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North West WIN Annual
Update
Manchester
25 April 2013
North West WIN Annual
Update
Welcome – Ian Wood
25 April 2013
TUPE REGULATIONS AND EMPLOYMENT
ISSUES UPDATE 2013
EMPLOYMENT
Helen Hall
TUPE – Current issues (1)
 Erosion of service provision change mechanism
 Enterprise Management Services Ltd v Connect-Up Ltd and others
[2012] IRLR 190 (EAT)
 Johnson v Campbell and another UKEAT/0041/12
 Argyll Coastal Services Ltd v Stirling and others UKEATS/0012/11
 Hunter v McCarrick UKEAT/0617/11
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TUPE – Current issues (2)
 Which employees transfer?
 Eddie Stobart Limited v Moreman and others
 Argyll
 Seawell Limited v Ceva Freight (UK) Limited
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TUPE - Consultation on proposed changes
 Consultation 17 January – 11 April 2013
 Proposals include:
 repeal of "service provision change" provisions
 removal of obligation to provide employee liability information
 amending the meaning of 'entailing changes in the workforce' (part
of the ETO defence) to cover changes in location of the workforce
 dual consultation
 Legislation expected October 2013 onwards
 Contractual protection key to address uncertainty
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Employment Tribunal Reform - Fees
 Implementation in Summer 2013?
 Employment Tribunal fees
 Issue and hearing fees
 Level 1 – low value claims for sums due on termination (e.g.
unpaid wages and PILONs)
 Level 2 – all other claims (including unfair dismissal,
discrimination, equal pay and whistleblowing)
 Application specific fees
 EAT fees
 Remission scheme
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Employment Tribunal Reform – Procedures
 Changes to the Tribunal procedure rules
 Implementation in Summer 2013?
 Key changes
 Rejection of claim and response
 "Sift" stage
 Costs – awards above £20,000 no longer need to be referred to
the court for assessment
 Presenting a response – 5pm deadlines?
 Preliminary hearings – to consider both case management and
preliminary issues
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Employment Tribunal Reform – Enterprise
and Regulatory Reform Bill
 Implementation from Summer 2013 onwards
 Key changes in the context of Employment Tribunal reform
include
 Compulsory pre-claim ACAS conciliation
 Protected settlement conversations for ordinary unfair dismissal
claims
 Settlement Agreements – statutory code of practice and guidance
 Change to compensation award cap in unfair dismissal claims
 capped at the lower of 1 year's pay and existing limit
 Abolish discrimination questionnaires
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Changes to collective redundancy consultation
 Changes to collective redundancy consultation obligations:
 Implemented 6 April 2013
 90 day minimum consultation period before the first redundancy
can take effect is reduced to 45 days where 100 or more
employees are affected
 Employees on fixed term contracts which have reached their
termination point will be excluded from collective redundancy
consultation obligations
 New ACAS non statutory code of practice
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OPPORTUNITIES AND RISKS
CORPORATE RESTRUCTURING
Christopher Roberts
Expertise
Summary Profile
Christopher joined DLA Piper in 2002 as a trainee solicitor, qualifying into the firm's restructuring team in
2004.
Christopher specialises in non-contentious aspects of corporate recovery, restructuring, turnaround and
insolvency including advising upon administrations, receiverships and liquidations.
Other aspects dealt with include advising directors upon their duties and responsibilities in relation to
companies facing financial difficulties and acting for purchasers of businesses from insolvent companies.
Expertise
All aspects of non-contentious insolvency and restructuring including business and asset sales, real estate
transactions, landlord and tenant issues, advice on security issues, advising main clearing banks, invoice
discounters and factors and insolvency practitioners.
Major Transactions
Administrations of: MusicZone, Wine Cellar, Passion for Perfume, Weatherseal Windows, Total Fitness and
Stanleybet UK Investments/Stanleybet Overseas Investments.
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Aim and Focus
 Aim of update
 To highlight certain circumstances where corporate restructuring
and/or insolvency procedures may be used to benefit your
company's business.
