Bankruptcy order withdrawn as arena legal costs settlement agreed

A judge has formally dismissed a bankruptcy order against property developer Jan Fletcher on request from Leeds City Council after a £2m out of court settlement of the council’s costs was reached.

An agreement that Ms Fletcher pay the council £2m has been signed outside the court and the council therefore formally requested that a district judge dismiss the bankruptcy petition it had filed in order to retrieve its costs.

Deputy District Judge Bruce Buchan agreed the council’s request and dismissed the petition at Harrogate County Court today.

The £2m costs had been awarded by High Court judge Mr Justice Supperstone nearly a year ago. This followed the failed attempt by Montpellier Estates Limited (MEL) to sue the council over the awarding of the contract to build Leeds Arena.

When MEL failed to pay the judge then granted permission to the council to pursue the company’s former chair Ms Fletcher personally for the costs. She gave a written undertaking to the council in July 2012, before the original case began, guaranteeing payment in the event of MEL both losing the case and not being able to pay up.

Leeds City Council chief executive Tom Riordan said:

"I’m very pleased that we have been able to recover a significant sum of the money we should never have had to spend in this case. I’m satisfied, based on legal advice, that this is a good deal for council taxpayers.

“This has been a long drawn-out and costly legal process and we are finally drawing a line under it by recovering as much as possible of public money at a time when our budget pressures are particularly severe.”

After the original High Court hearing Mr Justice Supperstone had ruled that the council had been perfectly entitled to cancel the competition to develop the arena and build it itself when other bids were found to be not good value for money. He also said that the deceit element of MEL’s claim should never have been brought.

Notes to editors:

Legal proceedings background:

Mr Justice Supperstone originally handed down a ruling on February 6 2013 dismissing entirely claims for more than £43.5 million in damages for alleged deceit and flawed procurement under European regulations brought by Montpellier Estates Ltd (MEL) against the council over the awarding of the development rights to build an arena in Leeds.

He also rejected allegations of fraud and dishonesty against eight named individuals connected to LCC and the arena project.

The judge said that the council was perfectly entitled to bring the competitive tendering exercise to a close when other bids were found not to be good value for money and then develop the arena itself. The original hearing took place in London’s High Court over nine weeks towards the end of 2012.

On April 25 2013 Mr Justice Supperstone, sitting in the High Court in Leeds, awarded Leeds City Council interim costs of £2m against MEL.

When MEL failed to pay the costs the judge then granted permission on October 17 2013 to the council to pursue its former chair Jan Fletcher for its legal costs, since she had given a written undertaking in advance of the original MEL case to pay should they lose and be unable to meet the costs themselves. He also issued an order that Ms Fletcher pay the interim costs of £2 million before November 14 2013, pending a final decision on the total amount due.

For media enquiries please contact:

Donna Cox, Communications Manager, Press & Media Relations

Leeds City Council press office (0113) 224 3335

e-mail: donna.cox@leeds.gov.uk