A deal has been struck between Salford council and a company that want to turn the city's former police HQ into high-spec apartments in order to postpone a potentially costly and embarrassing court case.
Developers began legal action against the council over alleged breach of contract after their plans to turn the Salford Crescent building into flats were rejected.
Stama Development told the Manchester Evening News last year that they were left 'with no alternative' than to start proceedings.
The case was scheduled to be considered at a hearing at Manchester's Civil Justice Centre in March 2021.
Negotiations to settle the matter out of court have so far failed. The Manchester Evening News understands the developers were seeking a multi-million pound settlement.
Five current councillors and several former ones were to be called to give evidence at the hearing - some on behalf of the developers.
Court records show that Stama brought the case against the local authority in June 2019.
The legal proceedings date back to 2017, when Stama’s plan to turn the former police HQ into flats was rejected because residents would have ‘dull views’ and little green space.
But the council and Stama have now agreed to stall the court case for six months so attempts can be made to find an alternative site in the city for them to develop.
If a suitable site is found the legal action will be dropped.
A record of decision published on the council's website says: "I Councillor John Merry, Deputy City Mayor, in exercise of the powers contained within the City Council Constitution do hereby approve:Applying to vacate a High Court hearing for a period of 6 months and agree to undertake further discussions and negotiations as detailed in the confidential report considered on 11th January 2021.
"The Growth and Development Scrutiny Chair has agreed that, having considered the advice of the Monitoring Officer, the decisions proposed are reasonable in all the circumstances and to them being treated as a matter of urgency and therefore not subject to call-in."
It adds: "The Reasons are:The application to vacate a High Court hearing has emerged to seek to resolve litigation before going to court, potentially avoiding a lengthy trial at public expense.
"Any delay caused by the call-in processes, would seriously prejudice the legal, commercial and financial position of the Council and the interests of the residents of Salford."
Developers wanted to transform the former police station - which has been lying empty since 2005 - into an £18m housing complex and had entered into a contract to buy the site from Salford council, providing planning consent was secured, for £1. 6m
But the scheme was rejected in 2017 by councillors who said that homeowners would have no gardens and that their windows would look out on dull and uninspiring views.
Property Alliance Group - Stama’s joint venture partner on the project - first threatened to take legal action against the local authority back in 2017, saying it had already sunk £230,000 into the project.
A spokesperson from Stama told the Manchester Evening News last year: "We remain disappointed by the decision of Salford council to refuse our planning application for the Former Police HQ on the Crescent.
"With the council unwilling to enter into any form of meaningful alternative dispute resolution, and having taken legal advice and prepared our case, we were left with no alternative but to start legal proceedings."
Council bosses have consistently said that the rejection was justified.
But in 2019 departing Labour councillor Stephen Ord referred to the case when he quit the council chamber, calling the refusal ‘one of the local government scandals of the decade’.
He believed that the passing of the ‘high quality scheme’ was a ‘foregone conclusion’ and said he was surprised to hear that it had been refused.
Town hall bosses deny any wrongdoing and say that their planning process was properly followed.
The Crescent Police Station, built in the 1950s, was shut down in 2005 and has been derelict since then.
Property Alliance Group (PAG), an established developer based in Trafford Park which has completed more than 40 schemes across Greater Manchester, wanted to turn the site into 117 new flats, and build 23 townhouses in a yard at the back.
However two years ago the council revealed a masterplan to create a new "city district" on 244 acres.
Billed as a "£800m investment opportunity" which will transform The Crescent area, the police station is in the middle of it, and would be demolished, with the site possibly being used for a new hotel.
The Stama scheme had been recommended for approval by council officers and had the backing of a local residents group following two years of talks to amend the original designs.
However, senior council officers responsible for the city’s regeneration opposed the plans, which were subsequently rejected.
After planning permission was refused they say the council terminated the agreement, citing that the time period to finalise the deal had expired.
They allege that the council are in breach of the contract for doing this.
In 2017, PAG chairman David Russell told the Manchester Evening News: “We spent hundreds of thousands of pounds putting together, what I believe is, a world class development which retained an impressive piece of Salford’s architectural heritage.
“I remain hopeful that if all sides cooperate a mutually beneficial outcome can be reached.”
The company claimed that the application was rejected on ‘fairly minor grounds’ and that they had believed they would be able to revise and resubmit their plans - but were instead surprised to be told that their contract to buy the police station had been terminated.
In a statement issued last year Salford council said that councillors had made a fair and transparent decision. A spokesman said: “The contract for sale of the Crescent Police Station has been terminated and the council has retained ownership because the purchaser did not gain planning permission within the contract timescale.
“Salford council bought the old station using central government regeneration funding in support of the Crescent area. It is not on the market at the moment and we are exploring options for the property."
Salford council has declined to comment further on the case.
A spokeswoman for PAG said: "This isn't something we could comment on at this stage in the legal process."