http://www.healdlaw.com/en-gb© 2012 Heald SolicitorsHeald Solicitorshttp://www.healdlaw.com/news-153-New-credit-easing-measures-for-SMEs.aspxThe government has recently published further details of a package of credit-easing measures aimed at SMEs. The package of measures relates to the National Loan Guarantee Scheme and the Business Finance Partnership. [b]The National Loan Guarantee Scheme[/b] The National Loan Guarantee Scheme allows banks to apply for government guarantees that they can use to lower their cost of funding. The Scheme allows banks to raise up to £20 billion to lend to SMEs at a lower cost than they might normally achieve and, in many cases, will lead to a reduction in the cost of business loans of up to 1 percentage point. Any SME with a turnover not exceeding £50 million is eligible for the Scheme. [b]The Business Finance Partnership [/b] The Business Finance Partnership is intended to provide joint public and private sector funding through managed funds lending directly to SMEs on fully commercial terms, with the aim of diversifying the sources of non-bank finance available to SMEs. Details of the BFP are somewhat sketchy. However, funds will apparently be required to invest in to lend to businesses with a turnover of up to £500 million. Although no minimum size of business has been set it appears that the BFP will be more aimed at medium-sized businesses rather than smaller ones. If you would like to know more, please contact David Dees or Nick Crook.30 January 2012 12:24:41http://www.healdlaw.com/news-152-Sale-of-Business-by-Company-in-Administration---Court-Ruling-Increases-Buyer-s-Exposure.aspxIn the recent case of [b]Amble Assets LLP v. Longbenton Foods Ltd.[/b], the High Court ruled on the validity of a clause in a sale contract that provided for any liabilities of the seller or the administrator to rank as an unsecured claim against the seller (rather than, for example, as an expense of the administration). Such clauses are a common feature of administration sale contracts. This decision means that should the administrator or seller breach their obligations under a sale contract, the buyer's remedies will be limited. It underlines the need to conduct thorough due diligence and for the buyer to take whatever steps it can to protect its own position. For sound legal and commercial advice on such matters, please contact David Dees or Martin Banham-Hall. 24 January 2012 12:17:45http://www.healdlaw.com/news-151-Entrepreneurs--Relief-Applied-to-Sale-of-Part-of-Business.aspxBusiness people will welcome a recent ruling that the sale of part of a business qualified for entrepreneurs' relief for Capital Gains Tax purposes. In [b]Gilbert v. HMRC[/b], G had carried on a business of selling food on commission. He represented nine different suppliers. In 2008, he agreed to sell part of his business to F, one of the suppliers. The sale included the records, goodwill, trade marks and customer database of the relevant part of the business. Under the sale agreement, G agreed to have no further contact with F's customers. G made a gain of £285,000 on the sale. He claimed entrepreneurs' relief, which would reduce the chargeable gain by four-ninths. HMRC rejected the claim on the basis that G had not disposed of 'an identifiable part of the business'. G appealed. Allowing the appeal, the Tribunal upheld G's contention that his business had comprised nine different parts (i.e. one part for each of the suppliers he represented), and that he had sold one of those parts. In the Tribunal's view the inclusion of goodwill and the customer database were the key factors for its finding that there was a sale of a going concern as opposed to the sale of the individual assets. Although this decision is not binding and every case will depend on its facts, anyone who has disposed of part of a business in similar circumstances should consider making a claim for entrepreneurs' relief. Individuals intending to dispose of their business in stages, or who are forced to do so because they cannot find a buyer for the whole business, should take whatever steps they can (such as same day completion for the sale of different business units) to ensure that entrepreneurs' relief is available. If you would like to know more, please contact David Dees or Nick Crook. 18 January 2012 10:05:01http://www.healdlaw.com/news-150-ECJ-Talks-Sense-on-Holiday-Pay-and-Sick-Leave.aspxIn a recent case the European Court of Justice (ECJ) ruled that EU law does not require the unlimited accumulation of annual leave by an employee who is on sick leave for several years. This is the latest in a series of cases dealing with the right to carry unused holiday forward. [link|http://www.healdlaw.com/news-135-Sick-Employee-Could-Carry-Untaken-Holiday-Over-to-Next-Leave-Year.aspx|The story so far] [b]KHS AG v Schulte[/b] concerned the legality of a tern in a German collective agreement. This stated that leave not taken during the leave year because of sickness could be carried forward but stipulated that it had to be taken within 15 months of the end of the holiday year in question. S had been off sick for six years. When he was eventually dismissed he claimed holiday pay in respect of several years when he had not been able to take annual leave. Following the opinion previously given by the Advocate General, the ECJ ruled that the limitation on S's right to carry forward untaken annual leave was compatible with EU law. The latter does not mandate a right to carry leave forward indefinitely. The Court indicated that any limitation must be substantially longer that the reference period for the leave (i.e. the holiday year) and allow employees to plan their carried over leave, but it must also protect employers from the possibility of employees accumulating long periods of holiday entitlement, thereby potentially making difficulties in organising work later. In so ruling, the ECJ indicated the purpose of the right to annual leave is to promote the health and safety and general well-being of employees. If large amounts of leave are carried forward, it becomes merely a matter of relaxation and leisure. This is not the basis for the entitlement. Where does this leave employers? Under the Working Time Regulations 1998 as presently worded, there is no express right to carry untaken annual leave forward. However, the Regulations must be read subject to the developing ECJ case law. The Coalition Government has previously indicated that it is considering introducing a right for sick employees to carry untaken annual leave forward, subject to a time-limit. The ECJ's judgment in the KHS case suggests that any reasonable limitation on the right to carry forward that is introduced is likely to be compatible with EU law. If you would like to know more, please contact Nick Crook or Gareth Pobjoy. 10 January 2012 10:47:51http://www.healdlaw.com/news-149-Court-of-Appeal-Clarifies-Law-on-AGAs.aspxA recent decision of the Court of Appeal provides some welcome clarification on the law relating to Authorised Guarantee Agreements and guarantors. In [b]K/S Victoria Street v House of Fraser (Stores Management) Ltd.