Montpellier Estates Ltd v Leeds City Council
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Supperstone,Mr Justice Supperstone |
| Judgment Date | 06 February 2013 |
| Neutral Citation | [2013] EWHC 166 (QB) |
| Docket Number | Case No's: HQ09X00477 & HQ10X04747 |
| Court | Queen's Bench Division |
| Date | 06 February 2013 |
[2013] EWHC 166 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Supperstone
Case No's: HQ09X00477 & HQ10X04747
Charles Hollander QC and Robert O'Donoghue (instructed by Messrs Walker Morris) for the Claimant
Mark Cawson QC, Rhodri Williams QC and David Mohyuddin (instructed by Messrs Cobbetts LLP) for the Defendant
Hearing dates: 4–25, 27–31 October; 1–14, 16–30 November 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Supperstone:
| TABLE OF CONTENTS | Paras. |
| I. Introduction | 1–8 |
| II. Factual Background | 9–51 |
| III. The Deceit Claim | |
| (A) The legal framework | 52–59 |
| (B) The claim as pleaded | 60–63 |
| (C) The evidence | 64–251 |
| (D) The parties' closing submissions | 252–339 |
| (E) Findings of fact | 340–400 |
| (F) Conclusion | 401 |
| IV. The Procurement Claim | |
| (A) Introduction | 402–404 |
| (B) The legal framework | 405–411 |
| (C) Statute bar to claims brought | 412–435 |
| (D) Breaches of the Regulations | 436–458 |
| (E) Findings of fact | 459–462 |
| (F) The implied term claim | 463–467 |
| (G) Conclusion | 468 |
| V. Conclusion | 469 |
I. Introduction
This is the trial of two actions brought by Montpellier Estates Ltd ("MEL") against Leeds City Council ("LCC") concerning the competition held by LCC in 2007 and 2008 for the development of an arena in Leeds ("the Arena"). MEL entered the competition in 2007, which was terminated by LCC on 5 November 2008. The first claim (No. HQ09X00477) is for damages for breach of statutory duty pursuant to the Public Procurement Regulations 2006 ("the Regulations") and breach of contract (" the procurement claim"). In the second claim (No. HQ10X04747) MEL alleges that LCC deceived MEL by making fraudulent misrepresentations upon which it relied in entering into and remaining in the competition for the procurement of a developer for the Arena (" the deceit claim"). The two claims were consolidated on 23 May 2011 by Order of Master Eastman, with the deceit claim as the lead action.
MEL is a company involved in property investment and development. Its sole shareholder and chairman is Ms Janis Fletcher OBE. MEL is the owner of the City One site, a ten acre site at Meadow Road in the Holbeck area of Leeds.
In the deceit claim MEL allege that LCC deceived it into entering and/or remaining in the procurement competition by false representations on the part of LCC to the effect that LCC had no preference for the Arena to be built on its own land at Elland Road, that MEL was not a "stalking horse" for LCC's own development of the Arena, that LCC did not want to develop the Arena itself and that the competition would be fair and transparent. It is alleged by MEL that LCC did have a preference for Elland Road, that MEL was a stalking horse, that LCC did want to build the Arena itself and that the competition was not transparent and fair. This is said to be on the basis that LCC concealed from MEL its own "Plan B" to build the Arena on its own site, that MEL was essentially bidding against LCC's public sector comparator ("PSC") based on LCC's own sites at Elmwood Road (sometimes referred to as Clay Pit Lane) and Elland Road, and that a flawed process was involved in comparing MEL's submission as against the PSCs that included, amongst other things, the misuse by LCC of the processes of "normalisation" and "risk adjustment" so as falsely to show that MEL's commercial submission made on 10 September 2008 did not represent value for money.
In the procurement claim, MEL contends that LCC conducted the procurement competition in breach of the Regulations and in breach of implied contractual obligations at common law.
In the deceit claim the main head of loss is said to be the diminution in value of MEL's City One site, which land formed the basis of MEL's submission. MEL contends that had it not been for the representations it would have sold the site and done so prior to the collapse of the property market, which MEL contends was in late 2008. Since the fall of the property market it has not been possible for MEL to dispose of City One. The calculation of damages is dependent on the date of the fraud and the date of the hypothetical sale of City One. The sum claimed in the re-re-amended Particulars of Claim ("RRAPC") is in excess of £43.5million. The claim for loss of value of the City One site is a claim which can only be made in deceit and is therefore precluded in the procurement action. Apart from this difference, however, MEL contends that the other heads of loss, in particular wasted costs and holding costs, are equally recoverable in the procurement action.
