Public Sector Update - August 2010

Planning

Town or village greens - further decisions from the courts

Applications to register land as either a Town or Village Green ("TVG") should be drawn to the attention of all landowners. In the March edition the case of R v Redcar and Cleveland Borough Council 2010 was discussed, where the Supreme Court held that although both local golfers and local residents had used the land for recreational purposes, the local inhabitants had used the land 'as of right' and the appeal in favour of the appellant was allowed upholding the registration as a TVG.

Two further cases serve as a warning to landowners to take action now or risk 'losing' land to TVG applications:

In Leeds Group Plc v Leeds City Council 2010 EWHC the  court considered whether those claiming use of the land as a TVG were inhabitants of "any neighbourhood within a locality ".  The landowner contended that (1) a "locality" had to be an administrative district for the purposes of sec 22 (1A) of the 1965 Act and (2) the existence of two or more qualifying neighbourhoods was fatal to the requirements of sec 22 (1A) of the 1965 Act. The court dismissed both arguments above and concluded that the locality did not need to be an administrative unit and the users did not need to come from a single neighbourhood in order to qualify for registration as a TVG under the Countryside and Rights of Way Act 2000 (which amended the 1965 Act). In dismissing the application, the court also confirmed that it is not appropriate to define the word "neighbourhood".

The case of R v Oxfordshire County Council [2010] EWCH concerns the use of signs reading "no public right of way" that were put up by the landowner on land used by members of the public. The Court found that the signs clearly related to the use of the paths nearby and not to the use of the meadow land for recreational purposes. The registration of the meadow land as a TVG was upheld. The inhabitants' continuous use of the land had not been interrupted by the signs. If the landowner had wanted to interrupt the inhabitants' use of the meadow land then a sign with clear wording to this end should have been used.

The effect trivial or vexatious TVG applications are having on rural affordable housing projects has been noted as a cause for concern in the recent Rural Coalition report "Achieving Sustainable Rural Communities," which presses the coalition government to legislate to prevent TVG applications being made once land has planning permission for development.

For more advice on this area of law please contact a member of the Planning Team.

Employment

Claimants behaving badly: Nicolson Highlandwear Ltd v Nicolson

In Nicolson Highlandwear Ltd v Nicolson the Employment Appeal Tribunal (EAT) decided that the Claimant had to pay the Respondent's costs in circumstances where he had won his unfair dismissal claim on procedural grounds, but had acted unreasonably in bringing the claim.

The Claimant and the Respondent's Mr Chalmers had a business together, where the Claimant was employed as retail manager. When Mr Chalmers visited the shop in October 2008 he found several matters which lead him to the conclusion that the Claimant had been acting fraudulently. There were cash discrepancies and evidence that the Claimant was running a second, competing shop. He drafted a  dismissal letter, which he gave to the Claimant at a meeting the following day.

The Claimant issued a claim for unfair dismissal to the
Employment Tribunal (ET). The ET found that the Claimant's behaviour constituted gross misconduct which directly led to his dismissal.  At the time, the statutory dispute resolution procedures applied. Because the Respondent had not followed the standard statutory dismissal procedure, the ET held that the Claimant had been 'automatically' unfairly dismissed, but there was a finding of 100% contributory fault against the Claimant. The ET refused the Respondent's costs application.

The Respondent appealed to the EAT and won. The EAT held that the Claimant acted unreasonably in bringing the claim. It did not require any understanding and knowledge of law on the part of the Claimant to know that this was the case, but "only a very basic understanding of the need to be honest and not to breach trust, particularly in financial matters". The EAT held that the Respondent was entitled to costs.

The case shows that it is possible to be granted costs even where the Claimant has won his claim.  A Claimant acts unreasonably in bringing a claim simply to seek a declaration of unfair dismissal. Unlike discrimination cases, there is no provision for declaratory relief in unfair dismissal cases. 

Procurement

The end of BSF - wasted bid costs

Following the announcement made by the Education Secretary, Michael Gove, last month that hundreds of school building projects will no longer go ahead, the spotlight has fallen on who will bear the burden of the wasted bid costs for those projects and, in particular, those who have reached the preferred bidder stage.

It has been estimated by the UK Contractors Group, the primary association for contractors operating in the UK, that well in excess of £100 million has been spent by consortiums bidding on the cancelled school projects.  The average investment in individual BSF projects is around £1 million, but there have been examples where bid costs have reached the £10 million mark.

As a general rule, contracting authorities reserve a wide discretion to terminate a procurement process and in most cases bid costs up to preferred bidder stage will not be recoverable unless there has been a breach of the rules of the process itself.  Once a preferred bidder has been selected, however, the issue of who is to bear the burden of these wasted bid costs will turn on what has been contractually agreed between the preferred bidder and the authority.  Contracting authorities should therefore ensure that there is a robust preferred bidder letter in place for all projects clearly setting out that the contracting authority will not be liable for any bid costs if the project is cancelled.   Contracting authorities should also be mindful of their obligations under the Public Contracts Regulations 2006 (as amended) (the "Regulations") to inform tenderers immediately of decisions to abandon the contract award procedures and the reasons for doing so.

In these difficult economic times, challenges by unsuccessful bidders have become increasingly common; the challenge by Sita UK Limited in the Greater Manchester waste PFI and by D C Leisure Management in the Hengrove Park leisure PFI are two recent examples of this.  Furthermore, in June this year, the High Court refused to strike out Montpellier Estates Ltd's ("MEL") claim against Leeds City Council.  MEL claimed several breaches of the Regulations and whilst the High Court did acknowledge that contracting authorities do have a right to terminate a procurement process (and that this is only fettered by the obligation to notify the Official Journal and supply written reasons to tenderers, if requested) it nevertheless held that there were issues to be decided at a full hearing, which has yet to be held. 

Whether any private sector contractors will bring a challenge following the cancellation of BSF remains to be seen.  The early indications are that the further costs of doing so, and the promise from the government to continue to invest in schools, may deter bidders from this course of action. 

Ashfords LLP is regulated by the Solicitors Regulation Authority.  The information in this note is intended to be general information about English law only and not comprehensive.  It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.