osband post 19 january 2012

8/3/2019 Osband Post 19 January 2012

1/4

W14 website post by Richard Osband of the Steering Group on 19 January

Comment by Richard Osband 3 hours ago11th January 2012 Meeting - Part 2

This is the second and final part of my report on the 11th January Meeting.

The 11th January 2012 meeting was with me on the one side and Nick Johnson,the Councils Lead Consultant on the Development, Philip Morris, SeniorRegeneration Officer, Sarah Lovell, Regeneration Officer, Richard Budge aPartner of SNR Denton and senior external solicitor advising the Council andJon Gorst, Senior Principal Environmental Services Lawyer of the Council, onthe other side and held at the offices of SNR Denton solicitors.

I then raised my concerns about the present consultation. (The ConsultationPackage was delivered to Residents and the local area on the 7th January 2012and residents have until the 17th February 2012 to respond - not enough time

as this consultation is the key document which the Council will use to justifysigning the CLSA. Click here for key consultation document.) I said I could notagree that the consultation was in any way adequate since it provisionallyrecommended the CLSA whilst hiding most of the details of the CLSA. I hadbeen, in a previous meeting with Phil Morris and Sarah Lovell, informed thatthe consultation documents had been written in a particular form by a Barristeracting for the Council so as not compromise the Councils case at the judicialreview. The present Consultation was undertaken because the Barrister for theCouncil advised one was necessary as a defense against the judicial review.

I already knew because I had been informed by Council Officers, theConditional Joint Venture agreement envisioned in the 9th October 2009

Collaboration Agreement had become the Conditional Land Sale Agreement,effectively a call option agreement, which would allow EC Properties Ltd theright to buy mini sites within the whole site ( the West Kensington Estate andGibbs Green Estate) on a timescale to suit themselves, with no obligation to doso but subject to certain conditions. I was most concerned to find out that theWest Kensington Estate and the Gibbs Green Estate were to be included in theComprehensive Scheme which means in the Collaboration Agreement thedevelopment of land in the Earls Court Regeneration Area by means of theConditional Land Sale Agreement scheme, which as you will see is a call option,which if exercised allows EC Properties to include the Estates in thedevelopment of land in the Earls Court Regeneration Area if EC Properties Ltd

want but with no certainty that the Estates will be included.

I learned at the meeting that EC Properties Ltd could requisition the next minisite to be cleared when it had built replacement homes, when the Council hadcompleted assisting the clearance by getting Compulsory Purchase Orders toforce residents out who refused to move, and so long as EC Properties Ltd didnot make existing services unoperable such as gas, electricity, sewage andwater.

In return for the call option to buy the mini sites at their own leisure andtiming, EC Properties Ltd are to pay the Council approximately 100 millionpounds. The amount to be paid under the CLSA is confirmed in the consultation

document.
http://w14london.ning.com/profile/RobertOsbournehttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BZDQ3ZGU5MzYtODRkMy00ZjJhLTg4OGQtNGY0YzJhNjI4N2Y3&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BZDQ3ZGU5MzYtODRkMy00ZjJhLTg4OGQtNGY0YzJhNjI4N2Y3&hl=en_GBhttp://w14london.ning.com/profile/RobertOsbourne


2/4

The team present confirmed that the main priority of the instruction toPricewaterhousecoopers PWC was to recommend the improvement or beefingup of EC Properties Ltd to make sure the Council got its 100 million pounds overthe five year period and was not to ensure the solvency of EC Properties Ltdover the period of the call option.

The Law Clerk Associate at Ashfords Solicitors, Keith Oliver, who has acted forme and some other residents, a Senior Planner and member of the AshfordsPlanning Team, was actually employed by the London Brough Of Hammersmithand Fulham in 1973 when the West Kensington Estate as it stands today wasdeveloped.

The following is from an email that Keith Oliver wrote to me on the 10thJanuary 2012:

Richard

I started working for Hammersmith in late 1973 at which time the towers wereat an advance stage of construction. The low rise houses were less welladvanced. This was also a time of recession in the housing market. Thefollowing is my recollection of events.

The site had been acquired some time previously from, British Rail (it had beena coal depot) plus a CPO of properties fronting north End Road. The acquisitionwas under the Hammersmith (North End Road Railway Sidings) CompulsoryPurchase Order 1967 (the 1967 CPO) made by the corporation on March 181968 under section 97 of the Housing Act 1957 for the purpose of providinghousing accommodation. The CPO was confirmed without modification by theMinister of Housing and Local Government on September 5 1969. Notice to

treat was served on October 30 1969 and possession was taken on July 151970. The previous Tory administration at Hammersmith had entered intosome form of joint venture arrangement with Gleeson Industrial Buildings whichwas a special purpose company formed by Gleesons (then one of the biggestconstruction companies) to build this estate. As I recall the deal was that LBHprovided the land and GIB built the development with the Council taking thehigh rise and Gleesons selling the houses to fund or part fund the new socialhousing.

