In our last post about Otterpool Park we spoke about the development vehicle – Otterpool Park Limited Liability Partnership (LLP) and its set up. It’s clear that that the ownership of the LLP and the nominee company – Otterpool Park Development Company Ltd are solely owned by the council as the diagram below shows.
Now at Cabinet yesterday Cllr Tim Prater (Lib Dem) raised an interesting legal point about the LLP (5m:02s – 9m:36s), one which we raised over two years ago.
One of the grounds for the Judicial Review was based around the fact if Haringey could set up a LLP for commercial use. Peters lost the case and Justice Ousley found it lawful for Haringey Council to set up an Limited Liability Partnership (LLP).
Now in that case Haringey had a partner – Lendlease Europe Holdings Ltd at the time of formation of the LLP. In our case the LLP has no partner as the sole owner through the nominee company and the LLP is the Council.
So the legal point is – Can the council form a partnership with itself, as currently there are no other partners? Peters v Haringey Borough Council did not deal with this issue as it was not under consideration in the Judicial Review.
In our Feb 10 2018 post we did deal with it when we said
However, if Cozumel were to pull out at some point in the future which is possible, then setting up an LLP, with just yourself, is not a legal point dealt with in the Judicial Review, but could so easily become one, as the word “Partnership” makes clear you need a partner.
Now Cllr Prater (Lib Dem) made this point and asked to see the legal advice the Council had received from Browne Jacobson, quelle suprise he was refused sight of it, fancy that. Cllr Prater makes it clear in the video that he believes the structure is “dubious“.
Now ask yourself this. Can you form a partnership with yourself? Or do you need a partner to do that?
It’s clear a LLP partnership must consist of at least two partners and have at least two partners designated to assume additional legal responsibilities on behalf of the LLP.
Now the Council’s structure does have two partners but both of those are the Council. So the question then is can the Council set up a partnership where it is both the partners? A point worthy of a judge deciding rather than an untested legal opinion.
The Council no doubt would argue the purpose behind them forming an LLP, is not that of a property developer simply seeking to make a profit, or to achieve a return on development. The purpose of the Council is to use and develop its own land to its best advantage so that it can achieve the housing, employment and growth or regeneration policy objectives.
So it has long been the Council’s sole aim to achieve as much as it can; and realise the best consideration on any disposal of its land; by either being the developer and master builder itself; and selling the built properties, or preparing the land and infrastructure and selling plots for local builders such as Quinn, Walker or Pentland to build on; and for the LLP to potentially take a cut of the sales as well.
The Council must be financially prudent, to produce returns in various ways which can be used to further its policy objectives. Achieving the return is neither the activity nor its purpose of itself. The Council would no doubt add that making a return is intended but it is a lesser consequence of the primary purpose of the development which the Council is using the LLP to undertake: the purpose of doing all of that is to achieve the development for a variety of local public benefits which that of itself would bring, plus an improved local tax base, and a return to enable further regenerative development. Some return on the investment and use of the Council’s land should be a consequence of obtaining the best consideration and of acting prudently financially.
In Peters v Haringey, Justice Ousley made clear the statutory interpretation of s4(2) of the Localism Act held that the reference to “a commercial purpose” was to be read as looking at the overall view of the thing being done and the overall purpose of the Council in doing that thing. As such it confirms the notion of a dominant purpose test when looking at whether a council is acting commercially; if the dominant purpose of the council is one which is non-commercial (in this case it is to develop and manage the Council’s land to achieve its housing and employment growth policy objectives) then the council is not acting commercially, notwithstanding the fact there may be incidental or ancillary functions which look to be commercial purposes.
Now once again Cllrs have been denied the legal advice, as they were in the s73 Planning debacle about the Folkestone Seafront Development. On this occasion though it was Cllrs Prater and Cllr Whybrow who were refused the LLP set up legal advice.
The Council’s Constitution makes clear Cabinet members do not have any additional rights to access information than any other Cllr. We make it clear the information is NOT confidential as the Constitution says:
Confidential information means information given to the Council, by a Government Department, on terms which forbid its public disclosure; or information which cannot be publicly disclosed because of a court order.
The information is “Exempt Information”
Exempt information means information falling within the following categories (defined by Part 1 of Schedule 12A to The Local Government Act 1972, as amended). This is subject to a public interest test whether maintaining the exemption outweighs the public interest in disclosing the information.
The Council’s monitoring officer Amandeep Khroud decided that Cllrs Prater & Whybrow could not have the legal advice as it was not in the public interest in disclosing it – quelle surprise.
The Shepwayvox Team
Dissent is NOT a Crime