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

Development of sites HC and G — Local planning authority in favour of both developments — Authority owning interest in site G and representing existence of tenant mix agreement to minimise competition to site HC — Developer induced by representation to develop site HC — Secret agreements relaxing tenant mix agreement — Whether authority liable for deceit

In 1982 the
plaintiff companies were granted planning permission to develop a large
shopping complex in the centre of Welwyn Garden City (‘site HC’). In 1984 they
became aware of a proposed development by C on the A1 motorway some three miles
away which included 200,000 sq ft of lettable space (‘site G’). The plaintiffs
feared the sustainability of two retail developments and discounted proposals
to develop site HC. The first defendant council, who were the local planning
authority for both sites and favoured both schemes, held a long leasehold
interest in site G; they were to be paid a premium of £11m by C, whom they
appointed as the developers. The lease to C incorporated a tenancy mix agreement
(‘TMA’) to allow the council to limit for five years the classes of tenants at
site G to reduce the competition to site HC. The council represented to the
plaintiffs that they intended to enforce the TMA. In September 1988 the
plaintiffs irrevocably commenced the development of site HC in reliance of the
representation made to them. Following secret agreements between the council
and C in 1987 and 1988 the TMA was relaxed. The plaintiffs alleged that the
council knowingly and dishonestly made secret agreements with C to relax the
TMA and at the same time led the plaintiffs to believe that the TMA was in
being and would be enforced. The plaintiffs contended that they relied on the
council’s representations and were induced to continue the development of site
HC at a loss; they claimed damages for deceit.

Held Judgment for the plaintiff in the sum of £48.5m.

The council
made or continued to make representations concerning the existence and
enforcement of the TMA between August 1984 and February 1990: see p95G. The
representations became false from 1987 when the council secretly resolved to
relax the TMA; their intention was to induce the plaintiffs to continue
developing site HC and there was a policy to tell lies about the TMA. There was
a continuing misrepresentation which was deliberate and which the council knew
was false. The plaintiffs were induced by the TMA representations to continue
with the development of the site as a loss: see p98 et seq. The
plaintiffs were entitled to all losses 1 suffered, both income and capital, down to the date when they discovered that
they had been misled. They were entitled to their costs and expenses of
proceeding with and committing themselves to site HC, less benefits which they
had received, and a value for the capital asset which they had acquired and
built. Because the claim was for deceit, the defendants bore the whole risk of
the transaction, including the fall in property values. The damages were
£48.5m: see p121 et seq. £12.8m would have been payable if an
alternative method of assessing damages had been accepted. This represented the
difference between the value of site HC in September 1988 with the TMA in place
and its value with the TMA relaxed.

Cases referred
to in the judgment

Atkins v
Great Western Railway Co (1886) 2 TRL 400

Banque
Bruxelles Lambert SA
v Eagle Star Insurance Co
Ltd
[1995] QB 375; [1995] 2 WLR 607; [1995] 1 EGLR 129; [1995] 12 EG 144,
CA

Bellairs v Tucker (1884) 13 QBD 562

Derry v Peek (1889) 14 App Cas 337

Downs v Chappell [1996] 3 All ER 344

Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158; [1969] 2 WLR 673;
[1969] 2 All ER 119, CA

East v Maurer [1991] 1 WLR 461; [1991] 2 All ER 733, CA

Esso
Petroleum Co Ltd
v Mardon [1976] QB 801;
[1976] 2 WLR 583; [1976] 2 All ER 5; [1976] 2 Lloyd’s Rep 305; [1977] 1 EGLR
57; (1976) 241 EG 82, CA

Hornal v Neuberger Products Ltd [1957] 1 QB 247; [1956] 3 WLR 1034;
[1956] 3 All ER 970, CA

JEB
Fasteners Ltd
v Marks Bloom & Co [1983]
1 All ER 583, CA

Linotype-Hell
Finance Ltd
v Baker [1993] 1 WLR 321; [1992]
4 All ER 887, CA

Marine
& General Mutual Life Assurance Society
v Feltwell
Fen Second District Drainage Board
[1945] 1 KB 394

O’Donnell v Reichard [1975] VR 916

R v Inland Revenue Commissioners, ex parte Coombs (TC)
& Co
[1991] 2 AC 283; [1991] 2 WLR 682; [1991] 3 All ER 623, HL

Rimgee v Shapwanee unreported

Royscott
Trust Ltd
v Rogerson [1991] 2 QB 297; [1991]
3 WLR 57; [1991] 3 All ER 294, CA

Saunders v Edwards [1987] 1 WLR 1116; [1987] 2 All ER 651, CA

Shrewsbury v Blount (1841) 2 Man & G 475

South
Australia Asset Management Corporatio
n v York
Montague Ltd
[1996] 3 WLR 87; [1996] 3 All ER 365; [1996] 27 EG 125, HL

Toteff v Antonas (1952) 87 CLR 647

Winchester
Cigarette Machinery
v Payne (No 2) The Times
December 15 1993

Young v Bristol Aeroplane
Co Ltd [1944] KB 718; [1944]
2 All ER 293

Claim for
damages for deceit

This was a
hearing of a claim in deceit for damages by the plaintiffs, Slough Estates plc,
Howard Centre Properties Ltd and Slough Industrial Estates Ltd, against the
defendants, Welwyn Hatfield District Council, in proceedings originally
commenced by an application for judicial review in which Kennedy J quashed
decisions of the defendants to relax the TMA and adjourned all questions of
damages to be dealt with as if the proceedings had begun by writ.

2

Michael
Lyndon Stanford QC, Amanda Tipples and Anthony Trace (instructed by Lovell
White Durrant) appeared for the plaintiffs, Slough Estates plc, Howard Centre
Properties Ltd and Slough Industrial Estates Ltd.

Anthony
Porten QC and Nicholas Huskinson (instructed by Sheridans) appeared for the
defendants, Welwyn Hatfield District Council.

The second
defendants, AIGalleria Investment Corporation did not appear and were not represented.

The
following judgment was delivered.

MAY J: Slough
Estates plc, the first plaintiff, is a property company and the parent company
of the second and third plaintiffs. It is not necessary to distinguish between
them and I shall refer to them together as ‘Slough’. Their claim now proceeds
only against the first defendant, Welwyn Hatfield District Council (‘WHDC’).
The claim concerns a large shopping development in the centre of Welwyn Garden
City called ‘the Howard Centre’ built on a site which incorporates part of
Welwyn Garden City railway station. The freeholder of most of the site is
British Rail. Another small bit of land was to be purchased from the Commission
of New Towns (‘CNT’). At some time before the summer of 1984, British Rail were
in exclusive negotiation with Slough, who were then in partnership with a
company which at some stage changed its name to Charlecote Estates Ltd. Mr
Cleaver is a director of this and other Charlecote companies and of companies
associated with the name ‘Boskalis-Keys’. I shall refer to Mr Cleaver’s
companies compendiously as ‘Charlecote’. In 1988, Slough bought out
Charlecote’s interest in the Howard Centre development. I shall refer to the
developers of the Howard Centre before this buy out as ‘Slough’ where the
context makes a distinction between Slough and Charlecote immaterial.

Somewhat over
a mile as the crow flies away from the Howard Centre — about three miles by
road — is another development built on the tunnel of the A1(M) motorway. This
is called ‘A1 Gallerias’, but was called ‘Park Plaza’. This was developed by
the Carroll Group, one of whose companies was the second defendant, now in
insolvent liquidation. WHDC are long leaseholders from the Ministry of
Transport and the developers’ landlords of the Park Plaza site. They are also
the local planning authority. A 1982 planning permission for this site had been
for a relatively modest amount of retail warehousing.

This is a
claim in deceit by Slough against WHDC. It is a claim for damages in
proceedings which began in the Crown Office as an application for judicial
review in which Slough (and John Lewis plc) were successful before Kennedy J
(as he then was) in March 1991.

Howard Centre
was planned as and in fact built as a town centre shopping development with the
main income producing space let as retail shops. These included Marks &
Spencer as ‘anchor’ tenants at one end, Boots and WH Smith at the other and
numerous other retail shops including fashion shops. In 1984 Slough learnt that
WHDC were moving towards a development agreement with Carroll, which was to
include 3 200,000 sq ft of lettable space at Park Plaza. They perceived this as
potentially unacceptable competition with their Howard Centre proposals. They
reckoned that the area could not sustain two large retail developments so close
together. WHDC were keen that both developments should proceed. They and
Carroll said that it was intended that Park Plaza should be what they called a
speciality leisure-based development. They drafted a ‘tenant mix agreement’
(‘TMA’) designed to limit for five years the classes of tenants at Park Plaza
so as to reduce or eliminate competition with Howard Centre and other town
centre traders. WHDC undertook to include the TMA in their development
agreement with Carroll and to enforce it. Slough’s case is that WHDC
represented to them that the TMA was in place and that it was WHDC’s intention
to enforce it; that they relied on these representations and that WHDC knew
this; that they were induced to continue with their Howard Centre development
in reliance on the representations and that they would not have done so if they
had known that the TMA was not in place or that it would not be enforced; that,
notwithstanding the representations, WHDC knowingly and dishonestly made secret
agreements with Carroll to relax the TMA, but at the same time pretended to
Slough that the TMA was in place and being enforced. Slough therefore claim
damages for deceit which are essentially quantified as the costs which they
have incurred upon the Howard Centre after the date when they were deceived
less the value of the completed development.

The first
secret agreement was in 1987 (although Slough contend for an earlier such
agreement in 1984). Slough rely on what they say was another extension
agreement in 1988. In February 1990, WHDC officially resolved to relax the TMA.
It was this decision and the earlier 1987 secret decision (by then in part
revealed) which Kennedy J quashed.

It is
remarkable that no witness has been called on behalf of WHDC to justify or
explain their relevant conduct up to and including the 1987 secret agreement.
Mr Asquith, who was then WHDC’s clerk and chief executive, has died. The
evidence is that most of the other councillors and officers who might have
given evidence, including the six councillors to whom I refer below, Mr Moore,
the then chief planning officer, Mr Heys, the chief financial officer and Mr
Anderson, the chief legal officer, and many others are alive and available.

Mr Riddle, who
succeeded Mr Asquith in January 1988 as chief executive of WHDC, did give
evidence. He said that Mr Moore was appointed director of planning and
development in March 1988 with responsibility to lead on behalf of the council
on these matters. His responsibility included all development matters with
which the council were involved including Park Plaza and the Howard Centre.
This appointment was made because Mr Riddle, as part of his assessment of WHDC
as a whole upon his own appointment, considered that his predecessor had been involved
in planning and development matters to an extent which he did not want to
perpetuate. Mr Moore had previously been chief planning officer reporting to
the chief executive.

4

Case
management

This case
originally had a time estimate for the hearing of six weeks or more. At the
pretrial review, I gave directions in accordance with the Practice Direction
(Civil Litigation: Case Management) [1995] 1 WLR 508. I indicated that, in my
view, the parties should be thinking in terms of a substantially shorter period
than six weeks which they agreed was possible and reasonable upon an assumption
(which proved to be correct) that most questions of detailed quantification of
damages would be agreed. I ordered that evidence in chief should be taken as
read from witness statements and reports. 
I required the parties to draw up a timetable for the hearing to include
pretrial skeleton submissions, limited opening statements by both parties and a
limited time (one day each) for final submissions. The programme was duly prepared
and (for practical purposes) adhered to. Since evidence in chief was taken as
read, the majority of the hearing was taken up with cross-examination enabling
the party cross-examining to put their case and in the course of doing so to
make it clear to the court. In the event WHDC’s cross-examination of Slough’s
witnesses occupied rather more time that Slough’s cross-examination of WHDC’s
witnesses. At the close of the evidence, there was a period for the parties to
prepare written closing submissions which I received and read before the oral
submissions were made.

I then gave
certain indications of factual findings which I was at that stage inclined (but
had not decided) to make and made some comments on authorities which I had been
asked to read. This was to enable parties to concentrate their limited oral
submissions on the points which mattered to their respective cases.

In the event
many (but not all) of these inclinations were adverse to WHDC, but WHDC had had
(and had taken) full opportunity to deploy their case in cross-examination and
by written submission and, in the event that WHDC had called no evidence, many
(but not all) of the factual inclinations were on points which were scarcely
defended or defendable. The parties duly concluded their submissions in the
time allotted and the hearing was concluded more or less within the timetable.
It is to be observed that this modern procedure puts considerable pressure on
all parties (including, if I may say so, the judge) by way of out of court
preparation. I suspect that the greatest pressure is on counsel and others
involved in preparation for what can be extended and uninterrupted periods of
intensive cross-examination. The case was, as I said in court, admirably
prepared. It is not a criticism in this case to say that the parties did not
succeed in reducing the volume of documents before the court to economic
proportions. No one has yet, so far as I am aware, devised a means of doing so
for a case of this magnitude.

Narrative

By April 27
1984, there was in being a document (12/796) entitled Development Concept
for Park Plaza for a ‘Proposed development by Carroll Group of Companies in
partnership with [WHDC]’. It recognised that the development might be seen as
competing with the Howard Centre 5 proposals (12/806), but it was said that:

Having regard
to the specialist nature and leisure element of Park Plaza, we believe the two
will exist harmoniously — not in direct competition.

On June 5
1984, Mr Asquith first told the Howard Centre working party of the Park Plaza
proposals and Mr Adds (of British Rail) recorded that the development team were
appalled (13/871). There followed letters of protest including that dated June
7 1984 from Mr Carey of Slough (13/891), which included:

The
disturbing news of the submissions on the A1(M) site limit the prospects for
our scheme and we feel that we would be forced to withdraw if any one of the
submission is accepted [sic], as would any other development company in
such circumstances.

On June 12
1984, WHDC resolved to appoint Carroll Group as the developer for the Park
Plaza scheme ‘subject to the adoption of the option given by that Company
concerning the Council’s ability to control the tenant mix within the retail
element of the Scheme and to completion of a suitable agreement’ (13/925). On
June 14 1984, work stopped on the Howard Centre scheme in the light of the WHDC
decision and WHDC were so informed by British Rail by letter dated June 15 1984
(13/934). Mr Cleaver said in evidence that the Howard Centre could not go on
unless either an alternative scheme for the Howard Centre could be worked up
quickly or the Carroll Group scheme could be defeated or delayed. As a result
of the Park Plaza proposals, Waitrose withdrew their interest from the Howard
Centre (13/949) and British Rail and Slough wrote strong letters of protest. Mr
Carey’s letter to Mr Asquith of June 27 1984 (13/959) expressed ‘utter
amazement’ and said:

I know that
you feel that you have a formula agreed with the prospective developer of the
A1(M) site which will protect the existing town centres of Welwyn Garden City
and Hatfield, but I am afraid that as professional property people we cannot
envisage a means whereby such a system could work to these centres’ advantage
or even if they could, to the A1(M) developers’ advantage who must surely
experience funding difficulties if all recognised town centre retailers are
forbidden to enter their scheme.

I know you
are accepting the Carroll scheme as a leisure based complex, but it does
include 200,000 sq ft of retail accommodation which must far exceed the
requirements of any leisure based retailers, and we are saying that the Welwyn
and Hatfield catchment area is simply not big enough to accommodate this scheme
and the Howard Centre. In the light of your decision, we have as you know had
to suspend all work on our scheme which is a very unsatisfactory situation
having regard to the effort which has been put into it to date, not to mention
the large sums of money that have been committed in good faith and we all feel
totally let down and misled by your Authority.

Mr Adds’
evidence was that British Rail hoped to defeat the Carroll 6 application. He said that at a meeting on June 21 1984 Mr Asquith stated that
there was no danger to the Howard Centre from what was proposed at the
Gallerias site which was to be leisure based. At this stage, British Rail
regarded this as vague and difficult to enforce. Park Plaza was regarded as a
threat. British Rail in the person among others of Mr Clarke were not
satisfied.

WHDC arranged
a meeting with Carroll for August 24 1984 (13/1011). Meanwhile on August 6 1984
WHDC issued a press statement which included:

… the council
is determined, and will have powers of landlord as well as those of Local
Planning Authority, to prevent the kind of retailers who might have been
prepared to go into the Welwyn Garden City Station Redevelopment site (the
Howard Centre) from taking up tenancies in the Hatfield Park Plaza. With the
full agreement of the Carroll Group of Companies we have an absolute embargo on
the choice of the main tenants (anything over 30,000 sq ft gross) and all the
other retail elements of the Galleria will have to fit into the agreed concept
of ‘leisure, pleasure recreation and enjoyment’.

The meeting on
August 24 1984 was chaired by Councillor Gillen and the Howard Centre
development team was introduced by Mr Asquith. It was said that WHDC were close
to agreement with Carroll on control of tenants by means of a document defining
the philosophy of leisure shopping. High Street shopping meant the necessities
of life — specialised shopping meant ‘something different’. The Howard Centre
team asked which retailers would be permitted into the A1(M) scheme ‘since the
development team doubted whether control could be exercised on occupancy’. Mr
Clarke of British Rail asked what WHDC thought speciality shopping was. Mr
Adds’ note of the meeting (13/1090) records no reply. It is suggested that the
formula remained vague and undefined. Mr Carey is recorded as saying that the
definition of specialist goods would create grey areas in which control would
be difficult. Mr Carey said in evidence that it was all very flowery. They
considered a leisure based scheme to be ‘specious in the extreme’. Mr Cleaver
did not believe that there was such a concept as a ‘leisure retail’ scheme and
he thought that the scheme would be a shopping scheme in direct competition
with the Howard Centre. It was thus decided to oppose the grant to Carroll of
planning permission and to request the Secretary of State to call in the
application (13/1167), which he did despite opposition from WHDC. Slough
decided to make a planning application on their own account so that the
inspector could form a balanced view: see 16/2352. The intention was to
convince the Secretary of State that the A1(M) scheme would seriously damage
the prospects for the Howard Centre (l4/1451).

The TMA had
come into being as a document by September 1984 (13/1137). Slough first asked
to see it at the meeting on August 24 1984 and by letter dated September 12
1984 (13/1123) but first received a copy at the time of the public inquiry into
the Park Plaza Scheme in 1985. The document is headed Agreed Document
and is subscribed in print by WHDC 7 and Carroll Group. The version in the court bundle is not signed. It states
that the leisure speciality centre is based around a theme which is ‘the
framework for the creation of an environment within which quality specialist
shopping can take place’.  There was to
be a gymnasium and work-out area, an ice rink, exhibition areas and generous
open air areas. There was to be:

•       30,000 sq ft gross as a specialist food
shopping area for which a full range supermarket was not considered to be
appropriate.

•       40,000 sq ft gross for ‘Leisure Oriented
Durable Goods’.

•       85,000 sq ft gross for ‘Habitat Type
Household Goods Store’

•       40,000 sq ft gross for service units and
travel agents.

In conclusion
it was stated that:

Any goods
outside the above categories … must be sold only as minor ancillary merchandise
within shops whose main trade is one of the permitted uses unless otherwise
agreed in writing by the Council.

There were
then examples of types of shop which did not fall into the permitted categories
including fashion shops, full range supermarkets, chemists, stationers, shoe
shops and clothing and general household goods stores. Specific examples of
shops excluded were stated to be Marks & Spencer, C&A, Littlewoods,
British Home Stores, Boots, WH Smith, Woolworths — ‘(this list is not
considered as exhaustive)’.

In the
judicial review proceedings, Kennedy J construed the expression ‘unless
otherwise agreed in writing by the Council’ as ‘clearly intended to enable
[WHDC] to sanction an occasional departure from the strict terms of the [TMA],
not the sort of wholesale abandonment of it which now [by 1991] seems to have
occurred (1/197)’.

A letter dated
October 4 1984 written to WHDC on behalf of Carroll in the context of tenant
inquiries (13/1157) stated that the wording of the TMA had been agreed and
imagined that ‘this document will be satisfactory for your purposes for the
time being’.

On October 22
1984 WHDC appointed Carroll as developer for Park Plaza and annexed the TMA to
the letter of appointment (13/1316). The letter stated that there were to be
restrictions within the first five years for lettings and assignments of anchor
stores and that all other lettings and assignments were to fall within the
agreed tenant mix strategy based upon the retail leisure theme. ‘The purpose of
this term is to safeguard specifically the development currently proposed for
the redevelopment of the Welwyn Garden City Station site …’. Carroll were to
pay WHDC a premium of some £11m thus giving WHDC a large financial interest in
the scheme.

Healey &
Baker were advising Slough and Mr Paul Orchard-Lisle [frics], their present senior partner, gave evidence. He said
that when Carroll Group made their planning application in 1984 to develop a
full scale shopping centre at the A1(M) site, he and Mr Carey agreed that if
the Carroll Group’s proposals were to be implemented the Howard Centre would
not be commercially sensible. Mr Orchard-Lisle understood that 8 published local planning policy was to resist new out of town or urban fringe
shopping centres. His opinion about the Howard Centre was that no fund would
have made a commitment until the extent of the Carroll Group scheme was certain
and would not do so unless they were convinced that the A1(M) site would have
no significance as a major shopping attraction and that no major High Street
retailer would provide an alternative to a traditional centre. This view was
contained in his written evidence to the planning inquiry prepared before he
had seen the TMA. Having seen the TMA, he preferred the view that there should
have been no competition at all from Park Plaza. The TMA was a middle course
between what he wanted and a clearly unacceptable position.

WHDC and
Carroll presented a joint case to the planning inquiry. WHDC’s statement of
issues (14/1604) included an assertion that ‘[p]erhaps the most significant
aspects of the Council’s involvement is that it is in a position to control
tenant mix within the retail part of the scheme’ (14/1609); and that ‘[t]he
Council has given assurances regarding its control of tenant mix at Hatfield
and is satisfied that there is no conflict with potential anchor tenants for
Howard Centre Scheme’ (14/1619); and that ‘[t]he District Council will legally
control tenant mix to ensure that there is no detraction of tenants away from
existing town centres and proposed developments in those centres’ (14/1620).

At the
planning inquiry, WHDC produced the TMA and said that it would be incorporated
into the lease to Carroll thus giving means of control. The council and the
Carroll Group gave evidence that their proposed agreed scheme would be a
leisure based speciality scheme and that the TMA would ensure that the usual
high street trader would not be allowed. It was said to be quite clear from the
terms of the TMA that ‘a conventional ‘town centre’ is not being created’
(14/1681). These matters appear in the proofs of Mr Hoffman and Mr Carter
(WHDC’s chief assistant planner). Provisions equivalent to those in the TMA
were suggested as planning conditions. Mr Carter’s proof included:

I can only
refer to the suggested planning conditions and to the tenant mix agreement
which is already embodied in the formal appointment of the Carroll Group. It
will, when planning consent is granted, be incorporated into an agreement for a
lease and later for the lease itself. On this the Council gives its undertaking
… My Council however, does require the assurance of the tenant mix control,
essentially to reassure others, and to assist the lettings of the new town
centre developments. (14/1687).

Mr Carter
expressed confidence that ‘the control of tenant mix contained in the letter of
appointment, to be incorporated into the lease agreement and eventual lease is
enforceable’ (14/1688).

Slough, among
others, opposed the grant of planning permission and were not deterred from
doing so by the production of the TMA and WHDC’s undertaking. Mr Carey’s
evidence to the inquiry was that they had stopped work in June 1984 as they had
no confidence in the local authority’s assertion that they would limit the
range of goods sold in the 9 Park Plaza scheme (15/1902). He could not understand how such a scheme could be
funded. Mr Carey said in evidence that in the early stages they had no
confidence that WHDC would or could enforce the TMA. They had had nothing but
vague assertions. They felt that the scheme proposed at the inquiry put the
Howard scheme in jeopardy. They continued to oppose the Carroll scheme. Their
case before the inspector was that if Carroll’s application as submitted was
given planning permission, it was extremely unlikely that the Howard Centre as
then proposed would go ahead (16/2688). It was suggested that the TMA would be
unenforceable in practice (16/2692) although Mr Cleaver said in evidence that
he did not consider that it would be entirely without value. He said that Park
Plaza was not nearly so unacceptable with the TMA as it would have been without
it.

Mr Adds gave
evidence at the inquiry (15/1831) to the effect that there was mistrust at the
council’s ability to enforce restrictions and that it was difficult for the
Howard Centre to proceed in the face of this competition. Even with a sight of
the TMA document at the inquiry, British Rail had misgivings and maintained
their objection. Mr Clarke said that it was their objective to defeat the
scheme.

Counsel
appearing for Slough made a final submission (15/2113) emphasising the size of
the scheme and doubt about the ability and willingness of WHDC to honour
assurances (15/2128). It was difficult to know what leisureware meant. Slough’s
position at the inquiry was that the TMA was worth little. There was no
certainty that the agreement would be concluded. Even if there was, there was
unlimited opportunity for amendment. The wording of the TMA was uncertain and
‘far from watertight’. There was power to waive any or all of the restrictions.
It was suggested that the Secretary of State could not rely on the ‘guarantees’
offered. But Mr Carey said that, while opposing the principle of the scheme, he
received comfort from the insistence of WHDC that they would put into place and
enforce the TMA. With the benefit of what they heard at the inquiry, he
gradually became more comfortable by considering the effect of what WHDC had
said at the inquiry, which gave considerable flesh to what the council’s
intentions were. The threat from the Carroll scheme was considerably diluted by
what had been said.

Mr Cleaver’s
evidence was that notwithstanding the council’s assurances there still remained
a concern. By the end of the inquiry, he had come to the view that the TMA
would be put in place. Reliance was not relevant before the decision of the
Secretary of State. The council had said that the TMA would be strictly
enforced. They continued to say so in the future. This allayed his fears
although he was not completely convinced. He did think that the council would
introduce the TMA into the lease. He did not consider that a scheme with rigid
enforcement of the TMA could be funded or fully let.

The planning
inquiry was held between February and May 1985. The Secretary of State’s
decision was given by letter dated March 20 1986 (17/2874). In the period
between the planning inquiry and the decision, it appeared as if either
Carroll’s application would be rejected or that, if it 10 were allowed, the development would be subject to TMA restrictions. By her
report of June 4 1985 (16/2647) the inspector recommended that planning
permission should not be granted (16/2696S). The parties were not aware of this
recommendation until the publication of the Secretary of State’s decision. The
inspector summarised the respective cases of those who had appeared before her
at length. Her account of the John Lewis Partnership’s case included (at
16/2678):

In the face
of financial and other pressures, the suggested retail concept of the scheme is
a myth and very unlikely to be maintained. The subsequent extension and
conversion into a traditional centre is inevitable, based on experience
elsewhere, and such a conversion would strongly favour the financial advantage
of the landlord, which would be the District Council.

Although these
were not in terms submissions made by Slough, the evidence before me shows that
they may be taken as expressing part of the case which Slough also were
presenting. The passage was relied on by the respondents in the judicial review
proceedings as suggesting that Slough and John Lewis never did place any
reliance on the TMA (1/177). The inspector herself noted (16/2696L) that there
was no precedent indicating that a centre on the speciality/leisure theme would
be likely to succeed in this location if the specialist traders could be
attracted. She expressed the opinion that units at Park Plaza would sooner or
later be let largely to traders who normally occupy retail premises in central
shopping areas. The TMA would allow this anyway after five years (16/2696M).

In June 1985
it was being said on behalf of Slough that a scheme would go ahead at the
Howard Centre but that the timing and content would depend to some extent on
the result of the Park Plaza inquiry (16/2712). Mr Cleaver said in evidence
that this was consistent with his views that either the Carroll scheme would
not get planning permission or that it would not be built or that it would be
subject to the TMA which the council would enforce. He then thought that
planning permission was likely to be refused for Carroll’s scheme. He was
always of the view that some scheme would go ahead on the Howard site, but not
necessarily the one that was eventually built. Any major change in the scheme
would have needed the agreement of British Rail, who might have reopened the
competition. If Park Plaza had been permitted without restrictions (or
unrestricted as to 85,000 sq ft which would have been equally devastating), a
major shopping scheme of the kind of the Howard Centre would not have gone
ahead. There would have been some development at some time, but nothing like
the Howard Centre which had to carry, and was alone able to carry, a lot of
infrastructure costs such as costs of the distributor road and the relocation
of the British Rail station. The Howard Centre also had a large gross area in
relation to the net area. Any alternative development would have required to be
shown to be viable. It would have been a much smaller scheme. If there had been
an office development, it would have been likely to take two years to plan and
perhaps 18 months to build. British Rail would probably not have been
content with a smaller scheme which did not improve their station. They might
well have withdrawn the site and put it out to competition again.

By January
1986, Slough were telling British Rail that they would still wish to
participate in some development at the Howard Centre even if the Secretary of
State decided against their objection and that they had had to suggest to the
inquiry the possibility of withdrawal to demonstrate their concern (17/2819,
2826, 2850). Mr Carey said that these documents should be seen in the light of
Slough’s commercial desire to maintain their exclusive position with British
Rail and the Commission for New Towns in relation to the best site in Welwyn
Garden City. The scheme might have gone forward in a different form — see eg
13/986 — and there were other possible developers ‘warming up beside the
running track’ (17/2900). Mr Carey agreed that there was a decision which
Slough published to go ahead so far as they were able to proceed with a scheme
in some form before the Secretary of State decision arrived. The climate was
optimistic. Ultimately the decision rested with British Rail. It was possible
that if the Secretary of State’s decision had been wholly adverse, Slough would
have promoted an office scheme which might have been completed earlier than the
Howard Centre which was in fact built.

