New £1.4bn Regional Growth Fund goes live

Deputy Prime Minister, Nick Clegg, has today declared the Government’s £1.4bn Regional Growth Fund open for business. The fund will support communities currently over dependent on the public sector. Businesses and local communities will now be able to bid for financial help to boost private sector growth and create jobs in their area.
Lord Heseltine will Chair the Independent Advisory Panel, which will consider all bids submitted to the fund. Lord Heseltine will be supported by Deputy Chair, Sir Ian Wrigglesworth and a panel of academics, business and civic leaders.
Speaking on a visit to Manchester to promote local growth, Deputy Prime Minister, Nick Clegg said:
“For too long growth in the economy has been pinned on a few sectors, like financial services, while other great British industries have been ignored. Prosperity has been confined to certain postcodes while huge swathes of the country have suffered serial neglect.
“The Coalition Government is determined not to repeat these mistakes. We will support growth across the whole country, rewarding hard work and innovation in all of our industries. We understand that areas which rely on the public sector for jobs will need special help.
“Millions of people across Britain are being asked to bear their share of the difficult decisions needed to get the public finances in order. It’s only fair that everybody benefits from future growth too.
"Crucially, spreading prosperity across the country also means giving local communities a greater say over how their money is raised and spent. That is why this Government is looking closely at ways of allowing local authorities to keep the business rates they collect."

Time to Pay: Restrictions Getting Tighter?

This article summarises the HMRC: Business Payment Support Service statistics released this month. It is clear that the Time to Pay entry requirements are either becoming tighter or being employed more strictly. If you are in the Time to Pay Scheme you should not be taking it for granted that you will continue into another period.

In summary the report states

Between the launch of the BPSS in November 2008 and the end of September 2010:

• 
  371,200 arrangements were granted which were worth £6.38 billion
• 
  £5.41 billion has already been paid to HMRC from mature arrangements
• 
  13,900 TTP requests, worth a total of £810 million, have been declined by HMRC
• 
  46% of the total number of arrangements were for VAT, equating to 50% of the total value of all
  arrangements
• 
  60% of the total number of arrangements were for a period of 3 or fewer months, equating to 63% of the total value of all arrangements
• 
  61% of the total number of arrangements were for requests under £10,000, equating to 15% of the total value of all arrangements
• 
  37% of the total number of arrangements were for requests between £10,000 and £100,000, equating to 60% of the total value of all arrangements

Since inception of the service 371,200 TTP arrangements worth £6.38 billion have been granted. Payments to HMRC against arrangements granted through the BPSS are made according to the individual payment schedules.

Instalments have therefore been paid since the first month following the start of the service (December 2008) up to the present day. Based only on those arrangements mature enough for at least one monthly instalment to have been paid before the end of September 2010, it is estimated that £5.41 billion has already been paid to HMRC.

Arrangements granted in September 2010 are not yet mature enough for payments to be made against their individual schedules which are beyond September 2010. However, future payments on these arrangements would be expected as they become due.

The following sections provide a more detailed examination of the underlying information from the BPSS, including the main characteristics of the TTP arrangements, trends over time for each tax regime as well as year-on-year comparisons of the demand for the service.

Clearing up the case for redundancy during maternity leave

Many employers believe that it is unlawful to make a woman redundant during maternity leave but the outcome of a recent Employment Tribunal case has clarified the circumstances in which this may be allowed.

A tribunal has ruled that redundancy during maternity leave does not automatically mean unfair dismissal, but employers have been warned that this is not a green light for change.

Many employers assume that they cannot make an employee redundant during maternity leave, but the recent case of Simpson v Endsleigh Insurance Services Ltd has thrown new light on the interpretation of the regulations.

The case has clarified the employer’s duties under Regulation 10 of the Maternity and Parental Leave Regulations 1999. This states that if the job of a woman who is on maternity leave becomes redundant, the employer must offer the employee a suitable alternative vacancy, provided that the work in the alternative job is suitable and appropriate for the woman. Also, the terms and conditions of the new job, including the status and place of employment, must not be substantially less favourable to the employee.

The employer, Endsleigh, had closed down several branch offices while Ms Simpson was on maternity leave. They invited her to apply for a job in the Cheltenham branch but she did not do so. She later argued before the Employment Appeals Tribunal (EAT) that she should have been offered the job in Cheltenham, not just invited to apply. Endlseigh argued that the job in Cheltenham would have meant relocation or commuting for Ms Simpson and therefore it was substantially less favourable to her. Therefore, the company argued, as both conditions in Regulation 10 had not been fulfilled, the duty to offer the alternative job did not apply.

In this case, the Tribunal agreed with Endsleigh and also said that it was for the employer, not the employee, to decide whether the alternative job was less favourable to the employee.

“Whilst this is a useful clarification of the law, it’s not a green light for anything that will undermine the rights of women on maternity leave. Employers need to be very careful in considering whether the terms of alternative employment are suitable to the employee and whether terms are more or less favourable,” said employment law expert Jane Dismore of Breeze & Wyles Solicitors LLP in Hertford.

“They must make sure they act objectively and in good faith in reaching their decision and record their reasons carefully, as they may well be open to scrutiny if there is subsequent action by the employee.”

Reference: Simpson v Endsleigh Insurance Services and others (UKEAT / 0544/09/DA)

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Landlords: what to do (or not to do) if your tenant abandons the premises?

In the current economic climate, an increasing number of landlords are faced with tenants who vacate premises and stop paying rent with little or no warning.

How a landlord should react in this situation depends on what they hope to achieve. From the moment a landlord realises that the premises have been abandoned, their actions can have important, and sometimes costly, consequences for that landlord.

