Sovereign Harbour property owners are covenanted to pay an annual charge (currently about £290) to the Sovereign Harbour (Sea Defences) Community Interest Company Limited, a subsidiary of the Sovereign Harbour Trust (SHT), through an ‘Estate Rentcharge’ for flood defence work and harbour and marina maintenance.
This page gives some of the background and complex history of the rentcharge and explains some of our concerns about the current arrangements.
The development of a harbour at Eastbourne, that was to be situated on a flood plain, went ahead contrary to the recommendations of the Sussex River Authority and Southern Water Authority, who petitioned against it throughout the 1960s and 70s. Concerns centred on the potential effects of the harbour arms on littoral drift of shingle, and consequential depletion of shingle along the adjacent coast resulting in weakening of flood defences. A Bill in 1975 for the construction of the harbour was defeated in Parliament, but a second bill promoting the Harbour was submitted in 1980 and subsequently enacted in the Eastbourne Harbour Act.
The passage of the 1980 Act (Eastbourne Harbour Act 1980 Eastbourne Harbour Act 1988 Modification ) was on the back of the agreement of the Duke of Devonshire to maintain shingle on the beaches along a 9 km stretch to the East of Sovereign Harbour and this was enshrined in the Eastbourne Harbour Act as the power of the Southern Water Authority to recover costs from the developing company for making good weaknesses along the ‘protected beach’.
This left the developers (either the Duke of Devonshire, or successor companies), with a legal obligation in perpetuity to remedy any depletion of shingle along the stretch of coast between Sovereign Harbour and Cooden Beach at their own cost. The ‘justice’ in this was that those organisations who would commercially benefit from the sale of the land and its development would contribute to any additional maintenance of sea defences required to compensate for the effects of the Harbour.
The Duke of Devonshire became aware that his original plan for a luxury marina was too expensive and he put forward a cheaper option with a less pronounced harbour wall. Concerns arose as to whether the Duke’s commitment and the safeguards in the Eastbourne Harbour Act would be affected by the new proposals. The Southern Water Authority gave assurances that the responsibility of the developing company to maintain flood defence provisions was protected. The new planning proposal was given permission in 1987.
However, a year later the Duke decided that the financial risks were too great and he sold the harbour site to Tarmac Construction. Even though responsibilities had been enshrined in law, in 1988 the Southern Water Authority and Tarmac signed an agreement and the responsibility to protect the 9 km of coast disappeared ‘overnight’.
● Why, given the arguments that Southern Water Authority had made to prevent the development of the Harbour and then to secure flood defence provisions from the developers, did they feel the need to enter into a weaker agreement?
The 1988 agreement was known as the Southern Water Agreement 1988 and amongst others Tarmac (later to become Carillion) and the Southern Water Authority (SWA) were key signatories, as was the Duke of Devonshire. Carillion developed the marina through a wholly owned subsidiary, Sovereign Harbour Ltd (SHL) and operated it through another company Sovereign Harbour Marina Ltd.
The Agreement committed the SWA to maintaining certain groynes to restrict shingle movement through littoral drift. It also committed the developers to set up a trust within 9 years of the Agreement (by 1997), that would provide the money for coastal defence work. The developers and the SWA agreed between themselves that a contribution to the trust funds would come from a rentcharge levied on residential properties on the Harbour development.
This was the first time the developers (Duke of Devonshire / Tarmac) had tried to avoid their responsibilities under the 1980 Act and place an ongoing burden for sea defence maintenance on residents.
● Why did the Southern Water Authority agree to this tactic, which was unfair to residents and contrary to the intentions of the 1980 Act?
However, all was not lost as far as future residents were concerned since, should the developers fail to set up the trust to the satisfaction of the SWA (now incorporated in to the Environment Agency (EA)) within the required 9 years, there was a provision that the developers would pay a bond of £2M, the income from which would fund the contribution. This would have released residents of Sovereign Harbour from any future responsibility for the maintenance costs and restore the intent of the Harbour Act.
By 1997 the 1988 Agreement had been substantially breached by both the Environment Agency and the developers, SHL. The EA defaulted on the agreement by failing to carry out the work on groynes that they had committed to. SHL also defaulted on the Agreement because, having failed to set up the trust within 9 years, as required by the EA, they refrained from providing the £2M bond and the EA apparently made the decision to not insist on this condition. The EA also claimed that SHL had also defaulted on a commitment to move shingle.
Having been breached by both key signatories, it could be argued that at this point the 1988 SW Agreement was no longer a credible basis for imposing obligations on residents.
● Why didn’t the EA enforce the requirement on SHL to pay the £2M bond in 1997 when it ‘became due’?
Between 1997 and 2000 the situation ‘went quiet’, but following a near failure of the defences during the winter of 1999/2000, in April 2000 the Agency made public its concern over the inadequacy of the sea defences in front of the new housing, and an acrimonious and very public argument erupted.
