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Complaint no. LA/NA/865/JM concerning an alleged contravention of the Councillors’ Code of Conduct by Councillor Elizabethe Marshall of North Ayrshire Council

1. Complaint number LA/NA/865/JM alleged a contravention of the Councillors’ Code of Conduct (“the Code”) by Councillor Elizabethe Marshall (“the respondent”).

2. It was alleged that the respondent had contravened the Code, in particular, the provisions set out in paragraphs 3.16 on Confidentiality; 3.20 on Dealings with the Council; 5.10 and 5.11 on Declaration of Interests; 5.13 on The Interests of Other Persons; and unspecified elements of the key principles set out in section 2.

3. The complaint stemmed from the decision by North Ayrshire Council to dispose of two cottages which formed part of the assets of Largs Common Good.  The complainant raised questions as to the role of the respondent as a trustee of the Common Good in relation to the sale, and as an elected member in relation to their subsequent purchase by her son and daughter-in-law.

4. On 11 March 2003 a report by the Assistant Chief Executive (Development and Promotion) which recommended the disposal by lease or sale of the cottages was considered by the Corporate Services Committee. The Committee agreed to sell the properties for rehabilitation or redevelopment of the site for a single dwellinghouse. The respondent had tendered her apologies for this meeting and was not present.

5. The sale became protracted due to legal issues which were not finalised during the term of office of that Council, but progress was considered by the Garnock Valley, North Coast, Arran and Cumbrae Area Committee at their meetings on 21 January 2005, 19 August 2005, 18 November 2005, 20 January 2006, and 2 June 2006.  The respondent was present at all of these meetings.  The intention to sell the cottages was evident to the public from the minutes of these meetings which are understood to have been given wider publicity through the local press.

6.  In 2008 the properties were publicly advertised for sale.  Six offers were received which were respectively, £78,500, £85,260, £107,500, £151,333, £166,500 and £181,000.01.  The highest bid was submitted by the prospective buyer’s legal agents on 28 May 2008 and included a nomination clause which was subsequently exercised in favour of the respondent’s son and daughter-in-law.

7. The specific complaints were made under paragraphs 3.16 of the Code which relates to the confidentiality of information obtained by a Councillor; 3.20, on dealings with the Council on a personal level; 5.10 and 5.11, on declaration of non-financial interests; and 5.12, on the declaration of interests of other persons.  The various elements relied however on a degree or speculation or perception by the complainant, and a belief that the respondent should have exercised a greater degree of scrutiny and independence in relation to the sale of the cottages.

8. The process by which the cottages came to be sold to the respondent’s son and daughter-in-law was a matter of public record and the facts were not in dispute.  It was appropriate however to note that the proposal to dispose  of the properties was first raised by the Assistant Chief Executive (Development and Promotion) and their exposure for sale authorised by the Corporate Services Committee in March 2003.   Although a member of that Committee, the respondent was recorded in the sederunt of that meeting as having tendered her apologies and she thus took no part in the decision to approve the disposal of the cottages.  It should also be noted that the decision was taken in March 2003 and the deliberations of the Corporate Services Committee thus fell outwith the scope of my jurisdiction.

9. The respondent acknowledged that she was aware of the decision to dispose of the cottages from about the date of that meeting, having learned of the proposal either from the papers received prior to the meeting or from the subsequent minute.  The proposal was in the public domain at this stage however and the respondent had no additional knowledge.  Responsibility for the sale under the later Council fell within the remit of the Council Executive, and it was to that body that the offers received in 2008 were reported.  The respondent was not a member of the Executive and had no role in the sale process or the acceptance of the highest offer from the original purchaser. Again the respondent had no access to privileged or confidential information that was not already available to the public. 

10. The documentation associated with the sale, the terms and conditions applied, and the procedure adopted in determining the acceptance of the highest offer were administrative in nature.  On the basis of the documents provided by the Council I was satisfied however that they demonstrated the adoption of appropriate procedures which were in accordance with established local authority practice.

11. The transfer of interest to the son and daughter-in-law of the respondent was not intimated to the Council until 13 August 2008.  This arrangement was in accordance with the nomination clause included in the conditions attached to the original highest offer, the contents of which was not itself exceptional within the process.  No evidence was adduced to show that that the respondent intervened or sought to influence the acquiescence of the Council’s legal officers to the transfer.  There was indeed no requirement for the identity of the respondent’s son and daughter-in-law to be advised to the Council Executive (of which the respondent was not a member), or to the North Coast Area Committee  whose role was limited to the disbursement of income from Common Good funds to which the net proceeds of the sale would be applied.

12. The complainant drew attention to the subsequent acceptance of a reduction in the offer price of £181,000.01 partially to cover the cost of diverting services to the site which had not been apparent in the sale particulars.  The adjustment to the price was agreed after negotiation and in consideration of estimates provided by the utilities concerned.  The matter was handled by the relevant legal officer of the Council without reference to elected members.  It is noted that the net sum realised by the Council for the sale of the properties continued to exceed the next highest offer, which might of course also have been subject to a similar negotiated reduction.

13. Paragraph 3.16 of the Code requires that Councillors preserve the confidentiality of information which comes to their notice in the course of their duties, and inter alia prohibits the use or disclosure of such information for personal advantage.  The complainant did not specify a particular instance of such use or disclosure by the respondent.  At interview he suggested that in her capacity as an elected member the respondent might have derived advantage as regards her knowledge of the outcome of the original sale.  The complainant was not able to specify the nature of this advantage however and I did not identify any use of confidential information by the respondent.  Given the circumstances of the subsequent transfer of interest in the properties from the original purchaser to the respondent’s son and daughter-in-law on the original terms it was not possible for m to identify what, if any, advantage might have been derived.

