COMPENSATION CLAIM- MOUNT MURRAY RESIDENTS

Transcription

1 REPORT OF THE SELECT COMMITTEE ON THE COMPENSATION CLAIM- MOUNT MURRAY RESIDENTS

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3 REPORT OF THE SELECT COMMITTEE ON THE COMPENSATION CLAIM- MOUNT MURRAY RESIDENTS M r J P S him m in M HK (D ouglas W est) C apt A C D ouglas M H K (M alew and Santon) M r E G Lowey MLC At the sitting of Tynw ald C ourt on 15th June 2004 it w as resolved " that the Report of the Council of Ministers on the Compensation Claim - M ount Murray Residents be received and that a Committee of three Members be appointed with powers to take written and oral evidence pursuant to sections 3 and 4 of the Tynwald Proceedings Act 1876 to investigate the reasons why the claim of the injured parties for compensation cannot be paid when there have been similar payments made in the past, and to report to the Court with recommendations by October 2004". The three M em bers appointed at that sitting w ere M r J R H o u g h to n M HK (D ouglas N orth) M r J P S him m in BEd M H K (D ouglas W est) C apt A C D ouglas M H K (M alew and S anton) A t the O ctober 2004 sitting of Tynw ald C ourt M r H o ughton w as discharged. W ith the approval of the Court, the M em ber elected as replacem ent w as M r E G Lowey MLC The pow ers, privileges and im m unities relating to the w o rk of a com m ittee of T ynw ald are those conferred by sections 3 and 4 of the T ynw ald Proceedings Act 1876, sections 1 to 4 of the Privileges of Tynw ald (Publications) Act 1973 and sections 2 to 4 of the T ynw ald Proceedings Act Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Bucks Road, Douglas 1M1 3PW (Tel , Fax ) or may be consulted at All correspondence with regard to this Report should be addressed to the Clerk of Tynwald, Legislative Buildings, Bucks Road, Douglas IM l 3PW

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5 To: The Honourable Noel Q Cringle MLQ President of Tynwald, and the Honourable Members of the Council and Keys in Tynwald assembled REPORT OF THE SELECT COMMITTEE ON THE COMPENSATION CLAIM - MOUNT MURRAY RESIDENTS PARTI INTRODUCTION 1.1 B ackground At the sitting of Tynw ald C ourt on 15th June 2004 it w as resolved " that the Report of the Council o f M inisters on the Compensation Claim - M ount M urray Residents be received and that a Committee of three Members be appointed with powers to take written and oral evidence pursuant to sections 3 and 4 of the Tynwald Proceedings Act 1876 to investigate the reasons why the claim of the injured parties for compensation cannot be paid when there have been similar paym ents made in the past, and to report to the Court with recommendations by October 2004".

6 1.2 The Committee met on ten occasions. At its inaugural meeting Mr Houghton was elected as Chairman. Subsequent to that meeting Mr Houghton found himself with a conflict of interest in relation to the Mount Murray Residents claim in which he had previously been concerned in another capacity. Consequently at its meeting in October 2004 Tynwald Court approved that Mr Houghton be discharged from the service of the Committee and duly elected Mr Lowey in his place. 1.3 At a meeting held on 8 December 2004 Mr. Shimmin was elected Chairman PART 2 STRATEGY 2.1 Your C om m ittee resolved to w rite to residents of M urrays Lake Drive to determ ine those w ho considered them selves to be injured parties seeking com pensation. 2.2 Y our C om m ittee agreed th at resid en ts w ho confirm th eir interest as injured parties be requested by the Com m ittee C lerk not to approach C apt D ouglas d irectly on the subject, being the elected M em ber for the constituency. 2.3 Your C om m ittee agreed that it w ould hold m eetings w ith relevant parties in p riv ate in o rd er to focus on the com pensation issue and to avoid raising issues th at h ad been w ell d o cu m en ted and addressed in other enquiries. The p u rp o se of those m eetings w as n o t for the taking of evidence b u t to consider evidence alread y p ro v id e d to an en q u iry co n d u cted by P rofessor C row (the C row R eport) and to an enquiry conducted by M r N M acleod QC (the M ount M urray P art O ne Report) 2

7 and to clarify pro ced u res in respect of p lannin g m atters and the legal conveyance of p ro p erties at M ount M urray. It w as also necessary to establish the basis on w hich com pensation, if any, should be calculated - w hether it be quantifiable as loss of value of property, as paym ent for loss of a rig h t to object or some form of ex gratia good w ill paym ent. It w as also necessary to determ ine w hich body, if any, w as responsible for any such paym ent. DELIBERATION 2.4 Y our C om m ittee w as cognizant of the conclusions contained w ithin Section 5 of a re p o rt by the C ouncil of M in isters in M ay 2004 (C om pensation Claim - M ount M urray Residents) and in particular 5.1 "It is clearly regrettable that a situ atio n arose w hich led to the developm ent of properties on plots M urrays Lake G rove, w ith o u t legitim ate p lan n in g perm ission. It is also regrettable that as a result of this a n u m b er of residents on the estate w ere effectively d epriv ed of the right of objecting to such a planning perm ission" and 5.3 "A ccordingly, the Council of M inisters has concluded that the individuals w ho subm itted claim s to the D epartm ent in February 2001 should not be offered com pensation." 2.5 H ow ever your C om m ittee, w hilst in accord w ith those conclusions, is of the opinion th at in the interests of fairness and justness, consideration should be given to the aw ard of an ex gratia paym ent. There have been in sta n ces of ex g ra tia p a y m en ts in the p a st, even th o u g h the circum stances of such paym ents m ay n o t relate specifically to events 3

