Damages
In its judgment of 28 March 2005 in Millbrook Healthcare Limited v Devon County Council and Nottingham Rehab Limited [2025] EWHC 744 (TCC), the English High Court (Deputy High Court Judge, Anneli Howard KC) lifted the automatic suspension on a £46 million home care services contract, the award of which had been challenged by the incumbent supplier, Millbrook.
Insufficient evidence of uncompensatable loss
The Court decided the application on the basis that damages would be an adequate remedy for the Claimant. In doing so, the Court rejected arguments about the impact that loss of the contract would have on Millbrook. The claims of prejudice were “made by mere general assertions, without supporting evidence” ([13]), the contract “was not unique, prestigious or the sole source of the Claimant’s workstreams” and the loss of one contract would not “undermine the Claimant’s entire business model or its ability to win new work from other local authorities” ([16]).
The ‘Sufficiently Serious Breach’ Problem
The judgment is particularly interesting for its treatment of the sufficiently serious breach point. This issue has featured prominently in applications to lift the automatic suspension, both in England and Wales and in Northern Irish and Irish cases. The point is this. In order to obtain damages for breach of procurement law, a Claimant must satisfy the so-called Francovich criteria, one of which is that the breach at issue is sufficiently serious to sound in damages. Whether a breach is sufficiently serious will depend on different factors, which may include, among others, the clarity of the rule that is breached; the degree to which the error can be excused; and whether the breach was deliberate. Bottom line – a claimant might establish that there was a breach of the procurement rules but fail to get damages because the breach was not sufficiently serious. The case of Braceurself Limited v National Health Service [2024] EWCA Civ 39 [2024] KB 914 illustrates the point. There was a breach in that case – manifest error in part of the evaluation. Not only that, had the breach not occurred, the Claimant would have succeeded in the competition. The breach therefore had a decisive effect. However, the Court of Appeal nonetheless found that the breach did not meet the sufficiently serious standard and so, no damages were recoverable.
A key factor in the English law test on applications to lift the automatic suspension is whether damages would be an adequate remedy for the Claimant were it to ultimately succeed at trial. If not, then this counts in favour of leaving the automatic suspension in place.
One can immediately see the problem posed by the sufficiently serious breach requirement. If, at the end of the day, a Claimant might actually establish a breach but fail to obtain damages because that breach is not sufficiently serious, how can it be said, at the interlocutory stage, that damages would be an adequate remedy for the Claimant?
In many cases on the automatic suspension, this issue has been neutralised by a Defendant conceding that the claimed breach would be sufficiently serious (or undertaking that it would not argue to the contrary at trial). As such, the Court, in deciding the application to lift, need not concern itself with the sufficiently serious problem. In this case however, no such concession was made by the Defendant. Yet, the High Court concluded that damages would be an adequate remedy for the Claimant. A critical part of the Deputy Judge’s analysis was to say that there was no contradiction or incoherence in a position whereby, for purposes of the lift application, damages were to be considered as being available and adequate; while, at the same time, one could in fact end up with a different finding at the end of the trial, i.e. that damages were not available because the breach was not sufficiently serious. Howard K.C. relied here on the analysis of Coulson L.J. in Braceurself, which posited that the two different outcomes were “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.“
The Deputy Judge rejected concerns that the Claimant could be left with no remedy in damages even if it established a breach. In doing so, the Court declined to follow the approach that was taken by Humphreys J in the High Court of Northern Ireland in CGI IT UK Limited v Department of Finance [2024] NIKB 49. Faced with an application to lift where no Francovich undertaking was provided, Humphreys J was concerned that it would not be just “to confine the Plaintiff to its remedy in damages on the basis that one possible outcome of this case is that the Plaintiff succeeds at trial on the basis of a breach which is not sufficiently serious to found an award of damages. If that were to occur, the contract would have been awarded to the wrong bidder and the Plaintiff would have spent considerable money and resources on a wholly Pyrrhic victory” ([44]).
That concern is also evident in the approach that has been taken in Ireland and, in particular, by the Irish Court of Appeal in Word Perfect Translation Services Limited v Minister for Public Expenditure and Reform [2018] IECA 35, [2019] 2 IR 305. There, Hogan J said the right to an effective remedy was a “constitutional fundamental” ([63]), and referred in that regard to both Article 40.3.2° of the Irish Constitution and article 47 of the Charter of Fundamental Rights of the European Union. In what was a finely balanced case on the weighing of various factors, this risk – that the applicant would be left with no real remedy – was decisive in deciding where the greatest risk of possible injustice lay, and the automatic suspension was left in place.
The Millbrook case therefore highlights what is something of a difference of approach to the question of the adequacy of damages in England and Wales on the one hand, and Ireland and Northern Ireland on the other.
Future Applications to Lift
The Millbrook case proceeded under the now revoked 2015 Public Contract Regulations. It remains to be seen whether the approach to applications to lift the automatic suspension under the Procurement Act 2023 are any different. Section 102 of that Act does arguably express a broader balancing of interests test than that which has applied under the American Cyanamid test for interlocutory injunctions. In that regard, it is worth noting the shift in approach seen in Ireland in recent years in interlocutory injunction applications generally and also in applications to lift the automatic suspension (following the Supreme Court decision in Merck Sharp & Dohme Corporation v. Clonmel Healthcare Ltd [2019] IESC 65, [2020] 2 I.R. 1), where the question of adequacy of damages in now one component of the overall balance of justice test, rather than being the kind of standalone and decisive factor that it was in Millbrook.
