Dispute prompts contractor shake-up at Cheshire Junction
Developer High Street Group is looking for a contractor to complete its stalled £50m residential scheme in Warrington while it awaits the outcome of a legal case between itself and Nobles Construction, which stopped work on site in November.
Nobles claims it is owed dues for work completed so far at the 362-apartment Cheshire Junction scheme and launched adjudication proceedings against the High Street-owned special purpose vehicle delivering the project at the end of last year. The SPV is called Palmus Developments and High Street’s founder and chairman Gary Forrest is listed as one of its directors on Companies House.
Jon Roberts, a partner at law firm Nelsons, which is acting for Nobles, said: “Following delays in payment before Christmas, which led to Nobles having to commence an adjudication, and following the apparent reneging of an agreement to vary the contract, Nobles decided to accept the repudiation of the contract by Palmus on 8 April 2021.
“The next step is likely to be the commencement of a second adjudication.”
Adjudication is a court process by which an arbiter or judge examines evidence presented by disputing parties to come to a decision that determines their rights and obligations.
A spokesperson for Newcastle-based High Street said: “HSG is unaware of any payment delays in December 2020; all payments need to be certified by the employer’s agent and are subsequently paid directly to the contractor by the funder, in this case [Cording Real Estate, part of] Edmund De Rothschild Real Estate Management.
“We are aware that there were delays in construction in excess of 12 months – many subcontractors contacted the developer and funder complaining about non-payment and towards the end of 2020 there was very little manpower on site. We are strongly defending our position at an adjudication.”
The spokesperson continued: “Protecting the integrity of the building was crucial after Nobles failed in its obligations to the development.
“As a result, the development funder Cording quickly appointed All Saints Construction, which is part of High Street Group, to make the building weathertight and carry out immediately required essential works.
“Cording undertook stringent due diligence before making this short-term agreement and is currently going through a process to appoint a permanent contractor to complete the build.”
Cording,via Edmond de Rothschild Real Estate Investment Management, did not respond to requests for comment.
Nobles’ original contract for Cheshire Junction is understood to have been worth around £33m and commenced in 2018. Under High Street’s plans, the £48.7m scheme comprises an eight-storey block containing 362 flats on a former industrial site on John Street. The scheme includes a car park with 796 spaces.
Payments were due to be made to Nobles on a monthly basis following assessment of work carried out during the preceding months. The contract continued for two years until the more recent funding disagreements, which Nobles claims led it to down tools at the town centre site last year.
As of November, Nobles had completed the external frame and begun work erecting the external walls and creating the internal structure of the apartments, with fit-out to follow, according to a project update sent to investors at the time. The scheme was intended to complete by November 2021.
However, work at the site has stalled since, although High Street is still targeting completion in the first quarter of 2022, it told Place North West in February.
It has been reported that Nobles could be forced to make redundancies as it faces financial troubles across the firm. Meanwhile, High Street is working on a business recovery plan to help it restart other stalled development projects.
It has already refinanced schemes and recently proposed rewriting the terms of a seven-year loan note to give it more time to repay its investors, Place North West revealed this month.