A Question Of Capacity: College Gives Contractor Expensive Schooling In Public Law

• Published date: 28 July 2020
• Law Firm: Charles Russell Speechlys LLP
• Author: Mr Kevin Forsyth and Paul Henty

Increasingly, public bodies with limited capital expenditure programme budgets are entering structured transactions with the private sector, allowing building costs to be met from periodic payments which can be treated as revenue expenditure.

In last month's High Court judgment, School Facility Management Ltd & others v Governing Body of Christ the King College & Isle of Wight Council [2020] EWHC 1118, the court decided that such an agreement between a voluntary aided college on the Isle of Wight and a contractor was unenforceable, because it was in effect a credit agreement, requiring prior approval by the Secretary of State which had not been given. The judgment shows the importance of ensuring a public sector body has legal capacity to enter the relevant contract.

Unpaid rent

In 2013, the College had entered into a contract with Built Offsite Limited ("BOS"), a specialist contractor, for the provision of a modular building for its sixth form...