Slough Estates plc and others v Welwyn Hatfield District Council and another

Planning permission for shopping centre — Another centre proposed in vicinity by plaintiff — Viability fears — Both developments encouraged to proceed — Plaintiff assured by defendant planning authority that classes of tenant to be limited so as to avoid competition — Plaintiff proceeding to construct shopping centre on that basis — Secret agreement to relax limitations on tenants — Plaintiff claiming in deceit — Judgment for plaintiffSlough Estates plc, the first plaintiff, was a property company and the parent company of the second and third plaintiffs (“Slough”). Their claim was brought against the first defendants, Welwyn Hatfield District Council (“WHDC”), over a large shopping development in the centre of Welwyn Garden City called the Howard Centre, built by the plaintiff on a site which incorporated part of Welwyn Garden City railway station. The freeholder of most of the site was British Rail. About three miles away by road was another development built on the tunnel of the A1(M) motorway, known at the time as Park Plaza and subsequently as A1 Galleria. That centre was developed by the second defendant, now in liquidation. WHDC were the long leaseholders of the Park Plaza site and the developers’ landlords. They were also the local planning authority. While Slough were negotiating with British Rail, they learnt that WHDC was moving towards a development agreement which was to include 200,000 sq ft of lettable space at Park Plaza. Slough perceived that as potentially unacceptable competition with their proposals, but WHDC were keen that both developments should proceed. They therefore drafted a “tenant mix agreement” (“TMA”) designed to limit for the five years the classes of tenants at Park Plaza so as to reduce or eliminate competition with Howard Centre. Thereafter they undertook to include the TMA in their development agreement with Park Plaza and represented that it was their intention to enforce it. Slough claimed that they relied on those representations as WHDC knew; that they were induced to continue with their Howard Centre development in reliance on WHDC’s representations and that they would not have done so had they known that the TMA was not being enforced. They also contended that WHDC had knowingly and dishonestly made secret agreements to relax the TMA while pretending to Slough that it was in place and being enforced. The hearing proceeded on the basis of the claim in deceit only. Slough claimed damages for deceit, which were essentially quantified as the costs which they incurred upon the Howard Centre after the date when they were deceived less the value of the completed development. Held Judgment was given for the plaintiff. 1. To succeed in a claim for deceit the plaintiff had to prove: (a) a false representation of fact; (b) that it was made knowingly or recklessly; and (c) that it was intended that the plaintiff should act on it to his detriment. 2. After a lengthy examination of evidence, the court concluded that there were representations; that those became false, when WHDC resolved to relax the TMA; and that Slough were thereby induced to continue with the construction of the Howard Centre. All the necessary liability elements of the claim were established. 3. Slough contended that the basis for the calculation of damages was to take all costs incurred in relation to the Howard Centre, from the date when the representations became untrue to WHDC’s knowledge, and to deduct receipts and assets including its present value. 4. That applied the proper measure of damages on the facts of the case. The policy of the law was to transfer the whole of the foreseeable risk on to the defendant. The eventual damages would be around £48m. Michael Lyndon Stanford QC, Amanda Tipples, and Anthony Trace (instructed by Lovell White Durrant) appeared for the plaintiff; Anthony Porten QC and Nicholas Huskinson (instructed by Sheridans) appeared for Welwyn and Hatfield District Council.