Contrary to
the recommendations of the inspector, the Secretary of State granted
conditional planning permission (17/2879), but it was not conditional in terms
which required the imposition of the TMA. His decision stated:

… the
Secretary of State does not consider that the decision on Park Plaza should
depend on commercial judgments about the viability of proposed new retail
floorspace elsewhere. While he accepts that, following the grant of any
planning permission for Park Plaza, developers might decide to alter or abandon
other schemes, he does not regard that as sufficient reason to refuse the
planning permission …

He considers
that planning conditions which seek to limit sales to specialist or leisure
goods, or to specify a Habitat type store selling household goods would be
inappropriate. He notes, however, the local planning authority’s intention to
use a ‘tenant mix’ agreement to control the occupation of retail floorspace in
the development, and considers that this is a more appropriate way to control
such matters than a planning condition.

Mr Carey
thought that the Secretary of State’s decision was extraordinary in that it
differed on virtually every point from that of the inspector (17/2905). Mr
Cleaver said that the decision was not the worst possible decision from the
viewpoint of Slough and Charlecote. The Secretary of State’s reference to the
TMA and the council’s assurance given at the inquiry meant that a TMA was the
way to control the tenants. By that time he was inclined to accept this. He had
been much more encouraged by the end of the inquiry. Once he had read the
Secretary of State’s decision, he was satisfied that the council could not in
all conscience fail to put TMA in place. He thought that this would result in
the Park Plaza not being built. He felt that the council were intoxicated about
the scheme.

Although the
planning permission did not impose restrictions 11 equivalent to the TMA, it is quite clear on the evidence that Slough and others
loosely regarded WHDC’s undertaking at the inquiry and the Secretary of State’s
reference to the TMA which I have quoted as together amounting to a requirement
upon Park Plaza that the TMA would be imposed and enforced. In my view, they
were justified in so regarding it.

Immediately
after the Secretary of State’s decision was published, Mr Asquith wrote to Mr
Carey on March 26 1986 offering assurance that ‘the full co-operation of all
the Officers of the [WHDC] will be available to enable a modified Station
Redevelopment Scheme to be put together and physical work started at the
earliest possible date’ (17/2903). Mr Cleaver wrote to Mr Carey on March 27
1986 (17/2909) saying that they were pressing ahead with their formal
consideration of the redesign of the Welwyn scheme. It was thereafter changed
in detail but it remained a town centre shopping development. Mr Carey said
that the only way in which the intended Howard Centre scheme could be
maintained unchanged was if there were assurances about the TMA at the A1
Gallerias site.

At a meeting
on April 11 1986 for which Mr Adds made manuscript notes (17/2936), ‘Mr Cleaver
stated that Park Plaza would undermine retailer demand for Welwyn GC and wished
to discuss two main issues (a) the tenant mix Agmt and (b) the extent of any
financial support from WHDC/HCC in view of the particularly high infrastructure
costs’. It was stated on behalf of the council that WHDC proposed to enforce
the TMA rigidly ‘using a ‘common sense’ approach’. They wanted to create a
quality shopping centre in Welwyn and would co-operate to achieve this aim. On
April 11 1986, Mr Cleaver wrote to Mr Carey (17/2940) reporting the meeting
with WHDC held that day. He reported that Mr Asquith confirmed that the council
genuinely intended to assist the successful development of the Howard Centre
which his officers were working hard to promote. The letter then stated:

The Local
Authority intend to implement the tenant mix agreement proposed at the Public
Inquiry and it is their view that this will be rigorously enforced … Asquith
was adamant that no fashion goods will be allowed and he proposed that this is
an area where we should be concentrating hard. Frankly I agree with that view.

Mr Carey said
that this was vital. He said that it was at this point that previous doubts
about the reliability of the council’s intention were dispelled. By this stage,
Slough were heavily committed and had no intention of withdrawing unless
viability could not be achieved (17/2942). Mr Carey said that the whole
viability depended on the TMA being in place. Had it not been, there would have
been no case for advancing the scheme at all because Welwyn/Hatfield was
obviously not capable of maintaining two unrestricted retail centres within a
mile and a half of each other. Mr Cleaver’s evidence was that he relied on Mr
Asquith’s undertakings and continued to do so. He always thought that Carroll
would try to depart from the TMA and would try to nibble round the agreement
and make lettings which it would be hard to overturn. But he 12 came to the view that WHDC were on their side and would support them. They had
made the TMA into a worthwhile document and had assured us that they would
enforce it. It was a very important meeting.

In the
judicial review proceedings, Kennedy J said of this meeting upon the evidence
before him (1/182):

I see no
reason to doubt that Slough Estates did, at least to some extent, rely upon the
undertakings given by the local authority in relation to the Tenant Mix
Agreement when deciding to proceed with the Howard Centre. However, I recognise
that … [WHDC] … may wish the court to give further consideration to the
question of reliance at a later stage.

The meeting
was reported to the WHDC members A1(M) working party on April 16 1986
(17/2945). It was recorded that Slough and British Rail ‘now accepted that
their development and the Park Plaza development could be compatible subject to
the agreement concerning the tenant mix’ (17/2947). At the Park Plaza steering
group (whose members were officers of WHDC and representatives of Carroll
Group) on April 24 1986, it was agreed that a formal retail tenant mix
agreement based upon the document presented to the planning inquiry was to be
prepared (17/2966). Every piece of correspondence was to be channelled through
Mr Murray of the Carroll Group and the chief planning officer (Mr Moore) on the
council’s side (17/2965).

On April 7
1986 Slough had instructed Healey & Baker to prepare a report (17/2921)
looking at the matter afresh. The letter from Mr Cleaver referred to ‘the new
climate of certainty’ which Mr Parker read as referring to the situation with Park
Plaza following the Secretary of State’s decision. There was an encouraging
response from prospective retailers (17/2977, 2984). Healey & Baker’s June
1986 report (17/3047) referred to the Park Plaza scheme and said that the
Carroll Group clearly indicated at the recent inquiry that they were not
seeking to replace the traditional town centre shopping. ‘They envisaged
endeavouring to create a leisure-orientated speciality retail development and,
if this proves to be the case, there may well not be any significant conflict
between the Park Plaza and Howard Centre proposals.’ Healey & Baker noted
(17/3061) ‘the restrictions placed on the Park Plaza planning permission to
food and size of units … Without exciting ‘anchors’ this scheme will be
difficult to let and certainly impossible to fund’.

A further
Healey & Baker report in July 1986 (17/3088, 3093), expanded in certain
respects, contained substantially the same material. It also said in its
introduction (17/3095) that:

The
uncertainty surrounding the Park Plaza proposals had now been removed and the
knowledge of the shopping content that the Howard Centre will compete against
has been improved substantially.

In its
conclusions, the report states:

We have had
particular regard to the Park Plaza proposals and as a 13 consequence recommend careful formulation of a tenant mix plan directly based
upon requirements of the affluent population.

The author of
the Healey & Baker reports of 1986 was Mr Parker. He said of this last
sentence that it was there in the light of the TMA at Park Plaza. His evidence
was that it was taken as read that the Carroll Group scheme was subject to the
TMA and that this was a fundamental assumption underlying the reports and all
his advice. There was considerable scepticism that the Carroll Group’s
proposals would be successful. He understood that the TMA would be strictly
enforced. Had it been known that the TMA was not in place or was not being
enforced, Healey & Baker would have recommended the Howard Centre
developers not to proceed. The existence of the TMA was fundamental and not a
matter of debate and hence did not get referred to constantly in documents. He
was extensively cross-examined by reference to documents which were suggested
to show that the TMA was not of central importance. He said that the documents
did not show the full picture and that there was no doubt that the TMA was
fundamental. The mere idea that two large developments head to head at such a
short distance was unthinkable at the time just as now. I found Mr Parker a
convincing witness.

Mr
Orchard-Lisle, the partner at Healey & Baker concerned with funding on
behalf of Slough, read the Secretary of State’s decision as confirming the
statements of intention made by the council and the Carroll Group at the
inquiry. He concluded that there was no significant conflict between the
Carroll Group proposals and those for the Howard Centre. He took it as read at
all times thereafter that the TMA would be enforced against the background that
WHDC had said that they would honour the intention that the Gallerias would be
a leisure based centre. He regarded it as Carroll’s problem if this led to a
planning white elephant. Had he believed that there would be the equivalent of
40 retail shops on the Galleria site, he would have been considerably more
cautious about the successful funding of the Howard Centre. If the true
eventual extent of the rivalry of the Galleria had been known, he believes that
Healey & Baker would have been asked for a revised report. Healey &
Baker would have advised the Howard Centre developers not to proceed. I found
Mr Orchard-Lisle convincing and authoritative.

The defendants
suggest that these reports do not support the contention that the enforcement
of the TMA was fundamental. They point out for instance that the TMA is not
referred to expressly in the assumptions set out in each report (17/3059,
3113). They point to passages in the reports and suggest that the terminology
is not consistent with the perceived importance of the TMA. Mr Orchard-Lisle was
clear that what they wrote did assume that Park Plaza would be subject to the
TMA. They described exactly what the Park Plaza would be and that was assumed.
In any event, his clients were highly experienced and the reports were not to
be read in isolation. Mr Parker reiterated that the existence of the TMA and
its enforcement was fundamental.

14

The evidence
was that Slough proceeded with the Howard Centre scheme assuming that the TMA
was in place and with the idea that the restrained Park Plaza scheme might well
not proceed as it would be seen as not viable. On August 14 1986, Mr Cleaver
was saying to British Rail (18/3201) that he could say with some confidence
that they considered that the Howard Centre scheme was viable and that it was
their firm intention to progress it vigorously to produce a worthwhile shopping
centre with a sound financial basis.

On September 8
1986, the WHDC members A1(M) working party resolved that ‘the Park Plaza
Development Agreement and associated side letters with the [Carroll Group] … be
approved by the Council’ and that WHDC’s officers be authorised to continue
negotiations together with the selection of tenants and other matters as
necessary (18/3229). A confidential report by Mr Asquith ‘not for public
circulation’ to this meeting stated that references in the TMA to named High
Street stores could be disadvantageous to Carroll and that it was agreed that
such references should be omitted from the development agreement but that ‘[a]
side letter to the Agreement will indicate that, in the event of any dispute
under the tenant mix clause, resolution of the dispute shall have regard to the
strategy document deposited at the Public Inquiry’ (18/3242). The minutes of a
Park Plaza corporate/financial working party meeting on October 30 1986
attended by WHDC officers including Mr Moore and representatives of Carroll
including Mr Murray (18/3442) record agreement of ‘side letters to the main
Development Agreement’ including one about ‘tenant mix’. An amended draft of
such a letter as Mr Asquith described on September 8 1986 is at 18/3450A dated
October 30 1986. The final version of this letter is dated July 31 1987
(20/4095) — the very same day as a second (‘secret’) side letter (20/4094 — see
below). 20/4095 records:

… the
agreement reached between us that in the event of any dispute as to whether the
intended business of a proposed tenant within the Galleria is within the
permitted range of retail activities set out in Clause 12 of the Development
Agreement, the parties shall have regard when resolving such dispute to the
‘Tenant Mix Agreement’ annexed hereto. It being recognised by the parties that
the Tenant Mix Agreement annexed hereto correctly records the trading practices
intended by the parties to be excluded from the Galleria by reference to the
trading practices carried on in September 1984 by those companies named in the
Tenant Mix Agreement.

The annexed
TMA was the September 1984 document which had been presented to the public
inquiry.

Slough’s investment
committee meeting on September 25 1986 (18/3305) resolved to approve the
commitment of further financing up to £550,000 to undertake the design
necessary for planning permission for the Howard Centre. Further consideration
was to be given to the actual commitment to develop later. Mr Carey prepared a
report (18/3315) for the Slough Group board meeting on October 1 1986. He
discussed its draft with Mr Orchard-Lisle (18/3275). It does not explicitly
refer to the TMA. 15 Important decisions were taken at the group board meeting on October 1 1986
(18/3313, 3415). It was decided to proceed with the Howard Centre scheme,
deferring decisions on funding until progress had been made on other particular
matters. Mr Carey said that Slough proceed with schemes such as this by stages.

On October 19
1986, the planning division of WHDC in association with Carroll Group held an
exhibition about the Park Plaza scheme (18/3425). A fact sheet prepared for the
exhibition (18/3426) explicitly stated what the TMA did and did not allow.

On December 2
1986, Mr Asquith wrote to Mr Cleaver (18/3508). His letter included:

I made it
clear that my Council would be concerned with honouring the undertaking they
gave at the Public Inquiry … The Tenant mix agreement remains a very important
document and basis for the occupation of Park Plaza but of course things have
moved on a great deal in the retail field and we shall have to look at changing
operations of some of the organisations and firms who are embargoed so far as
their activities measured in June 1984 were known to us. To that extent I have
no doubt that whichever firm goes in will prove to be contentious to some
degree; what matters is that we fulfil our obligations.

Mr Cleaver
understood this to mean that Park Plaza would be restricted by the TMA.

On December 4
1986, Mr Asquith wrote what now reads as a crafty letter to Mr Murray of
Carroll Group (18/3514) discussing how Marks & Spencer might be squeezed
within retailers permitted by the TMA (although they were explicitly excluded
‘in the context of their 1984 High Street trading Practice’) and saying that:

I am sure
that this incremental approach is the correct one because not only have John
Lewis expressed interest in who the main anchor tenant might be following the
assumption that Habitat will no longer be involved, but the developers of the
Howard Centre have also raised exactly the same point.

Mr Cleaver
wrote to Mr Asquith on December 16 1986 (18/3540) saying that it was always his
view that the TMA might prove complex in its operation when a potential tenant
came along but that a responsible approach by all parties should avoid undue
conflict. He sent the correspondence to Mr Carey. Mr Carey read Mr Asquith’s
letter (18/3508) as indicating that, although there might be difficulties with
grey areas, the TMA was in place. The council were making essentially the same
statement as they had at the public inquiry. He wrote to Mr Cleaver on December
16 1986 (18/3550) that he was not greatly encouraged by Mr Asquith’s letter: it
was going to be pretty difficult for him to maintain the TMA. Mr Carey said
that there was no question in his mind of the council not honouring the TMA.
The letter concerned the problem of grey areas. It was necessary to move
quickly because the restrictions on the TMA was limited to five years. It
remained fundamentally important to the Howard 16 Centre scheme that the TMA remained in place. Nothing the council said at any
time led them to believe that the TMA was not in place or would not be
enforced. He implicitly relied on what the council wrote and said. Mr Cleaver
read Mr Asquith’s letter as raising the spectre of Mr Carroll, indicating the
possibility that Mr Carroll might try to get lettings through the net by
nibbling round the edges. He might try to get out of the TMA but Mr Cleaver did
not think that he would be able to do so. He was happy with what Mr Asquith
continued to say in line with his assurances in April 1986.

At and
following a meeting with Mr Asquith on January 28 1987, Mr Cleaver saw the council’s
attitude as positive and supporting the Howard Centre (19/3615). In his
understanding this included enforcing the TMA although it was not explicitly
then mentioned. Enforcing the TMA had always been a part of Mr Asquith’s
support. Abandoning the TMA would have killed the Howard Centre scheme because
the developers would not have been able to get tenants or, if they could, only
at reduced rents.

On January 30
1987, Carroll Group made a revised planning application for what was at first
thought to be a larger retail development (19/3604). At a WHDC Officers working
party meeting on February 3 1987 it was noted that this might be acceptable in
planning terms but that the council would expect additional payment to reflect
the increased value of the Galleria (19/3613). British Rail saw this as a
potential threat to the Howard Centre and on February 20 1987 British Rail
wrote to Mr Moore expressing concern but without specific reference to the TMA
(19/3651). Mr Moore replied on February 27 1987 (19/3695) stating that the
total amount of retail floorspace remained in line with the outline planning
permission at 200,000 sq ft. British Rail replied on March 5 1987 (19/3727)
explaining a concern that planning constraints imposed by the Secretary of
State might be in danger of being flouted and suggesting a meeting. On March 7
1987, Mr Moore told Mr Clarke of British Rail that the retail content had not
been altered and that the TMA was still to stand. Mr Clarke confirmed this in a
note dated March 9 1987 (19/3735). He said in evidence that he specifically
recalled the circumstances in which this was said. I accept this evidence. Mr
Carey wrote shortly on March 20 1987 (19/3773) making formal objection to the
planning application. Slough’s internal position was expressed in a letter by
Mr Woolhouse to Mr Cleaver dated April 21 1987 (19/3868) that they would be
willing to withdraw their objection provided that WHDC were willing to confirm
in writing that they would enforce strictly the restrictions placed upon the development
by the Secretary of State. Mr Woolhouse said in evidence that this included the
TMA.

There was a
meeting on March 31 1987 (19/3802,3,4) at which British Rail expressed their
concern. Mr Ball’s typed note records that the council had assured the board
that they would adhere to the TMA. Mr Ball, who remembered the meeting and the
room it was in, gave evidence that this assurance was given in answer to Mr
Clarke’s first question at the meeting. Mr Clarke also gave evidence of this
assurance being given. I accept this evidence. I was not impressed with
cross-examination aimed at 17 casting doubt on this evidence by linguistic analysis of Mr Ball’s manuscript
and subsequently typed material. British Rail reported this assurance to Mr
Cleaver on April 2 1987 (19/3809) following a telephone call on March 31 1987.
The council had stated at the meeting that ‘Gerald Carroll is extremely
concerned that the Council are applying the ‘Tenant Mix’ to the letter of the
law’ (19/3802). Mr Cleaver’s view, expressed in a letter dated April 3 1987 to
Mr Woolhouse (19/3811) was that the Park Plaza proposal ‘flies in the face of
the intention of the original planning consent’ but that it would be difficult
to overturn it completely on the ground of increased retail area. He considered
that they should withdraw their objection to the Park Plaza scheme subject to
receiving a letter from WHDC that they would maintain absolutely the terms of
the TMA. Mr Cleaver wrote in these terms to WHDC on April 14 1987 (19/3862). He
still thought that in those circumstances Carroll would be unable to go ahead.

On the same
day that Mr Cleaver wrote, Mr Asquith met Mr Carroll. The meeting is referred
to in Mr Carroll’s letter to Mr Asquith dated April 16 1987 (19/3863) marked
‘Strictly Private & Confidential’. Mr Carroll wrote saying that:

The removal of
the tenant mix agreement is absolutely fundamental for us … the final occupational tenant mix of
the Galleria when the complex is up and running will be very much in line with
our original understandings reached some three years ago. The abolition of this
agreement underpins our conclusive arrangements reached with our financiers
concerning the funding and implication of the Galleria scheme …

I look
forward to receiving your draft letter confirming that the Council agreed (sic)
to the removal of the tenant mix agreement as well as the removal of our
obligation to develop the hotel which has not become obsolete following the
Galleria detailed planning permission.

On April 22
1987, Mr Asquith wrote in reply (19/3872) saying:

As I
mentioned on Tuesday of last week it is vital that the development agreement is
completed in its original form and that we do not go on making alterations as
we go along otherwise we will never have it signed. What I promised was an
additional letter, a copy of which I have yet to draft for you to see before I
go anywhere near my Members, and which will explain in some detail that our
intention, as with you, will be to fulfil the original bargain struck, but in
the process to take into account the changed circumstances since your scheme
was devised before being submitted to us in the spring 1984. I will produce
that letter for you around the end of the month. I cannot involve Members at
this stage prior to the District Elections on 7th May and my idea, as you know,
is that we can try and reach some agreed wording between us in the draft form
and then the matter can be put to the new hierarchy, whatever it may be, at the
end of May. The wording of it will not be nearly as forthright as that which
you have used in your letter concerning the Tenant Mix Agreement, but the
import will be exactly that.

This agreement
was unknown to Slough. The letters were not produced in the judicial review
proceedings and only emerged during later 18 discovery in these proceedings. Mr Riddle said that he personally found these
documents later after judicial review proceedings in documents left by his
predecessor.

Also on April
22 1987, Mr Moore wrote (19/3866) in reply to Mr Cleaver’s letter of April 14 1987
(19/3862). Mr Cleaver had asked for confirmation that the council intended to
adhere strictly to the TMA. Mr Moore’s reply referred to the undertaking given
at the public inquiry and to the terms of the Secretary of State’s decision.
There were a variety of issues and

… attitudes
both local and national, have changed considerably since the Inquiry in 1985
and no doubt will continue to do so. At this point in time however, I have no
reason to believe that Park Plaza will not proceed in any other way than
previously agreed.

Mr Cleaver
said that, although this was not a completely unequivocal reply, he read the
letter as in effect renewing the previous undertakings given by Mr Asquith with
Mr Moore present. He said that if Park Plaza had become an unrestricted
shopping development, that would have stopped the Howard Centre dead. Mr Carey
saw this letter at the time. It maintained his belief that the TMA remained in
place and he relied on it. There remained problems with grey areas. Mr Carey
knew that it was always going to be difficult to apply the TMA for marginal
lettings that were on the fringe of the descriptive labels in the TMA.

Mr Moore’s
letter was written on the very same day as Mr Asquith wrote to Mr Carroll
(19/3872). If Mr Moore knew what Mr Asquith had agreed with Mr Carroll, the
important final sentence of his letter which I have quoted was untrue. There was
reason to believe that Park Plaza was going to proceed otherwise than in
accordance with what had been previously agreed because Mr Asquith had agreed
to exactly that at his meeting with Mr Carroll on April 14 1987 as recorded in
his subsequent letter. Mr Moore has not given evidence although he is available
to do so. Mr Asquith is dead. It is quite plain from the history of this matter
not only that Mr Moore was one of the main actors in this matter on behalf of
WHDC but that in 1987 he was hand in glove with Mr Asquith. I have no doubt
that Mr Moore knew on April 22 1987 what Mr Asquith was doing and it follows
that his letter of that date was knowingly untrue.

Mr Cleaver
wrote on April 28 1987 (19/3891) asking for a categorical statement that the
council would seek to enforce the tenant mix agreement for the full period. Mr
Moore replied on May 28 1987 (19/3918) that he had made the council’s position
abundantly clear regarding their views on the enforcement of the TMA and did
not feel he could add anything. The effect of this was to restate the untruth.
Mr Cleaver’s evidence was that he took this as a further confirmation that the
position had not changed. He copied Mr Moore’s letter to Slough on June 4 1987
(19/3924) saying that ‘the Local Authority are clearly hedging on this issue
and obviously expect further flak from us if they make any bold statements. I
doubt if there is anything further we can do’. Mr Carey read Mr Moore’s letter
as referring 19 to the grey areas. So did Mr Woolhouse. Mr Cleaver was worried about Mr Carroll
slipping in tenants.

On June 29
1987, Mr Murray wrote to Mr Moore (19/3961) enclosing a paper (19/3962)
confirming Carroll’s proposals for tenant mix at Park Plaza. The letter stated:

The theme
will be leisure and speciality shopping with the ‘anchor’ tenants being the
collection of multiple retailers to include an element of specialist fashion …
It is important for the specialist ‘clutch’ concept to include the widest range
of retailers because ‘exclusions’ would detract from the total concept.

The enclosed
paper stated that:

The major
single difference from the [TMA] will be that a Speciality Centre for the 90’s
will need to include specialist fashion shops …

The centre
contains 200,000 sq ft of retailing and, therefore, the specialist fashion
shops would be limited to a maximum of 70,000 sq ft of trading space.

It was said
that this should not damage the existing town centres. Annexed documents list
retailing changes since 1984 and state blandly that ‘Retailing now perceived as
‘leisure activity” (19/3966). There is a list (19/3967) of possible interested
tenants who would comply and would not comply with the TMA.

On July 10
1987, WHDC granted planning permission for the Howard Centre.

Three days
later on July 13 1987, a WHDC principle officers’ management team meeting ‘were
informed of the latest discussions which had been held with the Carroll Group
and of the recommendations which would be made at the meeting of the A1(M)
Working Party to be held that evening’ (20/4022A). This matter was minuted as
‘Not for Publication’ (20/4022). The A1(M) working party unanimously resolved
to recommend ‘that the Chief Financial Officer [Mr Heys] and the Chief Planning
Officer finalise any matters outstanding with a view to all documentation being
complete and signed by the end of July, 1987’ (20/4021). Mr Heys prepared an
‘Aid (sic) Memoire’ for that meeting (20/4025) which was tabled as
exempt information (see also 20/4018C, 4297A, 4313A). This was marked ‘Private
& Confidential — Not to be released to the Press or Public’. It referred to
discussions between Mr Heys, Mr Moore and Mr Asquith on July 10 1987 and stated
that the recommendations had Mr Asquith’s total support. Under a heading
‘Tenant Mix Agreement’ there is stated:

Again
considerable discussions have been held with the Carroll Group to try and to [sic]
firm up their views on the extent of relaxation which they would find
acceptable in view of their significant current difficulties in letting the
scheme. You will recall that the general discussion at your last meeting was
about a relaxation equal to 85,000 square feet and this would be as a result of
various decisions made by the Secretary of State since 1984.

20

In view of
the very recent approval to the Howard Centre and the sensitivity that those
developers have always shown to the Park Plaza Scheme and decision to relax the
tenant mix agreement in the way suggested above cannot be minuted at this
stage
. Nevertheless, such a decision would need to be acted on at least
behind the scenes and the Carroll Group will require and will be happy with a
letter either from the Chief Planning Officer or myself indicating by reference
to the relative clauses in our agreement the extent of the relaxation in which
you as members would be prepared to give.

It is
therefore recommended that you give strong affirmation to the relaxation of the
tenant mix agreement to a maximum of 85,000 square feet. It will be a
requirement that the Council approve any letting in excess of 20,000 square
feet under this relaxation.

It was also
stated that:

… it would be
wise for the Council to resolve that the Chief Planning Officer and myself are
also nominated to sign letters etc, arising out of the agreement of the Carroll
Group.

A decision not
to minute was unlawful by virtue of para 41 of Schedule 12 to Local Government
Act 1972. I am satisfied that elaborate steps were taken to ensure that what
was proposed in this aide-memoire was not made public.

This aide-memoire
speaks for itself. It implicitly recognised a clear understanding that Slough
were relying on the TMA being in place and enforced. It was a recommendation,
in which Mr Asquith, Mr Moore and Mr Heys were complicit, to agree with Carroll
to relax the TMA for as much as 85,000 sq ft, but to conceal this from Slough,
among others, deliberately. It shows that discussions had been taking place
with Carroll about the extent of relaxation of the TMA.

At a full
council meeting on July 14 1987 attended by 39 councillors and 11 officials,
including Mr Heys and Mr Moore (20/4022B), it was resolved ‘that the report of
the meetings of the Members’ A1(M) Working Party of 29 June and 13 July, 1987
containing exempt information which was [considered] at the meeting be received
and the recommendation be approved and adopted’. Thus the full council adopted
a scheme which was intended to deceive. Mr Riddle attended this, his first,
council meeting as the designated successor to Mr Asquith.

On July 31
1987, WHDC entered into the development agreement with a Carroll Group company
(20/4099). It provided for the developer to pay WHDC about £11.765m (20/4109).
Clause 12 (20/4124) imposed tenant mix restrictions substantially the same as
those in the 1984 TMA for a five-year period. The TMA itself is referred to in
a side letter dated July 31 1987 (20/4095) to which I have already referred.

By a secret
side letter also dated July 31 1987 (20/4094), it was said that in consideration
of the developer entering into the development agreement:

Notwithstanding
the restriction upon user imposed by Clause 12 of the Agreement, you shall be
permitted to let shop units (as defined in the 21 Agreement otherwise than as permitted by Clause 12 of the Agreement up to a
maximum of 85,000 square feet. Provided that the approval of the Council (such
approval not to be unreasonably withheld) shall be obtained by you to the
initial letting of any such Shop Unit having a floor area in excess of 20,000
square feet.

This letter
remained secret until part way through the judicial review proceedings in June
1990. Slough (and others) were permitted to continue in ignorance of this major
relaxation of the TMA.

Mr Riddle was
the one witness to give substantial factual evidence on behalf of WHDC. He is
now their chief executive. He was interviewed for the post in June 1987 and
offered the post about then. Mr Asquith was to leave in December 1987. Mr
Riddle started work as chief executive designate on September 7 1987. He
attended the council meeting on July 14 1987 as a guest (20/4023). His evidence
was that he did not attend the council’s A1(M) working party meeting on July 13
1987. He said that the unminuted decision about the TMA was not disclosed to him.
He did not have much to do with the Park Plaza site until about the end of
1987. He knew that Mr Moore and Mr Heys and others had dealt extensively with
Park Plaza. He was present on July 31 1987 when the development agreement was
signed. He must have been present when the side letter was handed over, but he
did not read the letter at the time.