These consequences will depend on whether the landlord (whether intentionally or inadvertently) behaves in such a way that could be deemed by a court to either:

(a) End the lease, and thus effect a surrender by operation of law, or;
(b) Be consistent with the continuance of the lease.

Consequences of surrender of a lease by operation of law

The consequences of a surrender by operation of law include the following:

The tenant is released from its obligation to pay future rent.

Many leases provide for the payment of a service charge estimate by the tenant, to be followed by a ‘balancing’ payment at the end of each service charge year should the actual service charge due be higher. The landlord will not be able to recover a balancing payment that falls due after the date of surrender, unless the lease provides otherwise.

The parties remain liable for any breach of covenant and arrears prior to the surrender date.

How a surrender by operation of law comes about

A surrender by operation of law will take place only if the tenant and the landlord both behave in a way towards each other that is clearly and unequivocally inconsistent with the continuation of a lease. A surrender by operation of law cannot be one sided. The tenant must be seen to have surrendered the lease, and the landlord to have accepted the surrender. After such behaviour either party would be ‘estopped’ from then arguing that the lease continues.

By abandoning premises, taking their fixtures and fittings and handing or posting the keys back to the landlord, the tenant could, depending on the overall circumstances, be deemed to have behaved in a way that is inconsistent with the continuance of their lease. This is especially so if, for example, the tenant writes to the landlord confirming that it can no longer pay rent and no longer wishes to remain at the premises. However, this is not enough by itself to result in a surrender by operation of law.

It is what the landlord does in response to this that is critical.

It is the parties’ behaviour that is important, not their intent. A surrender by operation of law can occur irrespective of, or even despite, the intention of the parties. So landlords must be especially careful not to inadvertently accept a surrender where they have no intention of doing so.

Does it matter?

The landlord should consider at the outset what it wants to achieve, and what it is realistic to expect to achieve.

The landlord may want the tenant’s liability to continue, and so he can sue the tenant for future rents. This is more likely where the lettings market is weak and the prospect of finding a new tenant quickly and at the same rent is poor. This can matter more where the tenant vacates early in the lease term.

The landlord may have committed to carrying out extensive maintenance and repair works to the building or estate containing the premises. Therefore, it will want to be able to recover the balance of the service charge due from the tenant for the remaining part of the service charge year.

However, the most practical point to consider is whether the tenant is worth pursuing for any arrears in rent, service charge and any other monies due under the lease. They may have become insolvent, or have applied to the court for an administration order which would automatically restrict the landlord’s ability to bring a claim. Or a corporate tenant may simply have been dissolved. In these cases the landlord may decide that the loss of entitlement to make a claim is irrelevant, and that it is preferable to accept the surrender, regain possession of the property and deal with it freely.

If, on the other hand, the landlord does wish to preserve its claim against the tenant for future rents and liability for other obligations under the lease, it should take care not to act in a way which would constitute acceptance of a surrender.

How easy is it to prove surrender by operation of law?

Case law has confirmed that the threshold for confirming that the landlord has accepted a surrender by operation of law is high. In other words, the fact that his behaviour in this respect must be unequivocable means that usually it is not easy for a party to prove a surrender has been accepted.

This has been highlighted in a case heard by the Court of Appeal case in June this year. The landlords let a builders yard to a company (Co 1) that became insolvent and ceased operating from the yard. Another company (Co 2) took occupation, started paying rent and began negotiating a new lease with the landlord. Negotiations broke down and the administrative receivers for Co 1 agreed to assign their lease to Co 2. The landlord argued that Co 1’s lease had been surrendered by operation of law, Co 2 occupied under a tenancy at will and that the tenancy at will was now terminated. The Court of Appeal ruled that Co 1’s conduct was not “unequivocally inconsistent with the continuance of the lease” and that there was no surrender by operation of law. This was despite Co 1 making it clear that they wanted nothing more to do with the lease, ceasing to pay rent and knowing a third party was negotiating a new lease, and despite the landlord acknowledging this by negotiating a new lease with Co 2.

Even though this and other cases have shown that the test for surrender by operation of law is a difficult one to prove, landlords still need to be careful. They would do well to have in mind the distinction between actions which are likely to constitute acceptance of surrender and those which are not. Examples of behaviour which could apply in either case are set out below.

Actions which are likely to amount to an acceptance of a surrender

Taking possession of the premises. A landlord can do this by moving into the property and occupying it for the landlord’s own purposes.

Redecorating the property to its own taste and allowing family members or friends to occupy the premises for their own purposes.

Moving items into the property for storage.

Re-letting to someone else with the tenant’s consent.

Actions which when TAKEN ALONE in each case are unlikely to amount to an acceptance of a surrender

Receiving the keys back without demanding them, for example, where delivered in the post or by hand through a letter box.

Entering the premises to inspect and repair. This is consistent with the rights the landlord would already have during the lease term.

Carrying out repairs and taking security measures to protect the property against intruders and to preserve the value of the landlord’s interest.

Failing to demand rent and service charge when the landlord knew the tenant no longer wants the lease. Mere inaction alone is usually not enough to constitute unequivocal acceptance of a surrender.

Case law suggests that the landlord could reasonably be entitled to mitigate his losses by , in addition to any of the above actions, preparing to relet the property without this necessarily amounting to an acceptance of a surrender. However, it is not clear to what extent remarketing and finding a new tenant would jeopardise the landlord’s claim against the tenant. A court would consider each case on its facts, and advice should be sought before reletting as to whether this may affect the landlord’s claim for future rents.

A court will consider all of the landlord’s actions taken together in deciding whether the landlord has accepted the surrender. The landlord should therefore try to do only what is necessary to secure, repair and protect the property and then, subject to seeking appropriate advice, to try to find a new tenant if needs be. The key thing is not to be seen to be taking back possession of the property.

