The most important card in Monopoly

The most important card in Monopoly
Posted on 02/09/2015

There are some who are obsessed with buying the dark blue Mayfair and Park Lane properties, while others prefer to spread their risk over the lower priced properties, opting to own Piccadilly and all the yellows, with the Strand and Trafalgar Square as their rear guard in bright red. However, in our book, it’s the ‘Get out of jail free’ card which is invaluable and it’s not dissimilar to some of the benefits a good directors’ and officers’ (or D&O) policy can provide.

The benefits of a D&O policy

Whilst a D&O policy can’t necessarily keep you out of jail in the event of conviction, it will enable you to obtain legal advice from a specialist legal team without the worry of having to cover the defence costs, which are no longer recoverable in a prosecution case even if you win in court.

D&O insurance policies are becoming increasingly popular, not only with multi-national companies but for all types and sizes of organisation. Directors and non-executive board members now expect D&O policies to be in place as a matter of course.

Directors have to make important day to day decisions to ensure the smooth running of their business; D&O policies can protect against the unintended consequences of those decisions. With the ever growing threat of cyber-crime, leading insurance companies tell us that now is the best time to buy, as premiums are down and negotiation to broaden the scope of the policy is becoming increasingly common.

Insurers tell us that they will react to market needs, and cyber-crime protection is now beginning to come within scope of premiums and policies as related legislation is pending in England and Wales.

Zero tolerance

Latest research shows that regulators are operating a zero tolerance policy for non-compliance by directors and officers. Regulatory investigations can vary from an investigation by the Health and Safety Executive following an industrial accident, to an anti-bribery and money laundering investigation by the Serious Fraud Office. Whichever regulator is involved, the groundwork for defending the investigation should begin immediately because a case can be heavily influenced at this very early stage. When a case potentially involves individual criminal convictions then directors and officers are individually liable for financial penalties if convicted, but a D&O policy will cover the legal costs of responding to the allegations and in some cases will pay any prosecution costs award.

In our experience early advice can make a significant difference to the outcome of the investigation.

This post was edited by Pauline Munro and Kate Oliver. For more information, email blogs@gateleyplc.com.

Is happiness really a room without a roof?

Is happiness really a room without a roof?
Posted on 01/09/2015

In his best-selling song of 2014, ‘Happy’, Pharrell Williams asked us all to clap along if you feel like a room without a roof. This lyric resulted in clapping all over the world.

But, it’s unlikely that any commercial tenant of buildings with full repairing covenants joined in the applause. This is because when taking a fully repairing lease a tenant is accepting the responsibility to repair the building and to put it into good repair even if it is not in good condition at the commencement of the term. This means a tenant has to repair or even possibly replace the roof.

To avoid this responsibility it is common for the repairing covenant to be limited to provide that the tenant is not obliged to put or keep the property in any better state or condition than is evidenced at the date of the lease by a schedule of condition attached to it. A schedule can also provide useful evidence in disputes regarding reinstatement at the end of the term illustrating that an item existed at the commencement of the lease.

But, tenants beware!

A schedule of condition has a shortcoming that is an often overlooked. Just because the tenant is not obliged to repair an item does not mean the landlord is obliged to do so!

This shortcoming was highlighted a couple of years ago during the wet winter when some commercial tenants found that a schedule of condition meant that, although they were not obliged to repair a leaking roof, neither was the landlord. Despite the schedule of condition, the tenant still had to repair the roof for both operational and health and safety reasons to enable the tenant to run its businesses from the property.

To avoid this worst case scenario, the tenant should also consider:

Using the schedule of condition survey to make the landlord put the property into repair at the outset so as to prevent any dispute after the lease is granted as to who is liable for essential repairs.
Amending the lease so that, in addition to the schedule of condition, it is the landlord’s responsibility to repair such items as a leaking roof.
So, come on all you commercial tenants with full repairing leases.

Get happy!

And clap along if you feel like a room without a roof that’s subject to a schedule of condition and a landlord’s obligation to keep the property wind and water tight.

This post was edited by Chris Cheatle. For more information, email blogs@gateleyplc.com.

Pervaiz Naviede Family Trust boosts north west portfolio

Pervaiz Naviede Family Trust boosts north west portfolio
26th August 2015

A global property developer has added to its North West portfolio with the acquisition of two properties totalling £2.28m.

