The High Court has this week begun hearing a judicial review challenge to the London Borough of Haringey’s decision to establish the Haringey Development Vehicle (HDV), which is said to be the largest local authority development vehicle of its kind.
In February this year the Cabinet at Haringey chose Lendlease to be its 50/50 partner in the HDV. The decision to proceed was then taken at a meeting July.
Under the deal the council will transfer its commercial property portfolio, a large council housing estate and the Wood Green Civil Centre in return for a £45m investment from Lendlease.
Up to £2bn worth of currently publicly owned land could eventually be transferred to the vehicle. The council believes this will boost housing delivery and estate regeneration.
However, the claimant, local resident Gordon Peters, has previously described it as “the biggest ever sell-off of public assets in local authority history”.
Barristers’ chambers Francis Taylor Building said the case raised important and novel questions of local government law.
“One of the key issues for the court to determine is whether it is lawful for Haringey to set up the HDV as an LLP (rather than a company) under its general power of competence s.1 the Localism Act 2011. This question has major implications for local authorities looking to establish development vehicles across the country,” it said.
The claimant was also expected to argue that Haringey had failed to consult on the establishment of the HDV as required by s.3 of the Local Government Act 1999, failed to discharge the public sector equality duty and failed to follow its own rules by preventing councillors outside its Cabinet from having a vote.
Sarah Sackman and Katherine Barnes of Francis Taylor Building are acting for the claimant, led by David Wolfe QC of Matrix Chambers and instructed by law firm Leigh Day.
Rowan Smith, solicitor at Leigh Day, said: “The HDV represents the part privatisation of a whole swathe of publicly owned land on a scale never seen before, with a huge amount of public money at stake if things go wrong.
“Therefore, it is only right and proper that the court determines whether the council acted lawfully in setting up the HDV, and whether proper consultation with residents and rules on due diligence have been followed. As matters stand, the decision-making process is incredibly flawed.”