England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		23 January 2014

Mr. Justice Edwards-Stuart:

Introduction

1. This litigation concerns the procurement process for a contract in relation to the decommissioning of nuclear installations. The Claimant is a company which provides integrated waste management and decommissioning services for the nuclear industry.
2. The Defendant ("the NDA" or "the Authority") is a public authority established under the Energy Act 2004 which has responsibility for a number of nuclear sites and assets formerly owned by the UK Atomic Energy Authority and British Nuclear Fuels Ltd.
3. The Claimant formed a consortium with Bechtel Management Company Ltd ("Bechtel"), known as Reactor Site Solutions ("RSS"), in order to bid for the contract. However, RSS was not incorporated: the intention was that it would be incorporated if and when its tender was accepted. Bechtel is not a party to these proceedings.
4. RSS was one the tenderers who was selected for the shortlist of those eligible to submit final tenders. On 2 October 2013 the NDA issued invitations to submit final tenders to RSS and three other bidders who had also been shortlisted. One of the other bidders was a consortium that included Babcock Nuclear Services Ltd, which became known as Cavendish Fluor Partnership ("CFP").
5. On 31 March 2014 the NDA notified RSS that its tender had been unsuccessful and that CFP was the successful bidder on the basis that it had submitted the most economically advantageous tender. This formal notification triggered the ten-day standstill period required by the Public Contracts Regulations 2006, as amended, ("the Regulations") during which the awarding body is prevented from entering into a contract with the successful bidder.
6. On 6 April 2014 RSS wrote to the NDA expressing its concerns about the adequacy of the procurement process and requested further information from the Authority. The NDA promised a substantive response by Friday, 11 April 2014 but refused to enter into any agreement to extend the standstill period beyond 14 April 2014 (which in fact had allowed 14 days, rather than the mandatory ten days).
7. By a letter dated 10 April 2014 RSS indicated that if the Authority was not prepared to extend the standstill period it may be forced to issue proceedings by 14 April 2014 (but it did not in fact do so). On 15 April 2014 the NDA announced that it had entered into an agreement with CFP. The Claimant issued proceedings in this Court on 28 April 2014.
8. The effect of these events was that the Claimant's decision not to issue proceedings by 14 April 2014 meant that the NDA's right to enter into a contract with the successful bidder was not automatically suspended following the expiry of the standstill period. The parties were prepared to agree that there should be a consent order to reflect this position and such an order was duly made on 12 May 2014.
9. By proceedings issued on 28 April 2014 the Claimant claims damages on the grounds that the NDA had not complied with its obligations under the Regulations and that it had suffered loss as a result. The Claimant subsequently issued a further claim on 29 August 2014 to raise additional allegations of breaches of the 2006 Regulations which were arguably not embraced by the first claim. For the purposes of this application nothing turns on this. The NDA has served Defences and the two claims have been ordered to be heard together.
10. Against this background the Claimant applied for the trial of two preliminary issues arising out of the NDA's Defence to the first claim. Put broadly, the first issue is whether the Claimant is entitled to any award of damages having failed to start proceedings within the ten-day standstill period (or, if later, before the contract was concluded) and thereby prevented the NDA from awarding the contract to CFP. The NDA's position is that any loss that has been suffered by the Claimant was not caused by any breach of the Regulations by the Authority but by the Claimant's own failure to issue proceedings within the ten-day period.
11. The second issue, in general terms, is whether in these circumstances the court has a discretion not to make any award of damages and, if so, the basis on which that discretion should be exercised by the court. The NDA's case is that there is such a discretion: the Claimant says there is not.
12. On 10 October 2014 it was ordered that these two issues should be tried as preliminary issues and those issues were heard by me on 1 December 2014.
13. Effectively, the NDA's position is that, by failing to issue proceedings within the ten-day standstill period (or prior to the conclusion of the contract) and thereby initiating an automatic suspension of the NDA's right to award the contract to the successful bidder, the Claimant has avoided any commitment to give an undertaking in damages. Had there been an automatic suspension, the NDA would have had the right to apply to the court to lift it, a procedure that is commonly followed. On such an application the court would have had the power to order the Claimant to give an undertaking in damages if it were minded to refuse the Authority's application to lift the stay.
14. The ground underlying the NDA's contentions is that it should not be put in a position where an unsuccessful tenderer can effectively permit an authority to enter into a contract with the successful bidder and then make a claim for the losses that it says it has incurred as a result of not being awarded the contract. This state of affairs would be unfair, submits the NDA, because it throws the entire financial risk of the postponement of the entering into the contract onto the authority apart from the relatively modest costs of the related litigation. If in these circumstances the authority voluntarily refrains from entering into the contract with the successful bidder it has no redress against the unsuccessful bidder if it turns out that the challenge to the award of the contract was unfounded. Alternatively, if it does contract with the successful bidder, and it is found that the contract should have been awarded to the unsuccessful bidder, the authority will effectively end up paying the profit on the contract twice over: once to the successful bidder who has actually earned it and once to the unsuccessful bidder who has been deprived of the opportunity of earning it.
15. But from the Claimant's point of view, if the NDA is right in its contentions then an unsuccessful bidder who fails to bring its claim within the ten-day standstill period (or before any contract is concluded) will effectively have no remedy for any breach of the Regulations by the contracting authority.
16. These are issues of far-reaching public importance.
17. The Claimant was represented by Mr. John Howell QC and Mr. Ewan West, instructed by Freshfields Bruckhaus Deringer, and the NDA was represented by Mr. Nigel Giffin QC and Mr. Joseph Barrett, instructed by Burges Salmon.

The preliminary issues

18. The issues to be tried were set out in an order dated 10 October 2014 in the following terms:

"a. whether the fact that the Claimant did not issue a claim form and notify the Defendant that it had done so before the Defendant's entry into the Contract means that, given regulation 47G of the Public Contracts Regulations 2006, any loss that the Claimant has suffered in consequence of any breach of its obligations by the Defendant is not attributable to any such breach.

b. if the Claimant has suffered any loss in consequence of any breach by the Defendant of its obligations:

i. whether the Court has any discretion not to make any award of damages in respect of that loss or a discretion to make only a partial award of damages in respect of any such loss; and

ii. if so:

(1) on what basis any such discretion is to be exercised; and

(2) whether the fact that the Claimant did not issue a claim form before the Defendant's entry into the Contract and notify the Defendant that it had done so means that, given regulation 47G of the Public Contracts Regulations 2006, it would be inappropriate for the court to make any award of damages or one in relation to the full loss suffered by the Claimant."

