High Court ruling considers limitation periods in public contract direct awards

In a key ruling, the High Court recently held, in Brookhouse Group Ltd v Lancashire County Council, that the 30-day limitation period under Regulation 93 of the Public Contracts Regulations 2015 (the “PCRs”) did not apply to the directly awarded public works contract in question.

The facts

Brookhouse claimed that the award of a development contract to Maple Grove Developments Limited by LCC without a competitive tendering process was ineffective, rendering its provisions void.

LCC had previously awarded a Strategic Partnership Agreement to Maple Grove Developments Limited’s parent company. LCC argued that this agreement constituted a framework contract which allowed them to make further awards to nominated partners, such as Maple Grove Developments Limited, without conducting a further competition.

Brookhouse sent a letter before claim on 8^th September 2022 to which LCC replied, by way of a letter dated 22^nd September 2022, explaining its reasoning for entering into the contract without undertaking a further competition.

Brookhouse issued a claim form on the 20^th January 2023.

The defence

LCC set out a defence based upon limitation, asserting that Brookhouse should have issued their claim within a 30-day period. LCC argued that as they had responded to Brookhouse’s letter before claim on 22^nd September 2022, the expiry of the 30-day limitation period was 24^th October 2022.

Under Regulation 93(2) of the PCRs the 30-day limitation period will only apply if:

1. a relevant contract award notice has been published on a UK e-notification service (Regulation 93(3)); or
2. a summary of “relevant reasons” has been given (Regulation 93(5)).

"Relevant reasons" (as defined in Regulation 93(6)) are “the reasons which the economic operator would have been entitled to receive in response to a request under Regulation 55(2)”. Brookhouse argued that Regulation 55(2) does not apply to a situation where, as occurred here, no competitive tendering process has been carried out, therefore no “relevant reasons” could have been provided by LCC.

If the 30-day period was held not to apply, the long stop position for ineffectiveness of a six-month limitation period would apply instead. Brookhouse had issued their claim form (on the 20^th January 2023) within six months of LCC’s letter of 22^nd September 2022.

The Decision

The High Court struck out LCC’s limitation defence, applying the six-month limitation period rather than the 30-day period as neither Regulation 93(3) nor Regulation 93(5) were satisfied.

LCC stated that they did not issue a contract award notice as it would be a “red rag to a bull”. However, the High Court asserted that the entire point of a contract award notice is to put any potential challengers on notice and accordingly to have a shortened period for bringing a claim. As there was no contract award notice issued by LCC, Regulation 93(3) was not satisfied, therefore under this limb, the 30-day limitation period did not apply.

Furthermore, the High Court held that Regulation 93(5) was not satisfied either. As Brookhouse was held not to be a tenderer nor a candidate for the purposes of the PCRs (there had been no competition for the award of the development contract), LCC could not rely on the case of Alstom Transport v Eurostar International Ltd, as in that case Alstom was held to be a tenderer. Furthermore, it was underlined by the High Court that there is no such concept as a “would be candidate” under the PCRs. As Brookhouse was held to be neither a tenderer, nor a candidate nor a “would be candidate”, Regulation 93(5) was not satisfied, meaning the 30-day limitation period did not apply for this limb either.

The High Court reiterated that the intention of Regulation 93 is to impose a six-month limitation period (the long stop position) and only apply a 30-day limitation period in circumstances where Regulation 93(2) has been satisfied.