‘Reasonable chance’ for SBHA’s cash claim against council

A MULTI-million-pound claim against Scottish Borders Council by the region’s largest social landlord has a “reasonable chance” of success.

The optimistic note is sounded in the accounts of the Scottish Borders Housing Association (SBHA) for 2009-10 which were posted on the website of the Scottish Housing Regulator this week.

The legal action relates to the £23.34million which SBHA paid the council for the latter’s stock of 6,728 houses in March, 2003 – an average price of about £3,400 per property.

At the time, it was the largest whole-stock transfer of homes ever completed in Scotland and it followed a ballot of SBC tenants who were promised unprecedented investment in their homes. The capital receipt from the sale was passed on to the then Scottish Executive which wrote off the £38million historical loan debt on the houses.

But within two years, SBHA launched an indemnity claim against the council, alleging that the latter failed to provide accurate or complete information in relation to the sale.

Neither side has revealed the amount that SBHA believes it overpaid, although reports that it is between £4million and £6million have not been denied.

In August this year, the council’s unaudited accounts for 2009-10 revealed that the SBHA claim was going to arbitration or “other dispute resolution procedure as agreed by the parties”. SBC’s chief financial officer, Richard Webb, reported that the council had appointed advisers to review and defend the claim.

The accounts did not quantify the amount of public money spent by the council on legal advice in the five years since SBHA raised its action, although TheSouthern has been told it is in the region of £700,000.

The SBHA accounts state: “The claim has been subject to extensive discussions and negotiations between the council’s lawyers and SBHA’s legal advisers during the year.

“Expert witness reports have been produced to inform these negotiations and it is anticipated progress towards settlement will be made during 2010-11 [the current financial year].

“SBHA’s legal advice indicates that the claim has a reasonable chance of being resolved in favour of the association.”

Meanwhile, the housing association’s accounts refer to Councillor Zandra Elliot, one of four SBC representatives on the SBHA board. She is also company secretary of Hawick building firm J. & R. Elliot.

The accounts reveal: “All transactions with this supplier are carried out at arms length and the board member [Mrs Elliot] is not in a position to influence trading terms.

“During the year ended March 31, 2010, SBHA purchased building services valued at £232,065 from J. & R. Elliot Ltd.”