Mr Riddle said
that he first became aware of the contents of the secret side letter in about
December 1987 when he looked at the development agreement in the context of
discussions with Carroll about housing matters. He first became aware of the
July 13 1987 meeting in spring of 1988 when Carroll asked for planning
permission for an extra 20,000 sq ft. He thought that the question of relaxing
the TMA for the 20,000 sq ft was not considered until a meeting on June 20
1988. By then he knew about and had read the September 1984 TMA document. He
then learnt that the July 1987 decision had been confidential. He said that in
1988 the members were acutely conscious of the effect that relaxation would
have on the town centre development. He then understood from discussions with
colleagues and members that the 1987 decision had not been minuted because of
commercial confidentiality with Carroll and because it was a departure from the
publicly promulgated TMA which made it sensitive to a wide group of people,
including Slough Estates, John Lewis, other Hertfordshire local authorities and
local traders, who had objected at the public inquiry. Knowledge of the
concealed decision could have led any one of them to try to stop the Park Plaza
development. He did not know about the document relating to the July 13 1987
meetings until the judicial review proceedings. He thought in 1988 that Slough
would still be seeking to object because they were promulgating a development
of their own. He did not recognise that Slough were in a special position. He
knew they were carrying out in a time of boom a shopping centre development of
whose scale he was approximately aware.

He thought
that the decision not to minute was quite improper, unconstitutional and quite
remarkable. He did not then do anything about 22 it. It was known by members of the A1(M) working party and some others and by
the senior officers directly involved including Mr Moore and Mr Heys.

He accepted
that in broad terms the 1987 relaxation of the TMA for 85,000 sq ft was out of
step with the 1984 TMA. He accepted that statements made without revealing the
side letter could be misstatements to those for whom the subject was sensitive.
He took no steps to see that there were no misstatements in the future and with
hindsight he accepted the risk that there might be misstatements in the future.
He realised that the council had got themselves into a hole. The one thing that
he did do was to see that WHDC did not get into further difficulty with
Carroll. He did not decide to bring the matter into the open in 1988. It was an
unprecedented situation which he could not see how to resolve. He recognised
that the issue would have to be dealt with at some time.

Mr Riddle
first learnt of the aide-memoire dated July 13 1987 (20/4025) prepared
by Mr Heys and produced to the meeting on that date in 1990 during preparation
for the judicial review proceedings.

On August 14
1987, Mr Carey wrote to WHDC (20/4257) referring to a press report that Carroll
Group had exchanged contracts with WHDC and that a company such as Laskys would
be acceptable under the restricted use. The press report (20/4256A) said that:

The complex …
has a heavily conditional planning consent limiting the development to
leisure-oriented uses. This, according to a Welwyn Hatfield planner, is to
protect existing shopping in the borough. There is a tenant-mix agreement and
Carroll has to prove that the tenants it finds are leisure-oriented. The
agreement, which lasts for five years, means retailers like Marks & Spencer
would be excluded but a Laskys or Habitat would probably be acceptable

Mr Carey asked
for clarification. Mr Moore replied on August 17 1987 (20/4260) referring
specifically to para 2 of the TMA. He did not reject the article (which was
materially inaccurate) although he said that its contents were not based on
recent information given to the paper. He accepted that Laskys could be
regarded as a traditional High Street trader but they were not specifically
excluded by the agreement. Mr Cleaver replied on August 21 1987 (20/4261)
saying that he was pleased that the article did not reflect any new trend in
the agreements with Carroll ‘and as you know under the present circumstances we
are living with the reality of the Park Plaza Scheme including the tenant mix
agreement’. There was no reply to this letter and Mr Cleaver continued in the
belief that the TMA was in place and being enforced. Mr Carey understood these
letters to make it clear that the TMA was in place and that the council were
still intending to enforce it. He still doubted that the Carroll Group scheme
would proceed at all due to the presence of the TMA, but, if it did, he felt
comforted that the TMA would ensure it was not a rival scheme.

At a meeting
on September 21 1987 (20/4311) which Mr Riddle attended as chief executive
designate, the minutes of the July 13 1987 23 meeting were approved. Mr Moore reported that Carroll Group had agreed certain
occupiers for the Galleria.

On September
30 1987, Welwyn Garden City Chamber of Commerce wrote to Mr Moore (20/4328)
asking if there had been changes in the size of individual units and possible
tenants at Park Plaza. Mr Moore replied on October 5 1987 (20/4329) saying in
terms that ‘the Tenant Mixed [sic] Agreement is still in force’. This in
its context was false to Mr Moore’s knowledge. It was not a representation to
Slough (although there must have been a chance that it would come to their
notice). It is a manifestation of Mr Moore’s intention to deceive. Similarly on
February 11 1988, Mr Moore wrote to the Hertfordshire County Planning Officer
saying of Park Plaza that:

The Tenant
Mix Agreement between this Council and the Developer, Carroll Group of
Companies, is for five years from the date of the first letting of the first
shop unit.

The years 1987
and 1988 were part of a boom period for property development when the market
anticipated further rental growth and before the property slump in about 1990.
On July 13 1987, Healey & Baker wrote in terms that there was a massive
excess of demand over supply for high quality shop schemes (20/4028). Mr Parker
said that this was true of high quality schemes, but did not apply generally.
Mr Carey thought in hindsight that there was equilibrium in the market relevant
to Welwyn Garden City and that Healey & Baker’s letter represented the
optimism of the time. Healey & Baker wrote on February 8 1988 (21/4697)
that there were more funds seeking to invest than schemes available, but Mr
Carey said that this was significantly qualified. The letter stated that the
number of funds able to put more than £20m on the table remained limited to 20
or so, some of whom were happier to involve themselves than to purchase
completed developments. Mr Carey said that not all schemes were backed by
funds. Mr Orchard-Lisle said that the funding market was not as buoyant as it
had been.

Slough were
working towards secure lettings and in August 1987 issued a brochure (20/4214).
By December 11 1987, Slough had already spent over £1m on the scheme (21/4483).
In January 1988, it was hoped that space would be let to Marks & Spencer
(21/4552, 4643). In the spring of 1988, the Howard Centre scheme was seen by
Slough as particularly attractive in the light of revised terms agreed with
British Rail and a recent Marks & Spencer approval (21/4737, 4758). Further
expenditure was authorised on March 2 1988. It was seen as an absolute
requirement that the centre should open for trading by Christmas 1990 (22/4804,
5161). There followed negotiations which resulted in Slough buying out their
partner, Charlecote Estates. In June 1988, Slough transferred the project to an
investment company. Mr Carey said that this was because it had been decided
that, if the scheme proceeded, it would be retained as an investment (see 23/5400),
where Mr Carey wrote that ‘to all intents and purposes the project is under
construction’. This, he said, referred to the 24 preliminary works contract which was in progress. Mr Cleaver said that work on
a distributor road remote from the site had started.

In the early
summer of 1988, Carroll applied for planning permission for an additional
30,000 sq ft gross (20,000 sq ft net) of retail space at Park Plaza. They
wanted this additional space also to be free from the TMA. On May 26 1988, Mr
Murray wrote to Mr Moore confirming an intention to start work on August 1 1988
and ‘that the modification to the retail space is fundamental to match
viability and occupier interest’ (22/5197). Mr Murray recorded that Gerald
Carroll had spoken separately to David Riddle: see also 22/5207.

Mr Garnham
gave evidence on behalf of WHDC. He had been with local authorities from 1973
concerned with planning matters. He was assistant director of planning policy
with WHDC from January 1 1988 to September 30 1991 as Mr Moore’s assistant. He
had responsibility for certain developments including the Howard Centre. On
October 1 1991 he was appointed assistant chief executive. He left WHDC on
March 31 1994. Mr Garnham attended one Park Plaza meeting only — the working
party meeting on January 18 1988 (21/4586A). There was a report to that meeting
on lettings. At about that time he knew that there were restrictions on
lettings at Park Plaza. In relation to another planning inquiry, he was briefed
about the TMA by Mrs Wilson, who was helping Mr Moore as special projects
officer for Park Plaza, and was given the September 1984 document but she did
not mention the secret side letter (although she is recorded as having been
present at the meeting on July 13 1987 (20/4019)). He had no idea why he was
not told about the side letter. He agreed that it was an important document and
that she must have had a reason for not mentioning it to him. Mr Garnham
guessed that it was true that it must have been for the purpose of concealment.
He only became aware of the side letter after Slough applied for judicial
review.

Mr Garnham
took over as chairman of the Howard Centre working party in about March 1988.
He knew that Slough were aware of the TMA and that it was something that they
had in their mind because of their contribution to the Park Plaza planning
inquiry. He regularly briefed Mr Moore about what happened at Howard Centre
meetings and generally in relation to the progress of the Howard Centre. At
meetings there was a committee clerk who took minutes. Draft minutes were
circulated.

At a Howard
Centre working party meeting on June 15 1988 (23/5263), Mr Garnham told the
working party of the application by Carroll Group for an extension of 20,000 sq
ft net of the retailing area at Park Plaza. Slough wrote a letter of objection
dated June 21 1988 (23/5279) saying that it appeared that the developer was
seeking to increase their retail floorspace despite ‘the planning conditions
imposed by the Secretary of State’, by which Mr Woolhouse, who wrote the
letter, meant the TMA, although he did not know much about the details of the
planning application at the time. He said that Park Plaza was only seen as a
competitor if the TMA were not in place. Mr Moore acknowledged the letter of
objection on June 27 1988 (23/5298) upon which Mr Woolhouse wrote a note to
himself saying ‘nevertheless part of larger inquiry which 25 was approved subject to strict implementation of restrictions’ — see also
23/5467. Mr Woolhouse’s reply to Mr Moore dated July 12 1988 (23/5352) also
referred to ‘the restrictions imposed by the Secretary of State’.

His evidence
was that at all the times when he was concerned with the Howard Centre Slough
were proceeding with the development relying on the TMA.

Mr Riddle said
that Carroll’s suggestion that they should be given planning permission for a
further 30,000 sq ft gross first arose in the spring of 1988. The proposal was
for two blocks of additional lightweight shops on the roof of the tunnel. There
was a suggestion by Carroll that this could be dealt with shortly on a rubber
stamp basis. Initially the council were unaware that Carroll wanted a further
relaxation of the TMA. His recollection was that it was a request at the
meeting on June 20 1988. Members present included the leader and deputy leader
of the council, a previous leader, the chairman and deputy chairman of the
planning committee and the previous chairman of the A1(M) working party (‘the
six councillors’). Mr Riddle’s unaided recollection of the meeting was hazy,
but he wrote two letters to Carroll a week later (23/5297C). His evidence was
that he prepared a draft letter which he is now unable to locate and that the
text of the draft was split into two at Carroll’s request. (No notes of the
meeting are available nor are documents referred to in Mr Riddle’s letter nor
in a memorandum to the six councillors of the same date (23/5297E).) The
memorandum refers to a request from Carroll for two letters so that they could
show one of them only to their bankers. Carroll pressed the case for the
further relaxation of the TMA very hard, saying that they were unable to secure
anchor tenants for the development and needed to put more emphasis on costly
design which required the relaxation of the TMA. Members were reluctant to
grant planning permission or the relaxation. The council wanted the scheme to
go ahead, although there was scepticism about the likelihood of the scheme
going ahead at all.

Mr Riddle’s
first letter of June 27 1988 (23/5297A) included:

As regards
the application of the tenant mix agreement to the additional space, I have to
say that we will not be prepared to respond to your request (that extra space
should be free from restriction) until the contract has been let and work has
started. This is potentially the most sensitive handling. At this stage, all I
can tell you is that members present on the 20th will recommend that there
should be a further side letter indicating that the tenant mix agreement will
not be applied to the extra space but that there should be no amendment of the
development agreement.

The letter
referred to the need to discuss Carroll’s estimate of the additional premium
payable to the council as a result of the extension of the Galleria.

Mr Riddle said
that the driving consideration, which made the matter sensitive, was concern
about the effect on Hatfield town centre and the whole context in which the TMA
had to be handled. It may well have been 26 that there was an intention to keep this matter informal. He said that this was
a strong indication that Carroll had to start work and that, if they did so,
they would be likely to secure the further relaxation. His written witness
statement says that the members ‘felt themselves under irresistible pressure to
agree’.

Mr Riddle’s
second letter of June 27 1988 (23/5297D) included that:

The question
of the tenant mix agreement is one that we are not prepared to respond on
formally, until construction work has started. I have explained to Tony Clarke
that in my view it is not in your interests to take any action which might lead
to the arrangements between the Council and your Company becoming subject to
critical examination.

Mr Riddle said
that this last sentence referred to the circumstances surrounding the first
secret relaxation, the problems with which Carroll knew. ‘Critical examination’
impliedly contemplated those who had objected to the original planning
permission including Slough and other later local objectors who might take
action to prevent or impede the Park Plaza scheme.

At the Howard
Centre working party meeting on July 6 1988 (23/5338), Mr Garnham undertook to
provide Mr Adds with details of Carroll’s application. Mr Moore did this on the
same day (23/5337).

At the WHDC
planning and transportation committee on July 28 1988 (23/5403) which four of
the six councillors attended, whose minute was the subject of late discovery,
Carroll’s application was considered. ‘It was noted that the changes would also
necessitate a relaxation of the development agreement between the Carroll Group
and the Council.’ Mr Moore promised a report to the strategy and resources
committee on September 20 1988.

Mr Garnham was
not present at the WHDC planning and transportation committee on July 28 1988,
which determined the Carroll additional planning application. He returned from
holiday on August 1 1988, worked through all the papers on his desk and
discussed with assistants developments, including the planning committee papers
which included Mr Moore’s report to the committee (23/5401). He knew what had
happened at the meeting from a resulting temporary action list — the minutes
(23/5403) would have been in the course of preparation. He concluded as an
assumption that the TMA restrictions would apply to the additional Park Plaza
floorspace. The minutes of the meeting recorded (23/5430A) that it was noted
that ‘the changes would also necessitate a relaxation of the development
agreement between the Carroll Group and the Council’. This was to go to the
strategy and resources committee on September 20 1988.

There was a
meeting of the Howard Centre working party on August 2 1988 at which Mr Garnham
in answer to Mr Woolhouse said that the Park Plaza additional floorspace would
be subject to the same restrictions as the other floorspace (23/5431). By this
he was referring to the TMA. Mr Garnham said that it was his then understanding
from what he had read. 27 He did not recall whether he spoke with Mr Moore before this meeting although
he may have done. Mr Garnham’s statement was a misrepresentation both to the
effect that the TMA was in force and that it would apply to the additional
floorspace. When Mr Carey learnt what had been said at the meeting on August 2
1988, he was not unduly concerned that planning permission was granted for a
further 20,000 sq ft to be added to the existing scheme of 200,000 sq ft.

Mr Garnham’s
evidence was that after the meeting he discussed matters with Mr Moore and told
him that the question had been asked and the answer given. Mr Moore was not too
happy. He said that the answer was wrong and asked Mr Garnham to contact Mr
Woolhouse as soon as possible to say that the additional floorspace was going
to be free from the TMA. His evidence was that he tried to contact Mr Woolhouse
on two or three occasions but did not succeed. He did not write to him. He was
not able to explain why except to say that the working party operated
informally. Mr Woolhouse said that he had no recollection of any message being
left for him to contact Mr Garnham.

Mr Garnham’s
evidence then was that at the next Howard Centre meeting on August 26 1988 he
explained to Mr Woolhouse that his statement on August 2 1988 that the
additional floorspace would be subject to the TMA was wrong. Mr Woolhouse
expressed concern but that was the last Mr Garnham heard of the matter. As far
as Mr Garnham was concerned that 20,000 sq ft was from this point free from the
TMA. He thought that the matter was settled. Mr Garnham would have expected Mr
Woolhouse to have taken some action had he been told this. He accepted the
possibility that Mr Woolhouse may have misunderstood what he said or been
confused but he did not really think so as he believed that he expressed
himself clearly. He did not recall Mr Adds saying anything about it. He and Mr
Adds talked a lot but never had a conversation about the TMA. He did not recall
anyone from Slough raising the subject of the TMA with him.

The correction
which Mr Garnham said he made was not minuted (23/5519). He would have expected
what he said to have been minuted. He did not know why it was not. Mr Garnham’s
written evidence was that he remembered ‘advising the Committee Clerk not to
Minute the point as a correction to the Minutes of 2nd August because those
Minutes already clearly reflected what I had said. I can only assume now that
the Committee Clerk took me to mean that the statement I made should not be
minuted at all as there in no Minute of my statement have been made [sic]
at the 26th August meeting.’ There was no correction to the minutes of August
26 1988 at the next meeting on September 14 1988 (23/5572). Mr Garnham did not
know why he had not brought the matter up. Mr Woolhouse and Mr Adds were both
at the September meeting and neither of them raised the matter.

Mr Woolhouse’s
written evidence was that Mr Garnham did not tell him on August 26 1988 that
the additional floorspace would not be included in the TMA. He is sure that if
he had he would have objected most strongly. He would have requested that the
matter be recorded in the 28 minutes of the next meeting. Mr Adds’ evidence was that he did not hear Mr Garnham
correct what he had said at the previous meeting. He also would have objected
most strongly and insisted that the matter was minuted. Mr King, whose company
was employed as project manager for the Howard Centre and who was on the Howard
Centre working party, did not recall Mr Garnham saying at the meeting of August
26 1988 that the additional floorspace referred to at the meeting on August 2
1988 would not be included in the TMA. If he had done so he is sure that
considerable discussion would have ensued because he understood that it was
such a fundamental issue. He would have recalled such discussion and it would
have been minuted. Mr King was not concerned with Park Plaza but he was aware
of the TMA in general terms. He said that all those who attended working party
meetings did not necessarily stay for the whole meeting. Mr King did not
without reference to minutes recall that there had been references at previous
meetings to the Park Plaza additional planning application. It was suggested
that Mr King was not really concerned with matters concerning the Park Plaza
site. He said that he did not now have independent recollection of meetings at
this time.

Slough do not
suggest that Mr Garnham gave consciously untrue evidence about correcting what
he had said on August 2 1988. But their case is either that he did not in fact
correct what he had said or that, if he tried to do so, he did not succeed in
making himself understood either because he spoke elliptically (which would
have fitted with what Mr Moore was doing elsewhere) or because he did not speak
out. Mr Garnham was a quiet and plausible witness. But his own evidence was
that in August 1988 he was uninformed about the 1987 relaxation of the TMA.
This information had been kept from him and the high probability is that Mr
Moore did not explain the true position with the 20,000 sq ft in unambiguous
terms. Mr Garnham probably did not then appreciate the significance of the
topic as it now appears. It is, in my judgment, inconceivable, if Mr Garnham
really did say that the additional floorspace would not be subject to the TMA,
that Mr Woolhouse would not have reacted strongly both at the meeting and
afterwards by reporting it within Slough and equally inconceivable that the
subsequent statement would not have appeared in minutes either of the August
meeting or as a correction in the September minutes. It was to Slough an
important matter. (I appreciate and take account of the submission that this
very evidence is part of WHDC’s case that the TMA was not an important matter
to Slough, but, in my judgment, there is ample evidence elsewhere to conclude,
as I do, that it was.) There is no subsequent indication that Slough, British
Rail or anyone else outside WHDC knew that it was intended that the TMA should
not apply to the additional 20,000 sq ft. I accordingly find that Mr Garnham
did not succeed on August 26 1988 in correcting the misstatement that he had
made on August 2 1988.

A note made by
Mr Anderson, the WHDC’s legal officer (23/5454A), of a meeting on August 9 1988
attended by Messrs Moore, Anderson, Heys and Riddle, has a note that:

29

Any future
formal varn. T.Mix to be a varn. (as well as present informal)

Mr Riddle was
unable to explain this. It is, in my view, pretty obvious that the sense of
this note was that there was at present an informally agreed variation of the
TMA — which can only refer to that relating to the 20,000 sq ft since that
relating to the 85,000 sq ft had been formally (if secretly) approved and
recorded — and that future such variations would have to be made by formal
variation.

In a letter
dated August 24 1988 (23/5492), Healey & Baker wrote to Slough at some
length about marketing and promotion. Park Plaza is referred to as a competing
scheme. There is no mention of the TMA. The defendants suggest that indicates
that the TMA was not of the consequence attributed to it by Slough. Mr Parker
said that the suggested marketing of the Howard Centre would have been quite
different if Park Plaza had been seen as unrestricted competition. He would
have thought it as extraordinary to hark back to this with a client for whom it
had been a fundamental assumption for so long.

The WHDC
strategy and resources committee met on September 20 1988 (23/5575A). Mr Riddle
was present. He submitted an exempt report on progress of negotiations with
Carroll. Work had started on Park Plaza and the committee expressed gratitude
to the many council officers involved. Mr Riddle did not remember reporting
about the TMA. The exempt report is 23/5575I. It referred to the grant of
planning permission for the extra 30,000 sq ft. It stated:

Negotiations
are now under way with the Developers as to the terms upon which the Council’s
formal consent to the modified scheme should be granted pursuant to the
development agreement. Essentially, these negotiations are focused on two
issues. First, the amendment of the development agreement so as to restrict the
right of the developer to make further variations to the scheme, other than
minor ones arising during construction. Second, the application and
modification of the development agreement which entitle the Council to an
additional payment by way of premium in consequence of variation in the scheme.

Mr Riddle
agreed that at this stage, work having started, there was at the least an
understanding with Carrolls that the TMA would be relaxed for the additional
20,000 sq ft. Negotiations about the premium proceeded on the assumption that
the TMA would be relaxed further subject to the terms of Mr Riddle’s two
letters of June 27 1988.

It is Slough’s
case that WHDC agreed in the summer of 1988 to a further relaxation of the TMA
for the additional 20,000 sq ft but suppressed that agreement in much the same
way as they had suppressed the 1987 relaxation. Mr Riddle insisted that,
although there was an understanding that a further relaxation would eventually
be made, this was never formally agreed. Mr Riddle said that he had a
recollection of going to Carrolls to say that the release from the TMA of the
20,000 sq ft had not been formally sanctioned on behalf of WHDC. He said that
the February 1990 decision (see below) was intended to formalise the 1987
decision in relation to the 85,000 sq ft and to make the decision for the
20,000 sq ft. In the event only the first was done.

Slough
recorded (23/5313, 5583) that approval to proceed with the Howard Centre
construction was granted in June/July 1988 and that category II approval was in
August 1988. Mr Carey said that at this stage he had doubts whether the Carroll
Group scheme would be built at all but that, if it was, it would be subject to
the TMA. Had he known that the TMA had already been removed so that the
Galleria was to be a rival out of town shopping centre then even at this stage,
when approximately £2m had been expended (in addition to the £1m to buy out Mr
Cleaver) he had no doubt that work would have been stopped on the Howard Centre
scheme and Slough would have withdrawn from the project. Slough went ahead with
the Howard Centre relying on assurances given by WHDC that the TMA would be
strictly enforced. On September 22 1988, a substantial internal profit from the
scheme was anticipated (23/5584, 5588) although Mr Carey described the assumptions
as marginal and the percentage profit (10.8%) as marginal. Mr Parker described
10.8% as one of the lowest he had come across. The net profit as a percentage
of net development cost was 14.23%. Category I approval was sought (23/5585).

Slough signed
various development agreements on September 23 1988. This was their point of no
return. Shortly afterwards they entered into a construction contract with
Tarmac. Bulk excavation on the Howard Centre started on September 26 1988.

By September
1988, Mr Woolhouse knew that Carroll Group had been trying to attract Marks
& Spencer to Park Plaza (23/5602). He knew that they fell outside the TMA,
but he said that Slough never thought seriously that Marks & Spencer would
go to Park Plaza. Marks & Spencer had already agreed in principle to come
to the Howard Centre and Slough were never in doubt that Marks & Spencer
would come to the Howard Centre.

WHDC had
negotiations with Carroll about the premium to be paid for the additional
20,000 sq ft: see eg 23/5483. On October 27 1988, Mr Holt of the council’s
finance department wrote to Carroll on the subject of the premium (23/5750).
His letter includes:

The
additional retail area is to be free of the Tenant Mix Agreement.

He suggested a
valuation of £632,500. Mr Riddle agreed that the letter was written in terms
that the only outstanding matter was premium adjustments.

On November 18
1988, Carroll replied (23/5831A) suggesting an amount of £465,000. The schedule
added 10% for what Mr Riddle accepted meant the relaxation of the TMA: see also
23/5897C where Mr Holt also adds ‘10% tenant mix agreement’. Mr Riddle said
that there were other elements to the 10% but that it did include the TMA: see
23/5714.

On March 9
1989, Carroll wrote to Mr Holt (24/6122A) saying that £300,000 net had been
agreed (after allowing for £300,000 to be deducted in accordance with the
original agreement) and that this was in 30 consideration of, among other things, the additional square footage being
outside the tenant mix agreement. The council’s reply of March 17 1989
(24/6158A) confirmed the agreement of £300,000 saying of tenant mix, ‘the
position remains as set out in the Chief Executive’s letter to Gerald Carroll
dated 27 June 1988 in paragraph 4’: see ms note on 24/6123. Mr Riddle said that
he required this to be included in the letter because there had been no council
approval of the further relaxation by members competent to make a decision.
Carroll wrote on April 10 1989 (24/6259) asking for advice about ‘progress on
the question of adjustments to floor area and tenant mix in the sum of
£300,000’.

On April 13
1989 an article in the Welwyn and Hatfield Review (24/6263), which Mr
Riddle imagined that he had read, reported furious Hatfield traders demanding
that WHDC come clean over the Park Plaza development. Mr Moore is reported as
saying:

The Park
Plaza is and always has been a leisure-oriented development. We know there is
to be some 300,000 sq ft of retail floor space but the Council and the Carroll
Group have had a tenant mix agreement for five years. This means that there
will not be shops in the Gallerias which are already in the Hatfield town
centre. The shops that will be there will be specialist retail outlets to
attract a different kind of shoppers to those who use the Hatfield Town centre
shops. The Plaza will not be a threat to the shops in Hatfield …

Mr Riddle
cannot remember discussing this. He did not authorise it. He agreed that it was
evasive on the position on the 85,000 sq ft, which was known to Mr Moore. He
stood by the position that the council had not made a decision about the extra
20,000 sq ft.

Mr Riddle said
that in 1989 he was becoming acutely concerned at the council’s ability to deal
with matters in light of the concealed side letter. This, he said, derived from
an understanding that Carroll’s emphasis on fashion was becoming totally out of
line with anything which the council had intended under the development
agreement. There was a marked move away from the leisure concept. These
concerns were expressed in his letter dated April 20 1989 (24/6274). There was
to be a presentation of Park Plaza at the American Embassy.

By April 1989,
Healey & Baker had information of the identity of some of the tenants for
Park Plaza for whom Carroll apparently had commitments (24/6281), one at least
of which might be seen as breaching the TMA. Mr Parker said that experience
showed that some of Carroll’s publicity was not accurate. He did not think that
the council would ever approve such lettings in the light of the TMA. Slough’s
reply to Healey & Baker’s letter (24/6300) does not complain that there are
indications that the TMA was being breached. Mr Parker said that this
correspondence was part of a heated debate between Slough and Healey &
Baker about the extent of Healey & Baker’s marketing.

On May 5 1989,
Mr Hampson of John Lewis wrote to Mr Moore (24/6318) asking in relation to the
report in the press whether some other TMA was subsequently agreed that John
Lewis had not been told about. 31 Mr Riddle saw this letter at the time. It concerned him from the launch of the
Galleria onward that Carroll’s departure from the TMA was unanswerable by the
council because of the continued secrecy over the secret relaxation and because
the council had no control. It was therefore necessary to move towards putting
the record straight so that the council could exercise some control ‘albeit
minimal’ over the project. He agreed that this was a strong inquiry from John
Lewis which had to be dealt with. The John Lewis store in Welwyn Garden City
was open and, according to Mr Riddle, booming. They may also have been
contemplating opening as Waitrose near the council offices.

There was to
be a meeting between Carroll and Mr Riddle on May 8 1989 (see 24/6302) to
discuss tenants. Mr Riddle could not remember it.

There was a
presentation by Carroll to leading members (including five of the six
councillors) and officers on May 16 1989 (24/6302). They were handed a list of
contracts exchanged by Carroll (24/6341). Mr Murray of Carroll wrote on May 19
1989 (24/6351) referring to the council’s ‘continuing enthusiasm’. Mr Riddle
said that there was disenchantment because Carroll were not attracting leisure
tenants.

On June 7
1989, Mr Moore answered (24/6404) Mr Hampson’s letter (24/6318) having taken a
month to do so. The letter confirmed that the TMA referred to in the press
report (24/6263) was the 1984 document which was ‘prepared in order to give to
other Town Centre Traders particularly Hatfield Town Centre reassurance
regarding competition’. Mr Riddle agreed that it had historically been prepared
to give assurance to Slough among others. Mr Moore said that the document was
becoming ‘dated’. He commented on whether certain retailers might be within the
TMA but said that he had no knowledge of other organisations ‘as the Carroll
Group has not approached us regarding individual tenants’. He said that the
detailed proposals for A1 Gallerias ‘… combined with a predominance of leisure
orientated retailing will ensure that the original concept has not been
abandoned but merely updated to the present time’.

