Sysmex (UK) Ltd v Imperial College Healthcare NHS Trust [2017] EWHC 1824 (TCC)

[2017] EWHC 1824 (TCC)Case No HT-2017-000046
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 21 July 2017
Before
THE HON MR JUSTICE COULSON
Between
Sysmex (UK) LimitedClaimant/RespondentImperial College Healthcare NHS TrustDefendant/Applicant
Ms Sarah Hannaford QC (instructed by Bevan Brittan LLP) for Claimant/RespondentMr David Sears QC (instructed by Capsticks Solicitors LLP) for Defendant/ApplicantHearing Hearing dates: 19 and 21 July 2017
Judgment ApprovedThe Hon. Mr Justice Coulson:
[1]INTRODUCTION By these proceedings, the claimant (“Sysmex”) seeks to challenge the decision of the defendant (“the Trust”) to award a managed services contract (“MSC”) in respect of pathology services to Abbott Laboratories Limited (“Abbott”). Sysmex specialise in the provision of haematology and coagulation services and participated as a specialist sub-contractor in the unsuccessful bid for the MSC led by Roche Diagnostics Limited (“Roche”).[2]The commencement of these proceedings on 24 February 2017 triggered an automatic suspension of the Trust’s ability to enter into the MSC with Abbott, pursuant to Regulation 95 of the Public Contracts Regulations 2015. The Trust now applies under Regulation 96(1)(a) to lift that automatic suspension.[3]I set out a brief history of this dispute in Section 2 below. I identify the applicable principles of law in Section 3. Thereafter I deal in turn with each of the three questions which arise on an application such as this:(i) Is there a serious issue to be tried? (Section 4);(ii) Are damages an adequate remedy? (Section 5); and(iii) What is the balance of convenience? (Section 6). There is a short summary of my conclusions in Section 7. I am very grateful to leading counsel for their helpful written and oral submissions.[2]BRIEF HISTORY[4]On 4 November 2015, the Trust advertised the procurement for the MSC in respect of pathology services in the Official Journal of the European Union, on behalf of itself and three other NHS Trusts/Foundation Trusts. One of the main aims of the MSC was to ensure that the Trust had one provider who would in turn manage and be responsible for the numerous specialist sub-contractors and suppliers involved in the Trust’s pathology services.[5]The procurement was carried out over a period of 14 months, between 4 November 2015 and 27 January 2017. There were four separate stages of the Invitation to Submit Detailed Solutions (“ISDS”). Thereafter, there was an Invitation to Submit Final Tenders (“ISFT”). By the end of the tender process there were two bidders only: Abbott and Roche.[6]The Roche bid was rejected on 27 January 2017 when the Trust notified them that it intended to award the MSC to Abbott.[7]Sysmex commenced these proceedings on 24 February 2017. The original Particulars of Claim were served on 31 March 2017. At that point, the only allegation which was made concerned the equipment which Abbott were intending to supply as part of their winning tender: it was alleged that the Trust could not lawfully accept a bid based on prototype products that had yet to be CE marked, and had therefore wrongfully accepted Abbott’s bid, which was based on a full blood count analyser (called Alinity Hs) which was not CE marked.[8]The Particulars of Claim has been amended on two subsequent occasions, following the provision of further documents from the Trust. In consequence, the allegations made by Sysmex are now broader in scope, and go to the detailed evaluation and scoring of the Abbott tender, insofar as it related to haematology and coagulation services.[9]I am told that there were settlement discussions that began in April and continued until 12 June 2017. As part of that process, on 24 May 2017, by consent, Fraser J stayed the proceedings for four weeks “to allow the parties to attempt to settle the dispute through alternative dispute resolution.” There were two express exceptions to the stay: the making of any application by the Trust to lift the suspension, and by Sysmex for specific disclosure. On 16 June 2017, 4 days after the negotiations came to an end, the Trust duly made an application to lift the automatic suspension. A defence was served on behalf of the Trust on 26 June.[10]The evidence served in connection with the (disputed) application to lift the suspension fills 4 lever arch files. There were three statements originally served on behalf of the Trust (from Mr Dubery, who was the Trust’s Procurement Business Partner at the relevant time; Sir Stephen Bloom, a Professor and Chairman at the Trust; and Mr Bubb, who was the interim Finance Director for the Trust). There were then three statements in response on behalf of Sysmex (from Mr Pattinson, a director; Mr Howes, the managing director; and Ms Heard, their solicitor); and two further statements in reply from the Trust from Sir Stephen and Mr Bubb. Not to be outdone, Sysmex sought to rely on a second statement from Mr Pattinson, served only one clear day before the hearing. Following argument, I allowed that statement into the evidence. These nine statements contain a total of 501 lengthy paragraphs, run to 141 pages, and exhibit almost 1000 pages of documentation.[11]As I pointed out to the parties, that was an absurd amount of evidence and documentation; it seemed designed for a three week substantive trial, rather than a one day hearing and an application of the rough and ready principles to be derived from American Cyanamid. In view of the requirement for the court to address the issue of suspension speedily, the production of evidence on such an industrial scale was counterproductive. It took almost a day just to read carefully through these statements. If I do not refer to them (or their 501 paragraphs) individually below, that is not because I have not taken into account what they say.[3]THE APPLICABLE PRINCIPLES 3.1. American Cyanamid[12]It is well-settled law that, in approaching an application to lift an automatic suspension, the court should apply the principles set out in American Cyanamid Co v Ethicon Limited [1975] AC 396. There are a number of authorities which make clear that this is the correct approach in procurement cases: see, for example, Group M UK Limited v Cabinet Office [2014] EWHC 3659 (TCC) and Openview Security Solutions Limited v London Borough of Merton Council [2015] EWHC 2694 (TCC).[13]Although it is sometimes pointed out that the damages question is really an element of the balance of convenience, it is useful to identify the three separate issues to be considered which derive from American Cyanamid:(a) Is there a serious issue to be tried?(b) If there is, are damages nonetheless an adequate remedy?(c) If damages are not an adequate remedy, where does the balance of convenience lie?[14]As to the practical application of these three stages, I have always derived considerable assistance from the judgment of Chadwick J (as he then was) in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468 where he said that:
“…the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be “wrong”, in the sense of granting an interlocutory injunction to a party who fails to establish his rights at trial (or would fail if there was a trial) or, alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial.”
In my judgment, this neatly encapsulates the court’s principal task on the current application, namely to identify which of the two options (to continue or to lift the suspension) is likely to involve “the least risk of injustice”. 3.2. The Procurement Authorities: General[15]There have been a number of procurement cases in recent years in which the court has refused to lift the automatic suspension. One example is Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC), where the delays of 5 years in the procurement process itself, the extended period over which the contract was to run (30+ years), and the fact that an expedited trial could conveniently be accommodated in the court’s diary, led to a refusal to lift the suspension. In another example of the court maintaining the suspension, Bristol Missing Link Ltd v Bristol City Council [2015] 876 (TCC), the court was very critical of the Council’s conduct during and after the tender process and was concerned that, in part because the contractor was a non-profit making organisation which provided a range of care services for the victims of domestic abuse, damages for the contractor would not be an adequate remedy.[16]By contrast, there have been two recent cases in which the suspension was lifted. In Perinatal Institute v Healthcare Quality Improvement Partnership [2016] EWHC 2626 (TCC), Jefford J concluded that the claimant could be compensated in damages. Perhaps more significantly, when dealing with the balance of convenience, she said:
“57. On the other hand, there is a clear public interest in this project proceeding as soon as possible. It is a data collection and review project aimed at the reduction of perinatal mortality rates. Prof Gardosi’s evidence is that this is a project that PI has for some years been advocating should be undertaken. PI (or perhaps more accurately its predecessor) produced a report in 2010 emphasising the need to standardise the review process, also setting up a stakeholder group with clinical and patient representatives to develop an electronic tool for standardised review which was then piloted in England and Wales. Further, the apparent success of PI’s SCOR tool, about which Prof Gardosi gives evidence, demonstrates that the standardised collection and review of data can have significant benefits. 58. This type of standardised review may not result in an immediate saving of babies’ lives but there is unanimity in the view that it is likely to have a positive impact over time. It follows that the sooner it is implemented, the sooner it is likely to result in babies’ lives being saved and their parents being spared from tragedy.”
[17]In Alstom Transport UK Limited v London Underground Limited [2017] EWHC 1521 (TCC) Stuart-Smith J also concluded that damages would be an adequate remedy for the contractor. His alternative finding was that the balance of convenience was in favour of setting aside the automatic suspension. Some of the specific points he makes are directly relevant to this application, and I refer to them in Section 3.3 below. 3.3.

