February 2010 News Articles
Fears over red tape ‘prevent businesses expanding’
Many firms are choosing not to expand because of concerns over complex regulations, according to research by the Federation of Small Businesses (FSB).
A survey of its members showed that 27% of those who wanted to expand did not go ahead because they are afraid of tackling the regulations involved. The same survey revealed that half of the businesses planning to downsize or close said their decision was strongly influenced by regulatory burdens.
The FSB has called on the Government to put a freeze on all new regulations – a move it estimates would help to create 258,000 jobs and prevent a further 55,000 from being lost.
The Government has given no indication that it is prepared to introduce a freeze although it says it has saved businesses £3bn a year through its programme to simplify regulations and remove unnecessary paperwork.
In spite of this, small businesses are spending a total of £12bn a year on complying with various regulations, according to research by the Forum of Private Business (FPB).
A recent FPB survey of its members shows that employers in small to medium sized firms are spending an average of 37 hours a month on compliance.
Employment law provides the greatest challenge and costs small businesses £2.4bn a year dealing with issues such as dismissals and redundancy, discipline, absence controls and management, parental leave and holidays.
Health and safety administration costs £1.2bn and small firms also find themselves bogged down in tax administration, building and property regulations, and equality and diversity.
The costs seem enormous when quoted in this way and it’s not surprising that many firms will try to save money by dealing with these issues in-house. However, it is usually more cost-effective and safer to get good legal advice to ensure that compliance matters are dealt with quickly and correctly.
This can save money in the long term and reduce the risk of creating problems unnecessarily – particularly in the area of employment law where failure to follow the correct procedures can lead to costly tribunal claims.
Please contact us if you would like more information about compliance with the various regulations affecting business.
Who pays when actual costs exceed the estimates in the contract?
The wording of a contract has prevented a property developer from getting a full rebate on a project where some of the costs exceeded the estimates.
The company had bought a site which needed remediation work before it could be used. The purchase price was based on the notional value of the site once that work had been carried out.
The contract called for the estimated costs of this work to be agreed between the developer and the site owners within six months. These costs would then be deducted from the notional value of the site to arrive at an actual purchase price.
A second clause in the contract stated that the owners would bear any costs that the developers incurred in getting approvals relating to water supplies and the construction of a link road. It was estimated that this would take about five months.
In the event, it took longer and so the cost of obtaining the approvals was higher than estimated. The developer tried to get a rebate arguing that the clause in the contract relating to approvals allowed for actual costs rather than estimated costs to apply.
However, the judge held that the clause dealt with estimated costs in the same way as the rest of the contract.
That decision has been upheld by the Court of Appeal. It held that the cost of the approvals only differed from other costs in that they depended on third parties. It was always possible, therefore, that issues might arise that had not been anticipated. However, there was nothing in the contract to suggest that the cost of obtaining approvals should be treated any differently to other costs.
If the developer had wanted them to be treated differently it should have said so using “express language” in the contract.
Please contact us if you would like more information about matters relating to contracts.
Landlord loses appeal over repossession of premises
A landlord has lost his appeal to repossess premises that he wanted to use to set up a business.
The court ruled that he had not shown sufficient intention to occupy the building for the purposes of the Landlord and Tenant Act 1954 (the Act).
The premises were occupied by a tenant who had been running a small news agency since 1991. When the tenant applied to renew the lease, the landlord objected on the grounds that he wanted to set up a news agency himself on the premises.
The landlord accepted that to satisfy the requirements of the Act, he would have to show that he genuinely intended to use the premises to run the business and that he was capable of putting that intention into effect. He gave an undertaking that he would not use the premises for any purpose other than running a news agency for two years.
However, the judge ruled against the landlord because he thought his intention was only temporary and it was highly likely that he would sell the premises or grant a lease at the end of the two years.
The Court of Appeal has now upheld that decision. It said that if the landlord succeeded in meeting the requirements of the Act then the tenant would have no right to renew the lease and would have to vacate the premises. The goodwill that had been built up by the business would be lost or acquired by the landlord.
The tenant could suffer a substantial loss and the courts had therefore set a high benchmark for establishing the seriousness of the landlord’s intentions and capabilities. There had to be real substance in the intention to set up a new business and the occupation of the premises had to be more than short term.
In this case, the judge was entitled to conclude that the landlord had not provided sufficient proof of his intention to occupy the premises in the way he had described.
Please contact us if you would like more information about commercial leases and landlord and tenant issues.
Crane owners can not avoid responsibility for their negligence
The owners of a crane have been told they cannot pass on responsibility for their negligence to another company following an incident in which an operator was seriously injured.
The case centred on a dispute between the owners of the crane and a company which had hired it for use on a project at an electricity sub-station. The owners also supplied an experienced operator.