In the
judicial review proceedings, Kennedy J said of this letter that:

… it was
addressed, as Mr Moore knew, to the representative of a company from which the
decision of 1987 had been deliberately concealed. The letter was framed in such
a way as to suggest that the 1984 Tenant Mix Agreement stood unimpaired, and
that in general those taking space as retailers in the Galleria probably fell
within it. I am sorry to say that as Mr Moore was personally a party to the
1987 decision in that he was one of the persons consulted by the Chief
Financial Officer, and as he was in 1989 Director of Planning and Development,
he must have known the truth; and if he knew the truth, then his letter of 7th
June 1989 was dishonest.

WHDC did not
seek before me to dispel this finding. Mr Moore did not give evidence. Mr
Riddle agreed that this letter was ‘inaccurate’. He would not have sanctioned
certain parts of the letter. He could not remember whether he had seen it at
the time. He said that he may have spoken with Mr Moore before the letter was
written to agree the line that would be taken. He did not discuss the details
of the reply. He did not 32 recall that he specifically blest the line, but he appreciated that Mr Moore
had a limited range of options. He could have told the truth but Mr Riddle
appreciated that he appreciated that the situation would be dealt with
obscurely. That would apply to answering anyone else who was sensitive until
the council had made public their decision. Mr Riddle said that he did have
discussions with officials (Mr Moore and one or two others) at the council and
with members about the problem of how to bring the matter into the open.

On June 15
1989, Mr Hampson replied (24/6592) expressing concern and including:

I take it
from what you say, however, that we can assume your Council will be enforcing
the Agreement’s provisions, in spite of the fact that there is no reference to
this in the letting brochure.

A note
(25/6883A) made by Mrs Jackson, a senior planning officer, apparently of a Park
Plaza working party meeting probably in about September 1990 says:

Tenant mix —
time right to change tenant mix in devt agreement — want to bring into open
side letter & agreement by Members of 20,000 ft …

Worst
situation — 120,000 sq ft non-conforming. John Lewis could seek judicial
review.

Want to take
through Ctte before Christmas — need something from Carrolls by mid Nov.

Carroll
should apply relaxation of tenant mix agreement — need good reasons why they
want to abandon. Must keep leisure oriented theme. WHDC will say no to general
but suggest 105,000. WHDC to draft letter most like to receive.

Within week —
draft.

£300,000 for
extra 200,000 ft & exemption.

Mr Riddle accepted
that it was a reasonable inference that Mr Moore was at the meeting of which
this appears to be a note. Carroll may well have been. No formal minute of this
meeting has been produced. It is suggested that this note evidences the council
setting up a contrived application for complete relaxation which they would
grant in the part. Mr Riddle said that Carroll had already sought complete
relaxation. He saw this as part of the process of bringing the problem into the
open. He accepted that he may well have discussed the matter with Mr Moore
before the meeting. He did not remember attending the meeting. He did not
accept that the application was contrived — see in particular his written
witness statement.

In August 1989
an updated Healey & Baker ‘puff’ report (25/6841) lists some tenants
believed to have been secured at Park Plaza many of whom might be seen to
breach the TMA. Mr Parker said that this was probably written by someone in
another department of Healey & Baker who knew little about the background
to the scheme.

Mr Parker of
Healey & Baker said that the marketing period for the 33 smaller units at the Howard Centre was from about September 1989: see 28/9216.
At this stage Mr Parker had no idea that the TMA had been relaxed. If he had
known that there was opposition at Park Plaza, there would have been no sense
in an organised programme. They would have simply rushed round grabbing all the
tenants they could. Mr Rand did not consider that knowing that the TMA was
relaxed would have made a significant difference to the way in which the Howard
Centre was marketed. It would have been a factor.

On October 2
1989, Mr Moore wrote to the six councillors with copies to Mr Riddle and others
(25/6885) suggesting that the members who had previously been involved should
attend a proposed meeting with the planning and transportation committee.

At a meeting
of the Howard Centre working party on October 4 1989 (25/6889), it was recorded
that:

Mr Rymell
[Slough]; referred to the recent publication by the Carroll Group of potential
retail occupiers for [the A1(M) Gallerias] and questioned whether this met the
tenant mix criteria. Mr Garnham stated that the Council had not approved these
details.

Mr Carey’s
evidence was that Mr Rymell asked this question at his request as Healey &
Baker had brought to his attention the fact that Carrolls appeared to be trying
to attract fashion shops and non-specialist retailers.

On October 4
1989, Carroll wrote to Mr Riddle a letter (25/6893) drafted by Mr Moore (see
note at the top of 25/6892A), ie Mr Riddle received a letter from Carroll
drafted by one of his own senior officers. Mr Riddle said that he understood
that this was a document prepared in conjunction with Carroll. It was intended
to be a document on which the council would act. It referred to the 1984 TMA
without reference to any relaxation and stated that Carroll believed that a
review of the need for the agreement was now necessary. The letter concluded
with a formal request that the council agree to the rescission of the TMA in
its entirety as it no longer served any useful purpose. Mr Riddle said that
this was Carroll applying for relaxation. He did not wholly agree that it was
written on the false basis that the TMA was still in place unrelaxed. In my
judgment, the terms of the letter clearly justify the plaintiffs’ contention
that it was written on the false basis that the unrelaxed TMA was still in
place. It is equally clear from the fact that Mr Moore drafted it and from the
terms of Mrs Jackson’s note of the September meeting (25/6883A) that this was a
contrived application generated by WHDC in conjunction with Carroll seeking to
formalise the already agreed relaxations of the TMA for 85,000 sq ft and 20,000
sq ft, but to give the false public appearance that these were decisions made
for the first time.

On October 19
1989, Mr Moore wrote to Mr Rymell (25/6921) a letter drafted by Mr Garnham upon
information from Mrs Jackson with reference to the question which Mr Rymell had
raised on October 4 1989 (see above). Mr Moore said in the context of press
speculation about proposed Park Plaza tenancies that:

34

… at this
moment the Developers have not come forward with specific tenants for
consideration in the context of the Tenant Mix Agreement. The matter of whether
any prospective tenant complies or does not comply with the Tenant Mix
agreement has not yet arisen.

These
statements were untrue: see 24/6339. Mr Garnham said that Mr Moore was content
with this letter and did not seek to correct it. Mr Riddle agreed that the
first sentence was not correct and that the second sentence suggested that the
original TMA was still in force. Mr Carey saw this letter and understood it to
confirm that the TMA was still in existence and was being enforced.

In the minutes
of a meeting of the Park Plaza development and working party chaired by Mr
Moore on October 26 1989 (25/6942), it was noted that:

The Carroll
Group stated that they wished to have formal discussions with the Council
regarding the need for the continued application of the tenant mix agreement.
The Chairman agreed to arrange a meeting between members of the Council and the
Carroll Group.

Mr Riddle did
not agree that this was posturing.

On the same
day, Slough wrote (25/6947) asking if particular named tenants complied with
the TMA.

On October 31
1989, Mr Riddle wrote a memorandum (25/6949) to the six councillors and copied
it to Mr Moore in anticipation of a meeting with Carroll. It lists subjects for
discussion including ‘Tenant Mix Agreement — state of current and proposed
lettings’. The memorandum states:

I enclose a
copy of a letter that we have received from Carrolls formally requesting a
relaxation of the Tenant Mix Agreement. The letter is in a form that was
substantially agreed with us in advance and is intended to provide the basis
upon which the Council may reach decisions that will, in essence, confirm the
relaxations already agreed through the side letter and the concessions granted
in the Summer of 1988 for the extra 20,000 sq ft. Carrolls understand that this
is our intention, and the matter will probably be dealt with by Strategy and
Resources Committee close to Christmas. There need not be much discussion on
this item at the meeting other than for both sides to acknowledge their mutual
intention to set the record absolutely straight on Tenant Mix.

Mr Riddle did
not accept that the reference to ‘concessions granted in the Summer of 1988’
was contrary to his evidence that no concession had been formally granted for
the 20,000 sq ft. He again said that a relaxation for the 20,000 sq ft was
never authorised or agreed by those with authority to do so. He did not agree
that the expressions ‘there need not be very much discussion’ and ‘mutual
intention to set the record absolutely straight’ showed that what was to be
decided was all agreed in advance and that this was not a bona fide application
by Carroll. He said that the council were considering a genuine application
against the background that it was the council’s intention not to go beyond
105,000 sq ft.

35

On November 10
1989, Mr Moore wrote to Slough (25/6980) saying that:

Whilst it was
true to tell you in my letter of 19th October that the developers had not made
any approach regarding approval of tenants I can now inform you that the
Carroll Group have asked for discussions on the need for the continuing
application of the Tenant Mix Agreement … I do not propose to respond to your
list of organisations and comment as to whether they would comply with the
Tenant Mix Agreement as I am unaware of the activities of quite a number of
them.

Mr Riddle came
close to agreeing that this whole correspondence was written on a false basis.
Mr Carey took this letter to be confirmation that the TMA was still in
existence and being enforced although open pressure for a removal was now being
applied by the Carroll Group.

On November 14
1989, Carroll sent with two covering letters to Mr Riddle a further version of
the agreed letter (25/7009). The terms of the letter were not altered. There
was a suggestion that this second version had something to do with Carroll’s
negotiations with their financiers. One covering letter was innocuous
(25/6990B). The other (25/6990A), which was not disclosed until very soon
before the hearing, said that the letter was forwarded

… without
prejudice to the release of 85,000 sq ft of retail space from the tenant mix
agreement as set out in the Council’s letter of 31st July 1987 and the informal
agreement between us to release a further 30,000 sq ft of retail space as
discussed and agreed in correspondence earlier this year.

Mr Riddle
wrote to Mr Moore on November 17 1989 (25/7013) referring to discussions to the
effect that Carroll’s letter should go through the planning committee to the
strategy and resources committee which would consider representations. Mr
Riddle agreed that the council would have found it very difficult to be
influenced against the request by representations. The council had effectively
tied their hands in relation to 85,000 sq ft. Those invited to make
representations were not told of this. Carroll’s letter and the reference to
committees was reported to the Howard Centre working party on November 30 1989
(25/7051) in terms which gave the appearance that Carroll’s request was at
arms’ length.

On December 4
1989, Mr Hampson of John Lewis wrote to Mr Moore (25/7065) asking for
reassurance that there had been no shift in the council’s stance about the TMA.
Mr Moore replied on December 12 1989 (25/7103) saying that the council had
recently received a letter from Carroll asking for relaxation and inviting
comments by John Lewis. It is suggested that this was on the false basis that
the TMA still subsisted and that the application was independent of the council.
Mr Riddle said that the letter was factually correct. Slough were also informed
of Carroll’s application and their comments were invited (25/7104). The letter
is written on the basis that the 1984 TMA is in place and does not disclose the
1987 relaxation. Mr Riddle said that representations from Slough might
have had some effect in relation to the excess over 105,000 sq ft.

On December 8
1989, there was a meeting, chaired in the absence of Mr Riddle by Mr Moore, of
the Hatfield town centre working group — a group set up by WHDC advising the
council on measures to improve Hatfield town centre — at which it was agreed
that Mr Moore would prepare a draft letter setting out details of the views of
the working group expressing concern that the change requested by Carroll from
the previously agreed leisure theme concept of Park Plaza could have a
detrimental effect on retailers in Hatfield town centre. Mr Moore’s draft
letter is at 25/7135A/B. The eventual letter is dated January 12 1990
(25/7253). It expressed the ‘unanimous feeling’ of the working party that any
relaxation of the present TMA would be detrimental. Mr Riddle agreed that this
was ‘bizarre phraseology’ under Mr Moore’s signature. The letter is perhaps the
most extraordinary single feature of this whole sorry affair. For Mr Moore was
writing on behalf of the working group in opposition to an application by
Carroll, made in a letter which he himself had drafted, whose outcome was
predetermined as to 105,000 sq ft at least by decisions which had already been
made and in which Mr Moore had himself participated centrally.

The Carroll
letter of November 14 1989 was reported to the planning and transportation
committee on December 7 1989 (25/7094).

On December 18
1989, Mr Moore wrote to Slough’s solicitors (25/7120) saying that he had no
knowledge of what attitude the members would take to the suggestion of relaxing
the TMA. Mr Riddle agreed that this was ‘not accurate’.

On December 29
1989, the Welwyn and Hatfield Times had an article about Park Plaza beginning
with a statement that ‘under a current agreement with Welwyn Hatfield Council
the £150 million leisure and stores complex is not supposed to compete with
other shopping centres’. The article reports angry complaints from town centre
traders at Carroll’s application for relaxation and refers to ‘names announced
as moving into the complex include fashion favourites Principles, Burtons,
Laura Ashley and Dorothy Perkins’. Mr Moore is reported as saying that these
shops were not of a specialist nature and he is quoted as saying that ‘they
have been signed up without our knowledge or blessing’. It is to be supposed
that this article came to Mr Moore’s attention and there is no evidence that he
repudiated this statement which was in substance untrue to Mr Moore’s
knowledge. Mr Riddle agreed that the statement was ‘not accurate’.

On January 12
1990, Slough’s solicitors threatened judicial review proceedings if the TMA was
relaxed (25/7205).

On January 12
1990, the borough of Watford made
representations about the proposed relaxation (25/7230). Hertfordshire County
Council wrote on January 15 1990 referring to the intended effect of the TMA
and making representations (25/7248 — see also 26/7354). Welwyn Garden City chamber of commerce wrote on January 18 1990 urging WHDC not to relax
the TMA (25/7263). Mr Carey wrote to the members of the WHDC strategy and
resources committee on January 18 1990 (25/7274). Mr Riddle 36 accepted that this was on the assumption that the council would give proper
consideration to whether there should be any relaxation. Hatfield town council
wrote on January 30 1990 (25/7337). Stevenage Borough Council wrote on January
31 1990 expressing concern (25/7350). Stevenage chamber of commerce
and industry wrote on February 2 1990 (26/7355). There were other
representations opposing relaxation. It is abundantly clear that it was the
common perception of all those concerned, including Slough, that the TMA was
still in place.

There was a
meeting on January 23 1990 of which Mrs Jackson wrote a note (25/7296A). (An
architect’s note (7296D) shows that the meeting was a Park Plaza planning
meeting attended by Mr Moore.) Mrs Jackson’s note records ‘Will go ahead as
suggested — Don’t speak to anyone’ by reference to the TMA and its impending
committee consideration.

Mr Carey met
Mr Riddle and Mr Moore on January 30 1990. Mr Riddle said that he was not
intending to give any impression but he accepted that he probably gave the
impression that the TMA was still in place. Mr Carey had no means of knowing
that the 85,000 sq ft relaxation had already been made. Mr Carey wrote in
January 31 1990 (25/7344) showing that he believed that the TMA was still in
place although Carroll intended to contravene it. He enclosed a Carroll
marketing brochure asking that it be put before the committee. Mr Riddle
replied on February 5 1990 (26/7361) in terms implying that the TMA was still
in place and that the committee would consider Carroll’s request on the basis
that it was a bona fide request and that it would receive fresh consideration.
Mr Riddle accepted that he made no reference to the 85,000 sq ft relaxation and
that Mr Carey could form the impression from the letter that the TMA was
unrelaxed. He for practical purposes agreed that he intended Mr Carey to get
this impression. Mr Carey’s evidence was that he did get this impression. Mr
Riddle said that the 1984 document was still in place for a balance of 105,000
sq ft.

There was a
strategy and resource committee meeting on February 6 1990 (26/7386), which
received a long joint report from Mr Riddle and Mr Moore (26/7365). This refers
(26/7372) to an acknowledgement in 1987 by the A1(M) members working party —
the full council are not here mentioned — that Carroll should be permitted to
let shop units up to a maximum of 85,000 sq ft otherwise than as stipulated in
the TMA. It also refers to discussions in 1988 about additional floorspace —
clearly the 20,000 sq ft — being free from any letting restriction, but this
matter was not ‘conclusively disposed of at that time’. The committee meeting
minutes (26/7387) record that the committee was given written representations
and a petition. It was recorded that the main issue before the committee was
whether acceding to the Carroll Group’s request would secure or hinder the
council’s objective of a leisure speciality shopping centre.

After full
discussion, the Committee restated their commitment to securing a leisure
speciality shopping centre and concluded that rescinding the Tenant Mix
Agreement would hinder that objective. Accordingly, the request of the Carroll
group to rescind the Tenant Mix agreement should be refused. In the
case of the 85,000 sq ft which was originally to have been occupied by a
Habitat-type household goods store, the Committee accepted a case for relaxing
the Tenant Mix Agreement because of the change in circumstances which had taken
place since September, 1984 but considered that a proper scrutiny of all
lettings should be undertaken by the Resources Management Sub-Committee.

It was
accordingly resolved to refuse to rescind the TMA, but that the subcommittee
might permit uses which would otherwise be outside the four specified
categories of the agreement ‘but that the total so permitted should not exceed
85,000 sq ft without reference back to the Strategy and Resources Committee’.
This resolution was in substance what Mrs Jackson recorded as being intended at
the Park Plaza working party meeting in about September 1990 (25/6883A — see
above) except that the resolved relaxation did not extend to the 20,000 sq ft.
Mr Riddle did not accept that this was a contrived decision although he agreed
that it might appear so. He agreed that there was no mention of the secret side
letter. It is, in my view, quite obvious from the way in which this came about
and I accept that this was indeed a contrived result which had been planned
back in September 1989.

On February 7
1990, WHDC issued a press release (26/7392A) headed ‘Council Refuse Carroll
Group Request’ which quoted Mr Riddle in terms which could be seen as
suggesting that the TMA had until February 6 1990 remained in place. A note to
editors describes the TMA without any reference to the July 1987 side letter.
(Other bodies were informed of the terms of the committee resolution without
reference to the side letter.)

Mr Carey wrote
on February 13 1990 (26/7445) in strong terms saying that it was inexplicable
that a local authority should respond positively to cynical abuse of the agreed
TMA by acceding to an eventual request for rescission or amendment. Mr Riddle
wrote to Mr Carey on February 22 1990 (26/7474) saying that the decision was a
carefully judged one in a very difficult context and taking all representations
and considerations into account. He maintained in evidence that this was so in
relation to the excess over 85,000 sq ft.

The committee
decision was referred to the full council for confirmation which the council
gave on February 19 1990 (26/7469) upon resolution moved by two of the six
councillors.

The council’s
decision provoked something of an uproar. On February 27 1990, Mr Carey wrote a
letter to the deputy chief executive of the Crown Estate (26/7483), who had
written suggesting an application for judicial review, in which he said that:

… it is
really no surprise to us that Welwyn Hatfield have weakened their stance on the
user mix agreement for the Gallerias but we feel that it is worthwhile making a
‘song and dance’ about it and we have certainly achieved extensive coverage in
the local and national media.

WHDC say that
this shows that Slough never expected that the TMA would be enforced. Mr Carey
said that WHDC’s decision came as no 37 surprise because Slough had had meetings with Mr Riddle in January 1990 at
which he gained the impression that WHDC had already decided what they would
do.

By March 1990,
it was proposed that the £300,000 net which was to be paid by Carroll for the
additional 20,000 sq ft should be paid by instalments over five years
(26/7614A).

A note by Mrs
Jackson of a WHDC Park Plaza internal meeting on April 17 1990 (26/7654) refers
to ‘relaxation of tenant mix agreement — only what previously agreed’. It is
suggested that this must refer to the 20,000 sq ft as the 85,000 sq ft was
already agreed in the side letter. Mr Anderson’s manuscript note of the same
meeting has (26/7653B) the entry ‘T Mix agreet. Ratified nothg. needed.
‘30,000’ (10th. 20th)’. This might be read as meaning that the 30,000 sq ft
decision had already been ratified. Mr Riddle said that it could not mean this
as the February meetings had specifically not given that relaxation: see also
26/7654A.

On April 19
1990, Mr Moore wrote a memorandum (26/7660) in which he said of the additional
20,000 sq ft:

Planning
consent has been granted for these changes and the Development Agreement is
currently being amended. The financial arrangements have been agreed

In the
following paragraph he refers to this as ‘the deal struck’.

An undated
draft agreement in the bundle around September 1990 (26/8124E) supplemental to
the 1987 Carroll development agreement provided for payment of the £300,000
plus interest by instalments.

A note dated
July 31 1990 (26/7975A), records that Carroll were thought to be in financial
difficulties and that Mr Riddle required that the premium instalment agreement
and a £3,305,000 deferred payment office agreement should not be completed
until he issued further instructions. Mr Riddle said that this was because the
council had not yet authorised the premium instalment agreement. He could not
recall what stage the deferred payment office agreement had reached with the
council. By this time the main structure of Park Plaza was well advanced. The
building of the extra lightweight shops went ahead with the main structure and
were complete when the development opened.

On September 18
1990, it was agreed at a meeting between council officers and Carroll that it
would be appropriate to review the terms of the arrangement to release the
20,000 sq ft from the TMA after the judicial review after which the
documentation would be completed and signed: 26/8138B — see also 26/8124B,
8137. Mr Riddle said that this was because the issue was before the court and
therefore up in the air.

By 1995,
Howard Centre was 95% let after much marketing effort and money. Vacancies were
in part attributed to market conditions and in part because there was a dearth
of fashion tenants in circumstances where the Gallerias were 90% let. By
comparison, A1 Gallerias failed and was sold in receivership in 1993. But Mr
Carey said that the Gallerias was 98% occupied in about 1990 when Howard Centre
was not fully let.

38

Judicial
review proceedings

On April 27
1990, Slough and John Lewis applied for judicial review of the decisions of
February 6 1990 and February 19 1990. The existence of the 1987 side letter was
first revealed when Mr Riddle’s evidence was exchanged in the judicial review
proceedings on July 11 1990 (8/54). Upon its production, the judicial review
proceedings were amended to include the 1987 decision as one of the matters
which the applicants sought to set aside. The hearing of the judicial review
proceedings was in February 1991. Kennedy J (as he then was) gave judgment on
March 27 1991 (1/163, 167). He ordered that the WHDC decisions of July 13 1987,
February 6 1990 and February 20 1990 be quashed and that Slough’s claim for
damages against WHDC proceed as if begun by writ. Hence these proceedings. The
evidence before Kennedy J was on affidavit and necessarily less extensive than
that which I have heard given orally. Mr Riddle was the only deponent on behalf
of the council. His affidavit said (8/42) that the council had approved 42
units totalling 69,572 sq ft outside the TMA.

Kennedy J in
summary held that the concealed side letter of July 1987 fell foul of a
legitimate expectation that those concerned would be consulted before such a
decision was made; that there was in 1987 an abuse of power, although ‘I prefer
not to describe it as bad faith because that suggests a lack of integrity on
the part of Councillors and their officials. There is no evidence of that’;
that in 1990 ‘the process of consultation was flawed because, quite
deliberately, those being consulted were not told what had happened in 1987’;
and that the 1990 decisions should not have taken account of the flawed 1987
decision, but did so. Kennedy J quashed all three decisions and adjourned all
questions of damages to be dealt with as if the proceedings had begun by writ.

Kennedy J in
his judgment considered a submission on behalf of Carroll that Slough always
intended to go on with the Howard Centre and that at the planning inquiry, for
tactical reasons, they showed lack of candour. Of this, Kennedy J said (1/196):

So far as
Slough Estates were concerned, there was, they say, and I accept, no lack of
candour at the inquiry but a real concern as to the impact of the Gallerias
scheme, and serious doubts as to whether it could or would be developed as
envisaged in the Tenant Mix Agreement. The current recession has aggravated
matters, but it has not caused in either of the present applicants a sudden
change of heart.

Mr Michael
Lyndon Stanford QC submitted (and Mr Anthony Porten QC did not demur on this
point) that findings of fact by Kennedy J are open for review before me, since
his findings were made on comparatively limited affidavit evidence exhibiting a
comparatively limited number of documents, whereas I have heard oral evidence
and considered many more documents. That of course applies both ways.

The 20,000 sq
ft issue was not before the court in the judicial review proceedings as a
decision subject to review although there some reference to the historical
subject-matter in Kennedy J’s judgment. Mr Riddle said 39 that this was because the council had never taken the decision on that matter.
He said that Carroll never paid for the 20,000 sq ft extra space. In May 1992,
WHDC, in consultation with Slough and John Lewis and as a compromise, permitted
Carroll to retain the tenants who breached the TMA up to 85,000 sq ft and to
let the 20,000 sq ft to tenants who did not comply with the TMA if they could
show that they were unable to let this space to complying tenants (27/8997). By
that time, Carroll were in serious financial difficulties and derived no
advantage from any relaxation of the TMA for the 20,000 sq ft. Mr Riddle did
not accept that it was too embarrassing to pursue payment for the 20,000 sq ft.
There was not the slightest secrecy about this. The letter has a list of 50 or
so non-conforming tenants amounting to 83,400 sq ft of mostly let space.

Documents

Slough make
much of the fact that numerous relevant documents were not produced by WHDC in
the judicial review proceedings and that many such documents were only produced
at a late stage in these proceedings. Those not originally produced importantly
include the critical April 1987 letters (19/3863, 3866, 3872), Mr Heys July
1987 aide-memoire (20/4025) — the single most telling document in the
whole case — and some of the meeting minutes surrounding the meeting on July 13
1987 and numerous documents relating to proposed relaxation for the 20,000 sq
ft. Slough also maintain that in certain respects full disclosure has still not
been made.

Mr Riddle had
no personal knowledge why documents were not produced earlier. He said that he
was convinced that there was no wilful concealment of documents. For his part
there had been no obstruction and his instructions to staff and his expectation
was that all documents were to be disclosed. Slough’s solicitors spent a long
time in the council’s offices delving into discovery. Mr Riddle accepted that
the council had an obligation in the judicial review proceedings to place on
record all facts and matters relevant to the dispute: see 26/8155. He said that
he pressed Mr Heys for relevant documents and he was later for the first time
given Mr Heys’ aide-memoire.

The number of
documents not originally produced and the nature of their content make a strong
cumulative forensic case that WHDC historically deliberately withheld
embarrassing documents in the hope that they might remain undisclosed. There is
a possibility that this remains the case to a limited extent. On the other
hand, I suspect that many of the documents disclosed late — but probably not
the most damaging — were originally withheld by oversight or because requests
for documents to numerous individuals within WHDC were responded to by people
who did not fully understand what was required of them. I accept Mr Riddle’s
evidence that he was not personally concerned with any attempted suppression.
It is not, I think, necessary to say more on this topic nor to make any more
precise findings, since Slough’s factual case in relation to WHDC’s own
activities is scarcely defended and does not need help from inferences drawn
from any failure to disclose documents.

40

Slough’s
case in deceit

Slough plead
various causes of action, but the hearing proceeded on the basis of their claim
in deceit only. The other causes of action were not investigated and each party
has reserved their position in relation to them. This judgment therefore deals
only with the case in deceit.

To succeed in
a claim for deceit, a plaintiff must prove that the defendant made a false
material representation of fact; that the defendant knew that the
representation was false or did not believe in its truth or was reckless as to
its truth or falsity; that the representation was made with the intention that
it should be acted on by the plaintiff, or persons including the plaintiff, in
the manner which resulted in damage to him; and that the misrepresentation
induced the plaintiff to act to his detriment: see eg Derry v Peek
(1889) 14 App Cas 337; Downs v Chappell [1996] 3 All ER 344. In Downs
v Chappell Hobhouse LJ said at p351C:

A
representation is material when its tendency, or its natural and probable
result, it to induce the representee to act on the faith of it in the kind of
way in which he is proved to have in fact acted. The test is objective.

The plaintiff
has to prove that the misrepresentation was a real and substantial inducement
but does not have to prove that it was the sole inducement: see JEB
Fasteners Ltd
v Marks Bloom & Co [1983] 1 All ER 583 at p589.
Inducement is not the same as mere encouragement. The standard of proof which
the plaintiff has to achieve in an action for deceit is the civil standard, ie
on the balance of probabilities, but the degree of probability must in all
cases be commensurate with the occasion and proportionate to the
subject-matter. ‘The more serious the allegation the higher the degree of
probability that is required’: Denning LJ in Hornal v Neuberger
Products Ltd
[1957] 1 QB 247 at p258.

(a) Representations

Slough contend
that WHDC in essence represented to Slough that the TMA had been agreed with
Carroll and was in place and that it was WHDC’s intention to enforce it. (I
shall refer to a representation to this effect as ‘a TMA representation’.) Mr
Porten accepted that these are capable of being representations of present
fact, although he made submissions that what was important to Slough was in the
nature of a promise for the future.

