Stornoway-based Cala Hotels says it intends to seek financial damages from the comhairle
over the way the lease and redevelopment contract of the Lews Castle was awarded
to Natural Retreats to operate it as a plush hotel.
The Court of Session has overturned a previous court ruling that the hotel firm left
it too late to lodge court action.
Cala Hotels - which previously indicated they sought damages over £23 million - is
now allowed to sue the council.
The appeal judgement highlights claims the council emailed important documents over
the contract to an agent of Natural Retreats for a "quiet review" before going out
This gave Natural Retreats and “unfair advantage” with public funds used to “distort
competition,” Cala Hotels told the court.
The company also said the council held back releasing information and documents which
the company sought before making a decision over commencing legal action.
The court judgment delivered by Lord Menzies found the “slow drip-feed of disclosure”
showed the council “was not notably prompt or cooperative in disclosing all information.”
Waiting 11 months since the contract award was officially published in 2014 was not
an “unreasonable delay” due to the “complex” contractual procedures and the council
delay in releasing documents.
Lord Menzies highlighted it took “repeated” freedom of information requests and a
large amount of information was not disclosed to the hotel group until December 2014
with a further wait until March 2015 to receive a large number of documents.
“Even now, some documents which (Cala Hotels) has called for have not been produced,”
stressed the judge.
The “coincidence” of the timing of the comhairle’s release of documents was also
One delayed response was delivered shortly before 5pm on the day before the council
made the formal decision to award the contract, it was said.
Originally, Cala said it wanted the comhairle to hold a fresh tendering process to
allow all businesses including Natural Retreats and Kenman Holdings an opportunity
to bid for the project.
This is now reduced to financial damages only as the comhairle went ahead with the
Ruth Crawford, QC for the council, told the court that Cala Hotels made a deliberate
choice not to submit a bid for these contracts.
“They did not compete, so they have no complaint that their offer was not properly
If they raised legal action in June 2014 then the council would not have concluded
the development agreement with Natural Retreats, she said.