Below are extracts from a Highland Council Participation request form submitted by Nairn West and Suburban Council:
4 The outcome that your community participation
body want to improve (Note 3)
(Proposed disposal of) Nairn Common Good Fund land
at Sandown Nairn
5 Please tell us the reasons why the community
participation body should participate in an outcome improvement
process: (Note 4)
The Trustees of the Nairn Common Good Fund are all
the members of Highland Council. Statute has placed them in an
egregious conflict of interest situation which they clearly cannot
reconcile. The evidence, outlined in section 8 ante, supports the
conclusion that they are incapable of discharging their duty as
trustees for the exclusive benefit of the fund as distinct from the
benefit of the wider electorate of the HC.
6 Please note the knowledge, expertise and
experience the community participation body has in relation to the
outcome: (Note 5)
One of the elected NW&S Community Council
members is a Chartered Accountant and experienced Insolvency
Practitioner with extensive practical knowledge of Trust Law,
Fiduciary Duty and the practicalities of disposal of assets in a
statutory Trustee capacity.
We also have members with a broad range of other
qualifications and technical experience who have proven abilities to
research, reveal and articulate evidence, which the evidence of
previous transactions supports, may be at variance with that provided
by the officials on whom the Trustees rely.
7 How will the outcome will be improved because of
the involvement of your community participation body: (Note 6
As we have no conflict of interest, we can assist
Highland Council Trustees overcome their conflict of interest so that
the outcome of the proposed sale of the land/ best use of Nairn
Common Good Assets, complies with the law and is for the exclusive
benefit of the Common Good Fund.
9 Additional Information (Note 8)
1. There was a
previous attempt to sell the Sandown land in the years up to 2013.
This revealed a number of serious anomalies. The first is the
discovery that the Trustees or their predecessors had allowed an
annual grazing lease to become a Protected Agricultural Tenancy. The
HC appear to have accepted that this was a consequence of negligence
rather than intention. The Statutory to protect Common Good funds had
not been applied by the trustees. The HC then set about recovering
the Tenancy and a sum of £390k that was paid to the tenant to
relinquish the tenancy. The £390k was originally charged to the
Common Good Fund and interest charged. Following intervention by the
Audit Commission the interest that had been illegally applied was
cancelled.
The Council also
resolved in July 2013 to cancel the debt which they had charged on
the CGF. It is believed that this was not a function of benevolence
on the part of HC but a function of the fact that it was anticipated
that when the facts were exposed there would a call for restitution
to the CGF on the grounds of negligence. The minutes of the HC
meeting held on 27 June 2013 shows that the resolution was carried by
32 for 29 against and 5 abstentions. The evidential value here is
that nearly half of the Trustees show their priority is to insulate
their constituents from the financial consequences of the alleged
negligence to the detriment of the Nairn CGF. It is evidence of the
alleged conflict of interest.
There were other costs and expenses
associated with the previous attempt to sell the Sandown lands.
These total £344k. The minutes of the June 2013 meeting affirmed
that these costs should remain as a charge on the CGF and that, for
undisclosed reasons, the council should take a proportionate share
of the value of the lands based on a valuation of unknown
provenance. The minutes show that this land value was subsequently
transferred as an asset into the Councils General Fund account.
The evidential value here is that it is
accepted that the Sandown lands were part of the Royal Charter of
1589. There is no doubt they fall into the inalienable category of
assets and have Statutory protection in sec 75 of the CEA. The
Trustees have failed to comply with the Legislation and no Court
approval has been sought or given for any such charge on the NCG In
addition, we have a concern that Trustees acquiring part of their
wards assets offends Common Law. It is prohibited by Statute in
other Trustee situations.
It is unclear how the Trustees can defend
themselves from the accusation that will undoubtedly be made that
the principal reason for the proposed current sale is to facilitate
the realisation of the Trustees hoped for investment in the Sandown
lands. The Trustees need our assistance to identify and verify,
without conflict of interest, the real reason the land is to be sold
at this time.
Within the £344k costs is an item of legal
expenses to McLure Naismith totalling £61082. This information was
revealed following a Freedom of Information Act request. No detail
was supplied. Given the costs that would be expected to be incurred
in recovering the Agricultural Tenancy noted in para 1. above and
the absence of any other identifiable cost that could be the
anticipated legal fees we believe that the McLure Naismith costs
were incurred in recovering the Tenancy and should be dealt with in
accordance with the principle established in para 1. Apart from the
possibility of litigation if the Trustees should yield to the
conflict of interest and resist applying the principle, the primary
evidential value is that the Trustees cannot rely on their officials
to fully inform them of the facts.