WHDC’s case
was that at the planning inquiry WHDC stated that their intentions were: (a)
that the grant of the lease to Carroll would be subject to the TMA, the
contents of which had been agreed in draft; and (b) that it would be able by
that means to control the retail content of the Park Plaza development for five
years. It is suggested that representations in March and April of 1986 were
representations of future conduct and to similar effect as those made at the
planning inquiry. Similarly subsequent representations up to September 1988
were as to WHDC’s future intention. In this period, however, WHDC did not
reassert what had been said at the planning inquiry, but rather drew attention
to the way in which things had 41 changed in the field of retailing and to the difficulties of maintaining the
TMA. WHDC accept that on August 2 1988 it was represented that the additional
20,000 sq ft would be subject to the same restrictions as the rest of the
development. (I have rejected the factual case that Mr Garnham later corrected
that misrepresentation.) After September 1988, no representation can have been
a material inducement since Slough then reached and passed their point of no
return. I agree with Mr Porten that the material period for this case is
between the date when the representations became false to the knowledge of WHDC
and September 1988 when Slough reached their point of no return with the Howard
Centre. I also agree with him that what WHDC did after that date may be
relevant to a consideration of WHDC’s state of mind then and earlier and to
their intention. It may also be relevant to a consideration of when Slough
discovered the truth and what they then did.

WHDC submit
that the nature of the representations should be seen in the context in which
and the purpose for which they were originally made. They were made for a
planning purpose to satisfy the Secretary of State that any potential planning
harm from Park Plaza could be controlled by WHDC through the TMA. It was not a
planning concern to protect other retailers or developers from competition.
There was never any representation that the TMA would be strictly enforced.
Things might change (and in fact did change) and WHDC did not represent that
they would never reconsider at a later date what they had said in 1985 in the
light of changed circumstances.

The essence of
this case is that WHDC never made material representations of present fact. I
have no hesitation in rejecting this. WHDC represented the TMA at the planning
inquiry as an agreed document between themselves and Carroll. That was a
representation of fact that it was indeed an agreed document and this was in
fact then so, as I find. They further represented that they intended to enforce
the TMA. That too was a representation of fact as to their then intention. What
was said in April 1986 included representations to essentially the same effect.
Thereafter WHDC at no time before 1990 informed Slough that these facts were no
longer true. On the contrary, they made further statements which in their
context and in the light of what had previously been said and written expressly
or implicitly represented that the facts continued to be true.

I have no
difficulty therefore in concluding (and I do) that WHDC made or continued TMA
representations to Slough or persons including Slough expressly or by
implication on at least the following occasions:

•       August 6 1984 (13/1011).

•       August 24 1984 (13/1090).

•       At the planning inquiry in 1985
(especially 14/1687).

•       April 11 1986 (17/2936).

•       October 19 1986 (18/3426).

•       December 2 1986 (18/3508).

•       March 7 1987 (Mr Clarke’s evidence).

•       March 31 1987 (Mr Ball’s and Mr Clarke’s
evidence).

42

(Representations
to British Rail are in the context representation to Slough.)

•       April 22 1987 (19/3866).

•       May 28 1987 (19/3918).

•       By not seeking public representations in
advance of July 13 and 14 1987 (20/4025) and by not publishing the decision
then made (20/4022B) nor the secret side letter of July 31 1987 (20/4094).

•       Thereafter by keeping the secret side
letter secret until the judicial review proceedings.

•       August 17 1987 (20/4260) — Mr Moore about
Laskys.

•       (October 5 1987 (20/4329) — Mr Moore to
Welwyn Garden City Chamber of Commerce.)

•       August 2 1988 (23/5431) — Mr Garnham.

•       April 13 1989 (24/6263) — newspaper
report not repudiated by WHDC.

•       October 4 1989 (25/6889).

•       October 19 1989 (25/6921).

•       November 10 1989 (25/6980).

•       December 18 1989 (25/7120).

•       January 30 1990 (Mr Carey’s and Mr
Riddle’s evidence).

•       February 5 1990 (26/7361).

The content of
these representations appears in the narrative which I have given. The first
few of them were before it was said that agreement of the TMA had been reached
with Carroll but the representation of intention was nevertheless made.

(b) Misrepresentation

WHDC accept
that on July 13 and 14 1987 they departed from their earlier expressed
intentions as to the TMA and it follows from my findings that the
representations became false (necessarily to WHDC’s knowledge) from July 14
1987 when they secretly resolved to relax the TMA. WHDC do not accept
forensically that it was their intention to induce Slough to continue with the
Howard Centre knowing that it was probable that they would not if they knew of
the relaxation. But, in my view, this quite obviously was their intention. I
have already said that Mr Heys’ aide-memoire of July 13 1987 (20/4025)
speaks for itself and Mr Porten really had nothing to say on the subject of
WHDC’s intention when I asked him what I was to make of the aide-memoire.
The same might be said of other documents including Mr Riddle’s second letter
of June 27 1988 (23/5297D) and of WHDC’s whole contrived scheme leading up to
the decision of February 1990. WHDC’s whole purpose in effecting and publishing
the TMA had explicitly been to reassure others and specifically Slough about
the proposed nature of Park Plaza.

My summary
findings on this aspect of the case need to be spelt out. They are these. In
July 1987 the full WHDC council resolved upon specific advice from their most
senior officers to agree to Carroll’s request to relax the TMA as to 85,000 sq
ft (which in the context was an enormous area), but to keep this relaxation
secret and to pretend to all other interested parties, including particularly
Slough, that the TMA was still in place and that it 43 was their intention to enforce it. It was obvious that if the relaxation became
public there would be an uproar. WHDC’s specific intention so far as Slough
were concerned was to induce them to continue with the Howard Centre in the
knowledge that, if they learnt of the relaxation, they probably would not
continue. WHDC wanted both Park Plaza and the Howard Centre to be built. They
had a strong financial interest in Park Plaza.

From July 1987
onwards WHDC were nursing a lie and had set themselves a time bomb. Those
involved included at least the councillors and officers who were at the members
A1(M) working party meeting on July 13 1987 before whom Mr Heys’ aide-memoire
was tabled, and also those who attended the principal chief officers’
management team meeting held on July 13 1987 — there were 10 of them excluding
Mr Simmons who only attended for an item about car parking — who were ‘informed
of the latest discussions which had been held with the Carroll Group and of the
recommendations which would be made at the meeting of the A1(M) members’
working party to be held that evening’ (20/4022A). It is logical also to
conclude that all those councillors and officers who attended the council
meeting on July 14 1987 also knew what was going on, although in human terms it
may be that some of those who attended that meeting (along with Mr Riddle,
whose evidence on this point I accept) did not appreciate what it was that they
were deciding to do. The officers mainly involved appear to have been Mr
Asquith, Mr Moore and Mr Heys. It looks as if the six councillors were a
nucleus who steered the rest. None of those to whom I have alluded (except Mr
Riddle) gave evidence although Mr Lyndon Stanford made it abundantly clear that
Slough were pointing the finger at each of them.

Thereafter there
was a policy to tell lies about the TMA if it was necessary to do so. The lies
were watered down wherever possible, but they were conscious lies. The
principal agent who peddled the lies was Mr Moore because of his position, but
I think that it would be unfair to pile the whole responsibility on to him when
he was acting out the consequences of a decision taken by the full council on
the recommendation of three of their senior officers (of whom he was one) and
without demur from most of the rest of the senior officers.

Mr Riddle
agreed that all the members of A1(M) working party who were present at the
meetings in 1987 knew about the 85,000 sq ft relaxation. He imagined that all
members of the working party knew of the side letter, but he did not know.
Senior officers also knew. They also knew of the 20,000 sq ft arrangement. He
accepted that, in so far as the true position was not made known to
individuals, there was a risk of misinformation. It was up to Mr Moore to brief
people who might have to talk with Slough. Mr Riddle did not know of steps
which Mr Moore took to see that people under him were properly informed.

Mr Riddle
inherited the time bomb and did not know what to do about it. He became aware
of the secret side letter in December 1987 and knew the full story by June 1988
at the latest when WHDC were considering Carroll’s request for a further
relaxation for the 20,000 sq ft. That request was agreed to in substance (and
Carroll proceeded to act accordingly) 44 although there was no final formalised agreement. The agreement in substance
was not published. Mr Riddle perceived the need to bring the whole matter into
the open, but did not take effective steps to try to do so until the late
summer of 1989. In about September 1989 a plan was hatched and put into
operation for Carroll to make a contrived application, as if for the first
time, for complete relaxation of the TMA which WHDC would in form refuse. But
they would appear to be persuaded to relax the TMA for the first time for
85,000 sq ft and also, as the plan was initially conceived, for the 20,000 sq
ft. This is what they did with the exception of the 20,000 sq ft, but the time
bomb went off during discovery in the judicial review proceedings.

Mr Riddle,
although he may not have been consciously dishonest personally, knew what he
was doing and the effect of what he was doing was to perpetuate the deception
which he inherited. His objective was to resolve this situation. He had many
other things to deal with. Nothing was done which achieved this between June
1988 when he became fully aware and the summer of 1989 when the steps leading
to the February 1990 decisions were initiated. He said that the council’s
position became untenable in the spring of 1989 when Carroll were flaunting
lettings which did not conform with the TMA. I think that Mr Riddle was less
than frank historically in correspondence (eg with Mr Carey in January 1990
(26/7361) and also in his judicial review affidavit). But he had the courage to
give oral evidence in these proceedings and to submit himself to
cross-examination in what for him must have been most uncomfortable
circumstances. I judged his oral evidence to have been generally as open and
straightforward as loyalty to his council allowed.

There was thus
a continuing representation going back to 1984 to 1985 which was explicitly
restated at intervals through to 1990. The representation became false to
WHDC’s knowledge on July 14 1987 at the latest. WHDC’s case is that it did not
become false earlier than that. They say further that the occasions between
July 1987 and September 1988 when WHDC did anything which amounted to a
material representation were limited to what Mr Moore said about Laskys in
August 1987 (20/4260) and what Mr Garnham said about the 20,000 sq ft on August
2 1988 (23/5431). Mr Porten points out that the same period occupies some 10
pages in the chronology prepared by Slough for this case. In my view, Slough’s
case could stand on the basis of these two representations alone. (Mr Garnham
did not personally know that what he was saying was untrue. But on his evidence
he had been kept in ignorance — this must have been intentional — of the true
state of affairs such that this is to be taken as a representation by an agent
which WHDC, knowing that there was a risk of misinformation, permitted him to
make: see Bowstead and Reynolds on Agency 16th ed (1996) 8–183 (b). It
is accordingly to be taken as a misrepresentation by WHDC which they knew to be
untrue.) However, Mr Porten accepts, I think, that there may be circumstances
in which silence and failure to correct a previous representation may amount to
misrepresentation. For this to arise, there has to be something in the nature
of a duty to speak out. WHDC’s case is that there was no such duty here,
although Mr Porten realistically accepted that it was not an attractive case.
It is suggested first that in the context of their origins in the public
inquiry the representations were not continuing representations. I disagree.
They were clearly in substance restated in April 1986 and thereafter. It is
suggested that Slough had made clear at the public inquiry that they regarded
the TMA as worthless and that therefore there were no continuing
representations which WHDC were obliged to correct. I reject the factual basis
of this submission later in this judgment. In the present context it is
sufficient to say again that WHDC restated the representations in April 1986
and thereafter and to point out how difficult it is for WHDC to say with any
credibility that the representations were not continuing and material in the
light of Mr Heys’ aide-memoire and the steps they themselves took to
conceal their relaxation of the TMA. It is suggested that WHDC had already
indicated to Slough that strict adherence to the TMA was going to be difficult.
But, in my view, such difficulties as were alluded to never came near to saying
that there would be large scale consensual relaxation of the TMA. Finally, it
is suggested that Slough had already decided to proceed with the Howard Centre
and did not indicate to WHDC that their development was dependent on the truth
of earlier representations. I reject the factual basis of this submission later
in this judgment. As to WHDC’s own view of the matter, Mr Heys’ aide-memoire
speaks for itself.

In my
judgment, there could scarcely be a clearer case of a duty to tell Slough what
was in the event secretly decided in July 1987. Kennedy J found that there was
a duty in public law to consult which would of course have meant that any
decision had also to be published. In my judgment, there was a plain duty in
private law as well. That duty becomes even clearer in the light of the lie
told by Mr Moore in his letter of April 22 1987 (19/3866): see below. I
accordingly find that there was a continuing misrepresentation by silence in
addition to other misrepresentations. It was deliberate. WHDC knew that it was
false. It is suggested that there was no intention to induce Slough to continue
with the Howard Centre. Mr Heys’ aide-memoire in the circumstances
clearly shows that there was. It was clearly also Mr Moore’s intention in
saying what he did in his April 22 1987 letter.

(c) Date when representations
became false to WHDC’s knowledge

Slough’s case
is that the representation was already false to WHDC’s knowledge by April 11
1986 and that what was said at the meeting on that date to the effect that WHDC
proposed to enforce the TMA rigidly (17/2936, 2940), by which they say that
they were induced to continue with the Howard Centre, completed their cause of
action in deceit. They say that the other ingredients of their cause of action
in deceit existed then, ie that what was then said on behalf of WHDC was untrue
to the knowledge of Mr Asquith among others. Slough invite me to find that WHDC
and Carroll never agreed or intended to enforce the TMA and that the pretence
which it is accepted went back to July 1987 in truth went back to 1984.

45

The issue of
the date at which WHDC first knowingly made representations which were untrue
gives rise to a damages issue. The parties agree that Slough cannot recover
costs for any period earlier than the time when their cause of action was
complete. These have been referred to as ‘sunk costs’.

Slough’s case
that WHDC and Carroll never intended that the TMA should apply to Park Plaza
depends on inferences which I am invited to draw from what Mr Lyndon Stanford
referred to as mainly straws in the wind. The case is that, cumulatively and in
the absence of explanatory evidence from WHDC, these establish pretence back to
1984.

It is
convenient first to examine April 1987. Carroll had made a revised planning
application for Park Plaza in January 1987 and in March 1987 Mr Carroll was
reported by WHDC as having been extremely concerned that the council were
applying the TMA to the letter of the law. Mr Asquith met Mr Carroll on April
14 1987 and Mr Carroll wrote his strictly private and confidential letter to Mr
Asquith on April 16 1987 saying that the removal of the TMA was absolutely
fundamental to Carroll and that its abolition underpinned Carroll’s
arrangements with financiers. Bearing in mind that this was a confidential
letter which did not need to be dressed up, it suggests that up to this point
the TMA was in place. Mr Carroll looked forward to receiving a draft letter
‘confirming that the Council agreed (sic) to the removal of the tenant
mix agreement’. The tense of ‘agreed’ is one of the straws in the wind and said
to imply an earlier agreement. In my view, this is by itself tenuous in the
extreme. It is more likely a typing mistake or a minor grammatical solecism,
but it does indicate, as Mr Asquith’s letter in reply of April 22 1987 makes
perfectly clear, that Mr Asquith had agreed to steer Mr Carroll’s request for
relaxation of the TMA through the council after the May elections. There was an
agreement to this effect between Mr Asquith and Mr Carroll and it is, in my view,
obvious (and I infer) that Mr Asquith was quite confident that he would be able
to arrange matters with his council in accordance with his agreement with Mr
Carroll. As between Carroll and WHDC’s most senior officer, therefore, there
was a secret agreement in April 1987 that the TMA would be removed (or at least
relaxed). Slough suggest that the phrases ‘our original understandings reached
some three years ago’ in Carroll’s letter and ‘the original bargain struck’ and
‘in the Spring of 1984’ in Mr Asquith’s letter imply a secret bargain to get
rid of or avoid the TMA dating back to dates in 1984 when there was no TMA. In
my view, these phrases more naturally in their context refer to the 1984
bargain including the TMA such that, although the TMA was to be relaxed, the
eventual tenant mix would be presented as achieving the spirit of the original
purpose including the TMA. I do not think that ‘some three years ago’ written
in April 1987 has to be read literally as going back to April 1984, but
rather as going back to some time in 1984.

Mr Lyndon
Stanford’s other straws in the wind are as follows:

(a) Mr Moore’s
reference in his letter of September 21 1984 (13/1136) to the TMA as a document
which ‘may now be shown to those parties who require assurance’. It is suggested
that this implies that this was its only 46 purpose. I think the expression is quite neutral. Mr Moore was asking for
Carroll’s agreement to the document and it obviously could not be made public
until it was agreed.

(b) A
reference in a letter dated October 4 1984 (13/1157) from surveyors acting for
Carroll to the TMA being ‘satisfactory for your purposes for the time being’,
implying perhaps that the TMA was a temporary expedient.

(c) The
agreement on April 24 1986 that a formal retail tenant mix agreement based upon
the document presented to the planning inquiry was to be prepared (17/2966),
(suggesting that something different from the TMA was intended); and that every
piece of correspondence was to be channelled through Mr Murray of the Carroll Group
and the chief planning officer (Mr Moore) on the council’s side (17/2965)
(suggesting that Mr Murray and Mr Moore were already in clandestine cahoots).

(d) 1986
references in 17/3172, 18/3229 and 18/3243 to intended ‘side letters’. I have
indicated in the narrative part of this judgment that there was a side letter
drafted in 1986 which in its amended version became 20/4095 and which is
innocuous in the context of the present analysis. Slough point out that the
references to side letters are in the plural and that no second candidate has
been produced. They also point out that the innocuous side letter was intended
to enable the development agreement to contain a watered down version of the
TMA without the names of those excluded. They suggest that this was to enable
Carroll to show the watered down version to financiers and infer from this that
relaxation of the TMA was already in hand. In my view, the 1986 draft of the
innocuous side letter by itself tends to confirm that the TMA was in place as
between WHDC and Carroll whatever Carroll may have intended with financiers.
References to side letters where only one is identified is a rather better
point.

(e) The
agreement on September 8 1986 to omit reference to named High Street stores
from the Park Plaza development agreement as being disadvantageous to Carroll
in securing lettings (18/3242). I do not read this as carrying overtones
indicating that it had already been agreed that the TMA would be relaxed or not
enforced.

(f) The fact
that WHDC and Carroll met Marks & Spencer (who were specifically excluded
by the TMA) on October 9 1986 and agreed that lines of communication should
remain open (18/3418). The succeeding words in the note are ‘WHDC would need to
let Marks & Spencer know the type of goods that we would not wish to see
trading except as ancillary to other main lines’. This and other passages in
the note can be read as implying that what was being looked at was a limited
Marks & Spencer store which did comply with the TMA.

(g) The fact
that at the Park Plaza steering group meeting on January 8 1987 Mr Moore is
recorded as saying that ‘he would not need to know individual named occupiers
for the retail units but would need to know precise location of specific uses
eg Cinema’ (19/3572). It is suggested that under the TMA WHDC would need to
know the identity of individual retailers and that this indicates that the TMA
was understood not to apply. I think that the reference is neutral.

47

(h) The fact
that in the period before April 1987 (as afterwards) WHDC wrote what may
perhaps be seen as guarded letters, implying in hindsight that there were
clandestine arrangements already in place. Specifically Slough refers to
letters containing the theme that retailing practices had changed since 1984.

(i) The ease
with which the arrangement agreeing to relax the TMA for the additional 20,000
sq ft suggests that this was simply implementing what had been agreed earlier.

(j) The fact
that, as Slough’s own evidence in particular suggests, no one experienced in
property development could have thought that Park Plaza could ever have been
funded or let if it were shackled with the restrictions of the TMA.

Slough rely
(to my mind without persuasion) on a presumption of continuance. They also say
that it is open to the court to draw inferences adverse to WHDC from the
failure to call any of numerous witnesses who could have explained the straws
in the wind. They rely on R v Inland Revenue Commissioners, ex parte
TC Coombs & Co
[1991] 2 AC 283 at p300, where Lord Lowry said:

In our legal
system generally, the silence of one party in face of the other party’s
evidence may convert that evidence into proof in relation to matters which are,
or are likely to be, within the knowledge of the silent party and about which
that party could be expected to give evidence. Thus, depending on the
circumstances, a prima facie case may become a strong or even
overwhelming case. But, if the silent party’s failure to give evidence (or to
give the necessary evidence) can be credibly explained, even if not entirely
justified, the effect of his silence in favour of the other party, may be
either reduced or nullified.

See also O’Donnell
v Reichard [1975] VR 916 at p929 for what the Supreme Court of Victoria
said about the contribution of a party’s unexplained failure to call a witness
whom he might reasonably be expected to call to the drawing of inferences from
evidence which has been given.

In my view,
the straws in the wind are insufficient to raise any real case to the effect
that the TMA was a sham agreement from when it was first agreed between WHDC
and Carroll in 1984. The whole sense of the evidence is that relaxation arose
from Carroll’s difficulties when they got down to the details of Park Plaza in
early 1987. I have indicated my view that some of the straws do not bear the
inference for which Slough contend. Some remain to constitute the beginnings of
a possible case, but they do not add up to much and do not, in my view, attract
the very large help which failure to explain would need to give. There are very
obvious reasons relating to the case as a whole why WHDC have not called a
large number of possible witnesses. The present particular part of the case is
important, but may be seen in the context as peripheral. In these particular
circumstances, where Slough do not do more than raise a suspicion, the failure
to give evidence may be explained as referable to the case as a whole and not
as illuminating this somewhat peripheral part.

48

Slough do not
therefore establish a TMA representation which was to WHDC’s knowledge false
from as early as April 1986. They do, however, in my judgment, succeed in
pushing the date back somewhat earlier than July 1987. In April 1987, Mr
Asquith secretly agreed with Mr Carroll that he would see to it that the TMA
was abolished or relaxed. He recorded this in his letter of April 22 1987
(19/3872). I have held that Mr Moore knew on April 22 1987 what Mr Asquith was
doing and that his letter of that date (19/3866) was knowingly untrue. It was
specifically untrue that Mr Moore had ‘no reason to believe that Park Plaza
will not proceed in any other way than previously agreed’. This letter was in
answer to Mr Cleaver’s letter of April 14 1987 (19/3862) in which he had asked
for confirmation of WHDC’s intention to adhere strictly to the TMA. Mr Moore’s
letter was a TMA representation and he knew that it was untrue. Mr Porten
submits that whatever Mr Asquith and Mr Moore were doing in April did not then
have the authoritative blessing of the council. That may be, so far as it goes.
But Mr Moore was WHDC’s chief planning officer with apparent (if not actual)
authority to write letters on the subject of Park Plaza and of the kind which
he wrote on April 22 1987. The letter was written on behalf of WHDC and it was
knowingly untrue. Mr Moore’s intention can scarcely be in doubt in the light of
Mr Cleaver’s letter, what Slough had been told in 1986, the events at the
planning inquiry and the fact that Slough had stopped work on the Howard Centre
in 1984 when they first heard on Carroll’s scheme for Park Plaza. It was the
same as the full council’s intention in July 1987, ie to induce them to
continue with the Howard Centre in the knowledge that, if they learnt of the
relaxation, they probably would not continue. The events of July 1987 were
after all what the agreement of April 1987 was aiming at.

In my
judgment, therefore, the date when WHDC’s representations became
misrepresentations which WHDC knew to be untrue and by which they intended to
induce Slough to continue is April 22 1987. In any event, costs incurred before
that date are sunk costs.

(d) Inducement

Slough’s case
is that they called a halt to the Howard Centre project in 1984 immediately
they learnt that Park Plaza appeared to represent serious close competition.
They reactivated the scheme in 1986, being induced to do so by WHDC’s
representations. They were induced to continue the scheme by continuing
representations and were induced to commit themselves to it irrevocably in
September 1988 when they signed the development and building agreements. They
could have called a halt at any time up till then and would have done so had
they known the truth.

Mr Carey’s
evidence was that at no time did the plaintiffs ever envisage that the tenant
mix agreement would be removed or materially relaxed. If the plaintiffs had so
envisaged then the Howard Centre would not have been built. Sequential
decisions to go ahead proceeded upon the assumption that the spirit of the TMA
remained in place. The importance of retail shop lettings could not be
overstated. If there had been any suggestion that the TMA would be changed to
the extent that it was, it 49 would have thrown the viability of the scheme completely off the rails. There
was continuous contact with WHDC all along. The framework had been set in 1986
and the TMA was part of it.

Mr Carey said
that Slough never contemplated that there would be a wholesale abandonment of
the TMA. After the planning inquiry, there were continuing assurances from
WHDC. It was Slough’s view that a speciality centre would not be viable and Mr
Carey was not then surprised to hear that Carroll were trying to lease units to
high street multiples who would not be within the TMA (25/7174). But he did not
expect WHDC to accede to this. He regarded a letter dated January 11 1990 from
Marks & Spencer (25/7199) which indicated that they had some knowledge that
‘the nature of retailing in Gallerias would change’ as extraordinary.

Mr Carey
acknowledged the case that had been made by and on behalf of Slough at the
planning inquiry to the effect that the TMA was not to be relied on. But he
said that WHDC made very strenuous efforts later to persuade Slough that the
TMA could be relied on and they were given clear assurances that it could be
relied on. One benefit was that the Secretary of State felt that Slough should
be able to rely on the TMA. Slough came to regard WHDC’s promises as reliable
and that the TMA was a reliable document. This was some time in 1986. The
review began before the Secretary of State’s decision during the long time
before the decision arrived. They knew that there would be grey areas of
interpretation. The initial revival of the Howard scheme was not prompted by
anything then said by the council. The Secretary of State’s decision took a
long time and there was plenty of time to reflect. Slough believed that
planning permission for Park Plaza would be refused. When the consent was
given, they thought that they should proceed with the Howard Centre in the
light of the terms of the Secretary of State’s decision. Mr Carey did not
consider that it was the worst possible result for Slough which would have been
a permission with no suggestion that there should be tenant restrictions.

It was
suggested to Mr Carey that he and Slough had doubts about the efficacy of TMA
which had been expressed at the time of the planning inquiry and that these
remained throughout. Mr Carey denied this. He said that there was substantial
evidence that they were relying on TMA. The first thing they did after the
planning decision was to meet WHDC with a view to co-operation. The TMA was
critical. They were unable to move forward until after the decision. 85,000 sq
ft almost matched the retail space at the Howard Centre and was only a mile
away. There would have been no question of going ahead in the face of such
competition.

Mr Cleaver’s
evidence was that his view at the time of the inquiry was that if Park Plaza
were permitted unrestrained that would have killed the Howard Centre project,
but that as a property developer he would have regrouped and considered other
forms of development. He hoped to be able to develop the site in some form
whatever the outcome of the planning inquiry. After the Secretary of State’s
decision, they were able to talk to WHDC in the light of what they had said at
the inquiry and WHDC confirmed what they had said. He said with some emphasis
that on at least 50 one occasion he asked to see the development agreement between WHDC and Carroll.
He was not given it. He could not remember when this was. He said that the TMA
in unaltered form was vital. He was certain that the council were aware of
this. He had had a number of conversations with Mr Asquith and Mr Moore when he
made it very plain and they were stressing the importance of the TMA to him.
They knew that the developers needed the TMA in place to be able to proceed.

Mr Adds said
that there was some mistrust of the council at the inquiry because they had
withheld the TMA document until the day before. He said that he personally had
some reservations throughout but that, as a result of the council’s assurance
at the inquiry, British Rail’s attitude mellowed at and after it. Mr Clarke
said that, once the planning decision was received with its reference to the
TMA, they had to rely on the TMA and it was relied on. There was no alternative
other than to abandon the scheme.

There was
conflicting opinion evidence given by Mr Creamer and Mr Rand respectively as to
the likelihood of Slough being influenced against continuing with the
development if they knew that the TMA had been relaxed. I summarise this
evidence in the part of this judgment dealing with damages.

It is obvious
from the facts which I found that in 1987 WHDC believed that their concealment
of the relaxation of the TMA was material in the sense that it was likely be an
inducement to Slough to continue with the Howard Centre. But that does not
conclude the question whether it did in fact induce Slough to continue.

WHDC’s case is
that I should reject the evidence called on behalf of Slough to the effect that
Slough relied on the TMA and were induced by a belief that it was in place and
being enforced to continue with the Howard Centre and to commit themselves to
build it.

WHDC submit, and
I accept, that it is relevant to take into account Slough’s own competence and
experience in property development and the fact that they were advised by
experienced surveyors and valuers. Mr Porten referred to a number of
authorities for this essentially common-sense proposition including: Shrewsbury
v Blount (1841) 2 Man & G 475 at p504 and Bellairs v Tucker
(1884) 13 QBD 562 at p577. Slough are very substantial developers of great
experience and it is suggested that they are to be seen as anything but
gullible newcomers likely to be taken in by a loose agreement which no one was
ever likely to enforce.

WHDC
submitted, and I accept, that a representation cannot properly be said to
induce a course of action if the other party has already firmly decided to
embark on it before the representation is made; likewise that there is no duty
to inform the other party that an originally true representation has become
false if the other party has already firmly decided to embark on the course of
action to which the representation is material. In this context, WHDC made some
attempt to suggest that there were stages in Slough’s development process
earlier than September 1988 when they became irrevocably committed to the
Howard Centre scheme. I am satisfied on the evidence that this was not so.
There was a series of 51 decisions to commit preparatory expenditure, but the project was not authorised
as category 1 until August 1988 and there was no irrevocable commitment before
September 1988. Up till then, Slough could have withdrawn, cut their losses on
the Howard Centre and, as Mr Cleaver said of an earlier stage when he was
involved, regrouped and considered other forms of development.

