Council’s £50,000 high court victory

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A top judge has ruled in South Holland District Council’s favour over the amount of compensation offered regarding a controversial housing development in Fleet Hargate.

Following a damning report by a Local Government Ombudsman, South Holland District Council was told to pay more than £250,000 in compensation to Nestwood Homes Developments for “maladministration”, but instead offered only £50,000.

However, Mr Justice Sales ruled at London’s High Court that the council had “acted within the law” when making its compensation offer.

The ombudsman had found the council guilty of maladministration in respect of a development in Old Main Road, Fleet Hargate.

Nestwood Homes Developments – which had initially sought to recover alleged losses of £1.2million – had asked the judge to order the council to reconsider its £50,000 offer.

But, dismissing the company’s challenge, the judge said: “I have approached the decision in this case with concern, because of the serious findings of maladministration, injustice and loss made by the LGO and the substantial contrast between the compensation recommended by the LGO and that eventually decided by the council.

“Against this background, I have subjected the council’s decision and decision-making process to careful scrutiny. However, I consider that the council has acted within the law and so Nestwood’s challenge to the council’s decision regarding the payment to be made to it in respect of the council’s maladministration is dismissed.”

In his written decision, the judge said: “The LGO recommended that the council pay substantial compensation to Nestwood and its director, Mr Shephard, in the sum of about £250,000. The council, however, did not accept that recommendation and resolved to pay only £50,000 plus interest.”

Nestwood purchased the land with planning permission for residential development in June 2005. Later that year, the council granted further planning permission and, in January 2006, a council officer confirmed that conditions attached to the planning permission had been satisfied, on the basis of plans which clearly showed raised site levels for the development.

The judge said that, in early 2006, Nestwood commenced building works on the land but, shortly afterwards, neighbours complained about the raised site levels.

In response to these complaints, the council informed Nestwood that it did not have planning permission for the raised site levels. Nestwood contested this but, in late 2006, prospective purchasers of the land pulled out of the purchase on grounds of delay and difficulties with the planning permission.

The planning committee decided to take enforcement action in 2007, requiring four houses, garage buildings, boundary walls to be demolished and for the site levels to be restored.

In August 2008, the council paid sums amounting to £92,625 to neighbours due to the raised site levels, but Nestwood applied to the LGO for compensation of £1.2million.

Council members considered paying £50,000 would strike an appropriate balance between injustice suffered and affordability.

South Holland District Council declined to comment.