Montpellier Estates Ltd v Leeds City Council

An application to strike out procurement claims or obtain summary judgment should be refused where the pleaded case raises disputed or developing issues concerning an undisclosed parallel process during the procurement. A public authority’s broad discretion to terminate a procurement does not necessarily answer complaints about conduct occurring before termination. The court should not conduct a mini-trial or resolve uncertain questions of law summarily. An implied contract may arise in a procurement context even where the Public Contracts Regulations 2006 apply. A claim for an injunction should not be struck out merely because relief may ultimately prove difficult to obtain.

Montpellier Estates Ltd brought claims against Leeds City Council arising from a competitive dialogue procurement for the development of a Leeds arena. It alleged breaches of the Public Contracts Regulations 2006, general principles of European law and an implied contract. The Council sought under CPR 3.4 and CPR Part 24 to strike out selected allegations concerning an undisclosed public sector comparator, termination of the procurement and the pursuit of an alternative development plan. It also sought to strike out the claim for injunctive relief. The central issues were whether those allegations were legally unsustainable and whether the pleaded implied contract and injunction were plainly untenable.

1. The Council’s application was rejected in its entirety. The court accepted that a public authority generally has a wide discretion to terminate a procurement process, subject to applicable notification and reasons obligations. That general principle did not make the present claims plainly unsustainable.

2. The pleaded case was not directed solely to the circumstances of termination. It alleged that an undisclosed parallel process had operated during the procurement and had influenced the formulation of an alternative public development plan. Whether that process affected the procurement, and whether it caused loss, required investigation at trial. The allegations concerning the public sector comparator, undisclosed affordability requirements, premature termination and the alternative plan therefore remained on the record.

3. The court declined to determine developing questions concerning the application of the procurement rules summarily. Summary relief may nevertheless be appropriate where a particular plea is bad in law on undisputed or assumed facts, but that was not this case.

4. The allegation of an implied contract was not inherently objectionable. Harmon CFEM Facades (UK) Ltd v House of Commons Corporate Officer (1999) 67 Con LR 1 supported the possibility of an implied contract in a procurement context notwithstanding the Regulations. The pleaded contractual case could therefore proceed as an alternative legal basis.

5. The injunction claim was also retained. Its prospects at trial might be weak, particularly if relevant contracts had already been entered into, but that was not a sufficient reason to strike it out at the interlocutory stage.