Mr Porten also
submitted that, even if contrary to his earlier submission there were misrepresentations
of fact, any relevant reliance by Slough should be seen as relying on a hope
that WHDC would in the future enforce the TMA rather than on any present
intention. Slough were thus, it is said, relying on a promise as to the future
which, in the absence of a contract, is no basis for a claim. This submission
is, in my view, specious once misrepresentations of fact are found. A statement
that there is a TMA in place and that WHDC intend to enforce it may not amount
to an agreement enforceable by Slough in contract, but in the mouth of a public
authority such a statement is a solid basis for taking a commercial decision.

WHDC say that
Slough were going to proceed with the Howard Centre anyway. They were induced
to do so by the prospect of profit from what was agreed to be the best
development site in Welwyn. They went ahead because they thought that they
could not fail. Their object in 1984 and 1985 at the time of the planning
inquiry and thereafter was to defeat Carroll or, if not, to minimise the
competition that Park Plaza would generate. Slough’s evidence and submissions
to the planning inspector that the TMA was a vague and worthless document which
would not be enforced are to be taken at face value as showing, not only
Slough’s view of it in 1984–85, but their continuing view thereafter. It was a
document which Slough reckoned could not be relied on and, it is submitted,
Slough did not rely on it. Slough’s case in these proceedings is to be seen as
an incredibly miraculous conversion. There was nothing which may be seen as
having caused this conversion. On the contrary, Slough had decided to go ahead
with the Howard Centre before the result of the planning inquiry was known.
They never told WHDC that they were relying on the TMA. Their internal
documents do not evidence such reliance. Nor do the contents of Healey &
Baker’s reports nor their publicity documents. The existence of the TMA would
have been a good point to make to prospective tenants and it is suggested that
Mr Parker’s evidence, that it was a matter of importance but not something he
wanted to share with British Home Stores, is unconvincing. There is no document
after 1985 indicating thoughts of abandonment. There was no question after July
1987 of Slough not building a scheme. Their reaction to information that
Carroll appeared to be ignoring the TMA does not support their case that the
TMA was vital to the Howard Centre. Their reaction to learning that the TMA was
to be relaxed was that it was no surprise. They were proceeding with the Howard
Centre during a period of optimism, boom and increasing rents and would have
proceeded anyway whether there was an agreement restricting competition from
Park Plaza or not. The loss which they say that they have subsequently suffered
resulted from the slump in the 52 property market, not from any relaxation of the TMA. WHDC point out that by now
the Howard Centre has largely succeeded whereas Park Plaza failed. The
credibility of individual Slough witnesses was systematically challenged in
cross-examination both generally and by reference to documents. It is submitted
that there was an element of drilling in their evidence and that reiterated
phrases such as ‘grey areas’ and ‘taken as read’ were to be seen as repetitions
of the party line. The credibility of the case generally is attacked with the
suggestion that Slough should be seen as chameleons, making the best case to
meet the needs of the day, eg at the planning inquiry when they wanted to
defeat the Carroll scheme so as to eliminate its competition; to British Rail,
when they wanted to retain commercial exclusivity; to people generally when
they want to market their development with ‘puff’ reports; and in these
proceedings when they want to recover large damages. It is submitted that it is
not credible that Slough went from strong disbelief about the efficacy of the
TMA to total belief by a process of reflection.

It is
submitted that these points cumulatively constitute a formidable rebuttal of
Slough’s case on inducement. There is, in my view, some force in some of these
points individually. But others, in my view, are not individually persuasive.
Taking individual points separately:

•       1987–88 was a period of optimism, boom
and increasing rents and the evidence was that this was the best development
site in Welwyn. Slough were not likely to let it go easily.

•       The evidence does not, however, support
the contention that Slough were going ahead with the Howard Centre as a town
centre shopping development come what may. They were assessing its viability at
each stage. If they had thought that it was not viable, they would have tried
not to abandon the site, but they would not have developed it as a shopping
centre. It is speculative whether in these circumstances they would have
succeeded in retaining the site and, if they had, what different kind of
development they might have undertaken.

•       I do not consider that it is in substance
correct that Slough never made it clear to WHDC that they were relying on the
TMA. WHDC had given a public assurance that it would be incorporated into their
lease with Carroll and that they required to be able to exercise tenant mix
control to reassure others, including obviously Slough. One of two subjects
which Mr Cleaver brought up on April 11 1986 was the TMA and Mr Asquith said
that it would be rigorously enforced. Thereafter the TMA appears in
correspondence or at meetings as a subject with which Slough were obviously
concerned: see, for example, 20/4261 — Mr Cleaver’s letter of August 21 1987 in
response to Mr Moore’s letter about Laskys.

•       I do not read Healey & Bakers’
reports as indicating by omission that the TMA was unimportant — see on the
contrary 17/2922 (‘the new climate of certainty’), 17/3053 (‘Carroll Group …
not seeking to replace the traditional Town Centre shopping’) and 17/3095
(‘shopping content that the Howard Centre will compete against has been
substantially improved’). Professional advisers do not ram the obvious down
their intelligent clients’ throats.

53

•       There are letters (eg 18/3550 and
19/3924), which can be read as placing a diluted importance on the TMA or the
likelihood of its enforcement.

•       Mr Carey’s letter of February 27 1990
expressing ‘no surprise’ that WHDC had weakened their stance is, I think,
credibly explained by the impression he had gained at his meeting on January 31
1990.

•       Some of Slough’s reactions to apparent
contraventions of the TMA by Carroll appear muted. This is particularly so, for
example, of Mr Woolhouse’s knowledge in September 1988 that Carroll Group had
been trying to attract Marks & Spencer to Park Plaza (23/5602) and Slough’s
apparent reaction to Carroll’s news release in April 1989 and their brochure
indicating breaches of the TMA (24/62277, 6279, 6281). Others reactions are
more forthright, eg 25/6892 and 6947.

•       ‘Grey areas’ is an expression which goes
back to the meeting on August 24 1984. ‘Taken as read’ did not strike me as an
orchestrated expression.

The contrast
between the stand taken by Slough and others at the planning inquiry towards
the TMA and the inducement which they say in these proceedings that it later
constituted is marked. On any view, ‘miraculous conversion’ is an overstatement
but there is a contrast requiring explanation. Before the TMA was produced as a
document, the Park Plaza leisure proposals were vague. When it was produced,
they were not vague — just surprising. The TMA was not produced until the
planning inquiry and it does not seem to me at all surprising that the
opponents of Park Plaza continued immediately after its production to oppose.
After the hearing, Slough believed (with some justification in the light of the
inspector’s views) that planning permission would be refused. When it was
surprisingly granted, Slough considered their position in the light of it and
were soon in April 1986 being assured by Mr Asquith that the TMA would be
rigidly enforced using a common-sense approach. This seems to me to be a
credible reason for Slough on reflection to reach the state of mind to which
their witnesses attest. As Mr Cleaver said, WHDC had put themselves into a
position at the planning inquiry where they could not in all conscience fail to
put TMA in place. That position was reinforced by what they said in April 1986
and thereafter.

WHDC suggest
that any reappraisal of the viability of the Howard Centre in the light of the
relaxation of the TMA would have concluded that the effect was minimal so that
Slough would have decided to continue notwithstanding. Here the evidence of the
expert valuers is in point. Mr Rand, called on behalf of WHDC, considered that
relaxation of the TMA for 85,000 sq ft would have made no significant
difference to such an appraisal. Mr Creamer, called on behalf of Slough,
disagreed. They each gave their opinions of the value of the Howard Centre as a
development as at September 24 1988 immediately after Slough committed
themselves to the construction contract (a) with the TMA in place and (b) with
the TMA relaxed for 85,000 sq ft. They agreed that its value with the TMA in
place was £1.8m. Mr Rand considered that there should be no reduction in that
value if the TMA was relaxed. Mr Creamer considered that this latter value
should be  minus £11m giving a difference
in value of £12.8m. They both considered that Slough’s September 1988
development appraisal 54 (23/5586) was a reasonable assessment upon the assumption that the TMA was in
place. The £1.8m is the total of the costs to Slough of acquiring the site and
is taken as the value of the development on the basis that Slough’s own
appraisal was reasonable, ie they paid the market price for the development. Mr
Creamer as a check did his own residual development calculation. Mr Rand was
inclined to think that a cautious developer might have made some small
adjustments to Slough’s appraisal if the TMA were known to have been relaxed
for 85,000 sq ft. He might have put a contingency of perhaps 5% into gross
development value — it would have reduced the £44.724m (23/5586) by about
£2.23m which would reduce the net profit to Slough to about 5% (23/5588) and
the net profit as a percentage of development costs to below significantly 10%.
In re-examination Mr Rand said that a cautious developer would not have made
such an adjustment in the climate of 1988. I deal with these valuations in
greater detail below when I consider damages. I there prefer Mr Creamer’s
evidence. In my view, on the evidence any developer knowing that the TMA had
been relaxed would have made some adjustment to the development appraisal. On
Mr Creamer’s figures, which I accept, the Slough’s Howard Centre scheme was
plainly not viable. Even if on the basis of Mr Rand’s cautious developer
contingency of 5%, the profit figures fall below 10% which on the evidence was
the lowest level of acceptable profitability. Since the inducement issue and
valuation issue may be seen as two facets of the same question, this evidence
contributes to and confirms the view which I reach that the existence of the
TMA was of material importance.

The oral
evidence of Mr Carey, Mr Cleaver, Mr Orchard-Lisle, Mr Clarke, Mr Parker, Mr
Adds and Mr Woolhouse was all to the same effect, ie that the existence of the
TMA was vital to the decision to proceed with a shopping centre development at
Welwyn and that Slough would not have proceeded with that development if they
had known that it was to be relaxed in the way in which it was in 1987. WHDC’s
case has to invite me to reject the evidence of all these witnesses as
unreliable and incredible. They do so generally by reference to documents and
by submissions to which I have referred. The credibility of individual
witnesses is also attacked on specific points. It is suggested for instance
that Mr Carey was less than frank about the climate in the property world in
the mid-1980s and about knowing that Carroll had approached Marks &
Spencer. It is suggested that Mr Cleaver thought that WHDC were naive about
Carroll and had fears about the TMA throughout. (Mr Cleaver’s evidence was that
he had fears that Carroll would try to nibble around the edges of the TMA.)

I am not
persuaded by these submissions whose bases are, in my judgment, fragile when
the evidence is seen as a whole in its full context. The submissions are
themselves nibbling at the edges of a very strong case. The ‘miraculous
conversion’ is neither miraculous nor unexplained. I have seen each of the
witnesses and am able to judge the credibility of their evidence both
individually and collectively. I found them all credible and convincing. They
did not impress me as chameleons. I have made comments assessing the
credibility of some of these witnesses in the 55 course of the narrative part of this judgment. I here say that, without
detracting from the others, I found both Mr Carey and Mr Cleaver credible and
measured witnesses. I accept their evidence on this central point.

For these
reasons I find that Slough were induced by TMA representations to continue with
the Howard Centre and specifically were induced to commit themselves in
September 1988 to its construction. Accordingly, Slough establish all the
necessary liability elements of their claim from April 22 1987.

Damages

(a) Generally

Slough advance
two methods of assessing their damages. The first method takes all costs
incurred in relation to the Howard Centre and deducts receipts and assets,
including the present value of the Howard Centre. In the main, the figures for
this calculation are agreed as figures. Accountants have agreed that the net
costs incurred by Slough in relation to the Howard Centre to June 4 1996 (after
giving credit for receipts such as, eg rents received) are £76,863,625. It is
agreed that sunk costs have to be deducted from this figure, but no calculation
has yet been provided to me for such costs to the particular date which I have
found, viz April 22 1987. Valuers are agreed that the open market value
of Slough’s interest in the Howard Centre as at June 4 1996 is £27,400,000.
This valuation ignores the cost of any repair works, in particular repairs to
the roof (to which I shall return). It also makes no deduction for vendor’s
realisation costs. It is agreed that, when valuing a property it is not normal
valuation practice to deduct vendor’s realisation costs. Such costs would be
incurred if and when Slough decided to sell the property. But it is agreed that
such costs would be 0.7%. Slough say that £1.4m should be deducted from the
valuation for roof repairs in accordance with the evidence of Mr Creamer and
that 0.7% should be deducted from the resulting £26m making £25,818,000. The
damages on this first method will work out a somewhat less than £50m and
decisions are needed on roof repair costs and vendor’s realisation costs. The
main dispute is a matter of principle, ie whether this calculation represents
the correct measure of damages on the facts of this case. WHDC submit that it
does not, because it includes irrecoverable ‘windfall’ damages resulting from
the fall in property values and because it does not attempt to measure any loss
which would not have been suffered if the representations had been true.

It is not in
dispute that property values fell sharply at a time starting in about 1990 and
I have no doubt that this is reflected both in the present value of the Howard
Centre and in the agreed net costs figure. The evidence is that by May 1992
there were 50 or so tenants at Park Plaza who did not conform with the TMA. The
evidence in my view, justifies a very general factual conclusion (but no more)
that breaches of the TMA reduced Slough’s income at the Howard Centre either
because Howard Centre lettings were delayed or because rents achieved were
lower than they would have been if the TMA had been enforced or because greater
incentives had to be offered. Whether it is possible to assess this
component of the loss or not, such an assessment has not been attempted in the
evidence and I would be unable to make it.

Slough’s
second method is to take what they say was the difference in September 1988,
when they passed the point of no return, between the value of the development
with the TMA in place and its value with the TMA relaxed for 85,000 sq ft. To
this they would add the extra net costs incurred above the costs estimated in
Slough’s September 1988 appraisal. Slough say on Mr Creamer’s evidence that the
valuation difference was £12.8m. Mr Rand’s opinion was that there was no
difference. At one stage during the hearing it was, I think, WHDC’s case (see
Mr Porten’s document Damages: Defendants’ Position) that the proper
measure of damages was the difference between ‘price paid’ and market value in
accordance with Saunders v Edwards [1987] 1 WLR 1116 (see below),
ie Slough’s second method but without consequential expenses, and that that
difference was on the evidence negligible. Their eventual case tended to revert
to the first method but subject to the Downs v Chappell qualification
(again see below). On either version, their case is that the consequential
losses are not recoverable because they were not related to the relaxation of
the TMA but to the collapse of the property market. For reasons which I give
below, I do not consider that the second method is the appropriate measure of
damages in this case. I am nevertheless asked to decide the factual issue
between Mr Creamer and Mr Rand.

In Doyle
v Olby (Ironmongers) Ltd [1969] 2 QB 158, Mr Doyle was tricked into
buying a business by fraud. He made losses and incurred expenses while he ran
the business and later sold the business at a loss. Lord Denning MR said at
p167:

… in contract,
the defendant has made a promise and broken it. The object of damages is to put
the plaintiff in as good a position, as far as money can do it, as if the
promise had been performed. In fraud, the defendant has been guilty of a
deliberate wrong by inducing the plaintiff to act to his detriment. The object
of damages is to compensate the plaintiff for all the loss he has suffered, so
far, again, as money can do it. In contract, the damages are limited to what
may reasonably be supposed to have been in the contemplation of the parties. In
fraud, they are not so limited. The defendant is bound to make reparation for
all the actual damages directly flowing from the fraudulent inducement. The
person who has been defrauded is entitled to say:

‘I would not
have entered into this bargain at all but for your representation. Owing to
your fraud, I have not only lost all the money I paid you, but, what is more, I
have been put to a large amount of extra expense as well and suffered this or
that extra damages.’

All such
damages can be recovered: and it does not lie in the mouth of the fraudulent
person to say that they could not reasonably have been foreseen. For instance,
in this very case Mr Doyle has not only lost the money which he paid for the
business, which he would never have done if there had been no fraud: he put all
that money in and lost it; but also he has been put to expense and loss in
trying to run a business which has turned out to be a disaster for him. He is
entitled to damages for all his loss, subject, of course to giving credit for
any benefit that he has received. There is nothing to be 56 taken off in mitigation: for there is nothing more that he could have done to
reduce his loss. He did all that he could reasonably be expected to do.

Winn LJ said
at p168:

It appears to
me that in a case where there has been a breach of warranty of authority, and
still more clearly where there has been a tortious wrong consisting of a
fraudulent inducement, the proper starting-point for any court called upon to
consider what damages are recoverable by the defrauded person is to compare his
position before the representation was made to him with his position after it,
brought about by that representation, always bearing in mind that no element in
the consequential position can be regarded as attributable loss and damage if
it be too remote a consequence: it will be too remote not necessarily because
it was not contemplated by the representor, but in any case where the person
deceived has not himself behaved with reasonable prudence, reasonable common
sense, or can in any true sense be said to have been the author of his own
misfortune. The damage that he seeks to recover must have flowed directly from
the fraud perpetrated upon him.

Sachs LJ said
at p171:

If the
purchase is one of a business which the plaintiff but for the fraud would not
have acquired at all, the objective of the court is to put the plaintiff, so
far as is possible, into the same position financially as if he had not entered
into the contract at all; in other words, one must look at the end result of
his having entered into the transaction and find out what was his loss over all
… The computation of the loss may in many cases not be easy. Thus, the court
must obviously take care not to include sums for consequences which may be due
to the plaintiff’s own unreasonable actions, and also not to include results
which are too remote — matters which often involve difficult questions of fact
and degree.

So a plaintiff
claiming damages for fraudulent misrepresentation is entitled to ‘all the
actual damages directly flowing from the fraudulent inducement’ comparing the
plaintiff’s position before and after the transaction fraudulently induced. The
damages are not ‘limited to what may reasonably be supposed to have been in the
contemplation of the parties’ but should not include ‘consequences which may be
due to the plaintiff’s own unreasonable actions’ nor ‘result which are too
remote’. The actual quantification of the loss in Doyle may be seen from
the judgment of Winn LJ at p169. Essentially Mr Doyle was awarded the amount he
paid for the business less the amount he realised on its sale, plus the net costs
(after crediting benefits) of running the business between its purchase and
sale and other consequential expenses such as interest on a loan taken out to
enable him to meet the purchase price. On the facts of that case the damages
crystallised when Mr Doyle sold the business.

In Saunders
v Edwards [1987] 1 WLR 1116, the plaintiffs claimed damages for
fraudulent misrepresentation relating to the acquisition of a flat. The Court
of Appeal held that the correct date for quantification of 57 loss was the date of completion of the purchase, being the date of the actual
loss, and that the measure of damage on the facts of that case was the
difference between the value of what the plaintiffs paid for (ie the value of
the flat upon the hypothesis that the representation had been true) and what
they received (ie the flat’s value in the circumstance that the representation
was untrue).

In East
v Maurer [1991] 1 WLR 461, the plaintiffs bought a hairdressing salon
upon a fraudulent misrepresentation that the defendant seller would not be
working at his other salon in the area on a regular basis. The plaintiffs were
unable to make their salon profitable and tried to sell the lease of their
premises but did not succeed for three years. The Court of Appeal held that the
damages for deceit would include both actual losses incurred and loss of profit
that could reasonably have been anticipated while the plaintiffs waited for an
opportunity to mitigate their loss by realising to the best advantage the
business they had bought. The loss of profit was to be assessed, not on the
basis that the representation was a warranty that the defendant’s customers
would patronise the salon, but from the starting point of the expected profits
of the business run by the plaintiffs. Beldam LJ said at p464:

That the
measure of damages for the tort of deceit and for breach of contract are
different, no longer needs support from authority. Damages for deceit are not
awarded on the basis that the plaintiff is to be put in as good a position as
if the statement had been true; they are to be assessed on a basis which would
compensate the plaintiff for all the loss he has suffered, so far as money can
do it.

Beldam LJ
cited at length what Lord Denning MR had said in Doyle and then referred
for support to a judgment of Dixon J in Toteff v Antonas (1952)
87 CLR 647 at p650, a passage which included:

… the
question is how much worse off is the plaintiff than if he had not entered into
the transaction … But what is meant is the transaction into which the representation
induced the plaintiff to enter.

Mustill LJ
said at p468:

In my
judgment the best course in a case of this kind is to begin by comparing the
position of the plaintiff as it would have been if the act complained of had
not taken place with the position of the plaintiff as it actually became. This
establishes the actual loss which the plaintiff has suffered and often helps to
avoid the pitfalls of double counting, omissions and impermissible awards of
both a capital and an income element in respect of the same loss.

In Royscott
Trust Ltd
v Rogerson [1991] 2 QB 297, the Court of Appeal held that
the measure of damages for innocent misrepresentation under section 2(1) of the
Misrepresentation Act 1967 was the same as for fraudulent misrepresentation, so
that the plaintiff was entitled to recover 58 as damages all losses flowing from the misrepresentation, including
unforeseeable losses, provided that they were not otherwise too remote. The
judgments discuss this measure of damages on orthodox Doyle lines.
Gibson LJ considered that, if it were necessary to prove that the loss was
reasonably foreseeable, he would hold without hesitation that it was. At p310A,
he said:

The holding
that the damage was foreseeable, if right, is, in my judgment, a conclusive answer
to any argument on causation based on the notion of novus actus interveniens.

Downs v Chappell [1996] 3 All ER 344 also concerned the sale and
purchase of a business, a booksellers shop. The defendant seller was held to
have made fraudulent misrepresentations about its turnover and profit. The
judge held that the plaintiffs relied on the representations but that the
plaintiffs had not discharged the burden of demonstrating that they would not
have completed the sale had the true figures been disclosed to them. He had
also held that they had not established a loss attributable to the alleged
tortious acts or omissions of the defendant whether assessed as diminution in
value or by reference to an alternative approach.

Hobhouse LJ,
who gave the leading judgment, said that the defendants accepted the judge’s
finding on liability and that the sole remaining issue was one of causation. He
held that the judge was in error in asking what would have happened if the
plaintiffs had been given truthful figures. In deceit, a plaintiff has to prove
that the representation was fraudulent, that it was material and that it
induced the plaintiff to act to his detriment. Inducement is a question of fact
and the judge had found that the plaintiffs were induced by the representations
to enter into the relevant transaction. ‘The word ‘reliance’ used by the Judge
has a similar meaning but is not the correct criterion’. Hobhouse LJ continued
at p351e:

The
plaintiffs have proved what they need to prove by way of the commission of the
tort of deceit and causation. They have proved that they were induced to enter
into the contract with Mr Chappell by his fraudulent representations. The judge
was wrong to ask how they would have acted if they had been told the truth.
They were never told the truth. They were told lies in order to induce them to
enter into the contract. The lies were material and successful; they induced
the plaintiffs to act to their detriment and contract with Mr Chappell. The
judge should have concluded that the plaintiffs had proved their case on
causation and that the only remaining question was what loss the plaintiffs had
suffered as a result of entering into the contract with Mr Chappell to buy his
business and shop.

Turning to
damages, Hobhouse LJ said that, if Mr Chappell had not been fraudulent, the
plaintiffs would not have entered into the transaction. He continued at p352b:

This is
therefore, factually, a ‘no-transaction’ case. The plaintiffs’ damages have to
be assessed by reference to what they have lost as a result of entering
into the transaction. As I will explain later, this statement of the causative
principle to be applied is subject to a qualification. But it provides the only
valid starting point and to take any other starting point is unsound. The
causal relevance of the defendants’ torts was that they caused the plaintiffs
to enter into the transaction. It follows that the recoverable damages must
have been caused by that consequence.

No question
of remoteness of damage arises … All parties must also have been aware that
property values can go down as well as up and that if the plaintiffs should
have to sell they might have to do so at a loss.

It was
submitted on behalf of the defendants that the plaintiffs’ lack of success was
attributable to changing market conditions and to their own lack of experience
in running a bookshop. The judge had substantially accepted this submission.
Hobhouse LJ analysed the evidence and said at p355c:

Accordingly,
as a matter of factual causation, the consequence of the plaintiffs having
purchased the business and the premises from Mr Chappell was that they found
themselves 18 months later with an unviable business and shop premises with a
reduced value and limited marketability.

It had been
possible for the plaintiffs to sell out in the spring of 1990, but they chosen
not to do so. Hobhouse LJ said that losses suffered after the spring of 1990
were not caused by the defendants’ torts but by the plaintiffs’ decision not to
sell. The plaintiffs ‘were no longer acting under the influence of the
Defendants’ representations. The causative effect of the Defendants’ faults was
exhausted.’

Considering
the law, Hobhouse LJ said that causation is a question of fact. The feature
which gave rise to difficulty was the fact that the loss of value suffered by
the plaintiffs between 1988 and 1990 primarily reflected the fall in the market
value of commercial and residential properties. At p356d he said:

Whilst such
fluctuations are not unforeseeable and there were other factors which contributed,
the defendants argue that whatever property the plaintiffs had bought they
quite probably would have suffered a similar loss.

Having cited
from Doyle and Esso Petroleum Co Ltd v Mardon [1976] QB
801, Hobhouse LJ then said at p358a:

These cases show
that where a plaintiff has been induced to enter into a transaction by a
misrepresentation, whether fraudulent or negligent, he is entitled to recover
as damages the amount of the (consequential) loss which he has suffered by
reason of entering into the transaction. The principle is the same. Where the
representation relates to the profitability and, by necessary inference, the
viability of the business, the plaintiff can recover both his income and his
capital losses in the business.

At p359c, he
said:

59

In general,
it is irrelevant to inquire what the representee would have done if some
different representation had been made to him or what other transactions he
might have entered into if he had not entered into the transaction in question.
Such matters are irrelevant speculations. (See eg United Motor Finance Co
v Addison Co Ltd [1937] 1 All ER 425 at 429.)

He then said
that:

where a party
has been misled, it must always be relevant to consider his position when he
discovered the truth. Until that time the misrepresentation will be continuing
to affect him and he cannot be expected to mitigate his loss.

After further
citation, Hobhouse LJ summarised the law thus at p361d:

Causation and
the assessment of damages is a matter of fact. In a misrepresentation case,
where the plaintiff would not have entered into the transaction, he is entitled
to recover all the losses he has suffered, both capital and income, down to the
date that he discovers that he had been misled and he has an opportunity to
avoid further loss. The diminution in value test will normally be
inappropriate. Where what is bought is a business, the losses made in the
business are prima facie recoverable, as is the reduction in the value
of the business and its premises. Foreseeable market fluctuations are not too
remote and should be taken into account either way in the relevant account.
These cases do not, however, discuss whether there is any question of causation
beyond the no-transaction test. In my judgment it may still be necessary to consider
whether it can fairly and properly be said that all the losses flowing from the
entry into the transaction in question were caused by the tort of the
defendant. I turn now to this qualification.

I pause there,
before going to Hobhouse LJ’s qualification, to note the following:

• Slough,
having established that they were induced to continue with and commit
themselves to construct the Howard Centre by WHDC’s fraudulent
misrepresentation (and that they would not have done so had they known the
truth), are prima facie entitled to all losses which they have suffered,
both capital and income, down to the date when they discovered that they had
been misled and had an opportunity to avoid further loss. Subject to
investigating its detail, that is their first method.

• It is
irrelevant to inquire what Slough would have done if some different
representation had been made to them or what other transactions they might have
entered into if they had not entered into the transaction in question. Such
matters are irrelevant speculations. It is accordingly irrelevant to wonder
whether Slough might have proceeded with a lesser office development or whether
British Rail might have put the site out to competition.

• It is
necessary to inquire if losses claimed flow directly from the fraudulent
inducement and are not too remote. Whether losses were within the reasonable
contemplation of the parties is not a material consideration, since this is not
a claim for breach of contract. Rises and falls 60 in the market value of commercial and residential properties are not
unforeseeable and foreseeable market fluctuations are not too remote. A
conclusion that a loss was foreseeable can be a conclusive answer to any
argument on causation based on the notion of novus actus interveniens.

• (In
parenthesis, if the cases which I have cited are taken as a whole, the
difference at the fringes between the concepts of foreseeability, remoteness
and causation in relation to losses which are or are not recoverable tend to
become blurred.)

• Slough were
not, as in many of the cases, induced by the misrepresentations to enter into a
transaction with the misrepresentor (WHDC), but it is not suggested that that
is a material distinction. They did not simply acquire an existing trading
business nor did they simply acquire property. They proceeded with and
committed themselves to a commercial development which they expected to retain
as an investment.

• When they
discovered that they had been misled, Slough did not set about disposing of
what they had acquired. It is not suggested that they acted unreasonably in
failing to mitigate their loss. What they actually did was to initiate judicial
review proceedings which succeeded in making the representations temporarily
true. This however proved impractical and there was a compromise. Slough retain
the development so there is no historic recovery from disposal to set against
costs and expenses.

• In my
judgment, on the face of the authorities to which I have so far referred,
Slough would be entitled to their costs and expenses of proceeding with and
committing themselves to the Howard Centre less: (a) benefits which they have
received from the venture; and (b) a value for the capital asset which they
have acquired and built. In principle, in my view, that value may be notionally
equated with what they would recover if they decided to dispose of the
development, which is the more usual circumstance in the reported cases. This
is not a Saunders v Edwards case concerned only with property
values at a determinate date, so that the diminution in value test (Slough’s
second method) is not appropriate.

