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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Kent Community Health NHS Foundation Trust v NHS Swale Clinical Commissioning Group & Anor  EWHC 1393 (TCC) (27 May 2016)
Cite as:  EWHC 1393 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Kent Community Health NHS Foundation Trust
|- and -
|NHS Swale Clinical Commissioning Group
NHS Dartford, Gravesham and Swanley
Sarah Hannaford QC and Simon Taylor (instructed by Capsticks) for the Defendants
Hearing dates: 26, 27 May 2016
Crown Copyright ©
Mr Justice Stuart-Smith :
i) The principles to be applied are generally both settled and well known and involve the application of American Cyanamid principles in the context of the statutory framework for the regulation of public procurement contracts. I shall refer to them in more detail below;
ii) It is accepted that the proceedings brought by the Trust raise a serious issue to be tried. The Trust says that it has a strong case. That may be so, but on an application such as this the material does not make it one of those cases where the Court can take the view that one party or another is bound to win. I therefore approach the case on the agreed basis that the first American Cyanamid requirement is satisfied;
iii) The Trust contends that damages would not be an adequate remedy for it as a not-for-profit organisation which exists to serve the public good. This raises interesting questions of principle and application which I will have to examine in some detail;
iv) The CCGs say that damages would be an adequate remedy for the Trust but would not be an adequate remedy for the CCGs for a number of reasons. At the forefront of those reasons are a number of stated concerns about the quality of the provision of services by the Trust. The Trust says that there is a short answer to those stated concerns, which is that it scored more highly on quality than did Virgin Care;
v) The CCGs say that the balance of convenience favours the lifting of the suspension and that a substantial consideration for the Court is the public interest in the NHS being allowed to get on with the provision of care services as it thinks best.
The Principles to be Applied
Damages as an adequate remedy
i) The Trust submits that the question is to be answered by reference to a Claimants' real concern in bringing the proceedings, so as to meet the substantial justice of the case if the claim succeeds. Here, it is submitted that the Trust is a public body that exists solely to care for and provide healthcare services to the people of Kent. It asserts that its true interest in pursuing this litigation is the protection of the public good. It submits that NHS procurement cannot be treated as if it were simply an ordinary commercial exercise and that the overarching statutory duty of an NHS body procuring services is to act with a view to securing the needs of the people who use the services, improving the quality of the services and improving efficiency in the provision of the services, including through their provision in an integrated way which "cannot be reduced to a lowest common denominator of financial returns, or damages representing such returns." It seeks to turn its not-for-profit status to its advantage by submitting that it "exists for the sole purpose of providing NHS Healthcare services to its patients";
ii) Second, it submits on the basis of evidence from Mr Flack, its executive director, that the Trust attempts to provide an integrated approach to healthcare services for the people of North Kent, which he says will be undermined if the contract goes to Virgin Care. It submits that "the prejudice that [the Trust's] public service mission would suffer …, and the impact on the interests of [the Trust's] patients, is not a matter that can be compensated for adequately or at all by an award of damages";
iii) Third, it submits that if the suspension were lifted it would lose approximately 10% of all its operations by turnover, which would in turn impact upon its ability to achieve economies of scale and so would require financial savings to be made elsewhere, with an impact on patient care.
i) In AB v CD  1 WLR 771 the Court of Appeal reversed my decision not to grant an interim injunction in circumstances where the damages that would otherwise have been recoverable as a remedy were reduced by a limitation of damages clause in the contract between the parties. Laws LJ said, at  that "the rule – if "rule" is the right word – that an injunction should not be granted where damages would be an adequate remedy should be applied in a way which reflects the substantial justice of the situation";
ii) More recently, in PJS v News Group Newspapers  UKSC 26 the Supreme Court held that damages would not be an adequate remedy where what was at stake, and what the Claimant was trying to protect, was his privacy. The point was encapsulated by Lord Mance at :"In any event, whether or not substantial or even exemplary damages could be recovered in the present case is not decisive of the question whether an interim injunction should be granted. Once again, it is necessary to consider the particular facts. Here, it is highly likely, having regard to the nature of the material sought to be published and the identity and financial circumstances of the appellant, that the appellant's real concern is indeed with the invasion of privacy that would be involved in further disclosure and publication in the English media, and that any award of damages, however assessed, would be an inadequate remedy."
i) For the purposes of this submission I accept the Trust's formulations that it is "a public body that exists solely to care for and provide healthcare services to the people of Kent" and "a public body that exists for the sole purpose of providing NHS Healthcare services to its patients". As the organisational structures of the NHS and the existence of the regime which permits procurement of services from other types of body or organisation makes clear, this cannot and does not give the Trust a monopoly or the right to primacy or priority in the context of NHS procurement. Nor does it determine whether or not damages would be an adequate remedy. Once it is accepted that the procurement regime being adopted in this case was meant to create a level playing field and complete equality of opportunity as between the Trust and Virgin Care, there can be no justification for approaching the question of adequacy of damages any differently depending upon whether it is the Trust or Virgin Care that is the disappointed bidder. In purely financial terms, the losses that would be incurred if the Trust fails to win the contract can be assessed without obvious difficulty and can be made the subject of an appropriate award of damages;
ii) The Trust's second submission is that patients may suffer because the provision of services to the people of North Kent will not be fully integrated if the contract goes to Virgin Care. The submission is expressly made by reference to the interests of the Trust's patients: see the Trust's skeleton at . Although it is said that the Trust's "public service mission would suffer [prejudice] as a result" this is in truth another way of saying that the new arrangements will not serve the interests of patients as well as would be the case if the Trust gets the contract. It is not seriously suggested that the Trust will lose reputation as referred to in some other cases: it is therefore not necessary for me to return to that issue in detail;
iii) The third submission is essentially a repeat of the second. It is that the Trust will lose 10% of its turnover and will no longer be providing an integrated service to the whole of the community it exists to serve. It is said that this would require economies of scale and savings elsewhere, but the end-point of the submission is that this will impact on patient care i.e. the interests of patients. This is not even remotely analogous to the catastrophic impact on BMLL of the loss of the contract in that case, which would effectively have obliterated its ability to function at all; nor is it comparable with the substantial difficulties, advanced by the disappointed bidder but rejected on the facts by Akenhead J, in the Solent NHS Trust Case.
"The fact remains, that little is said for the claimant to explain whether, and if so why, damages would not be an adequate remedy to it in its capacity as the economic operator, which is the capacity in which its use. I accept that if the claimant is not awarded this contract, it will not only suffer direct lots, but it may also suffer an indirect effect in its ability to win or perform other contracts, and in the maintenance of its existing structures."
The Role of the Public Interest in the Balance of Convenience
"In my judgement, one important area of the public interest is the efficient and economic running of the National Health Service. In these times of economic difficulties and constraints, there is massive pressure on the different arms and parts of the NHS to make savings. One main area is and must be the procurement of medical goods, drugs, equipment and services. It is not for the court however to determine how the different parts of the NHS must achieve efficient and cost saving procurement."
It is certainly not for the Court to second-guess the CCG's decision to put the services out for procurement. Once they chose to do so, there were two obvious public interests in play. The first is that the procurement exercise should be conducted fairly. The second is that the CCGs should be able to put the arrangements which they consider to be in the public interest into effect promptly.
Application of Principles to the Facts of this Case