Camden LBC wants to farm out its housing stock to an Arms Length Management Organisation (ALMO) and a ballot is currently underway in which tenants are being asked to vote for or against change.
Even if tenants vote in favour of the ALMO, it will have to be finally approved by the deputy prime minister, John Prescott, who has already, in principle, approved £238m in extra funding to enable Camden to meet capital improvement targets by 2010.
Kate Markus, representing two members of CDCH who are spearheading the case, said the outcome of the ballot 'is of critical importance to the future of Camden council housing'.
She added: 'Camden has circulated a vast quantity of information to voters. This provides almost no information that could enable voters to understand the arguments against the ALMO.
'CDCH is unable to compete with Camden's resources and access to voters. Camden has not enabled a balanced debate so that tenants and leaseholders can make an informed vote.
'It has conducted a propaganda campaign designed to secure a yes vote'.
Ms Markus added: 'Camden is clearly very worried that, where tenants and leaseholders to have access to the arguments against the ALMO, they might vote against it.'
Camden has said the outcome of the poll will be 'extremely influential' in its decision whether or not to submit the ALMO proposal for Mr Prescott's final approval. The deputy prime minister has also said he will not approve the ALMO unless a majority of tenants are in favour.
Ms Markus told the court: 'Our fundamental case is that Camden is required to ensure that the case against the ALMO is made availab le to all voters and is not, in the process, so marginalised that it has no realistic prospect of being noticed or given any serious consideration'.
She said the 'propaganda' so far put out by Camden violated 'basic principles of fairness' and would rob the ballot of any real meaning.
Although CDCH is convinced 'the only reasonable choice for tenants is to reject the (ALMO) proposal', Ms Markus told Mr Justice Munby he is not being asked to decide on the merits, or otherwise, of the scheme - only the lawfulness of the procedure followed by Camden.
Ms Markus is asking the judge to stop the balloting process in its tracks and order Camden to put out balanced material so that voters can make a better informed choice at a fresh poll.
But Mr Ashley Underwood QC, for the council, denied accusations that Camden had 'misused public funds to publicise the advantages of the ALMO'.
He said: 'There is no obligation to inform residents of the disadvantages of an ALMO. However, Camden has engaged in a consultation process by which arguments for the ALMO have been fairly put and those against the ALMO have been fully canvassed.
He added: 'In any event, there are no disadvantages to the proposed ALMO of which it needed to inform its residents.'
The hearing, expected to last two days, continues.
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