LIDL UK GmbH v Swale Borough Council & Anor

For the purposes of Local Government Act 1972, section 123(2), the best consideration reasonably obtainable is assessed on financial and commercial grounds. A council may consider the certainty of completion, the risk that an offer may be withdrawn, the terms already negotiated, immediate payment, and the risks of changing purchaser. A higher headline offer does not necessarily constitute the best consideration. Planning matters cannot be considered as such, although their financial consequences may be relevant. Moral or ethical considerations should not influence the statutory decision, but an inappropriate reference to them will not invalidate the decision where the substance of the decision rests on proper financial considerations. The statutory requirement does not compel a council to act in an unbusinesslike manner.

Lidl applied for permission to appeal from the judgment of Morison J, given on 23 February 2001. The judge had refused relief against Swale Borough Council in relation to its proposed disposal of land to Aldi Stores Ltd for supermarket development.

Lidl submitted that the council would breach section 123(2) of the Local Government Act 1972 by accepting Aldi’s negotiated offer, despite Lidl’s later and higher cash offer. The issues included whether the council had adopted a defective process, whether it had to seek further offers or valuations, and whether the transaction breached Article 87(1) or relevant Commission guidance.

1. Permission and outcome. Lord Justice Pill refused permission to appeal, concluding that there was no arguable ground. The application was dismissed with costs. Questions concerning injunctive relief and section 128 of the Local Government Act 1972 therefore did not arise.
2. Section 123(2). The statutory question was not merely the market value of the land. It was whether the consideration accepted was the best that could reasonably be obtained. The council was entitled to assess the competing offers by reference to their practical and commercial certainty.
3. The council could take account of the fact that Aldi’s offer had been negotiated in detail, could be completed shortly, and involved immediate payment. Lidl’s offer was made late, could be withdrawn, and carried uncertainty because Lidl had another possible site. Those matters could outweigh the higher nominal price.
4. The decision had to be made on financial grounds. The use of the word “ethical” in the committee material was inappropriate in its strict sense, but it was not crucial because the decision was in substance based on permissible financial considerations. Planning considerations could not be considered independently under section 123(2), although their financial implications could be relevant.
5. Tomkins and another v Commission for the New Towns [1989] 1 EGLR 24 did not directly support Lidl because that case concerned land with a readily ascertainable open-market value and a ready market. The present land had a restricted specialist market. Article 87(1) and the Commission guidance did not require the council to act in an unbusinesslike manner, and the council’s conduct was lawful.

• Court of Appeal (Civil Division) — On 26 February 2001, Lord Justice Pill refused permission to appeal from the judgment of Morison J and ordered Lidl to pay the costs.
• High Court of Justice, Queen’s Bench Division — Morison J refused permission to appeal and refused relief concerning the proposed disposal of land by Swale Borough Council to Aldi Stores Ltd.