AGENDA ITEM 7
BOROUGH OF POOLE
REPORT TO THE CABINET
DOLPHIN QUAYS AND POOLE POTTERY
27 JANUARY 2004
PART OF PUBLISHED FORWARD PLAN: (YES/NO)
1.PURPOSE AND POLICY CONTEXT
1.1To update Members on the current position of the Dolphin Quays Development and Poole Pottery.
2.RECOMMENDATIONS
2.1Members note the current position on Dolphin Quays and Poole Pottery.
2.2Members approve the actions taken by officers to recover debts from all companies involved and to support the continuation of the business of Poole Pottery at York Road.
2.3Members approve the appointment of the District Valuer to negotiate a financial settlement in compensation for the encroachment onto land owned by the Council on Poole Quay.
2.4Members note the current position in the negotiations regarding encroachment.
3.BACKGROUND
3.1In March 2000, the Council leased its land interests in the former Poole Pottery site to Orb Developments Limited for a period of 130 years. A premium of £300,000 was paid, with an annual rent of £10,000, rising to £68,000 when a certain level of residential leases are granted or retail space let and thereafter subject to regular reviews.
3.2In June 2001 the Executive approved a recommendation from the Transport Advisory Group for a Highways Licence to facilitate the construction of foundations beneath the highway of the Quay and for a bridge link over Fishermans Road.
3.3On 3 June 2003, Keith Goodman and Stephen Swaden, Leonard Curtis and Co., were appointed Administrators for Poole Pottery Limited.
3.4On 13 June 2003, Barry Gilbertson and Robert Birchall, Pricewaterhouse Coopers, were appointed Receivers for Poole Developments Limited and Dolphin Quays Developments Limited arising from a legal charge to the Royal Bank of Scotland.
3.5On 11 July 2003, the MacDonald Partnership was appointed Administrator for 11 companies, including Mitre Property Management Ltd, Orb Commercial Ltd and Orb Estates PLC, the principal shareholder of Poole Pottery and the owner of land in York Road on which it operated. Subsequently, Pricewaterhouse Coopers were appointed Administrators for Orb Securities Ltd; they wholly owned Orb Estates.
3.6On 6 January 2004 Quays Group PLC, the holding company for Poole Developments Limited, went into liquidation following a Winding-Up Order in a Scottish Court. KPMG have been appointed to liquidate the company’s assets.
4INFORMATION
4.1Poole Pottery
4.1.1On 2 June 2003 I received a letter from solicitors, Sprecher Grier Halberstam, concerning an administration petition in respect of the company to be heard in the High Court the following day. Support was being sought from the Council for an Administration Order rather than a Winding-Up Order; this would give the appointed administrators the opportunity to seek to sell the company as a continuing business rather than all its assets being liquidated to partly pay outstanding creditors.
4.1.2Following discussion with the Chief Executive and the Local Economy Portfolio Holder, Councillor Parker, in the absence of the Leader, I sent a letter by return indicating the Council’s preference for an Administration Order.
4.1.3Following the appointment of Administrators, Leonard Curtis, a meeting was quickly arranged between them and relevant officers to offer support in finding a buyer for the company and to identify all outstanding issues known to the Council.
4.1.4The only outstanding debt to the Council was for National Non-Domestic Rate; this was notified to the Receiver. Following a meeting of creditors on 2September 2003, Ray Hatchard was elected to the Creditors Committee to work with the Administrators.
4.1.5The shop and warehouse on Poole Quay is tenanted in the name of a separate but wholly owned company. Rent was due to Poole Development Limited, the owners of the property, but had not been paid. This company was also placed in Administration on 13 June 2003.
4.1.6A few parties interested in running the pottery as a “going concern” approached the Administrator. The Administrator concluded the sale of the business on 12 November 2003; the new owners are a group of investors led by a Mr Peter Ford and are continuing the business operation of the pottery has also purchased the company name.
4.1.7In July 2003 the land at Sopers Lane, on which Poole Pottery was now based, was sold to Conway Investment Properties Limited by Orb Estates. At the same time they also acquired Old Orchard House; this property may be changing owners again in the near future.
4.1.8The Pottery retains a number of artefacts, which are of local historical significance. A bid of £250,000 was made to the Administrator for these pieces subject to a valuation and the Council being able to obtain grant from English Heritage or other interested bodies. The bid was unsuccessful and the Administrators have indicated their intention to place these pieces in a public auction later this year.
4.1.9The Administrator has retained the artefacts of the pottery and a new company, PPL Realisations Limited, has been established to hold these assets and the NNDR debt of £201,689. Officers are continuing to try to secure the retention of the artefacts within the town although the success of these efforts cannot be guaranteed.
4.2Quay Development
4.2.1Following appointment of the Administrators, Pricewaterhouse Coopers, a meeting was arranged to share all outstanding matters in relation to the companies. These principally covered the outstanding debts, the planning consent and all its conditions, the Section 106 Agreement, including paid and outstanding monies, and the identified encroachment, both in highway terms and breach of the lease agreement.
4.2.2The rent premium due to the Council under the lease agreement was paid in February 2003, the Park and Ride contribution, due under the planning agreement, was paid in April 2003 and the rent for the Thistle Hotel site was paid in October 2003. There are still outstanding payments for palm tree sponsorship and legal fees amounting to approximately £8190. The on-going ground rent is next due in June 2004.
4.2.3Enforcement of the planning condition to incorporate 12 Poole Pottery tile murals into the new development is complicated by the fact that they are currently in the possession of Poole Pottery. Officers are continuing to press both the Administrator and the Receiver to find a resolution to this impasse.