The argument was essentially conducted in the local press and on local television in a BBC programme called ‘Living in the Death Zone’ that aired in 2000. The argument spawned press statements from both the EA and SHL with claims and counter claims of failures to honour the Agreement of 1988. The resulting effect on house sales, lead Carillion to make an application for a Judicial Review of the Agency's actions. Following submission of the EA’s witness statements SHL agreed to a postponement of the Judicial Review hearing, pending further negotiations with the EA.
Further negotiations between the two parties resulted in the EA signing a new agreement, the Sovereign Harbour Beaches Sea Defence Deed (24/8/2001) and the Judicial Review was dismissed.
Under this agreement initial capital works to bring the defences up to a standard specified by the Agency would be paid for by Carillion and a Trust funded by the residents of Sovereign Harbour. These works would comprise a 450 metre long rock revetment and shingle replenishment costing approximately £2.5 million.
It is perhaps surprising that the signatories still claimed the 1988 Agreement as the legal basis for this, but it is of no surprise that both the EA and SHL absolved themselves of failing to meet their responsibilities under the 1988 Ageement.
Sadly, neither was willing to pay towards resolving this fiasco, which after all was of their own making, so they needed a source of funds to pay for rock revetments, shingle replacement and ongoing maintenance of the sea defences. As a result, the idea of a trust was once again introduced.
This is when the Sovereign Harbour Trust (SHT) was set up. The only source of income for the Trust would now be the residents of Sovereign Harbour through what was initially known as the SW Charge. Sovereign Harbour Limited the (developer), the house builders and the businesses, who all benefited from the construction of Sovereign Harbour contribute nothing towards maintenance of its sea defences through the Trust.
The EA was party to the Sea Defences Deed and all the arrangements arising from it. They were allocated three of the six seats on the Board of Trustees of the SHT.
● Why were the commercial properties in the area at risk (many of them owned by Carillion at the time) excluded?
The workings of the SHT have not been transparent to residents over the years and detailed accounts have not been forthcoming. SHRA made applications to get a resident, or residents on the Board of Trustees, but this had always been rejected on the basis that there is no obligation on the SHT to make provision for a resident Board member.
For 5 years the EA declined to nominate representatives for their three allocated seats on the Board of Trustees, which had comprised only three trustees, who were all previous employees of Carillion. SHRA suggested that the Agency nominate harbour residents to fill their seats. They declined to do this, but clearly felt pressure to fill the seats and nominated three trustees of thier own, none of whom had any connection to the Sovereign Harbour neighbourhood.
The grievance felt by residents increased in what felt like a concerted policy by SHL and the EA to exclude them from the process which collected and utilised their contributions. The SHRA asked questions under Freedom of Information legislation that gave them a better insight into what was considered a potentially unsafe legal background to the charges and formation of SHT. The marina was being managed by Sovereign Harbour Marinas Ltd. (owned by Carillion), but in July 2007 was it bought by Premier Marinas.
At about this point SHRA was offered an opportunity to have an observer attend Board meetings. This offer was taken up, but then it was found that the observer was being excluded from some meetings on the basis that discussions commercially sensitive to SHL and Premier Marinas were taking place. It should be borne in mind that we are talking about a Trust, not a commercial company, and SHRA’s concerns grew.
SHRA then made a formal complaint about the status of the Trust to the Charity Commission. It investigated, but, ironically, would not uphold the complaint because SHT should never have been a charity and didn’t act as one. The fact that the Charity Commission had registered it as a charity was glossed over.
In parallel with this it later became apparent that SHT realised their position was untenable and to avoid criticism after having run for about 8 years, the Trust, the EA and Premier Marinas decided to form a Community Interest Company (CIC) using the same board members as the SHT, which was still to be kept on in name, now as a non-charitable trust. With the change of ownership of the marina business, the 3 Carillion nominees resigned, leaving just the EA nominees who moved across to the CIC. Subsequently, two additional trustee/directors were appointed, both employees of Premier Marinas.
Guidance on the formation of CIC’s, not unreasonably anticipates that the community involved with the CIC will be consulted as part of its formation. No community consultation took place.
In 2011 one of the EA nominees resigned and the Trust/CIC reluctantly appointed a resident (Cllr Patrick Warner) to the board to fill the vacant EA seat.
In 2012, when the marina was sold to Premier Marinas (PM), the SHL nominees resigned and two PM executives were appointed.
In 2014, harbour resident, Rick Runalls was appointed to the board, as the third PM nominee, giving harbour residents a second seat.
In June 2015, one EA and one PM trustees resigned and in December of that year Patrick Warner resigned and another PM executive was appointed.
At this point, all three PM seats were occupied, but there were two EA vacancies. Then, in a surprise move, in March 2016 the EA nominated two harbour residents to fill its two vacant seats, Cllr Penny di Cara and the then SHRA Chairman, Jan Weeks. This is when the situation became farcical. It had always been the trust’s position that only the EA and the marina operator could nominate trustees but, in the face of a situation where half of the board could be harbour residents, the trustees suddenly decided that they had the sole right to nominate new trustees.
