Mitie Care And Custody Limited v Secretary of State for The Home Department

On an application to lift the automatic suspension of contract-making in a procurement challenge, the court should ordinarily begin by asking whether damages would be an adequate remedy for the dissatisfied tenderer. If the answer is clearly yes, the suspension should normally be lifted without deciding the remaining American Cyanamid questions. The tenderer bears the burden of showing that damages are inadequate. Claims based on reputation, loss of specialist staff or future market opportunities require evidence proportionate to their remoteness and difficulty of proof. In assessing expedition, the court considers the reason for expedition, the administration of justice, prejudice to the opposing party and other special factors. An expedited trial is inappropriate where damages adequately compensate the claimant.

The claimant challenged the defendant’s procurement of a contract for irregular migration management services at Western Jet Foil and the Manston Reception Centre. The claimant was the unsuccessful tenderer and issued proceedings before the expiry of the standstill period.

The defendant applied under regulation 96(1) of the Public Contracts Regulations 2015 to lift the automatic suspension on contract-making. The claimant applied for an expedited trial and proposed introducing an additional ground of challenge. The court considered whether there was a serious issue to be tried, whether damages would be adequate for either party, the balance of convenience and whether expedition was justified.

1. Automatic suspension. For the purpose of the application to lift the suspension, the defendant accepted that there was a serious issue to be tried. The court applied the familiar American Cyanamid framework: adequacy of damages for the claimant, adequacy of damages for the defendant, and, where necessary, the balance of convenience.
2. The usual starting point is whether damages would adequately compensate the claimant. If the answer is clearly yes, it is ordinarily unnecessary to decide the later questions. Submissions on the later questions may nevertheless assist the court in deciding adequacy, and an expedited trial may sometimes be fairer than making a preclusive interlocutory assessment.
3. The burden lay on the claimant to establish that damages would be inadequate. Loss of profit is ordinarily quantifiable. More unusual losses, including reputational harm, loss of specialist personnel and impairment of future bidding prospects, require sufficiently clear evidence of significant and irrecoverable financial loss. The claimant’s evidence did not establish a significant irreparable reputational loss, a materially harmful loss of specialist staff or a substantial effect on its ability to secure future contracts.
4. The contract was substantial and prestigious, but represented only a limited part of the claimant’s business. The claimant also retained significant contracts with the defendant requiring similar experience and training. Those matters reinforced the conclusion that damages would be an adequate remedy.
5. The defendant valued the operational benefits expected from early implementation of the contract, including a single accountable supplier, flexible staffing arrangements, emergency uplifts and contract-specific performance management. Delay in obtaining those benefits could not be adequately remedied by money.
6. Because damages were adequate for the claimant but inadequate for the defendant if the suspension continued, the suspension had to be lifted. The application for an expedited trial was dismissed, since expedition was inappropriate in circumstances where damages provided an adequate remedy.