• The
assessment defined in the previous paragraph needs a date at which the
calculation of net loss and the valuation of the capital asset which they have
acquired and built is to be made. In my view, where Slough have retained the
development and where it is not suggested that they have failed to mitigate
their loss, the correct date is the date when the misrepresentation which
induced Slough to proceed with and commit themselves to the development ceased
to occasion them loss. That date may conveniently be taken as the date of the
start of the trial since the evidence was that by now the Howard Centre is more
or less fully let. I shall take that date, not because the date of the trial is
the date to which losses are to be calculated, but because on the evidence that
was when the misrepresentation ceased to occasion Slough loss.

I return to
Hobhouse LJ’s qualification. At p361g, he said:

In my
judgment, having determined what the plaintiffs have lost as a result of
entering into the transaction … it is still appropriate to ask the question
whether that loss can properly be treated as having been caused by
the defendants’ torts, notwithstanding that the torts caused the plaintiffs to
enter into the transaction. If one does not ask this additional question there
is a risk that the plaintiff will be over compensated or enjoy a windfall gain
by avoiding a loss which they would probably have suffered even if no tort had
been committed. This would offend the principle upon which damages are awarded:
see Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 and Dodd
Properties (Kent) Ltd
v Canterbury City Council [1980] 1 All ER 928,
[1980] 1 WLR 433 at 451 per Megaw LJ.

In this context
the defendants submitted that all owners of property suffered a loss of value
when the market fell. They asked the hypothetical question — what would the
plaintiffs have done with their money if they had not bought the shop? If they
are compensated for the fall in value of the shop, are they not being
compensated for a loss which they would have suffered even if the defendants
had not been at fault, and therefore being over-compensated?

I consider
that the appropriate way to give effect to these legitimate concerns is to
compare the loss consequent upon entering into the transaction with what would
have been the position had the represented, or supposed, state of affairs
actually existed … This check does not have the purpose of substituting some
different (and erroneously contractual) criterion for the assessment of
damages. Its purpose is to test the acceptability of the factual conclusion
that the assessed consequential loss was truly consequential upon the fault for
which the other party is liable and to recognise the fundamental principle of
indemnity.

Hobhouse LJ
proceeded to apply the qualification to the facts of the case before him and
concluded that plaintiffs would not be over-compensated by an assessment made
on a no-transaction basis.

The House of
Lords decision in South Australia Asset Management Corporation v York
Montague Ltd
(and two other appeals heard and decided together) was given
and published as the evidence in this case was coming to a close and barely a
week before counsel’s final submissions. Lord Hoffmann gave the one substantive
opinion which all other members of the House adopted. The appeal concerned the
measure of damages for negligent overvaluation of property by valuers. A
feature of the cases before the House was that a fall in the property market
after the date of the valuation greatly increased the loss which the lender
eventually suffered. The appellants challenged the ruling of the Court of
Appeal in Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd
[1995] QB 375 and that in a case in which a lender would not otherwise have
lent (a ‘no-transaction’ case), the lender is entitled to recover the
difference between the sum which he lent, together with a reasonable rate of
interest, and the net sum which he actually got back. Lord Hoffmann
characterised this basis of assessment as the valuer bearing ‘the whole risk of
a transaction which, but for his negligence, would not have happened’. The
appellants submitted that it was unfair merely because for one reason or other
the lender would not otherwise have lent that ‘the valuer should be saddled
with the whole risk of the transaction, including a subsequent fall in the
value of the property’.

Lord Hoffman
said that the correct starting point was to decide for 61 what kind of loss the plaintiff is entitled to compensation. The lender sues on
a contract under which the valuer undertakes to provide him with certain
information, whose purpose was to form part of the material on which the lender
would decide whether to lend. The valuer will not usually be privy to other
considerations which the lender may take into account. The law implies that the
valuer will exercise reasonable skill and care and there is a concurrent duty
in tort. The real question is the kind of loss in respect of which the duty is
owed. There is no reason in principle why the law should not penalise wrongful
conduct by shifting on to the wrongdoer the whole risk of consequences which
would not have happened but for the wrongful act. But rules to that effect are
exceptional.

Normally the
law limits liability to those consequences which are attributable to that which
made the act wrongful. In the case of liability in negligence for providing
inaccurate information, this would mean liability for the consequences of the
information being inaccurate.

I can
illustrate the difference between the ordinary principle and that adopted by
the Court of Appeal by an example. A mountaineer about to undertake a difficult
climb is concerned about the fitness of his knee. He goes to a doctor who
negligently makes a superficial examination and pronounces the knee fit. The
climber goes on the expedition, which he would not have undertaken if the
doctor had told him the true state of his knee. He suffers an injury which is an
entirely foreseeable consequence of mountaineering, but has nothing to do with
his knee.

On the Court
of Appeal’s principle, the doctor is responsible for the injury suffered by the
mountaineer because it is damage which would not have occurred if he had been
given correct information about his knee. He would not have gone on the
expedition and would have suffered no injury. On what I have suggested is the
more usual principle, the doctor is not liable. The injury has not been caused
by the doctor’s bad advice, because it would have occurred even if the advice
had been correct.

Lord Hoffmann
said that there ‘seems no reason of policy which requires that the negligence
of the doctor should require the transfer to him of all the foreseeable risks
of the expedition’. It is not fair or reasonable that the valuer should be
responsible for losses more extensive than those which are the consequence of
the information being wrong. There is a distinction between a duty to ‘provide
information
for the purpose of enabling someone else to decide upon a
course of action and a duty to advise someone as to what course of
action he should take’.

At p9 of the
transcript Lord Hoffmann said:

The measure
of damages in an action for breach of a duty to take care to provide accurate
information must also be distinguished from the measure of damages for breach
of a warranty that the information is accurate. In the case of breach of a duty
of care, the measure of damages is the loss attributable to the inaccuracy of
the information which the plaintiff has suffered by reason of having entered
into the transaction on the assumption that the information was correct. One
therefore compares the loss he has actually suffered, with what his position
would have been if he had not 62 entered into the transaction and asks what element of this loss is attributable
to the inaccuracy of the information. In the case of a warranty, one compares
the plaintiff’s position as a result of entering into the transaction with what
it would have been if the information had been accurate. Both measures are
concerned with the consequences of the inaccuracy of the information, but the
tort measure is the extent to which the plaintiff is worse off because the
information was wrong, whereas the warranty measure is the extent to which he
would have been better off if the information had been right.

Lord Hoffmann
said at p11 that the distinction between ‘no-transaction’ and ‘successful
transaction’ cases is not based on principle and should be abandoned.

In either
case, the valuer is responsible for the loss suffered by the lender in
consequence of having lent upon an inaccurate valuation. When it comes to
calculating the lender’s loss, however, the distinction has a certain pragmatic
truth … in principle there is no reason why the valuer should not be entitled
to prove that the lender has suffered no loss, because he would have used his
money in some altogether different, and equally disastrous venture.

Accordingly,
the law normally limits liability for wrong doing to those consequences which
are attributable to that which made the act wrongful and does not saddle the
wrongdoer with the whole risk of the transaction, including a subsequent fall
in the value of the property. In the case of liability in negligence for providing
inaccurate information, this would mean liability for the consequences of the
information being inaccurate, ie the extent to which the plaintiff is worse off
because the information is wrong. This is to be distinguished from the measure
of damages for breach of warranty which is the extent to which the plaintiff
would have been better off if the information had been right. There is no
distinction in principle between no-transaction cases and successful
transaction cases.

The South
Australia
cases did not concern damages for deceit, but Lord Hoffmann said
p8:

The principle
that a person providing information upon which another will rely in choosing a
course of action is responsible only for the consequences of the information
being wrong is not without exceptions. This is not the occasion upon which to
attempt a list, but fraud is commonly thought to be one. In Doyle v Olby
(Ironmongers) Ltd
[1969] 2 QB 158 at p167, Lord Denning MR said:

The defendant
is bound to make reparation for all the actual damages directly flowing from
the fraudulent inducement. The person who has been defrauded is entitled to
say:

‘I would not
have entered into this bargain at all but for your representation … ‘

Such an
exception, by which the whole risk of loss which would not have been suffered
if the plaintiff had not been fraudulently induced to enter into the
transaction is transferred to the defendant, would be justifiable both as a
deterrent against fraud and on the ground that damages for fraud are frequently
a restitutionary remedy.

The question
of liability for fraud does not arise in this case, and I 63 therefore confine myself to two observations. The first is that although I have
said that fraud is commonly thought to be an exception, Hobhouse LJ seems to
have expressed a contrary view in the recent case of Downs v Chappell
… when he said that the damages recoverable for fraudulent misrepresentation
should not be greater than [*] the loss which would have been suffered ‘had the
represented, or supposed, state of affairs actually existed’. In other words,
the defendant should not be liable for loss which would have been a consequence
of the transaction even if the representation had been true. This, as I have
said, is what I conceive to be in accordance with the normal principle of
liability for wrongful acts. But liability for fraud, or under s2(1) of the
Misrepresentation Act 1967, for a negligent misrepresentation inducing a
contract with the representor, has usually been thought to extend to all loss
suffered in consequence of having entered into the transaction. We have
received written representations on Downs v Chappell, which was
decided after the conclusion of the oral argument, but since the issue in that
case is not before the House, I prefer not to express any concluded view.

My second
observation is that, even if the maker of the fraudulent misrepresentation is
liable for all the consequences of the plaintiff having entered into the
transaction, the identification of those consequences may involve difficult
questions of causation. The defendant is clearly not liable for losses which
the plaintiff would have suffered even if he had not entered into the
transaction or for losses attributable to causes which negative the causal
effect of the misrepresentation.

(I think, with
diffidence, that some words are omitted at the point which I have marked [*] in
this citation. I think that the sentence may be intended to read ‘… should not
be greater than [the difference between the loss consequent upon entering into
the transaction and] the loss which would have been suffered …’. But the sense
is clear from the subsequent sentences.)

WHDC submit
with reference to Downs v Chappell and the South Australia
cases that fraud is not in law an exception to general rule on causation and remoteness.
The defendant is not liable in deceit for a loss which would have been the
consequence of the transaction even if the representation had been true. Lord
Hoffman’s example of the climber’s knee would give the same result had the
doctor been dishonest rather than negligent. The plaintiff is no more entitled
to recover in deceit losses due to the collapse of the market than they would
be in negligence. It is submitted that Slough’s first basis for calculating
damages must be wrong because it includes loss resulting from the fall in the
market. A difference in market values might be applicable but Mr Creamer’s
evidence of such difference is to be rejected and no present difference in
value has been established. If damages are not to be assessed as a difference
in market value, Hobhouse LJ’s qualification is to be applied so that the loss
should not exceed that suffered as a result of increased competition from Park
Plaza which would have been avoided had the representations been true. The
Howard Centre is now virtually fully let and the only loss which would have
been avoided had the representations been true would be reduced income from
lettings at the Howard Centre over some period when the competition was having
an effect. Slough have not called 64 evidence to identify or quantify such losses. They should not be permitted to
do so now since they declined to particularise such losses but have known for a
long time that this was WHDC’s case. Any such claim would be much smaller than
the current claim since the full Howard Centre annual rent roll is in the
region of £2m and a maximum period for reduced rents would not exceed five
years. So the claim could not be more than five times the amount by which rents
fell below £2m by reason of the competition. In fact, Slough have not attempted
to quantify a loss on this basis and Mr Rand’s evidence was that such a loss
would be difficult, if not impossible to isolate but in his opinion would be
minimal. There was no evidence that current Howard Centre rents are lower nor
that its value is less as a result of competition from Park Plaza.

I have
therefore to decide whether I am bound by Downs v Chappell to
apply Hobhouse LJ’s qualification. It is a decision of the Court of Appeal and,
if it stood alone, I should of course be bound by it.

Mr Porten
submits that I am bound by it (or at any rate that should apply it) on the
basis that the qualification is an extension of previous authority and not
inconsistent with it and that what Lord Hoffmann said in South Australia
is obiter. He submits that the question of windfall recovery did not
arise in Doyle and that the result would have been the same if the
qualification had been applied. He points to passages in earlier cases to the
effect that damages for deceit are limited to those which are directly caused
by entering into the transaction which the misrepresentation induced and to
those which are not too remote. He submits that, if the qualification is not to
be applied, Slough would get a windfall quite unrelated to the tort. The claim,
he submits, is grossly overstated. He illustrates this by supposing that
Carroll had taken no advantage of the relaxed TMA. Upon that hypothesis,
Slough’s claim would still be quantified at around £50m and that, he submits,
defies commonsense.

Mr Lyndon
Stanford submits that the qualification in Downs v Chappell
cannot be reconciled with Doyle and that, although what Lord Hoffmann
said is obiter, it so clearly expresses a unanimous view of five Law
Lords which is contrary to Downs v Chappell that I ought not to
apply the Downs v Chappell qualification.

In my
judgment, Slough’s second method is inappropriate. A historic diminution in
value calculation was appropriate to the facts of Saunders v Edwards
where the damage was suffered at the time of completion of the sale and where
the loss flowing directly from the fraudulent inducement was limited to a
difference in property values upon two hypotheses. But that does not apply
here. In my view, Slough’s first method is, on the facts of this case, an
appropriate application of Doyle subject to the question whether
Hobhouse LJ’s qualification is to be applied as a check.

At first blush
Mr Porten’s submission, that the doctor who negligently advised Lord Hoffmann’s
mountaineer about his knee would not have been liable if his advice had been
fraudulent, seemed persuasive. On reflection, I do not think that the
submission does undermine an orthodox application of Doyle. The
submission appears to be persuasive at first 65 because the hypothesis of such advice being fraudulent is such an unlikely one.
But if an idiosyncratic doctor really did pronounce the mountaineer’s knee to
be fit, when he knew that it was not with the intention of inducing the
mountaineer to go climbing and the mountaineer was so induced, then on an
orthodox application of Doyle the doctor would be responsible for an
injury which was an entirely foreseeable consequence of mountaineering but had
nothing to do with the knee.

Lord
Hoffmann’s passage in South Australia is explicitly obiter. Subject
to that, I read the passage as clearly expressing the view that Hobhouse LJ’s
qualification is out of line with the law as it is commonly understood and as
it has been stated in previous Court of Appeal authority. (With diffidence and
respect, I agree with that, but I am not confident that authority would permit
me to reach that conclusion unaided by the House of Lords.) The principle
applicable to the negligent provision of information is not without exceptions.
Fraud is commonly understood to be one. The authority for that is the Court of
Appeal decision in Doyle and other Court of Appeal cases to which I have
referred. The effect of the exception is that ‘the whole risk of loss which
would not have been suffered if the plaintiff had not been fraudulently induced
to enter into the transaction is transferred to the defendant’. In its context,
‘the whole risk’ includes a fall in property values since that was the very
subject-matter of the South Australia cases to which Lord Hoffman had
earlier applied the same expression. The exception is justified as a deterrent
against fraud and because damages for fraud may be restitutionary. ‘Hobhouse LJ
seems to have expressed a contrary view.’ I read this as in effect saying that Downs
v Chappell is in conflict with Doyle. Downs v Chappell
is in accordance with the normal principle of liability for wrongful acts, but
out of line with the usual understanding that liability for fraud extends
without qualification to all losses suffered in consequence of having entered
into the transaction.

What is a
first instance judge to do in these circumstances? In Young v Bristol
Aeroplane Co Ltd
[1944] KB 718, the Court of Appeal concluded that it, the
Court of Appeal, is normally bound by its own previous decisions, but, as an
exception to that general rule, it is entitled and bound to decide which of two
conflicting decisions it will follow. A first instance judge is, I think, bound
to do what the Court of Appeal would do. If Downs v Chappell
stood alone, it would not, I think, be open to a first instance judge to decide
that it was in conflict with Doyle, especially since Hobhouse LJ refers
to Doyle and applies it subject to the qualification. But I read the
unanimous opinion of the House of Lords as saying that Downs v Chappell
is indeed in conflict with Doyle, so that I conceive that I am entitled
and bound to decide which to follow. The South Australia cases then, in
my view, clearly indicate the answer, ie that I should follow Doyle
without the Downs v Chappell qualification.

Accordingly,
in my judgment, Slough’s first method applies the proper measure of damages on
the facts of this case. That produces a very large figure. A windfall is an
unexpected piece of good fortune. The expression does not necessarily imply
that it is undeserved. Damages may be undeserved as a windfall if they amount
to or include sums which the 66 injured plaintiff ought not in fairness to receive. If, as I conceive, the
policy of the law is to transfer the whole foreseeable risk of a transaction
induced by fraud to the fraudulent defendant, and if, as I conceive, the court
does not speculate what, if any, different transaction the plaintiff might have
done if the fraudulent representation had not been made, damages on this basis
are not to be regarded as a windfall, but the proper application of the policy
of the law.

(b) Roof repairs

The roof of
the Howard Centre is defective. The evidence was that between £0.5m and £0.75m
has been spent trying to repair it but without success. Mr Carey said that it
was thought that the only solution was to reroof. A contract for remedial works
has recently been placed. That is expected to cost around £1.4m. The trouble is
a combination of design errors and construction faults. Slough are being
advised about the possibility of making claims against those responsible. The
detailed position was not explored in evidence but it is obvious that, where the
designer can blame the constructor and the constructor can blame the designer,
such claims are likely to be troublesome.

I conceive
that for the purpose of assessing damages for deceit under Doyle v Olby,
defects in the completed building are foreseeable (just as Lord Hoffmann’s
climber’s accident was foreseeable). This means that roof repair costs already
spent, agreed to be £813,075 and which are included in the £76,863,625 are to
be brought into account.

Mr Creamer
considered that a deduction in the region of £1.4m should be made from the
agreed valuation of £27.4m to reflect the cost of the required repairs. He
agreed that a seller would resist such reduction and that he might offer to
assign his rights against those responsible. It would then be a matter of
judgment whether the vendor would pursue those responsible or not. (I observe
that the problems inherent in such an assignment might make it seem pretty
unattractive, but it might not be regarded as valueless.) Mr Rand did not agree
that there should be a reduction of £1.4m. He said that it would depend on the
market. There might be no reduction. There would probably be negotiations about
who should bear the cost and an investigation about the strength of the claims.
Some reduction, he thought, was probable.

I prefer Mr
Rand’s approach here. It seems to me that in the real world there would be a
negotiated reduction with an outcome which would probably favour the purchaser
(a) because there would be horse trading which would reduce the £1.4m and (b) because
it is more likely that Slough would be left to pursue claims against third
parties. I assess the reduction in the valuation at £500,000.

(c) Vendor’s realisation
costs

Since these
are not going to be incurred, I consider that Slough should not have the
benefit of them.

Damages —
summary

On the
findings which I have made, Slough are entitled to £76,863,625 — (£27,400,000 —
£500,000) = £49,963,625 less sunk costs incurred before 67 April 22 1987. Upon figures which have been provided for different dates, it
looks as if these costs will be between £1.5m and £2m in total so that the
eventual damages figure will be around £48m. Slough do not pursue their claim
for exemplary damages in deceit, although they reserve their position should
other causes of action become relevant.

Contingent
finding of fact on damages

I have decided
that Slough’s second method of assessing damages is not appropriate, but I am
asked to determine the factual issue between Mr Creamer and Mr Rand.

Mr Creamer and
Mr Rand disagree about whether the value of the Howard Centre as at September
24 1988 would have been less (and if so by how much) if the TMA was not in
place for 85,000 sq ft at Park Plaza than if it was. September 24 1988 is a
date just after Slough committed themselves to the Howard Centre development
agreement and the construction contract with Tarmac.

I shall refer
to a valuation which assumes that the TMA was in place as ‘valuation A’ and to
the valuation which assumes that the TMA was relaxed as ‘valuation B’.

Mr Creamer’s
valuation A was the aggregate of the costs to Slough of acquiring the site —
£1.8m. The defendants do not dispute this valuation. Mr Creamer checked this
figure, which he regarded as the best evidence, by doing a series of residual
calculations — these were not in his report. Mr Rand agreed that the figure was
in the right area, especially since Slough had historically bought out their
partner, Charlecote, a few months earlier for £1m. He carried out no
independent valuation. He looked at and checked Slough’s contemporary appraisal
and considered it reasonable. He had made no separate workings.

Mr Rand agreed
with Mr Creamer that Slough took a reasonable approach to the appraisal of the
Howard Centre site in September 1988 (23/5586). He agreed that the 10.8%
developers’ profit was at the lower end of the scale for developments of this
kind. He agreed that, if an additional factor put the same calculation below
10%, that would cross the line of viability. He did not agree that in that
event Slough would not have proceeded. This was because there were other
factors (eg prospects of rental growth) which would have influenced Slough. He
did agree that, if a reasonable calculation fell below 10% for developers’
return, Healey & Baker would have advised against proceeding with the
scheme.

Mr Creamer’s
valuation B was minus £11m. This was based on a residual valuation. He was
referred to cases decided in the Lands Tribunal and agreed that such valuations
require great care both because small adjustments in some variables are
enlarged by extension and because different genuine judgments can produce large
differences in the result. But here Slough’s own development appraisal was
itself a residual valuation. Mr Creamer had at appendix 8 of his report his
account of valuation theory and methods. His section 5 says why the residual
method is appropriate — there are so many variables in shopping centres that a
comparison method (often resulting in a value per acre is very difficult
and inappropriate. There are scarcely ever any proper comparisons. Mr Rand
agreed that there was no other practical method of valuing the site or the
development than a residual calculation. He agreed with Mr Creamer ‘that in the
case of shopping centre development sites the residual method is usually more
appropriate that the comparison method because the individual circumstances
connected to each site have a significant influence on value’ (6/597). He
agreed that a developer would have made a development appraisal of the kind
made by Slough. He agreed that Slough’s appraisal was made upon the assumption
that the TMA was in place but maintained that Slough did not place much
reliance on it. He considered that a developer would in September 1988 have
considered all factors affecting the property including the total amount of
competing floorspace both existing and proposed in the surrounding catchment
area. 85,000 sq ft in his view represented a relatively small percentage of the
proposed competing floorspace (7/933).

Appendix 1 to
Mr Rand’s supplementary report lists existing and proposed competing retail
centres. He agreed that the main competitors were those coming on stream at
about the same time. In this context, the Gallerias was a competitor with the
Howard Centre. Slough suggest that the only significant competition was at
Watford and Hemel Hempsted. Mr Rand agreed but said that a developer would also
take account of Lakeside which was 35 miles away but had influenced the
shopping as far as the Welwyn area. Distance, he said, is a factor but it
depends on the strength of the magnet. He agreed that relevant competition
would tend to reduce rents. Some tenants would only go to one scheme in an
area. There may be delays in achieving the target mix of tenants. There could,
depending on national well being, be increased letting incentives.

Mr Creamer’s
valuation B is at his appendix 15 (6/628A) and depends essentially on his
assessments of rents and yields. Slough’s development appraisal took a zone A
rent of £70. Mr Creamer’s valuation B assessed the zone A rent at £55 to £52.50
(see 6/626 where two units are at £55 and quite a lot at £52.50). This
adjustment reduced the rent roll from c £2.8m to c £2.2m. He also measured the development agreement
floor plans which may have been slightly less than Healey & Baker’s
measurement which probably used earlier plans. He had a good look at evidence
in Welwyn for comparables. He found no evidence of rents at this high level.
The best rent was c £35 at rent review. He had not started from Slough’s £70
which took account of Marks & Spencer being effectively signed up. A third
party purchaser would not make that assumption, especially if the TMA was not
in place. He did nevertheless include the Marks & Spencer premium. He
therefore started at £65 and reduced this for the effect of the TMA being
relaxed. Slough’s appraisal was not made on the same basis as Mr Creamer’s
appraisal. Slough’s development appraisal was working out how profitable the
site was likely to be, not working out a value for a third party purchaser.
Slough did not value the site.

In the scale
of retail towns, in 1988 Welwyn and Hatfield were significantly lower than
Watford, St Albans, Stevenage, Luton and Hemel Hempsted. Zone A rents were c
£130 per sq ft in Watford and around £100 68 per sq ft in the others. Welwyn had no town centre shopping then and Mr Rand
thought the existing zone A rent would have been up to £45. There was no town
centre at Welwyn at the time and historic rents in Welwyn were not relevant.
Statistics provided by Mr Rand indicated that Welwyn and Hatfield are seen as
one unit for catchment area purposes.

Mr Creamer
increased the yield from Slough’s 5.75% to 6.75%. It was suggested that
reducing both rent and yield was double counting. Mr Creamer said that they
were entirely different points. Rent is the amount of the rents payable at the
start by tenants. Yields are for anticipated performance, ie rental growth. He
said that investors would be very concerned about performance with competition
from the Gallerias. Another factor is a likely poorer covenant strength. Good
tenants would go to one development or the other not both, so you would dilute
the good quality demand.

Mr Creamer
agreed that this was the best site in Welwyn Garden City upon which some
development would take place. It was not odd that his valuation B was negative,
since the valuation assumes that Slough were committed to carrying out the
development. It did not follow that a developer who was given £12.8m as a
present would be in a position to proceed with equanimity since in the real
world the developer would not have completed the scheme.

Mr Creamer
assumed that a notional purchaser would have looked at the TMA. It was
suggested that no notional developer would attach much importance to the TMA.
Mr Creamer did not agree. He had assumed that the notional purchaser would
reckon that the TMA would be enforced. There was a possibility that Park Plaza
planning conditions might be changed. He read that TMA as a document of
importance to WHDC which was almost set in stone. A purchaser has to take it at
face value. He agreed that at the time of the Park Plaza inquiry Slough and
others had expressed scepticism. But things had moved on. The notional
purchaser would not be sceptical if he had been through the endorsement process
which Slough had. He did not agree with Mr Rand’s opinion that a notional
purchaser would have been sceptical of the enforceability or permanence of the
TMA. The TMA was a private agreement between landlord and tenant which they
could as between themselves agree to alter. It expressly provided for the
possibility of some consensual relaxation. But Mr Creamer did not see this as a
blank cheque. The notional purchaser would not just look at the document. He
would do a lot of research, for example by talking to WHDC and Slough. Any
document such as this would have grey areas. Mr Creamer did not believe for one
minute that Slough would have gone ahead with the Howard Centre if things had
got worse than their perception as expressed by Mr Carey on December 16 1986
(18/3550) in reaction to Mr Asquith’s letter of December 2 1986 (18/3508). It
was to Mr Creamer perfectly obvious that, if there was 85,000 sq ft competition
close by, any notional purchaser would make adjustments to his calculations.

Mr Rand
considered that an experienced surveyor or developer would have been aware of
the possibility that the TMA would be difficult to enforce both practically and
in the event of changing market conditions. 69 He did not believe that the absence of a TMA would have caused any experienced
developer to reverse their decision to develop the Howard Centre. He did not
agree with what he described as a highly subjective residual assessment made on
behalf of Slough upon an assumption that the TMA was relaxed.

Mr Rand
accepted Mr Creamer’s general approach but he did not think that it was
possible to quantify accurately a difference in value by calculating reductions
in rents and yields. It would be entirely subjective and he could put in any
figure he liked. In general, he agreed that increased competition would
decrease rents. But the state of the market in September 1988 was such that
rents would not have been decreased. There were sufficient overriding factors
to give this result. In September 1988, there was no talk of rent free-periods
or other incentives. A developer would have expected that he could make up lost
rent in the future. The Gallerias would have competed, but no more than other
surrounding developers. There might have been an element of delay taken into
the calculation. He did not accept Mr Creamer’s reduction in rent. He thought
that a cautious developer might make some small adjustments in the light of a
very strong market. He might have put a contingency of perhaps 5% into gross
development value — it would have reduced the £44.724m. (6/619) by about
£2.23m, which would reduce the net profit to Slough to about 5% (6/621). Not
all developers would have made this adjustment. In re-examination he said that
a cautious developer would not have made such an adjustment in the climate of
1988.

In the last
year, the Howard Centre has become almost completely let. Mr Rand said that it
was 60–65% let by floorspace when it opened in 1990. This included the very
large space let to Marks & Spencer. He agreed that a developer often makes
his money from the unit shops. There were 42 unit shops at the Howard Centre.
At the Gallerias, there were about 70 comparable units. 85,000 sq ft equates to
about 34 such shops. He agreed that smaller lettings to good tenants could have
a knock-on effect in attracting other tenants. It is crucial to time opening to
a time when enough tenants are trading to make it viable. He did not consider
that failing to get enough tenants initially would permanently damage a scheme.
If a shopping centre is not adequately let, there is a danger that shoppers
would not go back but go to a rival scheme instead. If it is perceived that a
scheme has not taken off, that can discourage prospective tenants. Five years
should be enough to reach maturity. This has generally been so during the
recession. 25-year leases are regarded as desirable especially if you have an
eye to selling to an institution. Mr Creamer considered that it would have been
difficult to change the Gallerias from an established leisure directed scheme
into an ordinary shopping centre after five years. Mr Rand agreed that a
developer would have considered that five years was sufficient to establish the
Howard Centre.

