10:36am Tuesday 23rd January 2007
Small Middlesbrough firm Chilli Developments has launched a David and Goliath-style legal battle against two of the big names behind the £200m Middlehaven project.
Business Editor Kate Bowman reports exclusively.
TWO years ago, Chilli Developments' ambitious plans to revamp part of Middlesbrough's derelict Middlehaven site reached a significant milestone.
Councillors gave approval to the local firm's £50m regeneration proposals and managing director Simon Brown was anxious to get the ball rolling.
Chilli had secured financial backing for the two-phase scheme, which comprised residential flats, offices, bars, restaurants and car parking, and by the summer of 2005, the main contractor had been chosen and was prepared to start on site.
At the time, Chilli claimed to have sold 101 of the 131 apartments, rented 50 per cent of the office space and had interest in all the commercial units of the ground floor.
The plans were even given the seal of approval by Middlesbrough Mayor Ray Mallon.
Behind the scenes, however, Chilli now claims it was fighting a battle against the owner of the land, English Partnerships (EP), and Tees Valley Regeneration (TVR), the agency set up to redevelop Middlehaven.
Within six months of being granted planning approval, Chilli's proposals had collapsed and its financiers had walked away. It claims TVR and EP were to blame.
In court papers seen by The Northern Echo, Chilli Developments is suing both TVR and EP for £10m in loss and damages. It has accused them of reneging on a "lock-out agreement" relating to the five-acre piece of land Chilli intended to redevelop.
It says TVR and EP went against the agreement by marketing the land to other developers, including Bio- Regional Quintain, which has since been chosen to carry out the regeneration of the Middlehaven site.
Court papers have been served on both TVR and EP claiming damages for breach of contract.
Yesterday, TVR refuted the claims and said in a statement: "The case is considered to be without merit and will be defended in full."
EP did not comment.
In a breakdown of costs, Chilli is claiming more than £1.5m in expenses and more than £6m in loss of profit from the scheme. It is also claiming an estimated £2m for the increased value of the land after it was granted planning approval.
Had Chilli been able to go ahead with its plans for the Middlehaven site, it claims work would have been completed by the end of next month.
As it stands, BioRegional Quintain is due to start work on the site this year - with the scheme scheduled for completion in 2012.
The project comprises 750 homes, a luxury hotel, health club and spa, offices and bars, cafes and restaurants and is part of a wider development of the derelict Tees Docklands, which will cost about £500m.
The first artist's impressions were unveiled by TVR last November. At the time, TVR chief executive Joe Docherty said: "No more plans, no more talk - because one of the UK's biggest and best say it will build a spectacular, head-turning development at Middlehaven."
The development has been a long time coming, with a history of false starts and disappointments dating back more than 20 years.
The now defunct Teesside Devel- opment Corporation came up with the original plan to build a worldclass tall ships centre at the hub of the redevelopment - the plan anchored on a food hypermarket.
The idea was that the money from the deal with the supermarket chain would pay for the infrastructure needed to open up the Middlehaven site. But local councils objected to the idea of a huge superstore and, after years of political wrangling and the failure to win Lottery cash, the plan collapsed.
At the turn of the millennium, regional development agency One NorthEast stepped in. Work began on infrastructure preparation, English Partnerships became a key player and a £20m scheme to prepare the site was carried out.
Four years later, Mr Mallon unveiled Middlehaven as a multi-million pound vision of the future and work started on the first offices on the site - the Terrace Hill development - followed by the £70m site for Middlesbrough College.
Today, the main developer, Bio- Regional Quintain, is preparing to start work on site, with the full backing of TVR, EP and Mr Mallon.
At the time BioRegional Quintain was announced as the preferred developer, Mr Docherty said: "Middlehaven will include a collection of iconic structures conceived by the most talented and creative architects working today."
Mr Mallon had said: "The sceptics have their answer. Work will soon be under way transforming the redundant waterfront into a thriving community."
But the one true sceptic of the Middlehaven development - Chilli boss Mr Brown - is still waiting for the answers as to why TVR and EP, in his words, pulled the rug from beneath him.
Unable to comment on the proceedings, Chilli's actions speak louder than words - the small Middlesbrough development firm clearly won't give up without a fight.
© Copyright 2001-2010 Newsquest Media Group
http://www.thenorthernecho.co.uk