[2025] EWHC 2664 (TCC)

It is common ground that American Cyanamid principles govern the Application to Lift generally. As O’Farrell J put it at paragraph 48 of her judgment in Camelot UK Lotteries v Gambling Commission [2022] EWHC 1664 (TCC):

“48.

The relevant questions for the court, when determining an application to lift

automatic suspension in a procurement challenge case, are as follows:

i)

Is there a serious issue to be tried?

ii)

If so, would damages be an adequate remedy for the claimant(s) if suspension were lifted and they succeeded at trial; is it just in all the circumstances that the claimant(s) should be confined to a remedy of damages?

iii)

If not, would damages be an adequate remedy for the defendant if the suspension remained in place and it succeeded at trial?

iv)

Where there is doubt as to the adequacy of damages for either of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong; that is, where does the balance of convenience lie?”

In this case, and for the purpose of the Lift Application, DWP agrees that there is a serious issue to be tried, as noted above.

For its part, Involve contends that damages would not be an adequate remedy for it. It accepts that they would be, insofar as it has made a claim for loss of profit from the putative New Contract and/or wasted bid costs. However, it says that it would suffer a loss of reputation and the opportunity to win further important contracts as a result of not being awarded the New Contract and being seen to be such. Here, Involve says that damages would not be an adequate remedy.

I therefore refer to some of the case-law in this area. I begin with the observation made by Joanna Smith J in Kellogg Brown & Root Ltd v Mayor’s Office for Policing and Crime [2021] EWHC 3321 (TCC) that the application of the principles will involve consideration of the circumstances of the particular case and every case will turn on its own facts. There is an obvious need for careful analysis of the reasons for the outcome in other cases and the extent to which the court in the instant case is concerned with a similar factual scenario - see paragraph 25 of her judgment.

This is reflected in the observation made by O’Farrell J in Bombardier Transportation v London Underground [2018] EWHC 2926 (TCC) at paragraph 58 of her judgment:

“Each case must be considered on its own facts. In most cases, unsuccessful bids are part of the normal commercial risks taken by a business and will not have any adverse impact apart from potential wasted costs of the tender and lost profits. Not every failed bid will result in damage to reputation causing uncompensatable loss. There must be cogent evidence showing the loss of reputation alleged would lead to financial losses that would be significant and irrecoverable as or very difficult to quantify fairly”.

In Openview Security Solutions v London Borough of Merton [2015] EWHC 2694, the whole topic of loss of reputation in this context was given detailed consideration by Stuart-Smith J (as he then was). In particular:

“37.

I am not persuaded that loss of reputation as such affects the question of adequacy of damages as a remedy. If damages were otherwise an adequate remedy, I can see no reason why the ‘reputation’ of a tendering party as such should affect the giving or withholding of interim relief. With commercial parties, what ultimately matters is whether the loss of the contract in question will reduce their profitability in a way which is not recognised by the normal principles on which damages are awarded. This in turn suggests that what is generally of concern is whether the aggrieved tenderer will lose out on other contracts that it might have obtained if it had added lustre to its reputation by getting the contract at issue. In other words, the real subject of the ‘loss of reputation’ argument is financial losses which the law of damages does not normally recognise…

38.

This points to the answer to the second question: the constituency of interest is future prospective contracting authorities (or other contracting parties) who might be influenced to give work to a party which has the contract at issue rather than to a party who has not. The answers to the two questions explain in many cases why the ‘loss of reputation’ does not normally sound in damages in the first place: the loss is speculative and legally too remote. They also provide good reason for restraint on the part of a court which is urged to adopt ‘loss of reputation’ as a reason for holding that the damages that would be awarded are not adequate compensation.

39.

What then are the criteria to be applied before a court accepts that ‘loss of reputation’ is a good reason for holding that damages which would otherwise be adequate are an inadequate remedy for American Cyanamid purposes? In the absence of prior authority directly in point (none having been cited by the parties) but with an eye to the approach adopted by the court [in previous cases] I suggest the following:

(i)

Loss of reputation is unlikely to be of consequence when considering the adequacy of damages unless the court is left with a reasonable degree of confidence that a failure to impose interim relief will lead to financial losses that would be significant and irrecoverable as damages;

(ii)

It follows that the burden of proof lies upon the party supporting the continuance of the automatic suspension and the standard of proof is that there is (at least) a real prospect that would retrospectively be identifiable as being attributable to the loss of contract at issue but not recoverable in damages;

(iii)

The relevant person who must generally be shown to be affected by the loss of reputation is the future provider of work.”

40.

These are general criteria, which need to be reviewed and considered in the light of the facts of each case. I readily accept that there is more to be said on the subject and the principles such as those I have suggested are not be applied by rote.”

I now turn to some particular cases dealing with arguments about loss of reputation whose outcome was relied upon by one or other of the parties here.

In Vodafone v Secretary of State for Foreign Commonwealth and Development Affairs [2021] EWHC 2793 (TCC), Kerr J held that the Claimant could not be adequately compensated by an award of damages. The loss of the contract in issue was significant because it would lead to a loss of opportunities to bid for and win other contracts “on the back of this one”. The contract was a very large and important one and in that case, the claimant’s submission was actually supported by what the successful bidder, Fujitsu, had said in a letter dealing with the effects on it of any delay in the award of the contract. It explained how developing the system for the contract to be awarded would help it to obtain similar contracts for other public sector clients such as the National Crime Agency, the Ministry of Defence, HMRC and NHS.

