Credit Suisse and Another v Waltham Forest London Borough Council
| Jurisdiction | England & Wales |
| Judgment Date | 02 November 1994 |
| Date | 02 November 1994 |
| Court | Queen's Bench Division |
Queen's Bench Division
Before Mr Justice Gatehouse
Local authority - guarantor for loan - whether ultra vires
A local authority acted within its statutory powers when giving a guarantee and indemnity for repayments of a loan made for the purpose of establishing a company to acquire properties which were then leased to the authority to provide housing for its homeless.
Mr Justice Gatehouse so held in the Queen's Bench Division when giving judgment in favour of the plaintiffs, Credit Suisse and North East London Property Company Ltd, in their claim for moneys outstanding under a guarantee, in the case of the first plaintiff, and an indemnity, in the case of the second, entered into with the defendant, the London Borough of Waltham Forest.
The plaintiffs had applied to the High Court for summary judgment and/or disposal of the case on a point of law under Order 14 and 14A of the Rules of the Supreme Court.
Section 111 of the Local Government Act 1972 provides: "(1) Without prejudice to any powers exercisable apart from this section but subject to the provisions of this Act and any other enactment passed before or after this Act, a local authority shall have power to do anything (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions."
Mr Christopher Clarke, QC and Mr Peter Irvin for the first and second plaintiffs; Mr Andrew Arden, QC and Mr Richard M Sheldon for the council.
MR JUSTICE GATEHOUSE said that in 1988 there being insufficient housing in its area, the council entered into a scheme to fulfil its statutory duty to provide housing for the homeless under section 65 of the Housing Act 1985.
The council established a company, Nelpco, of which 50 per cent of the shares were held by the defendant and the balance by National Leasing Finance Co Ltd, a company specialising in public housing finance and leasing schemes.
Nelpco drew upon the loan and purchased 108 properties which were then leased to the council on short leases at market rents for which the council was entitled to housing subsidy.
The loan was secured primarily by charges over the properties, a floating charge on Nelpco and a guarantee from the council in favour of the first plaintiff together with an...
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