[/b], a case concerning a complex deal, the Court of Appeal confirmed that an agreement by the tenant's guarantor to guarantee the tenant immediate assignee's liability under the lease in the future, at the time of an assignment, will be unenforceable. The Court also confirmed that an actual guarantee covering an assignee's liability under a lease by a tenant's guarantor will also be unenforceable. However, the Court indicated that it may be possible to get round the problem by clever drafting. A sub-guarantee, by which a tenant's guarantor guarantees the assignor's obligations under an AGA, will probably be enforceable; Landlords will probably welcome the indication that a sub-guarantee is likely to be upheld by the courts. Tenants may also regard this as good news as it increases the options available as to the form of security which may be offered to a landlord on an assignment. Where, for whatever reason, a sub-guarantee is not an option the landlord will have to rely on due diligence or alternative forms of security, such as a rent deposit deed or director guarantees. This is undoubtedly a complex and difficult area of law. if you would like clear and realistic advice about the legal and commercial issues that can arise in connection with AGAs, please contact Martin Banham-Hall or Caroline Wilton. 19 December 2011 09:24:00http://www.healdlaw.com/news-148-Residential-Tenancy-Deposits---Sledgehammer-Legislation-Repealed.aspxResidential landlords will be relieved to learn that the sanctions that for non-compliance with the rules relating to tenants' deposits taken in connection with assured shorthold tenancies are soon to be relaxed. Under the rules, which were enacted in the Housing Act 2004 and came into force in April 2007, any deposit taken from a tenant in connection with assured shorthold tenancy must be dealt with in accordance with an authorised Tenant Deposit Scheme (a TDS). The sanctions for non-compliance with the rules are fairly Draconian: . If a landlord fails to comply with the rules he is barred from serving a two-month notice terminating the tenancy. . In addition to ordering the landlord to either repay the deposit to the tenant or pay it into a TDS, the court [b]must [/b] also order the landlord to pay to the tenant a sum equal to three times the deposit - whether or not the landlord's non-compliance has caused the tenant any loss. The court is allowed no discretion in the matter. This provision has generated considerable litigation with the courts indulging in a certain amount of mental gymnastics in an attempt to mitigate the harshness of the rule. The Localism Act 2011 makes a number of changes to the rules which are expected to come into force in April 2012: . The time-limits within which landlords must comply with the requirements of the rules are increased from 14 to 30 days. . It is made clear that a landlord will no longer be barred from serving a two-month termination notice if: . The deposit has been repaid to the tenant in full or with such deductions as the parties have agreed; or . Court proceedings have been determined by the court, withdrawn or settled by agreement between the parties. . Most importantly, the courts are given a degree of flexibility as to the financial penalty imposed on a landlord in breach. This will be a sum not less than the deposit but not more than three times the deposit. To find out more, please contact Martin Banham-Hall or Caroline Wilton. 28 November 2011 15:21:14http://www.healdlaw.com/news-147-Supreme-Court-Cuts-Unmarried-Father-s-Share-in--250K-House-from-50--to-10-.aspxThe Supreme Court has overturned the controversial ruling handed down last year by the Court of Appeal that a man was entitled to a 50% share in the family home he left eighteen years ago. The Court reinstated the county court's decision that he was only entitled to a 10% share. Leonard Kernott and Patricia Jones began a relationship in 1980. They did not marry. They had two children, born in 1982 and 1986. In 1985, they bought a house in their joint names for £30,000. Patricia contributed £6,000 to the purchase price, the balance being provided by an interest-only mortgage supported by an endowment policy. Leonard contributed £100 per week towards the household expenses, mortgage, outgoings and endowment policy premiums. He was also primarily responsible for building an extension to the property, which increased its value by 50%. It was agreed that in 1993, when the couple separated, they had owned the property in equal shares. After separation, Patricia assumed sole responsibility for the maintenance for the children and the outgoings on the property. She did not apply to the Child Support Agency, and Leonard made no attempt to pay maintenance. In 1996, Leonard bought another property in his sole name, using the proceeds of a joint endowment policy. Patricia asked the county court to declare that she was solely entitled in the property. The judge ruled that the shares in the property had changed and that Patricia was now entitled to a 90% share. That decision was upheld by the High Court. However, Leonard appealed to the Court of Appeal. The Court of Appeal reversed the decisions of the two lower courts and took a very simple and legalistic approach. It held that they still owed the property as stated on the title in equal shares. Allowing Patricia's appeal to the Supreme Court, it ruled that the Court of Appeal's approach had been too inflexible. The key point concerns the scenario where it is clear that the parties agreed, either from the start or later on, that they would hold the property in unequal shares, but there is no evidence as to what were to be the precise shares. That was the case here, where it was clear that the parties had abandoned their original intention that that they would own the property on a 50 / 50 basis but there was no evidence of them having reached a new agreement as to their respective shares. The Supreme Court said that in such a case, each party is entitled to the share that the court decides is fair, taking all the circumstances of the case into account. When a relationship breaks down, there is often an understandable desire to sort things out as quickly and cheaply as possible, so that those involved can get on with their lives. However, failing to sort things out properly may prove a costly mistake. Many years later, the parties may find themselves embroiled in costly and time-consuming litigation in an attempt to sort things out. Problems are particularly likely to arise where the parties have not married / entered into a civil partnership. In such cases, the courts have none of the powers to adjust the parties' property and pension rights available to it in the case of a married couple or civil partners. The Supreme Court's decision in this case is certainly good news in that it increases the courts' room for manoeuvre in such cases. However much will depend on the facts of each case and there remains much scope for disputes leading to costly courtroom battles. In this case the case was judged by four levels of court. The costs will have been immense and probably exceeded the value of the assets in dispute. The couple may have made legal history, but probably wish they had simply sorted things out much sooner! Over the years, there has been much talk of reform of the law in this area, but change does not appear to be imminent. Cohabitees who have decided to call it a day should seek professional advice so to ensure that all loose ends are securely tied up. Otherwise, they may find that the past returns to haunt them. If you would like to know more, please contact Dawn Millar, Caroline Wilton or Esther Marchant. 