An example of this risk is illustrated by a 2009 case where the Court of Appeal confirmed a surrender by operation of law had occurred when after a tenant had abandoned premises, the landlord took back the keys, redecorated and occupied the property for six weeks.

Merely writing to the tenant asserting that the lease continues and that rent remains due, is not enough to prevent a surrender by operation of law, especially if accompanied by an action which is likely to constitute an unequivocal acceptance of surrender.

One point that does not appear in its own right to have been clearly settled in case law, but which is in our view could matter, is the timing of a landlord’s claim in tandem with other action it takes. If the landlord makes a claim against the errant tenant for future rent and service charge or other breach, whilst or before taking steps to protect the property, it may be easier for him to argue that he has not accepted a surrender than if he waits until after taking those steps.

However, this is not guaranteed, and any case argued in court will be taken on its own facts.

Hannah Collins

Solicitor

Commercial Property group

Business Services Department

HMRC: Time to pay: "This is not a bank overdraft or a loan"

In an excellent featured article by the Insolvency Today magazine in October / November 2010 issue the interviewee Nick Lodge, Director of HM Revenue and Customs Debt Management and Banking Directorate has repeated a line put forward by this blog that 'Time to Pay' should not be viewed as merely a bank loan or overdraft. However, Mr Lodge states that he is not enamoured by comments by IPs and the media that corporate insolvencies are being kept in check by the ability to get 'Time to Pay' easily. He goes on to state that the basis for creating and implementing 'Time to Pay' is to collect the taxes more effectively. Surely this is pure semantics with the outcome being the same.

Irrespective of how the HMRC come at this, 'Time to Pay' has the effect of delaying the onward rush of corporate insolvencies. It gives the business owner an incorrect impression of their financial position.

Breeze & Wyles Solicitors LLP joins the Conveyancing Association

This week Breeze & Wyles Solicitors LLP joined the Conveyancing Association, an industry group focused on creating and delivering best practice in the Conveyancing market.

Murray Fraser, Volume Legal Services Director said:

"The general process of conveyancing in the market is outdated and in need of urgent modernisation. Only through the coming together of the larger conveyancing practices in the country will the changes be capable of taking place to modernise it. We expect to play a significant part in the process due to our technology platform that delivers market leading automation and decision making processes.

We are proud to be part of the revolution that the Conveyancing Association will deliver in the forthcoming months and years."

Residential landlords face rent threshold rise for assured shorthold tenancies

Residential landlords are being urged to check their position, following a change in law that has seen the maximum rent level for assured shorthold tenancies quadruple to £100,000.
Previously, only tenants with annual rents of up to £25,000 had security of tenure. The change came in this month and applies to existing tenancies as well as to new ones, giving some tenants security of tenure for the first time. Tenants will be granted assured shorthold tenancy security if their agreement dates from March 1997 and here the landlord can recover possession once the fixed period of the tenancy has expired by giving the tenant at least two months’ notice.
More controversially, a tenancy that was granted before 1st March 1997 at a rent between £25000 and £100,000 will now become an assured tenancy, which may hit some landlords as they can only recover possession if they can establish that certain grounds apply.
The changes, which apply only in England, came in on 1st October, and any new residential tenancy of premises in England granted to an individual at a rent of up to £99,999 will be an assured shorthold tenancy by default.
Said property expert Brendan O’Brien of Breeze & Wyles Solicitors in Bishop’s Stortford: “The original threshold of £25,000 was set in 1990 so if this figure had been raised in line with inflation, the threshold would now be around £52,000. The £100,000 threshold shows how keen the government is to bring all residential tenancies under the umbrella of security of tenure, especially in London.”
He added: “The retrospective effect will be detrimental for landlords who have been letting their property to the same tenant for many years, but it seems to be seen as minor collateral damage”.
New tenancies and tenancy renewals will also be subject to the statutory deposit protection scheme. Whilst this only applies to deposits paid after 1st October 2010, or on tenancies renewed after that date, landlords are being recommended to adopt the scheme as good practice for all deposits held.

Pre-nuptial, or ante-nuptial, agreements - Analysis and comment on the decision of the Supreme Court in the case of Radmacher v Granatino, published o

