Charles Terence Estates Ltd v Cornwall Council & Anor

Charles Terence Estates Ltd v Cornwall Council & Anor

The leases entered by Restormel and Penwith councils with CTE are void and of no effect because the councils failed to have regard to their fiduciary duty to council taxpayers by not considering market rents. The councils lacked power to enter the leases. Restitutionary claims for repayment of rents and grants are defeated by CTE's change of position, as CTE acted in good faith and invested based on the agreements.

Parties
Claimant/first Part 20 Defendant: Charles Terence Estates Ltd; Defendant/part 20 Claimant: The Cornwall Council; Second Part 20 Defendant: Providers of Accommodation and Support Ltd
Jurisdiction
England and Wales
Judgment Date
07 October 2011
Procedural Posture
Civil / Final Judgment
Outcome
Leases void and of no effect; restitutionary claims defeated by change of position.
Legal Topics
Ultra Vires, Fiduciary Duty, Restitution, Housing Revenue Account, Mistake, Capacity of Public Authorities
Contract Law Public Law Local Government Law Ultra Vires Fiduciary Duty Restitution Housing Revenue Account Mistake +1 more

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Parties

Charles Terence Estates Ltd

Claimant/first Part 20 Defendant

The Cornwall Council

Defendant/part 20 Claimant

Providers of Accommodation and Support Ltd

Second Part 20 Defendant

Procedural Posture

Civil / Final Judgment

Legal Issues

  1. 1 Whether the leases entered by Restormel and Penwith councils with CTE were void for lack of capacity and breach of fiduciary duty
  2. 2 Whether the councils could invoke public law flaws to avoid private law contracts
  3. 3 Whether common mistake rendered the leases void

Ratio Decidendi

The leases entered by Restormel and Penwith councils with CTE are void and of no effect because the councils failed to have regard to their fiduciary duty to council taxpayers by not considering market rents. The councils lacked power to enter the leases. Restitutionary claims for repayment of rents and grants are defeated by CTE's change of position, as CTE acted in good faith and invested based on the agreements.

Court Disposition

Leases void and of no effect; restitutionary claims defeated by change of position.

Orders

  • Cornwall Council occupies the properties under tenancy at will, terminable at any time.
  • CTE to repay Penwith £350,000 loans in accordance with loan agreements.