A recent court decision from Birmingham offers welcome encouragement for council planners to keep things simple in regeneration planning. For some time, the city council had wanted to comprehensively regenerate an 11-acre site in Stirchley. About 0.86 acres of the site was owned by the council and contained a community centre and indoor bowls club. In the event of any redevelopment, council policy required these facilities to be replaced to its own specification.

Both the Co-op and Tesco secured outline planning permissions for the site. Tesco's permission envisaged reproviding the community facilities on-site as part of the wider development. The accompanying section 106 deal did not require Tesco to build the replacement facilities, but it clearly assumed that the company could. If it did not, it would have to pay the council the full relocation and fitting out costs for the new facilities.

The council subsequently agreed to sell the 0.86 acres to Tesco, subject to contractual arrangements to claw back some of its enhanced value. The Co-op challenged this sale agreement on the basis that it crystallised development obligations that should have been the subject of a formal procurement process under the Public Contracts Regulations 2006.

In deciding whether or not this sale triggered obligations under procurement legislation, the Administrative Court agreed it should look at all the arrangements between the council and Tesco. It also accepted that the terms of the sale were clearly geared to the ultimate development of the wider site, including the plot upon which the community facility stood.

So, given that the planning context ensured that replacement facilities would be provided one way or another, was this transaction a piece of unlawful procurement? Would the council have to start the whole process again, with the inevitable cost and delay that would entail?

Thankfully, the court rejected this ground for challenge. Applying the logic accepted by the European Court of Justice in Helmut Muller (C-451-08), it decided that if there was no enforceable contractual obligation upon Tesco to provide the replacement facility, there was nothing to formally procure.

Regeneration often involves redeveloping council-owned land and facilities and proper planning usually requires facilities to be reprovided. While a formal procurement process cannot always be avoided, this case should reassure councils that their planning powers, together with careful legal drafting, are often enough to secure replacement provision without the cost and delay involved in a formal procurement exercise. In these cash-strapped times, this is a sensible and welcome decision.

R (Midlands Co-operative Society Ltd) v Birmingham City Council; Ref: [2012] EWHC 620 (Admin); Date 16 March 2012  

First pubilshed in Planning Magazine, 10 August 2012.