24 November 2011 08:32:04http://www.healdlaw.com/news-146-Break-Clause---Blunder-Cost-Tenant--200K.aspxA recent Court of Appeal decision highlights the need for business tenants to take care when exercising its right to terminate a lease under a break clause. Getting it wrong can mean the tenant is saddled with paying rent and service charge for premises for which it has no use. A break clause will have a string of conditions before termination of the lease succeeds. For example, it is often a condition that the tenant must leave the premises in a good state of repair and decoration. Vacant possession of the premises on the break date is often required. This means leaving the premises unoccupied and clear of the tenant's possessions and any rubbish. In NYK Logistics (UK) Ltd v Ibrend Estates BV, in 2003 NYK took an assignment of a ten-year lease of a warehouse. When the premises became surplus to its requirements, NYK gave notice under a break clause in the lease terminating the lease on 3rd April 2009. The right to break was subject to NYK paying the rent up to the break date and giving vacant possession of the premises on the break date. It was not conditional upon NYK leaving the premises in a good state of repair and decoration. However, NYK was keen to control its costs and wanted to carry out repairs to the premises itself, rather than having to pay the Landlord to do them. The County Court ruled that by allowing its workman to have access to the premises after the break date so that they could complete the repairs, NYK had failed to give vacant possession and had not effectively terminated its lease. This decision has now been confirmed by the Court of Appeal. Some might consider this decision to be rather harsh. NYK behaved in what many would regard to be a commercially sensible way. It had emailed Ibrend with its proposal to remain in the premises for an extra week whilst it did the works. Ibrend did not reply. NYK's fatal mistake was to interpret Ibrend's silence as agreement. In this case all was not lost. Fortunately, NYK had a further right to break the lease terminate eight months later, which it correctly exercised. However, they still had to pay an extra eight months' rent (some £200K) and legal costs. In another case, a tenant might find itself on the hook for a substantial period. In the current market, assignment of the lease may not be an option. We have extensive experience in advising both landlords and tenants on the issues that arise on the operation of break clauses. To find out more, please contact Caroline Wilton or Martin Banham-Hall. 24 November 2011 08:29:35http://www.healdlaw.com/news-145-Hot-Shot-Lawyer-Falls-Foul-of-Data-Protection-Act.aspxThe Information Commissioner's Office (ICO) has ruled that Ruth Crawford QC, a leading Scottish lawyer, breached the Data Protection Act 1998 when she failed to encrypt the data stored on a laptop that was stolen from her home whilst she was on holiday. The laptop, which was never recovered, held sensitive personal data relating to a number of individuals involved in eight court cases that Ms Crawford had been working on, including details of their physical and mental health. In one sense, Ms Crawford had a lucky escape. She was not fined for the breach, because the incident occurred before the ICO was given powers to impose financial penalties. However, she has signed undertakings to encrypt all portable and mobile devices containing client data and to lock away personal information stored at her home. This case is a sharp reminder of how careful you need to be when it comes to data protection issues. The ICO now has power to impose financial penalties for breaches of the Data Protection Act up to £500,000. Click here to read the [link|http://www.ico.gov.uk/for_organisations/data_protection/security_measures.aspx|ICO's guidance] on storing personal information electronically: If you would like to know more, please contact Nick Crook or David Dees. 24 November 2011 08:27:20http://www.healdlaw.com/news-144-New-Collaborative-Lawyer.aspxHeald are delighted to announce that family lawyer Dawn Millar, has joined Mary Banham-Hall, by becoming a fully trained Collaborative lawyer. Heald already offer Collaborative law to its clients, providing a constructive, non adversarial route to sorting out family disputes, by everyone entering into an agreement ruling out going to court. This process offers separating couples or those entering into pre nuptial or cohabitation agreements a much more user friendly process based upon reaching agreement. To find out more, contact Mary Banham-Hall or Dawn Millar to discuss your options.11 November 2011 19:19:48http://www.healdlaw.com/news-143-Unfair-Dismissal---Withdrawal-of-Incentive-to-Accept-Change-in-Terms.aspxWe recently reported on the decision of the Employment Appeal Tribunal (EAT) in [b]Garside and Laycock Ltd. v Booth[/b] - see "[link|http://www.healdlaw.com/news-134-Dismissal-for-Refusing-to-Accept-Pay-Cut.aspx|Dismissal for Refusing to Accept Pay Cut]". In that case, the EAT confirmed that it may be fair to dismiss an employee who refuses to accept a pay cut. We now have another EAT decision which again suggests that tribunals are likely to have some sympathy for employers who find that, due to the current economic climate, they are forced to make changes in employees' terms and conditions in the face of employee opposition. In [b]Slade and Others v. TNT (UK) Ltd[/b]., TNT was facing a severe decline in profits from its distribution business. It decided that was necessary to remove what was known as an End of Sort Bonus (ESB) that was paid to 470 employees, even though this would result in a fairly substantial pay cut for many employees. It attempted to negotiate a deal with the trade union, offering each employee a one-off buy-out payment. However, in a ballot of the employees the deal was rejected by a small majority. TNT then gave all the employees Notice of Dismissal but offered to reemploy them on the same terms as before, minus the ESB. The employees all accepted the new terms under protest and then sued for unfair dismissal. ACAS managed to conciliate a settlement for most of the employees, based on an enhanced buy-out amount. However, 183 refuseniks stuck to their guns and persevered with their claims. These were rejected by the Employment Tribunal, which ruled that the employees had been fairly dismissed for Some Other Substantial Reason (the final miscellaneous category of fair dismissal). On the employees' appeal to the EAT, one of their arguments was that the requirement of "equity" laid down by the law meant that when imposing the desired terms, TNT should have included the one-off buy-out payment that had been on offer in the negotiations. However, the EAT rejected this argument. TNT had not been obliged to offer re-engagement on terms which included the buy-out sum but had been entitled to offer that sum in order to secure a specific benefit - namely, the employees' agreement to the changes it wished to make. There seems to be little doubt that the decision in this case strengthens the hand of an employer attempting to negotiate changes to employees' terms and conditions. In effect, it says that employees are not entitled to the benefit of a one-way bet and allows an employer to offer an incentive to accept changes to terms and conditions on a time-limited basis. If you would like to know more, please contact Nick Crook or Gareth Pobjoy. 