“Return to Sender, Address Unknown”

“Return to Sender, Address Unknown”
Posted on March 21, 2014

“I gave a letter to the postman, he put it in his sack, bright and early next morning, he brought my letter back. She wrote upon it: Return to sender, address unknown. No such number, no such zone.” So sang Elvis Presley. But it’s not so easy for recipients of legal proceedings to get off so lightly after a falling out. For companies, directors and anyone else served with legal proceedings at their last known address, there is a procedure available whereby the court can permit service by an alternative method or at an alternative place if the documents are returned to sender unanswered.

If you’re a director of an English company resident abroad and you give an address outside the jurisdiction, then usually permission to serve a claim form on you outside the jurisdiction must be obtained from the court before you can be served with legal proceedings. However, if you’re a company director (or secretary), did you know you can be served with legal proceedings in England and Wales without the court’s permission, even if you no longer live here, if you’ve not kept your registered address details up to date.

So, in the recent case* covered on our Talking Business blog, even though an individual had moved to the UAE in 2011, because he had not updated his registered address details at Companies House he was validly served at his old address in England (under Section 1140(1) CA2006).

Going forward, company directors and secretaries need to check that registered addresses are up to date. For more information, email blogs@gateleyuk.com.

*Key Homes Bradford Ltd and ors -v- Patel


Sign it, comply with it?

Sign it, comply with it?
Posted on March 28, 2014

It is always a healthy view to think that all agreements you sign will bind you. But even though they may be in writing, not all terms in many agreements are actually enforceable . Here are three examples that often occur:

Restraint of trade provisions in employment (and other) agreements: such clauses are unenforceable, unless the party relying on them can show that they go no further than reasonable protection of its business
Terms excluding or limiting liability for breach of contract: to be enforceable, many exclusion and limitation clauses will have to pass (but will fail) a ‘reasonableness’ test
Clauses which provide precisely for what sum must be paid in damages if there is a breach of contract: so called ‘liquidated damages’ clauses must be proper estimates of loss to be enforceable. Many fail because as drafted, they provide for a payment of a sum far in excess of what any likely loss would be. Such ‘penalty clauses’ are unenforceable.
There are, of course, other examples but these three are common and demonstrate the point well. Just because you sign an agreement, it does not automatically follow that all terms will be enforceable.

So if you sign an agreement, must you comply with it? Not always!


Richard III – What’s the dispute about?

Richard III – What’s the dispute about?
Posted on March 25, 2014

Richard III’s battles today are not being fought on Bosworth Field, but in the High Court. But what’s the battle all about?

As is well known the remains of the King were exhumed by Leicester University from a central Leicester car park. The exhumation occurred further to an Exhumation Licence granted by the Ministry of Justice to the University.

Normally after an archaeological exhumation the mortal remains are reinterred in the nearest consecrated ground. Leicester cathedral is 100 yards away and the plan was to lay Richard to rest there.

Signs emerged that not everyone agreed with this, but at the start it appeared to have a feel of good natured publicity. That was until the Plantagenet Alliance (an apparent loose association of the late King’s relatives) claimed that the University and Leicester City Council had failed to consult properly, further to the Licence upon were the remains should be interred. They also claimed that this failure breached the Alliance members Human Rights.

The Alliance applied to have the grant of the Licence to the University Judicially reviewed.

Judicial Review is a process for the review of exercise of powers by a public body. To proceed the permission of the court is needed and contrary to expectation this was granted by the Judge in August last year.

The Judge said there was a duty to consult “widely… given the legitimate public interest” in the Kings remains.

Having lost this battle the University did not roam the fields saying “a horse, a horse, my kingdom for a horse…”

Rather they regrouped and fought the next battle, the review itself which was heard in the High Court last week, where it was noted:

“Richard III would have raised an eyebrow if he’d been told that there would be public consultation on his reburial 500 years on”

It seems Plantagenet despots were not big on consultation.

Judgement was reserved and the decision is awaited. The outcome and its consequences will be covered in future blog posts.

Don’t shoot the messenger…just yet

Don’t shoot the messenger…just yet
Posted on April 2, 2014

With the nation blogging, tweeting, and posting on Facebook, LinkedIn and other websites on a regular basis, businesses have to be acutely aware of what is being said about them online.

Individuals and businesses who are defamed by material hosted on online platforms will usually want the material to be taken down as quickly as possible, in order to avoid serious harm to their reputation being caused or increased.

But who controls the material and who can remove it?

If you know who posted the material, then you should contact them immediately asking for the material to be taken down. However, often the contact details of individuals who post on websites are not publicly available, as most users are only known by a username or nickname.

Even if you are able to contact the offender, if they do not take the material down, the next step would be to take legal proceedings. Whilst this can be a hugely effective step, it is expensive. If the offender is an individual of modest means, you, or your business, may find yourself with a large costs bill, which you may not practically recover from the offender.

With this in mind, it is always worth contacting the operator of the website hosting the offending material, requesting that they take it down. If they refuse to remove the posting upon receipt of formal notice, you could bring a claim for damages against the website operator if you have suffered serious harm to your reputation as a result of the offending material (and in the case of a business, serious financial loss in addition).