(a) A Strong Case

[18]On behalf of Sysmex, Ms Hannaford QC referred to that part of Lord Diplock’s speech in American Cyanamid in which he said that a consideration of the relative strengths of the parties’ cases “may not be improper to take into account in tipping the balance”. On that somewhat slender foundation, she argued that the strength of Sysmex’s case here was an important element of the balance of convenience.[19]I do not consider, on an application to lift the suspension in a typical procurement case, that this is an appropriate matter for the court to investigate. Such cases are a long way from a straightforward claim for an interlocutory injunction, where a particularly good point on the substantive dispute (an admission, say, or an unequivocal contractual term in one side’s favour) might well be of assistance to the court’s consideration of the application overall. It is not appropriate to have a mini-trial in a complex procurement dispute like this. Where, as here, it is accepted that there is a serious issue to be tried, then (save in exceptional circumstances) both sides should resist any further temptation to argue about the merits.[20]Support for that approach can be found in three authorities:(i) Kent Community Health NHS Foundation Trust v NHS Swale Clinical Commissioning Group and Another [2016] EWHC 1393 (TCC), where Stuart-Smith J said, at paragraph 28: “It is common ground that there is a serious issue to be tried. By reference to confidential information, Mr Giffin QC for the Trust showed me what he described as an indicative example of the strength of the Trust's case that the marking had gone wrong. At present, that case has not been answered and, on what I have been shown, Mr Giffin's criticisms seem valid. However, in applying American Cyanamid principles, he accepts that the Court cannot adjust the weight to be applied to the nature of the issues to be tried to reflect what appear to be gradations of strength of the Claimants' case. Once it is accepted that there is a serious issue to be tried, the first hurdle is passed. Unless the Court can form the view, without conducting any form of mini-trial, that the claimant is virtually bound to succeed, the case remains classified as one where there is a serious issue to be tried. It is both unsafe and wrong (in principle and on authority) to attempt to calibrate the exercise of the Court's discretion by reference to an assessment of the strength of the Claimant's case as lying somewhere between the two points of there being a serious issue to be tried and being virtually certain of the Claimant's ultimate success. On the information available to this court, I am not able to form a reliable view that the Claimant is anywhere near to being virtually certain of success. I therefore treat the case simply as one where it is common ground that there is a serious issue to be tried.”(ii) Counted4 Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC) where Carr J said: “59. As for the strength of the claim, I have already concluded that a serious issue exists. I do not consider that the claim can be said to be so weak or indeed so strong that its strength is a material factor weighing either in favour of lifting or maintaining the suspension. I treat it as a neutral factor.”(iii) Alstom Transport,where Stuart-Smith J said (by reference to his own decision in Openview) that it would only be in rare cases that the potential outcome of the ultimate hearing could be predicted with any confidence, and that the court was not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either parties’ case. He indicated that he did not regard the application of American Cyanamid principles to require or permit the relative strengths of the parties’ cases to be taken into account in assessing the balance of convenience.[21]I agree with the approach adopted in those cases. Accordingly, save in the exceptional circumstances where one party has some kind of simple ‘knock-out’ point, I do not consider it appropriate as a matter of principle for the court to conduct a mini-trial or to endeavour to reach any conclusions as to the strength or weakness of one or both sides’ case.

