News

Northamptonshire council loses £2.4m housing stock battle

News

Christian Metcalfe

02 August 2010

Residential

East Midlands

A Northamptonshire council has lost a £2.4m High Court battle over housing stock.

On Friday, High Court judge Vos J dismissed Daventry District Council’s (DDC) claim against Daventry & District Housing Ltd (DDH) that it was owed £2.4m by the firm following the handover of council houses in Daventry.

The dispute centred on a November 2007 agreement by which the council agreed to transfer around 3,000 council homes and garages it owned to registered social landlord DDH.

Alongside the transfer of the properties the council also agreed to transfer its housing department staff, who were members of a local government pension scheme administered by another local authority, Northamptonshire County Council (NCC).

The pension scheme was at that time under-funded and an actuarial estimate revealed that a payment of £2.4m was necessary to make up the deficit.

Following negotiations, on 5 November 2007 a transfer contract was executed that contained a clause which stated that in relation to the transferring employees, the council would make a payment of £2.4m within five business days of the completion date.

Although the council accepted that its solicitors and lead negotiators had consented to the inclusion of the clause it contended that it was mistaken in giving that consent, and that both parties had intended that that clause should provide for DDH, not the council, to make the deficit reduction payment to NCC.

Accordingly, the council sued seeking rectification on the grounds of mistake.

Ruling in favour of DDH, Vos J said that while there had been a “common intention” during negotiations that DDH would pay the £2.4m to NCC in respect of the pension deficit, by the date of the transfer contract “the parties are to be taken as having intended to include [the clause] which unambiguously provides that DDC should pay the pension deficit to NCC.”

christian.metcalfe@estatesgazette.com

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A Northamptonshire council has lost a £2.4m High Court battle over housing stock. On Friday, High Court judge Vos J dismissed Daventry District Council’s (DDC) claim against Daventry & District Housing Ltd (DDH) that it was owed £2.4m by the firm following the handover of council houses in Daventry. The dispute centred on a November 2007 agreement by which the council agreed to transfer around 3,000 council homes and garages it owned to registered social landlord DDH. Alongside the transfer of the properties the council also agreed to transfer its housing department staff, who were members of a local government pension scheme administered by another local authority, Northamptonshire County Council (NCC). The pension scheme was at that time under-funded and an actuarial estimate revealed that a payment of £2.4m was necessary to make up the deficit. Following negotiations, on 5 November 2007 a transfer contract was executed that contained a clause which stated that in relation to the transferring employees, the council would make a payment of £2.4m within five business days of the completion date. Although the council accepted that its solicitors and lead negotiators had consented to the inclusion of the clause it contended that it was mistaken in giving that consent, and that both parties had intended that that clause should provide for DDH, not the council, to make the deficit reduction payment to NCC. Accordingly, the council sued seeking rectification on the grounds of mistake. Ruling in favour of DDH, Vos J said that while there had been a “common intention” during negotiations that DDH would pay the £2.4m to NCC in respect of the pension deficit, by the date of the transfer contract “the parties are to be taken as having intended to include [the clause] which unambiguously provides that DDC should pay the pension deficit to NCC.” christian.metcalfe@estatesgazette.com To access all EGi news stories and commercial property data sign up for a free trial today, or visit the subscription options page to find out more.