UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 332-ii

House of commons

oral EVIDENCE

TAKEN BEFORE THE

Environmental Audit Committee

Sustainability in the UK Overseas Territories

Wednesday 11 September 2013

Darryl Pickthall, Jason Pickthall and Jamie Davies

Evidence heard in Public Questions 169 - 223

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Environmental Audit Committee

on Wednesday 11 September 2013

Members present:

Joan Walley (Chair)

Peter Aldous

Neil Carmichael

Mark Lazarowicz

Caroline Lucas

Caroline Nokes

Dr Matthew Offord

Dr Alan Whitehead

Simon Wright

________________

Examination of Witnesses

Witnesses: Darryl Pickthall, Director, Crown Acquisitions Ltd, Jason Pickthall, Chief Executive Officer, Crown Acquisitions Ltd, and Jamie Davies, Jamie Davies, Accounts Director, Crown Acquisitions Ltd, gave evidence.

Q169 Chair: Mr Pickthall, Mr Pickthall and Mr Davies, I would like to thank you very much indeed, all three of you, for coming along and helping us understand a little bit more about overseas territories and the issues that we are trying to deal with in respect of biodiversity. We greatly appreciate your coming along to our Committee this morning and for giving evidence to our inquiry on sustainable development in the overseas territories. We have a very limited amount of time but, in the short time that we have, we would be grateful if you could explain to us how your business works and what interests you have in the UK Overseas Territories, just as a starter, and perhaps a little bit of background about how that all works and operates. I do not know who is going to be your spokesman.

Darryl Pickthall: Jason.

Chair: Mr Jason Pickthall.

Jason Pickthall: Almost 10 years ago we set out to do some smaller developments in the Cayman Islands. We have some in other territories, over in the Caribbean as well, but we saw the Cayman Islands as a great opportunity and very shortly into our planning process came this huge collapse in the market. So we had to think of a different way of doing the business that we were planning on doing, which was building houses and apartments; putting that on hold, which we have done until around now-we are just about to start building any day now-and then developing the land and selling the land plots off with a view to people building at a later stage.

That came at a time when everything else was collapsing; stocks and shares and currencies and banks and so on. So it was very desirable for clients to hold their monies in these land lots wherever in the world. We have sites all over the world: Australian, Denmark, Spain, England, Jamaica and America. That has been very successful for us and we put the build on hold because there weren’t the clients to buy. That is changing a little bit now and we are just about to start building our first couple of show homes and we are just about to start building 14 townhouses on Grand Cayman.

Chair: Sorry, building?

Jason Pickthall: Show homes.

Q170 Chair: It was interesting what you said about the economic climate at the time. Just for clarification it would be helpful to know whether or not your business is essentially land banking or developing real estate or is it both?

Jason Pickthall: It was always the intention to develop the real estate. First of all, a developer never wants to sell his core assets because it is not where they make their profits. We make our profits out of building and developing houses but, because of what happened in the market at the time, that was the route that we took. However, all of our clients are of the opinion that at some point they want to build. We have hundreds of clients and certainly 50 plus are already in negotiations with us to start building. We presume that the majority of them will build in the end because that is how they are going to get their profit out of their investment.

Q171 Chair: You mentioned that the phasing you were at meant you were ready to build but, in terms of who you are selling the property to, is it largely an overseas clientele or is it something that people on Cayman are interested in purchasing? Have local people bought into the development?

Jason Pickthall: We have a worldwide audience. We have been marketing the Cayman Islands now for nearly 10 years. We do shows throughout the world. We have never asked for any assistance from any Government there. We have never had any help, but we have been marketing those sites to a worldwide audience. We have clients from Cayman, America, Dubai, England, Sweden, Denmark, Norway, Spain, Italy, Pakistan. We have a worldwide audience.

Q172 Chair: In terms of where Crown Acquisitions is headquartered, could you clarify that for us, please?

Jason Pickthall: Our head office is in Knutsford now. We bought a building there recently.

Chair: Knutsford, Cheshire?

Jason Pickthall: Yes.

Q173 Chair: Just for our understanding of it, do you have any connection with Crown Acquisitions Inc of the United States?

Jason Pickthall: Yes, that is one of our companies.

Chair: What is the relationship between the two companies?

Jason Pickthall: We obviously have to abide by the various laws of the various countries. To hold land in America you have to have an American company. We have some fairly large sites over there that we are developing at the same time as everything else that we are doing. It is the same with Australia. We have a company in Australia that holds land there.

Mark Lazarowicz: Is the American company a wholly owned subsidiary of your own company?

Jason Pickthall: Yes.

Q174 Chair: In terms of the use of the word "Crown" in the title-this is just a little bit of interest-are you a bit concerned that people might be misled into thinking it has something to do with UK Crown land? Do you see any advantages or disadvantages in the use of the word "Crown" in the title?

Jason Pickthall: Not at all, no. We have never had any assumptions from any clients that, in any way, shape or form, think that we are aligned with the Crown. When people decide to buy a unit from us, whatever that unit might be-whether it is a piece of land or an apartment or a house-it is a lengthy decision that they take. It is not a decision that they make in minutes. Most people do all their homework.

Q175 Dr Offord: Can I ask you if you have any links with Oasis Land?

Jason Pickthall: Not at all, no.

Dr Offord: None at all?