(b) Damages as an Adequate Remedy

[22]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)…”
[23]There are cases in which, on their facts, the loss of a particularly prestigious contract or the potential for damage to the unsuccessful tenderer’s reputation, has been identified by the courts as being incapable of compensation in damages: see, for example, NATS (Services) Limited v Gatwick Airport Limited and Another [2014] EWHC 3133 (TCC) at paragraph 72; the passing reference to ‘reputation’ at paragraph 52 of the judgment of Sir Robin Jacob in DWF LLP v The Secretary of State for Business Innovation [2014] EWCA Civ. 900; and the rather more careful analysis at paragraph 129 of the judgment of Vos J (as he then was) in Alstom Transport v Eurostar International Limited and Another [2010] EWHC 2747 (Ch).[24]It is clear that these decisions have each turned on their own facts: in other cases noted above, the suspension has been lifted despite arguments about reputational effect. (c) Public Interest in Compliance with Public Procurement Regulations[25]There is clearly a public interest in the proper procurement of contracts of this sort: see, by way of example, the judgment in Covanta at paragraph 59; NATS at paragraph 99; and paragraph 18 of the judgment of Leggatt J in R (Edenred) v Her Majesty’s Treasury and Others [2014] EWHC 355 (QB). The latter might, at face value, be taken as meaning that this public interest trumped everything else and would always justify the continuation of the suspension; I am in no doubt that that was not what the judge intended to say in his ex tempore judgment.[26]But, as Stuart-Smith J has pointed out, the public interest in the lawful conduct of public procurements is not necessarily an automatic point in the claimant’s favour. As he noted at paragraph 38 of his judgment in Kent:
“I do not ignore or underestimate the public interest in procurement exercises being conducted lawfully. But the likely knock-on effect of even a modest delay in resolving this case at trial must be brought into account as a significant counter-balance since it will prevent the efficient and timely introduction of the arrangements which the CCGs consider to be in the best interest of the people of Kent for whose welfare they too are responsible. As I have indicated, the public interest of the people of Kent is in principle a material factor that may affect the balance of convenience in an appropriate case. But here, the Court is confronted by two limbs of the NHS, each having the same responsibilities and commitment to the public good and the efficient provision of healthcare services, and they take diametrically opposed views on what is in the public interest in the circumstances now prevailing. I am not in a position to conclude that the public interest would be better served by the Trust being the provider of these services or Virgin Care. I am therefore not in a position to bring the public interest arguments relied into account as a significant weight on one side or another when assessing the balance of convenience.”
[27]The same judge made similar comments in paragraph 39 of his judgment in Alstom: “39. Ms Hannaford advanced two submissions in relation to the public interest. Her first was that there is a public interest in procurements being carried out properly. I agree. However, for the reasons that I gave at [27] of Openview, which I repeat and adopt, I do not accept that the undoubted public interest in procurements being carried out properly tends of itself to support the maintenance of the automatic suspension. Ms Hannaford made the point that the Regulations provide more than one possible remedy. I agree; and, in my judgment, that supports the conclusion that the appropriate remedy should be identified without preconception or prejudice as to which one may be appropriate.

