High Court denies standing for a crowdfunded judicial review challenge to a Council procurement decision
Wednesday, 26th April 2017
In a decision of considerable interest to local authorities and developers facing development challenges, following on from an unexpected decision in favour of a local authority and developer in Whitstable Society v Canterbury City Council, Dove J once again ruled in favour of a local authority and a developer challenged by a community group, overruling precedent and denying standing to the claimants in Wylde and Ors v Waverly Borough Council  EWHC 466 (Admin) ("Wylde").
Waverley Borough Council (the "Council") awarded a contract for the development of Farnham town centre (the "Contract") to Crest Nicholson (the "Developer"). The Contract contained a 'viability condition' which called for a valuation of the site to be done before the Contract would be unconditional. In 2016, the Council authorised a reduction in the viability condition.
The claimants in this case were members of the Town Council and local civic societies who wanted to have the Council decision quashed for violating procurement law, enabling the Farnham taxpayers to recover the loss arising from the reduction in the minimum land value and potentially to reconsider the development plan. They crowdfunded the money for the review, claiming to represent the local community who objected to the development due to "its inappropriate scale and its harmful and unnecessary impact upon the historic environment".
The case turned on whether the claimants could be considered to have standing to bring a claim for a breach of the procurement rules, given that they were not economic operators.
The claimants relied on the following cases:
- Gottlieb - a case with striking similarities to the situation in Wylde, in which it was held that the claimant, as a City Councillor, resident and council tax payer, had a legitimate interest in seeking to ensure that the elected authority of which he was a member secured the most appropriate development scheme for Winchester through open competition. The claimant was permitted standing to bring a procurement challenge.
- Chandler - the court held that as the claimant was purely politically motivated by her opposition to academy schools she had no standing to bring a judicial review claim because she had no interest in the observance of the public procurement regime.
In his judgement, Dove J considered that Gottlieb's interpretation of the test in Chandler as being concerned with the presence of an "ulterior motive" was mistaken, and that the key test in Chandler is the gap that existed between the interest of the claimants and the policy and purpose of public procurement legislation.
He considered that although the public interest is served by the aims and objectives of the procurement regulations, this is different from saying that a member of the public could have an interest in the enforcement of those regulations. He concludes that it is:
"consistent with the purpose of the Regulations to confine standing in any judicial review claim brought outside the extensive range of remedies available to economic operators to only those who can show that performance of the competitive tendering procedure might have led to a different outcome that would have a direct impact on him"
Dove J held that the claimants had no standing because:
- the claimants could not show that any competitive tendering exercise for the varied contract would produce a different outcome; and
- and more centrally, the claimants were unable to demonstrate any direct impact on them as a result of a competitive tendering exercise, given that they were not economic operators.
This case is particularly remarkable given that it follows another recent ruling by Dove J in Whitstable. Both of these cases involved an admission by the Court that the claimants case was likely justified, but in both circumstances the Court came down on the side of both the Council and the developer in an unusual interpretation of the law.
These judgements will be welcomed by developers and local authorities whose schemes sometimes encounter significant local opposition, providing more certainty for the development community and local authorities to proceed with regeneration projects.