 To reduce concerns surrounding corporate restructuring and
insolvency
 Focus of update
 Acquisition of a company's shares followed by a CVA
 Sale of a company's business and assets through an
Administration process
 Avoiding TUPE liabilities
 ROT claims and identifying goods
 Risk of over-reliance on a single supplier in the current economic
climate
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Acquisition of shares followed by a
CVA
 CVA (Creditors voluntary arrangement) - process whereby a
company proposes an arrangement to its creditors to reorganise
its liabilities
 Enables a buyer to purchase a company and drop the loss
making parts whilst leaving the good parts untouched and intact
 Successful, well publicised CVA's include: JJB Sports, Focus
DIY, Blacks Leisure, Barratts Shoes and Flannels
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Acquisition of shares followed by a
CVA cont…
 DLA Piper was the first firm to bring this product to the market
 Our first client to successfully utilise the product acquired the
shares in a group of companies holding over 500 retail units
and in doing so acquired the benefit of very significant tax
losses which were available to be set off against the future
profits of the post CVA profitable business
 Advantages:
 Preservation of tax losses
 Less business disruption
 Reduces overall liabilities
 Avoids the stigma of insolvency?
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Sale of a company’s business and
assets out of Administration
 If a CVA is not workable, an asset sale may be a potential
alternative
 However, risk of an asset sale being challenged as a TUV in a
subsequent insolvency and vendor unable to fulfil its
obligations under the SPA
 An asset sale out of an insolvency procedure, e.g.
Administration, may be more desirable for vendors and
purchasers:
 Preserve goodwill and no break in trading where the sale is prepackaged
 Cherry pick assets without the company's liabilities (except for TUPE
liabilities) – though be wary of commercial reality: lack of supply credit
going forward and may need to pay sweetner to suppliers
 Limit the risk of the sale being challenged and subsequently unravelled
as TUV
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Avoiding TUPE liability on a business
purchase
 The Transfer of Undertakings (Protection of Employment)
Regulations 2006 ("TUPE") apply when purchasing a solvent
business or a business from an administrator
 All employees automatically transfer plus purchaser may also
be liable for potential protective awards
 However, employees do not automatically transfer in a sale by
a liquidator
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Retention of title "club"
 When supplying goods to customers, supply contracts normally
contain ROT clauses
 If a supplier is unable to identify its goods from an insolvent
customer’s stock, then the supplier’s ROT clause will not normally be
effective
 Admixture of goods
 BUT the supplier may be able to defeat an admixture defence if it can
prove that it supplied generic stock/raw material to the customer
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Risk of over-reliance on a supplier
 As a result of the current economic climate, suppliers have been
forced to reduce prices in order to combat competition
 Increasing shift to low stock, just in time models of supply
 Many suppliers now rely on volume ordering and customers have
reduced their amount of suppliers to increase efficiency
 Insolvency of one link in the supply chain can create a domino effect
of insolvencies up and down the chain
 eg the administration of Woolworths led to the insolvency of Zavvi
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Risk of over-reliance on a supplier
cont…
 Insolvency practitioners may seek ransom payments from
customers of an insolvent supplier
 eg the Land Rover and UPF case:
 KPMG threatened to stop supply unless Land Rover paid it £46
million.
 Land Rover ultimately paid £15m to £20m for UPF’s debt to
replace UPF’s receivers to ensure UPF continued to supply
essential parts to Land Rover
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Early warning signs of a supplier’s
insolvency
Warning Signs
 Missed deliveries
 Requests for deposits and up-front payments
 Unexpected rise in prices or attempts to renegotiate pricing or
terms
 Reduction in credit insurance cover
 County court judgments and winding-up petitions – DLA Piper
can conduct these searches for you
Questions to ask the supplier
 Have you moved from quarterly to monthly rents?
 Have you agreed a time to pay agreement with HMRC?
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Protect yourself
 Methods of dealing with a supplier's insolvency:
 Protect yourself by building up stock levels and consider
having more than one supplier for key supplies
 If a supplier becomes insolvent, customers may have to
consider acquiring the supplier's business to avoid costly
renegotiation of supply terms or having to make ransom
payments to the insolvency practitioner
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Key Messages
Key Messages
 There are ways to purchase distressed businesses and
assets in a financially efficient way
 A vendor can make the sale of a subsidiary business more
attractive to the market
 If you are a supplier of generic stock or raw material, you
may still be able to recover your goods from an insolvent
supplier even if you are unable to identify your specific
goods
 Be vigilant of supplier distress and protect yourself from
ransom demands and other business disruption
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North West WIN Annual Update
INTELLECTUAL PROPERTY
David Gardner
Contents
 Apple v Samsung - who is winning in the UK and the US?
