April News Articles
Corporate Manslaughter Act comes into effect
The Corporate Manslaughter Act 2007 has now come into effect making it easier to convict companies of manslaughter if their gross negligence leads to someone being killed.
The new law, effective from 6th April, means companies face unlimited fines if it’s found that they caused death due to gross corporate health and safety failures. Firms can also be ordered to take remedial action to rectify the failures that led to the death.
The court may also order them to publicise the case giving details of what happened and how much they were fined. The damage to a firm’s reputation and brand from such bad publicity could be enormous.
The Government hopes the new law will force company executives to take their health and safety obligations seriously.
The Act removes what used to be a major stumbling block in prosecuting a company for manslaughter. To secure a conviction, it was necessary to prove that all the gross negligence that caused the death could be laid at the door of at least one senior manager or director. This made no allowance for corporate system failures. Indeed, the piecemeal management approach that may have led to the tragedy could be the very same characteristic that prevented prosecution because the responsibility could be shared between several people, none of whom could be singled out as the one guilty of gross negligence.
The Act focuses on failures by senior management but that doesn’t mean that firms could avoid criminal liability by delegating responsibility for safety issues to lower or middle management. In fact, such action could be counter productive as it may be used as evidence of gross negligence in itself.
Directors who are still tempted to cut corners should remember that although the new Act does not increase liability, they can still be held to account as individuals through health and safety laws and the common law of manslaughter.
Firms who haven’t already reviewed their safety policies and management systems for ensuring compliance should consider doing so as soon as possible.
Pubs face instant closure as part of clamp down on binge drinking
As part of its clampdown on binge drinking the Government is introducing tougher sanctions against licensees who breach their licensing conditions.
Penalties include the instant closure of pubs and clubs in areas where disorder has occurred.
The measures were announced in a ministerial statement by the Culture Secretary, Andy Burnham, as he revealed the initial findings of a study to evaluate the impact of the Licensing Act 2003.
Mr Burnham said the findings revealed a mixed picture and the new legislation had not led to the widespread problems that some had feared. The statement said: “Overall, crime and alcohol consumption are down. But alcohol-related violence has increased in the early hours of the morning and some communities have seen a rise in disorder.
“To specifically address the small but unacceptable proportion of violent crimes occurring in the early hours of the morning, we will undertake further comprehensive research into post-midnight drinking patterns and their impact on crime and order, and will not hesitate to take the necessary action through new legislation and enforcement measures to tackle this. But we will take immediate action now.
“First, we will utilise existing powers to identify problem premises. We will make it easier to review premises where local intelligence suggests there is a problem.
“Second, we will encourage the imposition of tougher sanctions on those found to be breaching their licensing conditions. This includes the stipulation that there be far more instant closures of pubs and clubs in an area where there has been a disorder and indefinite closure by the courts for any breach of licence conditions.
“Third, we will change the offence of “persistently selling alcohol to a person under 18” from ‘three strikes’ to ‘two strikes’ in three months. This means that any seller who twice sells to under age drinkers and is caught doing so will immediately lose their licence.
“Finally, the message must be clear to all: breach your licensing conditions and you face severe and costly restrictions on your business – with a new “yellow card and red card” alert system. A yellow card will put the problem premises on immediate probation together with tough and uncompromising sanctions. And when the circumstances are right, it will be a straight red card leading to withdrawal of the licence.”
The Government also intends to bring forward legislation to tackle anti-social behaviour associated with alcohol consumption. The proposed measures include making it easier for police to disperse anti-social drinkers and to increase the maximum fine for anyone not obeying an instruction to stop drinking in a designated public place from £500 to £2,500.
Mr Burnham said the measures announced so far are not the end of the story. Research is still being carried out and there will be further developments over the coming year.
We shall keep clients informed of developments.
Private rented sector showing increased returns
Rents for houses in the private rented sector rose by an average of 4% in the three months to the end of February, according to the Association of Residential Letting Agents (ARLA).
Rents for flats rose by 2% over the same period. The average returns for renting out houses rose from 4.8% to 5% and the return from flats rose from 4.9% to 5%. The figures have been compiled following a survey of more than 400 letting agents. They show that the sector is still buoyant. The number of agents reporting that they have more tenants than properties is at its third highest level since the surveys began six years ago.
ARLA sees the figures as representing the start of a new housing cycle linked to house prices which have been falling in most parts of the country recently. ARLA’s head of operations said: “Whenever property prices soften or fall, rental demand, rents and yields all increase. As we begin a year of uncertainty in the sales market, it is inevitable that our member letting agents should report that they have more tenants than properties available for them.”
The increased demand is partly being driven by migration with the number of properties taken by immigrants, most of whom are from the European Union, showing a 20% increase. ARLA believes the supply of rented property will now have to increase to meet the rising demand.
OFT offers £100,000 reward for exposing cartels
The Office of Fair Trading (OFT) is offering rewards of up to £100,000 for information that enables it to take action against cartels which are prohibited under the Competition Act.
