HT-2025-000023 - [2025] EWHC 744 (TCC)

The criteria for assessing adequacy of damages in procurement cases have been established in a long line of case law, from American Cyanamid [1975] AC 396; Alstom Transport Ltd v Eurostar International Limited [2010] EWHC 2747 (Ch) (“Alstom”); Openview Security Solutions Ltd v The London Borough of Merton Council [2015] EWHC 2694 (TCC) (“Openview”); Bombardier Transportation UK Limited v London Underground Limited [2018] EWHC 2926 TCC (“Bombardier”); and, more recently, Camelot UK Lotteries Limited v Gambling Commission [2022] EWHC 1664 (TCC) (“Camelot”).

The Claimant must provide “cogent” or “compelling” evidence that it will suffer significant financial losses that are irrecoverable as damages: Openview at §39(i) per Stuart Smith J (as he then was); Bombardier §58 and Camelot §98.

The evidence of Mr Crawshaw, for the Claimant, is that, if the suspension is lifted and the new contract is awarded to NRS:

As a starting point, most of the points raised by the Claimant to establish prejudice are made by mere general assertions, without supporting evidence. Where the claimant makes significant claims about its future prospects and ability to win contracts, as a result of losing one particular contract, the Court will be cautious in accepting such claims without detailed evidence, such as management accounts, detailed financial information, details of other contracts that Millbrook has in place and other potential bids that it might apply for in future: Alstom Transport Uk Ltd v London Underground Ltd [2017] EWHC 1521 (TCC) (“Alstom v LUL”) §§29-30 and 37 and TES Group v Northern Ireland Water Limited [2020] NIQB 62 at [32]. In this case, there are no concerns raised by the directors or auditors in Millbrook’s accounts about risks from material uncertainties or events that would cast doubt on it continuing as a going concern; there is no mention or provision to reflect the risks of losing the new contract.

Secondly, to the extent that Millbrook faces loss of profits as a result of losing its incumbent position, that is very much part of life. As the TCC stated in Bombardier at [58]:

“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 that the loss of reputation alleged would lead to financial losses that would be significant and irrecoverable as damages or very difficult to quantify fairly.”

In this case, the main immediate harm is the hit to anticipated financial revenues from the loss of the new contract. Those losses will be quantifiable, based on the projections in Millbrook’s bid and their internal documents setting out their anticipated profits from the new contract alongside expert evidence on the lost opportunity: Exel Europe Limited v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332 (TCC) §48; Alstom v LUL, §24. Although there may be uncertainties and complexities with quantification, such difficulties are a common feature of damages claims and do not mean any losses are irrecoverable or impossible to quantity fairly.

As to the ability of Millbrook to compete, invest and benefit from economies of scale, in this case, the evidence of Mr Crawshaw is that the new contract represented a relatively small share (approx. [TEXT REDACTED]) of the Claimant’s overall business turnover. In contrast with other cases, such as Rail Franchising and Camelot, the new CES/TECS contract was not unique, prestigious or the sole source of the Claimant’s workstreams. The Claimant is part of a private equity financed group with its latest accounts recording a turnover of approx. £118 million and growing profitability of [TEXT REDACTED] per annum. I do not find it compelling that the loss of one single public sector contract, for a fixed term of 7 years maximum, and of modest value and profitability, would undermine the Claimant’s entire business model or its ability to win new work from other local authorities. In particular, the evidence of Mr Fotheringham, for NRS, suggests that the Claimant holds numerous CES and TECS contracts with at least 10 other local authorities and, in many instances, has won contracts away from NRS: Fotheringham 1, §15. Mr Fotheringham also explains that there are numerous other CES contracts that are due to be procured in the next 12 months, where Millbrook is not the incumbent and could win new work: Fotheringham 1, §15.

