Sita appealed against a decision to strike out its proceedings against the Greater Manchester Waste Disposal Authority (鈥淕MWDA鈥�) for alleged breaches of the public procurement rules. GMWDA had applied for the action to be struck out on the grounds that it had not been brought within the three month period required by Regulation 32(4) of the Directive 89/665 as enacted, at the time, by the Public Services Contracts Regulations 1993. Mann, J. had upheld GMWDA鈥檚 application to strike out. Sita now appealed against this decision.
Only one bidder, Viridor Laing (Greater Manchester) Ltd. (鈥淰L鈥�) was selected as the preferred bidder and Sita was told that it was the reserve bidder The basis of Sita鈥檚 case was that as a result of the further negotiations with VL following its selection as the preferred bidder, there was a fundamental change in the nature of VL鈥檚 bid, and this should have caused GMWDA to reopen negotiations with Sita. Sita had argued that the principles of transparency and equality underlying the procedure required this at least once there was real doubt whether VL鈥檚 bid remained the most economically advantageous. Sita said that GMWDA鈥檚 failure to reopen the process and to allow Sita back into the frame meant that Sita had lost the chance of obtaining this very important contract which had been worth about 拢4 billion.
At the centre of the case was the question of what degree of knowledge constructive knowledge was required for time to start to run, or, more correctly, when is the information known or constructively known to the appellant sufficient to justify taking proceedings for an infringement of the public procurement requirements.
On 27 May 2009, Sita had written a long letter to GMWDA, which subsequent correspondence demonstrated was intended to be the statutory letter before action referred to in Regulation 32(4)(b). The letter began by asserting that GMWDA had 鈥渂reached its legal obligations to Sita under procurement law鈥�. It observed the changes in the overall cost, the cost of capital works, the head count; and said that 鈥渢hese raise obvious questions as to why the Sita bid was not reconsidered鈥�.
On appeal, Sita鈥檚 case was the same as that before the lower court i.e. that it had not had sufficient knowledge to pursue their claim until at the earliest the 3 July 2009 when GMWDA had written to them containing more information than had been supplied previously and mentioning for the first time a report by Ernst & Young. Ernst & Young had been commissioned to carry out a re-evaluation of the financial and commercial aspects of VL鈥檚 bid as it stood at that time following the further negotiations, and they compared those aspects with the corresponding aspects of the original Sita bid.
Although it had had some information which put it on notice that there may have been a breach, it was far from conclusive and Sita maintained that it was justified in seeking further explanations before committing itself to taking legal proceedings. GMWDA鈥檚 argument was that whatever information appeared in July 2009, Sita had had sufficient information by April of that year demonstrating that it had a cause of action, as the correspondence from them confirmed. On appeal, Sita challenged not only the judge鈥檚 conclusions that the claims were out of time, but also his refusal to exercise his discretion in its favour to extend time.
The Court of Appeal held that the tone of Sita鈥檚 letters, which included the two statutory letters, demonstrated an intention to bring proceedings for what was in terms alleged to be a breach of a legal duty. The tone of these letters was wholly inconsistent with the assertion that Sita was unsure of the situation and was simply asserting that more information should be given. There was no doubt that Sita was aware that it had a prospective claim. It had had sufficient knowledge to bring its claim within the three-month time limit, but had failed to do so.
Sita UK Ltd. v Greater Manchester Waste Disposal Authority; [2011] EWCA CIV 156
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