Jason Pickthall: No.

Dr Offord: Is it correct that the CEO used to work for you?

Jason Pickthall: Yes.

Dr Offord: Okay, thank you.

Q176 Caroline Nokes: I wanted to ask some questions specifically about Little Cayman. I think you have referred to projects on Grand Cayman, but can I just ask how many residential plots with extant planning permission you have on Little Cayman?

Jason Pickthall: Approximately 200.

Q177 Caroline Nokes: Have you built any properties there?

Jason Pickthall: We are just about to start digging in the ground as we speak. We just had the final planning permissions a few weeks ago which have given us the go-ahead to start. Originally you get outline approval to go and do the sites and then you have to take it through further planning applications to get to the point of building. You have to build to their standards and so on, which we have only just had approved recently.

Caroline Nokes: Presumably you are building a show home there in that case?

Jason Pickthall: We are building a few, yes.

Q178 Caroline Nokes: Your website-and I have had a quick look at it-describes your beach villa development on Little Cayman as "a collection of stylish, contemporary, oceanfront properties", but there are no buildings, are there?

Jason Pickthall: No, obviously we are describing what we are about to build.

Caroline Nokes: How long have you been describing what you have been about to build on your website?

Jason Pickthall: The beach villas we launched in March this year.

Caroline Nokes: So the photographs that I have seen on your website of actual properties are CGI, taken from somewhere else, and do not exist?

Jason Pickthall: The beach villas?

Caroline Nokes: Yes.

Jason Pickthall: As I have just said, we launched the beach villas in March and we only just started selling them in March. Yes, they are CGIs. That is what most developers use to sell their product.

Q179 Caroline Nokes: Okay. I just wanted to pick up on a particular statement on your website. It says, "We believe that it is our duty to operate in a manner that maintains a balance between the economy and the ecosystem." Have you done any environmental impact assessment of your schemes on Little Cayman?

Jason Pickthall: Yes. We have instructed a company called DDL Architects, which are LEED certified, and we decided to do this three or four years ago now. All of our new sites are fully LEED certified and controlled by DDL Architects which make sure they point us in the right direction for everything that needs-

Chair: Did you say "fully certified"

Jason Pickthall: Yes.

Chair: Could you tell us what that means?

Jason Pickthall: There are only certain architects that are LEED certified, that can justify what they are doing and explain how you are supposed to develop a site for it to be eco-friendly. All of our new sites are eco-friendly now.

Q180 Caroline Nokes: That is the architects, but you have not done a separate environmental impact assessment?

Jason Pickthall: We had an assessment done by an external third party a couple of years ago.

Chair: Would it be possible for us to have a look at that?

Jason Pickthall: Yes.

Chair: Thank you.

Q181 Caroline Nokes: I just wanted to ask a question to follow on about the infrastructure on Little Cayman. Unlike some of my colleagues, I have not been there but I just wondered what assessment there had been of what infrastructure there were on the island that would develop the scale of development that you are proposing.

Jason Pickthall: I don’t quite understand that question.

Caroline Nokes: You are planning-what did you say-200 plots on Little Cayman that you are about to build. What assessment has there been of the capacity of the road network, the healthcare system and so on to be able to support that level of development and influx of residents?

Jason Pickthall: It supports thousands of people coming a week to stay in the five or six hotels that are there and there are months of the year when they are completely empty. If it can sustain those couple of thousand people, I am sure it can sustain-

Caroline Nokes: So the answer is, "None"?

Jason Pickthall: -a couple of hundred homes.

Caroline Nokes: There has been no assessment of what additional strain-

Jason Pickthall: No.

Caroline Nokes: Okay, thank you.

Q182 Peter Aldous: Mr Pickthall, you have explained how you bought these sites with the intention of developing them, the market collapsed and, therefore, to get money in, you have sold plots. In selling those plots, do you have master plan of what the developments will look like?

Jason Pickthall: Yes.

Peter Aldous: That is helpful. You do not think you are going to get a piecemeal scheme arising with hotchpotch, different properties on different sites and not looking-

Jason Pickthall: No.

Peter Aldous: You are happy with that?

Jason Pickthall: We have a brochure here if you want to have a look at the master plans.

Q183 Peter Aldous: In selling the plots, have you imposed any covenants as to how the plots might be developed?

Jason Pickthall: Yes. They do not have to use us as the developer, but they have to get our permission to build. So we have a say in what they are going to be build.

Q184 Peter Aldous: If a site was overdeveloped or you thought it would have a negative impact on the environment, you have the ability under the legal agreement or the contract for sale to say, "Hang on a minute, you should not be developing the site in this way"?

Jason Pickthall: We have the authority to advise the client of not doing a particular thing, yes. They have to get landlord’s approval. If we wanted to stick our heads in the ground then we could say-

Peter Aldous: If you had concerns-

Jason Pickthall: They could appeal that decision and say, "Well, it is unreasonably withheld". They have to build according to the Cayman Island laws and there are certain things they have to do and can’t do.

Q185 Peter Aldous: Obviously you have sold these plots. The provision of services to plots-I am talking about the laying out of state roads, extending sewers, connecting electricity-how is that provided for in the contracts of sale?

Jason Pickthall: All of the developments that we started are all finished now. The roads are-

Peter Aldous: On these developments, the road infrastructure-

Jason Pickthall: Is all there, yes.