Real Estate partner, Rod Waldie from the Manchester office of Gateley Plc, advised on the deal by the Pervaiz Naviede Family Trust for the purchase of Brite Court, located on a 1.5 acre site on Park Road, Gatley, Stockport, which was bought for £2m and is currently occupied by a 28,000 sq ft office facility.

The offices will remain tenanted until the end of 2016 and the Trust is expected to take vacant possession in 2017. The site has planning permission for 24 three, four and five bedroom homes, which would range in price from £300,000 to £600,000.

The Trust also bought a retail unit currently tenanted by McColl’s newsagents in Rock Ferry, Birkenhead, for £280,000. The 2,250 sq ft premises also includes two apartments and is the second McColl’s newsagent in the Trust’s UK portfolio.

The properties were purchased at London auction house Allsop Auction and are part of a wider £100m allocation by the Trust to make long-term investments in premium real estate across the UK.

Rudi Falla, spokesman for the Trust, said: “We are making strategic acquisitions with a view to long term gains through high rental yields and development opportunities. These two new purchases are excellent assets in the Trust’s growing North West portfolio.

“The retail unit in Rock Ferry is already tenanted by a sound business and provides the Trust a good covenant, whilst the Gatley site is in a prime location for a residential development in-keeping with its high quality suburban surroundings. The Trust is continuing to make considered purchases across the country and is presently looking at a number of potential sites.”

Contract claims – back to the future

Contract claims – back to the future
Posted on 28/08/2015

A recent judgment in the Employment Tribunal[1] could lead to employers facing future claims for historic breaches of contract.

Following a breach of any contract a claim can be brought in the County or High Court for compensation. However there are limits in relation to how far back a claim can go. In England and Wales compensation can only be awarded for up to 6 years. So even if the court finds that a party has been in breach of contract for the last 10 years the claimant will not receive compensation for the losses that resulted from the breach in the first 4 years.

However employers can also face claims of breach of contract in the Employment Tribunal brought by former employees. It had generally been thought that these claims were subject to the same 6 year limit on compensation as applied in the civil courts. At least one previous Tribunal had concluded as much.

Doubts though have now been raised as to whether this restriction does apply. It follows a case in which a former employee brought a claim in respect of a shortfall in national insurance contributions that dated back to between 1996 and 2003. She left employment in January 2015 and sought to bring a claim for breach of contract. If the 6 year limitation had applied no compensation could be awarded. The Employment Tribunal considered that as claims could only be brought after the employment had ended it did not consider that employees should also be bound by a further 6 year limitation as this might mean they could never bring a claim in the Tribunal if they remained employed. It awarded the compensation despite the breach dating back over 15 years.

The practical implications are that employers may face claims in relation to historic breaches whenever the employment comes to an end. So for example if an employee considered that they should have been paid a bonus in their first year of employment that could be the subject of a claim when they leave some 20 years later. It could be more costly too. If the bonus was due every year then the eventual award could reflect the total bonus that would have accumulated over the last 20 years. Whilst the maximum compensation an Employment Tribunal can award in a contract claim is still £25,000 this may mean that this maximum will be achieved in many more cases going forward.

This blog post was edited by Fran Read. For more information, email blogs@gateleyplc.com.

[1] Grisanti v NBC News Worldwide Inc

5 top tips for surviving the GDL

Posted on 27/08/2015
5 top tips for surviving the GDL

The Graduate Diploma in Law (GDL) is a year-long conversion course for non-law graduates which results in obtaining a qualifying law degree. Whilst many students are intimidated by the prospect of studying the GDL, this blog post aims to make your experience as straightforward as possible. I recently completed the GDL, having previously worked as a paralegal at the firm and have been offered a training contract to commence in 2016, and will begin studying the LPC in September this year.

1. Be organised

The study method on the GDL consists of lectures and workshops. Whilst lectures are similar to those at university, GDL workshops involve reviewing ‘homework’ activities and completing activities in groups, such as problem questions. Given the high volume of group work involved, it is important to plan ahead to ensure that all workshop preparation is completed, and to avoid being underprepared in class. Keeping a diary of any important dates and deadlines is another useful way to manage the large workload.

2. Practice makes perfect!

Throughout the GDL your work will commonly be assessed by problem questions. Typically you are given a fictional client scenario and you must use your knowledge to advise the client. At university I was used to writing essays, and therefore initially found it difficult to adapt to problem questions. However, weekly participation in workshops provides the opportunity to tackle problem questions in a group before reviewing them with a tutor. There are also plenty of past-exam papers and sample answers available on the intranet, which are particularly helpful for revision.

