We hope to see as many of you as possible at the AGM. This will be held at 6.00pm on the 16th December at The Cloisters off Bembridge High Street.
In the meantime, we bring you up to date on a couple of major issues, the sale of the aggregate yard and the Judicial Review of the Harbour Authority.
Sale of the aggregates yard at Bembridge Point
It appears that again, very substantial sums due to the Statutory Harbour Authority have instead gone to the separate property company (BIL) where the Thorpes are the ultimate beneficiaries.
BHT became aware that on 14th April 2022 the aggregates yard at Bembridge Point had changed hands, from Bembridge Investments Ltd (BIL) to JCM Ag Ltd for a sum of £900,000.
Substantial loss of funds due to the Harbour Authority
In that document the Harbour Authority grants to JCM Ag the valuable rights to extract and sell gravel taken from the harbour approaches, with no payment to the harbour authority.
Our valuation advice included assessment of the value without the rights BHIC granted (i.e., BIL’s freehold interest on the open market) at £75,000 to £100,000. The site has limited value owing to the range of restrictions; environmental, SSSI, flooding, erosion and planning constraints. In this transaction, clearly JCM cannot have paid the £900,000 on the basis of any other uses or for speculative development because the restrictions placed by BIL in the Transfer, preclude any other use.
Two companies with competing interests
Mr Thorpe has in the past alluded to BHIC (the SHA) and BIL working together for the benefit of the Harbour. However, they are two separate corporate bodies, one the SHA and one a separate private property company. Whilst the Thorpes must promote the SHA’s interests in any negotiation when acting as its directors, BIL has the opportunity to promote its own interest, where the Thorpes are also directors. Such a potential for conflict of interest is normally best dealt with each company having independent advice.
For completeness we sought further valuation advice to reflect the possibility of BIL taking a more aggressive negotiating position. That is, one based on the assumption that the extraction activity is best carried out using this land. In extreme BIL might claim its land controlled or ransomed BHIC’s ability to extract material.
Based on this possibility, our advisers concluded, at its highest, attribute £250,000 as the value of the land and so the amount BIL it would be entitled to.
Receipt of substantial overvalue by BIL
Therefore, we conclude that the £900,000 paid to BIL reflects not only the value of the site but also the value of the gravel extraction rights granted by the harbour authority.
The difference between the open market value of the site and the price paid to BIL, is £800,000 to £825,000. This broadly equates to a reasonable sum for the extraction rights. This assessment is based on an analysis of the quantities permitted and extracted, over a twenty-year period.
Even if BIL had argued on the basis of a “ransom” it has been over enriched by at least £650,000 as BIL received all £900,000.
BHIC reived nothing within this transaction. As such BHIC appear to have been deprived of income to the tune of at least £650,000.
Explanation from the Harbour Authority
We wrote to Mr Thorpe on the 5th July asking for information about the arrangements for gravel extraction. Mr Thorpe replied on the 8th July saying he would not provide any information. Others had received a similar response to its own request in the previous BHAG meeting.
Mr Thorpe made a number of claims about the arrangement at the Bembridge Harbour Advisory Group on 8th September. He said that the arrangement secures the site for dredging purposes. However, surely there was no prospect of any other outcome as, Mr Thorpe has repeatedly asserted that the companies controlled by the Thorpes always act in the best interests of the harbour, consistent with their duties as a directors of the Harbour Authority.
Mr Thorpe also claims that dredging/gravel extraction will be carried out at no cost to the Harbour. The fact is, however, that the rights to extract gravel are a valuable asset for which the Harbour Authority should be receiving full value, but is receiving nothing, as summarised above.
We conclude that the harbour authority has been deprived of at least £650,000 which it should have received for extraction rights. To put this in perspective this could have paid for the much needed replacement groyne and 4 years of dredging the harbour.
We have written twice to the directors of the SHA and BIL. First asking that they clarify the arrangements, to which BHIC said they would not provide any information. The second recent letter sets out the facts and asks them to rectify the situation. The response said they “are unable to respond within the unreasonable period of time allocated” and suggested they “will reply as soon as we are able”.
We have been advised that there is a sound cause of action for a legal challenge. However, legally this could not be added to the existing judicial review claim. We did not have the immediate resources to mount an entirely separate challenge, which was the only course. Accordingly at this stage we expect to engage with the relevant authorities to seek a remedy which would see the harbour appropriately compensated and therefore much better funded.
The case is against the Statutory Harbour Authority, a Public Body with public responsibility and so capable of being Judicially Reviewed. This case is still progressing through the courts.
The case revolves around the SHA’s responsibilities to the environment and proper use of the SHA’s incomes and assets in line with the Harbour Acts. We pursue this case to see the proper amounts invested in the harbour, without which maintenance is underfunded, and further to ensure the harbour’s assets are used to its benefit, in line with its Statutory duties including environmental duties.
Despite a general duty of candour, the SHA had declined to provide certain financial information without a Court Order. We have been formally requesting information since June 2021. A Court hearing for a ruling on disclosure was set. Subsequently information was released in three separate disclosures, in April and November this year. The last quite close to the court date. Having received this information we were advised that the hearing was no longer needed and with the defendant’s agreement the court date was vacated. Generally, the issue of disclosure of relevant material accounts for all activity on the case for the last year, which has been some drain on resources.
The next major step is expected to be the final hearing to decide the case. In the meantime, and whilst the SHA has been under this pressure, some of the loans we are advised were unlawful have been repaid.
A successful outcome of the Judicial Review of the SHA would see its liquidity, and thus its ability to invest in repair and renewal radically improved.
The trustees have all contributed to the professional costs, but the funding of legal routes is expensive and all the more so due to the nature of the defendant’s multiple submissions causing addition work for the experts and legal team. So please continue to help us bring justice for the harbour.
Chris Attrill, Jonathan Bacon, William Bland , Jeremy Gully (chair), Phil Jordan, Norman Marshall, Sara Smith.