8 such as those concerning the claim by M ount M urray Residents. Those identified instances are listed as at A p pendix A to this report, further details of each are available for inspection in the T ynw ald Library. 2.6 C orresp o n d en ce w as received from M r an d M rs N Vakil (70 M urrays Lake D rive), M r and M rs D Cox (72 M u rray s Lake D rive) and the executors of the estate of the late M r C H arriso n of 69 M urrays Lake Drive, advising that they w ished to be considered as injured parties in respect of the C om m ittee's remit. 2.7 Your C om m ittee deliberated for som e tim e over the issue of those w ho w ished to be considered as injured p arties and concluded that it w as in a p p ro p ria te, given the u n fo rtu n ate circum stances, to consider the executors of the estate of the late M r C H arrison as being an injured party given that the pro p erty had been sold in O ctober Your C om m ittee concluded that for the p u rp o ses of this enquiry M r and M rs N Vakil w o u ld be considered as an injured party as w ould M r and M rs D Cox, both having been resident at the tim e of the construction of M urrays Lake Grove and also currently resident. PART 3 A CTIO N S 3.1 Your C om m ittee agreed to hold m eetings w ith The A ttorney General M r R A H am ilton, C hief E xecutive, D ep artm en t of Local G overnm ent and the Environm ent M r I M ccauley, Director of Planning 4

9 M r R K Corkill MHK H on D Gelling MLC Isle of M an Law Society Injured parties (Mr & Mrs N Vakil and M r & M rs D Cox) 3.2 A m eeting of the C om m ittee w as held on site on 29th D ecem ber 2004 to determ ine the location of the properties in question. M eeting w ith A ttorney G eneral 3.3 Y our C om m ittee m et w ith M r W J H C orlett, A ttorney G eneral, on Tuesday 11 January 2005 seeking his advice on issues w hich included the legal im plications of ex gratia paym ents and the legal status of letters of com fort. 3.4 M r C orlett ad v ised th at ex gratia paym en ts m ay be defined as being w ith o u t any legal obligation. H ow ever th ere is a d anger th at such paym ents m ay set a precedence, and th at an assessm ent of any loss m ay be unquantifiable and should not be sh o u ldered by G overnm ent w here other parties m ay be liable. 3.5 M r C orlett ad v ised th at letters of com fort only ad d ress a confirm ed statutory breach 3.6 M r C orlett advised th at the Isle of M an Law Society h ad circulated to its m em bers a re p o rt p rep ared by M rs C lare F aulds and M r John W right (providing com m ents on the C row Report). W ith the perm ission of the 5

10 Society M r C orlett provided a copy of that rep o rt w hich is attached to this report at A ppendix B. 3.7 M r C orlett also p ro v id e d a copy of a letter to the C hief Executive, D epartm ent of Local G overnm ent and the E nvironm ent (DoLGE), relating to the fo u r p ro p e rtie s constructed in M u rray s Lake G rove w hich is attached to this report at A ppendix C. Meeting with Mr Hamilton and Mr McCauley on 31st January M r H am ilto n ad v ised th at letters of com fort only ad d ress p lan n in g m atters u p to the tim e of the issue of those letters. A ny further subsequent planning m atters are subject to application procedures in the norm al w ay and therefore it w as not necessary to issue sim ilar letters to com plainants as their properties already have valid planning consent. 3.9 M r H am ilto n advised th at the D epartm en t h a d tak en advice on the com pensation issue from the A ttorney G eneral a n d from G overnm ent insurers. The advice w as not to pay com pensation as recom m ended in the C row R eport. M r H am ilton provided copies of correspondence betw een advocates for the developer and DoLGE B uilding C ontrol, a sam ple letter of com fort and co rresp o n d en ce b etw een D olg E and G o v ern m en t insurers w hich are appended to this report at A ppendix D. M eeting with Mr R K Corkill MHK on 31st January M r C orkill advised your C om m ittee th at follow ing the election in 2001 and h is a p p o in tm e n t as C hief M in ister, h e w as aw are th a t a recom m endation of the Crow Report (ref. 4.13) 6

11 I conclude that, in its over-informal manner of dealing with amendments to the planning approvals at M ount M urray, DoLGE may well have deprived some householders of the right of objection to changes affecting them. In my view, the Department should consider its position in this matter, and be willing to offer an apology to those who submit legitimate claims, and make an offer of compensation in deserving cases of justified complaint" had not been endorsed by the Council of M inisters and felt uneasy that the m atter h ad been left unresolved. A ccordingly he agreed to m eet the resid en ts a n d at th at m eeting the subject of ex g ratia p ay m en t w as discu ssed and he agreed to look into it. M r Corkill stressed that no prom ise or assurance of any paym ent w as m ade. Subsequently he m ade an apology to residents in T ynw ald in F ebruary The m atter of ex gratia p ay m en t w as not p u rsu e d as events w ere o v ertak en by the C om m ission of E nquiry into D evelopm ent M atters at M ount M urray. M eeting with Chief Minister Hon D Gelling MLC on 24th February The Chief M inister (M em ber of the H ouse of Keys for the constituency of M alew and Santon at the time) advised your C om m ittee th at he agreed w ith the recom m endation of the C row R eport w hich w as to resolve the position and w as sym pathetic w ith the injured parties position. A lthough he had been contacted by the injured parties in his capacity as M em ber for the C onstituency of M alew and Santon at the tim e, he h ad at no tim e assured them that com pensation w ould be paid. 7

