SHEPHERD Homes, the York-based developers, have been ordered by the High Court to pay out almost £900,000 in compensation over a housing development.

The £887,943 compensation payment was to ten homeowners who bought properties which then started to crack.

A further 40 homeowners may now take legal action against the company. But this is not expected to damage it financially, because the compensation will be covered by insurance.

Shepherd Homes acquired the former landfill site at the Eden Park estate in Hartlepool in 2001, and the development of 94 four and five-bedroom houses was completed in 2004.

In 2003, the first cracking was noticed and investigations were carried out. A report found settlement in uncompacted landfill had caused stress in the walls of some of the houses and caused them to crack.

In October 2005 Shepherd Homes took legal action against its piling contractor, Encia Remediation Limited, and in 2007 the judge came to the conclusion that “the foundations were inadequate, but only by a small degree”.

In the High Court, Mr Justice Ramsey agreed to award homeowners compensation for the reduction in value of their homes and the inconvenience of having to find alternative accommodation while repairs were carried out.

He said: “There can be no question that the claimants have each suffered from the fact that the houses which they bought have had defective piles. It has caused them worry and concern and prevented them from moving home when they wanted to or from fully enjoying the houses which they have purchased.” But he said it was not necessary to require Shepherd Homes to build new foundations.

“The cracks are so fine that they are difficult to see and those which are larger are well below any feature which engineers would normally be concerned about,” he said.

A statement from Shepherd Homes said: “We are reviewing the judgement and details of what has been a very complex case and will continue to work responsibly with all the parties involved to resolve the outstanding issues.

“We are expecting that the financial consequences of the claim should be covered by the insurance arrangements in place.”