On 17 November 2023, Mr Martin Bowdery KC (acting as a Deputy Judge of the High Court) handed down judgment in Brookhouse Group Limited v Lancashire County Council  EWHC 2921 (TCC). The case provides important clarification about the limitation periods which apply to claims seeking a declaration of ineffectiveness against public contracts.
The underlying claim sought a declaration of ineffectiveness seeking to declare void a development agreement entered into in 2022 in relation to Council owned land at a regional investment site in Cuerden in Lancashire. It was common ground that no separate contact award notice had been issued in relation to that contract and no competitive tendering exercise had been conducted in relation to it. The claim was filed 4 months after the contract was entered into.
The Council advanced a limitation defence to the effect that the claim should have been filed within 30 days of the date the Claimant had been informed of the reasons why the Council considered no tendering process was necessary. The Council had informed the Claimant in pre-action correspondence that it considered no procedure was necessary on the basis that it had entered into an earlier agreement in 2012 which it claimed entitled the Council to appoint the developer in question. The Claimant sought to strike out that limitation defence, and the Council filed a cross-application to strike out the claim in its entirety.
The short question of law was whether, in circumstances in which no competitive tendering exercise under the PCRs had been carried out for a particular contract, could a contracting authority rely upon Regulation 93(5) of the Public Contract Regulations 2015 (“the PCRs”) by providing reasons to any economic operator as to why the authority considered no competitive award procedure has been carried out. In circumstances in which “a summary of relevant reasons” for the purposes of Regulation 93(5) has been provided, the limitation period for a declaration of ineffectiveness is shortened to 30 days from the “standard” 6 month period.
The Court rejected the contention that the situation was analogous to the only previous authority which had considered this issue, Alstom Transport v Eurostar International  EWHC) 1828 (Ch). In striking out the Council’s limitation defence, the Court held that Regulation 93(5) can only apply where a competition has been carried out and therefore there are tenderers or candidates to whom a summary of relevant reasons can be provided pursuant to Reg 55(2) PCRs. Where no competition had been carried out, there was only one route to shorten the limitation period, namely via a contract award notice which could include justification as to why a contract was awarded without prior publication of a contract notice. The Claimant had said this would be “red rag to a bull” but the Court held that this was the whole point of such a notice.