12 Meeting with the Law Society on 24th February Your C om m ittee m et w ith M r J Callin, P resident of the Isle of M an Law Society, acco m p an ied by M r Jam es Q uinn, to discuss conveyancing pro ced u res at the tim e of purchases at M ount M urray, any changes in convey an cin g p ro c e d u re s since p ro b lem s at M o u n t M u rray w ere identified and the basis of any legal challenge in respect of advice given to clients M r Callin advised that he was not privy to indiv id u al purchasers7files but th at the Society p ro v id e d Society m em bers w ith a stan d ard form of agreem ent from tim e to tim e. The v en d o rs ad vocate w o u ld provide a d ra ft convey ance an d site plan. The p u rc h a se rs advocate w ould u n d ertak e title search at the G eneral R egistry an d oth er searches w ith G overnm ent D epartm ents w hich w ould include planning m atters M r C allin acknow ledged that in one case an am algam ation of practices had resulted in one advocate acting for both v endor and purchaser. The Society had since issued guidance to its m em bers to avoid reoccurrence M r Caliin advised that in the event of alleged professional negligence the com p lain an t sh o u ld seek advice from an advocate. Such com plaints w o u ld be referred to the Society's in su rers w ho p ro v id e d a m aster indem nity cover. A ny considered justified claim w o u ld be considered by a D eem ster. H ow ever any such action w ould be tim ed out after six years from the tim e the action occurred M r Callin confirm ed that there w as no m echanism w ithin the Society for ex gratia paym ents. 8

13 M eeting with Mr Vakil and Mr Cox on 7th March Mr Vakil made it clear that he and his fellow complainants had no wish to embarrass Government but felt that DoLGE was responsible for them being deprived of the right to object to further development in the area. They only wished for justice and transparency of Government Mr Vakil advised your Committee that he had purchased his property in 1996, Mr Cox purchased his in At that time 24 properties had been built. No building work was going on. However when J G Kelly Ltd. took over the development in 1998 Mr Vakil saw a plan which was for about 70 properties. The plan indicated that only trees were to be to the rear of his property M r Vakil m ade enquiries at the Planning Office b u t no one could show him any ap p ro v ed plans. He w as p rovided w ith a host of various plans b u t it w as n o t clear w hether these plans w ere schem atic, ap p ro v ed or proposed A p lanning search u n d ertaken in N ovem ber 1997 show ed th at the m ost recent planning consent (ref 92/212) issued on 5th June 1992 and valid for four years h ad expired. This approval referred to location of four sites that "may be relocated elsewhere within the area allowed for sites and must form the subject of an amended plan to be submitted and agreed with the Architect and Planning Officer". A further planning search u n d ertaken in Septem ber 2002 show ed no further application in respect of these four properties M r Vakil advised that he saw a plan p repared by D ouglas Gas show ing proposed gas m ains services w hich clearly show ed a proposed bow ling 9

14 green to the rear of his property. The plan also show ed a road layout in the area of M u rrays Lake G rove. H e u n d e rsto o d th at the additional p roperties w ere to be constructed as an extension to the existing line of p ro p erties in M u rrays Lake D rive and n o t at a 90 degree angle into M urrays Lake Grove. W hen construction of the properties com m enced he contacted the Planning Office b u t could get no satisfactory answ er M r Cox advised that he w as aw are of the site plan w hich accom panied his conveyance in 1998 w hich show ed ('for identification purposes only and not of lim itation') the layout of four properties at a 90 degree angle from his ow n p ro p erty in M urrays Lake Grove. H ow ever the conveyance and site plan w ere signed w here indicated an d ad v ised by his advocate - effectively th ey w ere told w h ere to sign on the a ssu m p tio n th at everything h ad been checked M r Cox ad v ised th at he ap p ro ach ed his advocates, G ough & Co, for advice an d w as inform ed th at there w as now a conflict of interest as because of a m erger they now acted for the ven d o r as well M r Cox com m ented that he th ought it w ro n g th at the hom e ow ners in M urrays Lake G rove h ad received letters of com fort w hen they had received nothing, not even an apology. They d ecided to seek political su p p o rt from the then M em ber for the constituency, M r D onald Gelling MHK. They subsequently subm itted a Redress of G rievance in 2001 that w as not picked up as a C om m ission of E nquiry w as instigated. 10

15 PART 4 CONCLUSIONS 4.1 Your C om m ittee considers that the injured parties are justified in their grievance to a lim ited degree and concur w ith the recom m endation 4.13 of the C row Report. The injured parties w ere clearly denied the right to object to fu rth er d ev elo p m en t - this is a crucial consideration - and potential problem s w ere not highlighted to them at the tim e of purchase. The site p la n w hich accom panied the conveyancing docum entation, show ing the layout of the four properties, and the planning search which show ed the planning consent having expired, w ere clearly conflicting and should have b een hig h lig h ted as a p o ten tial p ro b lem by their legal advisers. 4.2 Your C om m ittee considers th at there are lessons to be learned across G overnm ent and other agencies w here it has failed to provide quality service expected by the Island's residents. It sh o u ld be incum bent on those responsible to acknow ledge shortcom ings and at least say sorry w here applicable. It is clear that procedures w ithin the D epartm ent failed to p ro v id e an adequate service in this p a rtic u la r case and it w as not beyond the bounds of reasonableness to have offered an apology to the com plainants, w ithout referral advice, w hich m ay well have diffused the situation at an early stage. 4.3 Your C om m ittee is satisfied that the involvem ent of M r R K Corkill MHK (Chief M inister at the time) and the Chief M inister (H on D Gelling MLC - M em ber of the H ouse of Keys for the C onstituency of M alew and Santon at the time) did not com prom ise the situation and helped to provide some com fort and su p p o rt to the injured p arties at a tim e w hen they were exasperated b y events. 4.4 Y our C o m m ittee expresses re g re t th a t legal a d v ise rs h av e not acknow ledged a possible failure in their ow n practices and perhaps they should consider that they have a m oral or professional responsibility to 11

