Court rules in favor of Claimant in Brookhouse Group Limited v Lancashire County Council, striking out Defendant's Limitation Defence in public procurement dispute under PCRs

Citation: [2023] EWHC 2921 (TCC)
Judgment on

Introduction

The case of Brookhouse Group Limited v Lancashire County Council concerns a dispute over the award of a developmental agreement (DA) made between Lancashire County Council (the Defendant) and Maple Grove Developments Limited (MGD). The dispute revolves around whether the contractual obligations were within the scope of a previous procurement agreement and whether the DA was entered into lawfully under the Public Contract Regulations 2015 (PCRs).

Key Facts

The central issue in Brookhouse Group Limited v Lancashire County Council is the awarding of the DA by the Defendant to MGD, a subsidiary of the Eric Wright Group Limited (EWG), without holding a competitive tender process and the Defendant’s subsequent defense based on limitation. The Defendant argues that the DA had enforceable obligations pursuant to a previous procurement contract and Strategic Partnership Agreement (SPA) without further tender requirements. The Claimant challenges this by seeking a declaration of ineffectiveness under regulation 98(2) of the PCRs, asserting that the DA was concluded improperly.

The legal principles that are key in this case include:

  1. Statutory Interpretation: The court refers to principles of statutory interpretation, emphasizing that the primary source of ascertaining meaning is the statutory text itself, provided it is clear and does not lead to absurd consequences. This principle is reiterated by citing Lord Hodge in R(O) v. SSHD [2023] AC 255.

  2. Timeliness and Limitation: The court examines the specific time limits for initiating proceedings under PCRs. The distinction is made between a standard six-month limitation period and a shortened 30-day period which applies in certain circumstances, such as after a contract award notice has been issued.

  3. Application of Regulations: The court scrutinizes the relevant regulations, particularly regulation 93(5) of PCRs, determining that this regulation only applies where a competitive tendering exercise has taken place, and reasons for Contracting Authority’s decisions must be provided to unsuccessful tenderers or candidates under regulation 55(2).

  4. Strike Out Applications: The approach towards strike out applications is outlined, alongside principles for deciding cases without a trial, as set out in Sita UK Ltd v Greater Manchester Waste Disposal Authority [2011] EWCA 156, and further elaborated upon in Tesco Stores Ltd v. Mastercard Incorporated [2015] EWHC 1145 (Ch).

The court’s analysis revolves around whether the reasons provided by the Defendant to the Claimant for not conducting a competitive tender process can initiate the shortened 30-day period for claiming ineffectiveness of the contract.

Outcomes

The Court concluded that the Limitation Defence could not apply to shorten the limitation period in the absence of compliance with Regulations 93(3) or 93(5) and where the Claimant does not qualify as a ‘tenderer’ or ‘candidate’. The reasons furnished by the Defendant—the detailed summary given in response to the Claimant’s letter before claim—were deemed not to satisfy the requirements of Regulation 55(2) and could not constitute “the relevant reasons” as intended under the PCRs.

Consequently, the court determined the Defendant’s Limitation Defence did not present a realistic prospect of defeating the claim and should be struck out, and the Defendant’s counter-application for strike out and summary judgment was also dismissed.

Conclusion

In Brookhouse Group Limited v Lancashire County Council, the court reasserts principles of statutory interpretation, applying them to the case’s factual matrix to determine the appropriate application of PCRs with respect to limitation defenses in public procurement disputes. The judgment clarifies that contracting authorities cannot rely on providing reasons post-contract award to restrict time limits for initiating a claim of ineffectiveness unless those reasons comply with the prerequisite conditions laid down in the PCRs. The court’s decision upholds the protective mechanisms intended by public procurement law for economic operators and reinforces the need for clear justifications when diverging from standard competitive tender processes.

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