The legal challenge to the Haringey Development Vehicle (“HDV”) has comprehensively failed. At a rolled-up judicial review hearing Ouseley J refused permission on all grounds.
The purpose of the HDV was to create a partnership between the Council and a private sector body. Following an EU compliant procurement process this was Lendlease. The objective was to bring private sector finance, experience and expertise to the task of developing the Council’s land for its better use, and so achieving the Council’s strategic aims in housing, affordable housing and employment.
The Claimant challenged a decision made by the Council through its Cabinet, on 20 July 2017, to confirm Lendlease as the successful bidder to become the Council’s partner in the HDV. Cabinet also approved the structure of the HDV.
The grounds of challenge were that the Council (1) could not use a Limited Liability Partnership for these purposes since the Council was acting for a commercial purpose under s1 Localism Act 2011, and so had to use a limited company; (2) had failed in its statutory duty of consultation under s3 Local Government Act 1999; (3) had failed in its public sector equality duty under s149 Equality Act 2010; and (4) could take this decision only in Full Council and not by Cabinet alone, by virtue of the Local Authorities (Functions and Responsibilities) (England) Regulations 2000.
These grounds were all contested by the Council and Lendlease, who both also said that all grounds, save the question of whether the decision should have been taken in Full Council, were affected by undue delay, that time should not be extended, and that permission and relief should also be refused under s31(6) of the Senior Courts Act 1981, because it would cause hardship, prejudice and detriment to good administration, and under s31(3)(D) of the 1981 Act, because it was highly likely that the outcome for the Claimant would not have been substantially different, if the alleged unlawful acts had not taken place.
The Judge has now given what will be an important judgment, in particular as to why the Council was not acting for a commercial purpose and could therefore use an LLP pursuant to the general power of competence (GEPOC) under the Localism Act 2011 (see the 11KBW Local Government Bulletin).
In short summary, Ouseley J held that:
- The Council was not acting for a commercial purpose, even though it hoped for a financial return from the project. The Council’s purpose was to pursue its strategic aims in housing and employment, to which any financial return would be ancillary – and certainly the Council’s dominant purpose was not commercial. Therefore the Council could rely upon GEPOC (the Judge was doubtful that, if the purpose had indeed been commercial, other powers could have been used instead). In any case, the Claimant should have mounted his challenge when the decision to use an LLP was first taken.
- The s3 consultation duty did apply to the Council’s decision to pursue the HDV, and had not been fulfilled. However, this aspect of the challenge was long out of time, and there was no good reason to extend time (especially in view of the related forms of consultation that had taken or would take place).
- The Council had not breached the public sector equality duty. It was entitled to take the staged approach to fulfilment of the PSED that it had. In relation to any point in the decision-making process at which the challenge might have been substantively arguable, it was also out of time.
- The Council’s decisions did not amount to a plan or strategy “for the control of the authority’s borrowing, investments or capital expenditure”, and so did not have to be taken by full council.
Nigel Giffin QC, instructed by Pinsent Masons, led for the Council on the commercial purpose issue.
James Goudie QC, instructed by Ashurst, appeared for Landlease.
A copy of the judgment can be found here. 11KBW will be holding a seminar in the near future to discuss issues arising from all four of the grounds of challenge dealt with in the case.