(d) Delays

[28]There are cases in which delays, whether in the original procurement process, or in the making of the application to lift the suspension, have been regarded as relevant to the balance of convenience: see, by way of example, Covanta and NATS. The obvious point is that a party who has not shown any urgency prior to the application to lift the suspension can hardly turn round and say that, suddenly, the application has now become urgent. Again, those cases turn on their own facts. But a lengthy passage of time does not equate to a delay: by delay, the court has in mind something which has taken longer than it should or could have done.[4]IS THERE A SERIOUS ISSUE TO BE TRIED?[29]Large parts of the witness statements originally served on behalf of Sysmex go to support the proposition that there is a serious issue to be tried. When reading them in advance of the skeleton arguments, I was slightly puzzled about this, because the statements served on behalf of the Trust – to which the Sysmex statements were ostensibly replying - did not appear to suggest otherwise. Consistent with my reading of the Trust’s evidence, at paragraph 15 of his skeleton argument, Mr Sears QC made the express concession on behalf of the Trust that “for the purposes of this application only, the Trust concedes that there is a serious issue to be tried.”[30]I accept and endorse Mr Sears QC’s concession. In my view, it is sensible and appropriate. Too often on applications to lift the suspension, the Authority seeks to turn the application into a mini-trial, to take all the substantive points it can in answer to the contractor’s underlying claim. In most cases, such a stance is futile, because the court will be unable to come to any sort of conclusion on the merits at the interlocutory hearing. It has the effect simply of increasing costs. In my view, the approach taken by the Trust in this case is one which, in the ordinary case, ought to become standard practice.[31]However, in the present case, Sysmex are unwilling to take ‘Yes’ for an answer. They appear to want the mini-trial that the Trust eschews. So, for example, Mr Howes argues that the Trust should not be allowed unlawfully to modify the requirements for CE marking, and that lifting the suspension would amount to the court’s validation of this approach; Mr Pattinson’s second statement repeats at length Sysmex’s arguments about what the tender documents said about CE marking; and paragraphs 38-40 of Ms Hannaford QC’s skeleton argument seek to argue, in connection with the balance of convenience, that Sysmex’s case – particularly on the subject of the marking of the Abbott bid - is so strong that it should be taken into account on the balance of convenience.[32]As set out in Section 3.3 (a) above, I do not agree with that approach as a matter of principle.[33]In addition, insofar as I have been able to assess the detail, I do not accept the proposition that Sysmex’s case is particularly strong. It is certainly not an exceptional case. As to the point about CE marking, which Ms Hannaford did not emphasise orally, it seems to me that there is something to be said for both sides’ positions. The tender instructions and the Trust’s clarifications to Roche on the topic of CE marking during the process may be capable of different interpretations. As for the complaints about the scoring of Abbott’s bid, I can only say that those complaints, although advanced in colourful terms, are not untypical of the points commonly taken by a losing bidder about the contracting authority’s marking of the winning bid.[34]Accordingly, I approach this application on the basis that there is a serious issue to be tried and that neither the claim nor the defence are particularly weak or particularly strong. In other words, the underlying facts and merits are “neutral”, as Carr J put it in Counted4.[5]ARE DAMAGES AN ADEQUATE REMEDY? 5.1.

(a) General Observations and Principal Claim

[35]The relevant authorities are noted at Section 3.3 (b) above. I have concluded that it would be just, in all the circumstances, to confine Sysmex to its remedy in damages. The reasons for that conclusion are set out below.[36]Sysmex’s main claim is that the MSC with Abbott should not be allowed to go ahead. Their alternative claim is for damages, pleaded as “its lost profits on the anticipated contract and/or its wasted tender costs”. Mr Howes, Sysmex’s managing director, accepts expressly that “it is possible to quantify the revenue that Sysmex would have earned under the MSC, the costs of running its service and therefore the anticipated profit.” The fact that Sysmex are a profit-making organisation, and that they can calculate their loss of profit as a result of Roche’s failure to win the contract, distinguishes this case from those where the question of damages as an adequate remedy is a very real issue because the claimant is a non-profit making organisation (see for example Bristol Missing Link). In addition, there were only two bidders, Abbott and Roche, so there is none of the difficulties of calculation, apparent in so many of the reported cases, that flow from the ‘loss of a chance’ claims.[37]At paragraph 32 of the witness statement of Mr Howes, he identified a figure of £3,152,601.56 as the loss of profit over the ten year term. He introduced some unnecessary confusion in his paragraph 36 by talking about a loss of revenue of £3.769 million per year. However this figure (which is not in any event profit) included one of the hospitals where Sysmex currently provide services but which, under the MSC, they no longer would do. Although Mr Sears QC, perhaps understandably, made much of this muddle between the two paragraphs and described it as unsatisfactory, and although Ms Hannaford QC accepted that Mr Howes’ evidence was confused, what was apparent was that Sysmex’s loss of profit on the MSC was capable of relatively easy calculation.[38]Despite this, Sysmex have put in a good deal of evidence to suggest that damages would not compensate them for other additional harm which they say they will suffer as a consequence of not being awarded the MSC. The evidence can be analysed under three headings: the large and prestigious nature of the MSC; the reputational damage caused by Sysmex’s failure to win the bid and/or these proceedings; and the wider impact on Sysmex. I deal with each in turn below. For the reasons noted, I consider that these points are not established on the evidence and/or are too speculative and/or are in any event capable of being assessed in financial terms.

(b) Large/Prestigious Nature of the MSC

[39]Sysmex say that the MSC is a large and prestigious contract, as a result of which its loss to them could not be compensated for in damages. This argument seemed to me to owe a great deal to Vos J’s analysis of the facts in Alstom v Eurostar, which seems to me to be a very different case, rather than the evidence here. In any event, I do not accept the proposition that, merely because the contract in question is large and/or prestigious, that somehow means that a failure to win it cannot be compensated for in damages.[40]The first point to make is that Sysmex are a specialist haematology and coagulation sub-contractor (that was their input into the Roche bid). The haematology and coagulation element of the MSC represented no more than 5% by value of the total worth of the MSC. There is a tendency in the Sysmex evidence to stress the size and value of the overall MSC, when what matters for these purposes is the much smaller element of the MSC in which they would have been involved.[41]I accept that the MSC was large. I do not necessarily accept that the haematology and coagulation element was of itself large, and the muddle in Mr Howes’ figures has not helped them. On Sysmex’s own case, this contract represented less than 10% of its UK turnover. But even if it was a large contract for Sysmex, I am certainly not persuaded that the haematology and coagulation element was particularly prestigious; although Mr Howes makes that assertion, he provides no evidence in support of it. There is nothing, for example, to explain how or why the MSC was of strategic importance to Sysmex.[42]I therefore reject this first reason offered by Sysmex as to why their loss is incapable of being measured in damages.