16 offer a form of recom pense or apology for th eir failure to h ig h lig h t potential problem s - particularly as subsequent proposals for procedural changes w ere m ade. 4.5 Your C om m ittee considers it to be unfortunate th at various parties relied too h eav ily on p ro ced u res and rig id advice ra th e r th an listening to co m p lain ts and atte m p tin g to reso lv e th e p ro b lem s at a n earlier o p portunity. W e feel that all D epartm ents of G overnm ent should have the ability to be m ore flexible in their approach to problem solving and dealing w ith com plaints. 4.6 Your C om m ittee concludes th at an ex gratia p ay m en t by G overnm ent to the injured parties should be considered. The am o u n t of such paym ent is a n o tio n al consid eratio n and su g g ested to b e 2500 to each p a rty identified in p arag rap h It should not be the sole responsibility of G overnm ent to aw ard such p aym ents given the duty of care expected from all those involved. The Isle of M an L aw Society m ay p e rh a p s w ish to co n sid er m aking a recom m endation to their m em bers that those m em bers involved m ake a sim ilar gestu re as a contribution to w ard s the cost, both financial and em otional, borne by the injured parties. 4.8 Your C om m ittee has been disappointed at the failure of G overnm ent and o th er agencies to d em o n strate a p ro ficient a n d cohesive appro ach expected by the people of the Island w ho are entitled to a professional service. H o w ev er, ra th e r th a n d ire c t criticism and blam e, y o u r C om m ittee feels th at it is tim e that a line is d raw n u n d er this unfortunate episode w hich h as show n G overnm ent to be w an tin g and h as perhaps 1?.

17 suggested that other agencies could have been m ore diligent or perform ed m ore efficiently. It has highlighted certain failures w hich the Law Society has addressed and expects the D epartm ent of Local G overnm ent and the Environm ent to continue to im plem ent changes in procedures w hich it has already addressed and to im prove w here it has failed. PART 5 R ECOM M EN D A TIO N S 5.1 Your Com m ittee recom m ends that the D epartm ent of Local G overnm ent and the Environm ent should recognise its failings and issue an apology to the injured parties. 5.2 Your C om m ittee recom m ends that a notational ex gratia paym ent be aw arded to each of the injured parties in the sum of 2500, such funds to be m ade available by the T reasury. H on J P Shim m in Bed M HK (Chairm an) C apt A C D ouglas M HK Mr E G Lowey MLC July ?

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19 APPENDIX A List of ex-gratia / Compensation Payments

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21 LIST OF INSTANCES : EX-GRATIA/ COMPENSATION CLAIMS Mr & Mrs Proctor: The Report of the Commission of Inquiry into Child Care (the McManus Report) recommended an ex-gratia payment of 1514 to Mr and Mrs Proctor as reimbursement of expenses properly falling to the public services and arising from a direction of the Court. References: Extract: Report of the Commission of Inquiry into Child Care; August 1992 Child Care - report of the Commission of Inquiry, Part I - Amended motion approved; Tynwald Court; 17 & 18 November 1992; T206; T213 Mr David Arthur Newton: Mr Newton s recently purchased livestock was destroyed on the direction o f the Department of Agriculture, having been imported to the Island from South-east England as an incidence of foot-and-mouth disease was reported in the UK. He was compensated for loss of production. References: Select Committee on the Petitions for Redress of Grievance o f David Arthur Newton - Report received and recommendations adopted; Tynwald Court; 20 October 2004; p i 50 T122 Petitions for redress of grievance of Mr David Arthur Newton - Treasury compensation for lost production income - Motion carried; Tynwald Court; 16 February 2005; p838 T122 Mrs Sturdy and Mr & Mrs Penketh: The Marlborough Hotel and the Claremont Hotel were closed for a period as a result of procedures carried out by the Fire Services Committee of the Department of Home Affairs. Ex-gratia payments were made for the trading losses suffered, and compensation made in respect of legal costs incurred. References: Extract: First Report o f the Select Committee o f Tynwald on the Fire Precautions Act 1975 Fire Precautions Act First Report of the Select Committee - Amended motion approved; Tynwald Court; 13 July 1988; T1860

22 Flood Relief: Compensation was paid as recompense for damage sustained as a result of the floods on 2 & 3 July 1968 References: Extract: Report of the Select Committee of Tynwald on Flood Relief; 14 November 1968 Flood Committee report accepted; Tynwald Court; 19 November 1968; p345 Other cases Petition of Jean Noreen Thompson: A sub-committee o f the Attorney-General, the Treasury Minister and DoLGE Minister were unable to identify any precedent for awarding ex-gratia payments to injured parties. Reference: Petition for Redress of Grievance of Jean Noreen Thompson - Precedent for ex-gratia payments - Question by Mr Braidwood; Tynwald Court; 20 M arch 2001 ; T621 M anm ohan Bhandari: Although not awarded by Tynwald, Mr Bhandari successfully sued the Department of Local Government and the Environment for damages. Incorrect advice by a Department official had led to the loss of a major contract. Damages awarded by the court included a modest award as a result of loss of face involved in the termination of supplying to Marks and Spencer and resulting financial anxiety. Reference: Reasons for judgment in the case of M Bhandari and SF Bhandari v Department of Local Government and the Environment; IoM High Court - Common Law Division; Deemster Corrin; 27 February 1992 and 1 April 1993 Sum m erland disaster: No compensation was paid, but a donation was made to the Summerland Disaster Fund. Reference: Summerland disaster - Contribution to fund - Agreed...: Tynwald Court; 16 October 1973; T24 Statement by the Governor on the Summerland Disaster Fund; Tynwald Court; 9 April 1974