19. Unfortunately, the position is not so straightforward. In a letter dated 6 November 2014, Burges Salmon, the Authority's solicitors, wrote to the Claimant's solicitors in the following terms:

"As to causation ... our client does not suggest that a claimant's failure to act so as to trigger, or to seek to maintain, the statutory suspension on entry into the contract means that, automatically or necessarily in every case, any financial loss resulting from the claimant's potential loss of the contract cannot be said to have been caused by any breach committed by the contracting authority. Similarly, it is not our client's case that any such failure must always lead to a damages remedy being withheld as a matter of discretion.

Rather, our client's case is that:

(a) A failure by a claimant to trigger the statutory suspension, or to take steps to maintain a suspension, may break the chain of causation between the authority's breach (if any) and the financial loss that the claimant has suffered. Whether the chain of causation has in fact been broken will depend upon an assessment of all the relevant factual circumstances. A failure of the kind mentioned is amongst those relevant circumstances.

(b) Under regulation 47J(2)(c), the Court has a general discretion as to whether to award damages in the circumstances in which that provision applies. How that discretion should be exercised depends upon the view which the Court takes of all the circumstances of the case. The discretion must be exercised consistently with EU law principles including the principle of effectiveness however, there is no breach of that principle where a claimant is properly deprived of a remedy because of its own conduct (whether that conduct consist of acts or omissions). A failure to trigger or maintain the statutory suspension is amongst the circumstances which are relevant to the exercise of the discretion."

20. In relation to the discretion whether to award damages, Burges Salmon said that a range of considerations were potentially relevant, and that they included:

i) The nature and extent of the breaches of duty by the authority which have been found by the Court to have occurred;

ii) Whether those breaches demonstrate a grave and manifest disregard of its duties by the authorities;

iii) The extent to which the wider public interest would or would not be served by an award of damages;

iv) The effect upon the bidder of taking one course of action in relation to remedy rather than another (including any considerations arising from not all members of the bidding consortium being amongst the claimants in the proceedings);

v) The claimant's failure to invoke the statutory suspension, in the context of the opportunity which it had to do so, what would have happened if it had done so, and the reasons (if any are offered) why it did not do so.

21. By a letter dated 25 November 2014 the NDA served proposed amendments to its Defence. These amendments included the following additions to paragraph 98:

"(iii) Delay in entering the Contract would have caused the Defendant substantial financial loss. If the suspension had been activated by the Claimant, but the Claimant had refused to offer an adequate cross-undertaking in damages, then the Defendant would have applied to lift the suspension, so as to be able to enter the Contract if that application succeeded. If the Claimant had been willing to offer an adequate cross-undertaking, the Defendant would have had to consider whether to make any such application in the light of the nature of the claim, the extent to which delay in entering the contract would have caused any prejudice not capable of being remedied through the cross-undertaking, the date when a trial (if expedited) would have taken place, and the legal advice which it received. Because of the manner in which the Claimant in fact proceeded, this situation did not arise.

(iv) In the premises, any financial loss suffered by the Claimant in consequence of the award of the Contract is attributable to its own omission, which was the effective cause such loss, rather than to any breach committed by the Defendant."

22. It is to be noted that these paragraphs contain no allegation that the NDA would have pursued an application to lift the suspension if the Claimant had offered an adequate cross-undertaking: the pleading says that the NDA "would have had to consider whether to make any such application".
23. The Claimant's solicitors ("Freshfields") responded to the proposed amendments on 24 November 2014, when they said this:

"We can confirm that our client will consent to the proposed amendments to the Defence on the basis that any issues of law raised by the amendments are dealt with at the preliminary issue hearing listed for 1 December 2014, and that our client reserves the right to apply under the CPRs either for summary judgment or to strike out any part of the defence as amended in the light of any judgment given following the hearing on 1 December 2014."

24. I have to say that it is somewhat unsatisfactory for the parties to embark on a course directed, in effect, to changing the terms of preliminary issues approved by the court and embodied in a court order. Whilst I am sure that neither side intended to derail the process, the result puts the court in a difficult position because it seems that the order made on 14 October 2014 has, to an extent at least, been superseded by rather different issues that have emerged as a result of the correspondence between the parties.
25. However, in his skeleton argument for the hearing, Mr. Howell drew my attention to the change of position that had been set out in the letter from Burges Salmon of 6 November 2014 and so I was aware of it. I had also been made aware of the proposed amendments to the Defence. In these circumstances, it seems to me that I must do my best to address and answer the issues as they have been developed in the correspondence between the parties.
26. I will now turn to the relevant EU provisions.

The Remedies Directive

27. Council Directive 89/665/EEC (as amended by Council Directive 2007/66/EC), the "Remedies Directive", is concerned with "… the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts".
28. The recital to the Directive includes the following:

"Whereas Community Directives on public procurement ... do not contain any specific provisions ensuring that effective application;

Whereas the existing arrangements at both national and Community levels for ensuring their application are not always adequate to ensure compliance with the relevant Community provisions particularly at a stage when infringements can be corrected;

... Effective and rapid remedies must be available in the case of infringements of Community law in the field of public procurement, or national rules implementing that law;

Whereas in certain Member States the absence of effective remedies or inadequacy of existing remedies deter Community undertakings from submitting tenders in the Member State in which the contracting authority is established; whereas, therefore, the Member States concerned must remedy this situation;

...

Whereas it is necessary to ensure that adequate procedures exist in all the Member States to permit the setting aside of decisions taken unlawfully and compensation of persons harmed by an infringement"

29. Article 1 of the Directive provides:

"1. ...

Member States shall take the measures necessary to ensure that, as regards contracts falling within the scope of Directive 2004/18/EC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in Articles 2 to 2f of this Directive, on the grounds that such decisions have infringed Community law in the field of public procurement or national rules transposing that law.

2. Member States shall ensure that there is no discrimination between undertakings claiming harm in the context of a procedure for the award of a contract as a result of the distinction made by this Directive between national rules implementing Community law and other national rules.

3. Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement.

4. Member States may require that the person wishing to use a review procedure has notified the contracting authority of the alleged infringement and of his intention to seek review, provided that this does not affect the standstill period in accordance with Article 2a(2) or any other time limits for applying for review in accordance with Article 2c."