Peter Aldous: -is in place and the sewers and the electricity are extended?

Jason Pickthall: Electricity is extended. Sewage is treated at this present moment by septic tank. Although, with all of the new developments that we are doing, we are doing a central sewerage system, which is the first on the island, which is one of the things that you have to do to be LEED certified.

Peter Aldous: In British terms, these are serviced sites you have sold?

Jason Pickthall: Yes.

Q186 Chair: Did you wish to come in, Mr Davies? Earlier when Caroline Nokes was asking a question I thought you did, but if you don’t that is fine.

Jamie Davies: There are a couple of points. I think Peter just picked up on your point about a client building whatever they so choose on a site. That is not possible with Cayman Planning. The plots that we sell come with outline planning and that is a specific type of property. It does not exceed 25% of the site. It can’t exceed over two storeys and it has to be built within a style that is graced by the Cayman Government or Cayman Planning. For them to go and build a four-storey apartment block is not feasible. They have to adhere to those outline plans. If they choose to resubmit plans and they put it forward to Planning and it gets approved then that is down to the client and the Planning Office, but we have very tight barriers as to what is allowed to be built on those sites. It is not a big-storey block of apartments. That is not what we are looking to do.

Chair: Right. Okay, thank you.

Q187 Dr Whitehead: Has the Cayman Islands Government expressed any interest or view on your developments and, if so, what is the word from the Government?

Jason Pickthall: Obviously there is a new Government just come in recently, I think in May. With the old Government we did not have pretty much any correspondence with whatsoever. The new Government has been a little bit more proactive. They have contacted us. We have been and met them. They are very impressed with what we are doing. They obviously want to see us build because that creates jobs, although we have already created hundreds of jobs in the infrastructure that we have already put in. We have our next meeting at the end of October with the Deputy Prime Minister, Moses Kirkconnell.

Q188 Caroline Nokes: This is probably completed unrelated to what Alan has just asked, for which I apologise. Can I just go back to the question about LEED certified? There are different levels, as I understand it, of certification. The basic level where you have to achieve 40 to 49 points of the categories that they assess you on, then silver, gold and then platinum. Which ones are your buildings working towards?

Jason Pickthall: We are going to obviously work towards platinum because that is the best you can get. Whether we get that at the end of it, who knows? It is all on a cost basis whether it is sustainable for us to put those monies in to develop the site, but we will certainly be trying for the top category.

Caroline Nokes: But at the end of the day it is going to be an economic decision, not an environmental one?

Jason Pickthall: Of course.

Q189 Dr Whitehead: The previous Government, that is the McKeeva Bush Administration, you had no contact with them. Is that because they were disinterested in what you were doing or did not want to talk to you or-

Jason Pickthall: It was a decision that we made early on. We were always advised not to create any allegiances with any Governments for various reasons. First, they come and go and, second, it can be frowned upon or seen as if you are doing something untoward with them. So we pretty much stayed clear of the Government Departments and ran everything through our own legal department and the planners, as any developer should do.

Q190 Dr Whitehead: But you are now in some reasonably close dialogues with the new Government, which seem to suggest that you changed your view on that.

Jason Pickthall: Well, we are at a different phase now. Seven or eight years ago obviously we needed to get planning for these particular sites and we have 35 or 40 sites in the Cayman Islands alone. We are now at the phase of building and when you start to build in the Cayman Islands it is very expensive and you can ask for certain concessions and we will be asking for certain concessions, but we didn’t need the Government at that particular time when we were applying for planning permission. We didn’t need any favours, if you like. Now we want to start building and, just like the Dart Corporation ask for various concessions on work permits and building material duties and so on, we are going to be asking for the same.

Dr Whitehead: Would you say that-

Jason Pickthall: To ask for that you have to ask the Government. They are the people who are going to approve it or disapprove it.

Q191 Dr Whitehead: Yes. Asking for a number of concessions from the present Government or from a Government in the Cayman Islands also suggests that the nature of the rules and regulations and planning regime there is somewhat flexible, I guess. Would that be fair to say?

Jason Pickthall: I don’t think the rules in planning are flexible. As far as I am concerned-and I deal with all of the planning applications-they have a pretty rigorous system of what you can and can’t do and they have a governing body that vote on it, whether you are going to get it or you are not, but there are certain things that you have to do to get that planning permission. There is certain land that is zoned for hotels or zoned for residential. Cayman Brac and Little Cayman have no zoning, so it is all on the say of the board on the day whether you get planning or not. In terms of the concessions that we are asking for, that is a completely separate scenario to the planning. It is the Government that has the discretion to give or not to give those concessions. It is not the Planning Board that can give those concessions.

Q192 Dr Whitehead: In terms of developments on the Caymans, how significant would you say your company is compared with other companies that are doing similar sorts of things? For example, are you a small tree on the horizon as far as the Cayman Government is concerned or something rather larger?

Jason Pickthall: I think the interest that the Cayman Government recently took in us is-they know how many sites we have. They know how much income we bring to the islands. They know how much stamp duty our clients pay. They know how much stamp duty we pay. They know how many jobs we are creating by employing road builders and electrical people and local architects and local lawyers. They are not stupid. They know what we have created and they know that we are about to build some fairly large projects. We are probably the second-biggest developer on the island after Dart.

