The case for appeal against the Judge’s refusal of our claim
Further to writing to you on 23rd May to tell you that the Judge at the High Court refused our claim for judicial review, we write to tell you that we have now obtained advice from our KC on whether or not to appeal.
He advises that the judgement overall,
- fails to address core elements of the claim, and
- contains obvious errors of fact
However, despite the above, we are advised that the appeal court would be unlikely to wish to question the judgement despite the manifest errors. As such, we are advised AGAINST appeal.
Based on this advice, the Trustees have agreed that BHT would not be wise to appeal this decision.
Two further major issues, in addition to those highlighted in our last Letter to Members, are:
1.The Judge admitted (late) to an error that wasfundamental to the court’s understanding of the use of the finances in dispute. This was a misunderstanding about the £1.2m debt (see below). The judge simply removed reference to her error from the judgement at draft stage, just before the final ruling was published.
We have no comfort that the judge appropriately reassessed the judgement in light of her mistake.
2.The Judge appeared to de-qualify the High Court (on the grounds that it is “ill equipped” to deal with the financial matters at issue) and held that the Minister – not the High Court – is the appropriate authority to act.
Further information from our counsel’s advice
We were not able to reveal certain information about the ruling until now. This concerns the judge’s aforementioned misunderstanding about the £1.2m debt to Hawk Property Developments Ltd (another company owned by Mr and Mr Thorpe).
It was in fact the defence that pointed out the judge’s error, and that text was swiftly removed. Clearly, had it remained it would demonstrate a weakness in the ruling.
Judge Collins wrongly believed this £1.2M was a “pump-priming” investment, spent on dredging and improvements in the harbour (which would have been entirely legitimate). However, it was in fact a purchasing device used when the SHA was acquired out of administration and at cost to the SHA.
The cost to the SHA was a £1.2m reduction in its net assets, and ongoing interest costs of around £750k to date.
Nor was this fact in any way hidden from the court’s view. It was in evidence as a significant negative impact of the administration in 2011.
This is highly relevant in terms of SHA money being used for the benefit of other companies and thus reducing profits – a key aspect of the case.
We are of the view that this and other misunderstandings influenced the ruling in favour of the defendant.
Background to the £1.2m
The £1.2M debt originated as a result of all of the SHA’s assets being used to secure other companies’ borrowings, with disastrous consequences for the harbour, plunging it into administration in 2011.
The new owners agreed new arrangements along similar lines, once again offering all the SHA’s assets as security for the borrowings of the directors’ other companies! And leaving it burdened with this £1.2m liability.
It could happen again
The purpose of BHT’s legal challenge was to safeguard against the type of actions that all but bankrupted the harbour in 2011- ie SHA funds being used for the benefit of other companies. Instead this judgement effectively sanctions such actions.
It leaves the door open for the same thing to happen again, whether under this or any future ownership.
Back to the Minister (again)
The Judge ruled that the Minister (and not the High Court) is the appropriate authority to act.
It is hoped that the Minister will take the issues at Bembridge Harbour more seriously in light of this Judgment which clearly sets out his powers and responsibilities.
Before we started this process we believed we had already exhausted this option: the Under Secretary of State with responsibility for ports at the Department for Transport, formally advised they did not have the powers to audit, and that they had no plans to hold an inquiry.
It is most regrettable that the Minister did not acknowledge these powers at the time, as the JR action, and huge costs it involved, could have been avoided.
It should be borne in mind that disappointing as the judgement was, this JR ruling focused on whether, in this one year, BHIC correctly deployed its profit. There are many more questions still to be addressed, and we do now at least have the benefit of the judge’s affirmation that Section 31 of the Local Harbour Act (profits must be reinvested) applies to Bembridge Harbour.
Whilst the route for appeal has closed, another has been opened by the judge’s finding that the Minister can, after all, call an audit if sufficiently concerned.
Rest assured we will be pursuing this route.
We will keep you advised of progress.
Chris Attrill, Jonathan Bacon, William Bland , Jeremy Gully (chair), Phil Jordan, Norman Marshall, Sara Smith, as Trustees