Lancashire County Council v Brookhouse Group Ltd

Factual and Procedural Background

This case concerns a procurement dispute under the Public Contracts Regulations 2015 ("PCR15") involving a site known as the Cuerden Strategic Regional Investment Site ("CSRIS") in Lancashire. CSRIS is jointly owned by the Council (71%) and the Plaintiff (29%). In 2012, the Council initiated a competitive tender for regeneration partners, dividing the bid into two Lots, with CSRIS falling under Lot 2. The Plaintiff expressed interest after the deadline and was excluded from the tender process. Subsequently, the Council awarded a Strategic Partnering Agreement ("SPA") to Company B, with no challenge to that procurement.

In 2019 and 2020, attempts to agree development terms between the Council and the Plaintiff failed. The Council proceeded to enter into a Development Agreement ("DA") in July 2022 with a subsidiary of Company B, without publishing a Contract Award Notice, citing concerns about triggering legal challenges from the Plaintiff. The Plaintiff was notified of the DA shortly after its conclusion and challenged the Council’s entitlement to award the contract under the SPA.

The Plaintiff commenced proceedings in January 2023, seeking a declaration that the DA was ineffective due to breaches of the PCR15. The Council contended that the DA was not a public contract covered by PCR15 and relied on Regulation 93(2)(a) to argue the claim was out of time. An application to strike out parts of the Council’s defence and a cross-application to strike out the Plaintiff’s claim were heard by a Deputy High Court Judge, who ruled in favour of the Plaintiff and dismissed the Council’s cross-application. The Council appealed this decision.

Legal Issues Presented

1. Whether the short time limit of 30 days or the long time limit of 6 months under Regulation 93 of PCR15 applies to the commencement of proceedings challenging the Development Agreement.
2. Whether the Council’s provision of reasons to the Plaintiff satisfied the requirements of Regulation 55(2) and thus triggered the shorter 30-day limitation period under Regulation 93(5).
3. Whether the Plaintiff qualifies as a "candidate" or "would-be candidate" under PCR15, entitling it to receive reasons under Regulation 55(2).
4. The proper interpretation and interaction of Regulations 55, 93, and 99 of PCR15 in the context of direct contract awards without prior publication of a contract notice.

Arguments of the Parties

Appellant's Arguments (The Council)

• The short 30-day limitation period under Regulation 93(2)(a) applies because the Council provided the Plaintiff with "relevant reasons" by 22 September 2022, triggering the start of the limitation period.
• The Plaintiff qualifies as a "candidate" or alternatively a "would-be candidate," entitling it to receive reasons under Regulation 55(2)(a).
• The term "relevant reasons" should be interpreted broadly to include reasons explaining why no competition was held, thus justifying the direct award of the Development Agreement.
• Reliance on section 106 of the Procurement Act 2023 to support the argument that the time limit should start when the Plaintiff first knew or ought to have known about the claim circumstances, rather than strict Regulation 93(6) wording.
• Reference to the principle of rapidity in public procurement law to argue for a prompt limitation period.
• Invocation of the case Alstom Transport v Eurostar International Limited as precedent for applying the 30-day limit despite material contract variations.
• Advanced a "merits" argument suggesting the 6-month period would lead to unfair outcomes if applied automatically to parties not involved in procurement processes.

Respondent's Arguments (The Plaintiff)

• The 6-month limitation period under Regulation 93(2)(b) applies because no Contract Award Notice was published and the Council did not comply with the requirements to trigger the 30-day period.
• The reasons provided by the Council did not comply with Regulation 55(2) as they were not given on request to an unsuccessful candidate or tenderer and did not address the specific matters required.
• The Plaintiff was not a "candidate" or "would-be candidate" under PCR15, as it did not participate in or was invited to a procurement competition.
• The Council’s tactical decision to avoid publishing a Contract Award Notice breached PCR15 obligations of transparency and equal treatment of economic operators.
• The Plaintiff had standing under Regulation 99 to challenge the direct award without prior publication of a contract notice.
• Rejected reliance on the Procurement Act 2023 and the case law cited by the Council as inapplicable or irrelevant to the facts.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the interplay between Regulations 55, 93, and 99 of PCR15, focusing on their purpose and application to the facts. The claim for a declaration of ineffectiveness was under the first ground of Regulation 99, which applies where a contract is awarded without prior publication of a contract notice. The court held that the shorter 30-day limitation period under Regulation 93(2)(a) only applies if a Contract Award Notice has been published (Regulation 93(3)) or the contracting authority has informed the economic operator of the contract conclusion and provided a summary of relevant reasons as defined in Regulation 55(2) (Regulation 93(5)).

Since no Contract Award Notice was published, the 30-day period could only be triggered if the Council complied with Regulation 93(5) by providing the relevant reasons. The court found that the reasons given by the Council did not comply with Regulation 55(2) because they were not requested by the Plaintiff as a candidate or tenderer, and the information provided did not relate to the specific matters required by Regulation 55(2). The Plaintiff was not a candidate or tenderer, nor a recognized "would-be candidate," as the definitions require actual participation or invitation in a procurement competition, which did not occur here.

The court rejected the Council’s broader interpretation of "relevant reasons" and its attempt to trigger the shorter limitation period based on reasons given to a hypothetical economic operator. It emphasized that Regulation 55(2) presupposes the existence of a competition and the involvement of the economic operator therein, which was absent in this case.

The court further criticised the Council’s deliberate decision not to publish a Contract Award Notice to avoid alerting other economic operators, finding this to be a breach of the PCR15 obligations of transparency, fairness, and equal treatment. This tactical decision prevented the reduction of the limitation period from six months to 30 days.

Additional arguments invoking the Procurement Act 2023, the principle of rapidity, and the Alstom case were considered but found inapplicable or insufficient to alter the proper construction of PCR15.

Holding and Implications

The court DISMISSED the Council’s appeal, affirming the decision below that the 6-month limitation period under Regulation 93(2)(b) applied and that the Plaintiff’s claim was not statute-barred.

The direct consequence is that the Plaintiff’s claim challenging the Development Agreement’s validity under PCR15 may proceed. The court did not establish new legal precedent but reinforced the strict interpretation of time limits and procedural requirements under PCR15, particularly the necessity of a Contract Award Notice or proper provision of reasons to trigger the shorter limitation period. The decision underscores the importance of transparency and equal treatment obligations on contracting authorities in public procurement.