Manchester council says it may sue over the decision to axe the supercasino. But will it succeed? And what are the wider questions for construction?

Late last month Andy Burnham, the culture secretary, sounded the death knell for Manchester’s supercasino, while giving the go-ahead for 16 smaller casinos across the UK. However, the proposed “consolation prize” of a multimillion pound regeneration package is unlikely to head off the city council’s threatened legal action.

Cynics would suggest that the government deliberately delayed this long-expected announcement until a regeneration package was finalised. However, the fact remains that Manchester invested nearly £250,000 to win this project in the first place, while making no bid for the “large” casinos that will now be built in other cities.

This could pave the way for Manchester to commence legal action against the government for wasted costs.

Judicial review

The council is reportedly considering its options but its most likely course would be to seek a judicial review on the grounds of “procedural impropriety”.

To be successful it will have to establish that it had a “legitimate expectation” that a supercasino would eventually be built.

Since it was awarded the project in a government-sponsored competition in January 2007 it seems to have a strong argument here.

However, there are two potential problems with any judicial review. First, there is the issue of timing. Court applications must be made within three months of the decision and it is uncertain when the clock started ticking for Manchester. Was it when the House of Lords rejected the government’s plans for the supercasino last March, when Gordon Brown announced a government review in July, or after Burnham’s announcement on 26 February? Only if the final scenario is the correct one would Manchester be able to make a claim.

The second issue is the remedies that might be available to Manchester. The council would clearly like to recover its costs but the problem with judicial review is that damages are only granted where there is another established cause of action for which damages are available.

Breaches of contract or duty of care would be the two likely candidates here. However, it would be difficult for Manchester to prove that a contract exists with the government

Breaches of contract or duty of care are the two likely candidates here. However, it would be difficult for Manchester to prove a contract existed with the government, and pursuing a claim in tort requires the council to establish that it relied on the supercasino decision to invest more money into the city – an argument the government will no doubt counter by saying that this money would have been invested in Manchester anyway.

Misfeasance in public office

Another alternative would be a claim for “misfeasance in public office”, which if successful would entitle the city to recover damages.

The advantage is that it would not rely on the existence of a contract between the parties. However, in order to succeed it would need to be shown that the secretary of state acted with “targeted” or “untargeted malice” towards Manchester. Essentially, Manchester would have to establish that the secretary of state exercised or failed to exercise a power as a public officer causing damage to the city of a type that was foreseen.

However, the burden of proof is extremely high, as defendants have a complete defence if they honestly believed the act in question was within their powers.

Wider implications

Aside from such legal technicalities, the whole supercasino saga raises wider questions for the construction industry as a whole, such as:

  • Will it affect the way in which developers bid for future projects?
  • Does it reopen the debate on upfront bid costs?
  • Given the current climate of the government reversing decisions, are we going to witness an increase in wasted costs claims from local authorities?

The supercasino may be dead, but will the construction industry continue to gamble on government contracts?