Brookhouse Group Limited v Lancashire County Council

Introduction

The Application

The Chronology of events

Paragraphs 21 to 25 of the Defendant’s Defence

The Regulations

The Relevant Legal Principles

Conclusions

INTRODUCTION

The parties dispute concerns the Cuerden Strategic Regional Investment Site (“CSRIS”). This comprises 65 hectares of land. The Defendant owns some 71% of the CSRIS whilst the Claimant owns some 29%.

The Claimant’s claim arises out of the award of a contract by the Defendant to a developer, Maple Grove Developments Limited (“MGD”) and entry into that contract by MGD and the Defendant on the 29 July 2022 (“the DA”).

The Defendant contends that the DA contains enforceable obligations on the part of MGD to carry out development works at CSRIS falling within the scope of a procurement contract competitively tendered and awarded to Eric Wright Group Limited (“EWG”) – which owns MGD – on the 6 December 2012 and within the Strategic Partnership Agreement (“SPA”) subsequently entered into with EWG on the 20 December 2012.

The Defendant further contends that the SPA constituted a framework contract which expressly and lawfully envisaged and provided for the Defendant entering into further project specific development agreements either with the chosen developer (EWG) or with its nominated Partnering or Project Services Provider (MGD) without any further competitive tendering requirements. The Defendant claims that the entering into the DA with MGD constituted the lawful execution of the specific provisions of the SPA for the relevant project, namely the development of the Defendant's land within the CSRIS.

The DA is a public works contract and/or a mixed public works and services contract for the purposes of the Public Contract Regulations 2015 (“PCRs”)

The Claimant claims in their proceedings a declaration of ineffectiveness pursuant to regulation 98(2) of the PCRs declaring void the provisions of the DA.

It appears common ground:

The Defendant in their Defence set out a defence based upon limitation. The Defendant contends that the Claimant was provided with a “summary of the relevant reasons” for the purposes of Regulation 93(5) of the PCRs at the latest by the 22September 2023 and therefore any claim had to be filed within 30 days of that date (“the Limitation Defence”) and the thirty day time limit for starting proceedings ran from that date and expired on the 24 October 2022.

The Claim Form in the present proceedings was issued on the 20 January 2023 nearly four months after the relevant date and well outside the thirty-day time limit. Accordingly, the Defendant contends that the claim is statute barred in its entirety pursuant to regulation 93(2)(a) of the PCRs. It is also alleged by the Defendant that the Court has no discretion to extend the applicable time limit under regulation 93.

The Claimant contends that the success or failure of the Limitation Defence turns on a short question of law whether in circumstances in which no competitive tendering exercise under the PCRs has been held by a contracting authority can the contracting authority still rely upon regulation 93(5) by providing reasons to any economic operator as to why no competitive award procedure has been carried out.

THE APPLICATION

The Claimant’s application dated 12April 2023 seeks the following order:

The Defendant’s application dated the 27April 2023 seeks an order:

THE CHRONOLOGY OF EVENTS

PARAGRAPHS 21 TO 25

The paragraphs of the Defence which are at the core of both the Claimant’s and the Defendant’s applications are:

“Limitation

[21] The claim is brought under the Public Contracts Regulations 2015 ("the 2015 Regulations"). The allegation at paragraph 43(1) - (4) is that on 29th July 2022 the Defendant entered into a public works contract with MGD without: (i) applying the procedure set out in Part 2 of the 2015 Regulations contrary to regulation 26(1); (ii) publishing a call for competition in accordance with Part 2 contrary to regulation 26(2); (iii) publishing a contract notice containing the information set out at regulation 49; and (iv) submitting such a notice in accordance with regulation 51. The Claimant therefore alleges that the first ground of ineffectiveness under regulation 99(1) applies and claims a declaration to this effect.

[22] Regulation 93 of the 2015 Regulations provides:

"[93] Special time limits for seeking a declaration of ineffectiveness

(1)

This regulation limits the time within which proceedings may be started where the proceedings seek a declaration of ineffectiveness.

