Council takes developers to court to recover Section 106 debt

Committee chair Nick Small, cabinet member for growth and economy at Liverpool Council, said the debt-recovery programme is “positive and the momentum needs to keep going”, according to minutes from the meeting this month.

If developers fail to pay Section 106 sums on time, the council said it follows four stages of the ‘dunning’ process, which means sending letters of “increasing severity” to the company requesting that the debt be paid.

After stage four of this process, Liverpool Council said it will warn the company of ensuing legal action.

The report said: “The planning team is then in contact with legal colleagues and with external legal assistance, typically the council seeks to wind up the debtor company in the courts. This has generally been found to be an effective route.”

On the council’s current position, the report said: “There are currently a total of three debts owing to the council totalling £947,264.45, which the council is actively pursuing through the courts.

“In each case, instruction has been given to pursue the debts through the courts. Court dates are anticipated to be set for October and November 2025.”

It continued: “Since May 2023, the council has been able to recover a total of £599,575.91 over seven developments using this action.

“In addition, there is a total of £465,218.66 across 11 developments which have reached the end of the dunning process and are now to be actively reviewed for legal action.”

The committee noted this position last week (Wednesday 22 October) and agreed to hear an update on the debt-recovery programme at each meeting, with the next due to take place on 19 November.

An independent inspection into Liverpool Council’s activities in 2021, which highlighted a series of failures with its housing strategy, identified a number of instances where Section 106 agreements had been omitted.

In 2023, Harlow Council took three developers to court for failing to uphold their Section 106 commitments to build community facilities such as sports pitches and allotments.