30. Article 2 of the Directive ("Requirements for review procedures") contains the following provisions:

"1. Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for powers to:

(a) take, at the earliest opportunity and by way of introductory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority;

(b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory, economic or financial specifications in the invitation to tender, the contract documents or in any other document relating to the contract award procedure;

(c) order damages to persons harmed by an infringement.

2. ...

3. When a body of first instance, which is independent of the contracting authority, reviews a contract award decision, Member States shall ensure that the contracting authority cannot conclude the contract before the review body has made a decision on the application either for interim measures or for review. The suspension shall end no earlier than the expiry of the standstill period referred to in Article 2a(2) and Article 2d(4) and (5).

4. ...

5. Member States may provide that the body responsible for review procedures may take into account the probable consequence of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits.

A decision not to grant interim measures shall not prejudice any other claim of the person seeking such measures.

6. Member States may provide that where damages are claimed on the grounds that a decision was taken unlawfully, the contested decision must first be set aside by a body having the necessary powers.

7. Except where provided for in Articles 2d to 2f, the effects of the exercise of the powers referred to in paragraph 1 of this Part on a contract concluded subsequent to its award shall be determined by national law.

Furthermore, except where a decision must be set aside prior to the award of damages, a Member State may provide that, after the conclusion of a contract in accordance with Article 1(5), paragraph 3 of this Article or Articles 2a to 2f, the powers of the body responsible for review procedures shall be limited to awarding damages to any person harmed by an infringement.

8. Member States shall ensure that decisions taken by bodies responsible for review procedures can be effectively enforced."

The United Kingdom has taken up the second part of paragraph 7 set out above by way of regulation 47J(2)(d).

31. Article 2a makes provisions for the ten-day standstill period to give parties affected by a decision to award a public contract "… sufficient time for effective review" of the contract award decision. The minimum time prescribed by the Directive is ten calendar days, but otherwise time limits and applications are to be determined by national law (Article 2f).
32. It seems to me that it is an inescapable conclusion from these provisions that a party who suffers a loss as a result of a breach of a contracting authority's obligations in relation to public procurement is entitled, at the least, to compensation in the form of damages. It is an inevitable consequence of this that contracting authorities who do not comply with the rules are at risk of being penalised - at least to the extent of having to pay not only the party with whom it enters into the contract but also, by way of compensation for loss of profit, the unsuccessful tenderer. However, for better or worse this is now a feature of the procurement law landscape.

The Public Contracts Regulations 2006 (as amended)

33. I will begin by setting out some of the basic definitions and obligations in the Regulations. An "economic operator" means a contractor, a supplier or a services provider: see regulation 4(1). By regulation 4(3) a contracting authority must (a) treat economic operators equally and in a non-discriminatory way and (b) act in a transparent way. It is not disputed that the Claimant is an economic operator within the meaning of the Regulations.
34. Regulation 28 deals with consortia. A consortium means two or more persons, at least one of whom is an economic operator, acting jointly for the purpose of being awarded a public contract: see regulation 28(1). Regulation 28(2) provides that a contracting authority shall not treat the tender of a consortium as ineligible on the grounds that the consortium has not formed a legal entity for the purposes of tendering for the contract. However, by regulation 28(3), where a contracting authority awards a public contract to a consortium it may, if it is justified for satisfactory performance of the contract, require the consortium to form a legal entity for entering into, or as a term of, the contract.
35. Part 9 of the Regulations concerns applications to the court. Regulation 47A applies to the obligation on a contracting authority to comply with the provisions of the Regulations (with certain stated exceptions). The definition of an economic operator is extended to include any person "who sought, who seeks or would have wished, to be the person to whom a contract to which regulation 37(3) applies is awarded".
36. Regulation 47C provides that a breach of the duty owed in accordance with regulation 47A is actionable by any economic operator which, in consequence of the breach, suffers, or risks suffering, loss or damage.
37. Regulation 47D is concerned with time limits for starting proceedings (unless the proceedings are brought for the purpose of seeking a declaration of ineffectiveness). By regulation 47D(2), proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen. Regulation 47D(4) permits the court to extend this time limit where the court considers that there is good reason for doing so. Regulation 47F requires a claim form to be served on the contracting authority within seven days after the date of issue.
38. In the context of this hearing regulations 47G-47J are of particular importance. Regulation 47G is entitled "Contract-making suspended by challenge to award decision". It provides as follows:

"(1) Where-

a claim form is issued in respect of a contracting authority's decision to award the contract;

the contracting authority has become aware that the claim form has been issued and that it relates to that decision; and

the contract has not been entered into,

the contracting authority is required to refrain from entering into the contract.

(2) The requirement continues until any of the following occurs-

(a) the Court brings the requirement to an end by interim order under regulation 47H(1)(a).

..."

39. Regulation 47H, entitled "Interim orders", provides as follows:

"(1) In proceedings, the Court may, where relevant, make an interim order-

bringing to an end the requirement imposed by regulation 47G(1);

...

(2) When deciding whether to make an order under paragraph (1)(a)-

(a) the Court must consider whether, if regulation 47G(1) were not applicable, it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract; and

(b) only if the Court considers that it would not be appropriate to make such an interim order may it make an order under paragraph (1)(a).

(3) If the Court considers that it would not be appropriate to make an interim order of the kind mentioned in paragraph (2)(a) in the absence of undertakings or conditions, it may require or impose such undertakings or conditions in relation to the requirement in regulation 47G(1).

..."

40. Regulation 47I is entitled "Remedies where the contract has not been entered into". It provides as follows:

"(1) Paragraph (2) applies where-

the Court is satisfied that a decision or action taken by contracting authority was in breach of the duty owed in accordance with regulation 47A or 47B; and

the contract has not yet been entered into.

(2) In those circumstances, the Court may do one or more of the following-

(a) order the setting aside of the decision or action concerned;

(b) order the contracting authority to amend any document;

(c) award damages to an economic operator which has suffered loss or damage as a consequence of the breach.

(3) This regulation does not prejudice any other powers of the Court."

41. Regulation 47J is entitled "Remedies where the contract has been entered into". It provides as follows:

"(1) Paragraph (2) applies if-

the Court is satisfied that decision or action taken by contracting authority was in breach of the duty owed in accordance with regulation 47A or 47B; and

the contract has been entered into.

(2) In those circumstances, the Court -

(a) must, if it is satisfied that any of the grounds for ineffectiveness applies ...

(b) must, where required by regulation 47N [which concerns penalties in addition to, or instead of, ineffectiveness] ...