(2)

Such proceedings must be started-

(a)

where paragraph (3) or (5) applies, within 30 days beginning with the relevant date mentioned in that paragraph;

(b)

in any event, within 6 months beginning with the day after the date on which the contract was entered into.

(3)

This paragraph applies where a relevant contract award notice has been published on the UK e­ notification service, in which case the relevant date is the day after the date on which the notice was published.

(4)

For that purpose a contract award notice is relevant if, and only if,

(a)

the contract was awarded without prior publication of a contract notice; and

(b)

the contract award notice includes justification of the decision of the contracting authority to award the contract without prior publication of a contract notice.

(5)

This paragraph applies where the contracting authority has informed the economic operator of:

(a)

the conclusion of the contract, and

(b)

a summary of the relevant reasons, in which case the relevant date is the day after the date on which the economic operator was informed of the conclusion or, if later, was informed of a summary of the relevant reasons.

(6)

In paragraph (5), "the relevant reasons" means the reasons which the economic operator would have been entitled to receive in response to a request under regulation 55(2).

(7)

For the purposes of this regulation, proceedings are to be regarded as started when the claim form is issued."

[23] Shortly after the 29 July 2022, the Defendant published a press release on its website announcing that it had entered into the DA with MGD. By no later than 8th September 2022 when the Claimant wrote a detailed letter before claim, the Claimant was aware of this fact. Furthermore, insofar as it was not aware of the same by virtue of the previous correspondence between the parties in 2020 and 2021, by no later than 22nd September 2022 when the Defendant responded to the letter before claim, confirming the conclusion of the DA, the Claimant was also made fully aware, by way of a detailed summary, of the reasons why the Defendant was entitled to enter into the DA by execution of the provisions of the SPA without conducting any further competitive tender process.

[24] In the circumstances, at the very latest by 22 September 2022, the Defendant had informed the Claimant of the conclusion of the DA and provided it with a summary of the relevant reasons for that, with the result that the relevant date, for the purposes of regulation 93(5) of the 2015 Regulations, was no later than 23 September 2022 and the thirty day time limit for starting proceedings ran from that date and expired on 24 October 20225.

[25] The Claim Form in the present proceedings was issued on 20th January 2023, nearly four months after the relevant date, and well outside the thirty day time limit, with the result that the claim is statute barred in its entirety, pursuant to regulation 93(2)(a) of the 2015 Regulations. Nor does the Court have any discretion to extend the applicable time limit under regulation 93.”

For the sake of completeness, the Claimant’s response to the Limitation Defence is set out in paragraphs 13 and 14 of the Reply which states:

“[13] As to paragraph 23, save that it is admitted that on 22 September 2022 the Council purported to give reasons why it considered it was entitled to enter into the DA without conducting any further competitive tender process, it is denied that the reasons given in that letter (which was a response to the Claimant's letter before action) constitute valid reasons for not conducting a competitive tender process prior to the award of the MGD Agreement. The reasons given in that letter, which were to the effect that the SPA was "awarded as, and consists of, a public works contract, albeit in the form of a framework contract and that its scope is clearly wide enough to incorporate the development of the CSRIS" were both inconsistent with the Defendant's case as now pleaded (which does not assert that the SPA was a public works contract) and is in any event flawed for the reasons set out in the Particulars of Claim.

[14] As to paragraph 24, it is denied that the explanation that the Defendant purported to provide in its letter of 22 September 2022 or at any earlier stage constituted a summary of the relevant reasons for the purposes of regulation 93(5):

(1)

"Relevant reasons" are defined in Regulation 93(6) as "the reasons which the economic operator would have been entitled to receive in response to a request under regulation 55 (2)";

(2)

Regulation 55(2) refers to responses to written requests from candidates or tenderers and specifies at Regulation 55(2)(a) - (d) the information to be provided to unsuccessful candidates or tenderers. Therefore Regulation 55(2) only applies where there has been a competitive tendering process carried out. It plainly does not apply to a situation where, as occurred here, no competitive tendering process has been carried out at all before the DA was awarded and entered into.

