Property ManagerFile January 2011
In house news
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
Brethertons LLP confirms that from 1 December 2010, Hodsons solicitors in Rugby formally merged with Brethertons LLP. Hodsons will be incorporated with Brethertons LLP and the merged firm is 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.
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.”
Other news
HMRC Set Listed Building VAT Trap
A recent case involving the VAT treatment of listed buildings illustrates a potential trap for those who convert such buildings.
A listed building which has been ‘substantially reconstructed’ is a zero-rated supply, which means that the VAT incurred on the ‘approved alterations’ is recoverable.
However, for this treatment to apply, it is also necessary that at least 60 per cent of the work carried out is ‘approved alterations’. Accordingly, a building which has been gutted and rebuilt will qualify.
Herein, however, lies the problem: substantial reconstruction implies that the building has been reinstated to its former appearance and this is, in effect, a form of repair. This argues against the possibility of 60 per cent of the work involving ‘alterations’.
HM Revenue and Customs (HMRC) have put forward the argument that work cannot be both reconstruction and alteration.
The case in point only considered whether the property had been substantially reconstructed, but the indications are that HMRC wish to pursue their argument at a later date, so watch this space.
Says Brethertons, “This legislation has been around for a long time and this is the first case to pick up on the looseness of the wording of the sections relating to the VAT treatment of listed buildings. If HMRC are successful in their argument, it could have severe implications for developers of such properties.”
Self-Contained Does Not Mean Incapable of Subdivision
The Leasehold Reform Housing and Urban Development Act 1993 allows tenants of flats to group themselves together to acquire the freehold of the whole building in appropriate circumstances. This is known as ‘collective enfranchisement’.
For collective enfranchisement to apply, the application must be in respect of ‘a self-contained part of the building’. No fewer than half of the tenants of that part of the building must join in the application.
In a recent case, a landlord (who opposed an enfranchisement application) argued that this meant that if the building could be further subdivided into smaller self-contained units, the application had to take account of that.
The landlord had been served with an application to acquire the freehold by 10 of the owners of a group of 20 flats (numbers 41-60). The landlord argued that the structure of the building was such that the flats could be subdivided into groups of 10 flats (in this case, numbers 41-50 and 51-60), which were capable of separate development and management. Only three of the tenants of flats 41-50 had joined in the application, so if the ability to subdivide the premises was accepted as the appropriate measure of what was ‘self-contained’, the enfranchisement notice in respect to flats 41-50 was not validly given, because at least half of the tenants in that group had not applied.
The High Court rejected the landlord’s submission, ruling that the language in the Act clearly intended that the fact that premises were capable of being further divided into smaller qualifying parts was not a bar to the enfranchisement of a larger part.
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
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.
Poor Plan on Conveyance – Court of Appeal Rules
A poorly-drafted plan and a refusal to compromise have led to an argument over the boundary between two rural properties reaching the Court of Appeal.
The argument between the owners of adjacent land arose because there was a brook and a fence that were close to one another. One owner claimed the fence was the boundary whereas the other held that the brook divided the properties.
The map accompanying the conveyance was unclear – it merely showed a wavy line which represented the stream. The fence was not shown on the plan. However, because the fence was in situ when the land was conveyed, Lord Justice Mummery ruled that it marked the boundary between the properties. When giving his judgment, he was highly critical of the inability of the neighbours to compromise and of the resultant costs for the loser of the dispute.
Be that as it may, it has been reported that an appeal to the Supreme Court is under consideration.
Clarity of documentation in conveyances is essential if the risk of future litigation over boundaries is to be prevented, says Brethertons.
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.
Obligations Under TUPE
The Employment Appeal Tribunal (EAT) has reaffirmed (Todd v Strain and others) that when there is a ‘relevant transfer’ under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the obligation under Regulation 13.2 to inform affected employees and the obligation under Regulation 13.6 to consult ‘appropriate representatives’ are separate obligations and where there are no appropriate representatives for this consultation process, the transferor is obliged to arrange for their election by employees (Regulation 14).
Ms Todd was the owner of a care home in Glasgow. The business was sold to Care Concern (GB) Ltd., which gave rise to a relevant transfer under TUPE. 32 of the employees brought proceedings in the Employment Tribunal (ET) claiming that Ms Todd had failed to inform and consult them, had not complied with the duty to organise the election of employee representatives and that Care Concern was also jointly and severally liable for this failure by way of TUPE Regulation 15(9).
Some of the care home employees had been given limited information regarding the impending transfer but Ms Todd did not arrange for the election of appropriate representatives. She did not therefore give any information to or consult with any such representatives. Her contention was that she did not envisage taking any measures in connection with the transfer that would impact on any of the employees, so was not under any obligation to consult and the obligation to inform only arose if there was an obligation to consult.
On the facts of the case, the ET found that Ms Todd must have envisaged taking some measures that would affect the employees and was in breach of her duty to inform and consult with them. It ordered Ms Todd to pay each claimant the maximum award of 13 weeks’ pay in compensation and dismissed the claim against Care Concern.
Ms Todd appealed against the ET’s decision.
The EAT held that the obligation to inform and the obligation to consult are distinct obligations and upheld the ET’s finding of liability against Ms Todd. In its view, however, the seriousness of her failure could not be said to be at the extreme end of the scale so as to justify the maximum compensation award. She had given employees some basic information and, importantly, a reassurance that Care Concern would not be making changes in staffing or terms and conditions following the transfer. The EAT therefore substituted an award of seven weeks’ pay for each employee.
As regards joint liability, the EAT found the ET’s reasoning on this point ‘difficult to follow’. The wording of TUPE Regulation 15(9) is unequivocal and the EAT therefore found Care Concern jointly and severally liable for the compensation payable.
Says Brethertons, “Failure to comply with the TUPE provisions can be very expensive for businesses. When a business or business unit is being transferred, with its employees, it is essential to take advice at the beginning of the process in order to avoid the potential pitfalls.”
