The Metropolitan Police Authority (MPA) is to face Salmon Harvester Properties in a dispute over the proposed redevelopment of the former Bow Street police station in Covent Garden.
The High Court has dismissed an application by the MPA to strike out Salmon Harvester’s claims of misrepresentation and negligent misstatement, holding that the property company has “a real prospect of success”.
Under a 1996 proposal, the Grade II listed building, which is no longer used for operational purposes, was to be converted into a police museum.
In 2001, the MPA, Salmon Harvester, and a third party, Bow Street Partners, entered into an agreement. Under this agreement, if Salon Harvester were to obtain planning permission to redevelop the property, the MPA would grant it a 990-year lease at a peppercorn rent for a premium of £2m.
Upon completion of the lease, the parties were to enter into an agreement requiring Salmon Harvester to redevelop the property so as to incorporate the museum and a secure van-docking area. Once the redevelopment had been completed, MPA intended to take a 60-year underlease of the museum, and to grant to Bow Street Partners a 15-year sub-underlease.
However, the MPA obtained a professional valuation of the property. This indicated that the monetary consideration that it was to receive under the agreement would be substantially less than the property’s open market value. The MPA declared the agreement to be ultra vires.
Salmon subsequently brought the claim for damages, contending that the MPA had impliedly “represented that it had, or would obtain, power to enter the agreement and related lease”.
The company maintained that such representations were false, in that the Secretary of State had been required to give his consent in order to confer vires on the defendant to enter into the agreement, and had not done so. It claimed that it had been “induced” to enter into the contract, and had incurred expenditure in reliance upon the truth of the representations.
Owen J has refused either to strike out or summarily dismiss the claim.
The judge held that Salmon Harvester has a real prospect of being able to defend itself against the MPA’s claim that, because the transaction was ultra vires, its representations were also void.
He also stated that Salmon Harvester’s submissions “provided a valid basis for the claims in misrepresentation and negligent misstatement”.
Salmon Harvester Properties Ltd v Metropolitan Police Authority Queen’s Bench Division (Owen J) 21 May 2004.
Mark Simpson (instructed by LeBoeuf Lamb Greene & MacRae) appeared for the claimant; James Goudie QC and Clive Sheldon (instructed by Field Fisher Waterhouse) appeared for the defendant.
References: EGi Legal News 25/5/04