(3)

Therefore no "relevant reasons" could have been or were provided by the Defendant. Accordingly, the assertion that the relevant date was 23 September 2022 and that the time limit was 30 days which ran from that date and expired on 24 October 2022 is misconceived. The applicable time limit was that specified under Regulation 93(2(b), ie. 6 months beginning with the day after the date on which the contact was entered into (ie. 30 July 2022). The claim was filed on 20 January 2023 well within this time limit. Paragraph 25 is accordingly denied.”

THE REGULATIONS

The PCRs have at all relevant times been in force and remain in force because they are “Retained EU Law” pursuant to sections 2(1) and 6(7) of the European Union (Withdrawal) Act 2018.

The Claimant submitted that their case was simply contained in regulation 55 but that it was necessary to look more widely at the regulations and the structure of the regulations.

I doubt whether this was strictly necessary but the relevant regulations to the two applications are:

THE RELEVANT LEGAL PRINCIPLES

As to the test to be applied on a strike out application concerning limitation the Defendant refers to the Court of Appeal decision in Sita UK Ltd v Greater Manchester Waste Disposal Authority[2011] EWCA 156 at (4) which adopted Mann J’s formulation at first instance which stated:

“The outline issues and the nature of this hearing

[14] The main basis on which GMWDA seeks to strike out this case, or seeks summary judgment, is that these proceedings have been commenced outside the limitation period provided for by reg.32(4)(b). It says that Sita knew or ought to have known of the infringements by a date which was, at the latest, April 8, 2009, so that proceedings ought to have been commenced by July 7, 2009, subject to limited agreed extensions which do not, in the event, assist Sita. It also says that Sita has not established any case for the exercise of any discretion to extend allowed by the Regulation. Sita claims that it has commenced its claim in time, or at least that it is not sufficiently clear at this stage that it has not; and insofar as necessary invites me to exercise the discretion to extend.

[15] A consideration of these issues, on the facts of a case such as this, is not a straightforward matter of considering the effect of some uncontested or incontestable evidence. It involves construing the Regulation, considering the effect of a very recent European authority, considering a number of other authorities, and then analysing the disclosed events relating to a negotiation to which Sita was not, for the most part, a party. For GMWDA to succeed it would have to establish not merely some facts, but also what Sita knew about those facts. That last element inevitably makes the inquiry more difficult. There is a possible alternative of what Sita ought to have known. That is potentially a more difficult inquiry still. I have referred to the scope of the documentary and witness statement evidence before me.

[16] In those circumstances it is not surprising that Sita has deployed what I might call the usual authorities about the undesirability, or even impropriety, of having mini-trials at an early stage of proceedings on applications for summary judgment or to strike out, where material facts are disputed and the law is not straightforward. I will not lengthen this judgment by citing the detail of that authority; the cases were Richards (t/a Colin Richards & Co) v Hughes [2004] EWCA Civ 266; [2004]P.N.L.R. 35; Barrett v Enfield LBC [2001] 2 A.C. 550; [1999] 3 W.L.R. 79 HL; Intel Corp VIA Technologies Inc [2002] EWCA Civ 1905; [2003] E.C.C. 16; and Bridgman v McAlpine Brown [2000] LTL Jan 19, 2000 (CA). I accept that a claim should not be struck out unless it can be demonstrated sufficiently clearly that it is bound to fail, as a matter of law and/or fact, and that I should not determine a serious live issue of fact which requires oral evidence, or which requires the full scrutiny that a trial will bring to bear.

[17] For its part, GMWDA deployed dicta in Three Rivers DC v Bank of England (No.3) [2003] 2 A.C. 1; [2000] 2 W.L.R. 1220; [2000] 3 C.M.L.R. 205 HL; and Swain v Hillman [2001] 1 All E.R. 91; [2001] C.P. Rep. 16 CA (Civ Div), the latter referring to the merits of a summary judgment in giving the quietus to a case which it appears sufficiently clearly is bound to fail. It saves court resources and enables the parties to know where they stand.

