Time Limits

December 23rd, 2019

In the 2019 Rail Franchising Litigation, SoS for Transport v Arriva Rail East Midlands Ltd (2019) EWCA Civ 2259, the issue in the appeal was the applicable time limit for the bringing of claims arising out of a public procurement process which was not governed by the Public Contracts (and similar) Regulations. It raised the stark contrast between the 3-month time limit required for an application for Judicial Review, and the 6-year limit for a claim for breach of statutory duty provided by the Limitation Act 1980.  It also raised an issue as to the correct approach to the 3-month limit where the public law issues arise not from a one-off decision, but an ongoing process.

The SoS is responsible for running competitions for rail franchises.  Train operating companies were disqualified from competitions. They commenced both Judicial Review and proceedings under CPR Part 7 against the SoS seeking to challenge their disqualification and make other claims – including claims for damages – consequential upon this public procurement exercise.  The SoS made applications to strike out various elements of the Part 7 claims.  The SoS said that, despite the fact that these are Part 7 proceedings, those elements of the claims should have been brought within the 3-month time limit referable to judicial review proceedings, and that this time limit was triggered earlier than the disqualification letters.  Stuart-Smith J, (2019) EWHC 2047 (TCC), refused to strike out those elements of the claims.  Accordingly, the principal issue which arose on the appeal is the applicable time limit in which these Part 7 claims should have been brought.  The SoS maintained that the Judge should have imposed a 3-month time limit by analogy with the procedure for judicial review in CPR Part 54, notwithstanding the fact that these are Part 7 proceedings seeking private law remedies such as damages, declarations and injunctions. The Respondents argued, and the Judge found, that the applicable time period for these Part 7 claims (subject to potential exceptions) was 6 years. The appeal was dismissed. Coulson LJ gave the leading judgment.

Coulson LJ addressed time limits in public procurement disputes, and the “Requirement for Rapidity”.  He said:-

“38. Public procurement law derives from EU law. There is no doubt that the various EU Directives stress the need for rapidity in dealing with challenges to public procurement decisions.”

“41. This emphasis on rapidity is of course no more than common sense. If an unsuccessful bidder wishes to seek a review of a public procurement process or decision in order to challenge the lawfulness of the process whilst it is ongoing and/or to undo the result, then there is a clear need for a swift challenge and a prompt resolution. Otherwise, public procurement would grind to a halt, and contracts could not be let, whilst challenges to the underlying tender process took years to pass through the court systems of the Member States.

42. On the face of it, it might be thought that rather different considerations apply to claims for Francovich damages arising out of a public procurement dispute. A claim for damages assumes that the wrong has occurred and does not try and undo what has happened. Instead the claimant accepts what has been done and seeks compensation for it by way of damages. In those circumstances, it might be thought that there is not the same need for rapidity…..

43. The need for speed in public procurement generally can be seen in the Procurement and Utilities Directives (2014/24/EU and 2014/25/EU) and the Remedies Directive (89/665/EEC, as amended by Directive 2007/66/EC). Those Directives were implemented in the UK respectively in the PCR, the Utilities Contract Regulations 2016 (“the UCR”) and the Concession Contracts Regulations 2016 (“the CCR”).

44. The best-known UK authority about the need for rapidity under these Regulations generally is Jobsin Co UK PLC v Department of Health [2001] EWCA Civ 124 …

45. The speed required for public procurement challenges under the PCR/UCR/CCR should not be underestimated. …

…  any claim for an alleged breach under the PCR expires 30 days after the economic operator was first aware (or should have been aware) of the grounds of their claim. That is one third of the time prescribed for judicial review, itself the tightest time limit commonly applied in the UK courts, and can start to run despite the operator’s lack of actual knowledge that it had grounds for starting a claim.

46. It is important to emphasise three things about the PCR. First, proceedings under the PCR (and the UCR/CCR) encompass all claims (whether for damages, or injunctions to quash the competition, or orders to reinstate the claimant and prevent the contract being let to a third party), whether separately capable of categorisation as private or public law claims. In other words, the distinctions in the present case between public and private law rights and remedies simply do not arise under the PCR, UCR and CCR.

