Housebuilder in court over alleged breach of Section 106 agreement
An East Midlands Council has taken a housebuilder to court over the lack of affordable housing on its site, even though it was a condition of the firm being granted planning permission for the scheme.
Hawthorne Meadows, off Chesterfield Road in Barlborough in Derbyshire, is being built by Arba Ground Trading Company. Bolsover District Council said it noted that the development was almost built out meaning Arba had “no intention” of complying with the obligations of the planning permission and paying the cash owed under a Section 106 agreement.
The scheme was granted planning permission in March 2011 with the Section 106 condition that 10% of the homes on the site be affordable housing. However, 126 houses have currently been built and occupied, leaving nine left to be built, which meant Arba could not meet the affordable housing target.
His Honour Judge (HHJ) Tindal presided over the case in the High Court in Birmingham and the council argued that the developer appeared to be trying to build a market housing only development on the site, which was a breach of the Section 106 agreement.
Jude Tindal said that “a party who made promises under a s106 and then breaks those promises can expect themselves to be made subject to an injunction”.
He added: “The developer had raised over £31m and there is a strong public interest in this council seeking an injunction and that as 126 properties are occupied the s106 cannot be complied with’.
Judge Tindal issued an interim injunction on the developer that prohibits it from building or selling/leasing any more properties and that costs have been reserved. The case has been adjourned as the developer has appealed a decision in February refusing to vary the Section 106 agreement to reduce its obligations. Once the appeal process is complete the case will be returned to the High Court.
Judge Tindal added: “I cannot understand what defence they can have. It should also be made clear that they owe the debt. What’s currently owed as we stand here today is the full amount of contributions owed under the original agreements.”
Bolsover District Council’s Cabinet Member for Governance, councillor Duncan McGregor said, “We faced the real risk that the development would be completed, sold and occupied without the monies being paid and other obligations being met. The developer could then wind up the company, leaving all contributions outstanding with little means for the Council to enforce the terms of the obligations.
“Nothing which has occurred over the last three years gives us any confidence that the obligations would be promptly and fully complied with, that’s why we sought court action.
“But let this be a warning to developers. We issue planning permission on the proviso that its conditions are met. If they are not, then we will take legal action against those responsible.”
Arba Ground Trading Company is based in Doncaster. In its latest available accounts, made up to the end of December 2023, the firm owned creditors over £7.2m.
