Local Authority Does Not Need To Tender For Insurance Services Placed With A Local Authority Owned Company

The High Court and Court of Appeal decisions were reported in previous bulletins. The case involved Brent putting insurance services out for tender and then abandoning the tender when a company set up by Brent and other local authorities for the purpose (London Authorities Mutual Limited) had been established and was capable of providing the services. The High Court and Court of Appeal both held that the Teckal exemption did not apply because Brent did not exercise control over the company equivalent to that over its own department. Brent settled the matter with the complainant (Risk Management Partners), but Harrow Council, also a member of LAML, appealed to the Supreme Court on the principle.

The Supreme Court overturned the decisions of the lower Courts. It held (as did the other Courts) that the Teckal principles were capable of applying, and were capable of applying to insurance contracts. In keeping with existing case law, it was permissible for the company to be collectively controlled by several local authorities and not by the individual local authority. The Court of Appeal held...