A landmark decision of the Supreme Court (20th October) over the validity of a pre-nuptial agreement, has seen a German heiress win the battle to keep her £100m fortune, in a move which lawyers say could open the door to such agreements taking their place in English law.
It has taken the Supreme Court seven months to reach the eagerly awaited decision, reflecting the controversial nature of the case and difficult issues involved.
In the case, Mr Granatino, a French banker, and Ms Radmacher, a German heiress, married in London in 1998. They had two children but, by 2006 their marriage had broken down and they got divorced in London, by which time Mr Granatino had become disenchanted with banking and was studying for a PhD at Oxford on a salary of £30,000.
Some weeks before the wedding, Mr Granatino and Ms Radmacher had signed a prenuptial agreement in Germany in which each agreed that, in the event of divorce, neither would make any financial claims upon the other.
A pre-nuptial agreement setting out how property is to be divided between a husband and wife in the event of their divorcing has long been regarded as void under English law because such agreements were considered to be contrary to public policy.
However many lawyers and politicians have been coming round to the view that this reflects an outdated view of marriage and that ante-nuptial agreements should be upheld by the courts. In 1998 the Law Commission recommended that such agreements should be treated as legally binding provided certain conditions were fulfilled, for example that both sides received legal advice, that the agreement would not be enforced if it was clearly unfair or if it failed to provide for children, and that there was full financial disclosure by both parties. However, the recommendations of the Law Commission have not been translated into law by the Government.
After the marriage breakdown, Mr Granatino applied for an order for financial provision. When it reached the High Court, Ms Radmacher argued that he was not entitled to make any claim because of the pre-nuptial agreement. But the judge in that court held that the agreement was unenforceable on the grounds that Mr Granatino had not had independent legal advice; that Ms Radmacher had not made any disclosure as to her assets; that the agreement made no provision for any children; and that the agreement was unfair in making no provision for the possibility of Mr Granatino or Ms Radmacher being in a situation of real need. The judge did, however, think that some weight should be given to the agreement because it was acknowledged by Mr Granatino that the agreement would be enforceable in Germany or in France and therefore made an order based upon Mr Granatino’s financial needs, rather than one based upon a division of capital. The upshot was that Mr Granatino was awarded about £5.5 million, which would have provided him with a house and an income for life.
Ms Radmacher appealed on the ground that the judge had not given sufficient weight to the prenuptial agreement, and the Court of Appeal agreed with her. They held that Mr Granatino could have had independent advice and he could have asked for full disclosure, but he declined to do so. He may not have known exactly how wealthy his prospective wife was, but he knew she was wealthy. The agreement was therefore not unfair and the court should not interfere with any agreement freely entered into by adults. The agreement, they said should be given “decisive weight”.
As a result, the Court of Appeal reduced the award so as to give Mr Granatino financial support as a parent rather than as a former husband, so, for example, the element of the award for housing needs should be limited to the period until the younger child reached 22.
This time Mr Granatino appealed, on the basis that to give decisive weight to the prenuptial agreement was contrary to English law. However the Supreme Court upheld the Court of Appeal’s decision by a majority, Baroness Hale dissenting.
The decision is controversial. Many commentators have been saying that England has become the divorce capital of the world due to the generous awards made, generally to wives, and that England is out of step with the rest of Europe on this issue. They say that recognising pre-nuptial agreements would lead to certainty and reduce wasteful litigation.
Other commentators say that in reality pre-nuptial agreements are simply a way for wealthy people to ensure that the less well off party to a marriage will not get the financial settlement they would be entitled to in the courts. They argue that since it is usually the husband who is the financially stronger party to a marriage, pre-nuptial agreements are detrimental to women.
The true effect will emerge over the next few years, as we see how the courts interpret and apply this judgement. Whilst they will be reluctant to interfere with agreements freely entered into, it may be that they continue to ignore pre-nuptial agreements in purely domestic cases, where both parties are UK residents, unlike Radmacher and Granatino, who were both from countries that would have recognised and enforced the agreement.
That’s likely to happen where they feel that adopting the terms of a pre-nuptial agreement is likely to result in an unfair decision. Even if they become the norm, no pre-nuptial agreement will have the power to replace the court’s jurisdiction, so it will be open to the court to over-rule a pre-nup where its effect might be unfair.
If anything, this case highlights the need for legislation to clarify where these agreements stand in law, as called for by the Law Commission.

Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.

Lehmans Adminstrations costs revealed! how many zeroes?

After the fanfare of disclosure that the adminstration of Lehman Brothers has netted assets of £11.9bn to date for creditors it may have been too much to read further into the information being revealed. It is assessed that the adminstrations costs for the professionals has exceeded £262m.

With the arguments in the market at present, notably led by BBC Radio 4, that 'icon of accuracy' one has to say the Insolvency Profession continues to shoot itself in the foot. John Tribe's blog on the accuracy? of the programme is very clear. It can be found at http://bankruptcyandinsolvency.blogspot.com/2010/10/bbcs-demolition-job-on-ips-some-words.html and is well worth a read. But the media feed the public perception and when information of the kind above is revealed we can argue as much as we like about the accuracy or otherwise of reporting but when the author of this column viewed the number the zeroes did not stop.

Suggest removal of firearms from all IPs or that it is a professional obligation for them to wear iron clad shoes.

An introduction to Mergers and Acquisitions

An Introduction to Mergers and Acquisitions

I have been asked by some of my clients and contacts to present a number of articles as an overview of mergers and acquisitions. In this blog I will introduce a number of the terms applying to Mergers and Acquisitions and explain why M&As happen. In the last section, I will explain the process and the methodology to make it pay.

Mergers & Acquisitions: Any Difference?

Many people think they are the same but there is a theoretical difference.
Acquisition: this occurs where one company takes over another and established itself as the new owner.

Merger: this occurs when two companies agree to amalgamate as a single new company.

In merger transactions, one party more often than not is the dominant force in the end result or through the transaction. Most onlookers see that this control has passed from a junior organisation to a senior one and accordingly from the outside world most mergers are seen as ‘acquisitions’ by reaching a conclusion based on this control. However, perhaps this is not the right question. The only real question is whether the transaction gives rise to a stronger entity post transaction.

What are the types of Mergers and Acquisitions

Horizontal – means acquisitions in the same industry between companies having the same or similar products, technologies and markets. This type of acquisition leads to a concentration of assets in the same industry and is a faster method (and potentially cheaper) to increase market share rather than the longer process of organic growth.

Vertical – means acquisitions between companies involved in different parts of the supply chain enabling among other examples for manufacturers to deliver straight to market or where the manufacturer wishes to take control of the raw material production for its processes.

Conglomerate – acquisitions between companies with different products and markets together with no special technology relationships. This is a type of transaction that occurred more frequently in the 1960s in the US when Profit/Earnings ratios were a key driver to the transaction.

Friendly/Hostile

Until the 1980s transactions were invariably ‘Friendly’ with the Boards of both companies being broadly in agreement with each other as to the terms of the agreement for acquisition. In these terms the process would be better prepared since the basis of the agreement presented would be more detailed and the shareholders of both companies would have the opportunity to approve the eventual outcome.

