Guidance

Change in Management Control of Land and Succession Under a HS2 Woodland Fund: operations note 63

Published 8 December 2022

Applies to England

• Publication for Northern Ireland
• Publication for Scotland
• Publication for Wales

1. Purpose

The purpose of this Operations Note is to provide information about the steps Agreement Holders need to take where a Change in Management Control, including a Succession, will or is intended to take place.

2. Summary

You must follow this guidance when the following are intended to or will take place in relation to Land covered by a HS2 Woodland Fund Grant Agreement:

2.1 A Change in Management Control

This is a change affecting all or part of the Land subject to the Agreement which could prejudice the carrying out of the Terms and Conditions. Examples of this include, but are not limited to:

• granting a licence over the Land
• granting any contractual interest in the Land
• granting a new leasehold interest over the Land or a sublease
• permanent boundary changes to the Land
• a Succession

2.2 A Succession

This is the transfer of the legal interest in all the Land subject to the Agreement, held by an Agreement Holder when the Agreement was put in place. Examples of this include, but are not limited to:

• sale of the Land
• surrender of a leasehold interest in the Land by the tenant to the landlord
• transfer of the Land as a gift
• novation of a leasehold interest in the Land
• death of the Agreement Holder and transfer of the Land as a result of probate

If a Change in Management Control occurs (including a Succession), you must notify the Authorised Representative under the Agreement (who is currently the Forestry Commission, also referred to as “FC” and for the avoidance of doubt any reference to the FC within this Operations Note is a reference to the Authorised Representative from time to time under the Agreement) within three months of the date the Change in Management Control took place (see below for further details on notification requirements).

If a Succession occurs, you will be entitled to make an application to Novate the Agreement. This Operations Note sets out guidance on the Novation process which, in summary, involves entering into a new agreement which substitutes an existing party to the Agreement with a new one. Novation of the Agreement following a Succession is at the Forestry Commission’s sole discretion.

For all other Changes in Management Control which do not constitute a Succession, you will not be automatically entitled to make an application to Novate the Agreement. If a Change in Management Control takes place, the Agreement may be closed with or without a reclaim of the Grant paid to-date.

This Operations Note provides guidance only. You should consult the Terms and Conditions and take legal advice before a Succession or a Change in Management Control takes place.

3. Definitions

Unless otherwise defined, definitions used in this Operations Note have the same meaning as in the HS2 Woodland Fund Terms and Conditions (“Terms and Conditions”). For your ease of reference only, the following definitions from the Terms and Conditions are used in this Operation’s Note (other definitions may apply):

• Authorised Representative: Forestry Commission England (also referred to as the FC) or such other person or persons appointed from time to time by HS2 Ltd and notified to you within thirty days of such appointment, to administer the HS2 Woodland Fund, and where such appointment is terminated or ceases and no new appointment is made or until a new appointment is made, shall mean HS2 Ltd.

• HS2 Woodland Fund: the voluntary scheme to support landowners and managers to undertake new native woodland creation, particularly to increase connectivity to existing woodlands and to undertake restoration of plantations on ancient woodland sites within 25 miles of HS2 Ltd.’s proposed high speed rail line from London to the West Midlands (also known as HS2 Phase One). Applications of high biodiversity value outside the 25 mile radius of the HS2 Phase One route may be considered for funding at the discretion of HS2 Ltd.

• Land: all units of land which are proposed for tree planting or PAWS restoration and under which claims will be made under this Agreement

• Novation: as defined in clause 4.3.1.

• Novation Agreement: an agreement in the form annexed to this Agreement pursuant to which you agree to Novate this Agreement to a Successor

• Scheme: the HS2 Woodland Fund

• Succession: the transfer of the legal interest in the whole of the Land subject to the Grant, held by you at the date of the Agreement, from you to a Successor

• Successor: a third party who obtains the legal interest in the whole of the Land subject to the Grant from you

4. Background

The HS2 Woodland Fund opened in February 2018. The Scheme provides funding to support native woodland creation or the restoration of Plantations on Ancient Woodland Sites (PAWS) within a 25-mile zone surrounding the Phase One HS2 route from London to the West Midlands.

The Grant total payment is based on the range of capital items put into the application, up to a specified cap. The planting of new woodland is a long-term investment. A ten-year maintenance payment (Woodland Creation Maintenance Payment) is also payable for woodland creation at £200 per hectare per annum. This is paid in two instalments at years five and ten of the agreement period. The state or local authorities cannot apply for maintenance payments.

Please read the HS2 Woodland Fund: terms and conditions for more information.

5. Change in Management Control and Succession under the scheme - Overview

Agreement Holders should be aware of the Maintenance period: the period of time over which the trees planted under their Agreement must be maintained to ensure successful tree establishment. The maintenance period begins when the final payment is made for tree planting. All agreements have a maintenance period which lasts for five years. This increases to ten years where the Grant Agreement includes Woodland Creation Maintenance Payments.