Q193 Dr Whitehead: From your point of view as a responsible developer, what is your view on the objective status of the planning regime in the Caymans and Sister Islands in terms of what you find elsewhere in the world or indeed in this country? Is it fit for purpose in terms of the sort of things you would expect a planning regime to encompass?

Jason Pickthall: My personal view is that they are beautiful islands and both Cayman Brac and Little Cayman need more development. They need to be more independent and they can’t be independent while there are no revenues coming from anywhere. It is almost like the 100 people who live there have the beauty of their own private island subsidised by the UK Government. As that changes, more revenue will come in and the UK Government will not have to subsidise them anymore. That goes for Little Cayman and Brac and, to a certain extent, Grand Cayman. The financial services industry is not what it was and one of the things that attracted us to the Cayman Islands eight or nine years ago was that it had not had any other development that most of these other islands had had, like Barbados or Jamaica or Antigua or British Virgin Islands and so on.

There was very little development going on because they depended on the financial services market. That has pretty much collapsed and it is not what it was, so they have to look for other revenues. One source is developing and attracting tourists, wealthy people. We have in excess of 25 or 30 clients who took themselves out of other tax-free jurisdictions, Dubai for example, and moved there. Some of them are English, some of them are American, some of them are German, but that all brings extra revenue to that Government and it is all from the hard work that our company has put in to market the Cayman Islands for the last 10 years, because no one else has been doing it.

Q194 Dr Whitehead: In that context, you could be described as sort of self-creating a development plan in terms of what you have been doing. Would you have preferred or would you prefer for the future to perhaps work with something that is more familiar as a wider development plan and encompassing power, transport, waste management and that sort of thing, or do you think that your self-development efforts are something you draw towards in the future?

Jason Pickthall: No, I think most developers know and understand that there are always going to be issues with planners or Governments on how you build stuff and what you are building. Pretty much the whole world is against developers whatever they do, good or bad. We understood a long time ago that, once you start to get in the limelight of having a huge amount of stock on your books, we have to do things that keep everybody happy. Three or four years ago we decided that all of our new developments were going to be LEED certified and that is what we have done. The next four sites that we are about to launch any day now, which you will not have seen because they are not on our website, are all that.

Chair: Where are they?

Jason Pickthall: We have a brochure here if you would like to see it.

Jamie Davies: We have three sites: one on Grand Cayman, one on Little Cayman and one on Cayman Brac. So three master plan sites, which are all eco-sites, which will have central sewerage systems in place.

Jason Pickthall: This is a first for the Cayman Islands because no other developer has ever done that and no developer is doing that. There are no other developers that are doing small sites with a central sewerage system.

Q195 Peter Aldous: When you bought these various parcels of land were there any leasehold interests in existence on them?

Jason Pickthall: No.

Peter Aldous: You bought fully with vacant possession?

Jason Pickthall: Yes.

Q196 Mark Lazarowicz: I am not fully clear, so if I may just pursue in a bit more detail your company’s approach to environmental sustainability around the developments that you have been involved in or that you are planning, how do you make an assessment? I don’t mean for planning purposes but for your own purposes, but how do you ensure that there are no environment-damaging results from your activity?

Jason Pickthall: There are certain stipulations that have been put upon us not to use major heavy equipment on these new sites. Things like that have already been put in place by the Cayman Islands Government and then it is for us to instruct our architects. As your colleague said before, we want to strive towards that platinum status. If we can do that, we will, but obviously it has to be profitable to us as well.

Q197 Mark Lazarowicz: Basically your environmental approach is you do what the Cayman Government requires you to do, but you don’t have a particular company approach beyond that?

Jason Pickthall: No, we do a little bit more than that. The Cayman Islands Government didn’t request that we put in a central sewerage system. We did it out of the kindness to the environment and it makes a huge difference to have a central sewerage system where you can re-use your waste as opposed to having 200 septic tanks on site that all have to be emptied once every couple of months.

Q198 Mark Lazarowicz: Just to clarify, I now want to ask about the relationship between the company headquartered in the UK and Crown Acquisitions Inc in the USA. You said that was a subsidiary of your company. Is that the right way round? Do you own them or do they own you?

Jason Pickthall: No, the PLC company owns the two American companies.

Mark Lazarowicz: Right, the UK based company owns the American company?

Jason Pickthall: Yes.

Q199 Dr Offord: I just have a couple of points I want to pick up from that. That is a useful introduction as well. You are saying they are American companies. Is that correct? I understood they were registered in the Grand Cayman.

Jason Pickthall: No, I think you are confused. This colleague of yours is talking about some American companies that we have that own American sites and you are talking about some Cayman companies that we have that own Cayman Islands sites.

Q200 Dr Offord: Crown World?

Jason Pickthall: Correct. Well, Crown Acquisitions Worldwide Ltd.

Dr Offord: Yes. You own those?

Jason Pickthall: Crown Acquisitions Worldwide Ltd.

Dr Offord: Yes. Are they located in Grand Cayman?

Jason Pickthall: Yes.

Dr Offord: They are? They are registered in Grand Cayman?

Jason Pickthall: Yes.

Dr Offord: So they are a Grand Cayman company?

Jason Pickthall: That is right.

Q201 Dr Offord: Leading on from that, as you are headquartered in Grand Cayman you will also have a trading business licence. Is that correct?