23 APPENDIX B Isle of Man Law Society: Report to Council

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25 REPORT TO COUNCIL BY CLARE FAULDS and JOHN WRIGHT Chairs Respectively of the Conveyancing and Rules, Ethics and PI Committee - in respect of - THE REPORT OF PROFESSOR STEPHEN CROW into the enquiry into Planning and Development and other matters at Mount Murray and the letter from the Chief Secretary dated the 29th January 2001 In view of the difficulties being experienced by a certain person either wishing to buy or sell property at Mount Murray, Professor Stephen Crow was appointed by the Council of Ministers on 18th August 2000 to investigate into the planning, development and other matters at Mount Murray. His Report was delivered on the 30th December 2000 and by letter dated the 23rd January 2001 the Law Society was invited to comment upon the Report to the Council of Ministers. Chapter 2 of the Report concerns title to the property and in particular paragraph 2.29 to 2.34, a criticism of our existing Practice Rule 7 which allows advocates to act on behalf of both vendor and purchaser. Whilst we disagree with Professor Crow s views on the question of title as stated in his report, we consider him to have raised some valid and important areas of concern, particularly with regard to planning issues, financial

26 liability for roads, sewers and the future estate management, and advocates acting for both vendor and purchaser. It is our understanding that those firms of advocates which did not feel able to certify title to purchasers and lending institutions never suggested that there was a lack of good freehold title as far as the vendors were concerned. Their concern was that advocates have to certify good marketable title and draw to the attention of any potential purchaser and lending institution anything which may affect the value of the property and in particular the value of their security. Professor Crow s Report shows there to be unresolved issues about management companies (including liability and maintenance of roads and footpaths and the communal spaces generally), drainage connections and sewerage, plot boundaries and planning. All or any of these have the potential seriously to affect marketable title. The Planning Consent in respect of the Mount Murray Developments consistently referred to the use set out on the plans*. The vast majority of the plans were styled HOLIDAY. This seems to have been overlooked by Professor Crow in his Report. Reference was also made in the Planning Consent to the terms and conditions in the B uyer s Guide booklet.

27 8. There was clearly a potential dispute between the wording on the plans and the wording in the booklet. 9. Those firms which felt that caution was the better part of conveyancing practice therefore advised their clients that in any certification of title they would have to point out that there was uncertainty as to whether or not, in all the circumstances, the property had planning permission for permanent residential occupation or only for temporary holiday occupation. 10. In the latter case, there was likely to be a diminution in value of the property which might have an affect on either the purchaser s concept of what he was buying was good value for money, or alternatively the value of the property from a lender s point of view in foreclosure proceedings. 11. Indeed, given the vagaries of the difference between the possible interpretation of the plans and the possible contradiction of the Buyer s Guide booklet and, notwithstanding the findings of Professor Crow, we both believe that at the moment advocates would be well advised not to certify marketable title to either a purchaser or a lender until such times as the Department of Local Government and the Environment has made it clear that it accepts the report of Professor Crow in full and provides written confirmation of acceptance that the permitted planning use of all of the properties at the Mount Murray Development is permanent residential. 3

28 12. We recommend that the Department of Local Government and the Environment be requested to provide a Letter of Comfort for recordal in the Deeds Registry to the effect that no prosecution for alleged breach of planning consent or enforcement proceedings in respect of permanent residential use will take place against existing or future owners of any houses now built or in the course of construction at Mount Murray. These should be identified by reference to a plan. 13. Professor Crow considers that there are no problems of title that could not be settled by goodwill between the advocates acting for the purchasers and those of the vendors. We cannot share his view because of the effect that the unresolved issues have on marketable title. 14. Professor Crow also refers to the management company issues as an exception to title at paragraph The problem is not to do with strict legal title to the freehold but is a matter of performance and ability to perform long-term and goes to marketable title. It will clearly be a matter upon which advocates would wish to comment both to purchasers and lenders and it has a potential effect on the value of the properties on the open market. 4

29 15. In relation to the question of advocates acting on both sides in a transaction, we have discussed, shortly, whether a halfway house between the present rules in England and those in the Isle of Man could best serve the particular needs of the Manx community but do not believe this to be the case. 16. Whatever the arguments may have been in the past against adopting the Clothier Report recommendation against acting on both sides, Professor Crow s Report provides proof that the Society must revisit the issue. 17. Annexed at Appendix 1 is a copy of Manx Practice Rule 7 and at Appendix 2 a copy of English Practice Rule A close reading of the English Practice Rule 6 has convinced us that we should adopt it (or something very similar) and that the adoption must be sooner rather than later. 19. The English Practice Rules do not prohibit a solicitor from acting on both sides in a transaction for both purchaser and vendor as long as both parties consent. Given the provisions of the Advocates Act 1995, all firms should now be giving a written estimate of fees and best practice requires that Terms of Business letters should point out the dangers of an advocate acting on both sides (there are no real advantages). On the basis of full disclosure the clients could agree to the same advocate acting for both parties. We believe there must however be an absolute prohibition on an advocate acting