The contract contained clauses stating that the operator was to be regarded as working for the hirer while the work was being carried out. The hirer also had to indemnify the owner for any claims for damage or personal injury that might arise relating to the crane and the actions of the operator.
On the first day of the project the operator fell from the crane and was seriously injured. He made a claim against the owners for negligence and breach of statutory duty. The owners then began proceedings against the hirer based on the indemnity clauses.
However, the court ruled against the owners on the basis that the indemnity clauses only covered claims that might arise out of the operator’s actions. They did not cover claims that might arise out of the owner’s negligence in respect of the crane.
That decision has now been upheld by the Court of Appeal. In giving their ruling, the Appeal Court judges stressed that if a company wanted to limit its liability when entering into a contract then it must do so in clearly stated terms.
The crane owners had failed to do this because their indemnity clauses were wide and did not specifically cover their own negligent acts.
Please contact us if you would like more information about contract issues and professional negligence.
Equality Bill introduces protection against ‘dual discrimination’
The new Equality Bill, which is now making its way through parliament, has been amended to provide protection against dual discrimination.
Ministers believe the new protection is necessary because at present, people can only bring individual claims for each form of discrimination such as age, race, disability etc. The Government says this can sometimes make it difficult to prove that they were discriminated against on that one individual area alone.
The dual approach will allow people to bring claims on the basis that they were discriminated against for a combination of reasons. Ministers give this example of how the kind of case the new approach might cover: “a black woman who is discriminated against because her employer has particular stereotyped attitudes towards black women - as opposed to black men or white women - could bring a single claim for combined race and sex discrimination.”
The Equality Bill will replace nine other pieces of legislation and approximately 100 measures relating to equality introduced over the last 40 years.
One of the key aims of the Bill is to narrow the pay gap between men and women. To this aim,
secrecy clauses in employment contracts will be banned so that employees can compare wages if they wish, enabling women to take action if they find they are being paid less than men for doing the same work.
Firms may also need to consider equality issues when tendering for contracts with public bodies. Organisations such as local authorities will be encouraged to use procurement as a way of promoting equality within private sector firms.
There will also be more protection for carers against discrimination. It is currently illegal to discriminate against someone because of their association with a person of another race, religion or sexual orientation. The Equality Bill will extend this protection so it relates to age, disability and sex or gender reassignment. It means, for example, that an employer could not refuse to promote someone just because they were the carer of an elderly relative.
Firms may wish to re-assess their equality policies in light of the new measures in the Bill. Please contact us if you would like more information.
Unqualified will writers putting families at risk
Badly drafted wills by unqualified and unregulated providers are putting families at risk of severe hardship, according to a report by the Law Society.
Research by the Society highlights cases where wills turn out to be invalid because they are not properly drawn up. This means the deceased person’s estate is treated as if he died intestate – that is, without having made a will at all.
The estate is then divided in a way laid down by the law, which could mean it goes to people the deceased person had not chosen.
The President of the Law Society, Robert Heslett, said: "Solicitors know of so many cases of people who have turned to them for help after being left with what can only be described as nightmare wills by will writers.
“In many cases, the victims are not aware their will writer is not regulated nor insured, so there is no means of redress if things go wrong.”
Sometimes, people are persuaded to use these unregulated will companies because they offer a cut-price service. In reality, however, that can turn out to be a false economy.
Mr Heslett said: "While the initial cost of using these will writers can appear cheap, rectifying the damage if things go wrong can add up to much more. We advise people in this situation to consult a solicitor to check the accuracy of their will before it is too late."
Court of Protection rules to be made clearer and simpler
The rules and procedures for the Court of Protection are to be made simpler following complaints that the system is sometimes too formal.
The Court of Protection was created under the Mental Capacity Act 2005. Its role is to make decisions on behalf of people who lack the capacity to decide for themselves. It also appoints other people, known as deputies, to make decisions on behalf of others.
The issues involved relate to such things as property, financial affairs, health and personal welfare.
The President of the Court of Protection, Sir Mark Potter, has set up a committee to review the court’s rules together with its forms and practice directions.
Sir Mark said: "The Court of Protection has faced a number of difficulties in its first two years and court users have complained that court procedure is too formal particularly in relation to straightforward financial matters which are not contentious.
“My aim is to create a set of rules, practice directions and forms that are clear and simple for lay and professional users to understand. Where possible, the committee should simplify the handling of routine property and affairs cases which constitute the majority of applications to court, for example by slimming down some of the procedures."
The court may have experienced difficulties in its first few years but it still provides a way for families to get decisions made on behalf of loved ones who have lost the capacity to decide for themselves. This can be very helpful when such a person had not already granted someone authority to manage their affairs by registering a Lasting Power of Attorney.
