Developer Lendlease has warned Haringey Council that it could take legal action if its £2bn regeneration deal is scrapped.
The developer was chosen last year to partner the council under its Haringey Development Vehicle (HDV), a JV aimed at developing a number of housing projects on borough sites.
However, next week the council looks set to make a decision on whether to terminate the agreement.
Following May’s local elections, the new Labour council said it did not believe the HDV was the right solution for the borough’s housing shortage, and intended to end the deal.
A letter from Lendlease chief executive Dan Labbad to the council said that the contractor would consider its next steps if Haringey attempted to scrap the agreement.
He wrote: “If the cabinet decides to attempt to reverse our appointment as the successful bidder, we will have no choice but to seek to protect Lendlease’s interests given our very significant investment over the last two-and-a-half years.”
The HDV was set up as a 50:50 joint venture between the council and Lendlease, with an aim of building 6,400 homes in the borough over 20 years.
Council papers have suggested that a decision to end the JV would see Haringey have to pay Lendlease £520,275.
Lendlease has already spent approximately £3.5m on consultants, advisers and work carried out to support its bid. Haringey Council has spent £2.5m on the project so far.
The letter from Mr Labbad to the council said: “Lendlease is entitled to be treated fairly and not to be discriminated against and the council is obliged to act rationally.
“You will presumably have taken legal advice on the full range of remedies that would be open to Lendlease if we were prevented from proceeding.”
Lendlease was appointed as the preferred bidder for the HDV deal in February 2017.
However, the decision has been a source of major political infighting, with Labour’s National Executive Committee voting to call for the north London council to scrap the deal.
In February 2018 a High Court ruling upheld the council’s decision to progress with the HDV following a judicial review last September.
In May Haringey’s former chief executive Claire Kober, who had backed the scheme, stepped down from her role, criticising the national executive’s response to the HDV and saying she was proud of the JV’s procurement.
In his letter to the council, Mr Labbad added: “It is important that in reviewing the HDV at the cabinet on 17 July, the council does not take any step which infringes or damages Lendlease’s rights.
“Most obviously, it is not open to the council in such circumstances to attempt to abandon the procurement in which Lendlease was selected and then confirmed as successful bidder.”
Haringey Council has been contacted by CN.