On 29 March 2010, the High Court struck out a public procurement challenge by Sita UK Limited (Sita) on the basis that its action for damages had been brought outside the 3 month time limit from when Sita knew or ought to have known that there had been an infringement of the public procurement rules. Sita has been given leave to appeal this judgment.
This is the first reported case before the High Court in which the ECJ ruling in the Uniplex case has been applied. In Uniplex the ECJ held, inter alia, that the period of three months which the claimant has to raise an action cannot simply run from the date of the breach; rather, it begins from the date when the claimant knew, or ought to have known, of the breach. Click here to see previous law-now.
The Sita case further clarifies the law in this area and serves as a warning to disgruntled bidders not to wait to bring proceedings until they are in receipt of all the factual details supporting a breach of the procurement rules. A claimant should bring an action once it has sufficient evidence that there has been an infringement even when the full detail and extent of the alleged wrongdoing is not known.
Sita had brought an action for damages against Greater Manchester Waste Disposal Authority (GMWDA) after unsuccessfully bidding for a PFI project to provide waste disposal facilities for Greater Manchester. Following the tender evaluation GMWDA announced the selection of Viridor Laing (VL) as its preferred bidder. Sita was left in the process as reserve bidder which meant it could be brought back in if negotiations with VL failed.
Sita was informed that its bid had been unsuccessful on 18 April 2008. The final contracts between GMWDA and the winning tenderer VL were delayed due to changes in the specification as a result of the credit crunch. These changes to the project were negotiated with VL after it was selected preferred bidder. GMWDA finally entered into a contract with VL on this basis on 8 April 2009 and issued a press release to that effect.
Sita argued that it should have been allowed to return to the tender process once material changes to the contract had been agreed. Sita also argued that the process was flawed since VL was offered the opportunity to amend its bid whilst Sita was given no such opportunity. On 27 August 2009 Sita launched a claim for damages against GMWDA for breach of the procurement rules. GMWDA sought to strike out Sita's case on the basis that proceedings were commenced outside the limitation period. GMWDA argued that Sita knew or ought to have known of the infringements by 8 April 2009 at the latest.
The High Court applied the ECJ's interpretation of the 3 month limitation period in Uniplex, finding that the claimant knew, or ought to have known, of the infringement on or shortly after 8 April 2009 when the contract was entered into. Sita argued that it knew little of the breach in April/May 2009. However, the High Court ruled that on the facts it knew enough to commence proceedings on 8 April 2009. The detail it subsequently found out did not materially change the picture that Sita had. However, the Court recognised that there may be circumstances where it would be appropriate to begin the limitation period from the date when the claimant became aware of further information, if that information justifiably changed a previous decision not to challenge the breach of procurement procedure. The Court's reasoning here highlights the importance of not waiting until the claimant has extensive factual details to support its claim.
Sita had also argued that the "grounds" for bringing proceedings included both the infringement and the existence of some potential damage. Since it was the case that damage was an essential ingredient for a claimant to decide that it has a cause of action, it followed that the "grounds" of which one had to be aware included the fact that there was a chance that loss had been caused. The High Court held that only knowledge, or constructive knowledge, of the infringement triggers the running of time; knowledge of the damage or loss suffered is not relevant.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 01/04/2010.
