March 2025 saw the launch of many new procurements under the Procurement Act 2023.
But at the other end of the procurement journey, the Commercial Court continued to hear challenges to contract award procedures conducted under the Public Contracts Regulations 2015.
One such challenge caught our eye for its commentary on the interplay between the “adequacy of damages” limb of the test for determining whether to lift the automatic suspension and the “sufficiently serious” test for determining whether damages will ultimately be awarded: Millbrook Healthcare Limited v Devon County Council - and - Nottingham Rehab Limited (T/A Nrs Healthcare), [2025] EWHC 744 (TCC) (“Millbrook”) (28 March 2025).
This follows the Court of Appeal’s judgement in Braceurself Limited v National Health Service [2024] KB 914 ("Braceurself"), where the automatic suspension was lifted – in view of the adequacy of damages as a remedy - but ultimately, after the full substantive trial, the claim was dismissed on the basis that, even though the contracting authority had made two manifest evaluation errors, those breaches were not sufficiently serious to warrant an award of damages since they were minor, inadvertent and excusable.
Adequacy of damages
When a procurement decision is challenged, an automatic suspension is put in place, preventing the contracting authority from entering into the contract unless and until the matter is resolved or the court decides otherwise. It is open to a contracting authority to make an application to lift the automatic suspension, to allow the contract to be signed and the services, supplies or whatever has been procured to be delivered without further delay.
When considering such an application, one of the factors that the court will consider is whether damages would be an adequate remedy for the claimant.
On the adequacy of damages, Millbrook Healthcare (who was the incumbent supplier of healthcare services and technology) needed to satisfy the court that it would suffer significant financial losses that were irrecoverable as damages. It argued, among other things, that the difficulty of quantifying loss, potential damage to its reputation and inability to invest in technology and further service improvements to develop its business, meant that damages would be an inadequate remedy.
The court was unmoved by these arguments, noting – among other points - that uncertainties and complexities with quantification are a common feature of damages claims and do not mean any losses are irrecoverable or impossible to quantity fairly.
There was, however, a further argument in support of the Millbrook Healthcare’s position on the adequacy of damages: that there was a very real risk, following Braceurself, if the suspension was lifted, that Millbrook Healthcare would be awarded no damages at all. This risk, it was argued, should be factored into the assessment of adequacy of damages.
“Sufficiently serious” breach
The judgement in Millbrook reflects on the grounds of appeal in Braceurself, which challenged the final conclusion that the breach was not sufficiently serious in circumstances where, but for the breach, the contract would have been awarded to the claimant and argued that it was incoherent to find the breach was not sufficiently serious when, in assessing whether to lift the automatic suspension, the court had held that damages would be an adequate remedy.
The Millbrook judgement quotes from the section of the Braceurself appeal where Coulson LJ dismisses this idea: “That is not incoherent; it is the consequence of there being two different exercises (one interlocutory and one final), involving two different sets of evidence and two different sets of governing principles. They may produce differing results. In my judgment, that is what has happened here.”
Ultimately, the court in Millbrook determined that the risk that no award of damages would be made should not be taken into account in the assessment of the adequacy of damages. It would, the court found, be “an impermissible invitation to enquire into the merits of the case at an interlocutory stage, in advance of disclosure and evidence”. It also determined that “the principle of effective relief does not function as a guarantee or create any entitlement to a particular preferred remedy where there is none” and that the system of remedies for breaches of procurement law “does not mean that all remedies are universally available at all times”, concluding that “It would be inappropriate to build in a further circular consideration into the adequacy of damages assessment, requiring the judge to project forwards and consider the nature and quality of any eventual relief at the end of the proceedings”.
What now for prospective claimants (or pursuers, in Scotland)?
The judgement in Millbrook is further confirmation of the outcome in Braceurself, which Coulson LJ himself described as arising from a situation that was “very unusual” and “most unfortunate”.
For prospective claimants, any decision to proceed with a challenge must take account of the fact that damages are not guaranteed, even when a breach is established; not every legal error in the course of a procurement warrants an award of damages. Indeed, even when damages have been found to be an adequate remedy for the purposes of lifting the automatic suspension, damages are still not guaranteed.
If the impact of the breach on the unsuccessful tenderer is not determinative of the question of whether or not it is sufficiently serious to warrant damages, it would be sensible for an early assessment to be made of the nature and quality of the breach itself. Perhaps that involves the kind of ‘circular consideration’ that the court in Millbrook was not prepared to undertake; but at the very least, prospective claimants should be as satisfied as they can be that the breach goes beyond “minor, inadvertent and excusable.”
If you're considering a procurement challenge, it's crucial to assess not only the likelihood of a breach but whether it's likely to be considered "sufficiently serious" to justify damages. Get in touch with our procurement team for tailored advice at the earliest stage.
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