CorporateFILE December 2010
New Head of Employment strengthens team
Regional Law Firm, Brethertons LLP, has further established its commitment to providing the very best legal advice, with the recruitment of respected employment specialist, David Hodge, who joined the firm in October as its new Head of Employment.
David, who is 34, joins Brethertons after forging a successful practice in the South West of England, most recently as a senior member of a highly regarded (Legal 500 rated) employment team at an Exeter based law firm.
David is an experienced litigator with an enviable record of success in employment tribunal matters, acting for both executive and business clients. With his solid understanding of commerce, David also provides pragmatic employment advice to FTSE 250 and AIM listed clients and provides expert support to SME management teams and HR professionals in diverse industry sectors from Utilities, Logistics and Construction to Education. Since 2008, David has been instructed by well-known entrepreneurs to provide valuable employment support to their businesses and investments.
David plays an active role as a member of the Employment Law Association.
David says: “This is a fabulous move for me and my family and I relish the opportunity to support business in the Midlands. Brethertons commercial team has made several key appointments in the last eighteen months and it is fantastic to be part of such a progressive and innovative team.”
Brian Auld, Partner and head of Commercial explains: “This is an important appointment for us and will enable us to provide a greater service to our commercial clients in an ever demanding marketplace. I am delighted to welcome David on board his expertise will prove a substantial asset to our practice.”
Outstanding Legal Professional Wins Prestigious Law Society Award
The exceptional achievements of local Solicitors Brethertons LLP have been recognised by the Law Society in its annual Excellence Awards.
Almost 600 leading lawyers and their guests joined the President of the Law Society and BBC Broadcaster Mishal Husain at the black tie dinner and presentation ceremony at Old Billingsgate in London.
Last week, Sioban Calcott, Litigation specialist from Brethertons was presented with their award by Law Society President Linda Lee. The President said she was “extremely impressed” by the high standard of entries.
Sioban Calcott won in the category of Legal Executive ‘Legal Executive of the Year’ and Brethertons was also noted as highly commended in ‘Excellence in Practice Management’ recognising their award for the Law Society’s Lexcel Quality Certification and were finalists in the category for Excellence in Learning and Development.
Sioban explains: “It’s a real honour and mark of success to be awarded such a prestigious award which saw us judged alongside some of the best firms operating in the legal profession.”
Law Society President Linda Lee said: “Winning a Law Society Excellence Award is a huge achievement and brings great recognition for individuals and firms. The winners of this year’s awards should be very proud of this superb accolade. The awards reflect the Law Society's commitment to celebrating excellence in the legal profession. Winning an award is more than recognition from their professional colleagues; it is also a symbol of quality for members of the public.”
Richard Pell, Senior Partner explains: “These awards recognise all the work, effort and specialist legal expertise Sioban Calcott together with her team has delivered to their clients, they are very much deserved.”
Two Rugby Law Firms Merge This Week
Brethertons LLP confirms that from 1 December 2010, Hodsons solicitors in Rugby will formally merge with Brethertons LLP. Hodsons will be incorporated with Brethertons LLP and the merged firm will be called ‘Brethertons LLP incorporating Hodsons’.
The merger brings together two well-established Rugby law firms with reputations for quality advice and service. The two firms have been practising law in Rugby for a combined period of over 275 years.
The merger between Brethertons LLP and Hodsons recognises increased opportunities both for clients and staff as the combined reputation of both firms is significant in Rugby.
Brethertons LLP has just celebrated its 200th Anniversary year in 2010 and is a firm with an award-winning and recognised reputation in many fields of private client and commercial law. Brethertons
was recently recognised for the Law Society’s “Lexcel” quality mark for practice management excellence and received a Lifetime Achievement Award at the Rugby Business Awards 2010 for its contribution to the local community.
Hodsons has a reputation for legal excellence and client service that goes back generations and is well known in the town for its specialist advice in Wills, Conveyancing and Family law.
The merger brings together two established and well-regarded Rugby-based law firms and the combined firm will offer an enhanced legal service to individuals and businesses in the region.