Jason Pickthall: Yes.

Q202 Dr Offord: The Department of Commerce and Investment would have asked you for a local companies control licence as well. As you are not owned by 60% of Cayman Islanders, how did you get that licence?

Jason Pickthall: We left it to our lawyers to get it for us.

Dr Offord: But your company is not owned by 60% of Cayman Islanders.

Jason Pickthall: We offered it to Cayman Islanders and that is what I believe is the stipulation you have to follow, which we did. We advertised in the newspaper on three occasions. If any Cayman Islander wanted to invest in the company-at the time it was a very stressful time for most people, so we didn’t get anybody coming forward and, therefore, we didn’t need that investment.

Dr Offord: The Department of Commerce who give this licence does not explain how they give it. You say they just put an advert in the paper?

Jason Pickthall: No, they didn’t put an advert in the paper. We had to put an advert in the paper.

Dr Offord: My understanding is the Trade and Business Licensing Board sits and considers an application. They do not put it in the paper.

Jason Pickthall: I didn’t say that they put it in the paper. I said one of the stipulations to get a Cayman Islands company is you have to offer a Cayman Islander the option to invest in your company. That was offered. The lawyers put the advert in the papers themselves on three separate occasions. They had a couple of inquiries. It didn’t lead to anything. Once you have been through that process then you do not need a local Caymanian to invest in your company.

Q203 Dr Offord: But you still need a licence.

Jason Pickthall: You still need a licence, but now you have your Caymanian company. Just as long as you are adhering to the rules of the Cayman Islands you get your licence and we have to renew our licence yearly.

Q204 Dr Offord: I am happy to leave it there because we can come back to that. I am acutely aware that Darryl Pickthall has not said anything and as director of the company I wanted to ask, because I am a bit confused about how many properties you own, how many acres do you own across all three islands?

Darryl Pickthall: I would say around 300 to 400 acres.

Dr Offord: 300 to 400?

Darryl Pickthall: Yes.

Q205 Dr Offord: One of those, I understand, is at Rum Point Drive on the north shore. I understand you said to the cayCompass two years ago that you had sold 61 plots to people to build houses and they would be built. How many have been built now?

Darryl Pickthall: At the moment, none.

Dr Offord: Why is that?

Darryl Pickthall: Why haven’t they been built? Well, Jason explained before that most of our clients who bought the land are paying on a payment plan over a period of time and it is not the right time now to go and built property.

Dr Offord: I think I get you. They are not in a position to build yet?

Darryl Pickthall: Some are in a position to build now, but some believe it is not the right time to go and build now and others are still waiting for us to go back to our clients with a decision on the best way to go about building.

Jason Pickthall: There is no point in building houses when you can buy houses out there in the market cheaper than what you can build them for and that has been the situation for the last three, four, five years. It hasn’t been in London, but London is a special one-off market.

Dr Offord: It is. I agree with that.

Jason Pickthall: But most of the rest of the world, you can go and buy houses now cheaper than you can build them for.

Dr Offord: Right, okay. Do you-

Jason Pickthall: Hang on a minute. Our clients are not going to start building until they believe that the time is right. That time is changing.

Dr Offord: Right.

Jason Pickthall: But hang one minute.

Dr Offord: No, thank you, Mr Pickthall. I do want to hear what Darryl has to say because I am aware he hasn’t had an opportunity to speak.

Darryl Pickthall: I agree with what Jason is saying and I will let him carry on speaking.

Dr Offord: No. I am asking you.

Jason Pickthall: But I just have one more point.

Dr Offord: No, excuse me, Mr Pickthall.

Jason Pickthall: No, I just have one more point because I want to answer your question because Darryl has not answered it in the manner that it should be answered in.

Dr Offord: Well, with respect, Mr Pickthall-

Jason Pickthall: Hang on a minute.

Dr Offord: No. Mr Pickthall, with respect, that is because I would like to hear him answer the question, not you. As you said, he has not answered it. So I would like to hear him answer it.

Jason Pickthall: All right. Well, I am just going further on to what he is saying. One of the reasons why no one has built on that particular site yet is it takes years to do the infrastructure. We have been doing that infrastructure and it is not finished yet.

Dr Offord: Okay, thank you.

Jason Pickthall: But it is nearly finished.

Dr Offord: Thank you. I will go back to Mr Pickthall.

Jason Pickthall: Which one?

Chair: Darryl.

Darryl Pickthall: Okay.

Q206 Dr Offord: You also said that you would be building 14 condominiums and a golf course yourselves that would encourage other investors. Why has your company not done that?

Darryl Pickthall: Again, we are waiting to get everything finalised and propose it to our clients.

Dr Offord: What are you waiting on, because over two years ago you said you would be starting construction in the next three months?

Darryl Pickthall: Yes. Well, it has been delayed because obviously we are still finalising the plans.

Dr Offord: But your plans were ready then.

Darryl Pickthall: No, they were not ready then. They were in the process then and they are still in the process, but we are nearly there now to go and offer these to our clients.

Dr Offord: I am not sure that is what you said to the cayCompass. You said that they were ready then.

Jason Pickthall: Well, look-

Dr Offord: No, Mr Pickthall.