[18] I bear all these points firmly in mind. The real question for me is whether it is clear enough, at this stage, that the claim is bound to fail on limitation grounds, and that a trial (or a fuller hearing of a preliminary issue) would not change that situation. Any doubt about it would have to be resolved in favour of the claimant. When I make any determination in this matter whether of fact law or discretion, I should be taken to be doing so on the footing that the point has been clearly established, and that the same result would clearly be reached at a trial.

The Claimant referred to Mrs Justice Asplin’s (as she then was) decision in Tesco Stores Ltd v. Mastercard Incorporated [2015] EWHC 1145 (Ch) where she stated:

“The Court's approach to applications under CPR Parts 3.4 and 24

[9] The relevant principles on applications under CPR Rule 3.4(2) to strike out statements of case and under Rule 24(2)(a)(i) for summary judgment are well known and are not controversial. On an application to strike out it is necessary to decide whether the whole or a material part of the Statement of Case discloses no reasonable grounds for bringing the claim. One of the most recent summaries of the relevant principles applicable on an application for summary judgment is contained in the judgment of Simon J in Arcadia Group Brands Ltd & Ors v Visa Inc [2014) EWHC 3561 (Comm) at [19). He referred to the much quoted summary of the relevant principles found in the judgment of Lewison J (as he then was) in Easy Air Limited v Opal Telecom Limited [2009} EWHC 339 (Ch) and in addition went on:

" ... For present purposes it is sufficient to identify 8 points which are of potential relevance to the present applications.

i)

The Court must consider whether the Claimants have a 'realistic' as opposed to a 'fanciful' prospect of success, see Swain v. Hillman [2001] 1 All ER 91, 92.

ii)

A 'realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003) EWCA Civ 472 at [8].

iii)

The court must avoid conducting a 'mini-trial', without the benefit of disclosure and oral evidence: Swain v. Hillman (above) at 95.

iv)

The Court should avoid being drawn into an attempt to resolve conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, Mummery LJ at [17).

v)

In reaching its conclusion, the Court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brampton Hospital NHS Trust v. Hammond (No. 5) [2001) EWCA Civ 550 at [19).

vi)

Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand the Court should heed the warning of Lord Collins in AK Investment CJSC v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2012) 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116).

vii)

The overall burden of proof remains on the Defendants,

... to establish, if it can, the negative proposition that the [Claimants have] no real prospect of success (in the sense mentioned above) and that there is no other reason for a trial,

see Apvodedo NV v. Collins [2008] EWHC 775 (Ch), Henderson J at [32].

viii)

So far as Part 24.2(b) is concerned, there will be a compelling reason for trial where 'there are circumstances that ought to be investigated', see: Miles v. Bull [1969] 1 QB 258 at 266A. In that case Megarry J was satisfied that there were grounds for scrutinising what appeared on its face to be a legitimate transaction; see also Global Marine Drillships Limited v. Landmark Solicitors LLP [2011] EWHC 2685 (Ch), Henderson J at [55]-[56)."

[10] I was also referred to the recent summary of the principles in the dicta of Floyd LJ in TFL Management Services Ltd v Lloyds Bank plc [2013] EWCA Civ 1415, [2014] 1 WLR 2006, at [26]-[27]. At [26] Floyd LJ set out the approach set out by Lewison J in Easy Air Limited v Opal Telecom Limited. In particular, Lewison J's sixth and seventh principles set out at [26] and the dicta at [27] are relevant here:

"….

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may tum up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.

[27] Neither side sought to challenge these principles. I would add that the court should still consider very carefully before accepting an invitation to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross examination in any event, or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action: see Potter LJ in Partco v Wragg (2002] EWCA Civ 594; [2002] 2 Lloyds Rep 343 at 27(3) and cases there cited. Removing road blocks to compromise is of course one consideration, but no more than that. Moreover, it does not follow from Lewison J's seventh principle that difficult points of law, particularly those in developing areas, should be grappled with on summary applications; see Partco at 28(7). Such questions are better decided against actual rather than assumed facts. On the other hand it may be possible to say that the trajectory of the law will never on any view afford a remedy: see for example Hudson and others and HM Treasury and another [2003] EWCA Civ 1612."

