AGENDA ITEM NO 14
BOROUGH OF POOLE
CABINET
Land Transfer, Covenant Approval with Former Police Station and Lease and
Leaseback arrangements and rights of Access and Egress with Poole Law
Courts
PART OF THE PUBLISHED FORWARD PLAN
YES
STATUS (Strategic, Service Delivery Information)
1.
PURPOSE
The Civic Centre, Law Courts and Former Police Station form part of the
island site and were formerly operated as a single Civic Centre Estate.(see
plan No 1)
More recently the Law Courts have had their property interests transferred to
Her Majesty’s Court Service (HMCS) and the Dorset Police Authority (DPA)
intend to transfer the freehold interest in the former Police Station to a third
party property investment and development company.
This report deals with all the title issues that have resulted from these recent
property transactions in order that, whilst safeguarding the best interests of
the Council, the three organisations can act independently of each other in
future.
2.
DECISION(S) REQUIRED
2.1
The Council will undertake the property transactions as described below.
2.2
The Council agrees to allow the restrictive use of the Police Station to be
modified to allow for general (B1) office use but for no other purpose.
2.3
The Council delegates to the Head of Property Services in consultation with
the Head of Legal and Democratic Services and the Head of Financial
Services authority to negotiate the detailed terms of the legal documents
necessary to complete these transactions.
3.
BACKGROUND/INFORMATION
3.1
Poole Law Courts
The Freehold estate in the part of the The Poole Law Courts building occupied
by the Magistrates Court was acquired by HMCS under statutory order
namely the 2009 Property Transfer Scheme. The Country Court operates
from another part of the building which is currently leased from the Council,
although parts of this lease are out of date when compared to current usage.
The building in which the Law Courts are housed is in shared occupation with
Poole Borough Council. At present a situation exists which means that neither
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party has clear legal responsibility for the entire building or the costs of
running the building. It is proposed that the present unsatisfactory situation
which amounts to a “flying freehold” title can be dealt with by three different
proposed options as outlined in Appendix A.:3.1.1 The Recommended Option (1 in Appendix A)
The Secretary of State would transfer his freehold estate in the building and
the car parking areas (i.e. the freehold estate acquired under the 2009
Property Transfer Scheme) back to the Council.
The Council would simultaneously grant a full repairing long lease for 999
years at a peppercorn rent to the Secretary of State which will include the
whole of the building and car parking areas of the courts building.
Simultaneously, with the grant of the long lease, the Secretary of State would
grant a full repairing underlease back to the Council of parts of the building
currently occupied by the Council .The underlease would be for a term of 999
years less three days at a peppercorn rent.
This is the recommended Option for these reasons:a)
The Council would be able to hold the freehold ownership of the whole of
the building and curtiledge as part of its civic estate thus retaining a level
of control over the area which may otherwise be lost.
b)
Under these proposals, each party would have clarity as to the nature of
their property assets.
c)
Under these proposals each party would be liable for the maintenance
and control of its leasehold property.
d) The existing County Court lease would be surrendered and there
would simply be one lease in favour of the Secretary of State which
would be self governing. This would alleviate the current property
management issues for both parties.
3.2
Former Poole Police Station
3.2.1 Covenant Approval
3.2.2 The Council have the benefit of a covenant which requires the Police to
seek the consent of the Council for non – police station use. The police
station is in the process of being transferred to a third party investment
and property development company following an informal tender process
undertaken by agents acting on behalf of Dorset Police Authority.(DPA)
3.2.3 DPA have sought consent for the former Police Station to be used as
office accommodation. This consent is not to be unreasonably withheld,
therefore whilst the costs of the Council in granting consent have been
covered by the DPA there is no other consideration. The modification
permits a change to office use only and any further requests for a change
of use will require a further application which may attract a premium.
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The new owner will in due course seek further approval to carry out alteration
to form the offices and to demolish the cell blocks to the rear.
3.3
Land Transfer
There is currently an untidy relationship of rights of access between the
three organisations and this requires regularisation.
3.3.1 The vehicular right of way in favour of HMCS across the former car park of
the Police Station is to be extinguished.
3.3.2 There are to be compensatory grants of rights of access and transfers of
land at the rear of the Police Station owned by the DPA. Any rights of
access in favour of DPA over this land will be extinguished at this time.
3.3.3 The DPA will grant to the Council reserved rights of light and air onward
transmission to HMCS under the lease and leaseback arrangements in the
recommended option as described above.
3.3.4 There has been a request made by the Courts Service that an area to the
front of the Court building over which the Council has an easement from
Dorset County Council also forms part of this transfer and lease grant
arrangement and the Council has agreed to affect this transfer if it is able
to do so, as part of this overall transaction.
4.
FINANCIAL IMPLICATIONS
4.1.
Each party will bear their own costs in these transactions albeit the DPA is
responsible for the Council’s costs in granting consent for an alternative use.
The modification of the use covenant has been dealt with the same consistent
approach as all other requests for covenant modification.
4.2.
The Council need not pay consideration neither will it receive consideration for
undertaking these modifications and variations to the title of each freehold
ownership. There are therefore no capital implications as there is no
anticipated receipt.
4.3.
In regulating the ownership structure of the Law Courts there is a revenue
impact of approximately £6,000 per annum as a result of service charges
which will be levied by HMCS subject to scrutiny of a service charge budget