(c) Reputational Damage

[43]Sysmex also say that the loss of the MSC, and their decision to bring these proceedings, has affected their reputation in ways which cannot be compensated in damages. Two points are suggested. The first is that Sysmex’s reputation and commercial standing has already been damaged by what has happened. The second is that their reputation would not be restored if they won the litigation but were confined to their remedy in damages. Again, I consider that the evidence on both points was very speculative.[44]As to the first point, that the damage may already have been done, I can only say that, save for the issue addressed in paragraph 45 below, there is nothing in Mr Howes’ statement which supports the contention that Sysmex has already suffered reputational damage.[45]The one specific piece of evidence to which reference was made was the bad-tempered email sent by Mr Dubery on 26 April 2017, in which he criticised his colleagues at the Trust for continuing to place new ad hoc orders with Sysmex. The email related to a single point-of-care machine. In it, Mr Dubery said:
“If it’s not a chip and not important – don’t buy it – go somewhere else? I presume your argument is that you must have it. Well equally, having spent twelve weeks full time embroiled in legal action solely because of this supplier I would argue any chip is important to solve the current legal issue. We shoot ourselves in the foot by acting like nothing will change as a result of their action – and this gives the green light to Sysmex to do it to the next trust (we are the third trust we know of). Note – this supplier is currently costing the Trust £11,500 a day. YES per day. The QC may not be aware of this, and whilst the issues are not in any way related, the Supplier will have absolutely no reason to stop any litigation if it thinks we will just carry on as normal and costing the Trust millions will have no impact on its future business. I do not know a commercial business anywhere that would just continue as if nothing had happened – in fact I can think of plenty of cases where the exact opposite has happened and the supply of services have been totally stopped. Sysmex is reliant on the NHS for 95% of its business – yet it has taken at least three trusts to High Court in the last twelve months. Tail wagging dog, and we are more than happy to support it.”
[46]In my view, although its wording is unfortunate, the effect of this email has been exaggerated. As Mr Dubery explains in his second statement, the Trust had made an important decision in good faith about the MSC, which Sysmex were challenging, and which challenge was causing the Trust to incur further costs and was serving to act as an unwelcome distraction. In the real world, therefore, his irritation was understandable, even if the threat of some sort of wider backlash against Sysmex was inappropriate. But, in my view, the proof of the pudding is in the eating: the evidence is that, despite Mr Dubery’s irritation, this order was nonetheless placed with Sysmex. I therefore place little weight on this email as demonstrating that damages would not be an adequate remedy for Sysmex.[47]On a related issue, Sysmex argued that the Trust was influential, and therefore the fact that they were now bringing proceedings against the Trust was going to create problems for them. The particular influence of the Trust about which Sysmex complained was that they were members of something called the Shelford Group, an important grouping of NHS Trusts. But the evidence was that the Shelford Group was not involved in the procurement of equipment of this type, so it was difficult to see where this point went. Moreover, there was nothing to suggest that the Trust was so influential that it could affect Sysmex’s participation or performance in future competitions: indeed, Mr Dubery’s failure to prevent an order being placed with them for a single point of care machine perhaps indicates the opposite.[48]The second strand to this part of the Sysmex case is that their primary claim is for the restoration of what they say was their rightful bid, rather than damages. I understand of course that, like all aggrieved bidders, Sysmex would prefer the contract which they lost to an award of damages. But that preference cannot of itself mean that damages is not an adequate remedy.[49]Behind this point was, I think, the suggestion that their reputation would not be restored by an award of damages at the end of the case, and that their reputation would only be restored by the award of the MSC. To the extent that that is Sysmex’s case, I emphatically reject it. There is no evidence put forward by Mr Howes (or anyone else) to support it.[50]Moreover, it is fundamentally wrong in principle to say that an award of damages would not restore a reputation lost because of the rejection of a tender, but the award of the contract itself would. What would matter in those circumstances would be the public acknowledgement that their bid had been wrongly rejected, not the precise remedy which the court provides in consequence of that finding. By way of example, if an individual claimant is wrongly deprived of a contract under which he or she would have provided personal services, the court would be most unlikely to order specific performance of such a contract even if the claimant is successful, so damages are inevitably the claimant’s remedy. It could not be suggested in those cases that damages are not, in principle, proper compensation.[51]For all those reasons, I do not consider that Sysmex has suffered any reputational damage as a result of failing to win the MSC or that, if they have done and they go on to win this action, the nature of the remedy awarded will make any difference to whether that damage is repaired or not.

