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Developer Fails to Prove Local Authority Deceit

Waste LandA developer that failed to win a £70 million contract for the construction of a major sports and arts facility has failed to convince the High Court that it was the victim of deceit and fraudulent misrepresentation on the part of the local planning authority. The tendering process in which the developer had taken part had been fair and open and had not been tainted by dishonesty, the court ruled.

The developer had claimed in the region of £30 million damages on the basis that it was used as a ‘stalking horse’ and duped into bidding for the contract at a time when the local authority had already decided to carry out the project itself on land which it part-owned. The procurement competition had been aborted prior to completion and the developer argued that it had been ‘a sham’. It was submitted that, as a result of its involvement in the tendering exercise, it had lost the opportunity to sell its land at the top of the market.

However, the court ruled on the evidence that there had been no dishonesty on the part of senior local authority employees and professionals it had engaged during the tendering process. Submissions that the competition had been infected by breaches of the Public Contracts Regulations 2006 were also dismissed.

The local authority argued successfully that carrying out the development as a public project was a ‘fall back’ position that had been adopted as property prices collapsed and it became apparent that there was a real risk that the private bids which had been submitted would either not represent value for money or not be viable.