Development by local authority — Grant of lease containing tenant-mix agreement — Assurances concerning tenant mix given to developers and tenants of further development projects — Secret side letter relaxing tenant-mix agreement — Application to relax agreement allowed by council — Whether legitimate expectation of consultation — Whether abuse of power — Applications allowed
The first applicant is the developer of the Howard Centre at Welwyn Station; the second applicant, John Lewis plc, has recently opened a store in Welwyn. The first respondents, Welwyn Hatfield District Council, are the owners of the A1(M) Hatfield Tunnel the lid of which is being developed for them by the second respondents, A1 Gallerias Investment Corporation Ltd. Following the grant of planning permission, a lease was granted in July 1987 incorporating a tenant-mix agreement and development of the tunnel lid commenced. The purpose of the tenant-mix agreement was to restrict the scope of uses and types of shops in the tunnel development project to those which were leisure oriented. The council qualified the effect of the tenant-mix agreement by a side letter with the second respondents; this was not made known to the first applicant who was opposed to the tunnel development, and who, at one stage, stopped working on the Howard Centre, because of the rival tunnel development.
In February 1990 the council made two decisions to relax the tenant-mix agreement. The applicants sought judicial review of the 1987 and 1990 council decisions; the applicants contended that they had a legitimate expectation that the tenant-mix agreement would be adhered to, at least until after full and fair consultations.
Held The applications were allowed.
In recommencing work on the Howard Centre the first applicants relied on the council’s undertakings in relation to the tenant-mix agreement. The side letter did substantially relax the effect of the tenant-mix agreement in the lease of the tunnel development site. A legitimate expectation of consultation can be said to have arisen without there being any evidence of an express promise or of established practice. The decision of the council in 1987 to relax the tenant-mix agreement by issuing the side letter amounted to an abuse of power. That decision, and the council’s further decisions in 1990 to relax the tenant-mix agreement were quashed; damages to be assessed.
David Keene QC and Duncan Ouseley (instructed by Lovell White Durrant) appeared for the applicants; Jeremy Sullivan QC and Nicholas Huskinson (instructed by the solicitor to Welwyn Hatfield District Council) appeared for the first respondents; and Matthew Horton QC and Sebastian Head (instructed by Slaughter & May) appeared for the second respondents.