(d) Significant Impact on Sysmex

[52]Finally, there is the suggestion in paragraphs 33-42 of Mr Howes’ statement that the loss of the MSC will have a significant impact on Sysmex which cannot be compensated in damages. In my view, on analysis, that case has not been made out.[53]First, there is an argument about Sysmex’s current position in the market, and thus the work that they are continuing to do despite losing the MSC. In Mr Dubery’s evidence there was a list of the high value contracts which Sysmex have with London NHS Trusts, where Sysmex were believed to be the prime managed service contractor. Mr Howes disputed both the list and Sysmex’s role at those hospitals. In his second statement, Mr Dubery expresses his surprise at this dispute, because his original list was taken from information which Sysmex themselves provided as part of their tender bid. I conclude that this dispute, although minor in itself, shows that Sysmex are seeking to minimise their other current work, so as to enhance the possible effects of not getting the work within the MSC.[54]Secondly, Mr Howes complains that, if Sysmex was to lose the MSC, it could not use it as an example of the work which it was undertaking when it was tendering for other work in the future. That argument is circular: an inevitable effect of not winning a contract is that you cannot say that it is a contract you are working on when you bid for other jobs. In any event, no prospective tenders have been identified as being affected by this alleged difficulty. Since the evidence was that most NHS Trusts require just 3 examples of current contracts, it could not be said that Sysmex cannot comply with such a requirement, despite losing the MSC. Nor is there any wider evidence that the loss of the MSC meant that Sysmex would be unable to bid for other large contracts, or that their failure in respect of the MSC would have any detrimental effect on their future tendering generally.[55]Thirdly, Sysmex complain that, as an SME, they have to take part in consortium bids of this kind. I agree with Mr Sears that it is not clear what relevance this has to the adequacy or otherwise of damages as a remedy. I also agree with him that, to the extent that this leads on to a suggestion that the loss of the MSC risks putting Sysmex out of business, the evidence is directly contrary to that proposition.[56]During the course of his submissions, Mr Sears QC made the point that there was no evidence that the failure to win the MSC would affect the wider viability of Sysmex. Mr Dubery’s second statement deals with the financial strength of and support provided to Sysmex in some detail at paragraph 29. That central issue was not answered in the second statement of Mr Pattinson (which deals with certain peripheral points instead), neither was it addressed by Ms Hannaford QC during the course of her oral submissions.[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.

(e) Summary

[61]For these reasons, I conclude that, on the evidence, damages would be an adequate remedy for Sysmex and that it would be just in all the circumstances to confine Sysmex to that remedy. 5.2. For the Trust[62]The consequences of not lifting the suspension for the Trust are best dealt with in the next section, in which I consider the balance of convenience. Some elements of the Trust’s losses if the suspension is continued, such as the savings represented by the MSC, could be calculated as damages. In addition, I am not persuaded that the Trust could suffer reputational damage, so I leave that out of account. But I consider that there is overwhelming evidence that, if the suspension is not lifted, it would have a significant and detrimental effect on patient and clinical care. That is emphatically not something which is capable of being compensated for by way of damages. I deal with that in detail in Section 6 below. 5.3. Conclusions on Damages[63]Accordingly, I consider that, in the round, damages would be an adequate remedy for Sysmex if the suspension is lifted and they win at trial. I consider that damages would not be an adequate remedy for the Trust if the suspension is continued and they win at trial. In those circumstances, the suspension ought to be lifted. However, in case I am wrong about that, I go on to consider the balance of convenience.[6]BALANCE OF CONVENIENCE 6.1. Material Considerations[64]In my view, there is an overwhelming preponderance of evidence in favour of lifting the suspension. That is for two main reasons: the impact of continuing the suspension on the quality of care; and the savings that would be made as a result of the new MSC. I deal with each of those matters in turn.[65]As to the first point, namely the quality of care, there are two statements from Sir Stephen Bloom, a professor of medicine and chairman at the Trust. His evidence is clear and, save on one issue, largely unchallenged. He makes it clear beyond doubt that the continuation of the suspension would have an adverse effect on the patient care offered by the Trust. It does not put it too high to say that the effect of his evidence is that patients may suffer, even die, if the suspension is not lifted.[66]Sir Stephen’s evidence shows that the existing pathology equipment is out-of-date and prone to regular breakdowns. This poses an obvious risk to patient health and safety, as well as decreasing the accuracy of test results. The most critical problem with the delivery of pathology services at the Trust’s sites arise from the length, severity and frequency of the periods of downtime caused by equipment failure (see paragraph 12 of his first statement).[67]This has and will continue to have an adverse clinical impact on patients and can result in fatalities. Moreover, if there are delays in test results, then there may be delays in the commencement of cancer treatment regimes, which could also ultimately have a fatal effect. These problems will only get worse if the suspension is not lifted.[68]The structure of Sir Stephen Bloom’s first statement is as follows. Paragraphs 19-33 deal generally with the problems caused by the Trust’s existing pathology equipment. He identifies particular problems with the equipment for haematology and coagulation between paragraphs 34 and 48. Unlike the earlier paragraphs, those passages directly reflect on Sysmex, because they are the present provider. There are then some graphic passages dealing with the consequences of the failings of all of the equipment between paragraphs 49 and 59 of the same statement.[69]Sysmex are unable to counter much of this, with the exception of their response to particular criticisms of particular elements of the existing Sysmex equipment (the exception to which I referred at paragraph 65 above). In relation to those matters, the two statements from Mr Pattinson take a number of specific issues about specific equipment, seeking to correct some of the assertions in Sir Stephen’s two witness statements.[70]It is of course impossible for the court, on an application like this, to decide all those individual issues, nor is it necessary to do so. In my view, on a fair assessment of the evidence, the position is that, whatever the individual issues might be on specific Sysmex machines, the general position is that the pathology equipment as a whole (including the Sysmex equipment but encompassing much more besides) has gone beyond - in some cases well beyond - the end of its natural life and is beginning to fail. Those failures are having an adverse effect of patient care.[71]That conclusion cannot come as a surprise to anyone. It is common ground that the pathology equipment, including that provided by Sysmex, is beyond its design life and needs to be replaced. The whole point of the MSC was to allow the Trust to provide faster, more efficient and more accurate testing results, providing a higher quality and more reliable service. So if the MSC is delayed, there will be a delay in those intended improvements. Putting the point the other way round, if there was nothing wrong with the current pathology service, there would be no need for the MSC.[72]Standing back from the individual matters that are disputed by Sysmex (for example, whether a particular machine had a good or bad record for breakdowns), it seems to me that, realistically, in a case where there is credible evidence that patient care will suffer if the suspension is not lifted, it will usually be the case that the least risk of injustice will favour the lifting of the suspension. Sir Stephen Bloom is responsible for the service to the Trust’s patients, and I accept what he says. In that result, therefore, this case is very similar to Perinatal.[73]On the second point, relating to savings, there is clear evidence that the Abbott bid would save the Trust £250,000 per month on pathology tests alone. There are also the sums due to the Trust as a result of Abbott’s agreement to pay the Trust for the existing equipment, as well as costs savings on staff costs, out-sourcing and VAT. In addition, Mr Bubb has calculated that a ten week period of delay might cost the Trust £1.5 million or more. This in turn could have an effect on the Trust’s ability to meet its financial targets which could lead to an NHS intervention.[74]In my view, the potential effect on patient care, and the cost savings which could be made if the suspension was lifted, provide an overwhelming case on the balance of convenience for lifting the automatic suspension. 6.2.

