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7 February 2013 | Paul Snell
The High Court has dismissed a £43.5 million damages claim against Leeds City Council (LCC) for alleged breaches of procurement regulations and deceit.
Property developer Montpellier Estates claimed the local authority had broken the rules, breached an implied contract and had deceived the company to keep it in a procurement competition.
But following a case that lasted nine weeks, the judge rejected both of these complaints, ruling in favour of the council.
The case involved a procurement process to find land and a developer to build an arena in Leeds, in which Montpellier was a participant. The local authority later cancelled the competitive process, and instead proceeded with a plan that involved purchasing land from Leeds Metropolitan University.
Montpellier argued the council was looking at alternatives while it was carrying out the procurement process, and that it misrepresented this to the developer, encouraging it to continue with its bid. The authority argued the proposals were used as a ‘public sector comparator’ to test if private bids gave value for money, and was a fall-back if they did not. The judge agreed with the council that they had the right to cancel the process when they did and rejected the fraud allegation.
The court also dismissed the claims that had alleged the council breached the public procurement regulations, had “gerrymandered” the tender process to favour its own plan and that the scoring process contained errors. A claim there had been an implied contract between the developer and council was also dismissed.
In a statement, LCC chief executive Tom Riordan said: “This is absolute vindication of the honesty and integrity of Leeds City Council, its members, officers and professional consultants. Our processes have been held up to the most intense scrutiny possible over two months in the High Court.
“Cancelling the competition to develop the arena and progress with the scheme at Clay Pit Lane was always a difficult decision to take, but was a correct one given the state of the economic crisis in November 2008. There was certainly never any deceit involved.
“This court case has proved beyond any doubt that Leeds City Council has the highest standard of integrity and its operations are conducted openly, honestly and with robust, fully-accountable procedures.”
Responding to the judgement, Jan Fletcher, chairman of Montpellier Estates, said in a statement: “Anyone who knew what went on in this arena competition will understand why we took this action against Leeds City Council. We are very surprised at the judgment and we are considering whether there are grounds for appeal.”
She added the case had wider implications for procurement training. “I have also been surprised at just how many people feel strongly about the need for better run tenders and competitions,” she said. “There is a call for the government to introduce a college of procurement – particularly after the West Coast rail franchise fiasco. This is a priority and must be extended to include local authorities.”
Leeds City Council had previously applied to have the claim struck out in 2010, and had Montepellier been successful with their action, the case could have significantly widened the duty of transparency for buyers.