10 November 2011 14:00:27http://www.healdlaw.com/news-142-Taxman-Clobbers-Granny.aspxA Tribunal has ruled that the conversion of a barn into a granny-annex was subject to VAT because the annex could not legally be sold separately from the main house. New residential buildings are normally zero-rated but conversions and the like are subject to VAT at 20%. In [b]Gerrard Silver v HMRC[/b] the Silver family owned a listed building called Home Farm. There was a barn in the grounds of the building that had previously been used for chicken and duck pens and as a workshop. The family obtained planning permission to allow the conversion of the barn into a "granny annex" for Mr Silver's mother to live in. Permission was granted subject to a condition (the Planning Condition) that: "the development hereby permitted shall not be used other than for the purposes of ancillary residential accommodation to the adjacent farmhouse known as "Home Farm" without the prior written consent of the Local Planning Authority." Unfortunately, Mr. Silver's mother died before the barn conversion was completed. Mr Silver claimed refund of the VAT incurred in respect of the conversion works under what are known as the DIY relief provisions, which apply where works are carried out otherwise than in the course of a business. However, the relief is only available in the case of a building "designed as a dwelling". The Tribunal dismissed Mr Silver's appeal against HMRC's refusal of his claim. It ruled that the fact that the Planning Condition restricted use to "ancillary residential accommodation to the adjacent farmhouse" meant that the separate use or disposal of the barn as a dwelling was prohibited. The building was not "designed as a dwelling" within the meaning of the legislation. The Tribunal commented that matters such as separate house numbers or council tax registrations, or even future occupation in breach of the Planning Condition were irrelevant to the question as to whether a building was designed as a dwelling. Although this decision concerned the DIY relief provisions, it has a wider significance. The same rule - that there must be no prohibition on the separate use or disposal of the relevant building - also applies to the zero rating of the construction of new dwellings. The decision highlights the importance of the wording of a planning consent in relation to the VAT recovery position and the fact that this issue needs careful consideration at the outset of development. To find out more, please contact Caroline Wilton or Martin Banham-Hall. 10 November 2011 13:57:33http://www.healdlaw.com/news-141-Marks-and-Spencer-Fined--1m-for-Breach-of-Asbestos-Rules.aspxFollowing a sentencing hearing in Bournemouth Crown Court on 27 September 2011, Marks and Spencer plc and its contractors were fined significant sums for asbestos management offences. The convictions follow the carrying out of refurbishment works at M & S’s Reading and Bournemouth stores. M & S was fined £1m for breaches of the Health and Safety at Work etc Act 1974 and ordered to pay costs of £600,000. Two of the contractors were fined £100,000 and £50,000 for breaches of the 1974 Act and ordered to pay costs of £40,00O and £75,000 respectively. The third contractor got off more lightly, being fined £200 under the Control of Asbestos at Work Regulations 2002 for failing to minimise the spread of asbestos. This case is a sharp reminder that the asbestos regulations must be taken seriously. Nor is it an isolated example. In another recent case, a company and one of its directors pleaded guilty in the Eastbourne Magistrates' Court to various offences under the asbestos and waste management regulations. The Court fined the company and its director a total of £36,000 and ordered them to pay £4,000 costs. It also ordered them to pay £4,000 compensation to the owner of the premises where the offence occurred and disqualified the director from acting as a company director for four years. Finally, it should be noted that, notwithstanding the Coalition Government’s much vaunted deregulation drive, contractors’ responsibilities in this area are set to become more onerous. In February 2011, the European Commission issued a reasoned opinion that the UK had not fully implemented Directive 83/477/EEC on the protection of workers from the risks to exposure from asbestos at work. This has been accepted by the Government and in September the Health and Safety Executive issued a consultation on the proposed introduction of revised regulations. The Consultation Paper can be found [link|http://consultations.hse.gov.uk/gf2.ti/f/15426/401829.1/pdf/-/CD237%20Complete.pdf|here] If you would like to know more about how you can stay on the right side of the law, please contact Caroline Wilton 13 October 2011 13:47:44http://www.healdlaw.com/news-140-Why-Use-Heald-Solicitors-For-Wills--Probate--Powers-Of-Attorney---Trusts.aspxHeald Solicitors have been established in Milton Keynes now for 30 years. It has a long and established reputation in the City. By using Heald Solicitors for drawing up your Wills you have the benefit of advice from our Wills and Estates Practitioner, Esther Marchant, who has over 20 years experience in the field. Esther brings a practical and down to earth approach to the making of Wills. When making a Will it is important to be open and clear about your personal assets and your family relations in order to achieve the best advice possible. The advice will range from how to limit inheritance tax liability and how best to organise your affairs for the benefit of those you care about which will then be reflected in your Will. Esther brings the same attitude towards the administration of estates. She endeavours to guide you through the process with the least fuss and will help you overcome any difficult issues that you may encounter along the way. This may be with regard to the personal belongings of the deceased or in helping to ensure that the deceased's wishes are carried out. If you need help in obtaining the Grant of Probate, Esther will give you the assistance you need, often at a reasonable fixed fee. Esther also advises clients on the creation of Lasting Powers of Attorney. She can assist you in drawing them up, confirming that the person making the Power of Attorney has the necessary mental capacity to make the Power and dealing with the registration. She will guide an assist you in as much as it may be necessary for you. Sometimes, an individual has not made a Power of Attorney but is in the position where they can no longer manage their affairs. In this case a Receiver should be appointed through the Court of Protection and again Esther can assist you in that process. Esther will also deal with the drawing up of Trusts if you wish to make some lifetime gift to a minor and wish the assets to be held by Trustees until they are old enough to take them on themselves. For further information about any legal issues relating to the above matters, please feel free to contact Esther Marchant. 13 October 2011 12:56:54http://www.healdlaw.com/news-139-Raising-money-through-wine--cheese-and-other-smellies.aspxThe Well Heald Team, a team of cyclists comprising Nick Crook and Esther Marchant of Heald Solicitors, Linda Plowright from Sport Leaders UK and Alex Gamberini of Entropie, will don their cycling shorts once again this weekend and brave the elements to take part in the Extra Mile Challenge; a 500 mile plus relay challenge through France. Having raised in excess of £7,500 for the last two years for various local charities, this year the team has a steely determination to achieve two goals (i) to avoid getting drenched on the cycle ride and (ii) beating their fundraising records. Whilst holding back the rain could prove a little problematic, the team took a more creative route with regards to the second goal and what better way to raise additional funds then appealing to the taste buds of many. On 7th September the team hosted a wine and cheese tasting night in Newport Pagnell. With a selection of fine cheeses generously supplied by Eric Charriaux of Premier Cheese and wine tasting hosted by Simon Stagnell of the Stony Wine Emporium, guests realised that there is a difference between a Rioja and a Merlot! With the drinks