the fact that the applicants were invited, after the opening of tenders, to submit a power of attorney, is immaterial. The Tender Board was bound to act on the certificate issued by the Registrar of Companies in respect of the applicants, who were a registered partnership. The crucial criterion in determining whether an irregularity is material or not, is whether the irregularity affects the essence of the tender or not. In this case failure to submit the power of attorney together with the tender, was a most material irregularity. The question, whether Mr. Garanis bound the partnership or not, goes to the very route of the tender.
Recourse dismissed. No order for costs.
Cases referred to:
Papadopoulou and Another v. Republic (1986)3 C.L.R. 25.
Papadopoulou and Another v. C.B.C. and Another (1987) 3 C.L.R. 1685,
J. N. Christofides Trading Ltd. v. republic (1985) 3 C.L.R. 546,
Medcon Constructions and Others v. Republic (1968) 3 C.L.R. 548,
Kounnas& Sons v. Republic (1972) 3 C.L.R. 542,
Nicola v. Republic (1987) 3 C.L.R. 586.
Recourse.
Recourse against the decision of the respondents to reject applicants' tender for the operation of the duty free shops at Lamca and Paphos International Airports.
R. Stavrakis with G. Cacoyannis, for the Applicants.
A. Evangelou,Senior Counsel of the Republic, for the Respondents.
Cur.adv. vult.
KOURRIS, J. read the following judgment. By the present recourse applicants pray for a declaration that the decision of the respondents contained in their letter dated 12.3.1987, whereby they rejected applicants' tender for the operation of the duty free shops at Larnaca and Paphos International Airports is null and void and of no effect whatsoever.
Applicants are a general partnership, the two general partners of which are "KapnoviomichaniaGaranis and Petrides Ltd." (Garanis and Petrides Tobacco Industry Ltd.)andFrancoudi and Stephanou Ltd., both of which are private companies limited by shares incorporated in Cyprus under the Companies Law, Cap. 113.
On 20.11.1986, the respondents invited tenders for the provision of Sales Facilities (Tobacco and Liquors) in the duty free shops at the Lamaca and Paphos International Airports and such tenders were submitted by various tenderers including the applicants, who submitted their tender on 26.12.1986 which was signed by Mr. Stellos G. Garanis, purporting to bind the said partnership. The respondents failed to award the contract to theapplicants or to any other tenderer.
Applicants' tender was rejected by the respondents on grounds which appear in the letter of the respondents dated 12.3.1987 (exhibit 8 to the application) where they contended that the tender failed to comply with the conditions set out in paragraph 8.2 of the Invitation for Tenders which provides as follows:
"The original and all copies of the tender shall be typed or written in indelible ink and shall be signed by the tenderer or a person duly authorised to bind the tenderer to the contract .The letter of authorization shall be indicated by written power of attorney accompanying the tender."
It appears that the contention of the respondents is that the applicants' tender failed to comply with the above requirements on the following grounds: (a) that the tender was not signed by the tenderer: and (b) that the authorization of the person who signed the tender was not indicated by written power of attorney.
Before proceeding to examine the substance of the case, I propose to deal with a preliminary point raised by counsel for the respondents. Counsel for the respondents alleged that applicants have no legitimate interest in the sense of Article 146.2 of the Constitution to file a recourse because they have accepted the sub judice decision rejecting their tender together with the return with a letter of guarantee.
I do not think that this contention is valid. Applicants have not accepted the rejection of their tender unreservedly. (See Papadopoulou and Another v. The Republic (1986) 3 C.L.R. 25 at p.54 and FriniPapadopoulou and Another v. C.B.C. and Another (1987) 3 C.L.R. 1685). On the contrary, in the circumstances of the present case, applicants filed the,present recourse denoting that they have never accepted free and unreservedly the sub judice decision.
Reverting now to the substance of the case, I propose to examine the first point which is the following:
(a) Tender not signed by the Tenderer.
In connection with this point the Registrar of companies issued a certificate of the registration of the partnership under O/E 8036, dated 5.1.1987, which stated as follows:-
Ο κ.. Στέλιος, Γκαράνης ή ο κ. Λουκής. Πετρίδης για την Καπνοβιομηχανία Γκαράνης και Πετρίδης Λτδ και ο κ. Νί-κος Στέφανου για την Φραγκούδη και. Στεφάνου Λτδ, είναι, εξουσιοδοτημένοι, να, διαχειρίζονται, την εταιρεία και να διευθύνουν και να υπογράφουν γι' αυτή· με το όνομα της από κοινού.
And in English it reads:-
Mr. SteliosGaranis of Mr. LoukisPetrides for the Garanis and PerridesTobacco Industry Ltd. and Mr. NicosStephanou for Frangoudi and Stefanou Ltd are authorized to manage the partnership and to sign on its behalf jointly."