One benefit of suing the operator is that they are more likely than an individual offender to have the necessary financial means if a court orders that they pay you damages and/or costs.

However, on 1 January 2014, new legislation (the Defamation Act 2013) brought into effect a new defence for operators of websites where a defamation action is brought against them in respect of a statement posted by a third party user on their website.

Will the operator get off scot-free?

No. Operators can only establish a defence if they can show they did not post the statement on the site and they comply with certain conditions including providing you with prescribed information as set out in the new law. This law requires the site operator to provide, amongst other things, sufficient information to the claimant, upon receipt of a notice of complaint, to enable the claimant identify the third party user. This includes the full name and address of the offender, so that the claimant is able to bring proceedings against them.

In most circumstances, it is highly unlikely that the site operator would hold such details for their users. Even if the information is known, can it be released to the claimant, without the permission of the user? Isn’t that a breach of data protection laws? The answer is currently being debated and regulations which will accompany the act and provide more guidance, are still being drafted.

All is not lost

So, until such time as the regulations are agreed, it is likely that site operators will only be able to use the defence in limited circumstances, meaning that site operators could find themselves in an unwelcome position, if the material is not removed by the offender upon request.

Moral of the story

If defamatory material is posted online about you, ACT QUICKLY and serve a compliant notice on both the website operator and (if possible) the individual offender as soon as possible. Unless they can release information about the identity of the user to you, to avoid any liability, the operator is likely to take down the material immediately and consequently limit the harm caused to you/your business.

For more information, email blogs@gateleyuk.com.


Unregistered land conveyancing – enjoy it while it’s still with us

Unregistered land conveyancing – enjoy it while it’s still with us
Posted on 16/04/2014

Recently a residential development client of ours acquired some unregistered land near Carlisle. While the land itself didn’t otherwise have any particular quirks, that the freehold land was unregistered was perhaps a quirk in itself given it is relatively rare these days to encounter unregistered land.

How rare? Well, the most recent Land Registry statistics indicate that 98% of the circa 23 million and counting freehold land interests in England and Wales are now registered albeit this equates to something less than 98% of freehold land by area as many of the unregistered interests are large estates and/or farm holdings (that have escaped registration due to being within the same farming family for several generations).

What have been the drivers for the increase in land registration?

While compulsory first registration of freehold transfers has been required in certain parts of the country since as early as 1926 (the original introduction of the modern system of land registration) it wasn’t until 1990 that the final few districts of England and Wales were brought in to the compulsory registration regime
An increase in the number of transactions that trigger first registration are such that currently nearly all transactions that result in a change of ownership or a grant of a mortgage require registration e.g. since 1998 an assent now triggers the obligation to register land
The Land Registry pro-actively encouraging voluntary first registration of land by working directly with large land owners (the Church, Government, etc) and offering reduced fees for voluntary applications
Land owners recognising the benefit of voluntarily registering their land prior to disposal to a developer or third party so as to provide certainty of title interests
What we perceive to be an unofficial Land Registry policy of encouraging first registration of very small areas of land (often by incorporation into existing titles) whereby the Land Registry has taken a ‘light touch’ when reviewing the merits of applications.
There are still a few refuseniks. For example, Network Rail is reluctant to voluntarily register its estate, much of which dates back to 19th century conveyances from the height of ‘railway mania’. This in part stems from its policy of refusing to deduce title to its land when acting as landlord in various circumstances. Using Leeds as an example, the city centre is now virtually entirely registered other than swathes of land that, on closer inspection, are the railway station and the various railway lines snaking out from it.

So for the time being property lawyers and their clients can still enjoy the occasional trip back to the world of epitomes of title, conveyances and frantic scrambling around for law school text books to remind ourselves of the differences between c(iv) and d(ii) land charges…


On a related point, the Land Registry has recently launched the final version of its Mapsearch product which makes available its index map (detailing all registered title numbers) online for registered users of the website. It’s a great new resource, no waiting around to receive back index map searches, though one word of caution: to benefit from the Land Registry’s indemnity provisions you still need to submit an index map search in the usual way.

For more information, email blogs@gateleyuk.com.


Gateley leads the way in private equity investment deal

Gateley leads the way in private equity investment deal
15th April 2014

A cross discipline team from top 50 law firm, Gateley has advised on a deal which saw mid-market private equity firm, LDC, complete a significant investment to support the £30 million acquisition of Prism UK Medical Limited (‘Prism’) from Toronto-based TSX Venture Exchange listed business, Prism Medical Limited.

Prism is market leader in the provision of safe patient handling solutions that enable the mobility disadvantaged to live at home in a safe and dignified manner, improving their quality of life. In addition to homecare, Prism also has a presence in the long term care and acute care areas. Prism manufactures and supplies products under a number of market leading brands in addition to offering a range of complementary services including assessment, installation, training, maintenance and after sale customer service.

