R Salford Estates v Salford City Council Tesco Stores Ltd (Interested Party)
| Jurisdiction | England & Wales |
| Judge | Hhj Waksman |
| Judgment Date | 17 May 2011 |
| Neutral Citation | [2011] EWHC 2135 (Admin) |
| Docket Number | Case No: CO / 9114 / 2010 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 17 May 2011 |
[2011] EWHC 2135 (Admin)
IN THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
Sitting at:
Manchester Civil Justice Centre
1 Bridge Street West
Manchester
M3 3FX
His Honour Judge Waksman QC sitting as a Judge of the High Court
Case No: CO / 9114 / 2010
Mr Mark Lowe QC and Mr Kelvin Rutledge (instructed by Eversheds) appeared on behalf of the Claimant.
Mr James Goudie QC and Miss Karen Steyn (instructed by Cobbetts) appeared on behalf of the Defendant.
Mr David Elvin QC and Mr Oliver Jones (instructed by Ashurst LLP) appeared on behalf of the Interested Party.
Hhj Waksman QC:
Introduction
On 28 July 2009 the defendant, Salford City Council ("the Council"), resolved to enter into an exclusivity agreement with the interested party, Tesco Stores Limited ("Tesco"), and thereafter a conditional contract, for the sale by the Council to it of a plot of land in Pendleton, Salford ("the Site").
The Site had been allocated as town centre land by the 1995 and later unitary development plans. Subject to the obtaining of planning permission, Tesco's intention was to build a superstore on the Site. On 4 November 2009 an exclusivity agreement was made and on 18 March 2010 the conditional contract was made. The purchase price of the Site was £60 million of which £4 million was now being paid. On 22 October 2010 planning permission was granted.
The claimant in these proceedings is Salford Estates (No 2) Limited ("SEL"). Its holding company, Praxis Holdings Limited ("Praxis"), owns an existing retail development near the Site on the other side of what is presently a dual carriageway called Pendleton Way. That development is known as Salford Shopping City. Praxis contracted to acquire it from the previous owner, Prime Commercial Properties Limited ("PCP"), on 16 February 2010.
The sale of the Site by the Council to Tesco was governed inter alia by section 123 of the Local Government Act 1972 which provides so far as material as follows. Under section 123(2):
"Except with the consent of the Secretary of State, a Council shall not dispose of land under this section, otherwise than by way of a short tenancy, for a consideration less than the best that can reasonably be obtained."
As this was not a disposal by way of a shorthold tenancy or with the consent of the Secretary of State the Council had to fulfil the stated duty.
On 26 August 2010 SEL issued these proceedings seeking judicial review of the Council's decision to sell to Tesco. Originally a plethora of challenges was made. They included an allegation of unlawful state aid, breach of legitimate expectation, breach of the Public Contract Regulations 2006 and also the positive allegation that the Council was in breach of section 123 because the sale to Tesco was at a clear undervalue and was therefore not at the best price reasonably obtainable. That allegation is no longer pursued. Instead a more attenuated claim is made. This alleges that the Council was in breach of section 123 because it failed to have or have any sufficient awareness of the full scope of its section 123 duty and gave no proper consideration to an alternative to dealing exclusively with Tesco, which was to offer the Site for sale on the open market.
As to the price actually obtained of £16 million, the position of SEL, as stated in oral argument, was that it was probable that the Site was worth more than £16 million in March 2010 but it cannot say by how much. I am not invited to reach that somewhat vague conclusion by deciding the issue on the basis of the expert evidence put before the court by SEL but simply because I should accept that competition in the market place tends to drive prices up and there was no such competition here.
For their part, and to the extent that this court should enter the territory of assessing the sufficiency of the price obtained at all, the Council and Tesco both contend as at March 2010 £16 million was in fact the best reasonably obtainable price or that on any view, there is no real evidence to show that significantly more could have been obtained for it.
