Newcastle-based Lugano announced on Friday night that it has now formally served papers detailing its claim against council leader Peter Jackson, cabinet member for planning John Riddle and chief executive Daljit Lally.
The company says papers have also been served on Northumberland County Council as it is vicariously liable in the case for the trio’s actions in relation to the plans for Dissington Garden Village – up to 2,000 new homes near Ponteland.
Lugano’s case is that the three individuals have acted improperly and unlawfully, abusing their powers and authorities as public officers of the council.
The company’s position is that actions of the trio amounts to misfeasance in public office and as such has caused Lugano a serious financial loss and damages amounting to almost Â£10million.
Company owner Allan Rankin said: “We have fully and openly detailed our concerns in our previous letter-before-claim. Neither the council nor the individuals concerned have responded to that in any meaningful or material way and our offers to meet on a without-prejudice basis have been ignored.
Mr Rankin added that Lugano will pursue its case ‘with the utmost vigour’ to ensure the individuals are held to account for behaviour he alleges ‘brings the name and reputation of Northumberland County Council and, indeed local government as a whole, into disrepute’.
He also said that the company has referred its concerns and all of its supporting evidence to the police.
A Northumbria Police spokesman said: "We are aware of the concerns and are working with Lugano Group to establish if any criminal offences have taken place."
Northumberland County Council did not make any new comment, but a spokeswoman repeated its previous statement.
“We are aware of further correspondence from the Lugano Group, and continue to take legal advice in this regard,” she said. “As previously stated, we believe that the council has acted lawfully and reasonably throughout this process.
“We continue to work with Lugano on its live planning application for Dissington Garden Village.”
Coun Nick Oliver, from the Conservative administration, previously described the situation as ‘a large offshore property company attempting to get its way on an unpopular planning application worth hundreds of millions’.
Today, he added: "Nothing has changed. Lugano has yet to substantiate their allegations – preferring instead to carry out a coordinated press campaign in an attempt to circumvent the proper planning process. The council and those cited will rigorously defend themselves."
But a Labour group spokesman said: “Northumberland taxpayers face a multimillion-pound payout because this Tory administration is so arrogant that they think a business will not protect its interests.
“Labour has consistently warned about the problems created by Coun Jackson’s reckless removal of the original core strategy which has saddled the council with a developers’ bonanza and now a legal case which could bankrupt the council.
“The actions of this administration have been disgraceful and that is why (Labour MPs) Ian Lavery and Ronnie Campbell have both called for an independent investigation into the actions and prejudices undertaken by Jackson and Co.”
During a debate on the decision to provide legal indemnities to the three individuals today, Coun Oliver said: “It’s really important to point out that there has been no evidence of any wrongdoing.”
He later added: “This offshore developer has the same access as any other developer to the planning system and they are trying to subvert the process with the support of the Labour group.”
The Labour leader, Coun Grant Davey, angrily responded that this was an ‘unfair allegation, totally and utterly wrong’.
Ben O'Connell, Local Democracy Reporting Service