HT-2023-000379 - [2024] EWHC 1201 (TCC)

REGULATION 92(2) - THE 18 SEPTEMBER LETTER

The Defendants rightly point out that the procurement claim is, on its face, made on the basis of information contained in the 18 September letter. This can be seen from an analysis of the Claim Form, to which there is a reasonably detailed endorsement in the form of an ‘Attachment to Claim Form’.

By paragraph 6 of the Attachment, it was alleged that the Assist Contract was outside the limits of the framework agreement, contrary to Regulation 33(7). The only particular identified (that a “Direct Award” process had been used without justification) was expressly stated to be based on the 18 September letter.

This allegation was developed in a little more detail in the Particulars of Claim (paragraph 22), but still relying on the information provided by the 18 September letter. The Claimant alleged, in summary, that the Assist Contract was awarded by a “direct award” process under the Framework Agreement, which commenced with a “Direct Award Invitation Request” on 9 May 2023 and concluded a month later with the awarding of the contract on 9 June 2023, such information having been provided in the letter.

In paragraph 23 of the Particulars, the Claimant alleges that it is to be inferred that the “above process” (i.e. that revealed by the 18 September letter) by which the Assist Contract was awarded was not and could not have been within the limits of the Framework Agreement, within the meaning of Regulation 33(7) of the PCR. The Claimant felt able to plead that inference without (at that stage) having a copy of the Framework Agreement itself.

In support of that allegation, as well as relying on the 18 September letter, and an earlier letter dated 14 September (and, of course, its own knowledge as to what allegedly had occurred in February-April 2023), the Claimant also relies in paragraph 23 on the content of a later letter (than 18 September) from the First Defendant’s solicitors (namely, their letter of 17 October 2023), or rather the alleged absence therein of any, or any adequate, explanation and justification for the direct award process revealed in the 18 September letter. It was also suggested that the letter of 17 October mentioned for the first time that the decision to appoint Assist was because of urgency. However, I note that, insofar as that was a material matter, urgency had been mentioned in the 18 September letter.

In the event, Mr Knox accepted, in my judgment correctly, that the content of the 18 September letter would have given the reader sufficient information and knowledge that grounds for starting the proceedings had arisen. Indeed, in the response to the letter, the Claimant’s solicitor stated on 25 September 2023 that it was working with Leading Counsel to produce a pre-action protocol complaint Letter of Claim with full particulars of the claim. In fact, Leading Counsel had advised on the case before 18 September.

The Claimant however says that the 18 September letter was not read on 18 September, other than being ‘skim read’ by its solicitor Mr Lobo that day, and there was therefore no actual knowledge, for the purposes of Regulation 92(2), on that date. Further, it contends, in the factual circumstances, that it was not unreasonable not to have (properly) read the letter until after 18 September, such that it should not be fixed with constructive knowledge on that day. The Defendants accept (subject to their July case) that if there was the necessary knowledge only after 18 September, the procurement claim was in time.

In Mr Lobo’s first witness statement (27 November 2023), it was said that the 18 September letter was received by his firm at 11.23 am that day and forwarded to both directors at 12.13pm. He explained that the directors had told him that they first read the letter on 21 September.

In his second witness statement (19 December 2023), Mr Lobo explained that he was out of the office on 18 September, having recently returned to the UK from honeymoon, and was not due back in the office until 19 September. The email sent to the directors on 18 September (at 12.13) is not in evidence, but Mr Lobo’s evidence is that he told the directors that he was out of the office and would return the next day and “go through the letter”, and that he sought “comments and instructions on the letter” in the meantime. Mr Lobo’s evidence is that he read and properly considered the letter only on 19 September, and that he had further communications with the directors then; he also contacted Leading Counsel’s clerk that day to arrange a consultation.

In a fourth witness statement, served on the eve of the hearing following skeleton arguments, Mr Lobo confirmed that he did open the attachment (i.e. the 18 September letter) on 18 September, but that he only gave it a “quick skim” then, and did not properly consider it until the 19 September.

Both directors have served witness statements. Both said they were out of the office on 18 September:

The communications between the Claimant directors and Mr Lobo’s firm in relation to the 18 September letter are not in evidence. Mr Knox told the Court that the Claimant had not sought (and was not seeking to rely on) privilege in respect of the communications, but that they had not been produced simply because the Defendants had not requested disclosure.

It is unfortunate that the Court does not have a copy of the 12.13 pm email, and other communications, since that might well cast light on (for example) the degree to which Mr Lobo had read and digested the contents of the 18 September letter, and whether it substantiates, contradicts or is neutral as regards his allegation that he merely skim-read the letter at that point. Be that as it may, at a summary stage, the Court must proceed on the basis of the factual evidence of the Claimant, unless it is fanciful or inherently incredible, which the Defendants rightly do not suggest.

