Kajima was forced to buy Caspar, its troubled housing scheme in Leeds city centre, to protect itself from legal claims.

It emerged this week that Kajima, the project’s design-and-build contractor, paid the Joseph Rowntree Foundation (JRF) £5.7m to take ownership of the scheme as part of a settlement drawn up in September last year. It has since sold the site to the local developer LifeHomes.

It was announced last month that Caspar (city-centre apartments for single people at affordable rents) would be demolished after it was deemed unstable and unsafe. In 2006 residents were evacuated from the pioneering scheme, designed by Levitt Bernstein, amid fears it could collapse in high winds.

The deal emerged in a High Court writ served by Kajima against the Underwriter Insurance Company (UIC), which Kajima is suing to recover the sum and associated costs and damages.

The writ reveals the full extent of problems on the scheme, which consists of a semi-circular structure built on sloping land.

Among the problems listed are: inadequate resistance to collapse, defective floor design and construction, inadequate design of walkway supports and a roof that might have blown off in high winds.

In the writ, Kajima claims that it first suspected that there were problems with Caspar as early as February 2001, when the accommodation pods began “moving excessively”. Arup carried out an investigation into the building in 2005, which found that there was a 2% chance that it could collapse in high winds.

Kajima decided to mitigate its losses on the project by buying the scheme from the JRF last September, once it had been deemed to be beyond economic repair. Kajima says it was entitled to claim the sum from UIC but its claim was refused.

It is understood that the deal with JRF prohibits Kajima from discussing the scheme.

The 46-home building was hailed as exemplar of affordable housing when it opened in 2000.

New owner LifeHomes has held preliminary discussions with the planning department to completely redevelop the site for housing. It is working with Leeds-based Architecture 2B on the project.