(c) may award damages to an economic operator which has suffered loss or damage as a consequence of the breach, regardless of whether the Court also acts as described in sub-paragraphs (a) and (b);

(d) must not order any other remedies.

(3) ..."

(My emphasis)

The submissions

42. The NDA submits that if the Claimant had issued proceedings within the ten-day standstill period^[1], as it could have done, it would have triggered the automatic suspension under regulation 47G. If the suspension had continued in force until the trial and it was then held that the contract ought to have been awarded to RSS, the Claimant would have suffered no loss.
43. So, submits the NDA, the Claimant has not taken a step by which it might potentially (NDA's expression) have avoided the financial loss for which it now sues. It says that the Claimant has advanced no reason for taking this course.
44. The NDA submits that this raises an important question, which in practice arises in a number of high value procurement disputes. In NDA's skeleton argument, the position was put as follows:

"A claimant who behaves as this Claimant has done places the public authority which is procuring the contract on the horns of a dilemma. Delay in awarding the contract may well expose the authority, and thus the public purse, to the risk (if not the certainty) of substantial financial loss. That might simply be because the price payable under the new contract is significantly lower than what the authority would have to pay to secure a service in the interim, by extending existing arrangements or entering into new and temporary arrangements. Or it might be because the tender price is only guaranteed to a certain date, or because the authority bears the risk of interest rate or exchange rate movements. Or there may be a risk that delay could cause the winning bidder to withdraw, or that for some other reason the procurement may collapse and have to be re-run. If the statutory suspension is not triggered, it is of course to open to the defendant authority voluntarily to hold off from awarding the contract, but if the defendant then succeeds at trial, the loss suffered through the delay will be irrecoverable - in the absence of the claimant seeking to maintain a suspension, there is no mechanism by which a cross-undertaking can be imposed, and no other means by which the claimant can be held responsible for that loss."

45. Mr. Giffin submits that in the circumstances the authority's only alternative is to sign the contract. But then, if the Claimant's arguments in this case are correct, the authority exposes itself to the risk that, if the Claimant succeeds at trial, it will have to pay both for the performance of the service by the winning bidder under the contract, and (by way of damages for loss of profit) for what the Claimant might have gained under the contract if its tender had been accepted. In the case of a large and valuable contract, this may represent a punitive burden upon the public purse, something which he says, correctly, the courts have often recognised as undesirable.
46. In the circumstances the NDA asks rhetorically whether it is right that a Claimant should be able to shift all the financial risk onto the authority in this way. The Claimant's answer to this is a short one. It is that it has taken a course that the Regulations permit. Under the Regulations it is for the authority to decide whether or not to enter into the contract with the successful bidder if no proceedings have been started within the standstill period. Further, the Regulations allow the unsuccessful bidder 30 days within which to start proceedings, the time running from the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen.
47. Thus the Regulations expressly permit the unsuccessful tenderer to start proceedings after the ten-day standstill period has elapsed. Further, as Mr. Howell pointed out in argument, why should an unsuccessful tenderer be forced to take proceedings in order to have the bid re-run if it has concluded that damages would be an adequate remedy?
48. By contrast, if the unsuccessful tenderer considers that it cannot be satisfactorily compensated in damages, it can bring proceedings within the standstill period and then resist any application by the authority to lift the suspension prior to trial. If it takes that course, it will do so knowing that it may have to give an undertaking to pay damages if its challenge proves ultimately unsuccessful.
49. The NDA submits that the problem lies in the fact that if the authority decides to postpone the award of the contract, it has no protection in the form of any cross-undertaking. But against that it can be said that it is the authority that is in the best position to know whether or not the tender process was carried out properly: if the authority is confident of its position why should it not get on and enter into the contract with the successful tenderer?
50. A further aspect of the NDA's position is that, for the chain of causation to be broken, I consider that it would have to be demonstrated that if the Claimant had started proceedings within the standstill period it (the NDA) would not have applied, or persisted in an application, to lift the suspension or, alternatively, that any application that it might have made would have failed. Unless the NDA can show that one or other of these alternatives would have happened, the Claimant's failure to start proceedings within the standstill period will have made no difference. This appears to be recognised implicitly by the NDA's submission that the Claimant has not taken a step by which "… it might potentially have avoided the financial loss for which it now sues". However, I have already noted that the NDA's proposed amendments to its Defence do not go so far as to say what the NDA would have done if it had made an application to lift the suspension and had been faced with an offer of an adequate cross-undertaking in damages by the Claimant.
51. The rule about the irrecoverability of avoidable loss (the so-called duty to mitigate) is that a claimant cannot recover a loss which, by acting reasonably, it could have avoided. This is a question of fact (see McGregor on Damages, 18^th edition, at paragraph 7-016). The onus is on the defendant, who must show (a) that the claimant failed to act reasonably and (b) that if the claimant had acted reasonably the loss in question would have been avoided. It is not in my view sufficient for a defendant to show that the claimant could have followed a course of action which might have avoided the loss. There are perhaps two reasons for this. First, if a defendant cannot show that the loss would have been avoided if the action contended for had been taken, the plea of failure to mitigate would fail for want of causation. Second, if it is unclear whether or not the course of action contended for would avoid the loss, it is hard to see how it can be said that it was unreasonable of the claimant not to have pursued it.
52. In my judgment this is not a question that can be resolved as a preliminary issue, and certainly not by reference to the preliminary issue in this case as initially framed. It is a question of fact whether or not any loss suffered by the Claimant is attributable to its failure to issue proceedings before the NDA entered into the contract. Further, the position taken in the NDA's skeleton (namely, that the Claimant has not taken a step that "might potentially" have avoided the loss) would not in my view be sufficient - even if made out - to defeat the claim.
53. This conclusion is put beyond doubt by the terms of paragraph 98(iii) of the proposed amendments to the Defence, because the NDA is unable to assert what it would have done if (a) it had made an application to lift the suspension (assuming that the Claimant had issued proceedings during the standstill period) and (b) the Claimant had offered an adequate cross-undertaking in damages.
54. However, as I have already pointed out, the Regulations permit an unsuccessful tenderer to start proceedings after the expiry of the standstill period, and therefore at a time after which the authority may have entered into the contract with the successful tenderer: indeed, the Regulations expressly contemplate this eventuality. I therefore have considerable difficulty in seeing how a decision not to start proceedings within the standstill period could be said to be unreasonable. But, as I have already said, this is a question of fact that cannot be decided on this application. I am not prepared to conclude that there could be no circumstances in which the NDA might be able to argue successfully that conduct on the part of the Claimant might serve to break the chain of causation, but I have great difficulty in seeing how it can do so on the facts asserted in the proposed amendments to its Defence. However, whether or not the NDA is likely to be able make out its currently pleaded case at trial is not a matter that I can decide on this application.