It is common ground that the tender was signed by Mr. SteliosGaranis and it was not indicated by written power of attorney accompanying the tender and at a later stage, after the opening of the tenders, respondent 1 requested applicants by letter dated 30.12.1986 to produce a power of attorney and they did so.
Counsel for the respondents contended that the Tender Board could not ignore the contents of the certificate of the Registrar of Companies dated 5.1.1987 stating expressly the persons authorised to bind the partnership In point of fact, he said that the certificate was binding on the Tender Board so long as it is in existence and it has not been modified by the appropriate authority which issued it. He went on to say, that the certificate of registration of the partnership is binding on the Tender Board which stated that in order to bind the partnership all the partners had to sign.
Counsel for the applicants said that applicants delivered to the Official Receiver and Registrar of Companies form No. O.E.1 for the registration of the partnership pursuant to the provisions of s.5 1 of the Partnership and Business Names Law,Cap. 116. He went on to say that the form contained a clear statement to the effect that any one of the partners (acting alone) could bind the partnership, but one of the employees at the office of the Registrar without authority, deleted by hand (in ink) the typewritten words "any one of the partners" in the Greek language and added in her own hand-writing in ink the words "jointly" ("apokoinou").Against the refusal of the Registrar to restore the said form to its original condition, recourse No. 345/87 was filed by the applicants in the Supreme Court on 30.4.1987, contending that the alterations to the said form are not and never have been in law binding on them and that in any event, the said alterations were brought to their notice and became known to them for the first time after the submission of the tender which is the subject matter of this recourse. It should be noted that the said recourse was heard by the Supreme Court and was dismissed on the ground that it was not justiciable in the sense of Article 146.1 of the Constitution because it did not fall within the domain of public law.
Counsel for the applicant submitted that in the light of this factual background by virtue of the provisions of s.8 of the Partnership and Business Names Law, Cap. 116,.by which one of the partners could by himself alone bind the applicants, one reaches the inevitable conclusion that there is nothing indicating any intention on the part of the partners to exclude the application of the provisions of s.8. Furthermore, he suggested that the partners were ignorant of the fact that such an insertion had been made by an officer of the appropriate department and, therefore, the alterations made cannot in any way bind them, since they were brought to their notice and became known to them after the submission of the tender which is the subject matter of this recourse.
I have considered the submissions of both counsel, and I hold the view that the Tender Board ought to rely on the official certificate of registration issued by the Registrar of Companies dated 5.1.1987. In the certificate of registration it is expressly stated "persons who bind the partnership", and in the present case the persons who were authorised to bind the partnership were all the partners jointly. In these circumstances, it was reasonably open to the respondent to reach the conclusion that the applicants contravened paragraph 8.2 of the invitation for
Tenders in that the tender was not signed by the tenderer.
(b) The Tender was not accompanied by a Power of Attorney.
It is common ground that applicants' tender when submitted was signed by Mr. SteliosGaranis and was not accompanied by a power of attorney, but such a power of attorney in fact existed as from 26.12.1986. It is also an admitted fact that the last date for the submission of the tenders was the 27th December, 1986.
The grounds on which applicants based their case on this point are the following:
(i) that in any event, there was at the material time a valid power of attorney authorising Mr. Garanis to sign the tender;
(ii) that even so, failure on the part of the applicants to produce the power of attorney on the date of signing the tender did not amount to a material irregularity;
(iii)that such irregularity was cured and/or waived by the respondents themselves;
(iv) that the respondents are estopped from putting forward an such alleged irregularity as by their express and/or implied representations and/or by their conduct they induced the applicants to believe that the production of a power of attorney at a later stage was acceptable to them and in reliance on such representation and/or conduct the applicants acted to their detriment.
Counsel for the applicants submitted that a mere failure to send the power of attorney was, in the circumstances, breach of a minor formality or of an immaterial irregularity that did not render the tender of the applicants invalid. He argued that when the respondents by their letter dated 30. 12.1986 requested the applicants to provide them with the required power of attorney, the applicants furnished them with a power of attorney dated 26.12.1986, the last date for the submission of tenders. There existed a valid power of attorney authorising Mr. Garanis to sign the tender on behalf of the applicants. In other words, hesaid at the time when tenders could still be submitted Mr.Garanis was, in fact, formally authorized to sign the tender.
On this point he relied on the case J.N. Christofides Trading Ltd. v. The Republic (1985) 3 C.L.R. 546 and contended that the failure on the part of the applicants to sign the power of attorney is an irregularity which does not in any way affect the essences of the tender; that the non-availability of the power of attorney could not pose difficulties for the respondents in evaluating the tender; that the irregularity was so treated by the respondent themselves who for that reason waived it.
I propose to deal first on this point with the grounds (i), (III) and (iv).
