Lendlease Sues Council for Scrapping $3.6bn Housing Deal

Global construction giant Lendlease has commenced legal action against Haringey Council after halting its controversial 6400-unit housing project in North London.

The north London borough voted in July to stop the Haringey Development Vehicle (HDV), a joint venture created by the previous Labour administration, which was estimated to cost £2 billion (AUD$3.6 billion).

Lendlease and the Haringey Council created the joint venture in 2017 to undertake a 20-year residential development in the London suburb.

Local activists had opposed the deal because it involved demolishing existing public housing, and voiced concerns about how much affordable housing would be included in the redevelopment.

The newly elected Labour council, backed by activist groups, eventually scrapped the HDV, only months after Lendlease was appointed as the preferred bidder for the HDV in February.

Related: Lendlease Mulls the Sale of Engineering Arm, Suffers $2bn Hit

Haringey Council has said its agreement was conditional and would only owe the contractor £500,000 (AUD$900,000) for half the costs.

Lendlease’s chief executive of Europe Dan Labbad put the authority on notice and said it would look to recoup costs and compensation in the wake of the vote.

“Lendlease is entitled to be treated fairly and not to be discriminated against and the council is obliged to act rationally,” Lendlease Europe chief executive Dan Labbad said in a letter to council.

“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.”

In papers now lodged with the Technology and Construction Court, Lendlease said it had not been reimbursed and that the council “was unlawfully/unjustly enriched at the claimants' [Lendlease’s] expense.”

The nine-page claim also states the council’s decision was “in breach of the fundamental duties of equal treatment, transparency, non-discrimination, proportionality, legitimate expectations and administration.”

The papers do not specify the amount of the claim.

Related: Lendlease Signals Interest in US Build-to-Rent Market

The authority has already spent close to £2.5 million (A$4.2m) on costs relating to setting up the HDV, including nearly £1.6 million (A$2.8m) on legal advice.

Lendlease has spent about £4 million (A$7m) on work related to the project, according to council documents.

The claim added that it had an “enforceable 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’s appointment as the preferred bidder”.

The council denied any wrongdoing in its decision-making process and any allegations of breaches of its legal duty, issuing a 10-page defence arguing it had laid out terms in the conditions of its procurement process.

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.

Even with the the Haringey cancelation Lendlease in partnership with global hotel owner Starwood Capital, is pressing forward with the The Silvertown Partnership, a 650,000sq m residential and commercial development project in London's East End.

Lendlease is also set to build 2,500 homes in London's North in Tottenham.

The project on a site adjacent to the new stadium of Premier League team Tottenham Hotspur is also in Haringey Council but is separate from the Haringey Development Vehicle.

Lendlease also secured the $7 billion contract to develop Euston rail station in London.