 The new European Unified Patent system - what will it mean
for you?
 The Internet's New Wild West? - an update on who iss
applying for new gTLDs and why
 Is using your Community Trade Mark in one Member State
enough to keep it safe from attack?
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Apple v Samsung (UK)
 In the UK, Apple sued Samsung
for infringement of its tablet
Registered Community Design
 Apple alleged that three
Samsung Galaxy tablets had
copied its RCD
 The High Court found that there
were certain similarities:
 the front screen
 the fact neither had indicator
lights or buttons
 the "thinness enhancing effect"
of the curved sides
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Apple v Samsung (UK)
 However, there were two major differences which meant that
the Samsung tablets did not infringe Apple's registered design:
 The Samsung tablets were thinner than the Apple tablets
 The Samsung tablets had detailing on the back of each of one,
whereas the Apple tablets we uniformly smooth
"They [the Samsung devices] do not have
the same understated and extreme
simplicity which is possessed by the Apple
design, they are not as cool, and so the
overall impression produced is different".
 The verdict of the High Court was upheld
by the Court of Appeal
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Apple v Samsung (US)
 In the US it was a different story. Apple sued Samsung for
infringement of three patents:
1. US Patent No. 7,469,381 relating to "list scrolling and
document translation, scaling and rotation on a touch-screen
display"
2. US Patent No. 7,844,915 relating to an "application for
programming interfaces for scrolling operations" (zooming,
bounce-back on scrolling)
3. US Patent No. 7,864,163 relating to a "method for displaying
at least a portion of a structured electronic document"
as well as four US "design patents", including one for the
"ornamental design for an electronic device", similar to the
Registered Community Design referred to above
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Apple v Samsung (US)
 Samsung counterclaimed for
infringement of six of its own patents
 After a three week trial, a Californian
jury gave its verdict:
1. Samsung had infringed all Apple's
patents and design patents, except
the "ornamental" design patent
2. Apple had not infringed any of
Samsung's patents
 In the first instance, the jury awarded
Apple damages of…
The '889 "ornamental"
design patent
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Apple v Samsung (US)
$1.05 billion
The fourth largest jury award in a patent case ever…
…though a Judge has ordered a new jury trial to re-examine
$450 million of the damages Apple was awarded
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European unified patent system
The old European system
 Obtaining patent protection in Europe is a cost-intensive
procedure
 Overall, the acquisition of patent protection in all 27 EU
Member States costs around €30k - €40k
 The cost of translations is a major factor in this high cost
 This is considerably more expensive, even for only the "major"
Member States, than it is in economically competing countries
such as the US or China
The solution?
 On 19 February 2013, 24 members of the 27 European Union
signed a unified patent court agreement in Brussels, followed
by Bulgaria on 5 March 2013
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European unified patent system
 Single European patent seeks to boost the innovative capacity
of European industry by streamlining previously fragmented
and bureaucratic procedures and decreasing costs
 The new unified patent will:
1. be cheaper and more effective than current systems in
protecting the inventions of EU businesses
2. provide automatic unitary patent protection in all 25
participating member states, cutting costs for EU businesses
3. cost as little as €4,725 when the new system is fully in place,
according to the European Commission
 Italy (despite signing the agreement), Spain and Poland have
all expressed concerns about the new arrangements
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New generic Top Level Domains ("gTLDs")
 The new generic Top-Level Domain Program was developed
by ICANN to increase competition and choice in the domain
name space (ICANN just made $350 million in the process!)
 There are roughly two dozen gTLDs now (.com, .org, .net, etc).
 Soon, there will be hundreds – 2,000 have been applied for
 Not a universally popular move by ICANN – a group of over
100 major international business associations and companies
campaigned against it…but it's happening!
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New gTLDs – Who is applying?