4.2.4The construction of the foundations to the development went below the highways of the Quay and Fishermans Road. The Transportation Advisory Group agreed a licence under S278 of the Highways Act (1980), subsequently approved by the Executive, in June 2001. This agreement will be formally completed in February following the precise identification of the encroachment by a recently completed ‘as-built’ ground survey.
4.2.5Initial discussions regarding the encroachment onto land outside of the agreed lease area commenced with Solicitors acting on behalf of Orb in July 2002. There was some uncertainty about the most appropriate manner in which to deal with the issue and no financial implications were discussed. These discussions ceased in December 2002 whilst other financial matters were being resolved with them.
4.2.6In April 2003, the Council was approached again by solicitors, Lester Aldridge, acting for Poole Developments Ltd., to pursue an appropriate supplementary lease to move the matter forward. The Council’s response was that it could reasonably expect a financial consideration commensurate with the value of the encroachment to the developer. These discussions ceased when the companies went into Receivership in June 2003.
4.2.7In July 2003, the Council engaged the District Valuer (Bristol) to negotiate on our behalf; he has estimated a significant value to this encroachment. The Receiver has questioned both our legal and valuation approach, quoting a number of case precedents; both sides have taken advice from Counsel and the legal debate is ongoing at present.
4.2.8In October 2003 I instructed that a full survey be carried out of the completed development; this was to confirm the precise amount of encroachment and to check conformity with the planning consent. This has been completed on the principal frontages of the Quay and Fishermans Road; I expect the full information to be available shortly. This has confirmed the encroachment by the foundations and also demonstrated further encroachment by balconies and the roof form. These will all be considered within our ongoing negotiations with the Receiver and any changes will be included in a further supplemental lease when agreed.
4.2.9The Council has notified the encroachment issue to the conveyancing Solicitors (Adams and Remers, Lewes) appointed by the Receiver; they have been requested to notify existing and prospective purchasers of any properties within the development. Applications were made to the Land Registry to register Cautions to protect the Council position against future purchasers of parts of the development but, although a Caution has been entered in relation the areas of land where the encroachment exists, the Land Registry has declined to register Cautions against the individual Titles of the properties within the development.
4.2.10Following some contractual difficulties last year, the Receiver reached agreement with the contractor, Taylor Woodrow, and construction recommenced in September 2003. Occupation of the first flats is expected shortly and structural completion is anticipated in April 2004.
4.2.11The Receiver invited bids for the incomplete development in July 2003 and officers co-operated with enquiries from a number of interested parties. No acceptable bid has been received to date and the Receiver is continuing to build-out the development to completion. He has also engaged Consultants to advise on the marketing of the retail space within the development and officers are encouraging this activity and co-operating at every opportunity.
4.2.12In October 2003, the Receiver requested a letter of confirmation that the new development on the former pottery site can remain and that the Council will not seek an injunction but only seek to claim compensation in financial terms. Initially, my response was to reject such an undertaking as it would fetter the Council’s ability to resolve the issue, although I did give an assurance that we preferred to seek a financial remedy.
4.2.13The response (13 November 2003) from the Receivers’ Solicitors (DLA, London) was swift and strong. Due to the risk of significant financial loss for their client, arising from prevention of sale of the flats, the Council was given a week to confirm their intention only to pursue financial compensation for the encroachment. The alternative was that an application would be made to the Chancery Division in London for an expedited trial before 19 December 2003.
4.2.14Following further legal advice, a letter was sent to the Receiver giving an undertaking that the Council would only seek a financial consideration for the additional encroachment onto its land, having first obtained a cross-undertaking that the Receivers would not seek to argue that this would limit the Courts ability to award damages in lieu of an injunction. This has always been the intention of the Council.
4.3General
4.3.1Officers from Legal, Finance, Revenue and Benefits, Planning and Property Services have supported me throughout this process; sometimes this has proved to be a difficult task due to the complex network of companies involved. A current schedule of outstanding debts to the Council is attached (Appendix 1).
4.3.2On 4 November 2003, I reported to Cabinet on a request to assign the lease on the Thistle Hotel site; this was approved and a Licence to Assign has been agreed in draft form but not yet granted. The impending sale of the site, for which this request was made, has not been completed to date.
4.3.3Officers from Revenue and Benefits were elected to the Creditors Committee established by the Administrators (Leonard Curtis and MacDonald Partnership); this has assisted the flow of information into the Council.
4.3.4The Leader, Deputy Leader and Local Economy Portfolio Holder have received briefings on all issues surrounding these matters at meetings on 11August 2003 and 30 October 2003.
ALAN BARLOW
POLICY DIRECTOR
BACKGROUND PAPERS
Contact Officer:Alan Barlow
Telephone No:01202 633203
Date:13 January 2004
Report Ref: Policy Directorate/Meetings/Cabinet/20 01 04 re Dolphin Quays and Poole Pottery
APPENDIX 1
OUTSTANDING DEBTS AT 13 JANUARY 2004
Orb Developments Ltd. (Poole Developments Ltd) – Dolphin Quays sale office
£4995 – NNDR
£4077.57 – Court costs for Park and Ride
£4,575 – Outstanding fee for temporary covenant approval for sales office use.
Dolphin Quays Ltd. – Poole Pottery shop, The Quay
£21,180 – NNDR
Orb Commercial Ltd. – Old Orchard House
£40307.65 - NNDR
Mitre Property Management Ltd. – Old Orchard House
£1510.96 - NNDR
PPL Realisations Ltd. – Poole Pottery, York Road
£201688.74 – NNDR
Conway Investments Properties Ltd. – Old Orchard House
£75568.59 – NNDR
Poole Pottery Ltd. – York Road
£32499.34 - NNDR
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