But Haringey says its agreement was conditional and only owes contractor 拢500,000 for half the costs
Lendlease has begun the legal action it threatened against Haringey council, which over the summer scrapped the controversial 拢2bn housing plan the pair signed last year.
The north London borough voted in July to bin the Haringey Development Vehicle (HDV), a joint venture created by the previous Labour administration, which planned to build around 6,000 homes.
In the aftermath of the vote, Lendlease鈥檚 chief executive of Europe, Dan Labbad, put the authority on notice it would look to recoup costs and compensation.
[The council] was unjustly enriched at the claimants鈥� expense
Lendlease
Now, in papers lodged with the Technology and Construction Court (pictured), Lendlease has said the council鈥檚 decision was 鈥渦nlawful鈥� and was 鈥渋n breach of the fundamental duties of equal treatment, transparency, non-discrimination, proportionality, legitimate expectations and administration鈥�.
It added that it had an 鈥渆nforceable legitimate expectation that in the event of abandonment they would be reimbursed by the defendant in respect of expenditure that was incurred in respect of the HDV subsequent to Lendlease鈥檚 appointment as the preferred bidder鈥�.
The nine-page claim says it has not been reimbursed and that the council 鈥渨as unlawfully/unjustly enriched at the claimants鈥� [Lendlease鈥檚] expense鈥�. The papers do not specify the amount of the claim.
But Haringey council said the pair had struck a deal which capped at just over 拢500,000 the cost of compensating Lendlease in the event of the deal being pulled.
It added: 鈥淭here was an agreement or understanding between the parties that, in the event the project did not proceed, [Lendlease] would be reimbursed for 50% [of costs 鈥 the total amount of which was 拢1,040,550.鈥�
The council denied any wrongdoing in its decision-making process and any allegations of breaches of its legal duty.
In its 10-page defence, it said it had the authority to scrap the deal as it had laid out terms in the conditions of its procurement process.
The council said the conditions of procurement stated: 鈥淭he authority [ie the council] reserves the right at any time [鈥 not to award a contract.鈥�
It also said it was stipulated that the council 鈥渞eserves the right [鈥 to cancel or withdraw from the competitive dialogue procedure at any stage鈥�.
The council also said it had made it clear that no offer or final tender was deemed accepted until all contract documents had been duly executed and declared unconditional.
The new Labour council, backed by the Momentum activist group, fought the local elections in May on a manifesto that included a commitment to scrap the HDV, which proved controversial with opponents claiming it would price residents out of the borough.
Lendlease was unavailable for comment. Haringey council declined to comment.
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