47. Secondly, any cause of action under the PCR, UCR and CCR arises very early. Regulation 91 (1) of the PCR makes plain that a breach is actionable “by any economic operator which, in consequence, suffers, or risks suffering, loss or damage”. The cause of action is therefore complete when there is a risk of suffering loss or damage. That is different to the date of accrual of a cause of action for judicial review, a distinction expressly made in Jobsin.

48. Thirdly, of course, there is the agreed fact that the PCR do not cover rail franchising procedures. That is because Regulation 10 (1(i)) of the PCR (and Regulation 21(1)(g) of the UCR and Regulation 10(4)(b) of the CCR) expressly exclude rail franchising procedures from those Regulations. …”

“54. Section 31 of the Senior Courts Act 1981 is concerned with applications for judicial review. It contains no mandatory time limits. …

55. The relevant procedural rules are set out in CPR Part 54. …

56. It is important to note that the 3-month period in r.54.5(1)(b) is not set in stone: the court can, in an appropriate case, extend that period …

57. Accordingly, in general terms, Section 31 of the Act and CPR Part 54 operate together to ensure that challenges to public acts or omissions are brought promptly and are subject to a relatively quick procedure in order to strike the necessary balance between the needs of administrative efficiency, on the one hand, and the requirement that a public law challenge can be brought effectively, on the other. But it is noticeable that this period is longer than the 30 days set out in the PCR and does not encompass the ‘risk of harm’ test noted in paragraph 47 above.

58. … the judicial review procedure is only mandatory in certain limited respects: it is a procedure which may be used for declarations or injunctions or, pursuant to r.54.3(2), a claim for damages. It therefore follows that, in general terms, the Part 7 procedure may also be used, not only for damages claims, but for claims where the claimant is seeking a declaration or an injunction.

59. Sections 2 and 5 of the Limitation Act 1980 provide that the limitation period for an action founded on tort or contract respectively is 6 years. Of course, the accrual date for such claims may be different: in contract, the cause of action accrues at the date of the breach, whilst the cause of action in tort does not crystallise until damage has been suffered. Thus if a claim arising from the same facts can be put in both contract and tort, the claim in contract may be statute-barred, but the action will not necessarily be struck out if there is an alternative claim in tort (even if it arises from the same facts and matters) because that claim accrues later, and may not be statute-barred: …”

As regards the applicable time limits in respect of the Part 7 claims, Coulson LJ concluded, at paragraph 72, that there is “ample authority” for the proposition that a private law claim for damages arising out of the decision of a public body or authority will not automatically be categorised as a “purely public law act” in order to activate the truncated limitation period applicable to judicial review.

Moving on to the claims for damages, these arose under Section 2(1) of the European Communities Act 1972 for breach of EU law duties. That is a claim in tort for breach of statutory duty. Claims for breach of statutory duty are subject to the 6-year limitation period noted in Section 2 of the Limitation Act 1980. Claims for breach of contract, express or implied, also have a 6-year limitation period pursuant to Section 5 of the Limitation Act. Claims for damages in these circumstances are subject to what can conveniently be called the Francovich conditions, as recently articulated by the Supreme Court in Energy Solutions, namely that: (1) The rule of law infringed must be intended to confer rights on individuals; (2) The breach must be sufficiently serious; (3) There must be a direct causal link between the breach of the obligations and the damage sustained by the injured party. Nonetheless, the mere fact that the claim for damages is circumscribed in this way cannot affect the relevant time limits.

Coulson LJ said, at paragraph 76:-

“On the face of it, therefore, claims for damages arising out of the appellant’s alleged breach of statutory duty have a limitation period of 6 years. That is what the judge found. So the critical question is whether there is a reason of principle or a rule of law, or some strand of authority, which suggests a different answer. For the separate and cumulative reasons explained below, I am in no doubt that the answer to this question is in the negative.”

Coulson LJ added:-

“110. … a claim for an injunction which seeks to set aside the underlying public law decision is a very different thing to a claim for Francovich damages. If I were the trial judge in this sort of situation, I would take some convincing that the 3-month period did not apply to claims for such injunctions (subject of course to any extension of time under r.3.1(2)(a)).

111. … it is, I think, consistent with my reasoning above if I indicate that, as a matter of principle, such claims for an injunction may well be subject to the 3-month time limit.”

