In a recent judgment, the Court of Appeal confirmed the High Court’s earlier verdict in the case of Braceurself Limited v NHS England that an error by NHS England in evaluating a procurement process wasn’t ‘sufficiently serious’ to justify damages.
This case concerned the Francovich conditions — where any breach of procurement law must be shown to be sufficiently serious for damages to be awarded.
Here, Partner Michael Winder considers the facts of the case and what this Court of Appeal judgment means for procurement matters.
The background of Braceurself v NHS England
The case sparked interest among public procurement professionals when an earlier judgment found that NHS England had made a manifest error in evaluating the bid responses to a specific question. This meant that what had been a very close race between two tenderers was decided in favour of Braceurself’s competitor. As a result, Braceurself sought damages in the region of £5m. Following the judgment, a further hearing was held to decide whether the breach by NHS England was sufficiently serious to justify the award of damages.
After reviewing relevant factors to determine if the breach was sufficiently serious, it was decided that the single breach in this case was not sufficiently serious to award damages. This left Braceurself with a hollow victory — it had proved its case but hadn’t received any effective remedy. This judgment was even more of an upset given that an earlier interim hearing regarding the automatic suspension had decided that the suspension could be lifted on the basis that if Braceurself proved its case, damages would be a sufficient remedy
Braceurself v NHS England in the Court of Appeal
Braceurself appealed the decision and raised three key issues — with several other issues being refused permission for appeal.
The three key issues were:
- That the High Court had overemphasised the minor manner of the breach rather than the drastic nature of its consequences.
- In the absence of bad faith, factors regarding excusability and state of mind of the breaching party are irrelevant.
- That Braceurself had been left without an effective remedy.
On 30 January 2024, the Court of Appeal handed down its judgment. While accepting that the Francovich conditions do not fit very easily into English common law or public procurement challenges, the Court of Appeal found that the High Court had been correct — the breach was not sufficiently serious to award damages.
In respect of the first point, the Court of Appeal said that the effect of the breach wasn’t and couldn’t be determinative of the sufficiently serious test.
On the second issue, the Court noted that previous case law had determined that the degree of culpability on the breaching party was of the upmost importance in determining whether a breach was sufficiently serious. Therefore, the factors of excusability and state of mind are significantly relevant.
Based on the facts of the case, the Court considered that the High Court was entitled to deem that the error had occurred due to inadvertence, misunderstanding and oversight rather than a calculated breach.
On the third point, Braceurself argued that the decision in the interim hearing to remove the suspension meant that the Francovich conditions had been circumvented and that sufficiently serious test was therefore not required in order to award damages. The Court of Appeal rejected this. The Court has unfettered discretion at each stage of the litigation. At the interim hearing, the lower Court decided that damages were an adequate remedy in principle if Braceurself proved its case. However, following judgment on the facts, the High Court had found that damages were not recoverable in fact due to the breach not being sufficiently serious. Braceurself’s appeal was therefore dismissed.
Was there even a manifest error?
The Court of Appeal also looked at two standalone points raised by NHS England, as respondent. While one of the points was rejected, the Court of Appeal considered whether the original factual judgment had been incorrect.
The Court of Appeal considered that, on review, it was likely that the original evaluation of the specific question had been undertaken correctly and was not a manifest error. On that basis, the Court of Appeal considered it more likely than not that the contract was properly awarded to the winning bidder. There hadn’t actually been a breach of public procurement law.
What this case means for procurement professionals
This is a very interesting procurement judgment for both the public and private sector. It goes to show that the Francovich conditions remain applicable. It simply isn’t enough to show that there is a breach — the breach must be sufficiently serious to permit the award of damages even if interim hearings have determined damages to be a sufficient remedy if the case is successful.
Previous commentary on the case had considered that it would have been overturned. Instead, the Court of Appeal has affirmed the earlier decision on damages and gone further to state that it’s likely that the original findings of manifest error by the High Court were in fact incorrect.
In a close-run matter, even if a breach has devastating consequences, challengers will need to consider the manner of the breach and the circumstances.
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