A recent case involving a development in Newbury considered the issue of 'best consideration'; a key issue for developers working with land deals involving local authorities.

Faraday Development Limited - one of three developers bidding to be the council's development partner - challenged the legality of the eventual development agreement between St Modwen and West Berkshire. The development agreement was completed in September 2015 and gave responsibility to St Modwen to prepare project plans, assemble land interests and prepare budgets as well as make the appropriate planning applications, with the council explicitly relying on their expertise. The content of plans and strategies were to be decided jointly by the council and St Modwen and in accordance with market conditions at the time.

The challenge - which failed on all grounds - included the assertion that the council did not comply with its duty under section 123 of the Local Government Act to obtain the best consideration reasonably obtainable for the disposal of interests in its land.

In relation to best consideration, Justice Holgate considered specifically whether it was reasonable for any local authority to take into account specific issues relied on by one of the parties or generally 'probe' rival bids further than it did. He ruled that the council had its obligations in relation to best consideration "well in mind” and there was no “freestanding obligation” to probe rival bids – the Council was “entitled to focus on its assessment of the experience and expertise of the developers bidding”.

He also ruled that:

  • The Development agreement was not a ‘public contract’ to which public procurement legislation applied, partly because the development agreement did not give the Council “a decisive influence" on the type or design of the works.
  • The Council’s decision to enter into the development agreement, relying on the “expertise and past performance" of the developer selected was not irrational.