Because of the longevity of the Agreement, there are specific rules to cover any Change in Management Control and Succession. These are designed to protect the public investment in the new planting and to ensure the desired outcomes are delivered.

If an intended Change in Management Control (see the examples in the Summary section of this Operations Note) will affect all or part of the Land, the Terms and Conditions must be followed. The Terms and Conditions require that the FC is given notice of the Change in Management Control no later than three months after the date that the Change in Management Control took place. This requirement must be met and it is strongly recommended that the FC is informed of a Change in Management Control as early as possible.

A Change in Management Control taking place may have an impact on the Grant and HS2 or the FC acting on behalf of HS2 retain the right to:

• recover all or part of the Grant as well as terminate the Agreement; and/or

• withhold payment of any sums that become due under the terms and Conditions at any time following the Change in Management Control

However, if the Change in Management Control is a Succession (the transfer of the legal interest in the whole of the Land subject to a Grant - see the examples in the Summary above), you may also apply to Novate the Terms and Conditions to the Successor. If:

• you do not make an application to Novate the Terms and Conditions to the Successor within the prescribed time frame; and/or
• your application to Novate the Terms and Conditions is refused, you may need to repay the Grant monies you have received. The application to Novate must be made in accordance with the Agreement’s Terms and Conditions (see answer to Question 1 below for further details).

Novation of the Terms and Conditions will have the following impacts (which are set out in the Novation Agreement):

• the Terms and Conditions are transferred to the Successor from the date of the Novation Agreement (this includes transfer of the right to receive further payments);

• the Agreement Holder ceases to be entitled to any payments under the Terms and Conditions and accepts that all payments due to them have been paid;

• the Agreement Holder is released from future obligations under the Terms and Conditions, with the exception that they remain liable for:

1. Any claims under the Agreement that arise prior to the date of the Novation Agreement (or Succession, that takes place after the Novation Agreement is completed); and

2. Repayment of any payments received by the Agreement Holder under the Terms and Conditions should a future breach of the Terms and Conditions occur.

If only part of the Land to which an Agreement relates is being transferred to a third party, or if a new legal interest, such as leasehold interest, has been created, you are not eligible to apply for a Novation. Such a transfer will not be deemed to be a Succession but a Change in Management Control as per the Terms and Conditions and HS2 or the FC acting on behalf of HS2 retain the right to:

• recover all or part of the Grant as well as terminate the Agreement; and/or
• withhold sums owed to you following such a Change in Management Control taking place.

Please see the answer to Question 1 below for information regarding your obligations and HS2’s rights on a Change in Management Control.

5.1 Question 1: What must I do?

Change in Management Control

The Agreement Holder should discuss with the FC if a Change in Management Control - which includes a Succession – is intended to take place to make sure that they understand the rules that apply when a Change in Management Control takes place. The Terms and Conditions require the Agreement Holder to notify the FC of any Change in Management Control no later than three months after the Change in Management Control takes place. However, it is highly recommended that you inform the FC of a Change in Management Control as soon as you become aware of the change.

The FC should be notified of a Change in Management Control by filling out and returning the “Change in Management Control Form”. The form can be requested from the FC to the following address: hs2woodlandfund@forestrycommission.gov.uk.

Unless a Change in Management Control involves the transfer of the legal interest in the whole of the Land subject to the Grant (i.e., it is a Succession) Novation of the Terms and Conditions will not be possible. In such circumstances HS2 or the FC acting on behalf of HS2 reserve the right to recover all payments made to the Agreement Holder under the Scheme, terminate the Agreement and/or withhold any payments that would become due following the date of the Change in Management Control.

The decision to recover payments received by an Agreement Holder rests solely with HS2 or the FC acting on behalf of HS2 if a Change in Management Control occurs. However, in most cases it would not be HS2’s intention to recover payments that relate to tranches of the Agreement that have reached the end of their maintenance period. In such cases, HS2 or the FC acting on behalf of HS2 may still exercise its discretion to recover payments that relates to any tranches of the Agreement where maintenance obligations remain outstanding.

Succession

If a Succession is intended, the Agreement Holder and any Successor should take independent legal advice prior to completing the Succession, particularly but not exclusively in order to determine how a Novation to the Terms and Conditions will affect them and any terms of sale/transfer. For details of the likely outcome for Successions in circumstances where a Novation does not take place, please see answer to question 2 below.

As is required for any Change in Management Control, the FC should be notified of a Succession no later than three months after the Succession takes place using the Change in Management Control Form. You can request a copy of the form from the FC by emailing hs2woodlandfund@forestrycommission.gov.uk. You should notify FC, on the Change in Management Control Form, whether it is the intention for you and the Successor to Novate the Agreement. On reviewing the completed Change in Management Control Form and noting your intention to Novate, the FC may (at its sole discretion) provide you with copies of the:

• HS2 Woodland Fund Successor Form; and

• Novation Agreement, which should be filled out jointly by the Agreement Holder (referred to in the Successor Form and Novation Agreement as the Original Occupier) and the Successor.

