Montpellier Estates Ltd v Leeds City Council

A contracting authority may abandon a competitive procurement without awarding a contract where the bids do not offer value for money, provided it acts transparently, equally and in good faith. It may develop a public-sector comparator as a fall-back option, including on a real site, provided the comparator is not treated as a competing tender and its purpose is adequately disclosed. The authority is not required to disclose every detail of the comparator where its essential nature and purpose have been explained. An implied contractual claim cannot be used to evade the statutory limitation period under the procurement regulations.

Montpellier Estates Ltd brought two consolidated claims against Leeds City Council arising from a competition for the development of a Leeds arena. The deceit claim alleged that the Council and several individuals made fraudulent representations about the preferred site, the Council’s intention to develop the arena itself, the fairness of the competition and the use of Montpellier’s bid. The procurement claim alleged breaches of the Public Contracts Regulations 2006 and an implied contractual duty to evaluate Montpellier’s proposal fairly.

The Council terminated the competition without awarding a contract on 5 November 2008 and selected Clay Pit Lane as its preferred site, with Elland Road as reserve. The central issues were whether the representations were fraudulent, whether the public-sector comparators constituted an undisclosed competing bid or altered award criteria, whether the procurement complaints were time-barred, and whether an implied contract added any enforceable obligation.

1. Deceit. The allegations of fraud and dishonesty against all eight individuals failed. The relevant statements were either not made, were honestly believed, or remained true when made. The Council’s contingency planning did not mean that it had decided or intended to build the arena itself. The representation that Montpellier was not being used as a stalking horse remained true. The Council acted in good faith throughout.
2. Public-sector comparators. From May 2008 the Council informed Montpellier that public-sector comparators were being developed to test value for money and could provide an alternative means of delivery if the private-sector competition failed. The comparators were based on real information and could be deliverable, but they were not tenders or participants in the competitive dialogue. The Council was entitled to develop this fall-back option and was not required to disclose further modelling detail once its essential nature and purpose had been explained.
3. Procurement duties. The Council did not alter the award criteria or create a competition between its own Plan B and the private developers. The revised two-stage process was consistent with the competitive dialogue procedure. The Council was entitled to terminate the process when the submissions did not demonstrate value for money and supplied proper reasons for doing so. The alleged defects in normalisation, risk adjustment, positive sensitivity and internal evaluation were not established.
4. Limitation and implied contract. All procurement complaints except the scoring complaints were statute-barred under regulation 47(7)(b) of the Public Contracts Regulations 2006. There were no good grounds for extending time. The implied contractual claim could not extend the statutory limitation period and, in any event, added nothing to the statutory claim.
5. Both claims failed.