The position of Bechtel

55. As I have already mentioned, Bechtel is not a party to this litigation. By the terms of the tender RSS's bid had to remain open until 1 September 2014.
56. After the conclusion of the oral argument, by e-mail dated 4 December 2014, I raised the following query with counsel and asked for their submissions:

"Since the Claimant was/is one member of a consortium yet to be incorporated, if the Claimant had issued its Claim Form in time to trigger suspension, on what basis could the Claimant have resisted an application by the Defendant to lift the suspension if it (the Claimant) was not an operator (being only one member of the consortium that put in the tender) to whom the contract could have been awarded?

Does the outcome depend on whether Bechtel would have been willing to keep the tender open until trial?"

57. The helpful responses from both counsel revealed a difference of opinion as to whether the remaining member(s) of a consortium could continue with the procurement process, or indeed perform the already submitted tender on its/their own (assuming that it/they were able to do so). However, it appears to be accepted on both sides that if the Claimant on its own was going to be unable to perform the contract, then it would be uncertain, at the very least, as to whether or not the court would be prepared to maintain a suspension of the Authority's ability to enter into a contract with the successful tenderer.
58. Mr. Giffin submitted, correctly in my view, that whether or not Bechtel would remain or would have remained willing to perform the contract, and thus justify continuing any suspension, would be a matter for factual investigation.
59. Accordingly, the fact that Bechtel is not a party to these proceedings simply adds to the uncertainty about the likelihood or otherwise of any suspension of the NDA's ability to enter into a contract with the successful tenderer being upheld. This reinforces my conclusion that it is not appropriate to decide this point as a preliminary issue.

The second issue: is an award of damages a discretionary remedy, and, if so, what criteria affect the discretion?

60. The second preliminary issue, b, refers to a "partial award of damages". That is not an expression of which I had ever heard prior to this application and Mr. Giffin was unable to give an example of such an award (apart, possibly, from an award from which there has been a reduction for contributory negligence, which is not relevant in this context). The question therefore is whether or not the court has a discretion under Regulation 47J(2) not to award damages to the Claimant even though the Claimant has suffered a loss caused by a breach of the Regulations by the NDA or, alternatively, to limit such damages to a sum that does not reflect full compensation for the loss (if assessed on ordinary principles).
61. Mr. Giffin submits that the wording of the regulation - in particular, the contrasting use of the verbs "must" and "may" in sub-paragraphs (a)-(d) of Regulation 47J(2) - leaves the court with a complete discretion in relation to the award of damages both, as I understood it, as to whether to award damages at all or as to the amount of such damages.
62. Mr. Giffin relied upon a decision of Ramsey J in Mears Ltd v Leeds City Council (No 2) [2011] Eu LR 764. That was a case where the claimant's proposal had been rejected at the first round of a competitive dialogue, so it had not been given the opportunity to submit a final tender. Although it is correct to say that Ramsey J said that he had a discretion as to the appropriate remedy, the discretion to which he was referring was the choice between two alternative remedies. The first was to set aside the decision about which the tenderers were to pass what was referred to as the ITCD stage, which would lead to the Council having to re-tender that stage. The second was to award damages. There is nothing in the judgment to indicate that, once damages were decided upon as the appropriate remedy, the court had a discretion as to the amount of damages which Mears should be awarded. Indeed, at paragraph 225 Ramsey J said:

"This is a case where Mears' loss or risk of loss can be adequately compensated by damages and that provides an appropriate remedy."

This suggests to my mind that Ramsey J did not have in mind an award of damages that would represent anything other than the ordinary measure of damages.

63. Mr. Giffin relied also on a decision of Langley J in Severn Trent Water plc v Welsh Water Ltd and others [2001] Eu LR 136 and, in particular, on a passage at page 144 in which he said:

"I see nothing in the Regulations, nor in the Remedies Directive 92/13 EEC, which justifies the submission made by Mr. Carr that the effectiveness of enforcement of the Regulations requires or supports a presumption in favour of the grant of restraining relief rather than confining a provider to a claim for damages. I think the factors with which the courts are familiar are material to what is expressed to be a general discretion as to whether to grant relief and, if so, to decide the appropriate relief to be granted. Those factors include delay, prejudice, the adequacy or otherwise of damages and the general policy conditions to which I have referred."

64. Whilst, on its face, this does provide some support for Mr. Giffin's argument, the principal issue in that case was whether, if the claimant was otherwise entitled to succeed, it should be limited to a remedy in damages and not an injunction. The other point to be borne in mind is that, under the regulations that were being considered in that case, a claimant was required to start proceedings promptly and, in any event, within three months from the date when grounds for the bringing of the proceedings first arose. Thus, there was a threshold question about whether or not the proceedings had been started promptly, even though they had been started within the three month long stop, so that the claimant could not recover damages (or, for that matter, obtain an injunction) unless the court concluded that threshold question in favour of the claimant. The question of whether or not something has been done "promptly" is one that must be answered in the light of all the circumstances and this often requires the court to carry out a balancing exercise or, as it is sometimes described, to exercise a judicial discretion. Accordingly, I consider that limited assistance can be gained from that case.
65. Another ground for Mr. Giffin's submission in relation to discretion as to the award of damages was a line of European cases beginning with the decision of the European Court of Justice in Francovich and Others v. Italian Republic [1991] ECR I-5357. I can perhaps summarise the position by citing the following passage from the judgment of Buxton LJ in Matra Communications SAS v The Home Office [1999] 1 WLR 1646, at 1653:

"It is important at this stage to note that the damages claimed are not what Mr. Vaughan described before the Judge, and which for purposes of identification only I will continue to refer to, as Norbrook damages; that name being taken from Case C-127/95 Norbrook Laboratories v Ministry of Agriculture , 2 April 1998. In Case C-127/95 the European Court of Justice restated the conditions imposed by Community law on the recovery of damages for a breach of Community law by a member state. The Court of Justice said in its ruling, at pp. 1598-1999, paras 106-107:

'It must be remembered, first, that as the Court has held repeatedly, the principle of State liability for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty (Joined Cases C-6/90 and C-9/90 Francovich and Others v. Italian Republic [1991] ECR I-5357, paragraph 35; Joined Cases C-46/93 and C-48/93 The Queen v. H.M. Treasury, ex parte British Telecommunications [1996] I-1631, paragraph 38; Case C-5/94 The Queen v. MAFF, ex parte Hedley Lomas [1996] ECR I-2553, paragraph 24; and Joined Cases C-178/94, C-179/94, C-188/94, C-189/94 and C-190/94 Dillenkofer and others v. Germany [1996] ECR I-4845, paragraph 20). It is clear from the above case-law that three conditions must be satisfied for a Member State to be required to compensate for damage thus caused: the rule of law infringed must have been intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties (Brasserie du Pecheur and Factortame paragraph 51; British Telecommunications, paragraph 39; Hedley Lomas, paragraph 25; and Dillenkofer and others, paragraph 24, all cited above).'