(a) Introduction

[75]I have already rejected the notion that Sysmex’s case is somehow particularly strong (or that that is even a relevant matter for investigation): see Section 4 above. As for the other matters raised by Sysmex on the balance of convenience, they can be identified under three sub-headings:(i) the Trust’s delays, including the delay in making the application to lift the suspension;(ii) the early offer Sysmex made to vary the terms of any automatic suspension; and(iii) the public interest in ensuring that public procurements are lawfully carried out.

(b) Delays

[76]The relevant authorities are identified in Section 3.3 (d) above. Ms Hannaford QC relied on a variety of different alleged delays which, so she said, indicated that the Trust had evidenced no urgency so far, so could hardly now say that the application to lift the suspension was urgent. For the reasons noted below, I consider this attack was much too wide and, in large part, unjustified.[77]Ms Hannaford QC complained about the long gap between the Carter report of 2008 and the business case for the MSC, which was not provided until 2014. In my view, the time before the procurement process even began is completely irrelevant on an application of this sort. There may be 101 reasons why it took a long time for a business case to be prepared. It is absurd to link events of a decade ago to the balance of convenience now.[78]Ms Hannaford QC next complained about the delays in the procurement itself. I accept that the delays in the procurement itself can be a relevant factor: in Covanta, it was a relevant factor because it had originally been envisaged that the procurement would be completed by 2008, whereas in fact it took until 2013.[79]But that five year delay should be compared to the present case, where it was anticipated that the procurement would be completed in June 2016, whereas in fact it was completed in January 2017. I do not regard that delay of 7-8 months as being particularly long or surprising, particularly given that the total value of this contract was £85 million. I therefore reject the suggestion that this delay has any relevance to the balance of convenience.[80]As to the delay in making the application to lift the suspension, I consider that there is some force in this criticism. I agree with Ms Hannaford QC that, the proceedings having started at the end of February 2017, the application to lift the suspension should have been made earlier than June. In my view, it should have been made by the end of March. As noted during the argument, I think that the court could have accommodated the hearing of that application in early May (i.e. just after the late Easter vacation).[81]However, there are two mitigating factors put forward on behalf of the Trust, both of which I accept as justifying the delay, at least in part. The first is that there were lengthy exchanges between the solicitors in March and April 2017 concerning the provision of further documentation to Sysmex. Some of what was provided required the involvement/permission of Abbott. As a result of the documentation that was provided, Sysmex are in a better position than many unsuccessful tenderers in their position: if the application to lift the suspension had been made immediately, Sysmex would undoubtedly have complained that the court could not deal with the issues fairly because of inadequate disclosure (see Alstom v LUL [2017] EWHC 1406 (TCC)). They cannot have it both ways.[82]In addition, as I have noted above, there was a formal stay whilst the parties endeavoured to resolve their differences. Moreover, the stay itself followed on from a period of negotiations between the parties, which I am told began towards the end of April 2017. The fact that those negotiations were unsuccessful does not of course affect the fact that at least some of the delay in making the application was the result of the (perfectly sensible) attempts to resolve the case. I am particularly mindful of the Trust’s financial position as a London NHS Trust, and the imperative to save money wherever it can.[83]Accordingly, whilst there was a delay in the making of the application to lift the suspension, I do not consider that that delay was wholly unwarranted. Moreover, the delay has not had a significant effect on the course of the proceedings. If the application had been heard promptly in May 2017 and the trial had been expedited (such that the suspension had continued until the expedited trial), it would have been impossible to accommodate the trial in the court lists before October 2017. It would definitely not have been heard in June or July 2017: it would not have been ready in such a short period of time, and there was in any event no space in the lists. If I was minded now to expedite the trial, it would have been heard in late November/December 2017.[84]So the delay in making the application has caused an overall delay of two months, which is not particularly serious or significant. More importantly, I do not consider that, in all the circumstances, this delay demonstrates a lack of urgency on the part of the Trust.[85]Finally on the question of delay, Ms Hannaford QC complained that the Trust has failed to deal with the requests for disclosure in a cooperative or systematic way, and that disclosure had been provided over a lengthy period of time. She said this was not illustrative of a defendant who was keen to push the litigation on because of its underlying urgency.[86]I do not consider that it is sensible to require a court, on an application to set aside the suspension, to deal at the same time with ongoing disputes about disclosure. There is a limit to what the court can do at and after an urgent one day hearing. But, to the extent that I am asked to express a view on this aspect of the proceedings, I reject Ms Hannaford QC’s submissions.[87]It seems to me that, when looked at in the round, the correspondence between the solicitors demonstrates a willingness on the part of the Trust to provide documentation. The fact that the documentation has come in stages is explained by the involvement of Abbott, who were at first reluctant to have information relating to their own confidential bid provided to a rival. It took a while for those matters to be sorted out. I gather that further documents are currently being collated but they are extensive, which explains why they have not yet been provided. I therefore do not accept that the Trust have behaved in an unreasonable or uncooperative way in respect of the documentation. We are again a long way from the sort of situation that pertained in Bristol Missing Link.

