THE FARADAY CASE AND THE IMPLICATIONS FOR HAM CLOSE REGENERATION

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What the case is

In R (on the application of Faraday Development Ltd) v West Berkshire Council (2018] EWCA Civ 2532; [2018] PLSCS 200, the Court of Appeal considered the vexed question of whether a development agreement (DA) imposing binding works obligations on a developer should have been tendered under the public procurement rules. 
 

The case arose as Faraday (the aggrieved party) were ‘passed over’ for a contract with the Council and challenged the award of a contract to another developer.
 

This case is the first-ever time an English court has declared such a contract to be ineffective. West Berkshire Council were fined.  This meant that the Council needed to re do the procurement and cancel the contract awarded.
 

The judgment means developers need to be more careful about the legal justification their public sector partners are relying on to justify not tendering under Official Journal of the European Union (OJEU) rules, if they want to ensure their contract will be secure enough to withstand legal challenges.

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Why is the case relevant for Ham?

The case is directly relevant as RHP are currently in the process of tendering for a joint venture partner to deliver the Ham Close regeneration.  RHP is a public body as defined by the Public Contracts Regulations (PCR) 2015 (as is the Council).

 

The case has implications for both the contracts which RHP is looking to sign with any development partner and for the contracts between RHP and the Council. RHP and the Council must ensure these contracts are compliant with the emerging law as a result of the Faraday case.

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What have RHP and the Council done to manage the impact on Ham?

RHP and the Council are working closely with their legal advisors to manage the implications on Ham.

 

RHP in addition has sought leading Counsel legal advice on the potential implications on Ham.  This is important as the Faraday case is the first of its kind.  This advice was received in January 2019 and the Council and RHP are currently considering how the legal agreements need to be changed as a result.

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What is left to do?

RHP and the Council are working to finalise agreements and changes needed as a result of the case, and also the documentation that RHP uses to contract with any potential JV partner.

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What are the implications for the current development programme?

We will do all we can to minimise the delay due to this unexpected case.

 

However, the latest legal advice received has informed us that the most prudent way to proceed with Ham Close is to re-start the procurement process to secure the development partner.

 

The Council and RHP have jointly agreed that this is the only way forward for the scheme. RHP Board considered this approach on 14th March and, whilst very much frustrated by this latest development, approved this approach.
 

At this stage we anticipate this additional delay will mean that we will start on site in Autumn 2020, with initial planning engagement with residents and the community in Spring 2020.

 

RHP and the Council will keep residents and the wider community updated as dates become clear.