Millbrook Healthcare Limited v Devon County Council – Its impact on local government procurement

The High Court’s Judgment in Millbrook Healthcare Limited v Devon County Council [2025] EWHC 744 (TCC) contains useful lessons in relation to interim relief in procurement claims.

The Court’s ruling in Millbrook confirms that the “sufficiently serious” test for Francovich damages is irrelevant to the question (at the interlocutory stage of the proceedings) of whether damages are an adequate remedy for a claimant seeking to challenge the award of a contract by a public authority.

This judgment will be of particular interest to claimants in considering whether, or how, to resist an application for the lifting of the “automatic suspension” in public procurement claims.

In Millbrook, the High Court lifted the automatic suspension that had prevented Devon County Council (the “Defendant”) from entering into a contract with Nottingham Rehab Limited (trading as ‘NRS Healthcare’) (“NRS”), the preferred tenderer for a major public services contract.

Under Regulation 95 of the Public Contracts Regulations 2015 (“PCR 2015”), the automatic suspension had commenced when Millbrook Healthcare Limited (the “Claimant”) issued legal proceedings that challenged the proposed award of the contract to NRS.

The Court refused the Claimant’s application to expedite the trial, as an alternative to the lifting of the automatic suspension.

The facts

Millbrook Healthcare Limited was the incumbent supplier of Community Equipment Services (“CES”) and Technology Enabled Care & Support Services (“TECS”) in the local authority area for the past 7 years.

These services enable residents with eligible health, social care, or educational needs to remain in their own homes, rather than move into hospital or residential care settings.

The new contract was valued at approximately £46 million (exclusive of VAT) for an initial five-year term, plus an optional two-year extension from 1 April 2025.

The procurement was conducted as an open procedure under Regulation 27 of the PCR 2015, meaning that any interested supplier was permitted to submit a tender.

The procurement was carried out by NHS South, Central and West Commissioning Support Unit on behalf of the Defendant. NRS was the preferred tenderer following the procurement’s evaluation stage, with a total score of 75 per cent. The Claimant’s total score was 72.5 per cent.

Following notification of the award decision during October 2024, the Claimant raised concerns regarding NRS’s information security and financial standing, both of which formed part of the pass/fail selection criteria in the procurement.

In response, the Defendant entered into two successive standstill agreements with the Claimant, during which time the Defendant undertook further due diligence into NRS’s financial standing and information security.

This was following concerns raised by Millbrook about the impact of a cyber security incident on NRS’s operations.

After completing its review, the Defendant concluded that Millbrook’s concerns were unsubstantiated and terminated the standstill agreements in preparation for the award of the contract to NRS.

On 23 January 2025, the Claimant issued a legal claim against the Defendant, seeking of the Court:

1. A declaration that the Defendant had breached its obligations under the PCR 2015 (in misapplying selection criteria and failing to assess NRS’s financial standing and information security);
2. An order to set aside the new contract;
3. An order for the Claimant to be awarded the new contract or for the contract to be re-run;
4. Damages; and
5. Interest

Key issues for local government procurement

The Defendant applied to the Court (under Regulation 96(1) of the PCR 2015) for the lifting of the automatic suspension.

In deciding whether the automatic suspension may be lifted, the Court applied the test summarised by O’Farrell J in Camelot UK Lotteries Ltd v Gambling Commission [2022] EWHC 1664 (TCC):

1. Is there a serious issue to be tried?
2. If so, would damages be an adequate remedy for the claimant(s) if the suspension were lifted and they succeeded at trial; is it just in all the circumstances that the claimant(s) should be confined to a remedy of damages?
3. If not, would damages be an adequate remedy for the defendant if the suspension remained in place and it succeeded at trial?
4. Where there is doubt as to the adequacy of damages for either of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong; that is, where does the balance of convenience lie?

Damages are only available in cases such as this where the procuring authority’s breaches are held to be “sufficiently serious” (Braceurself Limited v National Health Service [2024] KB 914).

Significantly for the Claimant’s prospects of obtaining damages at trial, the Defendant in Millbrook had denied that it had committed a “sufficiently serious” breach of the PCR 2015.

The Claimant argued that, in circumstances where the automatic suspension was lifted and the Claimant was to award the contract to NRS, there was a risk that the Claimant would receive no damages, and therefore no adequate remedy, at trial.

The Claimant argued that the assessment of whether damages would be an adequate remedy should take into account the risk that the Claimant might achieve a pyrrhic victory at trial, i.e., an outcome in which the Claimant succeeded in its claim yet received no damages.

In making this argument, the Claimant hoped to defeat the Defendant’s application to lift the automatic suspension, thereby preserving the possibility of a re-run of the procurement in which it might submit a tender for the contract.

The Court’s decision

The Court held that the automatic suspension should be lifted. The Court held that the consideration of whether a breach was “sufficiently serious” should not be taken into account when assessing whether damages were an adequate remedy.

Some of the key reasons it gave included (in summary):

• It is inappropriate for the Court to assess the overall merits of the case at the interim stage, especially prior to disclosure and evidence;
• The question of whether there had been “sufficiently serious” was a matter for substantive trial;
• Claimants are not entitled to any particular remedy as of right; and
• “It would be inappropriate to build in a further circular consideration into the adequacy of damages assessment, requiring the judge to project forwards and consider the nature and quality of any eventual relief at the end of the proceedings…”.

This ruling is likely to influence the future conduct of procurement disputes. The Court’s ruling confirms that the “sufficiently serious” test is irrelevant to the question of whether damages are an adequate remedy in procurement claims.

In explaining its reasoning for ordering the lifting of the automatic suspension, the Court noted that the Claimant had offered in correspondence to not resist the Defendant’s application to lift if the Defendant would agree to concede the “sufficiently serious” criterion. The Claimant’s willingness in this regard was evidence in support of damages being an adequate remedy.

If you would like any advice or assistance in relation to the issues raised in this article, please contact us at gmclellan@sharpepritchard.co.uk; fgroves@sharpepritchard.co.uk cwatkins@sharpepritchard.co.uk; or odickie@sharpepritchard.co.uk.