Richard Pell, Senior Partner at Brethertons LLP explains: “For Brethertons, we are delighted to welcome our Hodsons colleagues to the merged firm and look forward to working together. It is true to say that our two separate firms have been servicing the legal needs of Rugby clients for some time albeit as two separate firms. Now the bringing together of our two operations provides a greater presence in Rugby as one single law firm, and introduces to our clients a greater and deeper range of legal services in both private client law and commercial law.”
Jeffery Glenn, Managing Partner at Hodsons said: “For clients, the bringing together of Hodsons' and Brethertons' expertise is an opportunity to benefit from a greater pool of knowledge and experience that will be available to clients. We are very pleased to be merging with Brethertons at this time in our two firms’ histories.”
All employees at Hodsons are being given the opportunity to transfer to the merged firm as employees. The Hodsons premises in Rugby, Glebe House, will remain open well into 2011.
Competition Law – OFT Gets Tough with Directors
The Office of Fair Trading (OFT) has published revised guidance on Competition Disqualification Orders (CDOs), which are orders under which company directors are disqualified from acting as directors where the company of which they are a director is in breach of UK or European competition law.
A CDO can disqualify a director for up to 15 years if the court deems them to be unfit to act as a director. CDOs can be applied to anyone acting in a directorial capacity, no matter what their notional status in the company.
The major changes in the new guidance are:
• Directors who should have known of competition law breaches, as well as those directly involved with breaches, will be potentially liable to receive a CDO;
• Directors who fail to cooperate with an OFT investigation will not be offered immunity from a CDO. Those who do cooperate will be offered immunity where the company qualifies to be treated leniently; and
• The OFT will be able, in exceptional cases, to apply for a CDO before judgment has been made with regard to a breach of competition law by the company, if it can satisfy the court that an offence has been committed.
The changes in procedure should ring warning bells for company directors who are aware of breaches of competition law, or suspect breaches may be being committed by their company.
Competition Law Invalidates Confidentiality Clause
Businesses often seek to protect themselves by inserting confidentiality clauses and anti-competition clauses in their contracts of employment and commercial agreements, so that if an employee leaves or the contractual relations end, the potential commercial damage to the business is minimised.
However, the drafting of such clauses is fraught with potential pitfalls because the courts will not enforce a clause which is too widely drawn.
In a recent case, the former director of a company (now in liquidation) which had entered into an agreement with an office machine company went to the High Court to argue that his erstwhile employer’s confidentiality agreement had been breached by the other company. The office machine company claimed that the agreement as it had been written was in breach of competition law and was thus invalid. The purpose of the court hearing was to determine whether the case was arguable.
Although the Court found that the former director’s claim was arguable, it ruled that part of the agreement did breach competition law, because it went beyond what was reasonable to protect his former employer’s confidential information and was without limit as to its area or time of application.
An agreement which breaches competition law will not be upheld by the court and in some circumstances (where there are anti-competitive effects which distort market conditions) could lead to action being taken by the Office of Fair Trading. For advice on drafting all commercial agreements, contact us.
OFCOM Proposals to Get Tough Over Copyright Violations
OFCOM has consulted on a draft initial obligations code of practice designed to prevent online copyright infringement. The code, entitled ‘Online Infringement of Copyright and the Digital Economy Act 2010’ will:
• enable those whose copyright has been violated to require Internet Service Providers (ISPs) to notify their subscribers if the Internet Protocol addresses associated with them are reported by copyright owners as being used to infringe copyright;
• require ISPs to keep track of the number of reports about each subscriber; and
• require ISPs to compile, on an anonymous basis, a list of those who are reported on above a threshold to be set in the initial obligations code.
The copyright owner will be able to apply for a court order to obtain personal details so that they can take action against those included on the list. It is proposed that the person whose copyright is infringed will have to pay 75 per cent of the cost of notifying the online infringer and the ISP will have to pay 25 per cent.
The draft code of practice can be found at
http://www.ofcom.org.uk/consult/condocs/copyright-infringement/condoc.pdf.
The Digital Economy Act increases the maximum penalty for online copyright infringement to £50,000.
