In reviewing the development contract as a whole, the Court of Appeal therefore found that it was not a public service contract under the regulations, since it was “primarily” a contract for work. Where such a possibility is part of the agreements concluded, the scheme is a mixed contract, consisting in part of obligations to carry out work/services, which are in principle subject to the regulation on public procurement, and to grant rights for land that is not. The status of the Section 106 agreements also remains uncertain. While the Faraday Court of Appeal has tried to distinguish the situation in the Midlands Co-op, the basis of this distinction remains somewhat unclear. The key is to take a step back and consider the arrangement as a whole – but this kind of approach inevitably leads to certain areas of shadow. Other allegations that the Council deliberately and illegally avoided the rules on public procurement and that the development agreement was a public service contract were rejected. However, the Court of Appeal found that entry into the development agreement was still illegal, since the agreements, when considered as a whole, are ultimately required to place an order and that this obligation would crystallize at some point (i.e., the development contract would become a public contract for work), at a time when it was too late to proceed with the necessary contracting procedure (i.e. at the time the developer withdrew the land). This is both a violation of regulations and public law (on the basis that the Council has indeed agreed to act illegally in the future). The Court of Appeal`s decision helped clarify a previously uncertain area of the law concerning development agreements. In this regard, the judgment reminds the contracting authorities that, in situations where they are unsure of the nature of the contract they are entering into, they are not sure that they should ensure that all regulatory and procedural market requirements are met. However, given the range of trade agreements relating to land use, public procurement law often finds it difficult to delineate the boundaries between contracts that fall within the definition of a contract for work and those outside that definition.
The result of the awarding of the contract was that the Council decided to award the development agreement (the agreement) to St Modwen Developments Ltd (St Modwen). Overall, the agreement requires St. Modwen to draw up detailed plans for the rehabilitation of a site primarily owned by the Council and then gave Saint-Modwen, in accordance with certain conditions, the possibility of using long leases on the site. St. Modwen was not obligated to take over the leases, but if that was the case, he was required to do work and services to open the land according to council-approved plans. Although it considered that the transaction did not fit within the scope of the regulations, the Commission issued a voluntary ex ante transparency communication (VEAT communication) prior to the agreement with St. Modwen coming into force. The Commission submitted that, in accordance with the high court in R decision (regarding the application of the Midlands Co-operative Society Limited)/Birmingham City Council, the agreement should not fall within the scope of the regulations, as it did not imply a direct enforceable obligation on St. Modwen to make use of its option, to conclude the leases and to exploit the lands concerned.