The importance of time limits in public procurement — Brookhouse Group Ltd v Lancashire County Council

The High Court’s recent judgment in Brookhouse Group Ltd v Lancashire County Council provides further clarification about the limitation periods that apply when a claimant seeks a declaration of ineffectiveness under the Public Contracts Regulations 2015 (the Regulations).

Here, Michael Winder, Sam Thompson and Mpho Kgatuke explore the case and what it means for contracting authorities.

Declaration of ineffectiveness sought

The case concerned a development contract that was awarded by the claimant to a developer — Maple Grove Developments (MGD) — on 29 July 2022 in relation to Council-owned land at Cuerden in Lancashire without a separate competitive tendering exercise or contract award notice.

The Council considered that its existing strategic partnership agreement (SPA) — entered in 2012 with MGD’s parent company — allowed specific development contracts without a further tendering process.

The claimant issued a claim on 20 January 2023 — four months after the agreement was entered into — seeking a declaration of ineffectiveness against the development contract. Under the Regulations, declaration of ineffectiveness claims can be issued up to six months after the contract is entered. However, this limitation period can be shortened to 30 days in certain circumstances pursuant to Regulation 93.

The Council raised a limitation defence on the basis that it had provided a summary of relevant reasons for not undertaking a competitive award procedure to the Claimant on 22 September 2022. The Council considered that this satisfied Regulation 93(5) and therefore reduced the limitation period. It stated that the shortened 30-day time limit for starting a claim expired on 24 October 2022 and further sought to strike out the claim entirely on the basis that it was without merit.

Defence rejected

The Court rejected the Council’s limitation defence and application to strike out the claim. It considered that Regulation 93(5) only applies where (i) a competition has been carried out and (ii) reasons for rejections have been provided to unsuccessful tenderers or candidates.

The Claimant couldn’t be considered a candidate or tenderer under the Regulations because no competition had taken place. The Council’s letter of 22 September 2022 explaining why there was no competition therefore didn’t follow a competition and wasn’t provided to a candidate or tenderer. This was “fatal” to the Council’s limitation defence.

Furthermore, the letter wasn’t a proper summary of ‘relevant reasons’ as set out in the Regulations. It was simply a reply to the Claimant’s letter before claim. The Court therefore found in favour of the Claimant and confirmed that the default limitation period of six months from the date of contract entry applied.

In addition, the Court considered that the Council’s defence regarding the SPA had no realistic grounds for defending the claim and so the application to strike out was dismissed.

The importance of time limits

The case is a potent reminder of the importance of having a full understanding of the time limits within the Regulations — particularly the dates during which claims can be raised and when limitation defences can be legitimately deployed.

Until the new Public Procurement Act comes into force next year, contracting authorities should be mindful of remaining up to date with case law and processes under the Regulations to provide themselves with the best possible chance of avoiding the time, cost and expense of future ineffectiveness claims.

Need advice on procurement matters? Our procurement team can advise on anything related to the existing or upcoming regimes.