Please contact us if you would like more information about the Court of Protection.
Huge rise in number of employees claiming unfair dismissal
The number of claims for unfair dismissal has risen by 29%, according to the latest figures released by the Tribunals Service.
There were also steep rises in the number of employees taking action over levels of redundancy pay and the failure by employers to consult properly when making redundancies.
The increases are largely down to the recession which has put enormous pressure on firms. The sudden nature of the downturn has meant some have rushed to lay people off without following the correct procedures. This lays them open to claims from staff who feel they haven’t been treated properly or given the appropriate redundancy package.
The latest figures from the Tribunals Service cover the 12-month period up to last March. In that time the number of claims for unfair dismissal rose from just under 41,000 to just under 53,000. Claims over failure to inform and consult on redundancies more than doubled from 4,480 to 11,371. The number of claims over redundancy pay rose from 7,313 to 10,839.
The figures show the increasing willingness of employees to take action to protect their interests. Economic pressure is also a factor. In the past, many employees who lost their jobs would find new work quite quickly and so would not feel the need to pursue a tribunal claim. The recession has made it much harder to find work so people have fewer options. They may choose to take legal action to make up for their lack of income.
Anyone who feels they have been treated unfairly in redundancy proceedings or discriminated against at work should seek legal advice as soon as possible. Please contact us if you would like more information redundancy or any matters relating to employment law.
Chancellor scraps plan to increase inheritance tax threshold
The individual inheritance tax threshold is to remain unchanged at £325,000.
The Government had originally intended to increase the allowance to £350,000 from next year but that plan has now been scrapped because of the recession.
Making the announcement in his pre-budget statement, the Chancellor, Alistair Darling, said: "I do not believe that raising this allowance can be a priority, given the impact of the downturn on the country's finances. So I have decided to freeze the individual allowance at £325,000 for the next year."
The announcement will be a disappointment to many people and highlights the need to plan ahead in order to ensure that as much of your estate as possible is passed on in a tax efficient way to your beneficiaries.
Government announcements on inheritance matters often prompt people to review their wills, trusts and overall financial arrangements. A little careful planning now can prevent thousands of pounds being wasted in the future.
Please contact us if you would like more information about wills, trusts and any matter relating to inheritance planning.
Father can continue to seek contact with his children
The Court of Appeal has ruled that a judge was wrong when he dismissed legal proceedings in which a father was trying to establish his right to have contact with his two children.
The father suffered from bi-polar disorder and needed medication to stabilise his condition. In the past he had sometimes failed to take his medication and this had led to violent episodes involving both the children and their mother.
The couple eventually separated and the children continued living with the mother. He applied for a contact order so he could see his children and during the ensuing proceedings he admitted that he had been violent to the mother and the children.
He was then due to attend a fact-finding hearing but applied for an adjournment because his psychologist had advised him that he was not fit to give evidence.
The judge noted that this was a particularly important hearing because the father was due to be cross-examined about his past violent episodes. He refused to grant the adjournment because he decided that the father’s case had no chance of succeeding as the children did not want to have contact with him and it would not be in their interests to delay the proceedings any further.
However, the Court of Appeal has now overturned that decision. It held that the judge should have focussed only on the issues in front of him and not on matters that would be examined later. By totally dismissing the case he had denied the father’s right to a fair trial.
It was also true that the father’s case was not entirely hopeless because the eldest child had said that he might be prepared to see him under strict supervision and would probably want to bring his younger brother along as well.
Please contact us if you would like more information about any aspect of family law.
How victims of uninsured drivers can still claim compensation
The Government has announced plans to clamp down on motorists with no insurance. New measures will make it an offence to keep a vehicle without insurance as opposed to the present system where no offence is committed until the vehicle is actually driven on public roads.
Ministers believe this will make it easier to catch uninsured drivers and prevent them posing a threat to other road users. The latest figures show that uninsured and untraced drivers are responsible for 160 deaths and 23,000 injuries every year. Uninsured drivers also cost law abiding motorists £400m a year in extra premiums.
The measures are a welcome step forward as uninsured drivers bring tragedy and heartache to thousands of families each year. Many victims don’t even receive any compensation because they don’t realise they can make a claim even though the driver who injured them has no insurance or can’t be traced. In many cases, however, they can take action under a scheme run by the Motor Insurers Bureau.
The criteria for making a successful claim are quite strict so victims should take action as quickly as possible. For example, victims have to notify the police of the accident within a specified time. They can be left without compensation if they don’t. They should keep a note of the name of the officer who takes their details.
They should also seek expert help from a specialist solicitor who has access to the Motor Insurance Database which can sometimes be used to trace the guilty driver.
Please contact us if you would like more information