“You ought to have known”: Limitation arguments in the context of new claims in existing procurement litigation

The Court provides further guidance on when things about which a Claimant “ought to have known” will start the 30 day limitation clock for procurement challenges. (Siemens v HS2)

07 November 2022

This is the latest interim judgment in the long running litigation between Siemens Mobility – the rail solutions provider – and High Speed 2 (HS2) – the public body responsible for delivering and running HS2 – in which Siemens seeks damages for alleged breaches of the procurement rules (in this case the UCR) said to have arisen during the 2021 procurement of the contract for the manufacture and maintenance of the new trains which will operate on the HS2 line.

This judgment provides a useful analysis of the often fraught issues around the 30 day limitation period for procurement claims, and the point at which a Claimant can be said to have acquired enough knowledge to start that limitation clock running. The clock is stated to run from “the date when the [Claimant] first knew or ought to have known that grounds for starting the proceedings had arisen”. This new claim was brought in August 2022, in the context of litigation first started in late 2021. The judgment focussed therefore on what Siemens ought to have known and by what point. In each case, the Defendant argued that these new claims were based on information Siemens “ought to have known” many months ago, and so were time-barred.

The test for when the Claimant “first knew … that grounds for starting the proceedings had arisen”

One of the reasons that the 30 day limitation cut off based on knowledge is a particularly fraught issue, is that a procuring authority will generally only provide a challenging bidder with documents relating to the specific subject matter of the challenge, as it is currently argued. That material might contain information which the Claimant thinks hints at the possibility of a further breach it is not yet challenging. In the present case it was a new argument around conflicts of interest in circumstances where no conflicts argument was initially pleaded. A question then arises as to whether the limitation clock has started running or, if not, when it will start running.

In Sita the Court of Appeal had approved the formulation of the degree of knowledge required to start the clock as being: “knowledge of the facts which apparently clearly indicate, though they need not absolutely prove, an infringement". This formulation was then further explained in last year’s Bromcom case as being that:

"… what is needed is knowledge of material which does more than give rise to suspicion of a breach of the Regulations but that there can be the requisite knowledge even if the potential claimant is far from certain of success. Answering the question whether the facts of which a potential claimant was aware were such as to "apparently clearly indicate" a breach of duty by the contracting authority will require consideration of the nature of the procurement exercise; of the nature of the particular breach alleged; and of the nature and extent of the particular factual material".

A specific test for when a Claimant “ought to have known that grounds for starting the proceedings had arisen”

Where this test of ‘threshold knowledge’ becomes particularly challenging is its application to what a Claimant “ought to have known”. By definition the Claimant did not actually know this information. So the focus shifts to what the Claimant should have known and whether – if it had actually been known – this would have given rise to sufficient “suspicion of a breach” to start to clock.

In this judgment, the Court specifically approved a version of the test articulated in Matrix-SCM v Newham:

“A claimant will have constructive knowledge if, upon reasonable enquiries [being “enquiries which reasonably should have been made and the inferences which reasonably should have been drawn by a reasonably well informed and normally diligent tenderer” (aka the RWIND tenderer)], it should have discovered the alleged infringement. However, … the Court should be cautious not to impose too onerous a standard on tenderers who do not have actual knowledge of an infringement, and equally, should not require a claimant tenderer to take steps that would be regarded as unreasonable to discover the infringement".

The key risk for a challenger is therefore finding itself time-barred from bringing a claim (or new cause of action by amendment to an existing claim), despite having no actual knowledge of a particular breach. This will arise if the defendant procuring authority can establish that there are specific enquiries a RWIND tenderer should have made once it had some information (for example from early disclosure provided by the authority at the start of the challenge to the procurement) but about which the challenger did not enquire. On the basis of the above test, the defendant can say the response to these enquiries would have given rise to actual knowledge; therefore these are things the challenger “ought to have known”. That was exactly the argument run by the defendant in the present case.

Reflections on the application in this case

Applying the test in this case, two out of three of Siemens’ new grounds of claim were not time-barred. The particular factors that led to this result are analysed in our ‘deeper dive’ article here. However, a key reason for this was because Siemens had, in fact, undertaken enquiries and had been entitled to take the responses at face value, meaning there were no further enquiries it “should” have made beyond that point.

In particular, it had sent an enquiry seeking to establish the extent of actual or potential conflicts of interest of one of the relevant employees. In response it had been provided with that specific employee’s Conflict of Interest Declaration Form (COID), and no further information about conflicts. The Court consequently it did not address what could have been a far more difficult question of what enquiries Siemens should have taken to establish conflicts of interest; Siemens had made enquiries. The Court only had to determine whether the enquiries Siemens had undertaken had gone far enough.

