DAC Beachcroft acts for council in successful defence of £8m sixth-form centre dispute

Law firm DAC Beachcroft acted for Isle of Wight Council on its successful defence of an £8m multi-party dispute over a sixth form centre.

In SFM Ltd & Others v (1) Christ the King College (2) Isle of Wight Council the college had hired the centre, which was constructed from 81 modular units, on a 15 year term.

DAC Beachcroft said: “When the contract proved unaffordable for the college, default resulted in the claimants suing both the college and the council for breach of contract and misrepresentation, seeking damages equivalent to the balance of the hire payments.”

The claimants and the college also alleged that the college had entered into the contract as the council’s agent, making the council liable as principal.

Mr Justice Foxton agreed with the council that the hire contract was a finance lease which amounted to borrowing without consent, so was therefore ultra vires and unenforceable.

He dismissed the claimants’ allegation of misrepresentation as, although the council had confirmed that the college had authority to enter into the contract, it only did so at the claimants’ request and, unlike them, without the benefit of expert legal advice, DAC Beachcroft said.

Duncan Greenwood, a partner in the firm, said: “This is a significant decision for all public bodies and those contracting with them.

“In his judgment, the judge has not only given detailed, and very useful, analysis of when and how a public body can defend a private law claim on the basis of a breach of public law but has also, decisively, declared that the statutory framework does not render local authorities liable for all contracts entered into by maintained schools.”

See also: Ultra vires contracts and maintained schools in the Commercial Court - barristers at 11KBW explain the ruling.