Court to hear claim over £75m arena plan

Entrepreneur Jan Fletcher's Montpellier Estates is suing the council for damages over its shock decision to develop Leeds arena on land not previously on the shortlist – a decision which the firm said cost it "many millions of pounds".

Harrogate-based Montpellier is also on the brink of issuing deceit proceedings against the council, on top of its original claim the local authority breached European Union procurement rules.

Despite the city council's bid

to "strike out" parts of Montpellier's case, Mr Justice Eady yesterday opened the way for the company to take all its claims to a full High Court hearing

Montpellier had hoped the arena would be built on land at Sweet Street and went through a long and costly tendering process. But the company was incensed when Leeds selected a site in Claypit Lane in November 2008 despite never having said the location, owned by Leeds Metropolitan University, was under consideration.

The judge said it is Montpellier's case it was treated "appallingly" by Leeds because it had been pursuing its own development plans for more than a year before rejecting the private company bids.

The company says the council's "intention was to lead the bidders up the garden path".

Rhodri Williams QC, for the council, said, however, the criteria that tenderers had to meet were set out clearly from the outset and Leeds was fully entitled to cancel the process when neither of the two private bidders put forward "affordable" proposals.

At the preliminary hearing the city council asked the judge to dismiss Montpellier's claim for an injunction which, if granted, would have the effect of "preventing the council from entering into any contract for the development of the Leeds Arena, whether at the Claypit Lane site, or otherwise".

Mr Justice Eady said he could "see the force" of council arguments that it had a wide discretion to cancel the procurement process. But, refusing to strike out any part of Montpellier's claim, he said there was also the issue of the alleged "parallel process leading the formulation of Plan B".

No date has been set for a full High Court hearing of Montpellier's case, the legal costs of which are set to be extensive. Montpellier estimates its costs of the preliminary application alone at up to 54,000 and the council's are said to be around 26,000.

The judge ordered Leeds to pay the costs of its abortive bid to strike out parts of the company's case and the council will have to pay 25,000 on account, pending assessment of final bills.

In a statement, Jan Fletcher, chairman of Montpellier Estates, said: "It is not in the best interests of the region if the private sector refuses to take part in important procurement competitions (such as that for the Leeds Arena) because they are worried they may not be conducted fairly and transparently."

Leeds City Council said it was disappointed at the High Court decision and would continue work on the arena.

It added: "This arena will bring over 500 construction jobs to Leeds – many of these for local people – and a 25.5m boost to the local economy, both extremely important in these difficult economic times.

"We will vigorously contest this case. In the meantime we want to reassure Leeds people that it is still very much business as usual."

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