A plot of land, a doomed plan and a loss of £50m
Business writer A PLOT of land in a Tyneside suburb is at the centre of a multi-million pound row as developers seek damages from the region’s largest hospital trust after plans for new health facilities crashed.
Newcastle’s Malhotra Group says it could be owed around £50m in lost earnings after the Newcastle upon Tyne NHS Foundation Trust put the former Sanderson Hospital site in Gosforth up for sale, which it says wrecks a plan to turn the land into a pioneering health centre.
The developers claim a decision in summer to put the land up for sale breaches an agreement for it to buy and develop the land.
The Malhotra Group also says it learned of the land sale through The Journal.
Now it has emerged that the Malhotra Group’s solicitor has written to the trust, seeking answers as to why the project ground to a halt, as well as reimbursement of expenses.
The firm’s founder chairman told The Journal it has spent more than £700,000 on plans for the scheme over the last four years, including £100,000 of fees to architects, solicitors and others involved in the planning and design process.
In a letter seen by The Chronicle, the group’s solicitor outlines how the two organisations entered into agreements over the development of the land – which has lain empty for more than 15 years – in May 2015.
The letter says the two parties were “committed to act in good faith to pursue the development of a polyclinic on the property” and if the trust wanted to pull out, the Malhotra Group should be given one month’s notice.
The letter says: “Further, the Trust was bound by the terms of the PreEmption Agreement. Accordingly, and should it have desired to sell, or enter into certain other defined transactions, during the pre-emption period, it was required to make an Offer Notice to Malhotra and on an acceptance of the offer, Malhotra had a contractual right to purchase the Property.”
The letter details a number of meetings over the following months as Malhotra Group worked towards submit-