In the 1980s with increased competition between Investment Banks for M&A transactions and the related fees a number of the Banks agreed to advise on hostile transactions. This is where the Board of the target company (the company being purchased) does not agree to the terms. The Investment Banks make more money from these transactions because of the risks and advice involved.

Why merge or acquire?

The process of acquisition is expensive and takes a lot of resources from both companies whether the acquisition is successful or not. As a result it is important that the key drivers for the acquisition are achieved whilst giving the exiting shareholders, where cash is to be paid the appropriate value for the shares.

Evidence from history suggests that only 40% of transaction add value to the acquiring company with 60% reducing the value of the final product. This is a serious issue because the amounts spent both in cash and resources to achieve the outcome more often than not deteriorate the value of the amalgamation. Hostile takeovers tend to have an inflating impact on the price paid prejudicing the benefit of the key drivers. Post each recession business managers have stated that they will not make the same mistakes as previously but because of pressures to grow, the mistake of continuing a transaction where the price required to conclude a transaction has exceeded the benefit, the managers continue to proceed. An example of which is the recent Royal Bank of Scotland purchase of ABN Amro.

The key drivers for acquisition are:

Synergy.
Economies of scale.
Increased revenue and market share.
Cross-selling.
Diversification.
Acquiring unique capabilities and resources.
International Expansion..

It must be remembered that in 40% of acquisitions the above drivers add value to the acquisitive company. By way of caution M&A work is here to stay but a prudent approach to it must be the focus to the transaction.

Employment Law Newsletter September 2010

September 2010


Dear Employer

We hope that your workplace is back to normal following the holiday period. You will need all the renewed energy gained (we hope) from your own holiday to cope with the new Equality Act 2010 which comes into force on 1st October (see the “What’s in the pipeline” section). You should particularly be aware of the new recruitment provision relating to health-related questions. As always, it is better to seek advice first as prevention is better – and generally cheaper – than cure.

In the meantime, if you have any particular employment issues, please do not hesitate to contact us: details are at the end of this letter. If you have any comments or suggestions on this newsletter, please email newsletter@breezeandwyles.co.uk

Kind regards

The Employment Law Team

Some Recent Changes and Cases in Employment Law

1. Worker, self-employed or employee?

A recent case has helped define the different categories which are often the source of litigation, where an individual argues that he is (for example) an employee or a worker in order to claim the different degrees of benefits that each of those categories respectively is entitled to. The category with the greatest protection of employment law is the employee, followed by the worker. The true self-employed independent contractor has none.

In this case a dentist entered into a contract for services (ie. as a consultant) with a Primary Care Trust (PCT). Amongst other relevant facts, he insured himself and received no holiday or sick pay. He was also obliged under the contract to arrange a locum to cover certain absences. The Employment Tribunal found that he was not an employee but (in relation to claims for deductions from wages) he was a worker. The PCT appealed to the Employment Appeals Tribunal (EAT), arguing that he was a self-employed contractor. The PCT was successful. The reasoning was based on the fact that there was a lack of personal service because of the locum clause.

Of course, all these cases turn on their own facts and therefore each case must be looked at carefully. (Community Dental Services Limited v Sultan-Darmon)

2. Right to legal representation

A previous ezine has dealt with the case where an employee was entitled most unusually to legal representation at an internal disciplinary hearing because the finding of misconduct would have had a catastrophic effect on the employee’s future career (Kulkarni v Milton Keynes Hospital NHS Trust). A recent case has shown that that right will be the exception rather than the rule. The Claimant was an ophthalmologist dismissed for gross misconduct. Although the current case did not concern legal representation as such, the issues were similar. The High Court held that the case of Kulkarni is exceptional and each case must be considered individually in the light of (1) the gravity of the charge, (2) the likelihood of dismissal and (crucially), (3) the individual’s future chances of practising if dismissed. On this last point, in this case, it was held on the facts that, although a dismissal would obviously make it difficult to find future employment, this was not a case of a whole career being stopped in its tracks. Unlike Kulkarni, the Claimant here, for example, had finished her training and was unlikely to be the subject of the sort of “alert letter” to other Trusts that had featured largely in the Kulkarni case. (Hameed v Central Manchester University Hospitals NHS Foundation Trust 2010) A reminder to employers: the right to be accompanied at an internal disciplinary hearing or grievance hearing is (unless there are exceptional Kulkarni circumstances) limited to a work colleague or union representative.

What’s in the pipeline

1. Equality Act 2010

The majority of the provisions of this Act come into force on 1st October 2010. It is a significant piece of legislation with two main purposes: to harmonise discrimination law and to strengthen the law to support progress on equality. It will bring together and re-state all the various Acts relating to discrimination. It will also harmonise existing provisions to give a single approach where appropriate. The existing legislation will be repealed.

The Act does not only apply to employment situations but also to (for example) private clubs and political organisations, to selling and letting organisations and so on.

So far as the employment field is concerned, the provisions include the following:

· Preventing employers asking job applicants questions about health (including any disability) before making a job offer, except in specified circumstances.
· Making pay secrecy clauses unenforceable in as far as they purport to prevent someone making what is called a relevant pay disclosure.
· Introduces the new concept of “discrimination arising from disability”.
· Restore the previous protection from disability-related discrimination.
· Improving protection from discrimination from people who are perceived to have, or are associated with someone who has, what under the Act is now called a “protected characteristic”.
· The definitions of direct and indirect discrimination are harmonised, and new provisions come into force for public bodies. There are also provisions that affect employers with 250 or more employees.

The Act is far too great to go into any sensible detail here, therefore employers are advised to seek specific advice, including on their recruitment procedures.