30 for a builder/developer and for a purchaser. As far as lenders are concerned we are of the view that there is nothing wrong with the practice of the same advocate acting for borrower and lender, but that again the borrower must be made aware of the advocate s absolute obligation to disclose any adverse information as to, for instance, the value of the property, the security of the property or the borrower s income, to the lender. The advocate must ask for the borrower s consent to do this, and failing such consent the advocate should not act for both sides. 20. Annexed hereto, as part of Appendix 3 and 4, are copies of letters which are used by Wright & Co. i. When they act on both sides of a transaction; and ii. When they act for both borrower and lender. These are provided as an indication of the kind of information that should be provided to the client so that informed written consent to an advocate acting on both sides can be obtained. 21. Finally, annexed at Appendix 5 is a copy of our proposals for a new Practice Rule We should point out that we are aware that this matter was raised by Deemster Cain in his meeting with the President and with Mr Wright (as Chair of the Rules, P.I. and Ethics Committee) in relation to the Practice Rules and Byelaws. 6

31 It may have been, in years gone by, that with only 20 practising advocates and 6 or 7 firms that it was inevitable that we acted on both sides. We now have 120 members of the Society, 105 of whom are in full - time practice and we have more than 20 firms. In the new Practice Rule 7 that we are proposing there is no absolute prohibition against acting for both sides, except in the builder/developer situation. There will be exceptions to allow acting on both sides in transactions between close family members, non arms-length transactions and where there is written informed consent. We believe these exceptions will answer the needs of clients and of the profession. We believe that adoption of a new Practice Rule 7 is appropriate for the profession in the first decade of the 21st Century and that it must be done as a matter of urgency.

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33 APPENDIX C Correspondence from Attorney General to Chief Executive DoLGE

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35 Telephone: (01624) Fax: (01624) Your ref: R A H /M C /3 1 5 fk ^^ Our ref: W JH C /K C /38/3JX (Please quote on all correspondence) ATTORNEY GENERAL'S CHAMBERS 2nd FLOOR (NEW WING) VICTORY HOUSE DOUGLAS ISLE OF MAN IM1 3PP 28 August 2001 BY FA X A N D PO ST: R.A. H am ilton, Esq., C hief Executive, Departm ent of Local Government and the Environment, M urray House, M ount Havelock, DOUGLAS IM1 2SF. Dear Mr. Hamilton, Re: M ount M urray Development Thank you for your letter of the 17th August which was awaiting my return to Chambers after a period of leave. I have in fact been waiting to hear from the representative of the Law Society with w hom I have raised various issues relating to letters of comfort but unfortunately have received no response to m y follow up letter and reminder. There are, in fact, tw o issues to be examined as a result of the construction of four properties, M urray s Lake Grove:- (a) (b) Should a letter of comfort be issued to the owners of each of these properties notwithstanding that planning approval has not been granted in respect of their construction?, and Should your Departm ent offer compensation to the owners of properties who claim that the value of their properties has been adversely affected by the allegedly unauthorised construction of the four properties? The tw o issues are, perhaps inevitably, interlinked. W ith reference to the letters received from Mr. and Mrs. Vakil, Mr. and Mrs. Cox and M r. Harrison, it is suggested in those letters that the Report prepared by Professor C row requires your Department to pay compensation to them. In fact the recommendation of Professor Crow is as follows:-

36 Recommendations arising from planning and building regulation approvals and conditions 5.20 I have already noted that in its over-informal manner of dealing w ith amendm ents to the planning approvals at M ount M urray, D O LG E may well have deprived some householders of the right of objection to changes affecting them. I therefore recommend that the D epartm ent should consider its position on this matter, and be willing to offer an apology to those who submit legitimate claims, and make an offer of compensation in deserving cases of justified com plaint. I believe that the Departm ent should readily accept this recommendation but it does not follow that the Department must make an offer of compensation to those persons who have intimated a claim against the Departm ent. The m atter must be carefully considered with the Department's insurers and I feel quite sure that offers of compensation should indeed be made only in respect of those persons who submit legitimate claims where the cases are deserving of justified complaint. If I may refer to the correspondence which was discussed at the meeting on the 27th June in relation to plots Murray's Lake Grove it will be recalled that Gough & Co., acting for J.G. Kelly Limited, stated:- It is our clients understanding that the four dwellings concerned have been built w ith the benefit of planning permission, the only question being as to w hether or not the same have been constructed in the correct position. Gough & Co. have emphasised that the plots in question were actually purchased by Woodacre Properties Limited, another of their clients, and that at the time of the purchase of the plots the roads and sewers had been laid out and in parts completed. Gough & Co. state that their clients acted in good faith in relying upon plans which were provided by M ount M urray C ountry Club Limited to show the village layout. Searches w ith various utilities were carried out - although no reference is made to searches of the Planning Committee s records - and Gough & Co., on behalf of their clients, invite your Department to accept that their clients at all times acted in good faith in going about the purchase and development of the site. It would appear from Gough & C o. s letter that J.G. Kelly Limited have received no complaints from purchasers of plots with regard to the findings of the Crow Report save that Mr. and Mrs. Vakil, who purchased 70 M urray s Lake Drive from M ount M urray Club Limited, has complained that properties have now been built to the rear of their plot whereas the original layout plan would indicate that such properties would have been located along M urray s Lake Drive. It is the conclusion of Gough & Co., having checked at the Deeds Registry and in particular having noted the plan annexed to the conveyance whereby Mr. and Mrs. Vakil purchased their property, that the revised layout of M urray s Lake Grove clearly shows the properties located at the rear of Mr. and Mrs. Vakil s property. It is Gough & C o. s conclusion that all purchasers of properties in or about the M urray