I should add that by proceedings commenced on 21 January 2011 SEL sought to challenge by way of judicial review the planning permission granted to Tesco on 22 October 2010 referred to above ("the planning permission claim"). By the judgment which has just been handed down by me immediately prior to this one, I dismissed that claim save in one limited respect and declined to quash the permission. In addition on 25 August 2010 SEL had sought permission to seek judicial review of the Council's decision to adopt a negative screening opinion so that an environmental impact assessment was not required in respect of Tesco's application for planning permission; however this was not pursued by SEL and at its request, permission was refused on paper on 26 October 2010. Subsequently it was ordered to pay the Council's costs.
SEL's claim in these proceedings comes before me on a rolled-up basis so I have to decide first if permission to bring it should be given. Here the Council and Tesco allege not only that the claim is not arguable, but that it is made out of time and no extension is justified. For the reasons given later in this judgment I consider that their point on delay is well founded. On that basis, permission should be refused. Had I been considering the question of permission initially and putting delay to one side, I would have found it to be arguable as a matter of substance. I have in fact heard full argument on the claim over two days and in deference to that, and unless I be wrong on the question of delay, I propose now to determined the substantive claim fully.
The Facts
The Site
It is necessary first to set out the facts in some detail. In so doing, I shall at various points make comments which will hereafter need to be read with my analysis of the claim itself.
First, the location of the Site. The Site as a whole is shown bounded in red on the plan at bundle 2E 2, page 1. Pendleton Way can be seen to the east, and to the east of that is Salford Shopping City. It is about 9.44 acres in size. As at March 2010 the Council owned or would be able to deliver all of the Site except for one part which was already owned by Tesco. This is shown on the plan at 2E 2. Page 2 marks "the Tesco Land" and I shall refer to it as such. Tesco had acquired it from Limes Developments Limited on 23 August 2001 when it was known as "the laundry site". The Tesco Land is thus in the middle of the largest section of the Site. It is in that part of the Site where the superstore itself would be located. The rest of it would be occupied by car parks, a filling station and service yards. All of that is best seen from a plan which in fact was at page 202 of the bundle from the planning permission claim but with which all the parties are familiar since they are the same parties, and the document should now be formally added to the trial bundle here.
It is common ground that any superstore to be built on the Site would itself have to be in this general area of the Site although the precise location and the size of the store could vary. I deal below with a suggestion that a superstore of considerable size could be built next to, but not actually on, the Tesco Land.
Returning to the plan at 2E 2, page 2, There is an access road running directly north from the Tesco Land to Seedley Road. It lies between the northwards red and dotted lines. As the owner of the Tesco Land, Tesco has a right of way over that road which would bind any purchaser of the land to the north of the Tesco Land. Highway access to the Tesco Land is presently effected by means of Eller Street and Coleridge Street as is shown on the same plan. If the land stayed in separate ownership Tesco would be entitled to have alternative highway access to its land if those particular roads were stopped up to facilitate some other development, and alternative access would have to cross the site of any other store. I shall deal below with the detailed submissions made about the significance of the Tesco Land but at this stage I should indicate my view which is that it has fairly been described by the Council and Tesco in these proceedings as a ransom strip with significant marriage value for the owner of any adjoining land.
By 2000 the Council owned all of the Site except for the Tesco Land, the primary school shown above and to the right of Coleridge Street on the plan at 2E 2, page 2, and the Methodist church at the southern end of the Site. From an early stage it was expected that the Council would be able to acquire the two latter sites as part of a plan to market the Site as a whole. In the event and following the construction of a new school, the Council's acquisition of the primary school part of the Site was completed on 5 January 2011. It bought the Methodist church on 26 February 2007 and gave vacant possession once a new church had been built in February 2011.
Also by 2000 the Council was interested in having the Site developed as a retail centre to be integrated if at all possible with the shopping centre so that both sites would be enhanced. Although this ultimately foundered there were three-way discussions between the Council, Tesco and PDP, the then owner, to that end between 2002 and 2009; but the area that interested Tesco itself was always the Site originally without the land occupied by the Methodist church. By January 2003 all discussions proceeded on the basis that...
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