Suspended animation

RCJ portrait 146x219When will damages be an adequate remedy in automatic suspension cases? David Hansom looks at how a recent High Court decision was reached.

The recent case of the Newcastle upon Tyne Hospital NHS Foundation v Newcastle Primary Care Trust and Others [2012] gives new guidance on when damages will be an adequate remedy in cases where a contract has been suspended under Public Contracts Regulations 2006/5 (the Regulations).

The flurry of case law on automatic suspension shows no sign of letting up. In its decision the court considered an application by the defendants to lift the suspension imposed by Regulation 47G(1)(a) of the Regulations. As readers will be aware, a contract will be automatically suspended when a claim form is issued in respect of a contracting authority's decision to award a contract, claiming such an award would be a breach of the Regulations.

The claimant was an unsuccessful bidder following an invitation from the defendant for tenders for contracts to provide diabetic retinopathy screening services in the northeast of England.

Mr Justice Tugendhat used the established three question test from American Cyanamid v. Ethicon Ltd [1975] to decide the case; was there a serious question to be tried, if "yes" then would damages be an adequate remedy for a party, and finally if not, where did the balance of convenience lie. The judge confirmed the guidance in the Cynamid case stating that a low threshold should be used when looking at the first question and that he preferred not to decide the case on the basis that there was no seriously triable issue.

The main issue he identified was therefore whether damages would be adequate. He found that the claimant provided little evidence to show that damages would be an adequate enough remedy for it; instead the primary concern of the evidence was the delivery of the service to the population in need of that service. It is worth noting therefore that a claimant should provide an articulation of why damages would not be adequate in the particulars of claim.

The claimant had put forward the interim solution of providing the services until the litigation was decided, effectively meaning the contract was awarded to the unsuccessful bidder for a period of time. It was determined that the delay of a year or more to the commencement of a contract with an overall term of three years, would be a "very significant delay" and on this basis it was held this was not an adequate remedy for the defendants, nor was it just to the defendants and the successful bidder. As such, the suspension was lifted.

This case continues the theme of "pro authority" decisions which will be further reassurance to contracting authorities. The continued scrutiny under which purchasing decisions of all values and types, across all sectors, mean that authorities do need to be more careful than ever in ensuring their decisions are defensible.

David Hansom is a Partner and Head of Public Sector at Veale Wasbrough Vizards. He can be contacted on 020 7665 0808 or by This email address is being protected from spambots. You need JavaScript enabled to view it..