Update on limitation periods
A recent Court of Appeal ruling is a reminder of the applicable limitation periods for those procurements commenced under the current regime, write John Houlden, Laura Tudor and Abigail Cropper.
In Lancashire County Council v Brookhouse Group Ltd [2024] EWCA Civ 717 the Court of Appeal has confirmed that the 30-day limitation period does not apply where a declaration of ineffectiveness under Regulation 99 of the Public Contracts Regulations 2015 (the “PCRs”) is sought, and the contracting authority did not publish a contract notice or contract award notice.
This ruling comes as a development to the High Court’s previous ruling in 2023; our previous article can be found here.
Background
In Lancashire County Council v Brookhouse Group Ltd, the High Court ruled that the 30-day limitation period under Regulation 93 did not apply to the direct award contract. On 28 June 2024, the Court of Appeal unanimously upheld the High Court’s ruling on limitation periods for bringing a claim of ineffectiveness under Regulation 99.
Regulation 99 describes the grounds for declaring ineffectiveness in public contracts. There are three grounds under which ineffectiveness may be found:
- firstly, a declaration of ineffectiveness can be made where the contract has been awarded without prior publication of a contract notice in any case in which such publication is required; or
- secondly, where there has been a breach of the requirements contained in Regulations 87, 95 or 86 (standstill periods, challenges to awards, and interim orders respectively). In addition, there must have been a further breach of duty which was owed to the economic operator and that breach: (i) deprived the economic operator of the possibility to start proceedings or pursuing them to a proper conclusion before the contract was entered into; and (ii) affected the chances of the economic operator obtaining the contract; or
- thirdly, where the contract is based on a framework agreement or under a dynamic purchasing system, and the estimated contract value is equal to or above the relevant threshold.
Where a declaration of ineffectiveness is sought, Regulation 93 sets out the time limitations for bringing a claim. The time limit is six months, save for where the conditions for a 30-day limit under Regulation 93(3) or 93(5) can be satisfied.
The Decision
Coulson LJ found that Regulation 93(3) related to the first ground of Regulation 99, and Regulation 93(5) related to the second ground of Regulation 99. In the immediate case, Coulson LJ further found that:
- Regulation 93(3) could not reduce the time limit to 30 days because the Authority never published a contract award notice; and
- the third limb of Regulation 99 was deemed to be irrelevant in this instance, as the contract was not based on a framework agreement nor a dynamic purchasing system.
Coulson LJ also considered possible reliance on Regulation 55, whereby a contracting authority could provide “relevant reasons” to the economic operator. However, Regulation 55 relies on a competition having taken place, which was not the case in Brookhouse.
As such, a 30-day limitation period could not be established. Therefore, under a declaration of ineffectiveness under the first ground of Regulation 99, the time limit will remain at six months, instead of reducing to 30 days, if no contract award notice was published.
Changes to the PCRs
Although the Procurement Act 2023 is anticipated to go live in October 2024, the Court of Appeal ruling from Brookhouse is an important reminder of the applicable limitation periods for those procurements commenced under the current regime, which will continue to be applicable in certain cases even after the new Act is in force.
John Houlden is a partner, Laura Tudor is a solicitor and Abigail Cropper is a trainee solicitor at Burges Salmon.
Burges Salmon has produced a guide to the new Procurement Act, covering the key aspects of the new legislation and its impact at every stage of the procurement process from planning, selection, award and contract management through to potential challenges. It also includes detail on the new rules for below threshold and special regime contracts, along with quick reference guides on the Act's key provisions and special regime contracts. Readers can download it here: Procurement - PA23 Guide Book (burges-salmon.com)
