Cilldara Group Holdings Ltd v West Northamptonshire Council
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Steyn DBE |
| Judgment Date | 05 July 2023 |
| Neutral Citation | [2023] EWHC 1675 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/2027/2022 |
and
[2023] EWHC 1675 (Admin)
THE HON. Mrs Justice Steyn DBE
Case No: CO/2027/2022
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT
Birmingham Civil Justice Centre
33 Bull St, Birmingham, B4 6DS
Ewan West (instructed by TLT Solicitors) for the Claimant
James Goudie KC and Ben Mitchell (instructed by West Northamptonshire Council Legal Service) for the Defendant
Joshua Dubin (instructed by Bower Bailey LLP) for the Interested Parties
Hearing dates: 28 & 29 March 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 5 July 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
THE HON. Mrs Justice Steyn DBE
A. Introduction
On 8 March 2022 West Northamptonshire Council (‘the Council’) decided to sell about 8.25 Ha of land adjacent to Sixfields Stadium, the home ground of Northampton Town Football Club (‘the Club’) to County Developments (Northampton) Limited (‘CDNL’), a company which is owned by the Club (‘the decision’). The claimant company, Cilldara Group Holdings Ltd (‘Cilldara’ or ‘the claimant’), which had made rival offers, seeks judicial review of the decision.
Permission was granted by HHJ Simon (sitting as a Judge of the High Court) on 7 November 2022 to pursue six grounds, namely:
i) The decision was taken in a procedurally improper fashion and/or the process adopted lacked for procedural fairness (‘ Ground 1: procedural fairness’);
ii) The Council breached its Tameside duty of inquiry (‘ Ground 2: Tameside duty of inquiry’);
iii) The Council predetermined the party to whom it intended to dispose of the relevant land (‘ Ground 3: predetermination’);
iv) The Council breached its obligation not to dispose of land for less than the best consideration that can reasonably be obtained, contrary to s.123(2) of the Local Government Act 1972 (‘LGA 1972’) (‘ Ground 4: section 123(2) LGA 1972’);
v) The decision was irrational and/or the Council failed to take into account relevant considerations and/or took into account irrelevant considerations (‘ Ground 5: irrationality and relevant/irrelevant considerations’); and
vi) The Council failed to provide any or any adequate reasons for the decision (‘ Ground 6: reasons’).
The Council submits that each of these grounds should be dismissed and in the alternative that any procedural error Cilldara may succeed in establishing would not have made a difference to the outcome, and so relief should be refused pursuant to s.31(2A) of the Senior Courts Act 1981.
B. The Site
Following a local government reorganisation, the Council was vested on 1 April 2021 with the functions and land holdings of predecessor local authorities, Northampton Borough Council (‘Northampton BC’) and Northamptonshire County Council (‘Northamptonshire CC’). The Council owns the freehold to approximately 10.01 Ha of former landfill land at Sixfields.
The tenure of the Site is complex. The decision relates to two principal areas of land, immediately adjacent to each other, referred to as ‘the Main Site’ and ‘Running Track Land’.
The Main Site
CDNL has a long lease, due to end in April 2164, of the Main Site. This lease has a break clause allowing the Council to terminate it from April 2024 if CDNL has not carried out “ all necessary remediation works” (‘ the Main Site Lease’).
The Council has a sub-lease from CDNL of about 1.55 Ha of the Main Site, until February 2119 (but with a statutory right to renew), on which there is a household waste recycling centre (‘ the HWRC Lease’). The HWRC Lease does not contain a break clause. The Council has no plans to dispose of this land, and it is excluded from the decision. CDNL's obligation to remediate the Main Site includes such a requirement in respect of the HWRC site, although the HWRC Lease places no obligation on the Council to allow access for remediation.
The Main Site is also affected by a Clawback Deed (and Legal Charge) entered into by a predecessor authority with the Homes and Community Agency (now known as Homes England) (‘ the Clawback Deed’). Until the Clawback Deed ceases to apply on 11 April 2035, Homes England is entitled to receive 50% of any uplift in value where the deemed value of a planning consent exceeds the value of the site under its permitted use (payable on implementation). The permitted use, both for the purposes of the Clawback Deed and the Main Site Lease, is defined as:
i) Up to 300 dwellings for open market sale (use Class C3), and
ii) Up to 85,000 sq ft net lettable area of retail floorspace within Use Classes A1 to
A5 as defined in the Town and Country Planning Act Use Classes Order 1987 (as amended).
