The landlord of 30 properties used to house the homeless in
Charles Terence Estates claims that it was approached by the Penrith District Council and Restormel Borough Council to invest in houses and lease them to the councils for 25 years to meet the housing need in their areas. It says that it borrowed £8m to fund the project on the strength of this long-term relationship.
However, the councils amalgamated with others to form the unitary authority Cornwall Council in 2009, and, Charles Terence claims that the new council stopped paying rent on the properties last summer.
At the same time, the Council declared that its predecessors did not have the power or proper authority to enter into the 25-year leases and that they are void, and sought the repayment of grants and loans made under the project, totalling £1m.
However, Charles Terence claims that the council continues to occupy the 30 houses and let them to the homeless, despite asserting that its occupation is unlawful and not paying rent.
Its counsel, Martin Rodger QC, told Cranston J that his client is owed arrears of £946,000 since July 2010, plus interest of £34,000, and that it has been denied these sums to service its debts.
He alleged that the council had attempted to drive his client to bankruptcy.
Charles Terence is seeking a ruling that the council is bound by the leases and an order forcing it to pay the alleged arrears.
However, the council argues that the Restormel and Penwith schemes were “utterly flawed”, that the predecessor councils entered into the leases without establishing a housing revenue account, under a mistake as to the extent of their powers, and without any statutory foundation.
The trial is scheduled to last up to seven days, after which the judge will reserve his decision.
