Summary

The Commission for the New Towns had not breached exclusivity agreements with a development company concerning the redevelopment of docks and neither the commission nor an associated urban regeneration body had acted in bad faith throughout the negotiations or during the lifetime of the agreements.

Facts

The claimant company (C) claimed damages from the first defendant commission for purported breaches of lock-out or exclusivity agreements and from the second defendant company (T) for allegedly inducing those breaches. C had been incorporated as a special purpose vehicle for the intended development of an area (the site) that comprised part of the docks in Middlesborough. The commission owned the site and T had been formed to encourage and coordinate regeneration in the general area in which the site was situated. C entered into negotiations with the commission and T regarding proposed development of the site. Those negotiations culminated in exclusivity agreements that provided that for the period of the agreements the commission would not invite tenders for or enter into negotiations for the sale, development, letting, or charging of the site with any parties other than C. The agreements further provided that both C and the commission owed each other a duty of good faith. The period of the agreements was extended, but the development proposed by C did not come to fruition. C contended that the commission had breached the agreements by acting in bad faith and that T had induced the commission to act in that manner. In particular, C asserted that the defendants had negotiated with other companies regarding the development of the site during the lifetime of the agreements and that the defendants had never intended that the commission should enter into a development agreement with C for the site.

Held

The defendants had acted in good faith throughout all the negotiations with C and there had been no breaches of the agreements. The main allegation in the instant case was effectively that the defendants were guilty of serious misconduct in that they had led C to believe that it had a real chance of entering a development agreement with the commission when there was no chance because the negotiations were a sham. That allegation was not supported by the documentary evidence. Moreover it was clear from the evidence that the defendants had throughout the relevant period goodwill towards C and that C had been the preferred developer for the site. That was why the commission was willing to enter into the agreements and to extend them when deadlines provided for by the agreements were not met.

Judgment for defendants