The towers are concrete frames in filled with block walls. My main recollectionwas that the concrete floor beams were supposed to site on the concrete frame

at each level. However they were too short and were sitting on the inner skinof the walls. Long before the tower was finished the blocks startedcompressing and the floors sank noticeably. The cost of rectifying this errorforced Gleesons Industrial Buildings into liquidation, and the Council eventuallydid a deal with the administrators that it would take all the low rise houses ascompensation for the cost of remedying the towers. I think it took severalyears to sort out.

Keith OliverAssociateAshfords LLP
http://www.ashfords.co.uk/partners/Oliver/Keith/http://www.ashfords.co.uk/partners/Oliver/Keith/


3/4

I read this email to those present at the 11th January 2012 meeting and askedthose present what was being done to beef up or improve EC Properties Ltd sothe Borough would be protected from something like a repeat of the 1973fiasco. I asked what guarantees were negotiated to ensure that EC PropertiesLtd were going to be solvent after the end of the five year period, by when theCouncil would have pocketed the 100 million pounds.

I expressed the view that there were extensive risks that ECProperties Ltd would become insolvent because of the complexengineering problems which would have to be solved to completethe development. I mentioned as an example of the complexengineering problems that need to be solved, the dda compliantslope from the decking over the Lillie Bridge Depot to the NorthEnd Road, which will involve a fall of some 6 metres, to be builtwhile we live on the estates.

I was informed that PWC were only instructed to beef up or

improve EC Properties Ltd to ensure that it remained solvent forthe five years it would take for the Council to get its one hundredmillion pounds. I was told that the Council were taking no stepsto ensure the solvency of EC Properties Ltd for the entire lengthof the development or the life of CLSA call option. I was also toldCapCo could sell EC Properties Ltd or allow outside investors totake an equity interest in EC Properties Ltd or its subsidiarycompanies on or after the end of the five year period without anydue diligence on the part of the Council or any right to veto asale, or veto dilution, or transfer, of ownership. There istherefore no knowing who could eventually be the developer.Already CapCo have announced a conditional sale of part of

Seagrave Road to elements of the Kwok family.

I was told EC Properties Ltd have five years from the start of theCLSA to get planning permission. If EC Properties Ltd do not getplanning within the five year period is there is a break event inthe draft CLSA which could terminate the agreement.

I then asked the next natural question what was the life of theCLSA, in technical terms what was the longstop or longstop date.I was told by the team present that it was a very long longstop. I

was not told the exact length of the longstop. I was told by

Richard Powell, the Development Director of EC Properties Ltd, atour breakfast meeting the next day that it was agreed thelongstop was to be twenty years. I understand based on what Ihad been told previously that this means twenty years after theoption date, which commences on signing the agreement.

I then asked what arrangements there were to be for terminatingthe the CLSA if EC Properties Ltd did not perform. An example ofnot performing would be if EC Properties Ltd rear ended theBorough by starting work on the mini sites between years 15 to20. I was genuinely shocked and disturbed to hear that no earlytermination agreements were in place. I expressed the view that

there should be regular performance tests throughout the lengthof the CLSA which if EC Properties failed would enable the Council


4/4

to terminate the agreement.

Following the 11th January meeting, on the 12th January 2012, I met againwith the Council, with three other residents present, this time with a teamfrom EC Properties Ltd present also to discuss phasing. I was told by Phil Morristhat Nick Johnson had given his apologies for missing this phasing meetingbecause he has an urgent meeting with the Leader, Stephen Greenhalgh, todiscuss my point about the lack of performance monitoring and terminationarrangements in the CLSA as presently drafted.

I expressed the view that the lack of performance targets and terminationarrangements or break clauses would motivate EC Properties Ltd to rear endthe Borough and the Residents.

The sole details of the CLSA made public by the Council are on page 7 of theConsultation.

On page 7 it says If, after consultation, the Council decides to include theestates in the comprehensive redevelopment proposals it would enter a landagreement with EC Properties. The land agreement would grant EC Propertiesthe right, for up to five years, to purchase the land in phases on satisfaction ofa number of conditions This is a lie because actually the Council will agree(unless they now make changes) to grant EC Properties the right, for up to fiveyears, to confirm the purchase of a call option by which EC Properties may ifthey chose, and at a timing to suit themselves, purchase the land in phases onsatisfaction of a number of conditions, but without the Council having the rightto terminate the option agreement early should EC Properties not adequatelyperform, but at the longstop date, twenty years from the option date, ECProperties loses the right to purchase the unpurchased land.
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GBhttps://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzP3IKI6a15BN2M1NWFiOWQtNWJkYi00Y2M0LTk4ZmQtNzJkMTBkNTlhZTE4&hl=en_GB

osband post 19 january 2012

Documents