 Google has announced that it is targeting gTLDs such as
.google, .youtube, and .lol, to name a few – at a cost of
$185,000 per domain – at a total cost of more than $18.6m
 Amazon is Google's biggest competitor, with both
companies bidding on 21 of the same domains, including:
.search, .play, and .drive
 Microsoft also put in two applications that Google has
also applied for .docs and .live
 Apple applied for just one (.apple, of course)
 So why are they applying?
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New gTLDs – Potential benefits
 You operate a domain name registry, like .com today
 You have greater control and flexibility over your web
presence
 The new gTLD create opportunities for company specific or
sector specific domains
 They could be used to increase security - .dlapiper?!
 They could be used to increase brand profile (though some
notable brand owners have withdrawn, e.g. Heinz, G.M.)
 They may help in the fight against online counterfeiters – "If it
doesn’t end in .[brand], it's not real"
 This does come at an administrative and financial cost –
ICANN will evaluate applicants on this basis
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New gTLDs – Protecting your trade marks
 The "Trademark Clearinghouse" opened on 26 March 2013 to
allow rights holders to file evidence of their trade marks
 Sunrise period – trade mark holders who registered with the
Clearinghouse were given 30 days to register gTLDs matching
their trade marks before these were offered to the public
 The Clearinghouse provides a central repository of verified
trade mark data, to avoid the need to notify every gTLD owner
 Requirements
 You must provide a signed declaration of use and a single sample
to prove use
 Clearinghouse fees for a single trade mark are $145 for one year,
$435 for 3 years and $725 for 5 years
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New gTLDs – Protecting your trade marks
 A number of speculators have also been purchasing gTLDs,
hoping this will be the next internet gold mine
 For example, one VC-funded company called Donuts has
applied for 307 gTLDs – at a cost of almost $57 million
 ICAAN has established additional dispute resolution
procedures (known as RPMs) in connection with gTLDs
 This includes the Universal Rapid Suspension system (or
URS), intended to deal with clear cases of trade mark abuse
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Use of community trade marks
 The ECJ has recently handed down its decision in Case C149/11 Leno Merken v Hagelkruis Beheer B.V
 Better known as the ONEL/OMEL case
 The case is about the requirement for "genuine use" of a
Community Trade Mark ("CTM")
 A CTM which has not been put "to genuine use in the
Community in connection with the goods or services in respect
of which it is registered" within five years following registration:
 is subject to revocation
 cannot be relied on as an earlier trade mark right when opposing a
later filed CTM
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Community trade marks – CJEU referral
 So what constitutes "genuine use in the Community"?
 In particular, what if a trade mark is only used in one of the 27
Member States - is this genuine use?
 The four questions referred to the CJEU in this case were:
1. Is use in one country always enough?
2. If not, is it never enough?
3. If it is never enough, what is needed?
4. Should the assessment of genuine use in the Community be
done in the abstract, without reference to the borders of the
territory of the individual Member States?
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Community trade marks - Decision
 The CJEU held that Article 15(1) of the Community Trade
Mark Regulation must be interpreted as meaning that:
 use of a Community trade mark within the borders of a single
Member State is not, of itself, necessarily sufficient to constitute
genuine use of that trade mark, BUT
 it is possible that, when account is taken of all relevant facts, use
of a Community trade mark within an area corresponding with the
territory of a single Member State will constitute genuine use in the
Community
 Has the ECJ dodged the question, or is this answer the
pragmatic solution needed by CTM owners and their advisors?
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North West WIN Annual Update
TAX
David Thompson
Patent Box 1
 Reduced rate of 10% for companies within the charge to UK
corporation tax who exploit patents and/or certain other
botanical and medical innovations
 Companies must opt into the regime for it to apply and the
relief is to be phased in between 1 April 2013 and 1 April 2017
 The reduced rate of corporation tax is applied to a proportion
of the company's profits derived from:
 sales of products incorporating the patented technology
 licensing and selling patent rights themselves
 other use of such right sin the course of a trade (e.g. in providing
services)
 compensation for infringement of patent rights
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Patent Box 2
 The company must have an "exclusive" licence over the
qualifying IP in one or more countries or territories.
 The company must have been involved significantly in the
creation or development of the qualifying IP, or of a product or
process that incorporates it.
