Haringey Council has been threatened with legal action by developer Lendlease over its decision to scrap a controversial regeneration scheme.

The council has published a letter sent by the firm prior to the decision to pull the plug on the Haringey Development Vehicle (HDV) at a cabinet meeting last week (Tuesday, July 17).

Dated July 16, the letter, from Lendlease’s European chief executive Dan Labbad, warned: “If cabinet follows the recommendation set out in the report, this will expose the council to expensive and protracted litigation.”

Mr Labbad said Lendlease could sue the council for loss of profits as well as the money it had already invested in the scheme.

Although he did not provide a figure for the expected profits, he claimed the firm had already put more than £5 million into the HDV.

Mr Labbad argued the report on which the council based its decision was “fundamentally flawed” and the reasons given for axing the deal were not valid.

The council pulled out of the HDV deal over concerns about the transfer of £2 billion-worth of public assets to the developer and the risk posed by the fluctuating housing market.

But Mr Labbad claimed the concerns over the transfer of assets reflected “political considerations” while the risk to the council could be addressed by the HDV’s “flexibility”.

Mr Labbad also claimed the council’s alternative plan – the setting up of a wholly council-owned company to build homes – meant it would fall short of its development targets.

He added that the council did not allow Lendlease to respond to the issues raised in the report.

Haringey’s previous Labour administration agreed to enter into a 50/50 deal with Lendlease in July 2017.

The HDV was set to provide 6,400 homes – 40 per cent of which would be classed as affordable – over 20 years.

But a row within the Labour group led to the deselection of pro-HDV candidates and the election of an administration opposed to the HDV in March this year.

It followed concerns that promises to re-house tenants in affordable homes following their eviction from estates earmarked for demolition would not be kept.

Following the decision to scrap the HDV, council leader Cllr Joseph Ejiofor said: “We are obviously concerned at the threat of protracted legal action by Lendlease. However, the people of Haringey elected us to govern their borough, and to take decisions that are in the best interests of all Haringey’s residents.

“As set out in the cabinet report, this is an informed decision which we are taking with our eyes open.”