MEL made allegations of fraud and dishonesty against eight individuals:
(1) Councillor Andrew Carter: Councillor Carter was from 2004 until 2010 the joint leader of LCC and he held the position of Executive Member for City Development.
(2) Ms Jean Dent OBE: for seven years until her retirement in August 2010 Ms Dent was Director of City Development at LCC. She was the Project Sponsor for the project to build the Arena in Leeds and she chaired the Arena Project Board. At the time of her retirement she had worked for LCC for 40 years.
(3) Mr Martin Farrington: Mr Farrington is presently employed by LCC as Director of City Development. At the material time he was Head of Asset Management. He was the officer leading the Arena project. In December 2007 he was appointed Acting Chief Recreation Officer.
(4) Mr Christopher Coulson: since March 2004 Mr Coulson has been an Executive Officer in the Major Projects Section of Asset Management within LCC's City Development Directorate. He was the Project Manager for the Arena project.
(5) Mr Nigel Foster: At the material time Mr Foster was a Director of Ove Arup and Partners ("Arup"), based in the Leeds Office.
(6) Mr Richard Greer: Mr Greer is a Director of Arup, based at the Leeds Office. At the material time he was an associate director.
(7) Mr Nick Russell: Mr Russell was a Director of PMP Limited ("PMP") until November 2007 and thereafter he was a consultant to PMP on the Arena project.
(8) Mr Andrew Smith: Mr Smith currently holds the position of Director, Corporate Real Estate Consulting at DTZ Tie Leung Limited ("DTZ"). At the material time he was a Director of DTZ and Head of Corporate Real Estate Consulting for the North of England.
In February 2006 LCC placed a notice in the Official Journal for the European Union ("OJEU") for the services of a consultant to advise on the procurement for the development of an arena in Leeds. PMP (a subsidiary of Donaldsons and special leisure consultants) was subsequently appointed as lead consultant. Donaldsons, (subsequently acquired by DTZ) were appointed as sub-contractor for property related issues and Arup for technical issues.
In August 2007 Cobbetts LLP ("Cobbetts") were appointed LCC's legal advisers in connection with the Arena project. The core members of the team included Mr Mark Fitzgibbon who specialises, in particular, in advising upon UK and EU public procurement law; and Ms Frances Anderson, who advises on operator agreements (and other ancillary commercial contracts). (D2/1589–1590).
II. Factual Background
Councillor Carter recalls that in the late 1990's there was already "an appetite" for an arena to be built in Leeds (D2/1378). LCC has previously made attempts at delivering an Arena in Leeds. However despite LCC embarking on a competition offering land together with development funding, the competition failed. Thereafter in 2004 the LCC Executive Board instructed Council officers to procure a study into the need for music venues in Leeds. This led to PMP being instructed to conduct a feasibility study and they looked at different types of venues. On 16 November 2005 the Executive Board considered the findings of the feasibility study into the future provision of concert, arena and other music and related facilities in the City, and authorised the appointment of consultants to advise on the development and delivery of an Arena in Leeds (G2/169). Under the heading "The Way Forward" the report recommended, inter alia, the appointment via the Council's Strategic Design Alliance, of specialist advisers whose skills were not available within the Council to progress proposals for the development of an arena and associated related facilities (para 4.1). The consultants would be commissioned to undertake a full site options appraisal and market assessment, hold detailed discussions with potential developers/operators of such facilities, consider and recommend funding models, and set out a process to enable the Council to select a preferred developer/operator, site location and funding mechanisms (para 4.6).
On 28 February 2006 LCC placed a notice in OJEU seeking a consultant to advise on the procurement of a consortium for the development of the Arena.
In October 2006 PMP, DTZ and Arup produced a draft report dated September 2006 (G7/33) entitled "Proposed Multi-Purpose Arena and Associated Conference/Exhibition Facilities in Leeds" (the "Procurement Study") which considered the project for the delivery of the Arena. The final version of the report dated November 2006 (G11/34) contains a summary of the key findings and recommendations of the study process in Table 1.1 (G11/37–38). The summary findings in relation to site selection and assessment state:
"The site assessment exercise illustrates that there are a number of sites...
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