I will bear all these points firmly in mind when considering the parties’ respective applications.

CONCLUSIONS

The Defendant makes four principal submissions:

The observations of the Judge in Alstom at paragraph 69 I consider are applicable to the facts of this case:

“Regulation· 33 is about the provision of necessary information. It applies when a decision has been made to award "the contract". That contract is, in my view, the contract which the utility has been telling the relevant commercial world it is minded to enter into and is the contract which apparently conforms to the "proposed contract" for which it called for competition under the regulation 16 mechanism (in this case). The "tenderers and candidates" referred to are those who were tenderers and candidates for that contract. That is the effect of the definitions contained in paragraph (14). The provision of such information is a vital part of the control mechanism under the Regulations. Tenderers and candidates are entitled to assume that once they are part of the process, they will get the information referred to in regulation 33(2). The regulation makes linguistic and commercial sense if it is construed in that way.”

Mann J refers to the equivalent provisions in the UCRs to Regulation 93(5) which in turn refers to Regulation 55 of the PCRs and makes it clear that Regulation 93(5) only applies:

I disagree. The provision of such information is for tenderers and candidates as explained by Mr Justice Mann in Alstom. The Defendant seeks to distinguish the effect of his decision by taking what I consider were two bad points:

I disagree.

The Defendant in their written submissions referred me to the following passages in Arrowsmith’s The Law of Public and Utilities Procurement, 3^rd Edition:

“[22-93] It allows Member States to make available to their contracting authorities a method of shortening the period for challenge by informing economic operators or potential economic operators of the relevant decision, either directly or through a contract award notice, as appropriate. In this way contracting authorities can avoid the risk of a contract being challenged for ineffectiveness for six months after it is entered into and limit that risk to a 30-day period from the time of the notification.”

Which includes

“In this regard, Remedies Directive Art.2f(1) provides that Member States must give at least 30 calendar days to challenge the decision. However, this time period can only begin to run in the following situations - effectively when those concerned with the decision have had a chance to find out about it.

This possible 30-day period applies, first – relevant the case in which no call for competition was published - where the contracting authority has published a contract award notice in accordance with the 2014 Public Procurement Directive or the Concessions Directive, as applicable, which in includes justification of why the contract was awarded "without prior publication of a contract notice in the Official Journal of the European Union". In this case the 30 day period runs from the date after publication of the compliant award notice.

A second situation in which a 30-day period may be provided for, relevant to award procedures conducted after a call for competition, is where ineffectiveness arises from violating certain rules on standstill or suspension, when the contracting authority has informed the tenderers and candidates concerned of the conclusion of the contract, provided that this information contains a summary of the relevant reasons for its decision as set out in 2014 Public Procurement Directive Art.55(2) or Concessions Directive rt.40(1 ), as applicable. In this case the 30 calendar day time-limit commenced with effect from the day following the date on which the contracting authority informed the tenderers or candidates concerned.”

Here Professor Arrowsmith identifies two routes to shorten the limitation periods to 30 days. Absent these two routes the longstop of 6 months applies.

Here the words of the Regulations are clear and unambiguous and do not produce obscurity.

Applying orthodox principles of interpretation restated recently by Lord Hodge in

The shorter time limit in Regulation 93(2)(a) will apply where:

The reasons relied upon by the Defendant are the reasons set out in its letter dated 22^nd September 2022 as to why no competition at all was conducted for the Contract in question. Those reasons:

I am satisfied that the Limitation Defence relied upon and pleaded by the Defendant at paragraphs 21 to 25 of the Defence discloses no realistic grounds for defeating the claim and should be struck out and the Defendant’s counter application for strike out and summary judgment should be dismissed.

I would ask the parties to draw up and agree to a suitable order.