flowing and raffle tickets purchased for prizes such as MK Dons tickets and restaurant vouchers, the event raised £340 towards the team’s target. These funds can be added to the £160 raised by the team back in July when they hosted a Body Shop party. We wish the team the best of luck this weekend as they cycle through France and remind them that when the going gets tough, to remember the well-deserving charities that will benefit from their sweat and pain: i. The Hertfordshire Multiple Sclerosis Therapy Centre ii. Bucks, Oxon and Berks Air Ambulance iii. SSAFA Forces Help iv. British Sports Trust If you would like to sponsor the Well Heald Team’s efforts please visit their [link|http://www.justgiving.com/alex-gamberini0|Just Giving] 23 September 2011 15:01:33http://www.healdlaw.com/news-137-STAR-WARS---The-Trilogy.aspxThe Supreme Court has recently ruled in the long running and third instalment of the case between Lucasfilm and Andrew Ainsworth. Mr Ainsworth was engaged by Lucasfilm to make the Storm Trooper helmets from designs created by Lucasfilm. In 2004, some 25 years after the first Star Wars film, Mr Ainsworth marketed and sold Storm Trooper models including in the United States. Lucasfilm sued Mr Ainsworth in the United States and obtained judgment against him in California for $10m. It may be surprising to some that the model helmets created by Mr Ainsworth were not infringements of Lucasfilm's copyright within the terms of English Law despite his admitted copying of the Lucasfilm designs and drawings. The reason for this was that it was held by the Supreme Court that the helmets were not a "sculpture" and therefore not an artistic work which can be protected in English Law. The series of judgments and the final outcome indicate the complexity of the law in this area and that principles are technical rather than based simply on what one might call common sense. One of the most important outcomes of the case is on a different topic, that of jurisdiction. What the Supreme Court did decide in favour of Lucasfilm was that the copyright infringement that had occurred by selling the helmets in the United States can now be pursued in the English Courts. The consequences could be far reaching: a trader of goods may have to think very carefully whether those goods breach copyright or other intellectual property rules in each and every state into which their goods are sold. Will the Empire's tentacles now reach to every corner of the globe? If you business has any I.P. issues contact Nick Crook or David Dees on 01908 662277 or nick.crook@healdlaw.com or david.dees@healdlaw.com 13 September 2011 09:09:20http://www.healdlaw.com/news-136-The-Last-Will-and-Testament-of-----But-Not-Necessarily-the-Last-Word.aspxLawyers are forever chivvying their clients about making Wills and, as a general principle, making a Will is clearly a good idea. To a large extent, it allows you to control who is to benefit from your estate. If you are living with someone but you are neither married nor in a civil partnership, you can provide for your partner. Such a person has no entitlement under the intestacy rules - the rules that apply when an individual dies without having made a Will. If you have children of a previous marriage or relationship, making a Will can be an effective way of ensuring your current spouse or partner and children all benefit fairly from your estate. The basic legal position is clear. Individuals are entitled to make a Will disposing of their estate in whatever terms they wish. However, an individual who thinks that a Will fails to make reasonable financial provision for them may apply to the court under the Inheritance (Provision for Family and Dependants) Act 1975. An application may be made by, amongst others, the deceased's spouse or a child of the deceased. In the case of an application by a spouse, the court has a wide power to determine what would have been "reasonable financial provision" for the Will to have made for the spouse. In the case of an application by a child, the court's power is limited to determining what it would be reasonable for the applicant to have received for his maintenance. Two recent cases provide good illustrations of the way in which the 1975 Act works. In[b] Iqbal v. Ahmed[/b], the deceased died leaving a relatively small estate. He was survived by his wife, Mrs Iqbal, to whom he had been married for twenty two years, and Mr Ahmed, his son by a previous marriage. Under the Will, Mrs Iqbal was given a right to occupy the modest family home for life, subject to her bearing the costs of repairs, insurance and other outgoings. Subject to Mrs Iqbal's right to occupy, the deceased left his entire residuary estate to Mr Ahmed. The property was in a bad state of repair and needed some £30,000 spending on it, which Mrs Iqbal did not have. The trial judge ruled that the Will did not make reasonable financial provision for Mrs Iqbal. He ordered that (1) Mrs Iqbal should retain her right to occupy the property for life; (2) however, if Mrs Iqbal agreed to a sale of the property she would be entitled to half the proceeds of sale; (3) the residuary estate should go to Mrs Iqbal; and (4) Mr Ahmed was to bear half the costs of insurance and the structural repairs to the property. One of the main motivations behind the Judge's order was to provide Mrs Iqbal with some capital should she want or need to move house. The Court of Appeal upheld his order on appeal. In [b]Ilott v. Mitson[/b], Mrs Jackson, the deceased, died leaving a net estate of £486,000. Apart from a number of monetary gifts, she left it all to three charities. Mrs Jackson was survived by one daughter, from whom she had been estranged for many years. She left a detailed Letter of Wishes setting out her reasons for disinheriting Mrs Ilott. The latter brought a claim under the 1975 Act. In the County Court, the trial judge ruled that the Will did not make reasonable financial provision for Mrs Ilott and awarded her £50,000 out of the estate. Both Mrs Ilott and the charities appealed to the High Court - Mrs Ilott on the basis that she should have been awarded more, the charities on the basis that she should not have been awarded anything. The High Court upheld the charities' appeal, ruling that the trial judge had got the law wrong. It was unnecessary for the High Court to deal with Mrs Ilott's appeal as to the amount of the award. Mrs Ilott appealed further to the Court of Appeal. The Court allowed her appeal and reinstated the order of the trial judge. The charities tried but failed to get permission to appeal to the Supreme Court. The current position is that Mrs Ilott's first appeal, as to the amount of the award, remains outstanding and will be dealt with by the High Court in due course. The decision in the Ilott case has caused quite a few raised eyebrows. It is quite difficult to discern much in terms of underlying principle or guidance from the Court of Appeal's decision, or to understand precisely why the decision in Mrs Ilott's favour was finally upheld beyond the fact that she had five children and was living on benefits. The decision does seem to be distinctly more favourable to claims by adult children under the 1975 Act than the approach taken in previous cases, and it seems likely that in the future we will see more claims being made by adult children. Family relationships can be complicated. Sometimes there can be a wholly understandable desire to bury one's head in the sand rather than confront difficult issues. However, the provisions of the 1975 Act need to be borne in mind when an individual is considering the terms of his or her Will. In some cases, there may be an argument for making a moderately-sized gift to an individual in an attempt to head off a possible claim under the 1975 Act. If you need experienced and sensitive advice about such issues, please contact Esther Marchant. 