It is clear that the damages claim in our case is not a Norbrook claim not only because Mr. Vaughan so said; but also because no attempt is made in the statement of claim to plead, much less to establish, that the breach on which the claim is based was 'sufficiently serious' in Norbrook terms."

66. As I understood his submissions, Mr. Giffin contended that the three conditions mentioned by Buxton LJ that have to be satisfied in order for the court to award damages for a breach of Community law are applicable in this case. The one on which he relies is the second, the requirement for the breach to be sufficiently serious. This, he submits, introduces an element of discretion.
67. I note in passing that there is no averment in the Defence that any breach by the NDA was not sufficiently serious as to justify an award of damages nor, alternatively, any complaint that the Particulars of Claim were defective in that they failed to contain such an assertion.
68. Further, Buxton LJ expressed the view in Matra that the damages referred to at Article 2.1(c) of the Remedies Directive were not "Norbrook" damages. He said, at page 1655:

"Some of the more detailed implications of this dispute will have to be taken up in addressing the individual issues in the appeal. In more general terms, however, I am of opinion that:

1. The 'damages' referred to in Article 2.1(c) are not Norbrook damages. As already noted that is conceded in this case, but the point needs to be underlined. At the date of Directive 89/665, not only did the Directives to which it was subsidiary not contain provisions to ensure their effective application in the member states, as the recitals to Directive 89/665 acknowledged in terms, but also it was uncertain whether, in at least a number of member states, there could be any, or at least any general, recourse to damages as a remedy for infringement of directly effective Community rights: for example, see the position in 1989 in the United Kingdom as set out in the judgments in this court in Bourgoin SA v Ministry of Agriculture [1986] 1 QB 716. The right to damages that the member states are obliged by Article 2.1(c) to create must therefore be, in Community terms, sui generis, and must find its origins and limits in the specific provisions of Directive 89/665 rather than in more general principles of Community law.

2. That Directive 89/665 creates its own limited code of remedies is underlined by the fact that it only applies, because the underlying Directive 92/50 only applies, to contracts of a value in excess of ECU 200,000: Directive 92/50, Article 7.1. If the remedies envisaged by Directive 89/665 were general remedies already available in member states through the requirements of Community law, rather than being remedies imposed on the member states by Directive 89/665 itself, not only would there have been no need for Directive 89/665 at all, but also the exclusion from contracts of a certain size of the Directive 89/665 remedies would equally beat the air.

3. Once the obligation of the member state to provide that remedy in damages has been discharged by the United Kingdom by the terms of regulation 32(5)(b)(ii) those damages provided by domestic law remain damages on the basis envisaged by Directive 89/665; but regulation 32(5)(b)(ii) nonetheless thereby creates a private law, non-discretionary, remedy, because within the national legal order any remedy in damages necessarily has those qualities.

4. The obligation under Article 2.1(c) arises in the context of a scheme of remedies that are intended, as the recitals to Directive 89/665 state, to be effective and rapid."

69. Mr. Giffin submitted that this passage was obiter, a view with which I disagree. But whether or not that is right, Mr. Giffin submits correctly, that this decision preceded the judgment of the Court of Justice in Combinatie Spijker v Province Drenthe Case C-568/08, a procurement case, in which the judgment was given on 9 December 2010. At paragraphs [85] to [87] the Court said this:

"85 By its fourth question, part (c), the referring court asks, in essence, whether, if the awarding authority has to make good the damage arising from an infringement of EU law on the award of public contracts, EU law provides criteria on the basis of which the damage may be determined and estimated and, if so, what those criteria are.

86 Article 2(1)(c) of Directive 89/665 clearly indicates that Member States must make provision for the possibility of awarding damages in the case of infringement of EU law on the award of public contracts, but contains no detailed statement either as to the conditions under which an awarding authority may be held liable or as to the determination of the amount of the damages which it may be ordered to pay.

87 That provision gives concrete expression to the principle of State liability for loss and damage caused to individuals as a result of breaches of EU law for which the State can be held responsible. According to case-law developed since the adoption of the Directive 89/665, but which is now consistent, that principle is inherent in the legal order of the Union. The Court has held that individuals harmed have a right to reparation where three conditions are met: the rule of EU law infringed must be intended to confer rights on them; the breach of the rule must be sufficiently serious; and there must be a direct causal link between the breach of the loss or damage sustained by the individuals (Joined Cases C-6/90 and C-9/90 Francovich and Others v. Italian Republic [1991] ECR I-5357; Joined Cases C-46/93 and C-48/93 Brasserie du Pecheur and Factortame [1996] ECR I-1029, paragraph 31 and 51; and Case C-445/06 Danske Slagterier [2009] ECR I-2119, paragraphs 19 and 20)."

70. The Court went on to say, at paragraphs [90]-[92]:

"90 In the absence of EU provisions in that area, it is for the legal order of each Member State to determine the criteria on the basis of which damage arising from an infringement of EU law on the award of public contracts must be determined and estimated (see, by analogy, Case C-315/01 GAT [2003] ECR I-6351, paragraph 46; and Case C-314/09 Strabag and Others [2010] ECR I-8769, paragraph 33) provided the principles of equivalence and effectiveness are complied with (see, to that effect, Joint Cases C-295/04 to C-298/04 Manfredi and others [2006] ECR I-6619, paragraph 98).

91 It is apparent from well-established case law that the detailed procedural rules governing actions for safeguarding an individual's rights under EU law must be no less favourable than those governing similar domestic actions (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by EU law ....