The Defendants did not suggest that the Court could at this stage go behind the evidence served by the Claimant, at least as regards actual knowledge of the 18 September letter on that day.

They did however contend that if the Claimant did not bother to read correspondence, or otherwise chose not to read the 18 September letter on the date of receipt (properly or at all), as it claimed, that was a deliberate decision which it took; and was an unreasonable one – the letter should have been read on receipt.

They submit that the correct perspective is that of a ‘normally diligent tenderer’ (or in this case, putative tenderer) who has actively engaged in formal pre-action legal correspondence: see Siemens Mobility Limited v High Speed Two (HS2) Limited [2022] EWHC 2451 (TCC) at [64-68]. Such an entity does not choose, or does not act reasonably if he so chooses, not to read a letter that is attached to an email from his solicitor which he has received. Drawing on the principle expressed in The Brimnes [1975] QB 929 at 966H, they say that the email was sent in business hours, was an accepted mode of communication used by the parties, and the Claimant cannot rely on its own failure to act in a ‘normal and businesslike manner’ in respect of taking cognisance of it that day.

The Claimant submits, in essence, that there was no deliberate or unreasonable decision not to read the letter; it just was not read that day, and this was not unreasonable, given the circumstances explained in the evidence. As Mr Knox put it, there was no dereliction of duty in not reading the letter until the following day.

The Claimant also says that a company is entitled to have at least a day, or two, to consider information to know whether there were any grounds for a complaint and relies on a comment allegedly to that effect in paragraph 22(g) of Akenhead J’s judgment in Mermec UK Ltd v. Network Rail Infrastructure Ltd[2011] EWHC 1847 (TCC).

My conclusions on this aspect of the case are as follows.

Starting with Mermec, thisinvolved an application for summary judgment on the basis that the claim for breach of the Utilities Contracts Regulations 2006 was time barred. The regulation in that case required, on its proper construction, that a claim must be served within 3 months from the time when the claimant knew or ought to have known of the alleged infringement. The issue was a factual one. In summary, Akenhead J found that the basic facts supporting the complaint were clear from a letter dated 23 September 2010. As the Judge noted, there was no suggestion that the letter was not seen, read and its ramifications considered on that day. The proceedings were not served until 30 December 2010.

It was in that context that Akenhead J made the comment, with emphasis added: “I can see no reason why I should conclude anything other than that on 23 September 2010 or possibly one or two days at the outside thereafter [the claimant] as a company had a knowledge of the basic facts which would indicate, objectively, that it had any arguable claim. … The test articulated by Mr Justice Mann in the Sita case is met as at 23 September 2010 or within one or two days at the outside”. The Sita test being referred to is that set out in paragraph 94 above.

The case illustrates the point that mere receipt of information in a letter does not, necessarily, equate to the recipient having knowledge on the date of receipt that grounds for a claim had arisen. In some cases, depending on the facts, a recipient may need some further time to assimilate the information provided before it can be said to have the necessary knowledge. As I read the judgment, the Judge was saying no more than that: even if, on the facts of that case, one allowed a day or so for assimilation and consideration, then the claim would still be time barred. He was not articulating a principle of law that a grace period of a day or two should be allowed for a party to digest the contents of a letter. Nor that a day or two post receipt should generally be allowed in all cases for consideration. Such a conclusion would be inimical to the purpose of having a fixed, and certain, limitation period, with extensions of time only being available in exceptional cases.

Turning to the evidence in this case, I will start with actual authority. First, given the evidence, there is a triable issue (by which I mean in this judgment an issue with realistic and not fanciful prospects) as to whether either of the directors read the letter on 18 September and thereby had actual knowledge on that day that grounds had arisen. They say that they did not. Insofar as that might be disputed, this cannot be resolved summarily. Secondly, Mr Lobo says that he only skim read the letter on that day, and he did not read the letter properly until the following day, by which I understand his evidence to be that he did not read it sufficiently on 18 September to know that grounds had arisen. His evidence was that he was going to ‘go through’ the letter on 19 September and did not do so before then. Again, there is a triable issue as to his actual knowledge on 18 September, even if his knowledge is to be attributed to the company, as the Defendants submit. It may be that the communications between him and his client around this time, once disclosed, will be relevant to that question, as I have indicated above. Thirdly, I would add that, although I am at this part of the argument considering the 18 September letter on its own, that letter of course formed part of a continuum of correspondence going to back to July and possibly before; and it may well be that the previous correspondence, and the July case when resolved on the facts, will be relevant to what was actually known on, or by, 18 September, by the Claimant directors or its solicitor. The letter was not sent or received in isolation.