Businesses found to be taking part in a cartel to collude on prices can be fined up to 10% of their turnover. The Enterprise Act also makes it illegal for individuals to take part in such anti-competitive activity with offenders facing penalties such as an unlimited fine and/or up to five years in prison.
The OFT says clamping down on cartels in now one of its priorities. Simon Williams, OFT Senior Director of Cartels and Criminal Enforcement, said: “Cartels are very damaging both to businesses and consumers and they are usually conducted in secret making them hard to detect.
“Cartels are not the preserve of big business - for example, if a local authority needs to find a contractor to refurbish its schools, it is unacceptable for local contractors to seek to rig the tender process by colluding on price. That's bad for taxpayers, consumers and other businesses.
“We believe that it is in the public interest to offer financial incentives in the hope that it will encourage more people who have good information about the existence of hard core cartel activity to come forward, and in exceptional circumstances these incentives may be as high as £100,000.”
The reward system will be tried out for 18 months before deciding whether it should become a permanent arrangement.
SMEs hit by late payments and interest rate rises
Getting customers to pay their bills is the number one problem facing small to medium size enterprises in Britain, according to new research.
The survey was carried out by the Asset Based Finance Association (ABFA). It showed that nearly half of all SMEs found it difficult to get paid by customers within their payment terms. As many as 44% of companies report that customers have asked for extended credit in the last six months.
The Chief Executive of ABFA, Kate Sharp, said: "Cashflow problems, caused by limited working capital and poor credit management, is a major contributing factor to corporate failure in this country."
"In order to reduce this type of pressure it's important to examine where the cash is being tied up. More often than not unpaid invoices are the main culprit. Britain's SMEs must keep abreast of their debtor schedule to ensure they have the capital needed to support the business."
ABFA’s research also showed that 48% of SMEs believed that interest rises in 2007 had a detrimental effect on their business. Firms turning over less than £100,000 were the worst affected. In spite of these difficulties, 40% of firms believed they were financially robust and 55% expected to increase their turnover this year.
The ABFA findings are supported by research done by BACs which showed that over the last year, the amount of outstanding payments owed to SMEs rose by £2.6bn to £18.6bn. At any given time, the average SME is owed £30,000.
In the current climate brought on by the credit crunch and falling confidence, the incidence of late payment is likely to increase. Firms should seek legal advice as soon as possible when faced with such problems. Early action by a solicitor will often result in prompt payment which can help a company’s cash flow and even ensure it survives in a difficult financial climate.
PM announces above inflation rise for minimum wage
The Prime Minister Gordon Brown has announced that the minimum wage will rise by more than the current rate of inflation.
He told the Commons that the new hourly rate will rise from £5.52 to £5.73. The rate for 18-21 year olds will increase from £4.60 to £4.77, while the rate for 16-17 year olds will rise from £3.40 to £3.53. All the increases will take effect from October.
The chairman of the Low Pay Commission, Paul Myners, said the increase means the minimum wage rate will have risen by 59% since it was introduced in April 1999. That is almost double the growth in prices over the same period.
The Government has also announced new measures to enforce the minimum wage and crack down on rogue employers. These include increasing the maximum penalty for not paying the minimum rate to an unlimited fine. The most serious cases on non-compliance will be tried in the Crown Court.
There will also be a fairer method for settling minimum wage arrears so that workers do not lose out as a result of underpayment.
Government adopts new policies to develop brownfield sites
The Government has accepted proposals designed to free up vast tracts of brownfield land for development.
The recommendations were put forward by English Partnerships, the national regeneration agency which helps the Government to support sustainable growth in England.
The agency put forward a National Brownfield Strategy for England designed use 52,000 hectares of previously developed, vacant or derelict land to support Government plans to build three million new homes by 2020. It’s hoped that at least 60% of those homes will be on brownfield sites. This is intended to bring a double benefit of protecting greenfield land at the same time as improving the general environment for local communities by clearing up derelict and blighted land.
Communities and Local Government Minister Iain Wright said: “Since 1997, the amount of new development on brownfield land has risen significantly from 60% to 75% - a real achievement. But we want to go further and regenerate the most challenging sites.
"Brownfield land development is not just about building much needed homes, it is also about decontaminating blighted areas, recycling derelict sites and creating open green spaces in urban centres.
The National Brownfield Strategy identifies nine policy strands that need to be implemented between now and 2013 to make the proposals succeed. These include identifying suitable sites to ensure there is an adequate supply of land when it is needed and putting proper safeguards in place to protect the environment.
McCartney divorce settlement in line with well-established principles
The divorce of Sir Paul McCartney and Heather Mills may have attracted a blaze of publicity and at times seemed quite extraordinary but in the end the proceedings were settled in accordance with well established legal principles.
Ms Mills sought a settlement of £125m but was awarded £24.3m - still a huge sum by any standards but far less than she wanted. She had based her claim on several factors including her assertion that she was entitled to compensation because the marriage had restricted her career. She also argued that she had made an exceptional contribution to the marriage and was entitled to a share in the growth in the couple’s wealth.