37 Woods area at all times believed that Murray's Lake Grove would be constructed where it has been constructed and it is accordingly difficult to anticipate any situation whereby any resident has been misled by the plans made available to them... it is without question that any purchaser in the village area will have been fully aware from day one of viewing that Murray s Lake Grove was to be situate where it has been constructed. It m ay well be that Gough & Co. would draw similar conclusions in respect of M r. and M rs. Cox and Mr. Harrison, as well as Mr. and Mrs. Vakil. Gough & Co. consider that your Department was clearly aware of the layout of M urray s Lake Grove as far back as May Copies of the building regulation notices of approval for plot 70 M urray s Lake Drive, together w ith the accompanying site plan duly endorsed by your Department, have been forwarded to your D epartm ent and in those circumstances Gough & Co. assert that your D epartm ent understood that the layout of M urray s Lake Grove as constructed was approved. Gough & Co. rely upon paragraph 4.10 of the Crow Report to support their proposition that it would now be entirely wrong for your Department to consider taking any action whatsoever in relation to the four houses at M urray s Lake Grove (plots 73-76). Gough & Co. invite the Departm ent to give com fort to the owners of the dwellings forming M urray s Lake Grove so that the house owners are in no way inhibited or prejudiced in any subsequent sale of their properties. In view of the evidence summarised by Professor Crow in his Report, it is difficult to disagree w ith his conclusion at paragraph 4.10 that:-... as to the status of houses at M ount M urray... all but four have been erected with the benefit of planning approval. However, unless further evidence comes to hand, it seems to me that the erection of the four houses in M urray s Lake Grove has proceeded w ithout benefit of planning approval. Nevertheless, in my view, their owners need have no worries whatsoever. Clearly, the Professor anticipated that some action would be taken by the Departm ent to give comfort to the owners of those four properties. In all the circumstances I believe that letters of comfort indeed ought to be issued to the owners of those four properties. Insofar as Mr. and Mrs. Vakil are concerned, however, the question m ust be as to whether Gough & Co. are correct in their assertion that Mr. and Mrs. Vakil, in common with all other purchasers of properties m or about the Murray W oods area (including Mr. and Mrs. Cox and Mr. Harrison), at all times believed that M urray s Lake Grove w ould be constructed where it has been constructed. It must not be forgotten that Mr. and Mrs. Vakil and the other purchasers of those properties would have the benefit of professional advice from their advocates. It is standard practice for advocates to carry out pre-contract inquiries and of course 3

38 one of the most im portant inquiries is that which is made of the Planning Com m ittee of your Department. N ot only do the advocates check that a particular property has the benefit of planning approval for the development which has been or is to be carried out in relation to the property, but a check is also made as to the development w hich is to be carried out in relation to the adjoining properties. M oreover, the advocate will invariably check the boundaries of a plot (bearing in m ind particularly the provisions of clause 7 of the standard Deed of Conveyance at M ount M urray that:- A ny dispute between the purchasers and the vendor or between the purchasers and the owner or owners of any other building plot as to the boundaries of the Scheduled Property or the position and size of the Estate Sewers and Service Installation shall be determined by the Vendor s surveyor whose decision shall be final ). If the advocates were not able to obtain satisfactory replies to their precontract inquiries by reason of the abundance of drawings on the relevant files and the confusion in relation to the proposed development which apparently was found in the D epartm ent at that time, the fact is that the advocates ought, nonetheless, to have advised their clients accordingly and should have warned their clients about the confused state of the planning approvals. One cannot escape the conclusion that it was for the buyers and their professional advisers to satisfy themselves as to the location of the plots, the existence of the requisite planning approvals and the layout and location of other properties in the vicinity of the plots. You invite me to advise and guide your Departm ent in relation to these m atters and advise how you should respond to the letters received. Firstly I would reiterate that all correspondence from the Departm ent relevant to this m atter should be discussed w ith, and approved by, G overnm ent s insurers. The insurers and their advocates may well wish to settle the content of the correspondence. Secondly, and for the reasons stated by Professor Crow in his Report, I consider that it is indeed appropriate that the Department should issue a letter of comfort* in respect of each of the four houses in M urray s Lake Grove which were erected without the benefit of planning approval. I confirm that in my view the draft letter of comfort prepared by Mr. Sinden and forwarded to me under cover of his letter of the 4th June would appear to be satisfactory. Thirdly, insofar as the complaints against the Departm ent intimated by Mr. and Mrs. Vakil, Mr. and Mrs. Cox and Mr. H arrison are concerned, I consider that the Departm ent is justified in rejecting the claims intimated by them. I feel that in law the professional advisers acting for these purchasers had a duty to advise in relation to the layout of the plots and the development in the immediate vicinity of each relevant plot. Moreover, for the reasons stated by Gough Sc Co. I believe that it is highly likely that Mr. and Mrs. Vakil, Mr. and Mrs. Cox and Mr. H arrison were aware (or at least are deemed to be aware) of the development of the four properties in the vicinity of their plots. 4

39 Insofar as the issue of letters of comfort is concerned, I feel on balance that it is not appropriate for the Departm ent to issue a general letter of com fort to all the owners of properties at the M ount M urray Development. There may indeed be issues as to w hether the D epartm ent has the necessary legal power to issue such a general letter. I believe that it is more appropriate for the Departm ent to issue a specific letter of com fort in respect of each application made to it, depending on the m erits of the application. If there are any issues which require clarification, please do not hesitate to let me know. Y ours sincerely, W.J.H. Corlett, A ttorney General. 5

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41 APPENDIX D C orrespondence from Chief Executive DoLGE