2. Equality Act 2010 Regulations

The Government has also published three sets of Regulations relating to the Equality Act which are relevant to the meaning of disability, provision of auxiliary aids and adjustments to physical features, as well as continuing existing exceptions for occupational and personal pension schemes in respect of age and sex.

The Equality Act 2010 (Disability) Regulations: these prevent addictions and other conditions eg. a tendency to steal, from constituting impairments protected by the Equality Act. It also enables small children to qualify as disabled in certain circumstances, which may make it easier for a parent or carer to make a claim for disability discrimination by association (“an associative discrimination claim”). The person is also deemed to be disabled under the Regulations where they are certified blind, severely sight impaired etc.

The definition of a disabled person in the Equality Act is slightly different to that used in the Disability Discrimination Act 1995.

3. Guidance to help small firms address equal pay gap.

The Equality and Human Rights Commission and the British Chambers of Commerce have produced joint guidance to help small and medium sized businesses examine their pay schemes to ensure compliance with the law on equal pay. Apparently it also offers a brief guide on how to estimate whether different jobs are of different values. If you require information about this, please let us know.

The Employer Traps and Other Tips

1. Recruitment procedures

Even before the introduction of the Equality Act these can be minefields for the unwary and therefore this might be the right time to consider afresh your recruitment processes.

2. Constructive dismissal

Remember that an employee can claim constructive dismissal not only for breach of an express term in their employment contract but also for a breach of the implied term of trust and confidence. The trigger can be a one-off event or series of events that culminates in “the last straw”. Constructive dismissal is often also unfair dismissal and compensation is the same as for unfair dismissal. A word of comfort to employers: it can be much more difficult to succeed in a claim for constructive unfair dismissal ie. where the employee has resigned in response to a breach, than where the employee has actually been dismissed.

Don't rely on the courts: A duty to draft carefully

This article is aimed at those parties who regular enter into self drafted commercial agreements.

An agreement or other document such as a lease of commercial premises will be read by many people between the preparation of the first draft and completion. The parties to the transaction themselves will review the document and, as corporate bodies rather than private individuals are involved, the document may have to be studied by more than one person within the organisation. It will be considered by the parties' solicitors and other advisers, including those who have negotiated the commercial terms In essence this means that those parties reading the documents will not only check the document but will check that it is understandable.

The reason for the checking process is that after completion, the agreement will become a reference document that will be consulted on contract management matters as they arise during the term when a lawyer will not always be on hand to explain any mysteries that the document may contain. Many people, therefore, will have cause to curse the draftsmanship if the work does not lend itself to this type of scrutiny. Any solicitor acting for a party to the intended agreement should feel that there is a duty imposed upon him to produce a draft agreement that is as readable as it is reasonably practicable. So before he begins drafting, the drafting party’s solicitor should give careful thought to how he intends to approach the task ahead of him.

Where a document is self drafted there is no checking process. Moreover, the worst case is that errors can creep in from other documents that lead to multiple repetitions of the same problem with the damage to the business being unquantifiable.

Applying the exclusionary rule it should be borne in mind by those drafting documents that in claims relating to the construction of contracts evidence of pre-contractual negotiations between the parties is not admissible.

If it was clear that there was something wrong with the language of a contract and what a reasonable person would have understood the parties to have meant, the court could correct the mistake as part of its task of construing the agreement against its background and context, without the need for rectification. However, a strong case would have to be made before a court could be persuaded that the language was unclear. The mere fact that a contract might appear unduly favourable to one party was not a sufficient reason for supposing that it did not mean what it said. Further, the court may rectify a document that does not reflect the true bargain between the parties and in this situation evidence of pre-contractual negotiations is admissible. In Chartbrook Ltd v Persimmon Homes Ltd the House of Lords held that the two legitimate devices of rectification and estoppel by convention would, in most cases, prevent the exclusionary rule from causing injustice.

This means that you would need to present a strong case where the evidence points heavily in favour of your intended outcome. It would be better if the agreement was drafted appropriately at the outset.

Breeze & Wyles Solicitors LLP exhibit at the UK Property Investors Show

The Corporate and Property Investment Team at Breeze & Wyles Solicitors LLP exhibited at The Property Investor Show & OPP Live at ExCeL London from 14-16 October 2010. The exhibition was well attended and the firm made many useful contacts. In fact Breeze & Wyles Solicitors were the only UK lawyers represented.

Just a reminder to say that anyone who saw us at the exhibition need only confirm this to us when the ring within the next six months for a quote for conveyancing to obtain a 20% reduction on our standard quote.

Consumer credit and insolvency – A fairer deal

Consumer Minister, Edward Davey, and Financial Secretary to the Treasury, Mark Hoban, have today launched a joint call for evidence into how people can get a fairer financial deal as part of the Government’s review into consumer credit and personal insolvency.

The Department for Business, Innovation and Skills (BIS) and Treasury want to establish how people can get a fairer deal when borrowing money, and if they can manage their borrowing better. The review will also determine how best to improve the help available to those who run into financial difficulty.

The call for evidence invites people to have a say on how the existing consumer credit and personal insolvency regimes might be improved. It seeks views on a number of Coalition commitments, including:

• tackling unfair bank charges;
• introducing a seven-day cooling off period for store cards;
• introducing a power for a regulator to cap interest rates on credit and store cards; and
• requiring credit card providers to make electronic statements available to enable consumers to judge whether an alternative credit card would provide better value for money.

Consumer Minister Edward Davey said:

"Well-informed, empowered consumers are central to our vision for how a credit market between customers and lenders should work. I want to encourage both to take responsible decisions and to strengthen protection where necessary - particularly for the most vulnerable.

“If things go wrong people face a confusing array of debt remedies, so I also want to examine how the existing insolvency regime can be made to work better."

