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Website Articles for July
Stories included
- Recession hit developers to be given more time and greater flexibility Lords committee rejects plan to harmonise contract law in Europe
- Changes to insolvency law could provide lifeline for struggling companies
- Employers need to adjust to Lords’ ruling on holiday entitlement
- Former franchisee broke restrictive covenant
- More guidance on Home Information Packs
- Many Britons are relying on inheritance to fund their retirement
- Wife inherits husband’s estate despite family’s challenge to his will
- Judge ‘was wrong’ to separate eight-year-old boy from his mother
- Male workers win same equal pay deal as female colleagues
Recession hit developers to be given more time and greater flexibility
Land and property developers are to be allowed to extend the life of planning consent so they have more time before they have to start building.
They will also be given greater flexibility to alter plans without having to get bogged down in bureaucracy.
The measures were announced by the Housing Minister John Healey and are designed to support the industry during the recession. The Government is concerned that there has been a serious decline in the number of permissions being taken up.
It intends to change the current system whereby permissions which are not taken up automatically expire – usually after three years. Ministers fear that this could delay economic recovery when conditions improve because developers would have to go through the time-consuming process of applying for planning permission all over again.
As a temporary measure, the Government intends to introduce an easier way of extending the life of planning permission.
Mr Healey said the Government also wanted to simplify the whole process. This would include giving local authorities the right to alter large developments by using Local Development Orders (LDO).
These LDOs should make it easier for developers and councils to find new uses for empty town centre shops and premises, and to expand businesses and industrial estates.
However, developers will also have to build to greener standards so homes are more fuel efficient. As part of the move towards zero carbon, there will have to be a 25% improvement on current standards for new homes and buildings from 2010.
Mr Healey announced the changes in a speech to the Royal Town and Planning Institute.
He said: “I'm announcing the power for local authorities to extend the time limits for existing planning permissions. This will help to make sure that more homes, offices and factories get built at a time when investing in new developments is difficult and when access to funding is hard.
“The changes also make it easier to apply for planning permission in the first place and give developers scope to make minor alterations without going back to the start of the application process, therefore saving time and money.”
The Government has published a consultation document, Greater Flexibility for Planning Permissions, and intends to start implementing the proposals in the autumn.
Lords committee rejects plan to harmonise contract law in Europe
A proposal to harmonise contract law across the European Union has been rejected by a House of Lords sub-committee.
The Draft Common Frame of Reference was put forward by the European Commission as a way of making it easier to resolve disputes between companies from different member states.
The proposals were examined in detail by the House of Lords Sub-Committee on Law and Institutions. The chairman, Lord Mance, said the EU draft was “a hugely impressive academic work” which would be valuable to law makers across Europe. However, he said the sub-committee felt if should be rejected because it “takes an approach and makes choices which raise concerns and have been subject to some criticisms - particularly as to whether they would be beneficial or usable in a practical sense”.
The Lords also rejected an alternative proposal that there should be a body of European law that countries could choose to adopt if they so wished.
Contracts between companies in different countries often present difficulties and great care should be taken in the way terms and conditions are drawn up. Many firms will want to specify that disputes are dealt with in their own country under their own legal framework.
UK companies should ensure they know and fully understand how potential disputes will be handled. Otherwise, they could find themselves having to resolve a problem in a foreign language and under a legal system which is very different to that in Britain.
Please contact us if you would like more information.
Changes to insolvency law could provide lifeline for struggling companies
Large and medium-sized companies could soon benefit from changes to insolvency laws which will help them avoid going into administration.
The Insolvency Service is now consulting on two major proposals. The first measure would give businesses more breathing space to enable them to seek legally binding Company Voluntary Agreements (CVA) with their creditors without first having to go into administration.
At the moment, only small companies are able to obtain a moratorium on creditor action while seeking an agreement with their creditors. This would be extended to large and medium sized businesses.
The second measure would give absolute priority to creditors who lend money to companies in administration or a CVA. Such creditors would be at the top of the list for recovering their money if the company eventually failed.
It’s hoped this extra safeguard will make it more attractive to lend to companies in difficulties and thereby give those companies access to the funding they need to survive and stay in business.
A Government spokesman said: “Giving more businesses extra breathing space will encourage company rescues. It could make all the difference between a firm staying in business or entering insolvency - preventing the knock-on effects that failures have on employees, directors and creditors."