Rights and Responsibilities – Contractual Differences
The difference between rights and responsibilities under a contract is sometimes important. When a contract is transferred from one person to another, the type of transfer determines what aspects of the contract pass.
If a contract is assigned, the rights under the contract are passed on. So, for example, an author could enter into a contract to assign future royalties to someone else.
When a contract’s responsibilities are also passed on, the practical effect is that the new owner of the contract acquires all the rights and responsibilities of the former owner. This is a critical difference where there is something which must be done in order to benefit from the rights under the contract.
A recent case involving a property transaction illustrates the difference. It involved a man who had contracted to sell a property to German supermarket chain Lidl. The man had previously entered into a contract to buy the property and that contract was passed to Lidl. He was entitled to retain £100,000 of the purchase consideration until certain construction works were completed. When the works were completed, he was entitled to retain half of the further costs from the sum retained and required to pass the balance on to the original owner.
There was a similar term in his contract of sale with Lidl. However, in the case of the contract with Lidl, the company was entitled to retain the whole of the cost of the further works from the payment.
Lidl retained £100,000 from the payment to the man. When the further works were completed, he claimed that these had cost more than £200,000. He refused to pay any of the retention monies to the original owner.
The court had to decide whether the benefit which passed to Lidl under the assigned contract required it to perform the man’s obligations under the original contract. It ruled that it did not. The obligations remained for him to perform and were not passed on to Lidl.
Valuer Not Liable for Valuation Inaccuracy
Valuation, as any valuer will tell you, is an imprecise art. Claims against valuers for negligent valuations are therefore notoriously difficult to sustain. Recently, the court heard a claim brought by investors in hotels that a valuer had neglected to take into account a ‘turnover rent’.
The turnover rent was calculated in such a way that the rent payable by each hotel increased if the turnover exceeded a certain figure, but it was in effect based on a ‘rolling average’ so that if the turnover was less than the target figure, the shortfall ‘rolled forward’ against the subsequent payments. The result was that the rent would not rise above the base level until the whole of the shortfall was made good.
When the valuer prepared his valuation, he did not take the shortfall provision into account in working out when the increase in rents was likely to occur.
Investors, who had invested in the hotels after an offering by an intermediary, claimed this was negligent, that the valuations were overstated as a result and that the valuer was in breach of a duty of care to them.
The court agreed that the valuer did owe a duty of care to the investors. However, there was no evidence that the intermediary had relied on the valuation. The intermediary had been informed about the shortfall clause and had created prospectuses which omitted parts of the valuer’s valuation.
In any event, the valuation produced was within a ‘reasonable bracket’ of the acceptable range of valuations. Although the valuer’s methodology could be criticised, the valuation was sufficiently accurate not to justify a claim.
Website Accessibility and the Equality Act
The Government Equalities Office has signalled its intention to proceed with the introduction of the Equality Act 2010 according to the previously announced timetable, which means that its core provisions will come into force on 1 October 2010.
Under existing discrimination law, service providers have a duty to make their websites accessible to disabled users. Failure to do so exposes them to the risk of legal action under the Disability Discrimination Act 1995 (DDA). Where the features of a website make it impossible or unreasonably difficult for a disabled user to access a service, the service provider has a duty under the DDA to make ‘reasonable’ adjustments by way of auxiliary aids and services. What is reasonable depends on the nature of the service provided, the impact of the discrimination on a disabled person and the type of organisation and its available resources. To date, enforcement of this legal duty has not been widespread. Whilst the Royal National Institute for the Blind (RNIB) has campaigned to improve website accessibility and initiated legal action against organisations that failed to comply with the DDA, these cases were settled out of court.
The Equality Act combines the existing discrimination laws in one piece of legislation. Whether or not this will bring greater clarity to the law, and result in better enforcement of the website accessibility provisions, remains to be seen. The Act states specifically that where information is provided, the steps that it is reasonable for the service provider to take in order to avoid a disabled user being put at a substantial disadvantage include measures to ensure that the information provided is ‘in an accessible format’.