07 September 2011 13:26:39http://www.healdlaw.com/news-135-Sick-Employee-Could-Carry-Untaken-Holiday-Over-to-Next-Leave-Year.aspxIn [b]NHS Leeds v. Larner[/b], the Employment Appeal Tribunal (EAT) ruled that an employee who had been off sick for an entire leave year without requesting any statutory holiday – i.e. the 28 days’ holiday to which she was entitled under the Working Time Regulations 1998 - was entitled to a payment in respect of that untaken holiday when her employment terminated. [b]Background[/b] The relationship between annual leave and sick leave has been considered by the European Court of Justice (ECJ) a number of times in recent years: • In [b]Stringer v. HMRC[/b], the ECJ confirmed that employees on sick leave must continue to accrue holiday rights. It was for Member States to decide whether employees can actually take their statutory holiday during a period of sick leave. However, if employees are prevented from taking their holiday because of sickness, they must be allowed to take it following their return to work, even if this means carrying it over to the next leave year. • In [b]Pereda v Madrid Movilidad SA[/b] the ECJ ruled that, where an employee's prearranged statutory holiday coincides with a period of sick leave, he must have the option to designate an alternative period for the exercise of his holiday entitlement. So, although under the Working Time Directive workers may be allowed to take holiday during sick leave, if they do not wish to do so the holiday must be granted at a different time, even if this means carrying it over to the next leave year. • However, in the most recent case, [b]KHS AG v Schulte[/b], the Advocate General suggested that the Directive does not require that employees on long-term sick leave retain accrued leave indefinitely. In her view: • To allow an employee to take accrued leave several years after the leave year to which it related would not achieve the Directive's health and safety purpose of enabling the worker to recuperate from the effort and stresses of that year. • A German law under which annual leave entitlement was extinguished 18 months after the end of the relevant leave year did not offend against the Directive. However, a carry-over period of only six months would be insufficient. The ECJ has yet to reach its decision in Schulte. It is not obliged to agree with the Advocate General's opinion, although it does so in the majority of cases. There have been a number of cases – some of which are not very easy to reconcile – where the EAT has had to consider how far the Working Time Regulations could be interpreted in line with EU law as laid down by the ECJ. [b]The Larner Case[/b] Mrs Larner worked for NHS Leeds as a clerical officer. She went on sick leave on 5th January 2009. She did not return to work, and on 8th April 2010 NHS Leeds terminated her employment on grounds of capability. Mrs Larner brought a claim for her untaken holiday entitlement for the leave year from 1st April 2009 to 31st March 2010. The Employment Tribunal upheld Mrs Larner’s claim. NHS Leeds appealed to the EAT, arguing that Mrs Larner had lost her statutory holiday entitlement for 2009 / 2010 leave year as she had not given notice that she wished to take it before that date. Dismissing the appeal, the EAT confirmed that the right to leave was not conditional upon the employee giving such a notice or making a request for leave. [b]Where Are We Now?[/b] To be frank, the law is in this area is in a bit of a mess. Earlier this year, the government issued a Consultation on Modern Workplaces in which it proposed amending the Working Time Regulations so that where an employee is unable to take their annual leave due to sickness absence, or falls sick during scheduled annual leave, and it is not possible to reschedule the leave in the current leave year, he will be able to carry it over into the following leave year. Employers will be able to require employees to take unused leave in the current leave year if there is an opportunity for them to do so or, where there is a business need, to insist that the unused leave is carried forward to the following leave year. However, it is proposed that the changes will only apply to the four weeks’ annual leave required by EU law. They will not apply to the right to an additional 1.6 weeks annual leave which is purely a right under domestic law. Pending amending legislation, the advice to employers must be to err on the side of caution and treat with sympathy requests by sick employees to carry unused annual leave over to the next leave year. If you would like to know more, please contact Nick Crook or Gareth Pobjoy. 07 September 2011 11:40:35http://www.healdlaw.com/news-134-Dismissal-for-Refusing-to-Accept-Pay-Cut.aspxIn the current economic climate many employers have been forced to look at imposing a pay cut on their employees as a means of weathering hard times. Such a policy can have its attractions for both employers and employees. From the employer’s point of view, in addition to the immediate benefit of a cut in wage costs, there is the added benefit that the skills of valued employees are retained and the costs of recruiting and training new staff once the upturn comes - which must surely happen at some point! - are avoided. So far as the employees are concerned, redundancies may be avoided at a time of high unemployment. In a decision broadly helpful to employers, the Employment Appeal Tribunal (EAT) has confirmed that it may be fair to dismiss an employee who refuses to accept a pay cut. In Garside and Laycock Ltd. v Booth, in 2009 GL, faced with a drop in its sales and profits, asked its employees to take a pay cut of 5%. After a series of company-wide meetings with employees, a ballot was held. 77 employees voted in favour, 7 abstained and 4 voted against. B was one of two employees who ultimately refused to accept the pay cut – even though that GL offered to review his pay after six months and met with him three times in an attempt to get him to reconsider his position. When, eventually, he was dismissed he sued for unfair dismissal. He won in the Employment Tribunal on the basis that it was reasonable for B to seek to maintain his terms and conditions. GL appealed. The EAT upheld GL’s appeal, ruling that the Employment Tribunal had gone wrong in two respects. Firstly, it had wrongly focused on the reasonableness of B's decision to reject the pay cut, rather than on the reasonableness of GL's decision to dismiss B for not accepting it. Secondly, the Employment Tribunal had been wrong in thinking that, for a dismissal for refusing to accept a pay cut to be fair, an employer had to show that the situation had been so desperate that the imposition of the pay cut had been the only way of saving the business. In other words, the Employment Tribunal had placed the bar too high. The EAT sent the case to a different Employment Tribunal to consider the case afresh, applying the correct principles. In its judgment, the EAT gave some general guidance on the correct approach for tribunals to take when dealing with such dismissals. In deciding whether the decision to dismiss was reasonable, the tribunal must consider whether, in the circumstances (including the size and resources of the employer's undertaking) it was reasonable for the employer to treat the employee’s refusal to agree to a contractual variation as a reason to dismiss. However, the dismissal must also be “in accordance with equity”. Interestingly, t#he EAT considered that this may have particular force where, for example, management proposes a cut to employees' pay, but not to its own. Similarly, the process by which the pay cut was negotiated may be relevant where a tribunal considers whether the employer has acted unfairly. If you would like to know more, please contact Nick Crook or Gareth Pobjoy. 