LCC pursues arena court costs with winding-up petition on MEL

Leeds City Council (LCC) has confirmed that it is still seeking to recover legal costs from Montpellier Estates Limited (MEL) chairman Jan Fletcher after serving a winding up petition on her company.

The statement comes as the council has today published an advertisement in the London Gazette announcing it has served a winding up petition on MEL.

This is in respect of MEL’s failure to pay £2 million interim costs awarded to LCC by Mr Justice Supperstone following the company’s failed court bid for damages from the council after they did not win the contract to develop the Leeds Arena.

The council has also confirmed that because the company is unable to pay, it will seek to recover costs from MEL chairman Jan Fletcher, who gave a personal undertaking to cover the costs should the company be unable to do so.

Ms Fletcher gave a written undertaking to this effect to the council in July 2012, more than three months before the High Court hearing began in London, guaranteeing payment in the event of MEL both losing the case and not being able to pay up.

Tom Riordan, chief executive of Leeds City Council, said:

“Unfortunately, after our giving MEL every opportunity to pay the interim costs, including allowing them a further six weeks to find the money once the judge’s deadline to pay had expired, we have no choice but to take this action.

“Defending this unfounded case- which the judge himself said publicly should never have been brought- cost the council in excess of £4 million at a time when we have to make severe cuts to our budgets. We simply cannot afford not to actively pursue recovery for council taxpayers of this much-needed public money.

“We totally refute any suggestion that this action is in any way connected to inhibiting an appeal. It would be irresponsible of us not to try every legal avenue to reclaim this very large amount of public cash when MEL have completely failed to refund it to the people of Leeds. Not only do they have a legal duty to pay up they owe it to the public to do so."

"Leeds City Council consistently advised MEL that it would seek the full recovery of its costs should its claims against the council fail. MEL told the council that there was no reason to assume that the company could not meet a cost order against it."

Mr Justice Supperstone made an interim cost award of £2m in favour of Leeds City Council on April 25, to be paid in 28 days. At the time he indicated that he was in “no doubt" that the deceit claim against the council should never have been brought to court. Since that order was made the council has provided MEL with two extensions to this deadline, but no payment or credible proposal for payment has been made.

Notes to editors:

Legal proceedings background: on April 25 2013 Mr Justice Supperstone, sitting in the High Court in Leeds, awarded Leeds City Council interim costs of £2m against Montpellier Estates Ltd (MEL) following their failed attempt to sue the council over the awarding of development rights to the £60m Leeds Arena.

In awarding the costs- which are an interim payment pending a future decision on the total amount to be paid- the judge criticised MEL for pursuing the deceit element of their claim in the first place.

Mr Justice Supperstone had 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 MEL against the council.

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.

Leeds Arena- now known as first direct arena- will open on July 24 with a concert by US rock star Bruce Springsteen.

For media enquiries please contact:

Donna Cox, Leeds City Council press office, 0113- 224 3335

Email donna.cox@leeds.gov.uk