AN on-going case in the Competition Appeal Tribunal has been brought by businessman, Graham Thomas from Solihull and four companies of which he is a Director.
Mr Thomas, alongside the companies, namely BEK Developments Ltd, Alleyhaus Ltd, Dales and Moors Developments Ltd and Masonic Hall Ltd are cited as the Claimants in the case with Durham County Council being the Defendant. The case – number 1751/5/7/25 – was registered on September 19th last year.
The nature of the claim by Mr Thomas is for damages and declaratory claim in the Complaints Appeal Tribunal alleging ‘ unlawful subsidies, abuse of dominant position and breaches of transparency and procurement law arising from regeneration funding decisions’ by Durham County Council.
The key points that Mr Thomas is alleging is that there have been selective financial awards to third parties such as STACK and The Auckland Project, which improperly conferred economic advantages, distorting competition in local hospitality, leisure and cultural markets in the town of Bishop Auckland. The examples cited include the £5.8m to STACK, £3.1m for the Market Place Hotel and £887,000 for the Artist Hub. It is alleged that these awards lacked competitive process and transparency.
The Market Place Hotel project, which was launched by The Auckland Project last year, is the plan to build a new hotel on the site of the former Queen’s Head Hotel and the buildings alongside it, including the former Postchaise and Employment exchange.
Mr Thomas and his companies say that these awards meet the definition of subsidies under the Subsidy Control Act 2022 but alleges they failed to satisfy key principles such as proportionality, necessity and minimising distortion. They also believe that there was no open or competitive allocation process, contrary to Public Contracts Regulations 2015. They say that the council failed to publish eligibility criteria and excluded competing proposals, making the decisions unreasonable in the Wednesbury sense.
‘Wednesbury’ is a legal term used to describe an ‘irrational’ decision, so irrational that no reasonable authority could have made it – and that a decision is deemed unreasonable if it defies logic or accepted moral standards. The Wednesbury principles (from Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948]) are a foundational UK administrative law standard used in judicial review to determine if a public body’s decision is so irrational or “outrageous” that no reasonable authority could have made it. It sets a high threshold, requiring the decision to be a logical absurdity, not just merely wrong.
Indeed, Durham County Council was deemed to have been so in another case heard in 2015, brought by Galaxy Land Ltd with regard to the disposable of land. Public authorities spending public money need to ensure they are complying with statutes in relevant law.
In the present case, Mr Thomas and the companies of which he is a Director contend that there was no open or competitive allocation process, contrary to Public Contracts Regulations 2015 (Reg. 18). And that Durham County Council failed to publish eligibility criteria and excluded competing proposals, making the decisions unreasonable in the Wednesbury sense (irrational public law standard).
Mr Thomas also states that he suffered financial loss in that he was encouraged to acquire multiple properties based on assurances of available funding. And further alleges that Durham County Council knew funds were limited but nonetheless encouraged investment, leading to financial loss when funding was not delivered.
Mr Thomas is asking the court to seek the following:
- Declarations that the contested awards were unlawful subsidies and breaches of competition/procurement law;
- Orders to recover unlawful subsidies from recipients;
- Mandated transparent competitive allocation processes;
- Compensation for financial losses (grants, costs, lost earnings, interest, etc.);
- Costs of the litigation.
A spokesperson for The Auckland Project said: “The Auckland Project has received notice of the proceedings and understands that Durham County Council is the named respondent. The Auckland Project will cooperate fully with any inquiries as required. As this is an ongoing legal process, it would be inappropriate to comment further at this time.”
The case is continuing with a spokesperson from Durham County Council saying: “We are aware that proceedings have been lodged with the Competition Appeal Tribunal but it would not be appropriate for us to comment while legal proceedings are ongoing.
“Unfortunately, structural issues with the neighbouring property are preventing STACK from safely proceeding with the development at the moment. We are liaising with the owners of that property and taking statutory enforcement to ensure these issues are urgently resolved.
“Once the required works have taken place, STACK will able to progress with plans to transform the venue for the benefit of all those who live and work in, or visit the town.”
The news of this on-going court case comes on the day that Durham County Council admitted in a meeting of the Cabinet at County Hall that it has invested more money in the town of Bishop Auckland. Namely, the purchase of the Newgate Centre site for £3.31 million in 2022. The authority wanted to realise an ambition to revitalise the facility, but changes to shopping habits and the collapse of several high street retailers have proved a problem. And now, the local authority has admitted it faces a huge task to overhaul the site and attract new traders.
All of this when work is underway to try to win Town of Culture status for Bishop Auckland.