11 August 2011 08:29:43http://www.healdlaw.com/news-133-Mortgage-Valuation-Trap-for-Buy-to-Let.aspxA recent decision of the Court of Appeal shows that a buy-to-let purchaser cannot safely rely on a valuation carried out on the mortgagee’s behalf. In Scullion v Bank of Scotland PLC (trading as Colleys), Mr Scullion was a buy-to-let purchaser of a flat. The valuers negligently advised that the flat could be let for £2,000 per month. In fact, it proved impossible to obtain more than £1,050 per month. Evidence showed that in the case of home purchases around 90% of prospective owner-occupiers did not commission a separate survey of the property, and relied instead on the mortgage valuation; the financial constraints of home purchase were recognised as a major factor in this. No such evidence had been produced in respect of buy-to-let purchases. In the Court’s view, those entering the property market purely as investors would be likely to have sufficient resources to commission a separate survey, and to be more financially sophisticated. They would probably also need specialist advice on the likely rental value and letting prospects of the property. Some may consider the Court of Appeal’s decision rather harsh, and indeed the Court expressed some sympathy for Mr Scullion, whom it felt had been badly let down by his professional advisers. However, the Court’s ruling confirms that cases where owner-occupiers have successfully sued their mortgage lender’s surveyor are the exception rather than the rule. Buy-to-let purchasers who proceed without obtaining their own survey or valuation need to understand that they do so at their own risk. They are unlikely to have any remedy against a surveyor or valuer instructed solely by the mortgagee. To find out more, contact Martin Banham-Hall or Caroline Wilton. 04 August 2011 11:02:05http://www.healdlaw.com/news-132-Private-Sewer-Transfer---Some-Good-News-for-Householders-and-Businesses.aspxOn 1st October 2011 the responsibility to repair and maintain private sewers and lateral drains (a drain serving only one property but which is outside the boundary of that property) will transfer to the local water companies. This change applies to any private sewer connected to the public sewerage system immediately before 1st July 2011. Most sewers are publically adopted and are already the responsibility of the water companies. However, an estimated 200,000km has been in private ownership with repair and maintenance being the responsibility of the owner. Property owners have been faced with either bearing what can be the substantial costs of repair and maintenance themselves or incurring the cost of insuring against the risk of something going wrong. Private sewers often raise complex ownership issues. After a consultation by DEFRA conducted under the last Government, the Coalition Government decided it would make life simpler and fairer for property owners generally if all private sewers and lateral drains were transferred to the water companies. Under the new Regulations the water companies must give to property owners two months’ notice of their intention to adopt a private sewer or lateral drain. The proposal to adopt must also be published in the London Gazette and in appropriate regional and local newspapers. A property owner or anyone else affected by a proposal (e.g. a neighbouring owner) can appeal to OFWAT if he is objects to the proposal, or by a failure to make a proposal. Of course, there is no such thing in life as a completely free lunch. It is anticipated that the costs incurred by the water companies in taking over these responsibilities will be reflected in increased water and sewerage charges. To find out more, contact Caroline Wilton or Martin Banham-Hall. 03 August 2011 14:29:41http://www.healdlaw.com/news-131-Commercial-Agents.aspxA commercial agent is an individual or company appointed to sell goods on behalf of another. They are often paid a commission basis. Appointing a commercial agent can provide a business with a cost-effective way of selling into a new territory without incurring the cost of setting up a subsidiary company or branch. Traditionally, the approach of English law has been to treat a principal - agent relationship as a commercial arm's length relationship with the parties being free, generally speaking, to agree whatever terms they may consider appropriate. That has not been the approach taken in, for example, France or Germany where a commercial agent is regarded as more akin to an employee, and in need of a degree of protection. The continental approach has been adopted throughout the EU and was incorporated into English law by the Commercial Agents (Council Directive) Regulations 1993. Many think that the Regulations do not sit very comfortably with the way in which business is done in the UK. It may seem odd to a UK businessman that, for example, the protection afforded by the Regulations may be invoked by a multinational company, which might be thought to be quite capable of looking after its own interests. The Regulations impose a number of duties on both the principal and agent. They do not mandate the payment of commission. However, they contain rules that apply if the parties agree that the agent is to be paid on a commission bass. Amongst other things, these specify those transactions - whether during the agency contract or after its termination - which trigger a right to commission, the dates on which commission is payable and the principal's obligation to supply to the agent regular statements as to the commission due. The Regulations also impose minimum notice periods for terminating the agency contract. One of the most contentious aspects of the Regulations has been the right of commercial agents to claim compensation or an indemnity in certain circumstances upon termination of the relationship. In some ways the way the Regulations work is similar to unfair dismissal law in that this right does not only arise where the principal terminates the agent's contract prematurely. It may also arise when a fixed term agency contract expires without being renewed. Whether you are seeking to employ a commercial agent or are yourself a commercial agent, you need to make sure that you have a good understanding of the Regulations' requirements. Failure to do so may well cost you money. We have experience in advising both principals and agents on of all aspects of the Regulations. If you are an agent who has had your agreement terminated, then contact Tom Silverwood-Cope. If you are a principal who would like general advice on the Regulations, or you are about to terminate, or have terminated, an agency relationship then contact Nick Crook. 