Darryl Pickthall: I did not say they were ready then. I said that they were in the process of getting work done and we are still at the finalising stages now of having the architects-

Jason Pickthall: Let me say one thing. Darryl deals with a particular part of our business and I deal with the other part.

Q207 Dr Offord: Which part does he deal with?

Jason Pickthall: He deals with our agents. He deals with our accounts. He deals with our website, our lead generation, internal-

Darryl Pickthall: I basically do the day-to-day running of the business.

Dr Offord: Who is the director then?

Jason Pickthall: Darryl is.

Dr Offord: You are the CEO.

Jason Pickthall: Of the Cayman company.

Dr Offord: Right. The director usually tells the CEO what to do. It seems to me the other way round.

Jason Pickthall: That is not necessarily right, no.

Q208 Dr Offord: Let us move on. I will address it to you particularly, Jason. How do you see planning different in the Cayman Islands compared with the UK, because you must do some development here in this country?

Jason Pickthall: How do we see it? Not much different. The planners are very similar throughout the world. They are very awkward. They are very anti-development and they are not easy to deal with, and the Cayman Islands planners are no different. They are not easy to deal with either. One of the things I was just going to go on from on these 14 condos that you mentioned, is that we got planning permission for that over three years ago. Well, not three years ago-two and a half years ago when Darryl made the comment in the cayCompass. The Caribbean is the Caribbean. It is a little bit like Spain. Everything can happen tomorrow and it takes time to get to the point of building from getting planning permission. Just because you get planning permission does not mean you can go and start building tomorrow. You have to get all sorts of other structural surveys done and structural plans and engineering and electrical plans. All that takes time because you are on a small island. You are not in London where you can go and choose 50 different companies to go and do your job. There tends to be one or two companies that can do those particular jobs.

Q209 Dr Offord: In regards to difficulty in planning, I think most of us who have been involved in councils recognise that situation. How many refusals have you had for particular planning permissions?

Jason Pickthall: Several.

Dr Offord: Where were they?

Jason Pickthall: We have had various refusals. Right at the beginning we got various refusals from the first developments that we were doing. We got refused on that particular site that you are talking about originally.

Dr Offord: Sorry, which one?

Jason Pickthall: The Dubli site, the Rum Point site.

Dr Offord: You were refused on that?

Jason Pickthall: Sometimes the Cayman Islands Government do not necessarily just refuse it carte blanche. They say, "We’re not approving it today".

Q210 Dr Offord: But you said you had no contact with the Cayman Government before.

Jason Pickthall: We didn’t. We are talking now about the Planning Department.

Dr Offord: Who are the Government.

Jason Pickthall: Obviously we have contact with the Planning Department. The question that I was asked before was, did we have any contact with the old Government. No, we didn’t. But, yes, of course we had contact with the old planners. Well, we didn’t because we sub everything out to architects to go and put in that planning permission. We do not have any contact.

Q211 Dr Offord: Let me move on to the Sister Islands, Cayman Brac and Little Cayman for example. Have you had any refusals on those islands?

Jason Pickthall: Yes.

Dr Offord: Whereabouts were they?

Jason Pickthall: We had a refusal on our biggest site there originally. We have had-

Dr Offord: Where is your biggest site?

Jason Pickthall: It is a site called Dolphin Estate, which is 175 lots. Originally that wasn’t approved.

Dr Offord: Hang on.

Jason Pickthall: As I have said-

Q212 Dr Offord: No, I just need you to back up on something. You said earlier on in your evidence that you have about 200 sites on the Sister Islands and you have just said Dolphin is 175 sites.

Jamie Davies: 175 plots.

Jason Pickthall: Plots.

Jamie Davies: One site.

Jason Pickthall: Subdivided into 175.

Dr Offord: Okay. So you have 200 plots which are subdivided?

Jason Pickthall: No. We have between 36 and 38 sites across the three islands. Those sites may consist of one plot, two plots, up to 175 subdivided plots.

Dr Offord: Right. How many subdivided plots do you have across the three islands?

Jamie Davies: About 1,000.

Jason Pickthall: Just over 1,000.

Dr Offord: I think it is 1,105.

Jason Pickthall: There you go, just over 1,000.

Q213 Dr Offord: Excellent, thank you. You have had some refusals on Cayman Brac and Little Cayman?

Jason Pickthall: Like I said to you-

Dr Offord: Also Dolphin Point you mentioned.

Jason Pickthall: Dolphin, yes. The Cayman Islands Government, if I understand it correctly, the reason why they do not refuse you is that if they refuse you they can’t take the fees from you. They tend not to refuse you. They tend to put it on hold or say, "You have change this, change that, do this, do that and then we will put it back up to the board to be-"

Dr Offord: I must correct you. You are not quite right. If permission is refused on Little Cayman and Cayman Brac by the Cayman Committee, the applicant has the right to seek financial compensation from the Cayman Islands Government as it complies with the general requirement of the laws under the Development and Planning Law 2011.

Jason Pickthall: Yes. It is basically the same as-

Q214 Dr Offord: They paid you money, did they?

Jason Pickthall: No. That is what I am saying to you. They tend not to refuse it. They tend to tell you to change the-

Dr Offord: But you said they had refused some.

Jason Pickthall: Well, if they have not given us planning permission on the first occasion then they have refused it, haven’t they?

