In Killaree Lighting Services Limited (“applicant”) v Mayo County Council (“respondent”) and Electric Skyline Limited (“notice party”), the Court of Appeal ([2025] IECA 7) largely upheld the High Court’s conclusions ([2024] IEHC 79), albeit with points of difference, notably on the impact of the failure to send a standstill letter.

The background was that the respondent raised concerns that the applicant’s tender included abnormally low amounts. Correspondence followed, ending in a letter to the applicant in October 2020. The letter eliminated the applicant from the process on the basis that its tender included abnormally low amounts and indicated that, following identification of the successful tenderer and observance of the standstill period, the name of the winner would be published in a contract award notice. On the same day, the notice party was notified it was successful. A contract was signed with it in late October 2020, and the contract award notice was published on 3 November 2020. The applicant issued proceedings on 6 November 2020.

The High Court rejected the applicant’s submissions that it had been unlawfully excluded from the competition and had not received adequate reasons for exclusion. However, the High Court found that the October 2020 letter was not a standstill letter. This meant that the respondent had entered into a contract in breach of Regulation 5(1) of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (the “Regulations”).

Even so, the Court did not declare the contract ineffective (as it may do under the Regulations) because, though the letter had deficiencies, it made plain that the applicant was out of the competition. It had not come out of the blue but had followed correspondence repeatedly outlining concerns and stating that the applicant could be excluded from the process. It indicated the contract would be awarded without further reference to the applicant, who gave no evidence as to why it did not pursue remedies before the contract was concluded.

Reasons for Exclusion

The Court of Appeal agreed with the High Court that the applicant had not identified any substantive breach of the Regulations.

The applicant had been excluded because it submitted an abnormally low tender. Its assertions that it performed other contracts using similar pricing had not been an adequate explanation for the rates it tendered. The respondent had been entitled to assess the tender it received, for the contract it wished to award. There had been nothing to prevent the contracting authority from looking beyond the total tender price to see if constituent parts of the tender were abnormally low.

The respondent had not failed to give adequate reasons for excluding the applicant. The applicant’s justifications for its prices had breached the terms of the Request for Tenders. The applicant had to be taken to know this, and it had been reminded in correspondence about the rules of the competition. The respondent was entitled to provide reasons in a summary format because of the knowledge that was correctly assumed on the part of the applicant.

The High Court had therefore been correct to refuse to grant a mandatory declaration of ineffectiveness.

Standstill letter

The Court of Appeal differed from the High Court in that it concluded that the applicant had been deprived of the chance to seek pre-contractual remedies because of the failure to send a standstill letter. The letter did not make it clear that the respondent had decided the identity of the successful tender and that the clock had started ticking for the purposes of the standstill period.

In the words of the Court of Appeal: “The infringement here was the failure to tell Killaree the contract was being awarded and to tell it of the standstill period. … Killaree was entitled to assume that the contracting authority would comply with its obligations under the Regulations. By the time Killaree became aware of the signing of the contract, the horse had bolted and the only remedy available to it was a declaration of ineffectiveness.”

The Court of Appeal agreed, however, with the High Court’s indication that it would have refused to grant a discretionary declaration of ineffectiveness because of: (a) the significance of the contract both regionally and nationally; (b) the nature of the works, involving as they did public safety and related considerations; (c) the impact that a declaration of invalidity would have on the various contracts concluded with six different local authorities which were not party to the proceedings; and (d) the desirability of legal certainty.

Because there was a breach of Regulation 5(1), the High Court had been required to impose an alternative penalty under Regulation 13 (a civil financial penalty of up to 10% of the value of the contract to be paid to the Central Fund (the Exchequer), and/or termination or shortening of the duration of the contract). The applicant had not sought such a relief, but the Court of Appeal considered that this issue must be aired, so sent the case back to the High Court for that purpose.