26 July 2011 09:28:07http://www.healdlaw.com/news-130-Late-Payment-Interest-under-Commercial-Contracts---Improved-Rights-for-Creditors-on-the-Way.aspxIt has been estimated that in the Euro Zone there is currently just under €2 trillion worth of unpaid overdue bills. This eye-watering sum has a profound impact on businesses’ cash flow generally but the late payment of bills can be particularly damaging to SMEs. In the current tough financial climate, it can make the difference between surviving and not surviving. Late payment legislation was first introduced in the UK in 1998 by the then new Labour government, keen to help and encourage SMEs collect bad debts. The rights of commercial creditors are about to be bolstered by the Directive on combating late payment in commercial transactions (2011/7/EU). Once the Directive is in force: • Public authorities will be obliged to pay invoices for goods and services within 30 days. Member States will be able to specify a longer period, not exceeding 60 days, applicable in certain specified circumstances. • Businesses will be obliged to pay invoices within 30 days, although extensions up to 60 days can be mutually agreed. Any extension beyond 60 days will only be valid if it is expressly agreed and only if it is not "grossly unfair". • Debtors will be obliged pay interest at a rate of 8% over the reference rate and compensation costs (of not less than €40). • Suppliers will have the right to charge interest from the day after the end of the payment period stipulated in the contract, without having to send a reminder. • Member States have until 16th March 2013 to implement the Directive in domestic law. However, earlier implementation in the UK seems a real possibility. Heald Solicitors offer a proactive debt recovery service designed to help business owners manage late payment issues. To find out more, please contact Tom Silverwood-Cope or Simon Daw. 07 July 2011 15:53:34http://www.healdlaw.com/news-129-Time-Off-for-Emergency-Child-Care---Unimplemented-Policy-Wasn-t-Much-Use.aspxIn [b]Clarke v Credit Resource Solutions[/b], an Employment Tribunal ruled that an employee had been subjected to a detriment and unfairly dismissed for taking a reasonable amount of time off work to make emergency childcare arrangements. In 1999, the Labour government introduced the right of employees to take a reasonable amount of unpaid time off work to deal with certain emergency situations affecting their dependants, such as the unexpected disruption of childcare arrangements. Although it has not generated a huge amount of case law, the right gives an employee an effective remedy in the right circumstances. An employee denied time off or penalised for having taken it may bring an unlawful detriment claim. Also, an employee dismissed for exercising may be able to claim unfair dismissal - even if he or she has been employed for less than a year. Mr Clarke was employed by CRS for nine months. He and his wife both worked in the company’s call centre. Normally, Mrs Clarke’s mother looked after the couple’s small children whilst they were at work. One morning as they were driving over to drop the children off, they received a phone call from Mrs Clarke’s mother to say that she wasn’t very well and couldn’t look after the children that day. Mr and Mrs Clarke agreed that as Mrs Clarke’s shift started one hour earlier than Mr Clarke’s, he would drop Mrs Clarke at work and then make arrangements for another relative to take the children. Having done this he went into work, arriving half an hour late for his shift. He then and subsequently refused to sign a “late form” acknowledging that he had been late and agreeing to the deduction of one hour’s salary at the end of the month. When such a deduction was made he kicked up a fuss. Eventually, a disciplinary hearing was held and Mr Clarke was dismissed for gross misconduct. The Employment Tribunal upheld Mr Clarke’s claims. It found both that he had suffered a detriment (the deduction from his salary and being pressurised to sign the late form) and that he had been unfairly dismissed for exercising his right to take time off to make emergency childcare arrangements. It awarded him more that £4,600. A couple of more general points about this case are worth noting. Firstly, the case shows the danger of introducing a new policy – in this case, to deal with lateness – without giving proper consideration as to how the policy will mesh with employees’ statutory rights. Secondly, there is simply no point in having a policy in a staff handbook that is left on a shelf to gather dust. Here, CRS in fact had a time off for dependants policy as part of what was described as a "very comprehensive" staff handbook but none of the witnesses called on CRS’ behalf seemed to be aware of this. It is vital that managers and supervisors are properly trained as to the terms and implications of a company’s employment policies and procedures. If you would like to know more, please contact Nick Crook or Gareth Pobjoy. 07 July 2011 15:50:48http://www.healdlaw.com/news-128-All-Reasonable-Endeavours---Commercial-Contracts---Airport-s-Obligation-Proves-Terminal.aspxThe ideal commercial contract covers every eventuality with clarity and precision. Sadly if such a contract exists, we have never seen one. In the real world, not all possibilities are foreseeable. There may be too many to cover every one, and flexibility may even be desirable – especially in long-term arrangements. In such cases, contracts are often precise about the main business terms but deal with other aspects more broadly. For example, a requirement to use “all reasonable endeavours” to achieve an outcome that cannot be guaranteed is a common way of creating an obligation that is legally enforceable, but less than absolute. And in contractual negotiations where deadlock seems to be looming, a party may be tempted to concede a “reasonable endeavours” obligation to gloss over a difficult issue – more often deferring an argument than avoiding it altogether. Such terms have been much litigated, as parties strive to establish how far they have to go. In a departure from previous decisions, the High Court has just ruled that sometimes, “all reasonable endeavours” can bind a party to act against its own interests. [link|http://www.jet2.com|Jet2.com Ltd] v Blackpool Airport Ltd concerned a 15-year contract for the low-cost airline’s operation out of Blackpool Airport, owned by BAL. The contract said nothing specific about operating hours, but required the airport to "use all reasonable endeavours to provide a low cost base to facilitate Jet2.com's low-cost pricing." Both parties understood that a low-cost operator would need flexibility to leave and arrive outside the airport’s published opening hours. For four years, BAL allowed Jet2.Com to arrive late and depart early accordingly. However, because it was operating at a loss BAL then changed its policy, refusing to accept arrivals or departures scheduled outside the published opening hours. It gave Jet2.Com one week to change its schedules. The Judge agreed that BAL had broken the contract. He ruled that this case differed from previous cases on “all reasonable endeavours” obligations, where the courts have accepted that a party could take its own legitimate commercial interests into account. The position was different because the disputed issue was within BAL’s own control. BAL could not pick and choose what to do in its own interest. However, this was only a partial victory for Jet2.com. The Judge felt that the Court simply could not define the operating hours which BAL has to provide during the remaining ten years of the contract. Hopefully the Court’s steer on the meaning of the phrase may enable the parties to hammer out a further agreement, balancing their respective needs. For businesspeople in tough contractual negotiations, the Court’s decision warns that a “reasonable endeavours” obligation, which may seem like harmless fudge, can have commercially costly consequences. To find out more about commercial contracts, contact Martin Banham-Hall or Nick Crook. 06 July 2011 08:04:54