Development at Elwick Place, Ashford, Kent

Contracts

• Development at Elwick Place, Ashford, Kent · Stanhope PLC

  Signed

  16 Mar 2010

  Value

  £80,250,000

  Status

  active

  • Change The development agreement (“DA”) was entered into in 2010 between Stanhope as developer and South East England Development Agency as landowner. In 2015 the Council acquired the site and the landowner’s rights and obligations under the DA. It agreed to give Stanhope longer to develop Phase 1 and split Phase 2 into two (Phase 2 and Phase 3). Further changes were made in 2017 to facilitate the Council funding Stanhope’s development of Phase 1 and continuing to own the Phase 1 land on completion of that Phase. Phase 1 has now been completed. Stanhope must begin the process of drawing down Phase 2 prior to two key dates: the “Long Stop Date” (16 March 2022) and the “Phase Termination Date” (4 May 2022) but it may only do so after satisfying certain conditions. Delays caused by (i) the Covid-19 pandemic; and (ii) the Stodmarsh Issue (see below) each independently and also together cumulatively mean that Stanhope will not be able to meet the conditions before the deadlines. The Stodmarsh issue arises from formal statutory advice issued by Natural England in 2020 on development proposals in the Stour Valley River Catchment Area (“SVRCA”) and the potential for these to increase harmful nutrient impacts at designated protected lakes at Stodmarsh in east Kent. The SVRCA covers large parts of the Ashford Borough including Elwick Place. Planning applications for housing development within the SVRCA cannot now be determined until formal assessment of the effects on the Stodmarsh Lakes has been completed by the Council as planning authority. The Council is progressing a strategy to offer suitable mitigations for sites (such as Elwick Phase 2) not able to offer onsite mitigation, but timescales for this are uncertain so it is unclear when the planning authority will be able to grant a Phase 2 planning permission on terms that will enable the drawdown conditions to be satisfied. Accordingly, the parties entered into an agreement on 4 March 2022 to extend each of the deadlines (the “Extension”) by up to 515 days or (if later) until 40 days after (i) any offsite Stodmarsh mitigation measures required of the developer in respect of Phase 2 have been complied with; or (ii) if later, the period for any Judicial Review challenge to the Phase 2 planning permission has expired with no challenge being made or any challenge has been resolved. Provided that if Stanhope has yet to complete a planning obligation that would result in the issue of a Phase 2 planning permission the maximum Extension is 9 months from the date on which the local Council’s resolution to grant a Phase 2 planning permission will not require any offsite Stodmarsh mitigation measures to be complied with by Stanhope. The aim is to restore Stanhope, in terms of the timing of Phase 2, to the position it would have been in had Covid and Stodmarsh not intervened. The agreement also provides for (i) new activity milestones in respect of Phase 2: if Stanhope fails to achieve any of these, the Council is entitled to terminate the DA; and (ii) Stanhope to relinquish certain rights over the Phase 3 land. Neither of these entails substantial change: if there is any alteration in economic balance, it favours the Council. None of the amendments change the nature of the DA., Need for modification brought about by circumstances which a diligent contracting authority/entity could not foresee: Regulation 72(1)(c) Public Contracts Regulations 2015 applies. Stanhope planned to seek bids from residential development and funding partners in Spring 2020, in ample time to satisfy the drawdown conditions for Phase 2 within the terms of the DA. The March 2020 Covid lockdown, and the ongoing restrictions through the rest of 2020 and early 2021, radically altered the situation and caused huge uncertainties for valuation, funding and development generally. Funders were preoccupied with preserving their existing investments through the crisis: there was no appetite for taking on new projects. Only in late Spring 2021 could Stanhope recommence the process of satisfying the drawdown conditions, which nonetheless cannot be completed until the Stodmarsh issues for Phase 2 are resolved. The Covid pandemic and the Stodmarsh situation could not have been foreseen when the DA was entered into in 2010.

Dispute resolution & review bodies

• High Court, Royal Courts of JusticeReview body London