A claim for £11.6m is being made against Lewes District Council in the wake of the collapse of controversial housing plans.
Cabinet councillors voted in February 2016 to end a project with developers originally designed to bring 750 new homes.
Members were told that restrictive covenants on two key sites, The Buckle and Normansel Park Avenue in Seaford, restricting the scale of development made the scheme financially unviable.
Now Karis Developments Ltd and its sister company, Karis Southern Housing Projects Ltd, is seeking damages, rectification, interest and costs.
Papers lodged with the High Court of Justice include an allegation against Lewes District Council of misfeasance in public office and unlawful conduct.
The claimants allege that Andy Smith, Leader of the council, Catherine Knight, Assistant Director Corporate Services, and CEO Rob Cottrill acted unlawfully, being “aware that harm in the form of financial loss and damage would inevitably or most probably” result to Karis.
It is also alleged that a report on the viability of the development was amended on instruction of senior councillors; that the development was ended for “political advantage”; and that key council figures “deliberately abused their positions”.
It is further alleged that changes to a key report were made and that key parties attempted to hide their conduct.
It is understood that legal costs of defending the claim could well exceed £1m.
Trial of the claim is expected to take place at the High Court in London in late April.
Lewes District Council said in a statement: “The council strongly refutes the claim being made.
“We are confident that the project was terminated lawfully and the personal allegations made are without merit.
“We will be robustly defending the council’s position.”
The statement added: “There will be no further comment while legal proceedings are on-going.”
Karis has declined to comment on the claim.