All these documents should then be sent to hs2woodlandfund@forestrycommission.gov.uk

Under the Terms and Conditions, the Agreement Holder must submit the Novation application (i.e. the Novation Agreement and Successor Form) no later than 12 months from the date of the Succession. If an application for Novation is not received by the FC within that time frame, HS2 or the FC acting on behalf of HS2 may refuse to accept the Novation.

For the avoidance of doubt, Novation to the Terms and Conditions will not take place unless and until the FC, acting for and on behalf of HS2, processes the Successor Form and completes the Novation Agreement. HS2 and the FC may also decide at their absolute discretion whether or not to allow the Agreement Holder to Novate the Terms and Conditions to the Successor on receiving the Form and Novation Agreement.

If HS2 or the FC acting on behalf of HS2 decide to agree to the Novation:

• application received following completion of the Succession: the FC will process the application and complete the Novation Agreement on behalf of HS2 as soon as possible and, once completed, notify both the Agreement Holder and Successor that the Novation has taken place;

• application received prior to the Succession taking place: the FC may accept receipt of the Successor Form and the Novation Agreement and confirm whether or not the application for Novation has in principal been accepted and whether the FC intends to enter into the Novation Agreement on behalf of HS2. However, the FC will not complete the Novation Agreement until they are informed the Succession has taken place.
  The Successor and/or the Agreement Holder therefore must, following completion of the Succession, provide proof that the Succession has taken place to the reasonable satisfaction of the FC, acting on behalf of HS2. The FC will then complete the Novation Agreement. The Successor and the Agreement Holder will then be notified once the Novation has taken place.

In both circumstances (where applications for Novation are submitted pre-Succession and post-Succession) there is likely to be a time period between the Succession taking place and completion of the Novation. During this time the Agreement Holder remains the party to the Terms and Conditions and the Successor has no rights or obligations under the Scheme.

We will pay any claims for grant received during the processing of an application as soon as the process is completed:

• if the claim is made prior to the date of the Novation Agreement, to the Agreement Holder; and

• if the claim is made on or after the date of the Novation Agreement, to the Successor.

If you require further details for a specific case please contact hs2woodlandfund@forestrycommission.gov.uk.

5.2 Question 2: What happens if a Succession occurs but a Novation does not take place?

Change in Management Control

The Terms and Conditions of the Agreement enable HS2 or the FC, acting on HS2’s behalf, to exercise its discretion to do any of the following if a Change in Management Control of the Land occurs:

• recover all or part of the sums paid to the Agreement Holder;
• terminate the Agreement; and/or
• withhold any sums that become due to the Agreement Holder at any time following the Change in Management Control.

This discretion applies whether or not the Agreement Holder is eligible to, and an application is made  to, Novate the Terms and Conditions to a Successor and can be exercised by HS2 or the FC acting on behalf of HS2 at any time.

Succession

If a Succession takes place and for any reason the Agreement Holder does not Novate the Terms and Conditions to a Successor, HS2 or the FC acting on behalf of HS2 have additional rights to terminate the Agreement and recover the Grant payments. HS2’s current policy is that in the majority of cases where Succession occurs but Novation does not take place it will seek to recover all funds that the Agreement Holder had received and terminate the Terms and Conditions. HS2 or the FC acting on HS2’s behalf may exercise their discretion not to recover sums in any particular case but this will only be in exceptional circumstances.

It is therefore recommended, in order to ensure the Agreement Holder may retain the sums received prior to the Succession, that an application is made to  Novate the Terms and Conditions to the Successor.

5.3 Question 3: What happens if the Agreement Holder (or an Agreement Holder who holds the Grant and Land jointly with another Agreement Holder) has passed away?

If an Agreement Holder who holds the Land and Grant jointly with another Agreement Holder has passed away, leaving to that Agreement Holder their title to the Grant and Land, you do not need to do anything – we do not consider that a Succession or a Change in Management Control has taken place in these circumstances.

Where an Agreement Holder has passed away and the Land and Grant are to be transferred to a new third party, the executors of the estate who are to be granted probate should notify the FC as soon as possible that the ownership of the Land will change. As in any Succession, on the grant of probate the executors of the estate should fill in and sign the Novation Agreement (who are, for the purposes of the Successor Form, the Agreement Holder), ensuring that the beneficiary in receipt of the Land completes the Successor Form and signs the Novation Agreement (as the Successor). They should then arrange for both the Successor Form and Novation Agreement to be sent to the FC’s Incentive Development Team for processing.

If the Agreement Holder has passed away, HS2 or the FC acting on behalf of HS2 may at their sole discretion elect not to:

• recover any funds from the estate of the deceased;

• enforce the three month timescale for notification where any Change in Management Control occurs; or

• enforce the twelve month timescale for Novating the Terms and Conditions

6. Sources of further advice

The HS2 Woodland Fund website contains all the information you need to apply for grant support. Alternatively, you can request this information from the Forestry Commission Incentives Development Team – hs2woodlandfund@forestrycommission.gov.uk

7. Versions

Version 1 issued 8 December 2022.