Wirral councillors knew they could be sued for pulling out of an agreement for a proposed £190m golf resort.
This is according to a new council report detailing whether councillors were fully aware in 2016 of the legal risks if they went ahead with a proposed Hoylake Golf Resort which was shelved in 2019. The council ended up paying out nearly half a million pounds to avoid legal action.
Proposals for a golf resort or a major tourism project near Hoylake in Wirral date back to 2003 when the local authority was looking to invest in the area. Those supporting it said benefits would include boosting the local economy, an additional £1m for council services, and 300 jobs.
While initial proposals in 2008 for a golf resort were supported by all political parties, opposition grew over concerns to do with Wirral’s green belt as well as the feasibility of the scheme with the Conservatives later coming out against the plans.
A framework agreement was then signed in 2016 with the chosen developer for the project, Nicklaus Joint Venture Group (NJVG). The following year a £26m loan was proposed from the council to the developer to allow the project to move forward.
In 2019, the council then pulled the plug on the plans for the golf resort after Labour lost their majority in that year’s local elections and agreed not to offer the loan of £26m to NJVG in 2020.
NJVG then threatened to claim damages of £20m. Wirral Council instead paid out £495,000 the following year to get out of the contract and “avoid potentially costly litigation", as detailed in a council report.
That report has revealed it was “clear” the council’s Cabinet in 2016 “were aware that it was a binding legal agreement” and the developer could make a claim if the council breached or backed out of the contract.
The report was made after Cllr Stuart Kelly raised a question at an Audit and Risk Management committee in October. A previous report had found no decisions over the golf resort broke council rules.
He said: “The key question is that when the cabinet made the decision to sign the contract, was it fully aware that exiting would have a half a million pound risk to the authority? The reason the Cabinet entered into it at the time was because it believed it was a regeneration initiative worth backing so it would have seen a lot of the benefits of that but was it fully apprised of the risk involved?”
The report also states that later when the council pulled out of the plans for a golf resort, the cabinet were again “provided with details of the overall potential project risks and any key risks for the Council.”
Recently, Council leader Janette Williamson defended the decision to pay the settlement of £495,000 after criticism from opposition leader Tom Anderson.
She said: “The problem with the golf resort was that the company wanted to sue us for breach of contract and the half a million, that was kind of a settlement.
“In all honesty most of the councillors in the chamber knew that’s what we had to do but they just didn’t want to put their hands up publicly. We all had lengthy discussions behind the scenes.”
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