Many of the broader arguments regarding the impact on Millbrook’s staff and reputation are predicated on the assumption that there will be a “rushed transition” for the new contract and its transfer from Millbrook to NRS. In that event, I agree with Mr Barrett KC’s argument that, contrary to the requirements of the American Cyanamid test, the alleged prejudice does not result directly from the claimed breach of the PCR 2015 but from extraneous events such as transition. In any event, I do not accept that there necessarily will be a “rushed transition” - this allegation seems speculative, if not tendentious. The evidence provided by DCC and NRS is that they will, as a conservative estimate, need a 3-4 months’ transition process although this may be reduced further if, as now appears to have been agreed as part of an agreed timetable for transition, Millbrook transfers its premises to NRS. Millbrook has agreed a 6 month extension to the old contract so there will be no hiatus in provision nor a rushed transition for the new contract to be in place. There will be sufficient headroom within that 6 months extension period to carry out the transition with a buffer for any unexpected difficulties. Mr Halliday sought to argue that anything less than a 16-week transition would be insufficient yet conceded that the Claimant had itself accepted in its bid that a 3 month (12 week) transition would be necessary. So, there is no concrete basis for the premise that any transition would be rushed.

Similarly, there is no credible evidence that there will be a staff exodus as a result of the “rushed transition”, let alone the loss of a “highly and uniquely trained workforce” (Counted4Community Interest Co v Sunderland Country Council [2015] EWHC 3898 at §40 per Carr J (as she then was)). In any event, as Mr Halliday conceded at the hearing, many relevant staff members will be transferred to NRS along with the premises as part of TUPE protection, which is a common and unavoidable feature of transition to a new provider: see Vodafone §86 per Kerr J.

In so far as potential harm to Millbook’s reputation, I am not persuaded that any negative consequences from a “rushed transition” would be likely to be perceived by customers, other local authorities or the public more generally as being attributable to Millbrook. It is unlikely that the Defendant, a responsible local authority dealing with vulnerable service users, would permit a chaotic transition in the interests of speed. If there is any reduction in service quality during transition, it is more likely that any blame would be put on the Defendant than Millbrook. Similarly, I cannot see that the loss of a single contract out of many others would undermine Millbrook’s reputation, in a sector where it is evident that contracts are put out to tender at regular intervals and often move between service providers. Mr Crawshaw refers to an inadequate transition from NRS to Millbrook in the past (Crashaw 1, §27) but there is no suggestion that it caused Millbrook or its predecessor, NRS, reputational harm.

As regards potential harm to Millbrook’s competitive situation, it is not clear why the loss of this particular contract would undermine the Claimant’s ability to win other CES/TECS contracts in future. The new contract is not a prestigious contract nor a “reference contract” that would drive Millbrook’s future tenders. Millbrook currently hold 10 other CES/TECS contracts that it can use to establish its level of expertise in future bids. As regards the alleged impact on equipment prices, the Claimant presents no convincing evidence to demonstrate that the reduction of [TEXT REDACTED] in its market share, represented by the loss of the new contract, would undermine its ability to negotiate lower prices. I accept the evidence of Mr Sillars and Mr Fotheringham, that (i) Millbrook will have already negotiated prices in its existing contracts with equipment suppliers so the loss of this contract will not disturb those prices; (ii) equipment prices no longer feature as part of the evaluation methodology in more recent CES procurements, which focus on total modelled activity costs only and in others procurements, bidders are evaluated on a relatively small basket of limited stock items (Fotheringham 2, §§14-17) and (iii) in most CES procurements, quality has a higher weighting than price. In recent CES procurements, the ratio of quality to price has been between 75:25 and 90:10 (Fotheringham 2, §21). So, even if there were differences in price between bidders, that would not have the greatest impact on their chances of success.

As regards the claimed impact on the structure of competition in the market, I am not persuaded that there is any cogent causal evidence that the loss of this contract would place Millbrook at a competitive disadvantage or substantially reinforce the market position of the other two main players in the CES market. The Claimant refers to the other two players, NRS and Medequip, as being “dominant” or forming a duopoly but, even if NRS gained an additional [TEXT REDACTED] market share from the award of the new contract, it would not take NRS above the 50% threshold for an Akso presumption of dominance to arise under competition law. As mentioned above, there is recurring evidence of public sector contracts being won and lost with market share shifting between the various market players at different times, which suggests dynamic competition on the merits rather than static or “skewed” distortion. Further, Millbrook’s arguments focus solely on the CES sector and ignore the fact that it is one of the leading providers of TECS in the TECS sector (Fotheringham 2, §19).

