Ben Houchen development corporation wanted 90% of Teesport operator's revenue

Evidence presented at the High Court this week revealed Teesworks Ltd and the Ben Houchen-led South Tees Development Corporation (STDC) attempted to take 90 per cent of Teesport operator PD Ports’ revenues where tenants at the former Redcar steelworks site were concerned.

Representing PD Ports, Andrew Walker KC revealed an offer was made in January 2023 by STDC, which brought the legal claim in March 2021, and Teesworks Ltd to withdraw their case and grant the disputed access rights if the port operator agreed to pay a 90 per cent fee to them as “dues payable on cargo and tonnage of ships” coming through the port.

It would have meant PD Ports retained only 10 per cent of revenue for handling goods which were destined for tenants at the Teesworks estate.

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Teesworks Ltd, which was added as a third party to the litigation in November 2022, was initially set up in July 2020 as a 50-50 joint venture between public body STDC and property developers Chris Musgrave and Martin Corney. However, the private partners acquired 90 per cent of the company’s equity in November 2021 in a controversial share transfer.

An aerial view of Teesport at the mouth of the River Tees.An aerial view of Teesport at the mouth of the River Tees.
An aerial view of Teesport at the mouth of the River Tees.

According to a government review, the private partners have “put no direct cash into the project”, received £45m in dividends and hold £63m in cash. Teesworks Ltd’s accounts, published in January, show at least £39m has also been paid to another company controlled by the developers. Public sector contributions will be “in excess of £560m” by the end of this financial year.

Following Mr Justice Rajah’s decision in February that PD Ports had successfully argued their historical rights of access across three routes on land purchased by STDC, a consequentials hearing was held on Wednesday in which the High Court judge would rule on costs due.

In court, Mr Justice Rajah said the approach taken by STDC and Teesworks Ltd in January 2023, “makes settlement difficult.”

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In July 2023, following mediation between the parties, Teesworks partner Chris Musgrave wrote to PD Ports CEO Frans Calje, saying, “I have treated your comments with the contempt they deserve,” and asked Mr Calje for details of PD Ports’ tenants at the Teesport estate in order to “warn” them the pending court case could hinder development. Mr Calje refused this request.

During his ruling, the judge mentioned that during a site visit he could see there was “no sense development has been held back” at Teesworks, despite claims from STDC and Teesworks Ltd that uncertainty over the access rights was an obstacle to progress at the enormous redevelopment project.

PD Ports made their own settlement offer to STDC and Teesworks on September 19 last year in which they offered to drop their claim of access across the South Bank area as long as they were able to retain access to Redcar Bulk Terminal and the South Gare breakwater.

Legal advice leaked to The Yorkshire Post earlier this year shows the development corporation “did not dispute” the prescriptive rights held by PD Ports across those two remaining routes.

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The offer was formally rejected by STDC two days later, following a board meeting.

Correspondence heard in court showed CEO of PD Ports Frans Calje responded to this rejection in a letter to STDC the following day, saying, “I don’t understand what it is that you want.”

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