Cornwall bids to take £4.5m ultra vires case to Supreme Court

Cornwall Council has applied to the Supreme Court for permission to appeal in a case where it is alleging – in a bid to extricate itself from expensive leases and save £4.5m – that actions by its predecessor authorities were ultra vires.

In the High Court Mr Justice Cranston ruled in the unitary authority’s favour. 

The judge concluded that two of Cornwall’s predecessors, Restormel and Penwith, had breached their fiduciary duty to taxpayers by failing to take into account market rents on entering into the leases with Charles Terence Estates.

The properties were developed to house groups including vulnerable people in priority need.

Cornwall estimated that the High Court ruling, if upheld, would have saved at least £4.5m in public funds.

However, last month the Court of Appeal reversed the High Court’s decision.

Lord Justice Maurice Kay said: “When one compares this case with the leading authorities in which the breach of fiduciary duty approach was propounded and in which it succeeded, it seems to me that the present facts, taken at their highest, establish significantly less culpability.”

The judge added that the evidence “falls well short of a lack of vires by reason of unreasonableness of the rent to be paid to CTE” and the judge was wrong to find that the leases were void because of a failure to have regard to market rents.

He added: “There was neither a legal nor an evidential basis for such conclusion in the circumstances of this case.”

A spokeswoman for Cornwall confirmed that it was in the process of applying for permission to appeal to the Supreme Court, but said it would be making no further comment at this stage.

See also: Ultra vires and Credit Suisse revisited – Nicholas Dobson analyses the Court of Appeal ruling.