92 Therefore, the answer to the fourth question, part (c) is that, as regards State liability for damage caused to individuals by infringements of EU law for which the State may be held responsible, the individuals harmed have a right to redress where the rule of EU law which has been infringed is intended to confer rights on them, the breach of that rule is sufficiently serious, and there is a direct causal link between the breach and the loss or damage sustained by the individuals. In the absence of any provision of EU law in that area, it is for the internal legal order of each Member State, once those conditions have been complied with, to determine the criteria on the basis of which the damage arising from an infringement of EU law on the award of public contracts must be determined and estimated, provided the principles of equivalence and effectiveness are complied with."

71. It is important to note that the fourth question being considered by the Court concerned the EU law criteria on the basis of which "the damage" may be determined and estimated. I regard it as significant that the Court emphasised the importance of compliance with the principle of equivalence. In the context of English domestic law I am not aware of any situation in which an award of damages is discretionary, in the sense that damages may not be awarded at the discretion of the court even though the breach of duty and consequent damage have been proved. I am not aware of any concept in English civil law of a threshold of gravity of the breach (the "de minimis" rule apart) which must be crossed before damages can or should be awarded. It is of course possible in theory to deprive a claimant of damages on the ground that his or her contributory negligence was the sole cause of the damage, but the true reason for that would be that the defendant's breach did not in law cause the damage in suit.
72. Mr. Giffin relied on the following passage from the decision of the Court in Case C-46/93 Brasserie du Pecheur [1996] QB 404, at paragraph 84:

"In particular, in order to determine the loss or damage for which reparation may be granted, the national court may enquire whether the injured person showed reasonable diligence in order to avoid the loss or damage or limit its extent and whether, in particular, he availed himself in time of all the legal remedies available to him."

I do not consider that this passage assists Mr. Giffin. It seems to me that it is really no more than a statement of the rule relating to avoidable loss, which I have already discussed.

73. Mr. Giffin also referred me to Case C-445/06 Danske Slagterier v Bundesrepublik Deutschland [2009] 3 CMLR 10, a case in which a trade association comprised of Danish slaughterhouses argued that Germany, in adopting a test into its national law for determining whether pig meat gave off a "pronounced sexual odour", had failed to fulfil its obligations under the relevant directives. It brought an action against Germany in a German court seeking damages based on State liability. Questions arose as to whether the action was time-barred, when time began to run, and whether under Community law claimants were required to exhaust all of the legal remedies available to them prior to bringing an action for State liability.
74. Mr. Giffin relied on paragraphs 58 and 60 - 62, in which the Court of Justice said this:

"58 By its fifth question, the referring court essentially asks whether Community law precludes a rule such as that laid down in para. 839(3) of the BGB which provides that an individual cannot obtain reparation for loss or damage which he has wilfully or negligently failed to have by utilising a legal remedy ….

…

60 As regards utilisation of the available legal remedies, the Court held in Brasserie du Pêcheur [1996] 1 CMLR 889 at [84], in relation to liability of a Member State for breach of Community law, that the national court may inquire whether the injured person showed reasonable diligence in order to avoid the loss or damage or limit its extent and whether, in particular, he availed himself in time of all the legal remedies available to him.

61 Indeed, it is a general principle common to the legal systems of the Member States that the injured party must show reasonable diligence in limiting the extent of the loss or damage, or risk having to bear the loss or damage himself (Mulder v Council of the European Communities (C 104 & 37/90) [1992] ECR I-3061 at [33], and Brasserie du Pêcheur [1996] 1 CMLR 889 at [85]).

62 It would, however, be contrary to the principle of effectiveness to oblige injured parties to have recourse systematically to all the legal remedies available to them even if that would give rise to excessive difficulties or could not reasonably be required of them."

75. On the basis of this I understood Mr. Giffin to submit that in the present case the Claimant had failed to launch its claim at a point which would have triggered suspension and thereby failed to show reasonable diligence in limiting the extent of the loss or damage by not availing itself of a legal remedy available to it.
76. I have to say that I had some difficulty in understanding what exactly paragraph 62 of the judgment was saying. The answer, I think, becomes clear when one looks back at the headnote, of which paragraph H23(b) said:

"It would, however, be contrary to the principle of effectiveness to oblige an injured party to have recourse systematically to all the legal remedies available to it if that would give rise to excessive difficulties or could not be reasonably required."

77. Mr. Howell, in reply, referred me to paragraph 64 of the judgment where the Court said:

"Consequently, it is to be concluded that Community law does not preclude the application of a national rule such as that laid down in para. 839(3) of the BGB, provided that utilisation of the legal remedy in question can reasonably be required of the injured party. It is for the referring court to determine in the light of all the circumstances of the main proceedings whether that is so."

78. I would make two observations about this authority. First, it concerns a claim by a national body in one state against the government of another Member State which, under Community law, may limit a claimant to Norbrook (or Francovich) damages. Second, the test of whether a claimant has acted reasonably, so far as availing itself of a legal remedy is concerned, is whether or not it would have been reasonable for it to have availed itself of that remedy. Here, it is being said that the remedy in question is the ability to start proceedings within the standstill period and thereby trigger automatic suspension.
79. I have some reservations about this analysis. The remedy in question is that of obtaining either an award of damages or to have the award of the contract suspended, with a view to having the bid re-run, and the first step to either of those ends is to start proceedings in time. If the claimant is seeking to have the award of the contract suspended, then it must start proceedings within the standstill period or, in any event, within the 30 day period and before the award of the contract. However, if the claimant is merely seeking damages, then it need only start proceedings within the 30 day period. I do not see any basis for treating these two remedies as being of different importance: that depends on a claimant's circumstances and what it is seeking to achieve - the Regulations give it a choice.
80. Mr. Giffin also relied on the fact that section 8 of the Human Rights Act 1998, provides that in relation to any act by a public authority which the court finds is unlawful, the court may grant such relief or remedy as it considers just and appropriate. In particular, no award of damages is to be made unless, taking account of all the circumstances of the case, the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made. Subsection (4) provides that in determining whether to award damages or the amount of an award, the court must take into account the principles applied by the European Court of Human Rights in relation to the award of compensation under Article 41 of the Convention.
81. Mr. Howell's response to this was that it was a point against the NDA. He submitted that section 8 of the Human Rights Act 1998 is making it clear that damages under the Act are to be dealt with differently from the usual approach in English law. The draftsman of the 2006 Regulations could have taken the same approach but did not.
82. In my view any consideration of this question must begin at the beginning, namely the cause of action. The cause of action in this case is created by Regulation 47C. That regulation provides that there are two ingredients of the cause of action: first, a breach of the duty owed by regulation 47A or 47B and, second, the occurrence of damage or risk of damage in consequence of the breach. There is no reference to the nature or gravity of the breach: on the face of it, therefore, any breach of duty - irrespective of its gravity - will suffice if it is the cause of the damage. The duty itself is set out in Regulation 4, which I have already mentioned. Again, the formulation of the duty in that regulation imports no threshold of seriousness, as Mr. Giffin rightly accepts.
83. There is nothing surprising in this. This is not a claim against a Member State for a breach of EU law which was intended to confer a right upon a person such as the Claimant. This is a claim brought by a corporate body against a national public body under the Regulations, an English national provision, and I can see nothing in the Regulations or the Remedies Directive that limits the Claimant to recovery of damages on a Francovich (or Norbrook) basis.
84. Mr. Howell also submitted that it is well accepted as a matter of European law that it is not consistent with the Remedies Directive for a person to be deprived of a right to damages on the ground that the relevant authority can show that the infringement of the legislation was not its fault, or that there should be a presumption to that effect which a claimant has to rebut: see Case C-275/03 Commission v Portugal (2004) Oct 14, at paragraphs [31] and [32]; Case C-314/09 Stadt Graz v Strabag [2011] 1 CMLR 26, at paragraphs [33] and [35].
85. At paragraph 43 of their skeleton argument, Mr. Giffin and Mr. Barrett made the following submission:

