Cubic Transportation Systems Limited v Transport for London & Anor

On an application to lift an automatic suspension in a public procurement, the court should apply the American Cyanamid test. The dissatisfied tenderer bears the burden of showing that damages would be inadequate if the suspension were lifted. There is no absolute requirement for cogent evidence, but the more ephemeral the alleged loss, the clearer the evidence must be. The prestige or value of a contract does not by itself make damages inadequate. The tenderer must establish a real risk of significant financial loss that would be irrecoverable or difficult to quantify. Business disruption, workforce losses and loss-of-chance claims may be compensable in damages. Where the claimant has an adequate damages remedy but continued suspension would materially disadvantage the public or service users, the suspension should be lifted.

CTSL was the unsuccessful tenderer for TfL’s Proteus revenue collection contract. It challenged the procurement and thereby triggered the automatic suspension preventing TfL from contracting with Indra, the interested party and successful tenderer. TfL applied under regulation 96(1)(a) of the Public Contracts Regulations 2015 to lift the suspension.

TfL conceded, for the purposes of the application, that there was a serious issue to be tried. The central issues were whether damages would adequately compensate CTSL if it succeeded, whether damages would adequately compensate TfL if the suspension continued and TfL ultimately succeeded, and where the balance of convenience lay.

1. Application granted. The automatic suspension was lifted.
2. The court applied the familiar American Cyanamid questions: whether there was a serious issue to be tried; whether damages would adequately compensate CTSL if the suspension were lifted; whether damages would adequately compensate TfL if the suspension continued; and, if necessary, which course carried the least risk of injustice.
3. CTSL bore the burden of establishing that damages would be inadequate. The burden followed from the fact that the suspension arose from CTSL’s claim and that the relevant evidence was principally within its knowledge. There was no absolute requirement for cogent evidence. However, the further the alleged loss moved from readily provable losses towards ephemeral losses such as reputational harm, the clearer the evidence required to be.
4. The exceptional size and prestige of the Proteus Contract did not itself establish inadequacy of damages. CTSL had not shown at this stage that losing the contract would significantly affect its prospects in future procurements through reputational damage. A different conclusion remained possible at trial on different evidence.
5. The loss of a substantial part of CTSL’s business and workforce was capable of making damages inadequate. On the evidence, however, the likely business disruption and staff losses remained losses which the court could investigate and assess in damages.
6. The pleaded losses could be categorised as wasted tender costs, lost profit, disruption costs, loss of a chance of securing further contracts following business disruption, and possible loss of future opportunities resulting from reputational harm. These were all forms of loss which the court could assess, although their difficulty varied.
7. Accordingly, damages would be an adequate remedy for CTSL. The court did not decide whether an existential threat was required or whether any breach would be sufficiently serious to give rise to damages.
8. Had it been necessary to decide TfL’s position, damages would probably not have been adequate. Continued suspension was likely to delay substantial passenger and TfL benefits, create serious operational risks in ageing revenue-collection assets, and risk the expiry or renegotiation of Indra’s offer. Those matters also placed the balance of convenience in TfL’s favour.