Both DCC and NRS drew my attention to, and put great store by, a chain of correspondence between the parties dated 13 February 2025, where the Claimant offered not to resist the ATL provided DCC agreed to concede the sufficiently serious criterion. I do not place primacy on such tactical considerations but, at the very least, it suggests that the Claimant was willing to confine its remedies to damages as a matter of principle and its offer undermines its case that damages were unquantifiable and/or that harm caused was irreparable in monetary terms. It appears that the Claimant was willing to forego any wider losses to its reputation or competitive situation provided it could pursue a damages claim at the end.

Overall, in light of all of the above considerations and subject to the sufficiently serious issue discussed below, I would conclude that damages were an adequate remedy for the Claimant.

The Claimant contends that, applying the American Cyanamid test, the adequacy test runs broader than a mere quantifiable harm analysis since there remains a realistic risk that damages will still not be an adequate remedy for the Claimant. It is concerned that, if the suspension is lifted, there is a real risk of Millbrook being awarded no damages at all. That is particularly so, in the present circumstances, where, unlike in other cases, the Defendant has refused to concede that any breach would be sufficiently serious.

In summary, in light of the ruling of the Court of Appeal in Braceurself Limited v National Health Service [2024] KB 914 (“Braceurself”), the Claimant contends that, even if it established a breach of the PCR 2015, it may be left without an adequate remedy as it may still be unable to meet the “sufficiently serious breach” which is a precondition for Francovich damages: see R v Secretary of State for Transport ex p. Factortame (No 5) [2000] 1 AC 524 and Energy Solutions EU Limited v Nuclear Decommissioning Authority [2017] 1 WLR 1373.

The facts in Braceurself involved an application to lift the suspension of a public contract for nationwide orthodontic services that had been awarded to a competitor. The claimant had not included a claim for damages but sought to introduce a late amendment. At first instance, Mr. Justice Bird, applying the conventional Cyanamid approach in Openview and Covanta, concluded that damages, albeit not perfect, would be an adequate remedy and that it was just to confine the claimant to a remedy in damages. He also granted permission to amend the claim to include a claim for damages but ultimately, after full substantive trial, that claim was dismissed by Mr Alexander Nissen KC (sitting as a deputy High Court judge) on the basis that, even though the contracting authority had made two manifest evaluation errors, those breaches were not sufficiently serious to warrant an award of damages since they were minor, inadvertent and excusable.

An appeal was brought against the final judgment but not the application to lift ruling. The claimant challenged the final conclusion that the breach was not sufficiently serious in circumstances where, but for the breach, the contract would have been awarded to the claimant. It also contended that it was incoherent to find the breach was not sufficiently serious when, at the interlocutory stage, the court had held that damages would be an adequate remedy. The Court of Appeal, per Coulson LJ, dismissed the appeal, holding that the assessment of sufficiently serious had to be determined by reference to the nature and quality of the breach itself, having regard to all the facts and circumstances. No one factor was decisive. The fact that the breach led to the contract being awarded to the wrong bidder did not automatically mean that the breach was “sufficiently serious” for Francovich purposes.

As regards the interaction between adequacy of damages at the interlocutory stage and the final determination of any award after trial, Coulson LJ held at §§114-116:

“I accept that, in a public procurement challenge, there is a potential

conflict between the result at the interim stage of the litigation (when the

respondent sought to remove the stay) and the final stage (when the judge

came to consider whether the breach that he had found was sufficiently

serious to warrant damages). But that is not unusual. Take for example, an

application summarily to enforce a decision worth £2m in favour of X by an adjudicator, because he found that Y had wrongfully repudiated the

contract. The Technology and Construction Court will almost certainly

enforce that decision by way of CPR Pt 24. The payer Y will therefore have

to pay the sum found due. But Y may then issue court proceedings in which,

following a full trial, it becomes apparent that it was X who repudiated, and

it is X who owes Y £500,000. That is not incoherent; it is the consequence of there being two different exercises (one interlocutory and one final),

involving two different sets of evidence and two different sets of governing

principles. They may produce differing results. In my judgment, that is what has happened here.

…

Judge Bird said damages would be an adequate remedy in principle.

So they were. The judge said that damages were not recoverable in fact

because the breach was not sufficiently serious. He was right about that too. In all the circumstances, I consider that this is a relatively straightforward case where the court has exercised its discretion by reference to different criteria at two different stages of the litigation. That does not make either of the answers “wrong” or give rise to a novel method of recovery.”