"Whether it would in fact be appropriate to withhold the damages remedy in a given case would depend on the Court's overall assessment of all the circumstances as established at trial. Relevant factors may include: the nature and context of the breaches of duty by the authority which have been found by the Court to have occurred; whether those breaches demonstrate a grave and manifest disregard of its duties by the authority; the extent to which the wider public interest would or would not be served by an award of damages; the effect upon the bidder of taking one course of action in relation to remedy rather than another (including any considerations arising from not all members of the bidding consortium being amongst the claimants in the proceedings); and the claimant's failure to invoke the statutory suspension, in the context of the opportunity which it had to do so, what would have happened if it had done so, and the reasons (if any are offered) why it did not do so."

86. However, I can find no basis in the authorities that I have mentioned for the NDA's submission that any award of damages is dependent on the level of gravity of the breach, or any other such factor, and thus dependent on an exercise of judicial "discretion" or judgment, or whether, absent any failure to mitigate its loss, having proved a breach of the duty owed under the Regulations a claimant is entitled to anything other than damages that should be assessed by reference to ordinary principles. It may well be that the claimant's conduct will have been such that the court will be very reluctant to make any assumptions in its favour in relation to damages, but that is simply an aspect of the usual approach of the court to the assessment of damages.
87. It is worth considering, as the Claimant invited me to do, the implications of the NDA's submissions. Suppose that a claimant, an unsuccessful tenderer, believes that the contracting authority has wrongly rejected its tender but concludes, for various commercial reasons, that damages would be an adequate remedy in all the circumstances. However, it is advised by lawyers who adopt the approach advanced by the NDA in this case. Accordingly, they advise the claimant to start proceedings within the standstill period, thereby triggering the suspension preventing the authority from awarding the contract. The authority thereafter makes an application to lift the suspension and the claimant, on advice, resists the application and offers an adequate undertaking in damages. However, at the hearing of the application to lift the suspension the claimant does not assert (because it believes that it is not the case) that damages would not be an adequate remedy. In those circumstances the court would be very likely to lift the suspension so that the authority could go ahead and enter into a contract with the successful tenderer.
88. On this scenario, as I understand it, the claimant would have done everything that the NDA asserts to be reasonable, would have made no claim that it did not consider to be well founded and ought, therefore, on the NDA's approach, to be entitled to recover damages if successful at the trial.
89. By contrast, if, again having taken the view that damages would be an adequate remedy, the claimant (this time differently advised) starts proceedings after the expiry of the standstill period (and the immediate award of the contract to the successful tenderer) but within the 30 day limit, according to the NDA's approach it might lose its entitlement to recover damages. In fact, all it would have done is to make a reasonable appreciation of its commercial position at the outset and thereby saved the parties the trouble and expense of an application to lift the suspension whose outcome, given the claimant's belief that damages would be an adequate remedy (and honest unwillingness to assert the contrary), would have been pretty much inevitable.
90. It seems to me that what really underlies the NDA's approach is an implicit assertion that a claimant, who only seeks to recover damages, must always adopt the approach (whether true or not) that damages would not be an adequate remedy and act accordingly. In these circumstances, if the law were to be as the NDA asserts it to be, in my view there would be something seriously wrong with it.
91. This leaves only the effect of the use of the verb "may" in sub-paragraph (2) of Regulations 47I and 47J. Apart from a draftsman's natural caution, I can think of at least three reasons why this wording might have been adopted even where the requirements of breach and damage suffered in consequence have been satisfied. The first, suggested by Mr. Howell, is that he may have followed the language of the Remedies Directive (which has a reference to "powers"). The second is the impact of the rule regarding avoidable loss, which I have already mentioned. There have been differences of view between judges as to whether the rule against avoidable loss is simply an aspect of causation or is a free standing principle of mitigation: see, for example, the cases discussed by Tomlinson LJ in Trebor Basset Holdings v ADT [2012] BLR 441, [2012] EWCA Civ 1158, at [64] and [66]-[67]. A claimant may sustain a loss that is a foreseeable consequence of the defendant's breach: however, the circumstances may be such that if he had taken reasonable steps following discovery of the breach the loss could have been avoided. On that approach the doctrine of mitigation can be invoked to deprive a claimant of any damages even though the loss was, in one sense, a consequence of the breach.
92. A third possibility is that the use of "may" relieves the court from the requirement to award nominal damages in a case where there has been a breach but the claimant has failed to prove or to quantify the extent of the damage suffered. In such circumstances, it is perhaps arguable that under the Regulations the court could simply dismiss the claim, rather than award nominal damages.
93. In these circumstances it seems to me that Mr. Giffin's submissions require too much to be read into the use of the verb "may" in regulation 47J(2)(c). I consider that much clearer wording would be required if the Regulations were intended to introduce the novel (in English law) concept of discretionary damages.
94. For these reasons my answer to the second limb - b(i) - of the Preliminary Issues is No, and so issue b(ii) does not arise.

Note 1    Or before the conclusion of the contract, although once the standstill period has expired without proceedings having been issued, the contract can be entered into at any time.    [Back]