Dr Offord: No. You pay your fee and then they decide whether they are going to give permission or not and then the refusal comes afterwards. Then they give you, according to the law in 2011, compensation. Did they give you compensation?

Jason Pickthall: No.

Dr Offord: So I am not sure if they refused you.

Jason Pickthall: I suppose it is how you look at refusal. If you are looking at refusal initially or you are looking at carte blanche refusal then, yes, maybe there are two different parts to it.

Dr Offord: I understand the point you are making but what I am saying is you make a formal application. You put it in in writing. You pay your fee and they turn around and the Planning Board meets and says, "No, thank you. We don’t want this".

Jason Pickthall: Correct. That has happened on several occasions.

Dr Offord: That has happened on several occasions?

Jason Pickthall: Yes.

Dr Offord: How much have you received in compensation?

Jason Pickthall: Nothing, because we have not asked for it.

Dr Offord: You are a very bad businessman if that is the case.

Jason Pickthall: Maybe I am. Now you have put it to me, maybe we should go and claim some monies from them.

Q215 Dr Offord: May be you should. In terms of the Cayman Islands planning system, particularly on the Sister Islands, there is a clear presumption in favour of development if you meet the general requirements, which Mr Davies did say earlier. That includes things like setbacks, parking provision and the heights of buildings, for example, though that does not apply to all buildings in the Cayman Islands particularly.

Jamie Davies: No.

Dr Offord: I do understand that a lot of your applications and your plots of land have been on the Sister Islands where, as we have already pointed out, the development control does not exist. There is no development control plan there and also, in regard to the planning process, which is a lot different there. How would you respond to the criticism that some people feel that you are taking advantage of the Sister Islands’ lack of planning and development control and simply putting applications for plots in there?

Jamie Davies: May I?

Dr Offord: Of course.

Jamie Davies: I think that your question is rather misleading because, from what you stated, it would be deemed that we are taking advantage of the lack of planning in the Sister Islands, within Cayman Brac and Little Cayman. That is not the case. Grand Cayman is, in all essence, an emerged market. It is difficult to class Grand Cayman in the same category as Cayman Brac and Little Cayman. They are nothing alike. They are all beautiful islands but Grand Cayman is very, very advanced; financially, structurally, in every way. If you were to go and buy a development plot with planning on Grand Cayman you would be looking in the region of US$200,000 to US$300,000 at a minimum because all of the infrastructure is in place.

What we are doing is we are capitalising on effectively an emerging market, which is Little Cayman and Cayman Brac. Infrastructure is, all of a sudden from the Government, being put in place. Plans for a new airport are in place, new terminals, new hospitals, new schooling. What we are doing is working on the basis that land is cheap at the moment. It is at the advantage of investors who come in early now to acquire a piece of land with full planning at a price that is affordable to them to appreciate capital growth. Now, Dr Whitehead mentioned about developing a plot and why we have not built out on a site. It does not make financial sense to build a property if you can go 200 yards down the road and buy something that is cheaper than it costs to build.

We are working with investors that in some senses are land banking. They are waiting for that market to emerge in its full flair, which the Government are publicising at the moment. They are expanding the airports. They are going out internationally for tourism. Cayman Brac and Little Cayman are the best unchartered dive sites in the world; unchartered because tourism has not come to those islands yet. It is not a five-minute drive. It is a 20 to 25-minute flight to get from Grand Cayman to Little Cayman. Now, Little Cayman and Cayman Brac are stunning sites, but with the sites that we have outline planning for there are planning restrictions. On Little Cayman there is a beautiful nature reserve right in the middle of the island and it is stunning. An experience of-

Q216 Dr Offord: Is that the parrot reserve or the booby bird reserve?

Jason Pickthall: The parrot reserve is in Cayman Brac. The booby reserve is in Little Cayman.

Dr Offord: It is not right in the middle then.

Jamie Davies: It is the-

Jason Pickthall: He is talking about the one on Little Cayman at the moment.

Dr Offord: Right, which is not right in the middle.

Jamie Davies: It is a mile by 10 miles.

Dr Offord: It is right on the west.

Jamie Davies: On the west, from a mile by 10 miles. It is a stunning site.

Dr Offord: Just so you know that I do know what we are talking about.

Jamie Davies: Good. If you have seen the site you will know what we are talking about. It is not something we are going over there to capitalise on the lack of planning because we can get-

Dr Offord: No, you are at the other end of the island.

Jamie Davies: We are all over the island.

Dr Offord: Your major point is at the other end by the bluff.

Jamie Davies: There is no bluff on Little Cayman.

Q217 Dr Offord: I will come to this then because this moves us on and I am aware of time as well. You have mentioned that you have introduced roads to the island and let us take Little Cayman, for example, where the so-called roads have been put in. How would you describe those roads?

Jamie Davies: Little Cayman? I would see there is one major road on Little Cayman and it goes right round the perimeter of the island.

Dr Offord: What about the roads that you have put in?

Jamie Davies: The roads that we have put in are infrastructure on those sites. They are connecting roads to those developments.

Chair: Connecting roads?

Jamie Davies: Connecting roads.

Chair: They all link into each other?

Jamie Davies: No, they link in from the main road. So they have access to the main road, because you can’t have a site that does not have any access to it.

Dr Offord: What they are is somebody has taken a bulldozer, driven into the scrub and then you have just put crushed rock down on top.