 There are special rules for groups aimed at preventing relief
where the IP was developed outside the group (e.g. where a
company that developed the IP is subsequently acquired by
another company), unless certain further activity is carried out
within the group or an additional "active ownership" condition
is satisfied.
 Patent box profits are calculated according to a standard
formula (see next slide) or a "streaming method"
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Patent Box 3
Stage One
(Identify Profit)
(1) Calculate Gross
Trading Income
("TI"))
Stage Two
(Deduct
Routine
Return)
(4) Deduct Routine
Return to give
Qualifying Residual
Profit ("QRP")
Stage Three
(Deduct Brand
Value)
(5) Opt for Small
claims Treatment
(if appropriate)
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(2) Calculate
relevant IP Income
("RIPI") as a
proportion of TI
(3) Calculate
percentage of
trade profits (or
losses) attributable
to RIPI
(6) deduct
Marketing Asset
return from QRP
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Patent Box 4
Patent Box – Practice Points for In-House Lawyers
 The ownership of patent rights and other qualifying IP will
affect the availability of relief:
 whether a company opts into the patent box may depend upon
whether it is making profits or losses;
 this and other factors may influence a decision whether or not to
move IP around the group;
 the effect of litigation settlements and licensing arrangements will
be relevant for determining whether the company has an
"exclusive" right enabling it to claim relief;
 it may be beneficial to bring qualifying IP into the UK and to
relocate development here.
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Statutory Residence Test 1
 Statutory Residence Test ("SRT") is contained in schedule 43
of the Finance Bill and replaces the previous mix of case law
and HMRC practice (HMRC's approach was set out in
HMRC6) for tax years 2013-14 onwards;
 SRT
 if automatic non-residence test is satisfied, the individual is not
resident;
 if the automatic residence test is satisfied, the individual is
resident;
 where neither of these applies the individual is resident if he or she
has "sufficient ties" with the UK, which test depends on
"connecting factors" and days spent in the UK – the more
"connecting factors" the fewer days are required to make a person
resident
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Statutory Residence Test 2
Automatic Non-Residence – always takes precedence
Test
Days in UK
UK resident in one or more of 3
previous tax years
< 16 (and did not die here!)
UK resident for none of previous 3
tax years
< 46
Sufficient overseas work with no
significant breaks (complex
formula)
< 31 days in UK where more than
three hours' work done and < 91
days spent in UK
Two other automatic tests apply in the event of death
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Statutory Residence Test 3
Automatic Residence – next test to apply
Test
Days in UK
Present in UK for 183 days in tax
year
No additional "days" test
"Home" in the UK
Spends sufficient days in that home
and satisfies requirements in
relation to overseas home (if any) –
complex rules
Sufficient UK hours of work with no Complex rules here too!
significant breaks
A fourth automatic test applies in the event of death
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Statutory Residence Test 4
"Sufficient Ties" where resident in one or more of previous three
tax years
Days spent in the UK
Minimum number of ties
Greater than 15 but not more than
45
4
More than 45 but not more than 90
3
More than 90 but not more than
120
2
More than 120
1
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Statutory Residence Test 5
"Sufficient Ties" where not resident any of previous three tax
years
Days spent in the UK
Minimum number of ties
More than 45 but not more than 90
4
More than 90 but not more than
120
3
More than 120
2
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Statutory Residence Test 5
The "UK ties"
"Family"- "relevant relationship" with another person resident in the UK
"Accommodation" – a "place to live" in the UK for at least 91 days and
spends at least one night there
"Work" – at least 40 days working for at least three hours on each such
day in the UK
"90-day tie" – spends more than 90 days in the UK in the preceding tax
year, the tax year preceding that year or both
"country" tie (only applies if resident for one or more of previous three tax
years) – meets the "midnight test" for the greatest number of days in the
UK (compared to each other country)
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Statutory Residence Test 6
The rules are complex and the slides above are an oversimplification!
