Circle Nottingham Ltd v NHS Rushcliffe Clinical Commissioning Group

In an application to lift the automatic suspension of a public procurement, the court applies the Public Contracts Regulations 2015 and the American Cyanamid approach. Damages are adequate where lost profits and other losses can fairly be calculated. The assessment concerns the claimant, rather than its corporate group or brand. Reputational loss matters only where evidence shows a real prospect of significant, irrecoverable financial loss attributable to the lost contract, generally through reduced future profitable work. If neither course clearly carries the least risk of irremediable prejudice, the status quo ante is preserved. The suspension was therefore lifted, although the parties were urged to consider a consensual extension to protect continuity of services.

The claimant, the incumbent provider of medical services at the Nottingham Treatment Centre, challenged a procurement in which the defendant proposed awarding a new five-year contract to the Nottingham University Hospital Trust. The challenge triggered the automatic suspension of contract-making. Following a material change in the successful bidder’s financial circumstances, the defendant conducted financial and sustainability re-evaluations, but again selected the Trust.

The defendant applied to lift the suspension. The central issues were whether damages would adequately compensate the claimant for loss of the contract, including alleged reputational and group-company losses, and, if not or notwithstanding, which course would cause the least irremediable prejudice. The court also considered the competing evidence concerning patient safety, mobilisation and delay.

The defendant’s application succeeded and the automatic suspension was lifted.

1. Applicable approach. Under regulation 96(2) of the Public Contracts Regulations 2015, the court asked whether, absent the suspension, it would grant an interim injunction. The principles in American Cyanamid v Ethicon [1975] AC 396 applied. The serious-issue requirement was conceded. The court then considered adequacy of damages, the cross-undertaking, the balance of convenience viewed as the least risk of injustice, preservation of the status quo ante, relative strength where irrecoverable losses were closely balanced, and any special factors. The court also noted the requirement for a sufficiently serious breach before damages for breach of the Regulations could be awarded, but that issue was resolved by concession.
2. Adequacy of damages. The relevant assessment was the claimant’s position, not that of the wider corporate group or brand. Lost profits over the contract period, mitigation issues, wasted expenditure, redundancy costs and equipment losses were capable of fair assessment. The claimant identified no head of loss attributable to the lost contract which could not be adequately compensated. The reasoning in Eircom UK Ltd v Department for Finance [2018] NIQB 75 was pertinent to the treatment of a special-purpose company within a group.
3. Reputation. Reputational loss did not make damages inadequate without evidence linking it to significant, irrecoverable financial loss and future profitable work. The criteria identified in OpenView Security Solutions v The London Borough of Merton [2015] EWHC 2694 (TCC) were adopted as a helpful starting point, subject to the fact-sensitive caution in Central Surrey Health Ltd. v NHS Surrey Downs CCG [2018] EWHC 3499 (TCC). A finding that a tender rejection was wrongful would itself largely restore any reputational harm.
4. Balance of convenience. The likely duration of the suspension, trial and mobilisation was relevant. The evidence about patient continuity, safety and the proposed transformation of services was conflicting and could not safely be resolved on the application. Neither side’s course was shown to carry the lesser risk of irremediable prejudice. Potential double payment by the taxpayer was recognised as a consequence built into the legislative scheme, although it could have weight where unusually high; the evidence did not justify significant weight here.
5. Final order. The status quo ante was preserved by allowing the existing Contract to run until 28 July 2019, while lifting the suspension. The court’s concerns about the rapid and revised mobilisation plan were expressly concerns rather than findings, but the parties were urged to consider extending the Contract by consent.

not stated in the judgment.