Jamie Davies: In some areas-

Jason Pickthall: We have done what the Cayman Islands Government has stipulated for us to do.

Q218 Dr Offord: Secondly, there is no electricity supply there, is there?

Jason Pickthall: No.

Jamie Davies: Not to the sites. We have to connect to the sites from the main supply because a lot of it is generator supply. It has a central system but you are advised by the Cayman Government to have a generator backup.

Q219 Dr Offord: That is correct, but I put it to you that there is no infrastructure on the Sister Islands.

Jamie Davies: The Sister Islands is limited at the moment.

Jason Pickthall: Are you saying that there is no infrastructure on either of those two islands?

Dr Offord: What I am saying is there is none at your sites and there will not be any at your sites.

Jason Pickthall: There is none on our sites are you saying?

Dr Offord: We ask the questions. I don’t know if you know the format of a Select Committee but we ask the questions. Okay?

Jason Pickthall: Yes.

Dr Offord: I am asking Mr Davies. You mentioned earlier about the infrastructure and you have mentioned also about the provision of electricity. I am putting to you that that will never happen. One of the things that you have just mentioned in your evidence is that you say that some of the people that buy your plots are land banking.

Jamie Davies: They could be land banking, yes.

Darryl Pickthall: Can I mention something? You said that we haven’t completed infrastructure on our sites. I can tell you now that we have completed probably 10 to 15 developments with full infrastructure.

Dr Offord: I would be interested to know where they are.

Darryl Pickthall: I can tell you where they are. They are on Little Cayman called Little Cayman Estate, another one on Little Cayman called Lakeside Estate and then we have Indigo Bay, we have Ocean Bay, we have Ocean Bay 2, we have Ocean View.

Q220 Dr Offord: Can I just ask you what you mean by "infrastructure"?

Darryl Pickthall: The road are put in place and the electricity pylons are also in place.

Jason Pickthall: "Infrastructure complete" is surely what the Government classes as infrastructure complete, not what you class it as and we have letters from them to say-

Dr Offord: The Government does not require you-

Jason Pickthall: -we have completed the infrastructure to their standards.

Dr Offord: Please, Mr Pickthall, do not speak over me. The Government does not require you to put in anything.

Darryl Pickthall: No, the Government does.

Jason Pickthall: It does.

Darryl Pickthall: It does. One of the conditions when we got planning permission was that we have to complete infrastructure before we can transfer title to our clients. We have transferred title to many of our clients because the infrastructure is complete. You can check with the Lands and Survey Government how many titles we have transferred.

Dr Offord: I will leave it there. That is fine. Thank you very much.

Chair: I am conscious that we do have to draw our proceedings to a close by 11.10am.

Q221 Peter Aldous: You explained the model that you have pursued as a result of the downturn in the economy worldwide is of selling plots rather than developing. Have any of your buyers themselves now sold their plots?

Darryl Pickthall: Yes.

Peter Aldous: They have?

Jason Pickthall: Some of them have, yes.

Peter Aldous: Has that shown a substantial uplift in value for them compared with what they bought it for?

Jason Pickthall: Yes.

Q222 Peter Aldous: Do you benefit from that substantial uplift in value at all?

Jamie Davies: Across the sites we could. If you are working on a comparable basis you are going to work on a comparable of sites that have been sold. Now, if there is a site that sold for 20% more than what we are selling for then obviously there is the potential to increase in price.

Peter Aldous: You have what I would call claw-black clauses in your sale whereby-

Jamie Davies: No.

Peter Aldous: You have not?

Jamie Davies: No. If you work on a comparable resale valuation, our plots could be on sale for £40,000.

Peter Aldous: Yes.

Jamie Davies: A site or a plot that is comparable to our plot could sell for £60,000. That is potentially an uplift of £20,000 in the value, but you have to work it across the board and not just one site. You can’t compare one for one. You have to compare one with 10 and at the moment the Sister Islands do not have those comparables. There are few and far between re-sales where people are seeing profits where everybody is putting their prices up. They are not. They can’t because you might have a site that increases in value by 100% but it does not mean we can put our prices up by 100% further.

Peter Aldous: Just to clarify, if someone bought a plot off you for, say, £50,000 and then five years later they sell it for £100,000 and make a profit of £50,000, you do not get any of that profit of £50,000?

Jamie Davies: No.

Peter Aldous: Thank you.

Q223 Chair: At this stage we do need to bring the proceedings to a close. Is there anything that either Mr Davies, Mr Darryl Pickthall or Mr Jason Pickthall wishes to very briefly add to the session that we have had this morning?

Jamie Davies: Just to close, I think we would be very willing to attend in future or attend any private questions or open anything you need to see to assist in your evaluation of the sites and also the environmental impact on the sites. I just wanted to clarify that we are not working in an emerging market in Eastern Europe where we are just maximising the potential to develop on bad planning. We are working with a Government where they do have planning restrictions in place and we are looking to the best for the islands and obviously the best for our investors as well, but we are welcome to come again and discuss it.

Chair: Okay, and we look forward to receiving the environmental appraisal that you mentioned earlier on as further written evidence. On that note then I will draw the proceedings to a close. I would like to thank each of you for coming along this morning. Could I also say to the members of the public in the room I would be grateful if you could clear the room because we do have a further private session on a different agenda? Thank you to the three of you.