Openview Security Solutions Ltd v The London Borough of Merton Council

On an application to end an automatic suspension under the Public Contracts Regulations 2006, the court applies the ordinary American Cyanamid principles on the statutory hypothetical basis. Public interest is relevant principally to the balance of convenience. It does not alter those principles or create a free-standing reason to maintain a suspension.

Difficulty in valuing a lost chance does not itself make damages inadequate. Reputational loss matters only where there is a real prospect of significant financial loss, attributable to loss of the contract and irrecoverable in damages, including loss of future profitable work. The remedy of review cannot ordinarily justify interim relief where damages are adequate. The suspension should therefore be lifted unless some other factor justifies departure from the normal result.

The claimant, an unsuccessful tenderer, challenged the defendant local authority’s proposed award of a contract for an integrated CCTV and automatic number plate recognition system to a competitor. The proceedings triggered the automatic suspension imposed by Regulation 47G of the Public Contracts Regulations 2006.

The authority applied under Regulation 47H to end the suspension. The claimant alleged that the successful tender was technically non-compliant, that undisclosed criteria had been used, and that there had been unequal treatment and manifest scoring errors. The application was determined on the interim-relief principles, rather than by deciding those allegations.

The central issue was whether it was just, in all the circumstances, to confine the claimant to damages and permit the authority to contract.

1. The application was granted. The automatic suspension was set aside. Under Regulation 47H(2), the question was whether the court would grant an interim injunction restraining the authority from contracting if the statutory suspension did not apply. That directed the court to the principles in American Cyanamid Co v Ethicon Ltd [1975] AC 396.

2. Those principles were not modified by the public-procurement setting. Public interest was relevant to the balance of convenience, including the public interest in prompt procurement and lawful tendering, but it did not displace the ordinary inquiry into adequacy of damages. The court could not assess the relative strength of the underlying procurement claim without conducting an impermissible mini-trial.

3. Damages were adequate for the claimant. A loss-of-chance assessment may become inadequate where numerous uncertain variables prevent fair compensation, particularly in some undisclosed-criteria cases. However, difficulty of assessment alone was insufficient. On the evidence, the claimant would probably have received the contract if the successful tenderer had been excluded or properly marked. The maintenance work was a defined contract, not a framework dependent upon discretionary call-offs.

4. Alleged loss of reputation did not make damages inadequate. The claimant had to show a real prospect of significant financial loss, caused by loss of the contract and not recoverable in damages, normally through the views of future providers of profitable work. The contract had some prestige, but the evidence did not establish a substantial or lasting competitive advantage, future lost work, or irrecoverable loss. The claimant’s established business was not threatened with catastrophic harm.

5. Damages were also adequate for the authority. The asserted short-term traffic, safety, environmental and revenue consequences of delay were materially overstated on the evidence. The possible public benefits and the interest in avoiding an unlawful award did not favour either side decisively. Nor did the possibility of a review remedy justify continuing the suspension: at most it could give the claimant a further chance, not the contract itself.

6. Accordingly, no factor justified departure from the normal result where damages adequately compensated both sides. It was just to confine the claimant to damages.

This was a first-instance interim application. No prior appellate history is stated in the judgment.