EAST Hampshire district councillors made a dramatic U-turn behind closed doors on Thursday and threw out plans for a much- needed 85-bedroom hotel on the edge of Petersfield. In May councillors went against their officers' advice and gave permission for the hotel at Adhurst St Mary. Included in the plan was the restoration of the neglected Victorian country house. Councillors were warned it would probably be their last chance to restore the fine old home and create a desperately-needed hotel for Petersfield at the same time. They gave planning permission in May 7, subject to terms of the agreement and conditions being thrashed out by officers and brought back to councillors for their approval. But on Thursday, after going into secret session to hear legal advice from EHDC lawyer Sonia Sharpe, councillors changed their minds and threw out the plan. They rejected the scheme because they could not reach agreement with developers over how the plan would be carried out. At the centre of the disagreement was a clause requiring all restoration work to take place on the listed house at Adhurst St Mary before work started on the hotel development and the shells of the 12 open market houses. In the event of the hotel scheme failing, the listed building would have been restored and the financial bond held by the district council would cover the costs of the restoration of the grounds and the off-site highways works. But officers pointed out: 'There could be a scenario whereby the applicant or another developer could proceed with hotel development proposals and ignore the recommended clause requiring the restoration of the listed building as a prerequisite of starting development of the site. "The council would then have the option of enforcing the agreement, but such proceeding can take some time to enforce through needing to take to court action, for example." Planning officer Jon Parsons added; "Such actions could also endanger the viability of the hotel proposals, and if the hotel enterprise failed the council would be left with a partially-completed development and no restored listed building." In addition planning officers were keen that the 12 housing shells should have leasehold sales only, to ensure that Adhurst St Mary remained in one ownership. It was envisaged that if the hotel scheme was successful the shells of the houses would become additional bedroom accommodation for the hotel. But if it was not so successful the applicant intended to finish the houses and sell them with leasehold tenure But in the last few weeks the applicants told EHDC that they could not secure funding if the open market houses were leasehold. Mr Parsons told councillors: "Clearly it would have been preferable that control of Adhurst St Mary be tied within the control of one ownership. This would also give a greater degree of certainly that the estate would not be broken up. The applicant's intentions are to prevent the ownership of Adhurst St Mary being split up, but clearly freehold sales would lead to the estate being broken up in the event that the hotel proposals fail." Jennifer Gray told fellow councillors at EHDC's planning committee last week: "This is becoming a bigger and bigger mess. I wonder whether or not it is too late to go for refusal." But Elizabeth Cartwright told councillors they knew the developers' plan for the open market houses when they gave permission for the hotel plan in May. "We always knew we were taking a risk. We decided to take the risk because we wanted the house restored, and we wanted a hotel for Petersfield and the gardens restored. "If the applicant's hotel is successful he will not want houses, he will want more hotel accommodation, that is what we were told." Brian Dutton said by the time it was discovered whether or not the hotel was successful, the Grade II listed house and the gardens would already have been restored, which was part of the council's goal. Mr Parsons told the meeting it was the terms he wanted councillors to approve on Thursday. He said they had agreed the application at their May meeting on condition that agreement could be reached on the terms and conditions . "Officers are happy with the bond. We accept as officers that members have agreed to grant permission, but we are here to point out some of the pitfalls. The only issue is the possibility that as it stands, the shells of the houses could actually revert to residential use. " Lawyer Sonia Sharpe asked councillors if she could give them legal advice behind closed doors, and members of the public were asked to leave the debating chamber. After the meeting it emerged that councillors had refused the application on several grounds, including that they could not reach agreement over the terms. This week Jason Clemons, a partner with D and M Planning Partnership, the planning consultants acting for the owner of Adhurst St Mary, told The Herald: "No decision notice has been issued and we have arranged to hold meetings with the planning officers of East Hampshire District Council next week. We hope to resolve the issues which led to the decision on Thursday night. We remain fairly upbeat and positive about this, and hope we will get planning permission."