A bitter dispute over the development at the former North Quay council offices in Weymouth is finally at an end after a settlement was reached.

Weymouth and Portland Borough Council has avoided a costly and drawn-out High Court battle after coming to an out of court deal with developers Acorn.

The decision ends Acorn’s involvement in North Quay and frees up the council to progress with fresh redevelopment plans for the flagship regeneration site.

A £2 million legal battle was looming in the High Court, but the council and Acorn, through its subsidiary North Quay Weymouth Ltd, said an ‘amicable settlement’ had now been reached.

It is resulting in the council returning a deposit paid by the developer of £227,500, plus making a contribution towards the developer’s costs, said to be £167,500.

The Echo reported last month how the two parties had been in mediation talks in order to try and avoid a court battle.

Council leader Cllr Jeff Cant said: “We were as confident in our case as they were in theirs, but given that it was going to be quite a protracted case it made sense for us to settle.

“We’re happy with that outcome and it means we can crack on with the redevelopment of this site.”

Cllr Cant said the deposit held by Acorn had been kept in a holding account so was just being returned. He added that finance chiefs had identified a significant budget underspend in an area of the council’s finances so that would fund the contribution towards Acorn’s costs.

Acorn was the council’s preferred buyer for North Quay and contracts were exchanged in September 2016. Acorn proposed to convert the offices into homes, rather than knocking down the eyesore block and building something new in its place.

But the firm declined to complete the sale and the contract was rescinded by the council last September.

That prompted Acorn to announce it was going to sue the authority for misrepresentation because it understood it would get planning permission for converting the offices when the deal was agreed.

That court case has now been avoided after the dispute was settled.

In a joint statement, Weymouth and Portland Borough Council and North Quay Weymouth Ltd said: “We are pleased to be able to announce an amicable settlement to the disputed issues around the sale of the council’s former offices at North Quay, Weymouth.

“The agreement involves a clean break, with NQWL retaining the deposit paid when contracts were exchanged, and WPBC making a contribution towards NQWL’s costs.

“Following the settlement, NQWL will have no further involvement in the site, leaving the council free to pursue alternative plans for the site. Both parties agreed that such a settlement was preferable to a long and costly litigation with an uncertain outcome which would distract from other priorities.”

The council said it continues to develop opportunities for the site to best enhance the south side of the harbour.

This will involve demolishing the current building and developing the site to secure a mix of uses. A mix of residential, commercial and parking is being considered.

Cllr Jon Orrell, who previously led a protest calling for sympathetic development at North Quay, said: “I am glad this matter is settled.

“The town can now look forward to a different kind of development that takes on the historic nature of the harbour.

“This was the busy hub of Weymouth for centuries. Under public direction it should once more be mixed use with residential, employment and leisure uses.

“I am optimistic about the future.”