Financial Secretary to the Treasury Mark Hoban said:

"This Government is committed to curbing unsustainable lending and helping individuals manage their finances better. I believe that improved competition will deliver a better deal for everyone, and that financially capable consumers are best placed to drive competition."

Following the call for evidence, the Government plans to publish its proposals from the results of this review in 2011.

Breeze & Wyles Solicitors LLP wins LAWNET Best Single Innovation of the year 2010

On Friday 8th October 2010 Breeze & Wyles Solicitors LLP won the Best Single Innovation of the Year award 2010 given by LAWNET to the firm for its automated title checking system. The firm has only been a member of LAWNET for three months so this comes as a significant honour. With the levels of innovation already existing on the panel it would take some product to clinch the honour this year.

Since 1995 remortgage transactions have been handled by an ever smaller number of firms. Originally almost every firm in England and Wales handled a significant volume (say 20-30 per month). Over the 15 year period since that date the lenders have taken control of the remortgaging process so that today only 10 firms can handle volume remortgaging. The average number of remortgages handled by those firms is approximately 1500 per month. This has been achieved by significant progress in IT development within those firms to make the process less dependent on human interaction, thereby reducing the unit cost of production and to increase the overall risk management processes.

With the technological advancements that these firms have implemented (particularly in the last five years) it is hard to see how any one firm can stand out from the rest in this area. However, Breeze & Wyles Solicitors LLP (BW) is proud to be able to announce that it now has a fully automated title checking process. In previous years BW maintained a file opening team of 10 people including perhaps the most expensive, the qualified solicitor. Moreover a solicitor can easily become bored carrying out repetitive title checking tasks, leading to a higher rate of qualified staff turnover, and the associated acquisition costs. Perhaps more importantly human intervention is at best 95% accurate, meaning that 5 in every hundred matters is a potential risk to the firm in term of negligence claims. In order to combat that risk a further level of quality control is required further extending the costs per unit of production. A final issue relates to service quality. Unless the product is right first time every time the consumer of the product is likely to become disillusioned when the process if delayed because a title issue that should have been identified at the outset is only dealt with some weeks after instruction or worse still on the day of completion.

In order to enhance the service proposition, BW using EMC2 Captiva OCR software integrated with its TFB Partner for Windows case management system has created an automated title checking process. This means that the only human intervention is required for exception reporting, where for instance the system does not capture the relevant data. This usually occurs when the data contained SQL reserved characters. This means that in the vast majority of cases no human intervention is required to check the title or send the initial letters with security documents to the consumer (borrower). Depending on the issues raised those letters are manipulated to ensure that all of the issues that are raised through the title check process are notified to the consumer together with the steps required to remedy the problem.

Accordingly, the file opening team now consists of one person to supervise the title checking and letter generation at instruction. This has provided a significant unit cost reduction and has freed members of staff to manage and maintain consumer expectation.

Breeze & Wyles Solicitors join LawNet

Hertfordshire law firm Breeze & Wyles has been admitted as a member of LawNet, the leading law firm network.

The firm says membership will support its commitment to quality, as well as its ambitions for significant growth.

Breeze & Wyles has four offices across Hertfordshire and North London in Hertford, Bishop’s Stortford, Cheshunt and Enfield, employing more than 100 fee earners and staff. It has a range of specialist departments providing volume legal services to banks, building societies, housing associations and other corporate customers, alongside its more traditional and longstanding legal services for local markets.

Said practice manager Martyn Bateman: “We already have the Lexcel law firm quality accreditation but we were keen to secure ISO 9001. We can achieve this in a supported way through the LawNet quality audit and management system and it means we benefit from an established model.”

“We feel there are closely aligned aspirations between ourselves as a regional law firm and LawNet nationally, which helped make membership an easy decision. Even in the current market we are aiming for significant growth in the next couple of years and competing very hard in the general market.”

He added: “We are looking forward to being active members.”

Welcoming the firm, John Thomas, LawNet’s chief executive said: “There are only a limited number of firms that are eligible for membership of LawNet and there is a stiff approval process. One of the attributes we demand is a commitment to maintaining a recognised professional quality standard, and we’re very pleased to see the membership extended throughout Hertfordshire and North London with Breeze & Wyles.”

Land Registry statistics show Breeze & Wyles maintaining its position in the top ten UK conveyancers by application

In the recent figures published by the Land Registry, Breeze and Wyles Solicitors LLP has maintained it position as one of the largest conveyancing outfits in the country by Land Registry applications. Despite a month when applications reduce Breeze & Wyles saw applications rise by over 200 on the previous month.

With our focus on process automation and cost efficient pricing we are leading the market in innovations and customer service.

NEF: Report asks whether a second Bank Sector bail out is required

The New Economic Forum has reported today that a second bail out of British Bank will be required soon. Having already exposed £1.2 trillion of tax payers money to risk the UK Government may have to do so again in order to protect the UK economy. The report suggests that while the recently revised Capital Requirement rules set out in the BASEL III accord require banks to hold 7p in every pound lent ( the majority of UK banks already hold around 10p in every pound lent) but

"that this figure should be at least 15 per cent, and points out that the new threshold is actually lower than that held by many banks. As such, this too is unlikely to change the industry’s behaviour."

There is a very real risk that the banks may need to be shored up again in order to meet the reports suggestion that 15% is about the right amount to be held against loans. 2%, 7%, 10% or 15% is a matter of risk, the report arguing that the capital requirements of the bank should address the issue of "retain the profits in the good times and ask for hand outs in the bad times".