14. The process of sale and subsequent negotiated settlement were entirely in the hands of the Council’s legal officers.  Having scrutinised the papers made available to me I could detect no intervention or query by the respondent which might have given her access to confidential information.  The transfer of interest was allowed for in terms agreed with the original purchaser and this change, together with subsequent negotiations, was conducted on behalf of the new purchasers through their solicitors.  The original offers for the properties had been reported to the Council Executive on 24 June 2008 and were publicly available in the minute of that meeting.  In practice the respondent was in no position to obtain information from which any advantage might have been derived.  The respondent took no part in the acceptance of the original highest offer, and the subsequent transfer of the original bidder’s interest to her son and daughter-in-law did not imply that an advantage was obtained or in any way influenced by that process.  In the absence of a specified breach of confidentiality I was bound to regard this aspect of the complaint as arising from perception or inference which was not supported by fact, and accordingly I found that the respondent had not breached paragraph 3.16 of the Code.

15. Paragraph 3.20 of the Code prohibits councillors from seeking, or otherwise conducting themselves in such a manner as could lead members of the public to believe that they are seeking, preferential treatment in their personal dealings with the Council.  This aspect of the complaint was again prompted by perception arising from the close relationship between the respondent and her son and daughter-in-law as purchasers of the property.  No evidence was adduced by the complainant, or ascertained in the course of this investigation, to show that the respondent used her position as an elected member to seek any advantage whatsoever.  Indeed the respondent made no contact with the officers dealing with the transaction, and had no role in the relevant decision-making by councillors, or the subsequent adjustment in price.  The process of the sale was fully documented in correspondence between the Council and the legal agents of the purchasers, and showed an appropriate and transparent course of negotiation.

16. I was satisfied that the decision to take over the original purchaser’s interest in the cottages was originated by the respondent’s son and daughter-in-law and that the subsequent negotiations proceeded between their solicitors and the Council without any third party involvement.  Accordingly I found that the respondent did not seek preferential treatment in relation to the sale of the properties and that she had not breached paragraph 3.20 of the Code.

17. Section 5 of the Code requires councillors to declare financial and non-financial interests which might influence, or be thought to influence, their actions as elected members. The intention is to produce transparency and councillors are therefore advised to err of the side of caution when considering whether they have such an interest.  Declarations are only required in the context of Council or Committee meetings however.  Although it might be prudent for members to consider whether a personal interest could compromise their position in less formal situations such as discussions with constituents, the Code does not extend its provisions outwith formal Council proceedings. 

18. The complainant alleged that the respondent breached paragraph 5.10 which extends this requirement to councillors who are appointed to other bodies by the Council; paragraph 5.11 which requires the declaration of interests arising from private and personal interests; and paragraph 5.13, which requires the declaration of the interests of relatives and close friends.

19. In order to establish whether or not a requirement for declaration under section 5 arises it is self-evident that the matter to which the interest relates must be under consideration at a meeting in which the councillor intends to participate.  In this case the sale of the properties was considered (as opposed to merely being informed of progress) on just two occasions by the Council – on 11 March 2003 when the Corporate Services Committee approved the recommendation to dispose of the properties, and on 24 June 2008 when the Executive was informed of the offers submitted.  The respondent was not present at either meeting and accordingly no requirement to declare an interest arose.  I considered that an interest would have arisen after the respondent’s son and daughter-in-law intimated that they had taken over the purchase on 13 August 2008, but this would only have required a declaration if the respondent participated in any further consideration of the purchase by elected members. No such requirement arose and accordingly I found that the respondent had not breached either the generality of section 5 or the specific terms of paragraphs 5.10, 5.11, or 5.13.

20. The complainant also cited the key principles contained in section 2 as having been breached by the respondent.  These principles do not stand to be considered in isolation from the substantive elements contained in sections 3 to 7 of the Code, and in view of my findings it followed that the respondent had not breached section 2.

21. Finally the complainant expressed concern that the respondent in her role as a trustee of Largs Common Good should have exercised greater stewardship of the funds by overseeing the course of the transaction.  It was my view that the sale of the properties was properly agreed by the Corporate Services Committee in March 2003 and thereafter conducted in accordance with an open offer designed to achieve the best market value.  The bid of £181,000.01 by the original purchaser was honoured when the nomination clause was put into effect, and accordingly the property continued to be sold to the highest bidder.  The subsequent negotiated reduction to cover the partial cost of diverting services was in recognition that the requirement to do so could not reasonably have been anticipated by the purchaser.  While it might be argued that the purchasers should have satisfied themselves regarding the provision of services in accordance with conditions of sale, this was not a matter for me to consider.  The respondent herself took no part in the negotiations and while the consequence was that her son and daughter-in-law were relieved of part of the expense involved in relation to the provision of services I did not regard this as a direct payment by the Common Good.  It was relevant to point out that the respondent as a member of the North Coast Area Committee was concerned only with the disbursement of income, while the disposal of Common Good property was reserved to the Council Executive of which she was not a member.

22. Having considered the information that arose from my investigation, I concluded that Councillor Elizabethe Marshall had not contravened the Councillors’ Code of Conduct.

D Stuart Allan

Chief Investigating Officer

Forsyth House

Innova Campus

Rosyth Europarc

Rosyth

KY11 2UU

03 September 2009