Claimant fails in legal challenge over abandonment of procurement of strategic estates partnership

An NHS trust has defeated a legal challenge over its decision to abandon a procurement exercise for a 10-year strategic estates partnership (SEP), in circumstances where it had previously made a decision to award the contract to the claimant.

In Ryhurst Ltd v Whittington Health NHS Trust [2020] EWHC 448 (TCC) Ryhurst claimed that the central reason for the decision to abandon was pressure exerted upon the Trust from various individuals and entities, primarily a local campaigning group and a number of local MPs, including Jeremy Corbyn and Emily Thornberry, as well as the Trust's regulator, NHS Improvement.

The claimant contended that this pressure was exerted solely or primarily because it was part of the Rydon group of companies of which one company, Rydon Maintenance, had been responsible for the refurbishment, including the supply and installation of the cladding, at Grenfell Tower.

Ryhurst argued that this ostensible connection with Grenfell was illusory and in any event of no relevance whatsoever to the procurement exercise, so that the Trust could and should never have allowed itself to be swayed by political pressure into abandoning the procurement for that reason.

The claimant argued that in abandoning the procurement in such circumstances the Trust was in breach of the duties which it owed to Ryhurst under the Public Contract Regulations 2015 and otherwise.

It claimed by way of compensation for such breaches damages for the loss which it said it had suffered as a result of such breaches.

Whittington Health NHS Trust contended that its decision to abandon the procurement was lawful and was taken for a number of proper reasons, as explained in the formal notification of its decision to abandon.

It accepted that one of these reasons was the risk that some stakeholders would not engage in or support plans developed with Ryhurst. It also accepted that one of the reasons which motivated those stakeholders was the connection, real or perceived, between Ryhurst and with Grenfell but it denied that this was the sole or indeed the primary reason for its decision.

The Trust also contended that even if, contrary to that primary factual case, the sole or primary reason was the connection with Grenfell, on a proper analysis of the law that did not make its decision to abandon unlawful.

The scope of the trial was limited to the issues of liability, causation and whether or not any breaches made out under the Public Contracts Regulations were sufficiently serious to justify an award of damages.

His Honour Judge Stephen Davies, sitting as a High Court Judge, said that as the case had developed, it had become apparent that the key issues he would have to determine were:

i) What was the real reason, or the real reasons, for the decision to abandon the procurement?

ii) If the real reason, or one of the real reasons, was Ryhurst's connection with Grenfell, did the Trust act unlawfully in abandoning the procurement on that ground?

HHJ Stephen Davies said: “Having considered the evidence and the arguments my decision is that Ryhurst has not succeeded in making out its case on liability so that its claim must fail. Had I found for Ryhurst on its primary case in relation to liability it would have succeeded in establishing causation and sufficiently serious breach.”

Amongst other things the judge found that:

• The Trust had made out its case that there was indeed a significant change in its financial position in June 2018 compared with June 2016 and that this was a genuine and a principal reason for the Trust Board making the decision at the June 2018 meeting to abandon the SEP procurement.
• The Trust was entitled to take a lack of stakeholder support into account because in deciding whether or not to proceed with or to abandon the procurement it was entitled to have primary regard to its own interests. “If it had concluded, as it plainly always had, that the SEP was only workable with wide stakeholder support, then if that wide stakeholder support was not present in June 2018 for a number of reasons, many if not most of which were in no way irrational or improper, then in my judgment the Trust Board did not act improperly in taking that factor into account in deciding to abandon the procurement, looking not just at the present but also to the future.”

Siobhan Harrington, Chief Executive of Whittington Health, said: “We are very pleased at this outcome. We were always disappointed that Ryhurst chose to take legal action and we defended our decision to abandon the procurement robustly.

“We have already pushed forward with a number of improvements to our buildings – on our hospital sites and in some of our community locations – including refurbishing our postnatal ward, opening a new obstetric theatre and demolishing the Waterlow Building to make way for modern and efficient education facilities for our staff.  We have also developed a long-term Draft Estates Strategy in-house which we are talking to staff and local people about at the moment, with a final version to follow later this year.”