If the proposals do go ahead then they will help to keep struggling companies afloat and may help their creditors recover their money eventually. However, creditors can also protect themselves by monitoring their customers’ payments records closely and taking prompt legal action to recover debts before the situation gets out of hand.
Firms should also consider all their options carefully before entering into any agreements and take legal advice to ensure they are doing everything possible to protect their interests.
Employers need to adjust to Lords’ ruling on holiday entitlement
Businesses may want to reconsider some of their employment policies following a ruling by the House of Lords that staff are entitled to accrue holiday entitlement while off work sick.
An employee who resigns or is made redundant while off sick will be entitled to payment in lieu of holidays. This must be in addition to any redundancy payment. Employees will be able to take the case to an employment tribunal if the holiday entitlement is withheld.
The ruling follows a long running case involving staff at Her Majesty’s Revenue and Customs. The Court of Appeal ruled that the staff were not entitled to accrue holiday entitlement while off sick but in January, the European Court of Justice said that decision was wrong.
Now the House of Lords has also ruled in favour of the employees.
However, it only applies to statutory minimum holiday pay. Firms may be able to be more restrictive with contractual holiday entitlement which exceeds the statutory minimum.
Some firms may decide to try to find ways to make it easier for staff to return to work; others may feel obliged to move quicker than in the past to dismiss staff on long term sick leave. Whatever approach firms take they need tread carefully to avoid the possibility of a costly tribunal claim.
Please contact us if you would like more information.
Former franchisee broke restrictive covenant
A car repair company has won its case in the Court of Appeal to stop a former franchisee operating a rival business in breach of a restrictive covenant.
The company offered franchises allowing businesses to use its name, products and expertise in specified areas. The agreements contained a restrictive covenant which prevented anyone who terminated the franchise from setting up a rival business in the same area for a period of 12 months.
The franchisee in this case decided not to renew his franchise but then continued operating a car repair business on the same premises, although he didn’t use the franchise company’s name or any of its products.
The company took legal action but the judge held that the restrictive covenant only prevented the former franchisee from competing once a new franchisee took over the area. If there was no immediate successor then he was entitled to continue working.
However, the Court of Appeal has now overturned that ruling. It held that the purpose of the covenant was to protect goodwill and it made no sense to deny that protection at the time it was needed most. The former franchisee would have built up his own goodwill while trading under the company’s banner and so would pose a threat to the company if he was allowed to continue trading.
The restrictive covenant was needed to allow the franchise company time to find a new franchisee to cover the area.
More guidance on Home Information Packs
Home Information Packs (HIPs) have proved controversial since they were first introduced nearly two years ago.
Some have questioned their value and others have been confused as to whether or not they are needed for different kinds of homes – possibly because they were introduced in stages depending on the size of the property being sold.
Now the Department for Communities and Local Government has published an amended set of regulations and procedural guidance on HIPs. The document is aimed mainly at property professionals but contains information that will be useful to anyone wishing to buy or sell a home.
The regulations confirm that a seller must have a HIP available as soon as a property is put on the market. The HIP must have an index and include various documents such as an Energy Performance Certificate - which grades the property’s energy efficiency - the terms of sale, proof of title and boundaries from the Land Registry, and the results of local searches.
With the property market showing some tentative signs of improving following the problems of the last few years, many people may now be thinking of putting their home up for sale. If so, they should ensure that they have a HIP in place before the property is put on the market.
Please contact us if you would like more information about HIPs or any aspect of buying and selling a property.
Many Britons are relying on inheritance to fund their retirement
One in three people in Britain admit they are relying on an inheritance to help fund their retirement.
This is in spite of the fact that many of them have not discussed the issue with their parents, have no idea how much they might be left or even if their parents have made a will.
The research by Friends Provident found that only 14% of adults have discussed inheritance with their families and know how much they are likely to receive. A further 15% have not yet even considered how they will provide funds for their retirement.
A total of 44% said they were not concerned about the current recession reducing the value of their retirement savings and investments.
The study shows that many people could face hardship in their old age if they don’t start planning their investments as soon as possible because they may not receive the inheritance they expect. Even if they do, the value of that inheritance may be greatly reduced as a result of the economic climate.
They may even find that their parents have failed to make a will. That means the estate will be divided in ways laid down by law which may not be to the liking of the children and other members of the family.