As a Community Council we are alarmed by the
public statements made by certain HC Councillors that represent the
wider constituency in which our Community Council is part to promote
the notion that because Nairn has a Common Good Fund it should be
used to support the funding of the General Fund of the rest of the
Highland Council electorate. This manifests itself in the proposed
use of other CGF land to create a licence to occupy land, where no
HC access exists at present e.g. for the purpose of imposing fund
raising parking charges. Whilst raising funds for the HC is the
stated objective of parking charges no regard or research has been
offered for the damage that will inflict on our community nor the
long term sustainability of the CG. It is believed that the role of
the elected HC Councillors may be conflicted in their role as CG
trustees over their perceived duty to the HC priority of their
Fidiciury Duty administration. The concern we wish to consider and
possibly expose is that the NCG assets are not been maximised to the
exclusive benefit of the NCG and the community of Nairn.
A notice for planning permission was lodged
by HC in the previous year to utilise part of the Sandown land for
state subsidised housing through a Housing Association.
Representations were made to us by constituents that survey works
were apparently being undertaken. On being challenged to explain
what was happening at a CC meeting a HC Councillor advised that the
planning application was raised in error, and was subsequently
withdrawn. The evidential value here is that something was clearly
being planned which puts us on enquiry that the reason the sale
proposal is being pursued at this time. This is not an appropriate
use of CG assets without prior consultation and agreement by
trustees without bias.
We have not yet recovered from the effects
of the 2008 recession and we have not yet experienced the potential
effects of the 2020 recession which is undoubtedly lurching towards
us. In 7 above it is noted the involvement of a Housing association.
It is unclear if the HC has any conflict of interest in promoting a
CG land disposal and their role as trustees in this situation.
Selling land during a recession where there is an impaired market
and a significant investment risk in the utilisation of the proceeds
requires reasoned financial modelling. We are alert to the
possibility that the Trustees conflict of interest may allow them to
promote the sale of CG land at a time of significant market weakness
and value impairment to facilitate the purchase by a Housing
Association on terms that may not be acceptable when the market
improves.
Part of the Sandown site has been
appropriated for allotments. These allotments together with a
further area for further allotments are to be excluded from the
proposed sale. It is understood that the lease is to HC who pay rent
and sublease to the allotment holders. The lease was entered into at
or about the time of the 1st sale attempt. The challenge as to why
the income yield bore no resemblance to the perceived value of the
land for housing we were informed that this was to be a temporary
lease and the lease contained termination provisions that would
allow it to be sold. There is concern that the practicalities of
recovering allotments would prevent recovery and that now appears to
be the case, hence the possibility that the CG assets are not been
utilised to the ‘betterment’ of the Community. It should be
noted that the provision of allotments is a Statutory HC function
not a CGF function. Appropriation of land for allotments may be a
further example of a conflict of interest and as Sandown is
inalienable land the failure to apply Sec 75 of the act to a
long-term lease puts it into the misappropriation category. As part
of the outcome improvement of the sale proposal we will be seeking
information as to how the Trustees are going to repair the
impairment to the value of the CGF.
10. Returning to item 5 above. Excluding the
McLure Naismith costs there remains some £284k or so that is still
a potential charge to the CGF. We are of the opinion that incurring
this level of costs in selling 35ha of land of very obvious housing
potential is wildly excessive and does not reflect best value, and
in commercial setting let alone a Trustee administration, could not
be justified. Running charrettes etc to try to dictate to the
purchaser what they can do with the land post purchase is not a
function of the management of the CGF. Placing feudal burdens on
land is no longer enforceable. There is also the fact that this is
inalienable land and that the law had protected its ownership by the
community since 1589 was being addressed fully and prior to any
discussion or costs been incurred by Any party. It is felt that
proper process with respect to management of CG assets and the CEA
has not been followed. Our participation will improve the outcome to
the CGF by ensuring that does not happen again and require that the
information presented to the Trustees is verifiably accurate, and
that the final outcome of any decisions about CG assets are robust..
