YOU DON'T HAVE TO CLAIM INTERLOCUTORY RELIEF TO BE ENTITLED TO DAMAGES FOR BREACH

In Energysolutions EU Limited -v- Nuclear Decommissioning Authority [2015] EWCA Civ 1262 the Court of Appeal considered the issue of whether it is necessary for a party to litigate in order to be entitled to claim damages. The case concerns specific breaches of the Public Contracts Regulations,however some of the observations are of general importance.

“In short, it seems to me that if, as a matter of English law, there is no legal principle allowing for a claimant to be deprived of its damages for failing to apply for interim discretionary relief.”

KEY POINTS

• The failure of a claimant to issue proceedings, or apply for an interlocutory injunction did not deprive it of the right to claim damages.

THE CASE

The claimant brought an action claiming damages for breach of the Public Contracts Regulations 2006. Under those Regulations it was possible for the claimant to issue proceedings which would then have prevented the defendant entering into a contract. The claimant did not issue proceedings but wrote reserving its rights.

THE ISSUE

The issue was whether, in failing to issue proceedings, the claimant had waived its right to claim damages.

This issue, “the first preliminary issue” was summarised

“a. whether the fact that the Claimant did not issue a claim form and notify the Defendant that it had done so before the Defendant’s entry into the Contract means that, given regulation 47G of the Public Contracts Regulations 2006, any loss that the Claimant has suffered in consequence of any breach of its obligations by the Defendant is not attributable to any such breach”

1. The first preliminary issue may be dealt with more shortly, bearing in mind what I have already said. It is, I think, beyond doubt that questions of mitigation of damages are properly to be regarded as questions of either the “determination or estimation” of damages (see the Spijker case). Those matters are, as I have said, matters for national law on well-established CJEU authority.

2. It is, therefore, first necessary to ascertain whether there is any rule of English law that allows the chain of causation to be broken because a claimant has failed to avail itself of additional legal remedies available to it. The judge took the view that this was not a question that could be determined without a trial of the facts. He engaged with the facts and envisaged circumstances in which it could be shown that, had Energy Solutions issued the proceedings earlier, and had it offered an undertaking in damages, its loss might have been avoided. He was unimpressed, on the other hand, with the NDA’s failure to make clear what exactly it was saying would or would not have occurred had Energy Solutions started proceedings early enough to extend the standstill period under regulation 47G.

3. In my judgment, however, this kind of speculation was unnecessary to provide a clear answer to the first preliminary issue. Neither party has been able to point to any authority in English law whereby a claimant has been deprived of damages otherwise payable on the basis that it failed to seek an interlocutory injunction. That, as it seems to me, may be partly because an injunction has always been an equitable remedy, so that it would be counter-intuitive for an English lawyer to contend that it might be incumbent on a party to apply for such a remedy. Where the claimant has a common law cause of action, like a claim for breach of statutory duty, that claim entitles the claimant to damages to be determined and assessed on normal principles. It does not entitle the claimant to an equitable remedy, though the court may think it appropriate, if asked, to grant one whether at an interlocutory or a final stage.

4. The NDA does not much resist these points. Its skeleton accepts that applications to lift the suspension are in effect considered as if they were applications for an interim injunction, even though they work the other way around, and that normal American Cyanamid Co v. Ethicon Ltd [1975] AC 396 principles are applied. Rather, the NDA submits that the CJEU authorities compel the application of an EU law principle that a claimant which fails to avail itself of all available legal remedies may be deprived of its damages. That so-called principle is most clearly stated in paragraph 84 of the Brasserie du Pêcheur case that I have already cited. The CJEU said that “in order to determine the loss or damage for which reparation may be granted, the national court may inquire whether the injured person showed reasonable diligence in order to avoid the loss or damage or limit its extent and whether, in particular, he availed himself in time of all the legal remedies available to him” (my emphasis). As I have already made clear, the CJEU was not laying down any principle that was mandatorily applicable, whatever was provided for in domestic law. It was simply drawing attention to the fact that this might be an appropriate approach. Even if it were part of the Francovich conditions, it would remain a minimum standard, so that it must be open to national law to apply a more generous approach to the award of damages. Any other result would violate the principle of equivalence.

5. In short, it seems to me that if, as a matter of English law, there is no legal principle allowing for a claimant to be deprived of its damages for failing to apply for interim discretionary relief, such a principle cannot be overlaid by EU law to the detriment of the claimant injured by the infringement of his EU law rights transposed into English law.

6. Finally, in this connection, there is nothing in either the Remedies Directive or the Regulations to suggest that a person whose rights under these instruments have been infringed should be deprived of damages because of a failure to invoke any other available remedy. The standstill and court application regime is available as an option to the unsuccessful tenderer. Had the legislators wished to make it a pre-condition to the availability of damages, they could easily have said so.

7. In my judgment, therefore, the answer to the first preliminary issue ought to have been “no”. I would therefore allow the appeal on this issue.