and appropriate apportionments. These sums have not been paid since 2009
and remain outstanding following resolution of the title issues.
5.
LEGAL IMPLICATIONS
5.1
The legal implications are as set out within the options in Appendix A of this
report.
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5.2
Transactions with consideration at less that £250,000 are not usually decided
by Cabinet but these matters are considered strategic to the Civic Centre
Estate and should therefore be decided by Cabinet.
6.
RISK MANAGEMENT IMPLICATIONS
6.1
There is a high level risk in continuing with the status quo. The maintenance
and control issues if not addressed are likely to have financial implications for
future use, maintenance and repair and potential disposal (when the time
comes) and valuation.
7.
EQUALITIES IMPLICATIONS
7.1
This report has no specific equality implications but ensuring and establishing
clear estate boundaries and repair, maintenance and control liability will
ensure the Council can address any DDA or other equality issues which may
arise.
8.
CONCLUSIONS
8.1
It is recommended that Cabinet endorse these changes to the Civic Centre
Estate in accordance with the recommended option and the proposed
covenant modification of the Police Station in order that the three public
bodies ( and their successors in title in respect of the DPA) occupying the site
can do so independently of one another in future
Report Author Alan Jones - Head of Asset Management and Property Services
Contact officer: Sarah Varley
Background Papers. Appendix – Plan1 (to be attached)
APPENDIX A - Outline of options
APPENDIX B – Options outlined showing ownership structures
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APPENDIX A
Option Number 1
The Secretary of State would transfer his freehold estate in the building and the car
parking areas (i.e. the freehold estate acquired under the 2009 Property Transfer
Scheme) back to the Council.
The Council would simultaneously grant a full repairing long lease for 999 years at a
peppercorn rent to the Secretary of State which will include the whole of the building
and car parking areas of the courts building. Simultaneously, with the grant of the
long lease, the Secretary of State would grant a full repairing underlease back to the
Council of parts of the building currently occupied by the Council .The underlease
would be for a term of 999 years less three days at a peppercorn rent.
This is the recommended option for these reasons:a)
b)
c)
d)
The Council would be able to hold the freehold ownership of the whole
of the building and curtiledge as part of its civic estate thus retaining a
level of control over the area which may otherwise be lost.
Under these proposals, each party would have clarity as to the nature
of their property assets.
Under these proposals each party would be liable for the maintenance
and control of its leasehold property.
The existing County Court lease would be surrendered and there would
simply be one lease in favour of the Secretary of State which would be
self governing. This would alleviate the current property management
issues for both parties.
Option Number 2
The Secretary of State would transfer his freehold estate in the Building and adjoining
Car Parks (which have been acquired under the 2009 Property Transfer Scheme) to
Poole Borough Council.
Simultaneously, the Council would grant a long term lease in much the same form as
for Option 1 but in this case the lease would be of part only of the Building (being the
areas used by the Law Courts). The Council would retain the flats on the top floor and
the mezzanine storage area under its freehold estate.
Under this option the Council would have to resume the responsibility for repairing,
decorating, maintenance liability and facilities management of the building. The
Council would therefore need to “gear up” both financially and in terms of staffing
provision for this purpose.
There may also be TUPE implications for the Council as a transfer of staff wholly
employed in relation to the facilities management services provided for the building
would be required.
Under these arrangements, there could be security problems especially given the
sensitive nature of the majority use of the building.
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Option Number 3
This seeks to retain the status quo which was created by the Property Transfer
Scheme 2009 i.e. that each party retains its own separate freehold estate in the
Building and attempts to reach agreement as to the extent of the boundaries, the
easements, the covenants and other provisions which would effectively govern the
respective estates.
Again there would need to be a surrender of the County Court Lease as mentioned
in option number 2 in order to correct the letting areas.
The net effect of dealing with the Property in this manner:
Is that both parties would only have the equivalent of flying freehold
estates in the building which are not ideal interests under English law
for the following reasons;.

This could bring potential problems particularly if either party wish to
exit and/or dispose of their interests in the building at any time in the
future.

There could be problems in enforcing repair and maintenance liability
for the entirety of the building by one party against the other.

Given that each party would be a freehold owner of the same building,
this could create confusion as to operational and management
responsibilities on a day to day basis given the uncertainty of the legal
position.

The creation of separate flying freehold estates in the same building
also creates difficulty in terms of insuring and this could create
problems in respect of any loss or damage to respective parts of the
building and liability in this respect.

Even if agreement can be reached between the existing parties in
relation to rights, repairing obligations etc where one party has
disposed of its estate in the future the enforcement of those rights and
covenants may prove to be difficult against a new owner.

The uncertainty as to the precise nature of each party’s estate interest
in the building may prove to be a difficulty in establishing precise asset
values for each of the party's preparing assets.
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APPENDIX B
Option Number 1
BoP
(Freehold)
(999 year lease of Whole)
HMCS
BoP
(999 year less 3 days lease of Part)
Option Number 2
BoP
(Freehold)
HMCS
(999 year lease of Part)
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Option Number 3
BoP
Freehold (Whole)
HMCS
(Freehold Part)
BoP
(Freehold Part)
Flying Freehold
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