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Lendlease threatens Haringey Council with ‘loss of profits’ claim over axing of development vehicle
Lendlease threatened Haringey Council with a multimillion pound lawsuit for loss of profit from their controversial development vehicle, ahead of a vote to scrap it last week.
The council voted at a cabinet meeting on 17 July to scrap the plan, formed by the previous administration, to set up a joint vehicle, the Haringey Development Vehicle (HDV), with developer Lendlease.
The day before the meeting, Dan Labbad, chief executive officer for international operations and Europe at Lendlease, wrote to Joseph Ejiofor, council leader, and Zina Etheridge, chief executive.
In the letter – seen by Inside Housing – he warned: “If the council proceeds to seek to abandon HDV, that will expose the council to a significant loss of profits claim as well as a restitutionary claim for Lendlease’s costs, and a claim for the value that Lendlease has contributed to the council.”
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Elsewhere in the letter, he wrote: “The council made a clear commitment to proceed with Lendlease. Nothing which has occurred subsequently entitles the council to resile from Lendlease’s legitimate expectation that the contractual structure (which has also been affirmed in the judicial review proceedings) would be implemented.”
Cabinet papers last week revealed the council’s belief that it had to pay another £500,000 to cover Lendlease’s costs, in addition to the £2.5m already spent on setting up the HDV.
Mr Labbad, however, wrote that Lendlease’s costs to date are £5m. He did not give any estimate for the amount of profit the company believes it would have made.
Originally, the council predicted that the land transferred into the vehicle – to be jointly owned between it and Lendlease – would eventually be worth £4bn after development.
From the first wave of development, it predicted that each partner would make £275m of profit but did not make any predictions for subsequent waves.
A spokesperson for Lendlease told Inside Housing that the company was keeping all its legal options open but had no update beyond the position stated in the letter at this stage.
Mr Labbad said: “We’ve made every effort to work with the council to find a way forward to help solve Haringey’s housing crisis.
“At the end of the day it’s the residents of Haringey who will suffer most from this decision, given that 10,000 families remain in desperate need of a home.”