The Court found on the specific facts that those enquiries had gone far enough because – having received a COID form in response to their broad enquiry – Siemens was not required to look behind this and ask whether this had fully addressed its enquiry. It was entitled to assume its enquiry had been satisfied. Therefore, when new information came to light showing there was further information that had not been disclosed in response to that enquiry, the 30 day limitation clock ran from the point of that further disclosure. Since that new information came to light in July 2022, its new claim in August was not time-barred.

Lessons for litigation

It remains a difficult area of assessment, and often rife for argument, to know the point at which a Claimant “first knew or ought to have known that grounds for starting the proceedings had arisen”. It is sometimes hard enough to assess what the Claimant actually knows, and what causes of action might therefore arise from that knowledge, particularly in the high tempo stages of an initial claim when there can be material amounts of initial disclosure to assimilate. It is harder still to establish what a Claimant “ought to have known” by reference to enquiries a Claimant ‘should’ have undertaken, or as the present Court phrased it, the enquiries which “it was necessary for a RWIND tenderer acting reasonably to make” by a particular time.

Limitation is a compelling argument for procuring authorities, because it provides an entire defence to that particular ground of argument, irrespective of the strengths and weakness of the underlying arguments itself. This is more so where (as here) the Claimant seeks to argue it has come into possession of new information late on in the litigation which gives rise to new grounds of claim. A procuring authority may argue (as it did here) that given all the documentation provided during the course of the litigation the Claimant could have ‘pieced things together’ – i.e. Claimant was fixed with knowledge (it knew or at least ought to have known) some time earlier than is now asserted by the Claimant. The procuring authority can then apply to ‘strike out’ the arguments as being time-barred which, if the court agrees, means they are removed from the scope of the claim and the authority does not need to engage / defend itself against the underlying substance of the allegations.

This also has to be viewed in the context of the very short 30 day limitation period, which will only be extended by the court in limited cases, and even then only up to 3 months. The policy reason for the short period is so procurement challenges (and by extension new arguments within challenges) cannot be brought up at a later stage in order to reconcile the right to challenge with the delivery of procurement outcomes.

This policy driver means that in practice there is not very much time to assimilate complex procurement documentation; consider which breaches could be established; draft the relevant Statements of Case to start the claim / make the amendment; obtain internal sign-offs; and then file at court. Paraphrasing Mr Justice Fraser’s remarks in City Sprint: “Very short timeframes are imposed on procurement challenges, and [certain factors can mean] those short timeframes [can effectively] become even shorter. However, these short time frames are imposed for an important reason.” 

In particular, this short time period has driven the practice of Claimants filing new Claims within 30 days of discovery of new potential breaches, rather than amending existing Claims, in order to reduce the prospect of a successful challenge on the basis that the 30 days period has run out before the Court logistically approves and seals a requested amendment. The TCC has previously endorsed the use of new claims rather than amendments as a “wise course of action” given the 30 day limitation period.

It is notable in that respect that this new Siemens claim was the seventh Claim Form and Particulars (and Court issue fee) in this litigation. Those earlier claims have been consolidated and are set down for a 16 day hearing starting on 14 November 2022. The outcome will be awaited with interest.

This article was written by Lloyd Nail and Chris Jackson

 

 

References

Siemens Mobility Ltd v High Speed Two (HS2) Ltd [2022] EWHC 2451 (TCC) (14 October 2022)http://www.bailii.org/ew/cases/EWHC/TCC/2022/2451.html

Sita UK Ltd v Greater Manchester Waste Disposal Authority [2011] EWCA Civ 156[2011] 2 CMLR 32 

Bromcom United Computers PLC v United Learning Trust & another [2021] EWHC 18 (TCC).

Matrix-SCM Ltd v London Borough of Newham [2011] EWHC 2414 (Ch) (note: The quote from this case contains bracketed text which is a distillation of paragraph 66 of this judgment in which the Court explains what it understands to be the test for “reasonable enquiries” rather than from Matrix-SCM itself.

Citysprint UK Ltd v Barts Health NHS Trust [2021] EWHC 2618 (TCC)

Mrs Justice Jeffords at paragraph 39 of Perinatal Institute v Healthcare Quality Improvement Partnership [2017] EWHC 1867 (TCC)

Key contact

Chris Jackson

Chris Jackson Partner

  • Infrastructure
  • Procurement and State Aid
  • Transport

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