“113. … For completeness, I should say that, in my view, declarations are generally dissimilar in nature and effect to injunctions. Most claims for declarations are, in effect, no more than staging posts on the way to a successful claim for damages. Such claims would not, on their face, give rise to any public law constraints. … On the other hand, a declaration that might affect the rights of third parties, would – or might – fall on the wrong side of the line.

114. Accordingly, although it seems to me that the judge was right to recognise that these matters will turn on a consideration of the facts, I wold wish to emphasise that, in any procurement case not covered by the PCR/UCR/CCR, the judge should be astute to ensure that (in particular) claims for injunctions are not used as a means of circumventing the 3-month time limit applicable to judicial review applications.

115. The appellant’s application to strike out was always ambitious: there is no reported authority in which a Francovich damages claim was found to be subject to the 3-month time limit referable to judicial review. For the reasons set out above, I reject that contention. The same result is likely to apply to the respondents’ claims for declarations. Conversely, any extant claims for injunctions may well fall on the other side of the line although, in this case, that will ultimately be a matter for the trial.

116. For the reasons set out above, the 3-month time limit does not apply to the respondents’ Francovich damages claims.  Nor is it likely to apply to any claims for declarations, again for the reasons set out above.  But, if and to the extent that any of the respondents seek to claim injunctions then, for the reasons set out at paragraphs 105-111 above, the 3-month time limit may be applicable, in order to protect the appellant against claims which would otherwise be an abuse of process.  I deal with Ground 2 of the appeal on that limited basis.”

As to when the 3 month period started to run, Coulson J observed:-

“119. … in a simple case, (and subject to any extension) … the 3 months would start to run on the date of the decision or other public law act which is the subject of the judicial review challenge.

120. What happens if there is an ongoing process in which, at least theoretically, more than one decision may fall to be challenged? This was considered by the House of Lords in R (Burkett) v Hammersmith LBC [2002] 1 WLR 1593. …”

“123. … it seems to me that, when deciding when the 3-month time limit was triggered, general principles to be taken into account are, on the one hand, the fact that judicial review is a remedy of last resort and that an early challenge should not generally be made before the final outcome is known … and, on the other hand, the need for a readily ascertainable starting date, and the detrimental effect of a judicial discretion that is too broadly based.”

“128. Jobsin is… authority for the proposition that, in a straightforward procurement case under the PCR, a cause of action may well arise when the original invitation to tender is sent out …”

“132. The procurement authorities … demonstrate that it is perfectly possible for a cause of action, at least under the PCR, to arise on the issue of an ITT, or on some other decision taken before the formal completion of the procurement competition. That is particularly apposite in a simple case such as Jobsin, where nothing happened between the invitation to tender and the rejection of the bid, and in a case like Gleave, where the ITT effectively ruled out the challenger from the next stage of the bidding process. Furthermore, there are sound policy reasons to encourage bidders who consider that there is or may be something wrong with the ITT to make a challenge then and there, before a potentially tainted tender process goes any further.

133. But the authorities also show that, in an ongoing tender process, the cause of action may not accrue at the time of the ITT or other tender instructions and that it may only be when the claimant’s tender is refused or rejected that the cause of action crystallises. What is more, I consider that the approach in the procurement cases reflects the general law …

134. Accordingly, I reject the appellant’s contention that there is a hard-edged rule of law which provides that a judicial review challenge is automatically triggered by the provision to prospective tenderers of a tainted ITT (Decision 1) and/or, in this case, later Re-Bid Instructions which are themselves criticised (Decision 2). The relevant cause of action may be complete at that stage, but in an ongoing process, it may not be. That is a fact-sensitive issue and, depending on the complexity of the process, may not be capable of being decided summarily on a strike out application. That was what the judge concluded in this case.”

“138. For the reasons set out above, I conclude that there is no hard-edged rule of the kind contended for by the appellant.  To the extent that the 3-month time limit is applicable at all, it will be a matter for the judge to decide at the trial whether and to what extent any part of Decisions 1 and 2 fell the wrong side of the line. By reason of the outcome on Ground 1 of this appeal, this argument will not of course arise in relation to the damages claims in any event.”

An important decision therefore on (1) the applicable time limit (6 years) for a Francovich damages claim, (2) the applicable time limits for (i) injunctive relief and (ii) declaratory relief, and (3) when (variable) the 3-month judicial review prima facie time-limit, if it is applicable at all, is triggered, in the case of an ongoing procurement process.

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