15% seems an arbitrary figure and is unlikely to be addressed globally in the near term. To achieve this the Banks must de-leverage their risk over a period of time in order to ensure the economic systems in which they operate are not damaged irrepairably by inability to lend or onerous unilateral changes to credit facilities. By doing so the higher capital requirements can be achieved.

Whilst the report makes significant sense in some respects and the UK Government should take some of the factors raised into account when negotiating Capital Requirements NEF appears to have spun the information in the reporty to get its message across to those who agree with the NEF politics. It may be in the interests of some to bash the banks and to stop them lending appropriately within the BASEL III constraints but it is naive to assume that the banks play such an insignificant role in our economy.

To see report view http://www.neweconomics.org/sites/neweconomics.org/files/Where_did_our_money_go_0.pdf

OFT breathes down the neck of Estate Agents

If you are a property professional it is imperative that you read this article and implement the changes if you have not done so already. The OFT has recently published an interim policy on financial penalties for not registering with them.

Estate agents and certain credit lenders have an obligation to comply with statutory obligations under the Money Laundering Regulations 2007, which includes registration with the OFT.

Where businesses choose to ignore OFT warnings and do not register, the OFT will impose civil financial penalties. IThe OFT says that it is vital that they continues to identify those who should register, so that the OFT can supervise them effectively and reduce the risk of money laundering and terrorist financing in these sectors.

This re-emphasises the concerns that the UK Government has in respect of money-laudering and financing of terrorism through the use of the UK property market.

The Interim Policy is far less stringent in respect of penalties given that it is now purely a financial remedy rather than the previous draconian imprisonment but this should not be a reason to avoid registration with fines in excess of £2000 likely depending on the number of offices.

If you think that the changes may affect you but are unsure of what to do next we recommend that you view the following page and take the actions that the OFT suggest http://www.oft.gov.uk/news-and-updates/press/2010/98-10

UK Government guidance on tenants and forclosure

http://www.communities.gov.uk/documents/housing/pdf/1729687.pdf

On the 1 October 2010, the Department for Communities and Local Government issued guidance on the Mortgages Repossessions (Protection of Tenants etc) Act 2010. The guidance seeks to inform concerned parties of their rights and responsibilities under the act. The Act provides protection for tenants whose landlords have let the mortgaged property without consulting or informing them before falling into arrears on the mortgage payments, resulting in the lender seeking to repossess. This has previously resulted in the courts being unable to take account of tenants' circumstances, forcing them to leave their accomodation at very short notice. The guidance also provides copies of relevant court forms needed by those affected by the issues the act seeks to address.

KEEPING UP WITH THE WEB AND THE LAW

Restrictions relating to online advertising are the latest in a series of regulations affecting company websites. Here, digital legal expert Brendan O’Brien of Breeze & Wyles Solicitors LLP gives a reminder of what to watch out for, and what the Advertising Standards Authority CAP code will mean for your online presence.

Advertising standards and the web
Earlier this year the Advertising Standards Authority (ASA) announced that the CAP Code, which governs advertisement content in the media such as online, posters and the press, will be extended to website content and social media such as Twitter and Facebook from 1st March 2011. The CAP code is intended to ensure that advertisements do not mislead, harm or offend, that they are socially responsible. They also contain specific rules for certain products or markets such as alcoholic drinks, children, gambling and health products.
The new remit will specifically apply to:
• Advertisers’ own marketing communications on their own websites
• Marketing communications in other non-paid-for space under their control, such as social networking sites like Facebook and Twitter.
But journalistic and editorial content and material related to causes and ideas - except those that are direct solicitations of donations for fund-raising - are excluded.
There is a six month period of grace before the new code comes in and you can read more about it on the ASA website Link to: http://asa.org.uk/Media-Centre/2010/ASA-digital-remit-extension.aspx They are also encouraging website owners to sign up to CAP Services to receive guidance and training to help ensure their sites comply with the new rules before 1 March 2011 Link to: http://bcap.org.uk/CAPServices.aspx

AdWords
Google’s AdWords service enables a business to get their product or service higher up Google’s list when its search facility is used. A business buys a word or series of words (known as an AdWord) which, when typed into the “search for” panel, results in the business’s advertisement appearing at the top or on the right hand side of the results page under the “sponsored links” section.
However legal difficulties arise when a business uses the name of another business (for example that of the market leader) to attract business to its own site. In the recent European Court of Justice case Portakabin Ltd and Portakabin BV v Primakabin BV it was held that a company can prevent another company from using its name as an AdWord if the advertisement does not make it clear that the goods or services advertised are not being provided by the original trade mark owner. If the advertisement fails to make this clear, the advertiser is guilty of trade mark infringement. The same applies where miss-spellings of the other company’s name are used as an AdWord (for example Portacabin).

Back to basic
When designing a website, most of us focus on the style and look of the site, the photographs of our products and the words we write. But it is important to remember that the website must, by law, provide certain information so it’s worth checking to be sure you comply on all counts.
The Electronic Commerce (EC Directive) Regulations 2002, which came into force on 21st August 2002, requires any commercial website to set out the business’s correct name (which may be different from its trading name), its e-mail address, its geographical address, details of any trade or professional body that it belongs to, its VAT number, if any, and a contact telephone number or e-mail contact form. If the business is a limited company, it must also state the registered office address and the registered number and place of registration. Any prices quoted on the site must be clear and it must be evident whether or not those prices include VAT and delivery.
The Regulations also set out rules for making contracts online. The seller must set out, in a clear, comprehensible and unambiguous manner, the steps that the buyer must follow to conclude the contract, whether the contract will be filed or whether it will be permanently accessible, the means for identifying input errors prior to placing the order, and the languages offered. The site must provide a link to any relevant code of conduct and the terms and conditions of the contract must be made available in such a way that the buyer can store and reproduce them.