Council to pursue Jan Fletcher for costs in Arena case

LEEDS City Council is to pursue Montpellier Estates chairman Jan Fletcher personally for its costs defending her failed court bid for damages over Leeds Arena.

The move comes a week after the council issued a winding up order against the Harrogate-based firm, after it failed to pay £2m interim costs awarded to LCC by a High Court judge.

It has now emerged that Mrs Fletcher gave a personal undertaking guaranteeing payment of these costs in the event of her company, Montpellier Estates Limited (MEL), being unable to do so.

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

Ms Fletcher gave a written undertaking to the council over costs in July 2012 – more than three months before the High Court hearing began in London in MEL’s £43.5m damages bid over the contract to develop the city’s new arena – guaranteeing payment in the event of MEL both losing the case and not being able to pay up.

Last week advisors to MEL criticised the council for bringing the winding up petition against the firm which led to receivers being appointed to its land and property portfolio.

BTG Financial Consulting claimed the council was unlikely to get a penny of the £4m it cost to defend itself in the High Court.

Mark Fry, partner at BTG Financial Consulting, said that Montpellier had been in discussions with both its bank, Royal Bank of Scotland and the council, with the aim of paying the council in full.

But today 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 £4m 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.”

MEL had appealed against the court judgment but had agreed to ‘stay’ that whilst in settlement discussions with the council.

Mr Fry said that by issuing a winding up order, Leeds City Council has ensured that Montpellier is now unable to appeal or “get the justice they still believe is due.”

Riordan said: “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 said no payment or credible proposal for payment has been made.