A BUILDING firm has gone bust owing Cornwall Council £1.2-million which was earmarked for public open space, education and local affordable housing near Padstow. The local authority says it is pursuing the money, but the company argues it was incorrectly levied by a council planning committee.

RST Constantine Bay Homes Ltd – an offshoot of Acorn Property Group’s Cornwall developer Acorn Blue – was declared insolvent in October following the completion of eight detached houses and 20 apartments at the former Treglos Hotel site in Constantine Bay. Councillors approved the housing scheme in May 2020 on the proviso that the company made a Section 106 contribution “in excess of £1,200,000”. The money has not been paid.

A spokesperson for Cornwall Council has verified that a High Court determined that the £1.2-million is due. “We will continue to pursue options for recovering the contributions owed,” said the council representative.

The Acorn group has responded that the £1.2-million levy was applied incorrectly and has partly blamed an “ongoing dispute” with the council for the fact its company went bust.

A spokesperson said: “The Section 106 contribution referred to was incorrectly levied on the scheme by planning committee members, completely ignoring clear government-set rules and guidance. This decision was robustly challenged.

“The ongoing dispute, combined with the severe economic impacts of Covid and Brexit – such as a substantial increase in construction and financing costs, delays caused by lockdowns and general economic uncertainty – resulted in significant financial losses for the development company. Despite successfully completing a beautiful development, these challenges sadly culminated in the company being liquidated.”

They added: “Section 106 contributions play a vital role in funding local services. However, these charges must be applied correctly and only to viable and profitable schemes. Otherwise, they risk making the development non-viable and restricting the supply of much-needed housing in the region.

“Examples of successful development include the onsite affordable homes built by Acorn Property Group at Lusty Glaze in Newquay and The Dunes at Perranporth, as well as hundreds of thousands of pounds contributed toward off-site developments over 20 years of operations in Cornwall.”

Companies House notes that the private limited company, RST Constantine Bay Homes Ltd, was previously known as Droskyn Point Ltd and Chapel Point Lane Limited. John Mirko Skok is named as an active director, while Melanie Jayne Omirou and Romy Elizabeth Summerskill are named as former directors who both resigned on October 2, 2023. Mr Skok is currently group operations director of the Acorn Property Group while Ms Summerskill is its executive chairman and Ms Omirou its executive group managing director.

The group issued a press release in July 2020, which stated: “Acorn Property Group’s Cornwall office Acorn Blue has completed on the purchase of the former Treglos Hotel following detailed planning permission being granted in May by Cornwall Council for the second phase of an exciting residential project, delivering 28 new homes in the sought after coastal village of Constantine Bay, four miles west of Padstow.

“As part of the Section 106 agreement, contributions are being made by Acorn towards public open space, education and local affordable housing. These contributions total in excess of £1,200,000.”

Following the successful completion of the first phase of new homes at the end of 2019, Acorn was given the green light for the second phase and completed on the multi-million pound acquisition in the summer of 2020. All of the properties have been built and sold.

The Treglos Hotel was demolished to provide 20 “luxurious” two and three-bedroom apartments, duplexes and penthouses along with eight three and four-bedroom houses. The group’s marketing statement added: “The development will also provide an essential storage facility for the RNLI to store an IRB lifesaving boat and equipment to allow them to patrol the three nearby beaches of Constantine, Boobys Bay and Treyarnon”.

Acorn’s spokesperson gave further detail of what it regards as the incorrect Section 106 levy and resulting dispute with the council.

The representative said: “Vacant Building Credit (VBC) should have been applied to the land in accordance with the Government’s National Planning Policy Framework (NPPF). By failing to apply this credit, the council not only disregarded the NPPF but also contravened its own VBC policy (available on their website), which states that when a vacant building is brought back into use, a financial credit must be offered to the developer.

“In the case of RST Constantine Bay Homes Limited, it was argued that the VBC should have been applied, resulting in no Section 106 contribution being due. Nonetheless, the council initially levied a contribution of £448,000, which was subsequently increased by the planning committee to £1,580,590. This was done despite the planning officer advising that the higher sum was unreasonable.”