You definately can build on landfill, as I have carried out a number of projects directly adjacent to the current landfill site on Dargan Road. The foundations become very expensive and even hardstanding surfaces around buildings have to be piled to eliminate differential settlement. The opposite side of Dargan Road was basically the same landfill but possibly capped a few decades back.You definetly could not build on the north forshore due to the rubbish and methane but my suggestion is reclaiming the area between the docks and the old rubbish dump with quarried stone which can be build on immediatly. It would also keep the quarrying industry tick over until the end of the recession and create high quality industrial or commercial land
If you drive around some of the developments put up in the 80's on the reclaimed land (basically landfill) you may still see the numerous ramps constructed over the years as the ground surrounding the piled buildings settles away. This creates a lot of problems for drainage as it can fracture below the building and start flowing in the wrong direction.
Another difficulty with building on the landfill so close to the sea is the ground level fluctuation with the tides. We found that even piles driven 20-30m to bedrock still rose & fell with the sea level.
As well as the poor gound, a gas membrane needs to be installed as well as a system of venting pipes below ground floors to carry the methane away.
So definately not impossible, but more complicated.