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..