FIRST Minister Nicola Sturgeon will inadvertently walk into a £25 million legal storm next month when she goes to Stornoway to officially open the Lews Castle museum and hotel.
For judges in Edinburgh yesterday cleared the way for Stornoway company Kenman Holdings Ltd, operators of the Cala Hotels on the island of Lewis, to sue Comhairle Nan Eilean Siar (Western Isles Council) for £25m over alleged breaches of European Union law in relation to the contract to develop the Lews Castle project, the largest ever undertaken by the council.
Despite lengthy discussions about the project with local hoteliers, and complaints that their processes did not comply with EU rules, the council awarded the private commercial part of the contract to the Natural Retreats group, which has now completed the development of the hotel and hospitality side of the Lews Castle Project.
Kenman Holdings had sought a judicial review of the contract award, claiming damages for the council’s alleged breach of EU laws, but were denied it in the Court of Session, only for three senior judges to overturn that verdict yesterday, meaning that the case will now proceed.
At the original hearing, the judge concluded that Kenman Holdings had delayed too long in starting its case against the council – the Scottish legal term for it being “mora, taciturnity and acquiescence.”
The written appeal judgment issued yesterday said that the delay was not unreasonable and was partly down to the council. Kenman had required to make repeated Freedom of Information requests to obtain details of the contract awarded to Natural Retreats and has still not been given all the information.
The judgment noted: “The council was not notably prompt or cooperative in disclosing all information: we regard senior counsel for the petitioner’s [Kenman’s] description of this process as a ‘slow drip-feed of disclosure’ as not unfair.
“The contractual procedures and arrangements were complex; no doubt this is the case in most public procurement exercises, as observed by senior counsel for the respondent [the council], but it is nonetheless a factor to be considered.
“The challenge by the petitioner was not straightforward and until the receipt of around 12,500 pages of documentation in late March 2015, the legal advice which the petitioner received was that litigation was inadvisable.
“Even now, some documents which the petitioner has called for have not been produced.”
Kenman Holdings was unable to say when the court case would proceed as chief executive Kenneth Mackenzie is on holiday. At the time the contract was awarded, Mackenzie said he would be reporting the council to the European Commission and Audit Scotland. A spokesperson for their solicitors Maclay Murray & Spens LLP said: “We are not in a position to provide any further details at this stage.”
A statement to The National from the council read: “Comhairle nan Eilean Siar has noted the decision of the Court of Session in an appeal by Kenman Holdings on the first stage of a judicial review regarding the tendering of the hospitality contract for the Lews Castle Development in the Outer Hebrides.
“The court upheld Kenman’s appeal that the claim, which is now much more narrowly framed, had been submitted within an acceptable time.
“This decision was not about the merits of the case and Kenman’s claim for damages will now proceed to be determined by the Court of Session.”
Councillor Angus Campbell, leader of Comhairle nan Eilean Siar and chairman of the Lews Castle Project Board, said: “The Comhairle remains confident that its processes in the awarding of the contract were proper and competent.
“The restoration and development of Lews Castle is hugely popular and has already provided a major economic boost for the islands.”
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