(c) The Proposed Variation

[88]The next matter on which Sysmex relied was their early suggestion that the automatic suspension could be varied, such that it was only the haematology and coagulation elements of the MSC that remained suspended. On the face of it, that argument appears rather attractive, particularly as Sysmex are delivering those services to the Trust at the moment in any event. But on analysis, I do not consider that the offer was ever workable.[89]First, the whole point of the MSC was to provide an arrangement where there was one provider only and that there would be no contracts with the 70 plus third party sub-contractors and suppliers. The Trust wanted to get away from the current situation, where there are numerous such third parties: to achieve that through the MSC would represent what Mr Sears QC called “a major organisational fillip for the Trust”. I agree with that. It would not be appropriate now to require the Trust to go back on that fundamental objective.[90]Secondly, I consider that it would be impractical, and possibly unlawful, for the Trust to award only part of the contract to Abbott, in circumstances where the tender process concerned the whole of the MSC, including the haematology and coagulation services. Ms Hannaford QC argued that, since Regulation 96(1)(b) allowed the court to modify the requirement on the Trust to refrain from entering into the contract with Abbott, this must allow the court to impose the sort of partial suspension she advocates. In this regard, she relied on DWF, where the suspension was removed in relation, amongst other things, to the top two bidders in the competition.[91]In my view, DWF was a very different case to this one. There was no argument that the top two bidders were unaffected by the procurement dispute: it was only those below that line, whose scores were close to or the same as DWF, who were involved. It therefore made perfect sense to lift the suspension relating to the top two. Thus the suspension was continued unchanged, but only in respect of those bidders who were affected by the procurement dispute. What is more, that outcome was not decided by the court, but was agreed by the parties.[92]That is a very different thing to that which Ms Hannaford QC asks me to do now, which is to modify the terms of the suspension itself. No other authority could be identified in support of that approach. So, whilst I am sure that there may be unusual circumstances in which a variation or modification to the suspension may be appropriate, I do not consider, in all the circumstances of this case, that I should make such a novel order here.[93]Thirdly, such an arrangement would not protect the patients from (for example) the use of analysers which the Trust say are past their normal life, or middleware that they say is obsolete and susceptible to cyber attacks. I acknowledge that some of that criticism is disputed by Sysmex, but the fact remains that the proposed variation would mean that equipment well beyond its design life would continue to be used.[94]Fourthly, there is evidence from Mr Dubery (paragraph 97 of his first statement) about the likely legal challenges that this course might itself engender, including in particular from Abbott. Although Ms Hannaford QC maintained that these challenges would be misconceived because, on this assumption, the modification to the suspension would have been ordered by the court, I am not so sanguine: Abbott and others affected by the modification might argue that the modification itself was unlawful.[95]Fifthly, the evidence is plain that there is a pressing need for Abbott to get on with all of the preparatory works, including building work, and the installation of specialist equipment. In those circumstances, it would not be appropriate to hive off a part of the works at this stage and leave it in limbo for the rest of the year.[96]Finally, I should deal with a slightly separate point which Ms Hannaford QC deployed in support of the reasonableness of the proposed variation. This was the fact that, because of other reasons, the haematology and coagulation services currently provided by Sysmex have been extended into next year. She said that was consistent with her proposed modification. But the extension was plainly a decision reached by the Trust for operational reasons, in order to maintain these services to their patients. It does not seem to me that that should be linked to this proposed variation, which affects not only the Trust, but the substantive rights of the winning bidder.

(d) Public Interest

[97]The final matter relied on by Sysmex concerns a wider issue. Taking her cue from the cases noted in Section 3.3 (c) above, Ms Hannaford QC submitted that there is a public interest in ensuring that public procurements of this kind are properly carried out and that that public interest would be diluted if the suspension was lifted in this case before the substantive trial.[98]There is some force in that point: I regard that public interest as being always a factor in cases of this sort. It is also important to avoid a situation where the authority (here an NHS Trust) has to pay twice, once for the services and again by way of damages to the unsuccessful bidder. But there are two reasons why I regard the point as ultimately unpersuasive on the balance of convenience in this case. The first is that I respectfully agree with Stuart-Smith J’s comments noted at paragraphs 26 and 27 above. The second is that it butts up against another obvious public interest, namely that the NHS should provide the best possible service to the public without disruption and with minimal risk to its patients. Public interest in proper procurement does not become irrelevant, but it has to be seen in its proper context. 6.3. Summary[99]For all those reasons, therefore, I consider that the balance of convenience overwhelmingly favours lifting the suspension in this case.[7]CONCLUSIONS[100]For the reasons set out in Section 4 above, it is accepted that there is a serious issue to be tried. It is not appropriate to reach any other conclusions about the alleged strengths or weaknesses of the parties’ respective cases.[101]For the reasons set out in Section 5 above, I consider that damages are an adequate remedy for Sysmex. I consider that damages are not an adequate remedy for the Trust.[102]For the reasons set out in Section 6 above, I consider that the balance of convenience overwhelmingly favours lifting the suspension in this case. That is therefore what I shall order.

Cited in 13 later judgments

and 4 more of the most senior