Luton Borough Council wanted to overturn the decision by Central Bedfordshire Council, to give outline approval to 5,150 homes and more than 200,000 square metres of retail and industrial space across 260 hectares of green belt land to the north of Houghton Regis.
Luton Council argued that the decision failed to meet the Localism Act’s legal Duty to Cooperate, which means authorities have to continuously engage with neighbours on cross-border strategic issues such as housing.
Luton Council also claimed that the Houghton Regis North scheme would not provide enough affordable housing, at just 10 per cent.
It further complained that the scheme would include much more retail provision than is necessary to serve the area and that Central Bedfordshire failed "to assess lawfully or at all the sequential test for the [scheme’s] retail proposals".
But on Friday, Mr Justice Holgate, sitting at London’s High Court, dismissed the challenge, rejecting all 10 grounds of challenge and branding four of them "wholly unarguable".
He said: "It is most unfortunate that this project, which will deliver much needed development and nationally important infrastructure, has been delayed by a challenge lacking in legal merit."
The judge also found that Central Bedfordshire had not acted "irrationally" by failing to assess alternative sites, because housing needs could not be met without "substantial releases of land" from the green belt.
Luton Council has said it is attempting to appeal the decision.
Jason Longhurst, Central Bedfordshire Council’s director of regeneration, said that the move was "incredibly frustrating," adding: "This action alone seems to illustrate a real desire to frustrate the proper planning process and the delivery of much needed housing and infrastructure."
Sian Timoney, Luton Council’s portfolio holder for regeneration, said: "The fundamental issue at stake is the duty of a neighbouring authority to cooperate in the preparation of a strategy to address Luton’s very significant projected unmet housing need over the next 15-20 years, and support the borough’s identified key role in the sub regional economy.
"Luton Council is extremely disappointed with the judgement of the High Court and therefore intends to ask the Court of Appeal to re-examine the case as the issues involved are so serious."
*NOTE: This story was updated at 2pm on Tuesday, December 23, to add a comment by Luton Council.