3. Make the most of the resources on offer

Students can make the most of any of the resources offered by the careers centre. Students can also attend any workshops and skill-sessions which focus on relevant topics to assist with obtaining a training contract and improving your skill set.

4. Get stuck in!

Outside of the classroom, mooting (or mock trial) competitions provide the opportunity to prepare and present a fictional case in front of a ‘judge’. Other popular extra-curricular activities include pro-bono work, which involves working with members of the community to raise awareness of and provide advice on a range of legal issues. All of these activities help to give an edge to vacation scheme and training contract applications, and improve important legal skills.

5. Start revision early

Ultimately, keeping on top of workshop preparation and coursework throughout the year will ensure that you have a good set of notes to use for revision, and enable you to begin your revision as soon as possible. Regular mock examinations may also seem demanding, however they provide the opportunity to get to grips with exam-style questions and prepare you well for coping with the main examinations in the summer.

This post was edited by Emily Driver. For more information, email blogs@gateleyplc.com.

Enhanced protection for defendants?

Posted on August 26, 2015
Enhanced protection for defendants?

Being sued in a commercial context is bad enough, especially if you believe that you have no case to answer or you expect to win, but matters could be made worse if you are running up substantial costs in defending a claim whilst in fear that the claimant may not have the means to compensate you if you win. In such an unwelcome scenario, however, help is at hand in the form of the security for costs regime, which provides judges in civil proceedings in England and Wales with a discretion to order a claimant to provide security, most often by way of a payment into court, if certain criteria are met. In addition, a judge’s comments in a recent High Court judgment would suggest that such protection may be available more comprehensively than was previously thought.

One of the most common situations in which the court may make an order for security for costs is where the claimant is a company and there is reason to believe that the company will be unable to pay the defendant’s costs if ordered to do so. An inability to pay does not need to be proved beyond doubt or even on the balance of probabilities (there need only be “reason to believe”), although the words “will be unable to pay” require more than mere doubt as to whether a defendant will be unable to pay if the need arises.

Other situations which may prompt the court to order such protection for defendants include cases involving individual claimants who have changed their address after bringing their claim so as to avoid the adverse consequences of the unsuccessful litigation, or the individual claimant who has taken steps to move his assets so as to put them out of reach of a defendant seeking to enforce a costs order.

What about the amount of security? Will a security for costs order effectively make the successful defence of a claim a cost-free exercise for defendants? Not quite. The court will award such amount as it thinks fit in all the circumstances, bearing in mind that the standard recovery for the winning side is generally only such costs as are reasonably incurred, reasonable in amount and proportionate to the matters in issue. However, in a recent case involving a dispute over whether the parties’ approved costs budgets should be used as a basis for assessing the level of security, the judge proposed that they should, with a further effect being that the defendant would be entitled to security for not just future costs but also costs referred to in their budget which had already been incurred.* The judge concluded that his understanding of the costs management regime “might in some circumstances result in it inflating rather than reducing recoverable costs, but I cannot otherwise interpret it.” The judge’s comments are not strictly binding on other courts, as they were not relevant to his final decision, but they are bound to be relied upon by hopeful defendants bringing future security for costs applications nonetheless.

It should be underlined that the court’s discretion to award security for costs is wide, and the court must take the view that such an order would be just in all the circumstances of the case, but it remains a tool which can lighten the load of litigation for defendants and perhaps now to an even greater degree.

For more information, email blogs@gateleyplc.com.

* Sarpd Oil International Ltd v Addax Energy SA Queen’s Bench Division (Commercial Court), 14 August 2015 [2015] EWHC 2426 (Comm)

Bona vacantia land and mortgagees
Posted on 26/08/2015
As recently published on our Talking Recovery blog, if a company owns property and that company is dissolved from the register at Companies House, what happens to the land it owns? The short answer is that it becomes ‘bona vacantia’ (literally ‘vacant goods’) and vests in the Crown.

But what happens next if the property is subject to an outstanding legal charge in favour of a secured creditor? Whilst the power of sale can still be exercised, it has generally been necessary to inform the treasury solicitor and seek consent to the sale, even if there was to be a shortfall against the secured debt. This inevitably increased both the time taken to sell and related costs.

Good news

The good news for secured creditors in the above scenario is that the Bona Vacantia Department of the Government Legal Department has now set out new guidelines, specifying a new procedure for dealing with these cases which will be trialled as of 1 July 2015.

Click here to read the full article. For more information, email blogs@gateleyplc.com.