The principles governing the validity of tenders were laid down the case of Medcon Constructions and Others v. The Republic (1968) 3 C.L.R. 535.Triantafyllides, J., as he then was, said at p. 544 the following:
"It was not possible, or permissible to treat the interested party as a tenderer at all, because, though the initial noncompliance by the interested party with term 11 of the invitation for tenders could have been waived - as it was done - it was expressly provided by term 13 that any tender which would not be accompanied by a certificate of fitness, of the material offered, given by the District Engineer of the Public Works Department, would not be taken into account; and it is common ground that the tender of the interested party was not accompanied by a certificate of fitness. Thus, the Interested Party was treated as having submitted a valid tender, when by express provision in the invitation for tenders this could not be done; and it was not possible to put things right. ex post facto, by deciding that the contract would be awarded to the Interested Party provided that the quarry and crushing plant of the interested party would be inspected and found to be fit for the purpose (see exhibit 7(a)) - see, also, Decisions of the Greek Council of State 53 1(49) vol. B, p. 13 and 1403(60) in Zacharopoulos Digest 1953-1960 vol. 1 a-k, p. 489. Moreover, tenderers were entitled to equality of treatment, and to exempt the interested party fromcompliance with the express requirement, of term 13 of the invitation for tenders, and from the sanction for such non-compliance, was, not only contrary to good and proper administration and in abuse and excess of powers, but also contrary to the requirements for equality of treatment laid down by Article 28.1 of the Constitution."
From this case it emerges that a tender to be valid all the conditions must exist at the time of submitting the tender and that it is not possible to put things right ex post facto. Furthermore, all the conditions should exist at the time of submitting the tender, otherwise such non-compliance was not only contrary to good and proper administration and in abuse and excess of powers, but contrary to the requirements of equality of treatment laid down by .Article 28.1 of the Constitution.
Again, in the case of Kounnas& Sons v. The Republic (1972) 3 C.L.R. 542, Triantafyllides, P., at P. 546 said:-
"If the consideration of tenders takes place in a manner contrary to the principles of free competition or in an irregular manner affecting its outcome then the relevant administrative decision has to be annulled (See, inter alia, the Conclusions from the Case Law of the Council of state in Greece - ' Πορίσματα Νομολογίας του Συμβουλίου της Επικρατείας' 1929-1959 case 1965/47 at p. 430 and cases 2028/47 at p. 431)."
Applying the above principles to the facts of the present case, I am of the view that it was not permissible for respondent 1 to request applicants to provide them with the required power of attorney on 30.12.1986, i.e. after the tenders were opened and, furthermore, the rule of estoppel does not apply in cases of tenders. Whilst on this point, I am not prepared to hold that waiver or estoppel is not applicable to public law as alleged by counsel for the respondents, because I have not heard full argument on this point As at present advised, I can only say that estoppel is not applicable to tenders, in view of the principles laid down in the Medcon case (supra).
I shall now deal with point (ii), i.e. whether failure on the partof the applicants to send the power of attorney did amount to a material irregularity or not.
This point was tackled in the case of J.N. Christofides Ltd. v. The Republic (1985) 3 C.L.R. 546 where Pikis, J. at pp. 549-550 said as follows:-
"The distinction between the observance of 'substantial prerequisites' and 'non substantial formalities' in the consideration of tenders, is examined by L. Loizou. J., in a recent decision, that is, Papadopoulos v.The Republic. Relying on the exposition of the Law on the subject, in Kyriacopoulos on Greek Administrative Law, 4th ed., Vol. B., the learned Judge concludes, it is competent for the Tender Board, or other authority, to consider a tender, notwithstanding non compliance with terms of the tender, provided such conditions are of an unessential nature. Consequently, lack of a circulation permit for the machine tendered, was held not to invalidate the tender. In the relevant chapter quoted in the aforesaid judgment,Kyriacopoulos explains it is not an easy task to distinguish between substantial and insubstantial formalities. As a general rule, observance of a formality required by Law or administrative practice, is regarded as an essential prerequisite. The learned author discerns the following test, from Decisions of the Greek Council of State, to determine whether a term is an essential or inessential condition. It is this: If compliance with a formality is a factor influential for the content of the decision, it may be regarded as essential."
Again the same point came up for decision in the case of Andronikios Nicola v. The Republic (1987) 3 C.L.R. 586.
The question as to the nature of the irregularity is one of fact and depends on the particular circumstances of each case. However, the crucial criterion in determining such a question is whether the irregularity affects the essence of the tender or not.
In the present case, applicants' tender when submitted was not accompanied by a power of attorney in breach of para. 8.2 of the invitation for tenders. I am of the view that this is a most material irregularity which affects the essence of the tender Itgoes to the very root of the tender as to whether Mr. Garanis bound the partnership or not. Without the power of attorney accompanying the tender, Mr. Garanis could not bind the partnership.
For all the above reasons, I am of the view that it was reasonably open for the respondents to reject applicants' tender for the operation of the duty free shops at Larnaca and Paphos International Airports.
In the circumstances, the recourse is dismissed with no order for costs.
Recourse dismissed. No order as
to costs.