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Property developers Infinity Homes are suing insurer Technical and General Guarantee Co in a row over a £7m scheme in Southampton.

Infinity Homes accuses the insurer of failing to pay a guarantee bond after problems arose on its project to build six townhouses and 48 apartments in Oxford Street and Orchard Place, Southampton.

The main contractor for the development was Salier Ltd, who was provided with a guarantee bond limited to £500,000 by Technical and General, according to a writ issued in London’s High Court.

Salier Ltd went into voluntary winding up in March 2005, and Infinity Homes had to employ another contractor to finish the design and construction of the scheme, and to put right defects.

This was finished in May 2006, and putting right defects cost more than £1.197m.

The costs, including direct losses caused to Infinity Homes by the ending of the contract with Salier, and the total paid to contractors is £7,608,147, the writ says. This exceeds the amount which should have been due under the contract by £2,549,147, and this should have been paid by Salier, it is alleged.

Infiity Homes demanded £500,000 due from Technical and General in September under the guarantee bond, but says it has not been paid.

Now Infinity, of Calpe House, St Thomas Street, Winchester, is suing the Bahamas registered insurer for £300,000 for breach of contract, as well as interest of £2,958.93 and continuing interest of £109.59 a day.