Clear routes forward for BHT have been identified
The Judicial Review results, and the evidence it revealed, have identified clear routes forward that the Trust intends to pursue in the interest of the harbour and the local communities.
The Judge effectively ruled ONLY on whether the declared profits in the year 2019 to 2020 were correctly applied. Other issues, not addressed at JR, involve huge sums that have been extracted, instead of being used to maintain the harbour.
New opportunity for redress
Very importantly, the judge having confirmed s31 of the ’63 local harbour Act (profits must be reinvested) and also that the MfT does indeed have the necessary powers to act (it previously said it did not), a new opportunity is available to see any wrongly extracted money returned to the SHA, as our KC makes this clear in his formal opinion.
Evidence of loss of SHA income
All the following represent loss of income for the SHA which, if not legitimate, artificially reduces the profits – profits which the Judge protected in her ruling. As such these items will be addressed in a legal submission to ‘The Minister’.
1 Removal of £1,750,000* of cash or assets (see schedule below). Under the Act such disbursements would artificially reduce profits – profits which the judge ruled must be spent in line with s31, i.e. almost exclusively to the SHA’s benefit.
2 We have new evidence to take to the LPA re the s106. In a recent MMO application Mr Thorpe formally certified that certain land within the site of BIL’s planning permission at the Duver belongs to the SHA. (We and Land Registry agree). This was in direct contradiction with his claim in the development proposal, where he certified that the same piece of land belonged to the developer BIL. Uncorrected, it would benefit BIL, and disadvantage the SHA which would not get paid for its land, and on top of that would be legally obliged to pay rent at market rates for it for 25 years. With this new evidence we seek to compel the Planning Authority to make the necessary corrections in the S106 planning agreement. We hope that Mr and Mrs Thorpe, as directors of the SHA, will cooperate as correction is so obviously to the SHA’s benefit.
3 Evidence provided to the JR court on harbour dues confirms that the Thorpe-owned company, BBS offers a discount on harbour dues as an exclusive benefit to its customers (and not to harbour users generally). This gives BBS an unfair trading advantage, as well as reducing the SHA’s income.
4 The evidence also appears to show that BBS keeps the harbour dues. It appears that (weirdly) some of the BBS invoiced amounts were paid to the SHA in the first instance, only to be fully reimbursed to BBS. This means BBS appears to keep the harbour dues invoiced by them.
5 In the intercompany ledgers provided in court we can’t identify evidence of rent paid by BBS to the SHA for the jetty and pontoons in the harbour. If this is actually the case, it would again represent an unfair trading advantage for BBS, and a loss of income for the SHA. (Mr Thorpe declined to give any information when asked.)
Before going to the MfT with all of the above, we will of course give Mr and Mrs Thorpe one more opportunity to comment on the report, and hopefully take corrective action to restore the SHA’s financial position, so critical to its ability to maintain the SHA in line with its obligations under the ’63 Local Harbour Act, that the court confirmed.
Schedule of transactions causing concern
We set out here the main constituents of the total £1.75M that concerns us, so that Members can better understand the problems we try to address.
£650,000 value of the SHA’s aggregate extraction rights passed on BIL for £0, sold on by BIL as part of a £900,000 sale to JCM Aggregate in 2022. (The transaction details are clear in the transfer document from Land Registry. £650,000 Figure based on independent valuation advice).
£100,000 approx. of payments made by Bennetts to BIL (over some 8 years). This represents the overpayment of rent (beyond the value of the yard) that can be attributed to the SHA’s valuable aggregate extraction rights. All funds were retained by BIL. (This is an estimated figure based on the apportionment of actual figures in the lease agreement)
£750,000 loan interest charges on a £1.2m loan from Hawk. This £1.2m was never available to the SHA for the purposes of the undertaking, ie maintenance. (Figure from published accounts). The purpose of the loan was voluntarily disclosed by the SHA in evidence in JR. It was, in effect, part of Hawk’s funding of its acquisition of the SHA. At the time of the planning application BHT described this structure to the LPA just as the SHA described it to the court. However, earlier in the planning application Mr Thorpe advised he did not recognise this structure. (recorded in email correspondence on the planning file)
£93,000 proceeds from houseboat plot sales (Figures and intention to extract disclosed in correspondence between Mr Thorpe and the IWC). In addition, Mr Thorpe advised a further 20% ‘profit’ would be taken on subsequent sales – approx. £32,000 on the two subsequent sales to date. (It is not clear whether or not this has been charged, BHT having pointed out that it would be wrongful).
£90,000 as a result of a sale by the SHA of a houseboat plot at £1 to the Thorpe-owned BBS, which sold it on on the same day at £87,500. An explanation ultimately provided by Mr Thorpe was supported by board resolutions. The net impact of the transactions set out left the SHA some £90,000 out of pocket (Fully evidenced in board resolutions and Mr Thorpe’s correspondence with the LPA on the planning file)
£50,000 (to be confirmed) estimated loss of harbour dues revenue over 10 years, due to BBS retaining and discounting harbour dues. (Figure extrapolated from evidence provided in JR).
£40,000 failure to charge interest on loan balance to BIL (Evidenced in JR witness statements.)
Other unquantified sums
These include planning costs of BIL and BBS (Evidenced by applications on BBS’s behalf by the SHA, and formal reports in support of applications by BIL, addressed to the SHA). The reports were substantial professional reports so the charges will have been significant.
£100,000 to £200,000 (to be confirmed by DVA) loss of land value and future rents for at least 25 years (see 2 above).
These efforts will take considerable time for the trustees, and significant input from the professionals that advise us, to ensure we act correctly and robustly.
The alternative is that no one will be holding the SHA’s management to account. As well as being a failure in our responsibilities to our charitable objectives, this would be harmful to the harbour and the community that relies upon it thriving into the future.
We will not be able to do this without financial support, so please help where you can.
*This figure is after some £500,000 on loan accounts with one of the companies owned by the Thorpes, was restored to the SHA whilst under pressure from BHT before and during the JR of the SHA.
Chris Attrill, Jonathan Bacon, William Bland, Jeremy Gully (chair), Phil Jordan, Norman Marshall, Sara Smith, as Trustees
For and on behalf of
Bembridge Harbour Trust
Donate direct to Bembridge Harbour Trust Lloyds Bank A/C 00950539 Sort code 30-97-21
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