Sir Paul argued that because the marriage had only lasted four years and because he had accumulated most of his wealth before they met, the settlement should be decided purely on the principle of her needs and those of their daughter.
The judge, Mr Justice Bennett, said it would be unfair for Heather Mills to expect to live in the same manner after her divorce as she had during the marriage as Sir Paul had made most of his money before the couple’s relationship began. He also pointed out that her income had risen during the marriage rather than declined and so the question of compensation did not arise. The court also rejected her claim that her contribution to the marriage had been exceptional.
Sir Paul was ordered to pay a lump sum of £16.5m which together with other funds and property would give Ms Mills a total settlement of £24.3m.
The legal principles followed are well established but it does not mean that other spouses who stay at home while their partner creates the wealth will end up with only a small settlement. The court will take into account the length of the marriage and the contribution made by both parties.
In a notable case recently, Beverley Charman received £48m of the £130m fortune accumulated by her husband when the couple divorced. The key difference in that case was that both parties had entered the marriage with virtually nothing and she had supported him by staying at home and looking after the children leaving him free to concentrate on his career.
One other interesting point that emerges from the McCartney proceedings is the need for both parties to be open and reasonable. Mr Justice Bennett made it clear that he was not impressed by some of the claims made by Ms Mills. He said: "If, as she has done, a litigant flagrantly over-eggs the pudding and thus deprives the court of any sensible assistance, then he or she is likely to find that the court takes a robust view and drastically prunes the proposed budget."
Early trials suggest high level of satisfaction with HIPs
Consumers who took part in the early trials of Home Information Packs (HIPs) were happy with the system, according to a survey carried out by the research organisation Ipsos MORI.
HIPs have been required by law since last December by anyone selling a home of any size in England and Wales. They contain information about the property for sale such as the results of local searches and an energy performance certificate.
The research showed that “72% of sellers were satisfied with the HIP, 79% agreed that it contained everything expected, and 81% understood the documents, including their energy rating, from A-G, in the Energy Performance Certificate (EPC)”.
Nearly one third of buyers said they intended to carry out the recommendations in the EPC to improve the energy efficiency of their home. Just under 60% of buyers said they would have liked to have seen the HIP earlier in the process. Many didn’t get the chance to see it until after they had made an offer on the property.
In response to the findings the Government has organised a public information campaign to raise awareness of HIPs and remind estate agents of their responsibility to make sure the packs are readily available to ensure buyers get the full benefit.
The findings are based on trials that took place between November 2006 and April last year and so many of the problems and delays in providing HIPs have now been ironed out. Housing Minister Caroline Flint said: "Consumers are already benefiting from the introduction of HIPs. Search costs are falling as a result of increased transparency in the market, energy ratings can help people to reduce fuel bills, and first time buyers are receiving important information about their home for free.”
Please contact us if you would like more information about HIPs or any aspect of buying and selling a home.
Court balances conflicting claims as will is ruled invalid
A court has had to rule on the validity of a man’s will following conflicting claims from his daughter and his cohabiting partner.
The man made the will while terminally ill in hospital with liver disease. It was drawn up by his brother who was named as executor along with the man’s partner with whom he had lived for two years.
The man died five days after making the will which left all his estate to his partner. His daughter then claimed that he had lacked testamentary capacity when he made the will and so the court should rule it invalid. She was able to produce evidence from a hospital consultant that her father did not have the capacity to understand and authorise legal documents in the days before his death.
For her part, the cohabiting partner argued that she qualified as a claimant under the Inheritance (Provision for Family Dependents) Act 1975 and should be allowed to inherit the estate.
The court ruled that the father did lack the necessary capacity to understand and authorise the will and it should therefore be declared invalid. However, his partner had lived with him for more than two years before his death and so she was entitled to make a claim on the estate. This entitlement had to be balanced against the fact that the man loved his daughter and wanted to provide for her.
After considering all the circumstances, the court awarded the partner a lifetime interest in the house and awarded the rest of the assets to the daughter.
The judge clearly tried to be fair to both parties but much of the trouble may have been avoided if the man had taken legal advice long before he became ill and had drawn up a will while he was still fit and able. The thought of making a will may make some people feel uncomfortable but if it is drawn up properly with the help of a solicitor it can prevent a great deal of heartache for your family in future.
Widow of businessman killed in road accident awarded £1.7m
The widow of a successful businessman who died after being knocked down by an ambulance in a road accident has been award £1.7m in compensation.
The man had established a successful family business in which his wife and two of his children were partners. The court hearing where damages were assessed was told that the company had grown largely as a result of his efforts. The judge accepted this and described him as a wealth creator.
The court therefore awarded the £1.7m as way of covering the cost of replacing his services.
The Welsh Ambulance Services Trust, which employed the driver involved in the accident, appealed against the award. It argued that neither the wife nor the man’s family were dependent on his efforts and in fact were as well off after his death as they were before because the business continued to provide them with the same level of income.
The Court of Appeal upheld the award, however, because the wife had played no significant role in the wealth creation and so had been dependent on her husband. The fact that she and her children were as well off now as they were before was ruled to be irrelevant to the case.