BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Strand, London, WC2A 2LL
B e f o r e :
| (1) LANCASHIRE CARE NHS FOUNDATION TRUST
(2) BLACKPOOL TEACHING HOSPITALS NHS FOUNDATION TRUST
|LANCASHIRE COUNTY COUNCIL
Sam Karim QC (instructed by Lancashire County Council) for the Defendant
Hearing dates: 25 January 2018
Draft distributed to parties: 31 January 2018
Crown Copyright ©
Mr Justice Fraser :
The application to lift the automatic suspension
The legal principles
(a)a claim form has been issued in respect of a contracting authority's decision to award the contract,
(b)the contracting authority has become aware that the claim form has been issued and that it relates to that decision, and
(c)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 96(1)(a);
(b)the proceedings at first instance are determined, discontinued or otherwise disposed of and no order has been made continuing the requirement (for example in connection with an appeal or the possibility of an appeal).
(3) This regulation does not affect the obligations imposed by regulation 87.
(2) When deciding whether to make an order under paragraph (1)(a)—
(a) the Court must consider whether, if regulation 95(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 95(1).
(4) The Court may not make an order under paragraph (1)(a) or (b) or (3) before the end of the standstill period.
(5) This regulation does not prejudice any other powers of the Court.
" The first question is whether there is a serious issue to be tried. If there is, then there are two further questions: namely whether damages are an adequate remedy for a party who was injured by the grant or the failure to grant the injunction, and the more general question as to where the balance of convenience lies. These two questions have to be considered in stages because, as Lord Goff noted in R v Secretary of State for Transport ex parte Factortame Ltd (No 2  1 AC 603, the relevance of the availability of an adequate remedy in damages, either to the claimant seeking the injunction or to the defendant in the event that an injunction is granted against him should always be considered first."
"(b) In more recent times, the simple concept of the adequacy of damages has been modified at least to an extent, so that the court must assess whether it is just, in all the circumstances, that the claimant be confined to his remedy of damages."
" In practice, however, it is often hard to tell whether either damages or the cross-undertaking will be an adequate remedy and the court has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other."
1. The governing principle is that the court should first consider whether, if the claimant were to succeed at trial, he would be adequately compensated in damages. If damages were an adequate remedy and the defendant would be in a position to pay them, then an interim injunction would ordinarily not be granted.
2. If damages would not be an adequate remedy, on the other hand, then the court should consider whether, if the injunction were granted, the defendant would be adequately compensated under the cross-undertaking in damages.
3. It is where there is doubt as to the adequacy of the respective remedies in damages that the question of balance of convenience arises.
4. Where other factors are evenly balanced, or appear to be, then it is a counsel of prudence to take such measures as are calculated to preserve the status quo.
5. The extent to which the disadvantages to each party would be incapable of being compensated for in damages in the event of success at trial is always a significant factor in assessing the balance of convenience.
6. If the extent of the damage that could not be compensated (referred to as the "uncompensatable disadvantage") to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the written evidence on the application. This should however only be done if it is apparent that there is no credible dispute that the strength of one party's case is disproportionate to that of the other party.
7. In addition to these factors, there may be many other special factors to be taken into consideration on the particular circumstances of the individual case.
It was agreed by the parties that the first two principles that I identified in paragraph 48 of my judgment in Covanta remain an accurate summary of the law, namely:
"(a) If damages are an adequate remedy, that will normally be sufficient to defeat an application for an interim injunction, but that will not always be so (American Cyanamid, Fellowes, National Bank);
(b) In more recent times, the simple concept of the adequacy of damages has been modified at least to an extent, so that the court must assess whether it is just, in all the circumstances, that the claimant be confined to his remedy of damages (as in Evans Marshall and the passage from Chitty)…"
"57. Fourthly, and of potentially greater importance, is Mr Howes' assertion that there will be a significant loss of volume for Sysmex if the suspension is lifted which will affect/increase their service costs across the business. But I agree with Mr Sears QC that, on analysis, this part of the evidence is unpersuasive. Again, it is largely a matter of assertion rather than proper evidence.
58.The suggestion is that, because they did not win the MSC, Sysmex's costs base is too large, so that cuts will have to be made. But, not only is there no evidence to support that, it also appears on its face to be illogical. Sysmex must have the staff and overheads appropriate for their current contracts. They cannot have taken on extra staff in anticipation of winning the MSC; if they did, that was entirely their own responsibility. So the fact that they did not win the MSC should not have had any effect on their staff levels or cost base, which must relate to their current contracts, and not any that might have been won in the future.
59. It is sometimes said in these cases that the aggrieved bidder has had to make redundancies as a consequence of failing to win the tender. There is no evidence in the present case of any such redundancies. Ms Hannaford QC said that they had not yet reached that point, and that the existing contract had in any event been extended for a period, so redundancies might happen in the future. I acknowledge that, but it hardly amounts to a persuasive case that, as things presently stand, damages would not be an adequate remedy.
60. Furthermore, even if any of these wider arguments as to impact had been established, it seems plain that the loss of revenue and/or the increase in costs allegedly caused by these events would be capable of being calculated, thus making damages an adequate remedy in any event."
1. The Council may be of that view, but there is nothing to suggest, in my judgment, that such a view is even superficially correct or has even been the subject of any specialist advice. The Council's subjective view of "appropriateness" is not relevant.
2. I cannot, for myself, see why continuing the existing current provision of the services by the Trusts for a short time pending a legal challenge to the procurement exercise, whilst the Council is under an automatic suspension imposed by the Regulations themselves, could be said to be a breach of the Regulations. This would be the case whether there was a contractual option within the existing contractual obligations which can be exercised or not. The suspension is imposed specifically by the Regulations if a claim form is issued within a particular period. Those same Regulations set out the circumstances in which that suspension can be lifted. If those circumstances, in any particular case, do not justify at law the lifting of the suspension, then the suspension must continue as a result of lawful operation of the Regulations themselves. I cannot see how that can lead to a breach of the Regulations.
3. In any event, here there is already in place a legal right on the part of the Council to extend the provision of the Services in the sense of the ability to exercise the contractual obligation. That legal obligation, which is admittedly contingent upon being exercised, is an obligation into which the Council has already entered.
"Instructions from all officers engaged in this matter (from Legal Services, Procurement Services and Public Health Services) have at all times been consistently of the view that there was no available extension period under the terms of these Incumbent Contracts. Further enquiries with those officers offer no explanation which accounts for the actual presence of any extension clauses, save that all were of the belief that under no account could the Incumbent Contracts be lawfully extended.
Investigations into the position do not reveal a conclusive answer."
"[The Council] may extend the term of this Contract by a maximum of two periods of up to 2 years each (the Extension Period). If [the Council] wishes to extend this Contract, it shall give the [Trust] at least 6 months' written notice of such intention before the Expiry Date set out in clause A3.3….."