Kerr J said this:

“84.

Here, the immediate value of the contract is relatively low, though it is fair to hold the defendants to their own estimate of £184 million overall, taking account of opportunities to obtain call off contracts. I accept that the contract is highly prestigious. ..

85.

I am prepared to accept Vodafone’s assessment, not directly contradicted by the defendants, that in the field of international global communications this contract is second only in prestige to an equivalent contract to supply those services to the government of the USA. Such opportunities do not arise frequently; the last one was 11 years ago.

87.

In the end, what helps to persuade me that it would not be just to confine Vodafone to its remedy in damages is the unquantifiable loss of opportunities to bid for and win other contracts on the back of this one. I do not accept that the evidence of this was vague and speculative, as the defendants suggested.

88.

The disparity between the relatively modest value of the services immediately to be provided and the overall estimated value of £184 million shows the difficulty of quantifying losses that are, in my judgment, likely to prove irrecoverable as damages in future. While Vodafone can bid for other government and public sector contracts without having won this one, it would not be able to secure call off contracts and build its standing by that means.

89.

I also find persuasive Vodafone’s point that Fujitsu has heavily relied in its letter on threats to its future business opportunities and relationships with suppliers arising from any risk that it might, after all, not hold onto this contract. I see no reason why the same logic should not hold good for both companies.”

On the other hand, in Alstom Transport v London Underground Ltd [2017] EWHC 1521 (TCC), Stuart-Smith J (as he then was) held that the evidence submitted by Alstom in support of its submission that damages would not be an adequate remedy was surprisingly lacking in detail and that the picture painted by it was partial and that both scrutiny and scepticism were justified. On analysis, its evidence that if it did not get the contract in question it was highly unlikely that it would be able to maintain the centre of expertise for traction technology, was barely credible. He therefore rejected the submission that damages would be inadequate.

Finally, on this topic, I refer to the Northern Island case of TES Group Ltd v Northern Island Water Ltd [2020] NIQB 62. At paragraphs 32 and 33 of his judgment Horner J said this:

“[32] But no company can expect to be successful in every tendering competition it enters. If an unsuccessful tenderer is intending to make the case that the loss of a competition will spell financial ruin, then it should provide convincing evidence as to why this is likely. There has been a complete failure to provide such evidence. I have already commented on the expert opinion of Mr McAllister. Indeed, it is difficult not to conclude that there has been a deliberate attempt to keep the court in the dark as to how TES will perform should it lose this tender by starving it of up to date financial information as to how TES is currently performing. If TES had wanted to make such a case, namely that winning Lot 2 was essential for its long-term survival, I would have expected the following evidence to be provided at a bare minimum:

(a)

Up-to-date management accounts and detailed financial information as to turnover etc.

(b)

A breakdown of how TES’s turnover was made up and what was attributable to Water Services.

(c)

What contracts TES had in the Water Services sphere apart from those with the defendant.

(d)

What alternative work sources there were in the Water Services sphere available to it.

(e)

What plan TES had if it was unsuccessful in this tender to seek other work. If it had no plan how and why had it become so dependent on winning this particular contract.

(g)

The effect of a successful claim on its finances and its ability to retain its employees.

[33] In the circumstances I remain deeply unimpressed by the claim made by TES of financial ruin if it fails to win this contract and by its failure to provide any cogent financial evidence to support it.”

The very citation of these three last cases illustrates how the outcome of a consideration of the inadequacy or otherwise of damages in the context of loss of reputation is highly fact-sensitive.

One further useful statement of principle is that to be found in paragraph 47 of the judgment of Eyre J in Medequip v Kensington and Chelsea [2022] EWHC 3293 (TCC) where he said this:

“47.

Particular considerations arise when addressing this question in the context of procurement cases where the defendant will be a public body. There will be cases where damages will demonstrably be an adequate remedy even for such a body if the suspension is kept in place and it is precluded from placing the contract in accordance with its procurement process. This will be the position where awarding the contract would mean that the authority was able to obtain particular goods or services at a particular price and where the restraint on awarding the contract means that it has to obtain identical goods or services for a higher price. There, an award in due course of the difference between the two amounts would adequately compensate the authority in question for the inability to place the contract at the lower sum at the earlier time. In such a case the same goods or services will have been obtained during the period of the suspension but at a higher price than would have been the position in the absence of the suspension. There will, however, be circumstances where damages will not be an adequate remedy for a public body. This will potentially be the position where the contract is to provide particular services for the public or to provide those services in a particular way and where the maintenance of the suspension means that for a period of time the services will not be provided or will not be provided in the way desired by the authority. Such an impact on the provision of services by the public body in question will not be measurable in financial terms and damages would not normally be an adequate remedy for a defendant authority in those circumstances (see per Lord Goff in R v Secretary of State for Transport ex p Factortame [1991] 1 AC 601 at 673 A-B).”