Winchester city centre redevelopment plans halted after Council fails to run procurement exercise for amended Development Agreement

11 Feb 2015

The High Court has quashed Winchester City Council’s decision to adopt an updated scheme for a £165 million redevelopment of the Silver Hill area, in the heart of Winchester city centre. The judicial review challenge had been brought by Kim Gottlieb, himself a Winchester city councillor, against his own local authority. Mr Gottlieb is the leader of the Winchester Deserves Better campaign against the development.

The original 2004 Development Agreement pre-dated the ECJ’s landmark judgment in the Auroux v Roanne case, with the result that no procurement exercise had been conducted at the outset. The Council decided in 2014 to authorise variations to it to allow the current developer, Henderson Global Investors, to abandon a requirement of 35% affordable housing, and to replace a requirement for a bus station and various civic uses with additional retail space, including a new department store, which had not been part of the original scheme.

Mrs Justice Lang, applying the ECJ’s decision in Pressetext, held that the decision was unlawful in the absence of a fresh procurement exercise. The Council’s decision to vary the original Development Agreement showed its intention to renegotiate its essential terms and to change the economic balance of the contract in favour of the developer.

The case is notable for the finding that where the court is considering a development contract or concession contract, the commercial value will be judged by the potential profits to be obtained from third parties, not just the awarding authority: the financial terms between the parties are not the only consideration. The judge also distinguished the approach of Mrs Justice Andrews in the recent case of Edenred (UK Group) Ltd v HM Treasury [2015] EWHC 90 (QB), who had held that variations to a contract would not be material for the purposes of the Pressetext test unless the evidence demonstrated that “there would be someone else who would have been ready, willing and able to bid, who would have wished to have done so if the opportunity had been made clear, but who did not do so because it was not.” In the present case, where there had never been any previous tendering exercise, the Claimant could not identify any actual or potential bidders who had been deterred or disadvantaged. Lang J held that that was not a prerequisite. The Claimant had satisfied the court that, on the balance of probabilities, a realistic hypothetical bidder would have applied, had the scheme been advertised on the new terms. The Claimant was not required to identify actual potential bidders.

The Council also argued that no relief should be granted to Mr Gottlieb, since he was not an economic operator with an interest in the operation of procurement law. Lang J rejected that argument, and quashed the decision to authorise the variations.

Robert Palmer acted for the Claimant, Mr Gottlieb, instructed by Dentons UKMEA LLP.

A link to the judgment is here. 

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