As with the DDA, where there is a failure to make a website available to disabled users, the Equality Act envisages that this will be taken up with the service provider with a view to adjustments being made that are reasonable in the particular circumstances. However, the service provider would not be required to take a step that would fundamentally alter the nature of the service or the provider’s trade or profession.
So far, so good. At schedule 25, however, the Equality Act seeks to protect from liability those hosting websites that are not user-friendly for those with a disability. In so doing, it replicates the language contained in the E-Commerce Directive, which is aimed at protecting Internet Service Providers (ISPs) from liability for libellous content or copyright infringement on an account holder’s website. An ISP will not be in breach of the Equality Act if it ‘expeditiously’ removes the information or disables access to it as soon as it has actual knowledge that it contravenes the Act. This would appear to give a complainant the power to have the plug pulled on an offending website by notifying the ISP that the information contained on the website is inaccessible to disabled users. How this will work in practice, only time will tell.
Whilst enforcement of the laws on website accessibility has so far been patchy at best, clients are advised to check their website for compliance.
‘Without Prejudice’ Rule Trumps Public Disclosure
The Employment Appeal Tribunal (EAT) has upheld the principle that ‘without prejudice’ communications are not permitted as evidence in court except in very clearly defined circumstances.
Without prejudice communications are those which take place between the opposing sides in a legal dispute that are entered into with a view to reaching a settlement. Making such disclosures ‘without prejudice’ means that the negotiations can be undertaken without the fear that disclosures made for the purpose of settling the dispute will be produced in evidence later.
In principle, the court will only allow the use of without prejudice material as evidence either when a failure to do so would act as a ‘cloak for perjury’ or to prevent a clear impropriety on the part of one or both parties.
In a recent case, a woman who was claiming sex discrimination and victimisation against her ex-employer sought to produce in evidence communications made to her on a without prejudice basis during negotiations prior to settlement of an earlier claim. It was her contention that evidence regarding a refusal on the part of her employer to give her a reference showed that it had ‘reprisal in mind’ from that time onwards and had subsequently discriminated against her either by refusing to provide a reference or by giving her a poor reference when approached. Her ex-employer wished to prevent the evidence from being used.
The Employment Tribunal and (on appeal) the EAT both declined to allow the material to be used as evidence despite the fact that it had already been made public as a result of ‘whistleblowing’ by the woman.
We can assist in facilitating all negotiations and ensure your interests are protected where necessary.
1,000 Breaches of Data Protection
The Information Commissioner’s Office (ICO) has urged organisations to be extra vigilant in the way they handle personal data, after the number of reported data protection breaches reached 1,000.
Anyone who processes personal information must comply with the eight data protection principles laid down in the Data Protection Act 1998 (DPA) in order to make sure that it does not end up in the wrong hands. This means having in place procedures to avoid wrongful disclosure and ensuring that staff are adequately trained in applying them.
Many data security breaches are the result of human error. The ICO has the following tips on how to ensure personal information is protected:
1. Make sure that you know to whom you are disclosing personal information. Have you checked that they are genuine and that they are entitled to the requested information?
2. Beware of the dangers of email. Be particularly careful when selecting recipients of personal information from drop-down lists to ensure you get the right ones. Do not click on ‘reply to all’ when handling personal information. For more sensitive information, simple email disclosure may not be sufficiently secure;
3. Check that automated systems (e.g. for stuffing envelopes) are working properly and do some dip sampling to verify this;
4. Beware of window envelopes. Make sure that only the name and address can be seen through the window;
5. Check the positioning of computer screens, particularly in open areas or by windows where there is a danger they might be seen by members of the public; and
6. Train your staff in the risks of wrongful disclosure and make sure they adhere to strict procedures when passing on personal information.
The ICO has also published a Code of Practice explaining the approach the DPA applies to the collection and use of personal information online. This gives practical advice for organisations that do business over the Internet and are therefore subject to the DPA. The Code is available at http://www.ico.gov.uk/ebook/ebook.htm.
Guidance on how to comply with the DPA can be found in the ICO’s Guide to Data Protection at
http://www.ico.gov.uk/for_organisations/data_protection_guide.aspx.
