City council sees limited success in bid to have claim by property company struck out

Sheffield City Council has failed to get all but a small part of a claim against it struck out in a dispute over redevelopment of the city centre that stretches back to 2007.

District Judge Royle, sitting in the High Court, struck out claims against the council for private and public nuisance made by Tandem Properties, but allowed the rest of its claim for £3.5m to proceed.

Sheffield in 2007 began to promote redevelopment of part of the city centre, where Tandem owned a former Salvation Army Citadel, which was to have been at one entrance of a major new shopping area.

Retailer John Lewis & Partners had a store that was to be demolished and relocated within the complex.

The council felt that to enable developer Hammerson to proceed it needed control over the entire site and issued compulsory purchase orders for the John Lewis and Tandem sites.

Tandem argued acquisition of the citadel was unnecessary because it intended to refurbish the building for retail in line with the rest of the development.

Both later withdrew their objections to compulsory purchase on a basis that granted a pre-emption in favour of Sheffield over the citadel with an obligation on Tandem to develop it consistently with the adjacent area.

The redevelopment though never proceeded on the original basis and John Lewis did not move its store.

Tandem claimed before the court that its withdrawal of its objection to compulsory purchase was induced by misrepresentations, which caused it loss.

It said a key feature of the original scheme was the demolition of the John Lewis store and its relocation, and that a binding agreement had been entered into which required the retailer to become anchor tenant in the new development.

Tandem said Sheffield had assumed obligations of a fiduciary nature towards it, which it breached by failing properly and fairly to disclose material information or modifying the scheme without consultation.It claimed £3.5m.

Judge Royle said there was considerable overlap between the accusation of deliberate concealment and the breach of contract - or of fiduciary duty - claim which both parties had agreed would go to trial.

He said this overlap risked inconsistent findings on what information was allegedly not given by Sheffield to Tandem such that “it would be appropriate for me to grant summary judgment on the s.32 question on this application”.

The judge also declined to enter summary judgment on Tandem’s misrepresentation claim as there was a “compelling reason for there to be a trial on that question”.

He said Tandem “has real prospects of arguing a deliberate concealment. It is certainly not fanciful to suggest as much.

“I also consider that Tandem has real prospects of establishing that it could not, with reasonable diligence, have found out the relevant material. That is because I consider the question of weighing up the relative significance of the press materials against what Tandem's director was being told by an SCC representative is i) quintessentially a question of fact which (ii) is more than merely arguably in favour of Tandem. My views as to the ultimate merits of the trial positions are irrelevant.”

Judge Royle struck out Tandem’s public nuisance claim, saying that while the long saga of the redevelopment may have caused blight, Tandem continued to own the citadel and had agreed what it would or would not do with the building.

“I see nothing approaching a sufficient pleading that that caused any such interference”.

He said the claim for public nuisance was on identical grounds and was therefore also struck out.

Mark Smulian