The Gateley team, led by Corporate partner, Simon Gill and supported by Banking & Finance, Commerce, Technology & Media, Employment and Tax lawyers, acted as legal advisors to LDC on all aspects of the deal. The transaction was completed with support from a number of Midlands-based advisors and funders, including Deloitte, who provided financial due diligence to LDC.

The deal with Prism forms part of LDC’s continuing strategy of investing in leading mid-market businesses, backing high calibre ambitious management teams. It represents LDC’s sixth new investment of 2014, having invested over £85million of new funding, together with more than £30million of capital to support portfolio business acquisitions. Last year, LDC invested over £409million across 22 investments.

Simon Gill commented: “We are delighted to have assisted in the successful completion of this deal. Our wealth of experience enabled us to provide pragmatic and commercial advice on time and within budget. The management team at Prism has successfully implemented a strategic plan to capitalise on the market opportunity going forward and LDC will work closely with the business to accelerate this strategy.

“Initially, LDC’s support will allow the business to focus on the development and expansion of its existing product and service offering within the UK market, expansion into key European markets and target a number of acquisition opportunities.”

The news follows Gateley’s recent Law Firm of the Year win at the Birmingham Law Society awards. The award comes on the back of positive 2012/13 financial figures which saw the firm increase its fee income by 10% to £66 million. In addition, despite difficult economic condition, the firm performed well in the national and regional 2013 Experian Corpfin M&A Advisor legal tables, achieving a second place ranking nationally, up from thirteenth in 2012, and a first place ranking within the Midlands, up from second in 2012 based on deal volume.


Misapplying the prescribed part

Misapplying the prescribed part
Posted on 15/04/2014

You will already be aware that office-holders are required to set aside certain realisations for the benefit of unsecured creditors under the Insolvency Act 1986 (Section 176A). Those realisations are carved out from assets which would otherwise be subject to a post-Enterprise Act floating charge.

Failing to comply with this duty will place the office-holder at risk of censure and sanction. The office-holder must therefore be sure the prescribed part is disapplied and not, unintentionally, misapplied.

In this blog post we cover points worth considering for office-holders faced with disapplying the prescribed part.

In context

The legislation is clear on the circumstances in which an office-holder can lawfully disapply the prescribed part, being:

the net property is less than £10,000 and the office-holder thinks the cost of making a distribution to unsecured creditors would be disproportionate to the benefits;
the net property is greater than £10,000 and the court makes an order disapplying the prescribed part where the costs would, again, be disproportionate; or
the prescribed part is disapplied by the terms of a CVA; or other prescribed arrangement.
Based on previous experiences, it is the second limb which crops up the most, and we advise office-holders about the necessary Court application. We have found that the Courts have adopted a cautious approach, which we believe supports the aim behind the legislation.

Office-holders must be aware that the court’s blessing is discretionary and the application is by no means a rubber-stamping exercise.

Bearing this in mind, the following considerations are key:

It is the entirety of the prescribed part that may be disapplied; there is no halfway house. This appears sensible and avoids the office-holder having to put forward a business case to the court on which unsecured creditors he should pay and what should be prescribed. This way – the law treats all of the unsecured creditors on an equal footing and, fairly, at least among one another
The decision to disapply the prescribed part should not be made light-heartedly. The courts are reluctant to grant this relief except in obvious cases. “A small return is better than no return” appears to be the motto, and proportionality is key. For example, it has been held that where the costs of sharing the prescribed part eat into nearly 50% of the prescribed part itself the part should still be paid
What is more, the fact the cost of processing creditors’ claims might exceed the distribution to those creditors is not a relevant consideration. The office-holder should therefore consider innovative time and cost saving means of achieving the goal of distributing to unsecured creditors
Office holders should take all available steps to ensure that only what is strictly necessary is done to distribute the prescribed part. The courts have supported a more ‘rough and ready’ approach to valuing claims in these types of cases
Secured creditors cannot waive their security to benefit from the prescribed part after any interim distribution to unsecured creditors is made. By that stage the horse had already bolted
The costs of making the application to disapply the prescribed part should be brought to the attention of the court. It would be absurd to incur costs in making an application which are close to the costs savings which the office-holder is seeking to avoid in disapplying the prescribed part. As always, costs should be restricted wherever possible
Where relevant, administrators could make an application to court to disapply the prescribed part combined with an alternative application for permission to make distributions to unsecured creditors. This often guides the court into agreeing with the office-holder that he or she is actively trying to lessen costs and improving the level of distributions
These key principles are by no means exhaustive and a detailed examination of the facts and issues must be made in each case.

While it is the office-holder that must first form a view whether the lack of proportionality merits an application to disapply the prescribed part, the decision is the court’s. Even where the Judges have agreed with the office-holder’s view that the costs of distribution are disproportionate to the benefit to creditors, they have still been reluctant to, and have refused to disapply the prescribed part.

This confusing, and perhaps unhelpful, approach serves to highlight that disapplying the prescribed part must be reserved for the most exceptional cases, where there are clear and objectively demonstrable reasons to support the application.

For more information, email blogs@gateleyuk.com.