The Running Track Land
CDNL has a long lease (to February 2163, but with a statutory right to renew) of an area on which there is a former athletics track, immediately to the East of Sixfields Stadium (‘ the Running Track Lease’).
The Club obtained a long sub-lease (to April 2154, but with a statutory right to renew) of the Stadium and part of the Running Track Land (‘ the NTFC Lease’). The Club continues to hold the lease in respect of the part of the area subject to the NTFC Lease on which Sixfields Stadium is located, which is referred to as ‘ the Stadium Lease’. The Stadium is not part of the land which is the subject of the decision.
But the Club assigned part of the NTFC Lease to a predecessor of the Council. Consequently, while the Council is the freeholder of the whole of the Running Track Land, and CDNL has a long lease (the Running Track Lease) of the same area, the Council also has a long sub-lease from CDNL of the Eastern part of the Running Track Land (‘ the WNC Lease’).
There are no break clauses in these leases. References below to ‘the Land’ are to the Main Site, excluding the HWRC, together with the Running Track Land.
C. The facts
Part of the reason for the complexity of tenure of the Site is that, in 2013, agreement was reached by the previous owners of CDNL and Northampton BC (one of the now non-existent predecessor authorities) to develop the Land. This led to a series of property and loan transactions, including the Main Site Lease. The Club defaulted on the loans, and parts of the property agreements were cancelled. The housing development did not proceed, but the Main Site Lease (and the remediation obligations under it) remain.
In November 2015, Kelvin Thomas and David Bower bought the shares in the Club through Northampton Town Ventures Ltd. They both became Directors of the Club and Mr Thomas is the Chairman. Their acquisition of the Club prevented it being liquidated upon the petition of HMRC. Following the collapse of the arrangements with Northampton BC, CDNL became insolvent. Mr Thomas and Mr Bower bought CDNL and subsequently transferred ownership to the Club. Northampton BC agreed with the new owners not to pursue the Club for the missing loan monies, instead acquiring the rights in place of the Club to pursue parties previously connected with the Club who may have benefited from or held some of those monies.
On 27 January 2021, KPMG, Northampton BC's external auditors, published a public interest report under s.24 of and Schedule 7 to the Local Audit and Accountability Act 2014 regarding the previous disposal process, identifying a number of unlawful and unwise decisions made by Northampton BC. The KPMG report included a recommendation (Recommendation 10) that:
“Any future land sales should, other than in exceptional circumstances and where the law allows, be undertaken via means of a competitive process, in order that prospective parties are able to tender for the purchase, by submitting their plans for development. Each bid should be appropriately appraised, and consideration should be given to any relationships either with Council Members or related parties as part of the awarding process.
The ultimate decision on who to award the sale to, should in a matter of this significance be undertaken by Cabinet following receipt of a formal tender evaluation process, which includes the results of the due diligence undertaken against each bid. When considering best value for the land, the Council may (in limited circumstances and subject to the particular facts) be able to take into account ethical considerations.”
The Northamptonshire (Structural Changes) Order 2020 came into force in February 2020. Part of the process of transition involved the establishment of the Council initially as West Northamptonshire Shadow Authority (‘the Shadow Authority’). It appointed the Leader of South Northamptonshire District Council, Councillor Ian McCord, as Leader of the Shadow Authority and held its first meeting in May 2020. Councillor McCord remained Leader of the Council when it acquired the statutory functions of a local authority and its predecessors were abolished on vesting day, 1 April 2021. Following the elections to the new Council, the former Leader of Northamptonshire Borough Council, Councillor Jonathan Nunn, was appointed Leader of the Council, and Councillor McCord stepped down.
The new owners of CDNL had initial discussions with Northampton BC in 2018 about acquiring the Land, without result. From 2020, Mr Thomas and Mr Bower had protracted discussions with initially the Shadow Authority and then, following vesting day, with the Council regarding their proposed acquisition of the Land.
The Council is an executive arrangements authority and, as such, decisions relating to the disposal of the Land are the responsibility of the Council's Leader and Cabinet. CDNL's first offer of £500,000 for the...
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