Factual and Procedural Background
The Appellant, Company A, tendered for a large public contract with Company B, worth approximately £4 billion over 25 years. Company A was not awarded the contract, which was instead given to Company C. On 27 August 2009, Company A issued proceedings against Company B alleging breaches of public procurement law. Company B applied to strike out the claim on the basis that it was commenced outside the relevant limitation period. The matter was heard by Judge Smith, who upheld the application and struck out the claim. Company A now appeals that decision.
Legal Issues Presented
- Whether the claim brought by Company A was commenced within the applicable limitation period under the Public Services Contracts Regulations 1993, as interpreted in light of EU Directive 89/665.
- The proper interpretation of the knowledge threshold at which the limitation period begins to run, particularly what degree of knowledge or constructive knowledge is required before time starts.
- Whether the limitation period can be extended at the discretion of the court where the claimant did not have actual or constructive knowledge of the breach within the primary limitation period.
- Whether subsequent breaches of the same duty can restart the limitation period.
- The appropriateness of the judge’s test for striking out the claim on limitation grounds.
Arguments of the Parties
Appellant's Arguments
- Company A argued that the limitation period should start only when it had sufficient knowledge to bring an informed claim, which it contended did not occur until at least 3 July 2009, when it became aware of a key re-evaluation report.
- It submitted that the changes in the preferred bidder’s offer after negotiations should have triggered a reopening of the bidding process, and the failure to do so was a breach of transparency and equality principles.
- Company A contended that even if it had sufficient knowledge earlier, it should be allowed to bring proceedings based on breaches only discovered later, effectively arguing that time should run afresh for new breaches.
- It sought an extension of time under the court’s discretion due to alleged failures by Company B to disclose information and comply with transparency obligations.
- The Appellant challenged the judge’s application of the limitation test and contended that the judge should have applied a different limitation period applicable to breach of statutory duty claims.
Respondent's Arguments
- Company B argued that Company A had sufficient information by April 2009, including statutory letters expressing intention to bring proceedings, and thus the claim was out of time.
- It submitted that the limitation period began to run when Company A had enough material to take an informed view, which occurred prior to the receipt of the re-evaluation report.
- Company B denied any breach of transparency or equality obligations and rejected the claim that it concealed material information.
- It contended that subsequent breaches of the same duty did not restart the limitation period.
- Company B maintained that the judge correctly applied the test for striking out, and any doubts should be resolved in favor of the claimant, but here the claim was clearly time-barred.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Uniplex UK Limited v NHS Business Services Authority (C-406/08) [2010] 2 CMLR 47 |
Interpretation of limitation period under Directive 89/665; limitation period starts when claimant knows or ought to know of infringement; requirement of legal certainty and effectiveness. |
The court applied Uniplex to hold that the limitation period begins upon actual or constructive knowledge of grounds for proceedings, not merely the date of infringement; discretion to extend time must be exercised to ensure effective remedy. |
| Three Rivers District Council v Bank of England [2003] 2 AC |
Test for striking out claims; claim should only be struck out if clearly bound to fail as a matter of law or fact. |
The court adopted this standard for deciding whether to strike out the claim on limitation grounds, resolving doubts in favor of the claimant. |
| Swain v Hillman [2001] 1 All ER 91 |
Test for strike out; claims should not be struck out if there is a serious live issue of fact requiring trial. |
Applied in conjunction with Three Rivers to determine that limitation defence did not clearly defeat the claim at strike out stage. |
| Haward & Ors v Fawcetts (a firm) [2006] 1 WLR 68 |
Degree of knowledge required to start limitation period; knowledge sufficient to justify taking preliminary steps to issue proceedings. |
The court endorsed a test requiring reasonable belief or sufficient confidence to justify commencing proceedings, not certainty beyond doubt. |
| Lämmerzahl v Freie Hansestadt Bremen [2007] ECR I-8415 |
Effect of public authority concealing information on limitation period; time should not run if information is withheld making it excessively difficult to exercise rights. |
The court rejected application of this principle where claimant had sufficient information to bring proceedings; limitation not frozen due to non-disclosure once knowledge threshold met. |
| Brent London Borough Council v Risk Management Partners Ltd [2009] EWCA 490 |
Whether multiple breaches of same duty restart limitation period. |
The court held that multiple breaches of the same duty do not restart limitation period; only distinct duties trigger separate limitation periods. |
Court's Reasoning and Analysis
The court began by outlining the relevant legal framework, primarily Directive 89/665 and the Public Services Contracts Regulations 1993, which implement the Directive’s requirement for effective and rapid remedies in public procurement disputes. The limitation period under regulation 32(4) requires proceedings to be brought promptly and within three months from when the grounds for proceedings first arose, subject to court discretion to extend time.
The court examined the ECJ’s decision in Uniplex, which established that the limitation period begins when the claimant knows or ought to know of the infringement, not simply from the date of the alleged breach. The court emphasized the balance between legal certainty, effectiveness, and the principle of rapidity.
The central issue was the degree of knowledge required to start the limitation period. The court rejected the argument that the claimant must know with certainty or have a real likelihood of success before time runs. Instead, it adopted the test applied by the trial judge: knowledge of facts that clearly indicate, though do not absolutely prove, an infringement is sufficient to start the clock.
The court considered the statutory letters sent by Company A, which expressed a clear intention to bring proceedings and detailed alleged breaches, as evidence that Company A had sufficient knowledge by April 2009. The subsequent discovery of additional particulars, such as the Ernst & Young re-evaluation report, was treated as further evidence reinforcing an existing claim rather than a new cause of action that would restart limitation time.
The court rejected the submission that time should be extended due to alleged concealment of information by Company B, reasoning that once the claimant has sufficient information to bring proceedings, limitation should not be frozen due to incomplete disclosure.
The court also upheld the test for strike out applied by the trial judge, which requires that a claim should only be struck out if it is clearly bound to fail on limitation grounds and that no trial or further hearing would alter that conclusion.
In summary, the court concluded that Company A had sufficient knowledge to bring proceedings by April 2009, and the claim was therefore out of time. The refusal to extend time was not perverse or plainly wrong.
Holding and Implications
The court DISMISSED the appeal, affirming the decision to strike out the claim as time-barred.
The direct effect of this decision is that Company A’s claim against Company B for breaches of public procurement law is barred by the limitation period and cannot proceed. The court’s ruling clarifies the application of the limitation period under the Public Services Contracts Regulations in line with EU law, specifically endorsing a test for knowledge that requires a clear indication of infringement but not certainty. The decision does not establish new precedent beyond applying existing principles and confirms the importance of prompt action in public procurement challenges. No broader implications or changes to the law were established.