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STOP PRESS: When is a Development Agreement Not a Public Works Contract?

on Tuesday, 12 June 2018.

The Court of Appeal is due to hear on appeal the decision in R (on the application of Faraday Development Limited) v West Berkshire Council in this week.

The decision at first instance in 2016, was a significant case, particularly for regeneration agreements, as it concerned the principles that apply when seeking to structure development agreements outside the scope of the public procurement rules. Many regarded the decision as pushing the boundaries of when a development agreement is not a public works contract so the outcome will be an important test case.

We will be closely following the appeal and will publish further commentary once the judgement has been released.

Background

Faraday commenced Judicial Review proceedings following the decision by West Berkshire Council (the "Council") to structure a regeneration agreement in a way that would not require a competitive tendering exercise under the Public Contracts Regulations (2015) (the "PCR"). 

The High Court considered the PCR did not apply, in part, because:

  • the Council did not draw up or specify the plans for the development project. The Council did however have equal membership places on the joint steering group whose role included approving plans drawn up by the developer.
  • there was no legally binding obligation on the developer to commence the development project although in practice there was a significant commercial incentive. Walking away from the project would result in significant wasted costs for the developer as it was contractually obliged to draw up project plans, outline planning permission and proposals for the development and management of the estate.
  • the Court accepted the Council's view that the development agreement was a property transaction with the aim of income generation rather than having the realisation of works as its object.

Faraday subsequently appealed that decision. It will be interesting to see whether the Court of Appeal approve the wide approach previously adopted or attempt to narrow the boundaries for interpretation.


For more information or advice on this or any other procurement issue you may be facing, please contact Stephanie Rickard in our Procurement team on 0117 314 5675.

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