ContractStore Legal Business Blog

Graham Calvert, the greyhound trainer who sued William Hill for letting him carry on betting when he had asked them not to, lost his case in the High Court today. The judge ruled that William Hill owed no general duty of care to Mr Calvert, who lost over £2 million with the bookmakers.

We hope Mr Calvert had some insurance to cover his costs - betting on the law can be very expensive!

You can read our previous story on this case that was posted on 16th February.

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The OFT (Office of Fair Trading) has issued High Court proceedings against a letting agent whose terms can potentially require landlords to pay the agent substantial sums in commission, where a tenant continues to occupy the landlord’s property after the initial fixed period of the tenancy has expired - even if the agent plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property. The terms can also require the landlord to pay these sums after the landlord has sold the property as well as demanding commission where the landlord sells the property to the tenant, even where the agent has played no part in negotiating that sale.

The letting agent is Foxtons and the OFT’s action is for a declaration on the application of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs) to certain terms in Foxtons’ lettings agreements with landlords. The OFT is also seeking an injunction against Foxtons preventing it from using the terms.

The action taken by the OFT is in response to consumer complaints. If successful in this case the OFT intends to enforce compliance with the law, as declared by the Court, throughout the letting industry wherever similar terms are being used.

Foxtons contends that its agreements with landlords are not unfair and continues to use these terms, and accordingly, the OFT has issued proceedings so the courts can decide the matter.

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The Government’s assault on small business has had a slight reprieve with the latest change of mind concerning capital gains tax. Last autumn, the Chancellor announced the ending of the 10% rate for businesses and the introduction of a new, flat rate of 18%. Since, ostensibly, the change was intended to do something about the massive gains of private equity firms and the people most hit would be owners of small and medium businesses, there was a fully justified outcry.

The latest position – which still has to be confirmed in the Budget next month – now seems to be:

• A flat rate of 18% will be charged on all capital gains from April – this will cover business and non-business gains, so the same rate will apply whether you are selling your business, a painting or a buy-to-let property
• The first £1 million of gain will be at the rate of 10% for certain business assets – this is to be known as ‘entrepreneur’s relief’.
• Indexation allowance and taper relief will no longer apply – i.e. there will be no adjustment to the rate however long you have owned the asset. Gains on assets owned on 31 March 1982 will be calculated by reference to their market value at that date.
• In our view it is time for the Government to introduce a fairer tax system that taxes the mega-profits of the City instead of the hard-earned gains of smaller businesses.

The Chancellor might say he is trying – but his clumsy proposal to impose a £30,000 charge on non-doms is not the cleverest idea to come out of the Treasury. And small businesses have already suffered recently with the removal of the corporation tax exemption for the first £10,000 of profits.

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When age discrimination was banned a couple of years ago, it was still OK to have a retirement age of 65 for employees but this did not apply to partnerships. So partners and their legal advisers were unclear how to deal with the issue - might it be necessary to let partners stay on till they dropped?

Now an employment tribunal has looked at the problem and decided it can be acceptable to have a compulsory retirement age of 65 for partners – but only if it can be objectively justified.

The case concerned a ten partner law firm whose partnership deed said that partners must retire when they reach 65. When the senior partner reached that age, he claimed this was discriminatory and contrary to the regulations.

The tribunal accepted the firm’s argument that a compulsory retirement age was necessary to enable the firm to develop and grow by bringing associates into the partnership. Also the firm had a policy of avoiding expulsion of a partner for poor performance as this was though to conflict with the supportive culture of the practice – in other words, even if a partner under-performs he will be allowed to stay on , but there is a cut-off date of 65.

The conclusion from this case is – if you have a partnership agreement and you want a compulsory retirement age, work out some good reasons why the rule should apply.

This decision may be subject to an appeal but, unless it is overturned, it should give some comfort to partnerships that are wondering how to deal with the uncertainty created by the Employment Equality (Age) Discrimination Regulations 2006.

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The OFT (Office of Fair Trading) has applied to the court for a ruling in respect of unauthorised overdraft charges.  The hearing is due to start on Thursday 17 January.

The purpose of the application is to get a ruling on whether the provisions of the UTCCRs (Unfair Terms in Consumer Contracts Regulations) that deal with unfairness, apply to unauthorised overdraft charges, and will not address whether terms and conditions or specific charges of individual banks are unfair. However the OFT is continuing to analyse information supplied by the banks, and further information on the investigation into unfairness will be published after the judgment has been delivered and OFT has had time to consider any implications.

The application for the declaration is brought against: Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Nationwide Building Society and Royal Bank of Scotland Group plc. The hearing is expected to last three weeks with judgment to follow some time later.

