Easington District Council in the Northeast faces a potential legal battle over its handling of London & Amsterdam's Dalton Park factory outlet development.
The Prudential, MEPC and other landlords in the area have launched legal action over the council's decision to grant planning permission for an extension to the mall.
In the original planning consent - granted in 2000 - the Secretary of State for the Environment, Transport and the Regions capped the space allowable at 9,300 sq m. However, the plaintiffs allege that 'without proper public consultation, or any fresh application for planning permission, the council decided to authorise a 10 per cent increase in the original 9,300 sq m limit, and on March 6, agreed to increase it by another 10 per cent.'
The consortium alleges that the action taken by Easington District Council is illegal and is in direct contravention of Government policy on out-of-town shopping developments.
Bob Mogford, director of shopping centre investment at Prudential Property Investment Managers, said: 'Both their decision in November and on March 6 are unlawful and we shall be asking the Court to quash these decisions.'
But a London & Amsterdam spokesman questioned the motives of the objectors.
'As we and the council have pursued the proper procedures we cannot explain why, other than for commercial reasons, the actions of Realm, The Prudential and The Peterlee Partnership in seeking this Judicial Review,' he said.
The pitfalls of such cases for local authorities were proved in the early 1990s, when Slough Estates came close to bankrupting Welwyn District Council over its decision to grant planning consent for the Galleria scheme in Hatfield, which was in direct contravention of assurances it had given to protect Slough's existing shopping centre in Welwyn Garden City.