As to constructive knowledge, the issue is what the Claimant ought to have known. This is not, however, one of those cases where it is said, for example, that a claimant knew certain facts and through reasonable enquiries it ought to have known other facts too. That is because, as the Claimant accepts, the contents of the 18 September letter, once read properly, were sufficient in themselves to give rise to knowledge. The case of constructive knowledge in this case therefore amounts to a submission that the Claimant’s directors, or their solicitor, or at least one of them, ought to have read the letter, and done so, properly on the day of receipt.

As to the law, the passage relied upon by the Defendants in Siemens is not authority for any proposition of law that a letter must be read immediately; but rather that the test is one of reasonableness, to be determined objectively, on the evidence in any case. Similarly, I do not read The Brimnes as setting out a rule of law or principle that it will be a failure of ‘normal businesslike’ behaviour not to read an email sent in business hours on the day of receipt. It depends on all the circumstances.

As to that evidence, as I have set out in more detail above, Mr Lobo was out of the office that day, having recently returned from honeymoon, and as I understand his evidence he was (formally at least) only back at work on 19 September. Mr Harjeet Bhandal was out of the office that day, on other business, and only considered the letter the following day. Mr Hardeep Bhandal was out of the office on leave. In my judgment, if this evidence and the explanations are correct, which I must assume (and it is not suggested they are implausible), then it is hard to say that their individual decisions (insofar as they made them – and this may not apply to Mr Hardeep Bhandal) not to read the letter (or not to read it in any detail, as regards Mr Lobo) on that day, as opposed to shortly thereafter, were unreasonable. The reasons given for not reading (or perhaps seeing) the letter that day are all, in themselves, at least arguably reasonable and understandable, even in an era of instant messaging where it seems to be assumed that people are permanently glued to their phones.

I am sure Mr Lobo appreciated that it was an important letter – hence forwarding it to the clients – but it was not an urgent letter or marked as such, in the sense that it required action that day (or even within a few days), so the decision (insofar as there was a deliberate decision) to deal with it when he and others were back in the office is understandable. Again, as noted above, the facts may look different, and less favourable to the Claimant once the facts including the July case are tried.

I do not therefore consider that this is a case where it can be fairly said, at least on current material, that the Claimant ‘did not bother’ (the language of Akenhead J in Mermec) to look at the 18 September letter that day.

For those reasons, at the summary stage, and in light of the particular evidence served concerning the circumstances, I am not able to say that the Claimant, through its agents, whether directors or solicitor, should have read the letter on the date of receipt, and therefore should have known, that day, that grounds for a claim had arisen.

It is not necessary in these circumstances for me to determine the Defendants’ argument that the knowledge of Mr Lobo, as the Claimant’s solicitor, should be attributed to the company. I will however deal with the arguments briefly.

The Defendants submitted that Mr Lobo had been appointed by the Claimant for the specific purpose of seeking and receiving information from the Defendants in respect of the Assist contract, and therefore his knowledge as agent within the scope of that appointment and purpose was to be attributed to the company. They relied upon El Ajou v Dollar Land Holdings plc [1994] 2 All E.R. 685 at 701-702 per Hoffmann LJ, and both parties relied on the well-known Meridian principles [1995] 2 AC 500.

The Claimant submitted that Mr Lobo was not instructed or authorised to take decisions on behalf of the company, that was only a matter for the directors, and that only the directors could have taken the decision to commence the procurement claim. That is no doubt correct, but that does not mean that knowledge that there were grounds to bring such proceedings can only be that of the de jure directors, and not that of an agent specifically instructed to obtain information.

It was said, applying Meridian principles, that it is plain that only directors’ knowledge counts for the purposes of the Regulation, because the purpose of the PCR is to give economic operators (i.e. the company itself, through its board) sufficient information to make an informed decision to bring proceedings. In my judgment the purpose of this Regulation is to ensure that proceedings are brought promptly after a claimant has sufficient actual or constructive knowledge, and I see no reason in principle why the knowledge of agents of a company, including its solicitor, cannot be taken into account in circumstances where they have been instructed with the very task of obtaining and receiving relevant information.

In my judgment, there is no doubt that Mr Lobo had been instructed to enter into, and receive, correspondence from the Defendants and receive answers to the questions concerning the procurement exercise which his correspondence had raised. Accordingly, had it arisen, I would have found that Mr Lobo’s knowledge of the grounds to bring a claim, whatever that knowledge was, would be attributed to the Claimant for the purposes of the Regulation 92(2).