Supreme Court refuses Cornwall permission to appeal £4.5m leases case

The Supreme Court has refused to give Cornwall Council permission to appeal in a case where it alleged – in a bid to extricate itself from expensive leases – that actions by its predecessor authorities were ultra vires.

A panel comprising Lord Neuberger, Lord Mance and Lord Cornwath ruled that the local authority’s application did not raise “an arguable point of law of general public importance which ought to be considered by the court at this time”.

The panel also said that there was no realistic prospect of Cornwall successfully appealing the first ground of the Court of Appeal’s decision.

The case centred on leases entered into by two of Cornwall’s predecessor authorities, Restormel and Penwith, with Charles Terence Estates. The properties were developed to house groups including vulnerable people in priority need.

Cornwall claimed that Restormel and Penwith had breached their fiduciary duties by failing to take into account market rents on entering into the leases. It estimated that being freed from the leases would save at least £4.5m in public funds.

The local authority succeeded in the High Court, but this was overturned in the Court of Appeal.

The first ground of the Court of Appeal’s ruling was that the authority had not established breaches of fiduciary duty “or anything akin thereto”.

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.”

Philip Hoult