42 I

43 Isle of Man Government Rii/ryi Elian Vann in Department of Local Government and the Environment Rheynn Reiltys Ynnydagh as y Chymmyltaght Please reply to the Chief Executive 2 FE ri n-> - 0 p T!iE S J^ O F T Y N W A I n Murray House, Mount Havelock, Douglas, Isle of Man, IM1 2SF. ceo@dlge.gov.im Tel: (01624) Fax: (01624) Chief Executive: R. A. Hamilton, Assoc. IPD, MCMI Our ref: RAH/AJC/315/7 Your ref: C/MMC/01 31st January 2005 Mr L V Cretlin Clerk Select Committee on Compensation Claim (Mount Murray) Office of the Clerk of Tynwald Legislative Buildings Douglas Dear Mr Crellin Re: Select Committee of Tynwald on Compensation Claim Mount Murray Residents Further to my appearance before the Select Committee this morning, together with Mr M I McCauley, Director of Planning and Building Control, I have pleasure in enclosing for the Committee a copy of the following documents: - (a) (b) (c) (d) (e) (f) letter dated 10th April 2001 from Gough and Co, Advocates for J G Kelly Ltd and Woodacre Properties Ltd; "sample" letter dated 15th August 2001 to the Minister and Chief Executive of the Department threatening to lodge a Petition of Doleance; "sample" letter dated 9th October 2001 (with its enclosure) from the Chief Executive of the Department to the owners of the four houses in Murrays Lake Grove, by way of "letter of comfort"; letter dated 30th October 2001 to the Department from Aon (Isle of Man) Ltd; letter dated 26th November 2001 from Aon (Isle of Man) Ltd to the Chief Executive of the Department; letter dated 26th November 2001 from Conrad Hotels Ltd to the Chief Secretary (referring to the four plots in Murrays Lake Grove). No doubt you will let me know if I can assist the Committee further. Your. l b ;. Chief Execi/tive Copy to: Mr M I McCauley, Director of Planning and Building Control

44 Gough & Co Advocates Sc Notaries Public "Anglo International House Bank Hill, N orth Quay Douglas, isle of Man IM1 4QE Your Ref: O ur Ref: EPK/97-162/kkr 10th April 2001 Mr B Sinden Esq Department of Local Government and the Environment Murray House Mount Havelock DOUGLAS IMI 2SS PLANNING COMMITTEE SECRETARY S OFFICE 11 APR 2001 REF... Dear Sir OUR CLIENTS - 1G KELLY LIMITED and WOODACRE PROPERTIES LIMITED FOUR HOUSES AT MURRAY'S LAKE GROVE (PLOTS 73-76) MURRAY WOODS. M OUNT MURRAY. SANTON We write further to your letter of 2 8 th March 2001 addressed to our above named client company, ] G Kelly Limited, which was the company responsible for the construction of the above-identified dwellings at the Murray Woods Development. We have been instructed in this matter and we would be obliged if all future correspondence could be addressed via this office quoting the above reference. On a point of clarification, whilst JG Kelly Limited was the company responsible for the actual construction of the dwellings concerned, it was Woodacre Properties Limited who contracted for the construction of the same and went about the sale of those properties and for whom we also a c t We would also wish to qualify the complaint that you have received. It is our clients understanding that the four dwellings concerned have been built with the benefit of planning permission, the only question being as to whether or not the same have been constructed in the correct position. We consider that this is an important distinction in the particular circumstances of this case. Continued /... Telephone (01624) Fax (01624) Website: paul@goughco.com Partners: Alan L. Gough E. Paul Kerruish Associate: Jonathan Butiimore (Irish Barrister) Associate Advoc;

45 Gough & Co Continuation Page 1 Woodacre Properties Limited purchased the Rowan Woods site from Mount Murray Country Club Limited by a Deed of Conveyance bearing date the 7th July 1998 (a copy is annexed hereto at Divider A). The plan which annexed to this Deed of Conveyance is the plan upon which our clients based their development of the site. The boundaries of the site purchased are indicated in red ("the Site")* A t the time our client's purchased the Site, the roads and sewers had been laid out and in parts completed for some significant time and from discussions with a representative of Mount Murray Country Club Limited, we are informed that the. road lay out and sewers were installed as long ago as We are also informed that our clients' Sites Manager recalls that the Murray's Lake Grove section of estate road was indeed complete at the time of the purchase (save for topcoat) and there was even the road sign for Murray's Lake Grove in situ. In addition to the roads having already been installed, we are also informed that ail services were installed to the Site pre purchase and laid to each plot, including those four on Murray's Lake Grove. On further enquiry with a representative of Mount Murray Country club Limited, we are informed that all services had also been installed in the site and laid to each individual plot by no later than Whilst negotiating the purchase of the Site, our client made enquiries into the approved layout and designs and enclosed herewith are three of the plans which were provided by Mount Murray Country Club Limited to show the village layout (Divider B). You will note that all these plans date as far back as November 1994 and are the plans upon which our clients relied in good faith. We are informed that our clients had not had sight of any plans that would have brought them to question the positioning of Murray's Lake Grove as constructed and had no reason to question the same until the publication of the Crow Report. In addition to the plans received from Mount Murray Country Club Limited as Vendor, our clients have also carried out certain searches with various utilities in relation to the Site and at Divider C is a copy of the search response from the Isle of Man Water Authority dated 2nd June 1997 and which has annexed thereto a copy of its own plan of the layout of the Site. The reason for enclosing this plan is it is the only search which responded with its own independent plan of the Site. We consider it is important to note there is a dog-leg connection at the Murray's Lake Grove area of the plan, which sits comfortably with the layout plans provided by M ount Murray Country Club Limited to our client when it purchased the Site and upon which reliance was made. Continued /