Lancaster City Council is awaiting a Court of Appeal decision on whether it must pay thousands of pounds in legal costs following the purchase of a mill building and surrounding land on St George’s Quay.
The council is challenging a land court’s ruling that it must pay over £2m in compensation to Thomas Newell Ltd for the land and buildings, which form part of the Luneside East development.
If the council succeeds in persuading three leading judges to bring the compensation figure down by only £11,000 it will avoid “very substantial” further outlay on legal costs.
The council issued a Compulsory Purchase Order (CPO) over the site and all interests in the area in 2005 and, while Thomas Newell initially objected to the CPO, it withdrew its objection and entered into a building agreement with the council.
The CPO was confirmed in June 2006, and the matter went before the Upper Tribunal Lands Chamber to assess compensation payable to Thomas Newell.
The former landowner had sought as much as £6.35m for the land, assuming planning permission had been granted to redevelop it with 150 flats. However, in a preliminary ruling in 2010, the tribunal found that planning permission should not be assumed, but that compensation should be calculated on the basis that there was a 40 per cent chance that it would be granted within five years.
In the final ruling, the tribunal awarded £2,045,043 to cover the value of the land and disturbance caused to Thomas Newell, leaving the council facing the prospect of having to pay the company’s legal costs on top of its own – said to be a “very substantial” sum in total.
However, the council had earlier offered to settle the case for £2m plus other costs of £34,101.
If it is successful in having the award reduced below the offer total, this would mean that the burden of paying all the legal costs would fall on the former landowner.
The council claims that the tribunal wrongly awarded almost £18,000 compensation for management time and allowed too much in respect of loss of rent in awarding more than £62,000.
However, lawyers for Thomas Newell maintain that the tribunal made no error of law in its decision.
Andrew Dobson, head of regeneration and planning at Lancaster City Council said: “By defending the original claim in the tribunal, the council successfully reduced the amount of compensation to just over £2m.
“The current appeal is against two items of compensation where the council considers the tribunal erred in law.
“If the council is successful it could potentially reduce its exposure to costs. We are currently awaiting the court’s written judgement.”