Thurrock fires gun on claim against 23 APSE member councils over £40m losses from solar farm investments

Thurrock Council has filed a multi-million pound claim against a representative group of 23 member councils of the Association for Public Service Excellence (APSE), over what the unitary council alleges were "negligent" valuations of solar farm assets that it says led it to invest millions in bonds.

Thurrock issued proceedings on Friday (15 November) after a 'standstill' agreement was not reached with the other councils.

The unitary said it would be moving immediately to secure an order to stay the proceedings to "minimise costs for all involved and to allow the council to focus on other recovery options".

Thurrock has previously valued its compensation claim at between £42 and £54 million. However, APSE, which is a not-for-profit unincorporated association, believes the issues of quantum are circa £17.6m.

In 2017, 2018 and 2020, APSE produced valuations for Rockfire Capital, an investment fund that was run by a businessman named Liam Kavanagh.

Rockfire and its associated companies later collapsed, which partly contributed to Thurrock issuing a section 114 notice in December 2022.

Kavanagh is currently facing a separate claim from Thurrock that alleges he misappropriated money invested in Rockfire Capital and his other companies to fund a lavish lifestyle. Kavanagh has strongly denied the allegations.

Thurrock, which has been subject to statutory intervention since September 2022, is seeking to recover around £150m from the businessman.

The unitary meanwhile claims that the valuations of solar assets undertaken on a commercial basis by APSE were "negligent" and "overvalued" those assets.

In a letter warning its members of the potential litigation last week, APSE's management said the APSE associate who prepared the valuations stood by his calculations, "which have been rigorously revisited on numerous occasions". 

APSE also "vigorously" disputed Thurrock's argument that it must seek to recover from the association and its member councils to meet its Best Value Duty.

It said there must be a public interest test to also consider the outcomes of Thurrock's actions against the other councils who are "entirely without blame and yet face the cost burden imposed by Thurrock upon them".

APSE's legal team has also previously argued that the association had no duty of care to Thurrock and there were no material errors in the valuations provided.

Commenting on the launch of the litigation, Cllr John Kent, leader of Thurrock Council, said: "Since we raised our legal concerns about the valuations with APSE in September 2023, we have explained that the council has no option but to pursue the millions of pounds of public money that was lost through poor investments.  

"APSE provided inaccurate valuations that gave the council misplaced confidence in its investments, and so they must take responsibility for that, otherwise why would anyone seek such advice in the first place?

"We know what a challenging time this is for all councils, and we never wanted to pursue individual councils, but unfortunately APSE didn't have adequate insurance or protection in place, meaning that its member councils are liable for consequences of decisions taken by APSE.

"We will immediately be applying to the courts to pause the action while we pursue Kavanagh, but we had no choice but to file the claim by the deadline, or risk never having the opportunity to recover Thurrock's money."

The 23 councils are Gedling, Derby, Bolsover, Wolverhampton, South Tyneside, Warrington, Stockton-on-Tees, Preston, West Lindsey, East Riding of Yorkshire, Luton, Isle of Wight, Eastleigh, South Oxfordshire, Hertfordshire, Bournemouth, Christchurch and Poole, Oxfordshire, Bristol, Swansea, Vale of Glamorgan, Cardiff, Southampton and Flintshire.

APSE has been approached for comment.

Adam Carey