It was not until early September 2017, more than a year since their nomination, that harbour residents Penny di Cara and Jan Weeks were formally appointed to the CIC Board.
In late 2019, Rick Runalls resigned his seat on the SHT/CIC. The resulting vacancy was advertised in February 2020 but before any further progress could be made the pandemic brought things to a halt. To date (August 2021) the post remains vacant.
The CIC’s sole function is to collect the rentcharge, which it does through a company of Tunbridge Wells solicitors, a partner in which is also the secretary of the CIC and its legal advisor. Since the formation of the CIC, administration charges have risen substantially, to about £175K pa. These costs are taken from the fixed part of the rentcharge, resulting in a loss of income to the EA of about £130K per year. This issue has been raised with the EA at both local and national levels, but no action has been taken to reduce the cost. Enquiries by the SHRA have shown that the collection could be managed by Eastbourne Borough Council for around £10K. It seems that the EA has been content just to take whatever income the SHT passes on, without question.
The rentcharge and the SHT have been the source of much dissatisfaction on the part of residents, not least of all because of the lack of transparency. For example, the large increases in administration charges mentioned above. By working to get residents represented on the Board of Trustees, it was hoped to get fuller disclosure of where the money is spent, but it seems the trustees are reluctant to allow this to happen.
In March 2011 SHRA wrote to the CIC about the large increase in their administrative charges. We also asked for clarification on a number of points raised by our members. Click here to read the letter from SHRA . The CIC responded shortly afterwards and their letter does clarify some points we raised and contains information about costs and liabilities that residents may find useful. Click here to read the response from the CIC.
Whenever SHRA has expressed the opinion that the changes to the 1988 SW Agreement were unlawful, both the SHT and the EA have challenged them to “take us to court” in the full knowledge that both organisations have far greater financial resources and far greater access to legal professionals. The SHT, of course has no money to contest a legal action, other than the income from the rentcharge, so the costs of both parties in any legal action would ultimately be paid by residents. However, in 2014, having obtained the consent of its members, SHRA sought the advice of counsel.
The advice SHRA received indicated that there are some grounds under which collection of the charge could be challenged. Consequently, the SHRA Chairman wrote to the Chairman of the Sovereign Harbour Trust, setting out the grounds for the challenge, and requesting that the trust should re-examine its authority to collect the charge in the light of the advice received. The initial response from the trust seems to suggest that the trustees consider this to be an issue for the Environment Agency and that they bear no responsibility. This was at variance with the advice we received, so it seemed, as anticipated, that no early resolution would be likely.
In September 2015, SHRA representatives, Rick Runalls and Ian Weeks were joined by Sovereign Ward County Councillor, David Elkin, and Eastbourne’s MP, Caroline Ansell, on a visit to the House of Commons for a meeting with Liz Truss MP, then Secretary of State for the Department of the Environment, Fisheries and Food (DEFRA). The Environment Agency reports upward through DEFRA. This was a follow-up to a meeting that took place at Sovereign Harbour in March 2015.
The purpose of the meeting, which had been arranged by Mrs Ansell, was to discuss the injustice of the marina rentcharge and of the failure of the EA to respond to legal evidence provided to it, showing it had no authority to collect the charge. Ms Truss was sympathetic to the arguments presented and said that if, as seemed the case, the charge was cross-subsidising sea defences that protected other areas, residents had a valid case. She also said that the EA needs to explain how the rentcharge is spent and would help to arrange a further meeting with the relevant EA managers.
That further meeting, with the EA Area Manager, took place in December 2015 in Mrs Ansell’s constituency office. Unfortunately, the EA manager was clearly not interested in seeking a solution. His stance was confrontational, and he openly challenged the SHRA to take legal action. Although a follow-up meeting was suggested, it was considered to be of little value and unlikely to change the situation. As a result of this intransigence, the SHRA took further advice of counsel. This advice reinforced that previously obtained.
In May 2016, MP Caroline Ansell again invited Rick, Ian and David to a meeting in Westminster with the Deputy Head of the EA. This meeting was far more open, and the EA committed to obtain its own legal advice. Unsurprisingly, that advice was totally at variance with the advice we had received and the SHRA counsel’s view was that the conclusions drawn could not be substantiated. However, any further comment would require additional investigation with, inevitably, additional cost. Equally unsurprisingly, the SHT accepted the EA advice without question.
The SHRA committee continues to the investigate the basis for the charge, along with the management of the Trust and the CIC. Our main focus in on greater transparancy. See the our rentcharge page for latest news.
As a condition of the sales contract, the initial purchaser of a Sovereign Harbour residential unit (property) is required to sign a Deed of Grant and Covenant which obliges the purchaser to pay the Estate Rentcharge. This is attached to the property deeds, so the obligation passes to all subsequent owners of the property.
The original basis for the charge is an agreement between Southern Water and Tarmac construction in 1988 (see main column left). At that time, Southern Water was responsible for coastal defences and Tarmac Construction (later Carillion) was the owner of the development land at Sovereign Harbour. A newer agreement was signed in 2001