Hackney 'acted illegally'

A high court judge has quashed the sale of a prime piece of real estate in East London because Hackney borough council had disposed of the land too cheaply.

A high court judge has quashed the sale of a prime piece of real estate in East London because Hackney borough council had disposed of the land too cheaply.

The deal was highlighted in the Independent on Sunday in March. It prompted Structadene, the property development company founded by David Pearl, to seek legal action to overturn the sale.

Mr Pearl was furious that the council, ravaged by debt estimated at £40m, had sold off 12 light industrial units to the existing tenants for £400,000 after turning down an offer from Structadene for £100,000 more.

Last week a High Court judge vindicated Structadene's decision to go to court. Mr Justice Elias quashed the sale and declared the contract invalid.

"A rational council would not have rejected an offer which was £100,000 more favourable than the offer which it accepted," said the judge.

He ruled there had not been a lawful disposal of the property and that the council had been in breach of its fiduciary duty to obtain the "best price". The judge gave Hackney permission to appeal, saying the case raised issues of property law which were important.