Faraday Development Ltd v West Berkshire Council
[2018] EWCA Civ 2532
Independent editorial summary — not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
The touchstone for whether a transaction disposing of land is a public works contract requiring procurement is whether, in substance, the agreement as a whole -- viewed at the date it is concluded -- commits the authority to a relevant procurement, even if some of the developer's obligations to build are formally contingent on a future event such as exercising an option.
Facts
Faraday Development Ltd, a rival developer, sought judicial review of West Berkshire Council's decision to enter, on 4 September 2015, into a development agreement with St Modwen Developments Ltd for the disposal of land on the London Road Industrial Estate in Newbury, without first conducting a procurement process under the Public Contracts Regulations 2006. Holgate J dismissed the claim at first instance, holding that because St Modwen's obligation to carry out works was contingent on it first exercising an option to draw down the land, no 'public works contract' yet existed at the date of signature.
Judgment Summary
The Court of Appeal (Lindblom LJ) allowed Faraday's appeal. It held that once the council committed itself, at signature, to a transaction that would inevitably crystallise into a public works contract once St Modwen exercised its option, the council had in substance already procured the development without a lawful procurement process -- it could not shelter behind the contingent structure of the agreement. By entering into the development agreement on those terms, the council had effectively committed itself to acting unlawfully in the future, which was itself unlawful, whether as an anticipatory breach of the procurement rules or as ordinary public law illegality.
Key Quotes
"The touchstone, then, is whether, in substance, the agreement in question, at the date it is concluded, provides for a relevant procurement."
— Lindblom LJ at [60](verbatim, verified against the judgment)
Subsequent Treatment
Important on the characterisation of land transactions for procurement purposes.
What To Do Next
Get Professional Help