The OFT has published more information about the case and has a website section that explains more about the work on bank personal current accounts. Download a copy from http://www.oft.gov.uk

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The Government today announced a substantial package of help for up to 140,000 people who lost savings when their employer-sponsored pension schemes collapsed.

The Financial Assistance Scheme (FAS) will be extended so that:

• All scheme members will be guaranteed 90 per cent of their accrued pension at the date their scheme began wind-up. This will be subject to a cap of £26,000, the value of which will be protected.
• Assistance payments derived from pension accrued post-1997 will be increased each year in payment in line with inflation.
• Assistance will be paid from each failed scheme’s normal retirement age, subject to a lower age limit of 60.
• People who are unable to work due to ill health will also be able to apply for early access to payments from age 60.

For more information you can go to the Department of Work & Pensions website:

http://www.dwp.gov.uk/aboutus/news/#lostpensions

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A new Planning Bill was published last week by the Government. The main objective of the new law is to speed up the planning process for major infrastructure projects – new roads, airports, nuclear power stations etc. While it is true that any major project has a lot of hurdles to overcome, the new arrangements load the dice very heavily in favour of the developer. Under the Bill, the main features are:

• The Government will publish ‘National Policy Statements’ setting out the major infrastructure projects it wants to see.
• A new Infrastructure Planning Commission will be set up to decide on all infrastructure projects. The members of the Commission will be appointed by the Government.
• The normal planning process will not apply. Instead of seeking planning permission and a range of other consents that are currently needed, only one consent will be needed – from the Infrastructure Planning Commission and this will not only give planning consent but can give consent for other related issues – e.g. compulsory acquisition of land for the development
• In reaching a decision, the IPC has to decide the application in accordance with the National Policy Statement. It also has to consider other factors such as whether the application would breach EU directives or any other law or if the adverse impact would outweigh the benefits.
• The IPC will usually hold a hearing for interested parties and examine the evidence for and against the application.

The net result is likely to mean the Government will be able to push through any major development that they want to see: since the IPC will consist of individuals selected by the Government and they have to decide on applications primarily in accordance with Government policy as set out in a National Policy Statement, there will be little scope for objective criteria being applied and the existing cadre of qualified planning inspectors will be by-passed.

It is a sad irony that just when Governments should be reducing CO2 emissions, the British Government is paving the way for a procedure that is designed to allow major developments in roads, power stations and airports – no doubt beginning with a third runway at Heathrow.

It is not without relevance that the White Paper which is the basis for the new Bill was written by Rod Eddington, former CEO of British Airways, and contained a number of references to the long process that took place before Terminal 5 at Heathrow was given the go ahead. And the Government is currently ‘consulting’ on a third runway aimed at doubling the volume of air traffic at Heathrow.

To read the Bill you can go to http://services.parliament.uk/bills/2007-08/planning.html

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The hourly rates of law firms in the UK have increased by 89% nationally over the past four years, according to a speaker at the Sweet & Maxwell Forum for General Counsel held last week in London. The conference discussed ways of controlling the cost of external legal support.  One of the speakers, Richard Susskind, a leading proponent of online legal services and author of The Future of Law and The Future of Law Revisited, told the conference that lawyers should move towards alternative models such as ‘commoditising services and multi-sourcing from alternative providers, including online.’

ContractStore’s most expensive English language contracts cost less than the time spent over a cup of coffee with a partner in a City law firm. And our links with smaller, specialist and innovative providers of legal services enable us to advise our customers on how to get the right legal advice at an affordable  price. 

So, if General Counsel want some savings on their legal bills, they can come to ContractStore for advice.

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HM Customs & Revenue may have lost a few CD’s recently but they remain committed to modern technology: they have launched a podcast for people who are setting up their own business or becoming self-employed for the first time. Packed full of useful information, the podcast gives a step-by-step guide to the listener, helping them to get things right from the beginning.

The podcasts can be downloaded from HMRC’s podcast page on its website at http://www.hmrc.gov.uk/podcasts

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The Government confirmed yesterday, 7th November, that implementation of parts of the new Companies Act will be delayed for a year - until October 2009. It was feared that companies might incur “unnecessary risks or costs”, so they decided to delay implementation. Reaction from the business community has centred on the higher administrative costs consequent upon the delay.

Next October should be seeing the introduction of new, simplified constitutions for limited companies but this will now only take effect in 2009, 3 years after the Act was passed.

Also postponed is the new rule that the home address of directors of a company will no longer have to be on the public record. This was included in the 2006 Companies Act largely to protect directors of those companies who have had their homes targeted by animal rights activists. On a more mundane level, home addresses can be used by those who want to return unsolicited junk mail: it can be more effective than sending it back to the company’s head office!

The new law is the biggest single act ever passed by Parliament and has wide-ranging implications for companies, shareholders and investors. See our earlier posting for more information.

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