Braceurself Limited v NHS England (No 2: Substantive Appeal)

The Court of Appeal considered whether an unsuccessful bidder was entitled to Francovich damages under the Public Contracts Regulations 2015 after a manifest scoring error meant that it would, on the trial judge's recounting, have been the winning bidder.

The court restated that recovery of damages in procurement litigation requires satisfaction of the three Francovich conditions and that the second condition — that the breach be "sufficiently serious" — is a separate enquiry from causation. In applying the Factortame factors the focus must be on the nature and quality of the breach (including culpability, excusability and state of mind), not merely on the consequences of the breach.

The court rejected the appellant's submission that the finding that the contract would have been awarded to it but for the breach was, as a matter of principle, determinative of sufficient seriousness. The judge's multi‑factor balancing of the Factortame factors was held to be in accordance with law. The court also held that the interlocutory decision to lift suspension because damages would be an adequate remedy did not override the requirement to establish the Francovich conditions at trial.

Separately, on the respondent's Notice, the court found that the liability judge had erred in overstating the legal significance of the evaluators' misunderstanding about a stair climber versus a stairlift and had under‑valued contemporaneous access concerns recorded by evaluators; on that footing it was more likely than not that the original score of 3 would have remained and the award to the successful bidder was proper.

Background and parties:

• The respondent, NHS England, conducted a national procurement for orthodontic services (Lot PR002368 (WSX18)). The appellant, Braceurself Limited, was the incumbent and one of two bidders; PAL was awarded the Lot. Scores were very close (PAL 82.5%, Braceurself 80.25%).
• The appellant challenged the award and sought, among other reliefs, damages for breach of the Public Contracts Regulations 2015. The respondent applied to lift the automatic suspension; Judge Bird granted that application and permission to add a claim for damages.

Procedural history:

• Liability was tried before Mr Alexander Nissen KC (Deputy High Court Judge). In the Liability Judgment ([2022] EWHC 1532 (TCC)) the judge upheld only one of many complaints: an error in assessment of accessibility (CSD02) arising from a misunderstanding of a "stairclimber" as a fixed stairlift and adjusted the appellant's score from 3 to 4 such that, on recounting, the appellant would have been the Most Economically Advantageous Tenderer.
• The separate Francovich (sufficiently serious) issue was later considered in [2022] EWHC 2348 (TCC). The judge performed a Factortame-style multi‑factorial assessment and held that, notwithstanding that the appellant would have been awarded the contract but for the manifest error, the breach was not sufficiently serious to warrant damages.
• The appellant appealed to the Court of Appeal raising three principal issues: (1) whether the effect of the breach (that the appellant should have been awarded the contract) is decisive for sufficient seriousness; (2) whether excusability/state of mind are irrelevant in the absence of bad faith; and (3) whether the principle of effectiveness or the interlocutory decision to lift suspension obliged the court to award damages. The respondent filed a Respondent's Notice challenging aspects of the liability findings.

Issues before the Court of Appeal:

• Whether the "but for" finding that the appellant should have won the contract is, as a matter of principle, decisive of the second Francovich condition.
• Whether the excusability of an error and the state of mind of the contracting authority are legally irrelevant in absence of bad faith.
• Whether the principle of effectiveness or the interlocutory lifting of suspension (because damages were said to be adequate) required the court to award damages despite failure to meet Francovich conditions.
• On the Respondent's Notice, whether the liability judge was wrong to treat the stairclimber/stairlift misunderstanding as causative of the score given and whether the judge erred in his rescoring exercise.

Court's reasoning and result:

• The court reaffirmed that Francovich damages require satisfaction of all three conditions. It rejected the submission that a finding that the claimant would have won the contract but for the breach automatically satisfies the second condition: to do so would collapse the distinct second and third Francovich enquiries and run contrary to Factortame and subsequent authorities.
• Applying Factortame, the court held that the relevant inquiry must focus on the nature and quality of the breach (clarity/precision of rule, excusability, state of mind, foreseeability and persons affected). The actual consequences of the breach can be considered but cannot alone be determinative.
• The court rejected the appellant's contention that excusability and state of mind are irrelevant absent bad faith; those matters remain relevant and may significantly affect the assessment of seriousness.
• The principle of effectiveness does not grant an automatic remedy or displace the need to satisfy Francovich conditions; interlocutory findings about adequacy of damages do not negate the trial judge's obligation to determine sufficient seriousness at trial.
• On the Respondent's Notice the Court found that the liability judge had overstated the legal significance of the stairclimber/stairlift misunderstanding and had underappreciated contemporaneous access concerns recorded by evaluators; it was more likely than not that the original score of 3 would have been retained and that PAL would properly have been awarded the contract.

Relief sought and outcome:

• (i) Nature of claim: damages for breach of the Public Contracts Regulations 2015 (Francovich damages) and initially an order setting aside the award; interlocutory lifting of suspension was previously granted.
• (ii) Issues framed by the court: whether the "but for" award is decisive of sufficient seriousness; the role of excusability/state of mind; the effect of the principle of effectiveness and interlocutory undertakings; and challenges to liability rescoring.
• (iii) Concise account of reasoning: the court applied Factortame factors, emphasised the separate and objective nature of the "sufficiently serious" enquiry, rejected the appellant's attempt to make consequence decisive, maintained relevance of culpability/excusability, and concluded that the trial judge's balancing was lawful. On the Respondent's Notice the court found error in the liability judge's assessment of the stairclimber issue such that the rescoring was unlikely to have been warranted.

Appeal dismissed. The Court of Appeal held that the second Francovich condition (that the breach be 'sufficiently serious') is a separate, objective enquiry that focuses on the nature and quality of the breach (including culpability and excusability) and cannot be decided solely by reference to the consequence that the claimant would have been awarded the contract but for the breach. The trial judge's multi‑factorial assessment under Factortame was lawful. The court additionally found on the Respondent's Notice that the liability judge had overstated the impact of the evaluators' misunderstanding and that it was more likely than not that the original score would have stood, so the award to the successful bidder was proper.

Appeal from the Technology and Construction Court, Business and Property Court (Deputy High Court Judge Alexander Nissen KC): Liability Judgment [2022] EWHC 1532 (TCC) and Francovich judgment [2022] EWHC 2348 (TCC). Earlier interlocutory decision lifting suspension by His Honour Judge Bird [2019] EWHC 3873 (TCC). Procedural permission / interlocutory appellate consideration referenced at [2023] EWCA Civ 837.