Mr Creamer
gave details indicating that on average capital contributions per square foot
paid by Carroll as incentives were approximately three times those paid by
Slough at the Howard Centre. Mr Rand agreed that large incentives would tend to
attract tenants away from 70 competing schemes and that the total of incentives at the Gallerias was great.
Mr Creamer also expressed the opinion that about 15 Park Plaza tenants listed
as non-conforming tenants would have been suitable tenants for the Howard
Centre. Mr Rand agreed that some could have come to Howard Centre, eg
Principles, Levis, Body Shop (who went there in due course) and Stylo Barratt.
These were the sort of traders which Howard Centre might well have approached.
But it was not possible to quantify financially the effect of any competition
from the Gallerias except to say that it would be minimal compared with market
effects and other competition.

Mr Rand said
that the Gallerias was not seen as greatly competitive with the Howard Centre.
It was seen by many as a leisure-based development. He agreed that after five
years and the expiry of the TMA there would be competition. He broadly agreed
that with the TMA in place the Gallerias would not have competed with town
centre retailing. He said that Howard Centre had not suffered permanent damage
now that it is virtually fully let. The initial round of letting in 1990
especially on the ground floor was quite good. Later lettings slowed down and
then damage was done. It was the same with every single shopping centre. This
was not caused by Gallerias, but by the market.

WHDC attack Mr
Creamer’s valuation B as being based on a false premise in that he compared a
situation where there was no TMA with one where it was 100% watertight. Mr
Creamer certainly agreed that this is what he had done, but the essence of his
evidence was that reductions had to be made if the TMA was not in place. It is
suggested that a residual valuation is unreliable. Mr Creamer accepted that it
needed great care, but Mr Rand agreed that there was no alternative for this
shopping centre. It is suggested that Mr Creamer had no comparables for his
rent figures. This is correct, but the evidence was that there were no
comparables for Welwyn. It is suggested that Mr Creamer was not comparing like
with like when he was comparing a notional residual valuation with Slough’s
development appraisal. That was not, however, Mr Creamer’s evidence. He was
comparing two valuations of his own. His valuation A and Slough’s development
appraisal produced the same figure for the relevant element.

I judged Mr
Creamer’s evidence to be open, confident and convincing. He was completely
unshaken in cross-examination. Mr Rand was, I thought, less comfortable. The
difference between them really boiled down to the question whether an
experienced developer would have regarded enforcement of the TMA as important
and would have seen unrestricted competition from the Gallerias as sufficiently
material to affect a valuation or appraisal. I have held that Slough in fact
regarded this as important. As a separate and additional judgment, I agree with
Mr Creamer and accept his evidence that it is perfectly obvious that if there
was 85,000 sq ft competition close by, any notional purchaser would make
adjustments to his calculations. I reject the notion that even a cautious
purchaser would have sailed ahead regardless upon the heady tide of 1988.
Slough in fact made a detailed development appraisal and I prefer
Mr Creamer’s opinion that an equivalent valuation appraisal would have made
some adjustment if the TMA were known to have been relaxed. Mr Rand did not
offer a competing intermediate calculation, so that, upon my acceptance of Mr
Creamer’s case for a reduction, his calculation is the only one in the field. I
do not consider that the credibility of individual elements of his valuation B
was undermined such that I should assess them differently. I find therefore
that the difference in value on September 24 1988 between valuation A and
valuation B was £12.8m.

[On July 30 1996 the
following judgment was delivered.]

MAY J: I am giving judgment as at yesterday in this action between Slough
Estates and Welwyn Hatfield District Council for £48,551,191 plus discretionary
interest of £484,528; a total of £49,035,719.

That is a huge
sum and I am satisfied that its immediate payment would be beyond any
reasonable view of the council’s means. Judgment Act interest on that amount,
if it is not paid, would be in the order of £4m a year.

This is an
application by the council for a stay of judgment pending a proposed appeal to
the Court of Appeal. If, as a result of that appeal, the judgment is upheld in
full, the council will, of course, have to find ways and means of raising the
money.

The
jurisdiction to consider granting a stay is in Ord 59, r 13, which provides
that an appeal shall not operate as a stay of execution except so far as the
court below or the Court of Appeal or a single judge of that court shall
direct. There is thus a discretion and there is guidance in cases about how the
discretion should be exercised.

One ground,
but not now the only ground, upon which a stay might be granted, would be if
the defendants satisfied the court that if the damages were paid there would be
no reasonable prospect of recovering them if the appeal succeeded. This is not
suggested in this case. Indeed, it is not suggested that Slough should provide
security for any such repayment.

Mr Lyndon
Stanford referred to 19th-century cases when the practice was more restricted
than it is today. He also referred to Marine & General Mutual Life
Assurance Society
v Feltwell Fen Second District Drainage Board
[1945] 1 KB 394 where a defendant seeking a stay or a statutory body, and where
Evershed J held the possible prospect of bringing their drainage operations to
a standstill was no ground for depriving the plaintiff as the judgment creditor
of his right to levy execution.

The more
modern law and practice may conveniently start with the decision of Staughton
LJ, sitting as a single judge at the Court of Appeal in Linotype-Hell
Finance Ltd
v Baker [1992] 4 All ER 887. In that case Staughton LJ
said at p888:

In the
Supreme Court Practice 1991 vol 1, para 59 13 I there are a large number of
nineteenth century cases cited as to when there should be a stay of execution
pending an appeal. At a brief glance they do not seem to me to reflect the
current practice in this court; and I would have thought it was much to be
desired that all the nineteenth century cases should be put on one side and
that one should concentrate on the current practice.

71

It seems to me
that if the defendant can say without a stay of execution he will be ruined and
that he has an appeal which has some prospect of success, that is a legitimate
ground for granting a stay of execution. The passage quoted in the Supreme
Court Practice from Atkins v Great Western Railway Co (1886) 2
TRL 400: ‘As a general rule, the only ground for a stay [of execution] was an
affidavit showing that if the damages and costs were paid there was no
reasonable probability of getting them back even if the appeal succeeded’ seems
to be far too stringent a test today. The lord justice then went on (at p888h)
‘It is my opinion, an arguable appeal.’

I am not the
best person to judge whether the council have an appeal with some prospects of
success, since every judge will, naturally, consider that his own decision is
correct. There is, however, a transparent ground of appeal to be seen in the
judgment itself on the measure of damages in this case for deceit.

Mr Lyndon
Stanford suggests that there is no reasonable prospect of even a successful appeal
resulting in anything other than very substantial damages. Mr Porten submits,
as he did at the trial, that the application of the Downs v Chappell
[1996] 3 All ER 344 qualification if the Court of Appeal were persuaded that it
should be applied, might result in a nil award because Slough have not
established any loss on that basis, or that any quantified loss on that basis
is likely to be less than £10m. Mr Lyndon Stanford submits that a middle
position might be seen as something over £20m.

Except to say
that the indicated avenue of appeal on this point might conceivably, if it were
successful, go to the whole of the judgment, but that it is perhaps more likely
to go to part of it, it is not appropriate or necessary for me to say more, nor
in particular to attempt to quantify even descriptively the council’s prospect
of success.

In Winchester
Cigarette Machinery
v Payne (No 2), a decision of a full Court of
Appeal on December 10 1993, unreported in full, but of which I have kindly been
provided with a Lexis transcript, Ralph Gibson LJ said:

The prospect
of success of the ground of appeal appear to me to be not impressive, but it is
not suggested that it is unarguable.

He referred on
the second page to a submission that the approach should be as a matter of
commonsense and the balance of advantage. On p3 of the transcript, he said:

As Hobhouse
LJ pointed out in the course of the argument, the existence of the ground of
appeal cannot by itself amount to a sufficient reason to grant a stay because
the rule provides otherwise. No practice can properly take away the discretion
to refuse or grant a stay if as it appears to the court just to do so on the
facts before it.

Then a little
later on he referred to the case of Linotype-Hell Finance Ltd v Baker,
in these terms:

72

Staughton LJ
referred to the citation of the passage from Atkins set out in the
Supreme Court Practice (1991), limited to the words to the effect that as a
general rule the only ground for a stay is the probability of nonrecovery and
said that that seems to be a far too stringent a test today. If a defendant can
say that without a stay of execution he will be ruined, and that he has an
appeal which has some prospect of success, that is a legitimate ground for
granting a stay. For my part, I respectfully agree with the decision of
Staughton LJ in this case and that the prospect of financial ruin may provide a
legitimate ground for stay. Such facts may, of course, amount to ‘some other
reason’ as contemplated by Lord Esher in Atkins v Great Western Railway
Company
.

Ralph Gibson
LJ then cited a judgment of Balcombe LJ in Rimgee v Shapwanee,
which was in these terms:

The principle
to be applied in cases of this kind is laid down in a series of cases largely
in the late 19th/early 20th century which can be summarised in the phrase that
a person who has a judgment is not lightly to be deprived on the fruits of that
judgment, and therefore in granting the stay one starts with the assumption
that where someone has a judgment, as in this case the defendants have a
judgment, under the Millett order for costs, this court should not stop
the plaintiffs from exercising the necessary court proceedings in order to have
the benefit of that judgment even though an appeal is pending.

As Staughton
LJ said quite recently the practice of the court has moved on and I believe he
is right in saying that one approaches this really as a matter of commonsense
and balance of advantage.

Ralph Gibson
LJ then said having quoted a little more of Balcombe LJ:

I respectfully
agree with the approach of Balcombe LJ to the question, namely that one starts
with the assumption that a successful plaintiff is not to be prevented from
enforcing his judgment even though an appeal is pending.

I also agree
that the practice of the court has moved on in that the increased work of the
court has produced more examples of other reasons in addition to prove the
improbability of recovery which Lord Esher MR contemplated in Atkins v Great
Western Railway Company
. I do not disagree with the formulation of the
balance of advantage provided that in holding that balance full and proper
weight is given to those starting principles, that there must be good reason to
deprive a successful plaintiff of the right to enforce his judgment and that
the mere existence of an arguable ground of appeal is not by itself such a
reason.

He then said
that the practice had become considerably less rigid than it used to be, and
continued on p4 of the transcript:

The fact that
more and/or different factual situations have been recognised as capable of
constituting a sufficient ground for the grant of a stay of execution of a
money judgment has not, in my judgment, reduced the importance of the starting
principles to which I have referred.

Hobhouse LJ in
the Winchester Cigarette case on p5 said:

73

It is however
[‘it’ being Ord 59, r 13] gives to the court or single judge an unfettered
discretion to order a stay. There must be some ground for ordering a stay
beyond the fact that an appeal is pending. The discretion is not circumscribed.
It therefore should be exercised judicially having regard to all the
circumstances of the case.

A little later
on he said:

Since the
discretion is unfettered, no authority can lay down rules for its exercise. All
that can be done is to say it must be exercised judicially and to provide
guidance.

In relation
to a money judgment it has been recognised that it is relevant that the
appellant might be unable to recover from the respondent the sum ordered in the
event of the judgment being set aside on appeal: see for instance Atkins
v Great Western Railway Company.

It is also
relevant that the appellant can say that without a stay he would be ruined
regardless of the outcome of the appeal [see Linotype-Hell Finance] or
that the appeal would have been impossible or academic [see various
illustrations]. Limit should not be imposed on situations in which the court
may exercise its discretion provided that it does so judicially, but in any
case, the terms of Ord 59, r 13 must be recognised. The appellant must show
some special circumstances which take the case out of the ordinary so that the
ordinary rule should not apply, and that a stay be granted.

If showing
that such circumstances exists involves making good factual submissions, the
facts have to be made good by evidence.

Within the
ambit which I have quoted I am to exercise a discretionary jurisdiction as a
matter of ‘commonsense and balance of advantage’, to quote Balcombe LJ I take
the balance of advantage to be equivalent to balance of fairness between the
parties.

Mr Lyndon
Stanford submits in summary that this Winchester case may be taken to
indicate the following:

First, that a
stay of a money judgment has its own consideration and for a money judgment it
is unlikely that the balance of convenience will be material. A good ground of
appeal is not by itself sufficient. The starting point is that the plaintiff
should not be prevented from enforcing his judgment without special
circumstances amounting to ruin. It is irrelevant that the plaintiff would not
miss the money. The only considerations, he submits, so far as apply to money
judgments, would be if the plaintiff might be unable to repay, or that the
defendant would be ruined. Inconvenience to the defendants, short of ruin, he
submits, is not enough. The applicant has to show sufficient circumstances by
proper evidence.

Mr Lyndon
Stanford submits that the council do not make a sufficient case and that their
evidence is inadequate. He submits, by way of parallel, that a rich individual
who has not made prudent provision for an anticipated judgment should not
expect not to have to tighten his belt considerably and dispense with all the
essentials.

The evidence
from the applicant council comes from two affidavits of Mr Saminaden. Mr Porten
refers, in particular, to paras 6, 7, 35 and 36 of those affidavits. Para 6
reads as follows:

74

The 1988 Act
identifies certain accounting practices to be followed by local authorities and
which constrain the Council’s powers to raise revenue. Part 4 of the Local
Government and Housing Act 1989, contains provisions as to revenue accounts of
local authorities and controls on their borrowing and capital finance. Section
41 of the 1989 Act requires any expenditure made by the Council in satisfaction
of the judgment debt to be charged to its revenue account as it is not
expenditure falling within the provisions of Section 42 of the Act. Given this
restriction the Council must first look at revenue resources to seek to satisfy
the debt. For reasons I explain below the Council’s current revenue resources
are manifestly insufficient to meet a debt of the magnitude involved and given
the matters which were identified below, the Council is unable to utilise its
capital resources to pay the debt. Even if the Secretary of State for the
Environment were to be persuaded to employ his discretionary powers under the
legislation to permit the Council either to discharge the liabilities of deemed
capital payment of the Borrower to repay the debt, or a combination of these,
the Council would still be constrained in the realisation of its capital
resources which are protected by other legislation as well as its duties to
provide and maintain a number of services to the community, the cost of
borrowing, the loss of interest from its assets which are invested.

These
restrictions mean that the Council is presently unable to satisfy the judgment
in full, if it were to become immediately due to the Plaintiffs. And if no stay
is ordered the community to whom the Council provide the services would suffer
irreparable harm in the loss or diminution of services. These consequences will
follow in any event should the Council be required to pay over any substantial
proportion of the judgment sum pending the determination of the appeal. Such
harm would be incurred unnecessarily in the event that the appeal was
successful and I believe that no repayment by the Plaintiffs at that time could
remedy the harm.

The affidavit
then goes into detail of various accounts, funds and reserves to which I shall
return. In summary in para 35, Mr Saminaden says:

The funds
immediately available to the Council to satisfy this judgment are limited. I
have identified them above as follows:

(a) The sum
of £0.9 million from general balances. The use of this would lead the Council with
no balance to meet unforeseen contingencies;

(b) A sum
amounting to some £2.9 million being the aggregate of the amounts I have shown
to be available from earmarked and allocated reserves. The use of this sum
would have two consequences: (1) the Council would be unable to carry out
programmes for which those monies had been carefully set aside with no prospect
of replacement funds becoming available within the budgets for the years 1997
to 1999 inclusive; (2) the Council would suffer loss of interest on these sums
which it would have earmarked whilst they remained unspent and which I estimate
to be in the order of £100,000 a year. I have explained above that in order to
maintain existing service levels against the background of expenditure
limitation, the Council is dependant on such interest. If this money were not
available, the Council would have no choice but to reduce its expenditure on
services.

(c) A sum of
£6 million, which is the amount in the Business Rates Suspension Account and,
as I have said above, may need to be returned to 75 the Department of the Environment. I have explained that the Council has
prepared its budget plans for future years in the expectation of using the
interest on this money estimated at £450,000. Again, as I have explained above,
the Council is dependant on this interest to avoid cuts on expenditure and
services.

In the time
available for the preparation of this affidavit, I have not been able to make
detailed assessments of the precise effect on the delivery of the Council
services of any range of payment to satisfy the judgment debt. In broad terms,
however, it appears to me that:

(a) The
Council cannot pay the total judgment debt immediately.

(b) The
Council could pay a sum of up to £2.9 million, I have identified as available
from reserves, without immediate adverse effect on services.

(c) If the
Court should order payment of more than £6 million immediately, the Council
will face exceptional difficulty in maintaining its existing level of
activities.

Mr Porten
explained that (b) and (c) are cumulative; that is to say, the £2.9m is from
various funds and the £6m represents the business rates suspension account sum.

(d) If the
court should order immediate payment of all the sums I have identified above as
available, totalling £9.8 million, the Council would find it impossible to
maintain its existing level of statutory duties and its discretionary services.
I have explained that the Council cannot borrow to make good any shortfalls in
its required revenue; therefore, as the Council has little scope to reduce its
spending on its statutory duties, the burden of reductions would fall on its
discretionary services, the nature of which I have set out above.

(e) If the
court should order payment of more than £12 million immediately, the Council
would be forced to cease many of its discretionary activities with no
possibility of other agencies meeting the needs of disadvantaged groups
currently met in the community by their services. It would need to close public
service buildings; it would be forced to neglect the condition of public
spaces; to withdraw grants to voluntary bodies; to cease support to business
development initiative and economic regeneration; to scale down the statutory
services to the absolute minimum and to make redundancies. Further, it is my
considered opinion that services which are provided pursuant to statutory
duties would be at risk and the Council would be vulnerable to mandamus actions
by local residents in respect of any such failure.

(f) The
consequences I have referred in regard to (d) and (e) above would, in my view,
be gravely harmful to the residents and business community in the district of
Welwyn Hatfield. The repayment of monies in due course, if the Council’s appeal
were to succeed, would not, in my judgment, repair the damage caused.

The council
have resolved to adopt a policy of savings intended to accumulate the money to
meet the contingency that the appeal fails or is only partially successful. Mr
Lyndon Stanford suggests that this should have been done much earlier and
points to the fact that in July 1991 the council apparently had to choose
between being in breach of contract to Carroll and risking liability to Slough,
a risk which they then thought 76 might amount to as much as £20m. It was, says Mr Lyndon Stanford, imprudent not
to provide for this.

It is clear
that there are stringent statutory limitations upon a local authority on what money
may be used for what. To use capital funds to meet a judgment generally
requires sanction from central government. Inquiries have been made which, not
surprisingly, show that such sanction might or might not be granted.

Mr Porten
submits that capital reserves are a matter of extreme complexity. He submits
that services are not easily disposable even if, perhaps, they are not in
absolute terms essential.

General
submissions which Mr Porten makes include the following: that the damages which
have been awarded are not to be seen as money which has enriched the
defendants. I agree. He submits that there is a balance of advantage which
shows a clear disadvantage to the defendants and no evidence of disadvantage to
the plaintiffs if they are not paid immediately.

Mr Lyndon
Stanford submits, and I agree, that this is not a material consideration in the
light of the Winchester Cigarette judgment.

Mr Porten says
that no stay is sought in relation to the costs order which is likely to exceed
£1m. He says — and this is an inevitable condition of any stay — that the
council will seek to prosecute the appeal with expedition. He points out that
the council has resolved to save money against the eventuality of having to pay
the judgment in full or in part after an appeal. Mr Lyndon Stanford submits
this is unsatisfactory, and he also submits that it looks as if expenditure is
being incurred while the application for a stay is in progress. However, Mr
Porten has satisfied me in two particulars that are referred to that this is
not so.

Mr Porten
submits that this is an unusual position because one is dealing with the local
authority who cannot satisfy a judgment immediately and because there is so
much by way of statutory control. The evidence he suggests is that revenue resources
are inadequate and that freeing of capital is not easily to be achieved; it
will depend on authority from central government. The restrictions, he submits,
flow from primary legislation including sections 59 and 60 of the Local
Government and Housing Act 1989. Payment, he submits, will have to be met from
other resources and that will, on the evidence, lead to a reduction in
services. Such reduction will be felt by those who most rely on those services,
for example the elderly and those in need. Later repayment will not, he
submits, remedy hardship thus caused. The plaintiffs, he submits, appear to be
saying that the consequences of making payment should nevertheless be borne,
but he submits that most discretionary services are welfare services.

Mr Lyndon
Stanford submits that the evidence does not show any exact programme for
dealing with the consequences of the judgment and that the evidence provides no
means of knowing in detail whether cuts in services would or would not fall on
the elderly or disadvantaged.

Mr Porten
submits that freeing capital will take some time and, as I have said, that
revenue resources are not in any event available to satisfy 77 the judgment. He submits that there would be irreversible hardship even if the
appeal succeeds; this application was for a stay of the whole of the judgment.

It is
necessary to look in rather more detail at the evidence of the money which
might be available. This may be found in paragraphs, beginning with para 13 of
Mr Saminaden’s first affidavit, and there are summaries that may be referred to
in the second exhibit to Mr Dallas affidavit on behalf of Slough.

The first of
Mr Dallas’ notes, starting on his p2, compares his assessment with Mr
Saminaden’s assessment of money available from various funds. Mr Saminaden has
totalled and summarised these amounts as the £2.9m to which I have already
referred. Mr Dallas reckons, with the assistance of Mr Hopkins, that that sum
from those sources should be seen as something over £5.3m.

Slough, in
effect, submit that anything which is not contractually committed should be
taken as available and that services which the council provide should be pared
down to bare essentials only. It is suggested, for instance, but only as an
example, that payments required by the Ombudsman should take second place to
Slough’s entitlement to their judgment.

Mr Saminaden’s
evidence is that only the £2.9m should be regarded as available because the
services for which the balance of the money is earmarked are essential and
because an expenditure, which is committed but not necessarily contractually,
should not be overlooked. So there is a difference of opinion, if those are the
right words, as to how much is available from those sources.

The next
amount is that referred to in para 14 of Mr Saminaden’s affidavit. It is a sum
of £6m in a business rate suspension account. There is doubt whether this
amount is, in due course, repayable as an overpayment to the Department of the
Environment. Meanwhile, it earns valuable interest and helps balance an already
stretched budget. It appears that the question whether it is repayable or not
is unlikely to be resolved for at least two years. Slough submit that it should
go, meanwhile, to meet the judgment.

There is then
a general fund balance for contingencies. Mr Saminaden’s evidence that, of sums
in this account, £0.9m might be made available. On a slightly different
calculation and with the benefit of an opinion from Mr Hopkins as to what a
suitable reserve might be, Slough suggest that £1m is available from this
source.

Slough further
suggest — and this is summarised on the first page of Mr Dallas’ second exhibit
— that savings are capable of being made on 1996/1997 revenue and that further
savings are capable of being achieved from 1997/1998 revenue. The calculation
extends for that period upon the footing that it might take that long to bring
an appeal before the Court of Appeal.

As to capital
receipts, Slough say that appropriate applications should be made to central
government and that the court should expect that these will be granted. There
is, however, a clear statutory distinction between 78 usable capital receipts and reserved capital receipts to be seen in the
distinction between section 59 and section 60 of the 1989 Act.

In the result,
Slough submit that there are nearly £15m available from resources without the
sanction of the Department of the Environment and they further say that capital
resources should be made available to cover the balance of the judgment. As to
capital receipts, a letter from Mr Riddle confirming a conversation with an
official of the Department of the Environment — Mr Riddle’s letter being dated
July 17 1996 — says that the council have approximately £9m in usable capital
receipts. The official from the Department of Environment writing back, said,
of sums of that nature, that the department would consider a request from the
council for a direction under section 40(6) of the 1989 Act:

I cannot give
a definite view as to the outcome, though I can say that such directions are
given fairly frequently in response to authorities’ requests.

It appears
that there is, therefore, a strong hint from the department that sanction would
be given in relation to Mr Riddle’s £9m. Needless to say, if that were paid
there would be a loss of interest.

Mr Lyndon
Stanford submits that the council are not above the law and that it is not only
a question of how much should be paid now, but how the council would pay if the
appeal fails. He invites me to look at what steps are being taken to enable the
council to do so in that eventuality and submits that the evidence is
unsatisfactory in that respect. He submits that the evidence overall is
extremely woolly; that there is nothing that can be grappled with; and that it
is for the applicant to establish appropriate facts by appropriate evidence.

How essential,
he asks, are essential services? There is nothing, he submits, that is concrete
here. That, he suggests, puts not only Slough but the court in difficulties. He
submits that, in any event, the evidence does not add up to ruin. The evidence,
he submits, is so rolled up that it is not possible to see to what extent
vulnerable people would suffer. He submits it is not right to act upon such
vague evidence. He complains that the council have no concrete proposals for
raising the money if they have to and that I should not be seduced by vague
proposals. There is no programme, he suggests, even for meeting the interest on
the judgment. He submits that the whole of the judgment could and should be met
in the short term from cash reserves and by borrowing; in the longer term, the
council should embark on a programme of disposal of their fixed assets if that
is necessary.

As I have
said, the starting principle is that the plaintiffs should not be deprived of the
fruit of their judgment without good reason amounting to special circumstances.
I take that from the Winchester Cigarette case to which I have referred.
The existence of a ground of appeal cannot, by itself, amount to sufficient
reason.

I have held in
another case relatively recently involving individuals that acute and
irreversible financial and personal hardship to individuals is to be equated
with ruin. That could occur if meeting a judgment subject 79 to appeal meant that, for instance, individuals had to sell their houses. This,
of course, is a case which does not concern individuals. It is an unusual case.
You do not often get a local authority applying for a stay, but then you do not
often have a local authority with a judgment against them of around £50m.

It may have
been acceptable 50 years ago for a drainage authority to be rendered incapable
of performing their statutory function by a levy of execution in favour of a
judgment creditor, but I question whether that would be regarded as acceptable
today. There is a tension between the interests of the party in whose favour
the judgment has been given, which is the starting point, and the extent to
which in a discretionary jurisdiction those who rely on council for what, I
venture to say, are properly described as the essential services should be
deprived of those services.

In my
judgment, if the strain which meeting this judgment would obviously engender
meant that, for instance, services to the elderly or refuse collection services
in the area had to be materially curtailed, that should be equated in this case
with acute and irreversible personal hardship and to be equated (but the
equation is obviously not exact) with ruin.

Other local
authority services are not so essential. But it would, in my judgment, be a
blot on the law, if hardship resulting from withdrawal of essential services,
of the kind to which I have referred, where to be suffered by individuals who
live in the council’s area only to find that the appeal is allowed in whole or
in part and that the personal sacrifice was, with hindsight, unjustified.

Equally, I do
not regard it as reasonable to require serious dismantling of the council’s
capital structure in circumstances where a successful or partly successful
appeal would render that unnecessary.

I do not, for
instance, regard it as reasonable to suppose that in order to meet this
judgment the council should here and now set about selling some of its council
houses, even if that could be done, which I doubt, reasonably quickly.

Not
withstanding Mr Lyndon Stanford’s submissions about the quality of the evidence
advanced, I am satisfied that the position outlined in Mr Saminaden’s para 36
and especially his paras E and F is broadly, but I emphasise the words
‘broadly’, established. I am persuaded that there would be hardship to
individuals if more than a proportion of the judgment had to be paid now. I am
persuaded that there are special circumstances which make it unjust to make an
order whose effect would be the dismantling of part of the council’s capital
structure.

There is, on
the other hand, revenue account money which on the evidence can be paid without
undue hardship. There is £6m which may not have to be repaid to the Department
of the Environment and will not have to be paid yet. There is, I judge, usable
capital receipts for which it appears that Department of Environment sanction
may readily be achieved. If some or all of this has to be paid, there will a
loss of interest which currently contributes to a balanced budget.

Mr Porten
submits first of all, there should be no payment condition of 80 a stay, but against the suggestion that at the least interest of Judgment Act
rate should be paid as time passes, he submits that any condition over that
which requires payment of interest and costs should not be imposed.

It in these
circumstances becomes a matter of broad judgment how much should be required to
be paid and it will, of course, be a matter entirely for the council how they
achieve the conditions which I am persuaded to impose.

Applying, to
the best of my ability, the principles which I have outlined, and adopting, as
I hope, a common-sense approach, I grant a partial stay pending appeal on the
following conditions: notice of appeal is to be lodged in accordance with the
rules and the council are to prosecute the appeal with diligence. There is a
condition of a stay that the council will pay £10m within two months of today.

In addition,
the council should pay, as a condition of the stay, interest at the Judgment
Act rate on the unpaid balance of the judgment. That should be paid at three
calendar monthly intervals, the first such payment to be made on or before
November 1 1996 and, thereafter, at three monthly intervals. That will result
in payments at a rate of something rather over £3m a year, once the £10m has
been paid. The interest obligation applies to the full amount of the judgment
until the £10m is paid.

Those
conditions will amount, if the appeal were to take two years, to a total
payment as a condition of the stay of something over £16m. In addition, these
payments will result in an interest loss of something over £1m a year, so that
the cost of the conditions may be assessed at rather more than £18m. I say
again, it is entirely up to the council how they raise this money. I simply
point out that as a matter of arithmetic, the council’s evidence accepts that
£2.9m may be achieved from various funds and an additional £0.9m from the
general fund, that makes £3.8m. The usable capital receipts, subject to
direction from the department, are £9m, and the business rates special reserve
is £6m. Those sums total £18.8m.

81

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