If people are fortunate enough to inherit a large estate, they may find themselves paying back large amounts of it in inheritance tax.
Many of these problems can be avoided if people discuss the issues with their parents and families, and then plan ahead accordingly.
Please contact us if you would like more information about investments, inheritance tax, trusts, wills and probate and similar issues that may affect your future.
Wife inherits husband’s estate despite family’s challenge to his will
The wife of an alcoholic has inherited his estate after a court rejected claims that his mental condition meant he lacked the necessary capacity to make a valid will.
The man ran a family business with his two brothers. As a result of his alcoholism he often needed hospital treatment. On one occasion he spent two months in hospital during which time his mental state was considered to be clouded but he was not diagnosed as suffering from a mental illness.
During this time he made an enduring power of attorney in his wife’s favour but then revoked it soon afterwards because he felt he could conduct his own affairs.
When he was discharged he instructed his solicitor that he wanted to change his will to leave all his assets to his wife. The solicitor cautioned him that this may cause an upset because he had previously left his share in the family business to his two brothers. However, he confirmed that he wanted to press ahead and the will was executed.
A week later he became disorientated and recorded a low score on a mental test carried out by his doctors. However, further tests were carried out two weeks later and his score was much better. Shortly afterwards he started drinking again and died a year later from liver failure.
His two brothers then challenged the will because they claimed he lacked testamentary capacity – that is, the mental capacity and awareness to make a valid will - due to his illness and alcoholism. They submitted that the earlier will, leaving shares in the company to them, should stand instead.
The court, however, ruled that the will was valid because the man had not lacked testamentary capacity when he made it. There had been no diagnosis of dementia while he was in hospital, no one had questioned his capacity to make and revoke an enduring power of attorney and his solicitor had been satisfied that he had the capacity to make a will.
The man had also been able to give objective and rational reasons for leaving his company shares to his wife rather than his brothers. It was clear that he understood and approved the provisions of the new will and so therefore it should be allowed to stand.
Please contact us if you would like more information about wills and probate.
Judge ‘was wrong’ to separate eight-year-old boy from his mother
The Court of Appeal has ruled that a judge was wrong to decide that an eight-year-old boy would be better off living with his paternal grandparents than with his natural mother.
The court heard that the boy had continued living with his mother following her divorce from the father. She had subsequently remarried and had another son.
The father of the eight-year-old then began proceedings seeking contact and residence orders. A guardian was appointed for the boy and a child psychologist was asked to compile a report.
One of the main features in the case was that the father and mother were very hostile to each other. The psychologist believed that if the boy was allowed to become embroiled in this parental conflict, there was a strong risk that it would increase his own negative and aggressive behaviour. His parents would cause him harm if they did not reach a constructive agreement.
The guardian then recommended that the boy should live with his paternal grandparents. The judge at the original hearing accepted this recommendation and made a residence order to that effect.
However, that order has now been set aside by the Court of Appeal.
It held that the judge at the original hearing had failed to take into account the basic principle that children have a right to be brought up by their parents unless there were over-riding reasons why that would be detrimental to them.
The judge was right to take the view that the boy needed to be taken out of the arena of conflict involving his parents, but he had given this factor undue weight when making his decision. He had also lost sight of the fact that removing the boy from his mother’s care would also deprive him of family life with his half-brother.
Male workers win same equal pay deal as female colleagues
A group of men in low paid jobs have won an equal pay claim in a landmark ruling.
The case involved 300 men working in various capacities such as care workers, caretakers and leisure attendants for local authorities in the North East. They made a claim saying they were entitled to the same bonuses paid to male staff in better paid jobs such as gardeners.
They made their claim at the same time as some female workers who also believed that the bonuses were discriminatory. The women succeeded but the men’s claim was rejected by an employment tribunal.
However, that decision has now been reversed by the Employment Appeal Tribunal.
The president of the tribunal, Mr Justice Underhill, said: “It would be surprising and unsatisfactory if the Equal Pay Act offered no remedy to men in a situation like the present.
“The case where men and women do the same job but receive different rates of pay is the paradigm of the kind of situation which the Act was intended to prevent: how would it seem if – unusually, but not impossibly – the roles were reversed and the ‘piggyback’ claimants were not men but women?”
It’s estimated that another 12,000 men could now bring successful claims because of the ruling.
Please contact us if you would like more information about employment law.
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