Mr Halliday for the Claimant eloquently explained that there was a real chance that the Claimant in this case would find itself in the same position as Braceurself, namely successfully establishing a breach in a closely run competition, where one point’s difference in the scoring would have changed the outcome of the award, yet be left with no substantive remedy. If the ATL is granted, Millbrook would lose its preferred remedy of setting aside the contract and having the competition re-run and/or the contract awarded to Millbrook instead. Further, in the absence of any concession from the Defendant on the sufficiently serious criterion, there was a real risk that Millbrook could be left without any remedy in damages at all. This risk, he argued, should be factored into the assessment of adequacy of damages.

In support, he relied on the ruling of the High Court of Northern Ireland in CGI IT UK Ltd. v Department of Finance [2024] NIKB 49, where Humphreys J at §§43-44 held that the facts of the case were similar to Braceurself and, in circumstances where the bids were very close and the Defendant had not made a concession or given an undertaking on the sufficiently serious issue, there was a risk that if the contract had been awarded to the wrong bidder, the claimant would be left with a Pyrrhic victory. Humphreys J held that, in such circumstances, the suspension should be maintained as it would not be just to confine the claimant to a remedy in damages. Aside from the Braceurself point, he would have found that damages were adequate.

Mr Halliday also took me to a patent case - SmithKline PLC v Apotex [2003] EWCA Civ 137, where the Court of Appeal, Carnwath LJ, (as he then was) observed at §42-43 that “the purpose of an interlocutoryinjunction ..is protection, not just against “loss which would sound in damages”, but against violation of any right where damages would not be adequate compensation”. Relying on that purpose, Mr Halliday argued that the automatic suspension should be maintained to prevent the violation of Millbrook’s right to participate in a fair procurement process. It was necessary, he contended, to “hold the ring” to preserve Millbrook’s opportunity to set aside the award of the contract.

This clever argument, although logical and superficially attractive, does not work for several reasons:

I recognise that the High Court of Northern Ireland in CGI did take account of the likely seriousness of the breach in the assessment of adequacy but that authority is merely persuasive and non-binding. I take comfort in my conclusion to the opposite from a consistent host of eminent High Court judges endorsing the exclusion of the sufficiently serious criterion as part of the adequacy assessment, including in cases where the Defendant has not conceded the Francovich criterion. The tension between the adequacy of damages assessment at the interlocutory stage and the sufficient seriousness at the time of the final award has long been recognised in procurement cases: see Bombardier, per O’Farrell J at §64; Boxxe Ltd v Secretary of State for Justice [2023] EWHC 533 (TCC), per Constable J at §§39-43; and more recently in Unipart Group Ltd a.o. v SCCL [2025] EWHC 354 at §§50-54. It is true that in most cases, the Defendant has made a concession or offered an undertaking to square the circle between the two but I do not see that as decisive. In Alstom, O’Farrell J observed if a breach was not sufficiently serious enough to satisfy the Francovich conditions, it was unlikely to be sufficiently serious to justify setting aside the contract under challenge. In Boxxe, Constable J agreed and held that this should not be a factor that should weigh (or weigh heavily) in preventing the letting of the contract in the context of an application to lift. Both judgments were cited with approval on this point by Coulson LJ at §§41-44 of Braceurself itself; although that comment was obiter, I regard it (and the preceding TCC precedent chain) as more persuasive.

In the present case, as Mr Barrett KC observed, if the Claimant is entitled to maintain the suspension in place, purely on the Francovich risk when all other considerations point towards damages being an adequate remedy, it means that the previous operator can artificially extend its incumbency and the life of the old contract and the local authority will be forced to invest resources and mobilise with the bidder that it considers to be the losing party, even though its losses can be fairly and adequately compensated at the end of trial.

In all of these circumstances I find that it is just and appropriate to confine the Claimant to a remedy in damages, which will be adequate to remedy any breach. As such, that is the end of the enquiry and there is no need to go on and consider adequacy of damages for DCC or the balance of convenience: OpenView, §70; Circle Nottingham v NHS Rushcliffe CCG [2019] EWHC 1315, §18.

That said, in deference to the evidence submitted by the parties and the extensive written and oral arguments made, I will briefly set out my views on the other limbs of the American Cyanamid test.