St Margarets Nursery LTD against City of Edinburgh Council (Court of Session)

Factual and Procedural Background

The Plaintiff operates a children's nursery in The City and had an Early Learning and Childcare Agreement (ECLA) with the Defendant concluded in 2016 and renewed or extended on various occasions. The Defendant, an education authority responsible for securing early learning and childcare provision, notified the Plaintiff by letter on 18 February 2025 that it did not intend to renew the Plaintiff's ECLA when it expired on 12 August 2025. The Plaintiff protested and sought permission for judicial review, which was refused. The ECLA ended on 12 August 2025. The Defendant concluded new ECLAs with a number of providers and lodged a template of the new ECLA incorporated into its pleadings. The Plaintiff sought an ineffectiveness order under the Public Contracts (Scotland) Regulations 2015 (Regulation 91(6)), declarator and damages, alleging breach of the 2015 Regulations. Judge Lake heard debate on three issues: applicability of the 2015 Regulations to the ECLAs, whether the statutory time limits for challenge had passed, and whether the Plaintiff possessed title and interest to bring the proceedings.

Legal Issues Presented

1. Whether the Public Contracts (Scotland) Regulations 2015 apply to the ECLAs concluded by the Defendant (i.e. whether the ECLAs are "public contracts").
2. Whether the time permitted in Regulation 88 for bringing proceedings had expired before the summons was served.
3. Whether the Plaintiff has sufficient title and interest to bring the proceedings (standing).

Arguments of the Parties

Defendant's Arguments

• The 2015 Regulations do not apply because the ECLAs are not "public contracts"—there are no enforceable obligations on providers at the point the ECLAs are concluded.
• Providers may not be asked to provide any place and cannot be compelled to provide a place to any particular child or number of children; thus the requisite reciprocal, legally enforceable obligations are absent.
• The Plaintiff's claim was time-barred under Regulation 88 and the Defendant identified specific dates on which the Plaintiff ought to have had sufficient knowledge to start time running.
• The Plaintiff lacked title and interest to seek an ineffectiveness order and had not averred loss or damage resulting from awards to others.

Plaintiff's Arguments

• The ECLAs are capable of giving rise to enforceable obligations when a place is taken up by a child, which is sufficient for them to be "public contracts" within the Regulations.
• The 30-day knowledge period under Regulation 88 did not begin to run until the Defendant disclosed the terms of the new ECLAs; some relevant material was disclosed only after proceedings were raised.
• The court should exercise its discretion to extend the 30-day period and adopt a pragmatic approach, noting the claim for an ineffectiveness order was made within the longer six-month period.
• The Plaintiff asserted title and interest under Regulation 87 and contended factual disputes prevented dismissal on that ground.

Table of Precedents Cited

Court's Reasoning and Analysis

Applicability of the 2015 Regulations:

• The court applied EU and domestic authorities establishing that a public contract requires reciprocal, legally enforceable obligations (Helmut Müller, Remondis, Tax-Fin-Lex, Midlands, Ocean Outdoor).
• The court compared the ECLA template with the position in Faraday. The ECLA commits the Defendant to make funding available and records that the Partner Provider undertakes to deliver services in accordance with the National Standard, but no obligation arises until a place is offered and taken by a child.
• Accordingly, at the date the ECLAs were entered into there were no enforceable obligations on providers unless and until a place was taken; in that state the arrangement was not a "public contract" under the Regulations. However, once a place is offered and taken up, the ECLA gives rise to enforceable obligations and then becomes a public works contract.
• The court concluded that by entering into ECLAs the Defendant had done all it needed to procure such contracts and, if the Regulations had not been complied with, the Defendant acted unlawfully in that respect (drawing on the reasoning in Faraday about procurement crystallising when obligations take effect).

Time limits (Regulation 88):

• Regulation 88 provides a six-month period for seeking an ineffectiveness order (Regulation 91) and a 30-day period for other proceedings from when the economic operator knew or ought to have known grounds for starting proceedings.
• The court adopted the SITA/Mermec formulation: the 30-day clock starts when the claimant has sufficient knowledge of basic facts to take an informed view that there has been an infringement.
• The Defendant identified dates (18 February 2025 letter, 14 March 2025 Report on the Defendant's website, 1 May 2025 committee consideration, and a 2 May 2025 letter received 5 May 2025). The court analysed each:
• The 18 February letter did not indicate that new ECLAs would be concluded and so did not start the 30-day period.
• The Report published in mid-March disclosed intention to end all ECLAs and to place new agreements without a procurement exercise compliant with the Regulations; a reader could take an informed view of non-compliance.
• The 1 May committee consideration did not add material beyond the Report but placed matters in public consideration.
• The 2 May letter (received 5 May) informed the Plaintiff that procurement arrangements had been made and that providers not meeting certain National Standards would be excluded; the Plaintiff thereby had a clearly manifested interest and could readily obtain the Report and Minute.
• Taking these together, the court concluded the Plaintiff ought to have been aware by the end of May 2025 that grounds for challenge existed; the summons served on 31 July 2025 was not within the 30-day period. The court refused to extend the 30-day period: no adequate grounds for extension were identified and the existence of the longer six-month remedy did not justify extending the shorter period.

Title and interest (standing):

• The Defendant argued the Plaintiff lacked title and interest to seek an ineffectiveness order and had not averred loss; the court treated this as a question of title and interest and found there was a factual dispute that prevented a relevancy dismissal on that ground.
• The court would not have dismissed the action for want of title and interest if it had not sustained the Defendant's time-bar plea.

Holding and Implications

DISMISSED

Holding: The court sustained the Defendant's first plea in law (the proceedings were not raised within the 30-day period in Regulation 88) and dismissed the Plaintiff's action. The court also repelled the Defendant's remaining pleas and the Plaintiff's pleas.

Implications: The direct effect is that the Plaintiff's claim is dismissed as time-barred under Regulation 88. The court held, on the merits, that ECLAs do not constitute a "public contract" at the point of their conclusion because no enforceable obligations arise until a place is offered and taken, but they become public contracts at the point a place is accepted; however, the Plaintiff's challenge was barred by the 30-day time limit. The opinion did not purport to establish a novel general precedent beyond its application of existing authorities.