Insolvent Hawick firms cost Borders taxpayers £100,000

by DOUG COLLIE

Members of Scottish Borders Council will be advised to write off 25 outstanding invoices totalling more than £100,000 which the authority sent to two Hawick property companies between 2008 and 2015 after carrying out enforcement works to make buildings in their ownership stable.

Despite court action and a mediation agreement the directors of Beaune Properties Ltd. and Beaune Properties North Ltd failed to pay a single penny of the outstanding debts before both firms went belly up in 2013 and 2016.

A report which will be considered by the SBC Executive next week sets out the background which has resulted in officers recommending the money owed by Beaune should be written off.

According to the report an account in the name of Beaune Properties was opened in October 2008 and an invoice was raised for £2,050.74. This charge was for the provision of boarding to secure the site at Harriers Hut, Bath Street, Hawick.  

Another account in the name of Beaune Properties Ltd was also opened in October 2008 . A further 24 invoices were raised on this account from October 2008 to May 2015 totalling £99,680.71. These charges were to stabilise a dangerous building and enforcement works at Wilton Mill, Commercial Road, Hawick.

 

"Court proceedings were raised against Beaune Properties in 2010/11. These proceedings were defended by the company and with a view to avoid going to a full evidential hearing the Court asked both parties to go to mediation. 

"Mediation took place in 2012 where a qualified mediator oversaw the meeting. The meeting was attended by Senior Officers from SBC and representatives from Beaune Properties. The outcome agreed was for Beaune Properties to pay SBC the sum of £40,000 in full and final settlement of all sums due with the agreement drawn up in the names of Beaune Properties Ltd and Beaune Properties North Limited."

 

But the report then explains that the agreement was transferred at a later date to Beaune Properties North Ltd alone and Beaune Properties Ltd was dissolved in September 2013. Despite entering into the mediation agreement Beaune Properties North Limited failed to make the agreed payment of £40,000. 

"All correspondence seeking payment of the sum were met with responses asking for further time to pay and then subsequently wanting to enter into further discussion on the amount that was agreed to be paid. No payment was received from Beaune Properties North Ltd and they were dissolved in August 2016."

 

Councillors are told the powers for writing off debts are contained within the Council’s Financial Regulations and Scheme of Delegation. These powers are delegated to the Director, Finance & Corporate Governance who, for practical reasons, may delegate authority to Officers within the Finance Department to approve individual write off amounts up to a pre-determined level. The Director, Finance & Corporate Governance has delegated authority to write off amounts up to £100,000. Any potential write off greater than £100,000 has to be approved by elected members.

In respect of the Beaune debt, the circumstances for the debt being irrecoverable and appropriate for write off are the debtor is insolvent (bankrupt, in liquidation or in administrative receivership).

Companies House records show the directors of Beaune Properties Ltd., which traded from 2004 and 2013 were William McKinney, of Holywood, County Down, Northern Ireland, Edward Giles Membrey, of Tunbridge Wells, Kent, and Alexander Gavin Stevenson, of The Cross Keys, Lilliesleaf. The company's registered office was at 1 Melgund Place, Hawick.

The records show Beaune Properties had eight outstanding charges (loans or mortgages) at the time of the firm's dissolution - five with Ulster Bank and three with  Sainsbury's Supermarkets. The last published accounts for 2011 show net assets of £23,595.

Fifty of the 100 shares in the business were held by a company called Bergerac Estates Ltd., of Home Park Road, Wimbledon with the other 50 owned by Mr Stevenson. 

Bergerac Estates, which traded as developers and sellers of real estate from 2003 until it was dissolved in 2012 had Mr McKinney and Mr Membrey as directors during part of that time. Bergerac's last accounts (for 2010) recorded a deficit of £139,000.

However, documents at Companies House also show Bergerac Estates' two £1 shares were in the ownership of Rioja Developments Ltd. and RJM Developments Ltd., two firms directed by Mr Membery and Mr McKinney respectively.

Rioja Developments, involved in business management of real estate, was active from 1999 until 2021 when it was dissolved - Mr Membery having resigned as a director in 2019. At that time - according to company accounts - Rioja achieved an operating profit of £312,750 (for 2019) and £3,372,743 the previous year. Net assets as of 2019 were stated to be £2,730,933.

Meanwhile RJM Developments Ltd., based in Northern Ireland, and buying and selling real estate from 2002 until dissolution in 2015, appears to have been less successful. It chalked up losses of £166,000 in 2011 and £90,973 for 2012. A total deficit of £617,000 is recorded.

A note of related party transactions lists eleven other companies including Beaune Properties Ltd.

Beaune Properties North Ltd had the same three directors as Beaune Properties Ltd although Mr Membrey and Mr McKinney resigned in June 2016 shortly before the firm went under with just £12 in the bank.

The 12 £1 shares were divided between Mr Membery (three), a company by the name of MCK Development Management Ltd. (three) and Mr Stevenson (six). MCK Development Management Ltd. is registered in Belfast with Mr McKinney listed as one of its directors.