WEYMOUTH and Portland Borough Council is being sued in a multi-million pound legal battle over the collapse of its agreement to sell its former North Quay offices.

A claim has been issued in the High Court by North Quay Weymouth Ltd (NQWL), a subsidiary of Acorn Property Group, which wants to convert the building into apartments.

It comes after the council pulled the plug on the sale, as revealed in the Echo earlier this week, because it said the buyer failed to complete the sale in July as agreed in the contract.

The basis of the claim by NQWL is misrepresentation because it understood it would get planning permission for conversion when it agreed the £4.5 million deal.

It will be claiming for its return deposit of £250,000 – however it is understood the legal bill could run to £2 million.

Despite this potential battle however – which Acorn says will cost council tax payers millions – the developer says it hopes the council will review its position and proceed with the deal in the terms agreed.

Outlining its position on the matter for the first time in public, NQWL said it exchanged contracts with the council a year ago to buy the property relying on assurances that the existing use of the building was B1(a) Offices.

In its particulars of claim, NQWL alleged that it agreed to the deal on the strength of assertions by the council when previously securing its own planning permission and then through its legal team when selling the property that the building had been continuously used as offices for 41 years.

As a result of the building’s resultant status as ‘B1’ offices, NQWL says it also received verbal and written assurances from the council’s Chief Executive Matt Prosser, Strategic Head Martin Hamilton and Head of Assets David Brown as part of the sale agreement that planning permission would be granted for the building’s conversion into apartments.

Acorn specialises in reusing existing buildings on brownfield sites, producing schemes which have minimum impact on the environment during construction.

It believes the 45-year-old North Quay offices are perfect for conversion into 56 one and two bedroom "marina view" apartments.

The claim states that within a few weeks of the exchange of contracts and the payment by the developers of a deposit, the council then refused to accept the building was B1 offices.

Last November, the council wrote to Acorn claiming its former offices had been used for the “administration of local government”.

It said the building is “sui generis” (‘one of a kind’) – meaning it could not be converted into apartments. Full planning permission would be needed to do this.

A separarate planning appeal on this matter is set to be heard later in the year.

After months of argument, the council told Acorn this week it was seeking to rescind the contract as NQWL has declined to complete until this matter was resolved.

Stuart Callaghan, Regional Managing Director of Acorn’s South region said: “This is a deeply regrettable situation and entirely one of the council’s making.

“Our purchase was based on the council’s repeated verbal and written assurances that the building is a B1 office which meant the planning permission for conversion of this office building pre-existed. This is clearly stated in heads of terms agreement signed by both parties.

“Acorn has spent many hundreds of thousands of pounds on this site and its intended conversion of this office building would form a key part of the area’s regeneration.”

He added: “At no stage previously did the council ever say that the buildings had been used for anything other than B1 category offices."

Mr Callaghan said the council's position was "nonsensical and wrong".

He added: “They have put us in a position where we have no option but take legal action which could ultimately cost hard-pressed council tax payers millions of pounds. It will also delay the construction of homes and the creation of much needed local employment.

“Notwithstanding, Acorn has made very reasonable proposals to resolve this impasse. It remains our hope that the council will review its position and proceed with the deal in the terms agreed between us."

A spokesman for WPBC said: "It is disappointing that these proceedings have been lodged. We will contest the claim.

"However, in order not to prejudice legal proceedings, we are unable to discuss the specifics of the matter. Our goal is to secure development for the site to support the town and local economy and we will continue to work to do that."