SRT – Practical Points for In-House Lawyers
 Patterns of work for multi-state employees may change
 Old contracts and methods of working may need to be
reconsidered
 There will be a constant need to take tax advice on the impact
of detailed personal and employment circumstances
 Double taxation relief rules still apply
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General Anti-Abuse Rule
 The General Anti-Abuse Rule (GAAR) will apply to income tax,
corporation tax, capital gains tax, inheritance tax, petroleum
revenue tax and stamp duty land tax (it is later to be extended
to NIC)
 The GAAR will provide for the counteraction of tax advantages
arising from tax arrangements that are "abusive"
 Counteraction must first be notified by a designated HMRC
officer and, unless having considered representations made by
the taxpayer a designated HMRC officer decides that
counteraction ought not to apply, the arrangements must be
referred to an "Advisory Panel" to be established by the
Commissioners for HMRC for the purpose, for its opinion.
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General Anti-Abuse Rule
"Tax arrangements are “abusive” if they are arrangements the
entering into or carrying out of which cannot reasonably be
regarded as a reasonable course of action in relation to the
relevant tax provisions, having regard to all the circumstances
including—
(a) whether the substantive results of the arrangements are
consistent with any principles on which those provisions are
based (whether express or implied) and the policy objectives of
those provisions,
(b) whether the means of achieving those results involves one or
more contrived or abnormal steps, and
(c) whether the arrangements are intended to exploit any
shortcomings in those provisions"
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General Anti-Abuse Rule
Statute will set out examples of arrangements that are to be
considered "abusive"
 they result in an amount of income, profits or gains for tax
purposes that is significantly less than the amount for economic
purposes
 they result in deductions or losses of an amount for tax purposes
that is significantly greater than the amount for economic
purposes
 they result in a claim for the repayment or crediting of tax
(including foreign tax) that has not been, and is unlikely to be,
paid.
Practical Point for In House Lawyers – difficult dividing line between
"abusive" and non-abusive structures – scrutiny required
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Miscellaneous Points to Remember
 Entrepreneur's relief for shares acquired under an enterprise
management incentive scheme – always consider EMI if you
qualify.
 VAT and acquisition costs – following BAA –v- HMRC [2013]
EWCA Civ 112 – taxpayer lost its claim to recover input tax
on incurred on professional fees invoiced to a company
which acquired it and subsequently became a member of its
VAT group; the case underscores the need for a holding
company to have an "economic activity", to make ,or to
intend to make, supplies in the course of a business.
 VAT – Robinson Family Limited –v- HMRC [2012] UKFTT
360(TC) – grant of a long lease subject to sub-leases can be
a TOGC if value of reversion is minimal.
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North West WIN Annual Update
HOT TOPICS IN THE ENERGY
SECTOR
Ian Wood, Darren Walsh and Andrew Davies
RENEWABLE HEAT
INCENTIVE (RHI)
Ian Wood
25 April 2013
Background
 Government scheme to promote renewable energy for heat
generation
 Launched 2011
 Payments to businesses, organisations and communities that
generate and use renewable energy to heat their buildings
AIM = to help UK reduce greenhouse gas emissions and meet
climate change targets
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Renewable energy sources
 The following are currently covered by the RHI
 Biomass (boilers and energy from waste)
 Ground and water source heat pumps
 Geothermal
 Solar thermal
 Biogas combustion
 Biomethane production
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Eligibility criteria
 England, Scotland or Wales (not N. Ireland)
 Technology installed and commissioned on or after 15 July
2009
 New equipment
 Minimum capacity requirements
 Not purchased using public grant (option to pay back if
installed before 28 November 2011)
 MCS (Microgeneration Certification Scheme) or equivalent
 Heat delivered via liquid or steam
 Inside a building (due to be extended to external uses of heat)
 NOT single home heating
 Other technology-specific criteria
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Payments
 Spread over 20 years = long-term incentive
 Pay every quarter
 Tariff dependent upon
 technology used
 heat production capacity
 energy consumption of participant
Examples (from 1 April 2013)
 Solar thermal collections (<200 kWh capacity) = 9.2p per kWh
produced
 Small biomass (<200 kWh capacity)
= 8.6p per kWh produced (Tier 1) or
= 2.2p per kWh produced if energy consumption above threshold
(Tier 2)
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How to apply
 Online account at Ofgem website (www.ofgem.gov.uk)
 Provide evidence of installation
 Eligibility assessment by Ofgem
 Annual reporting
NB – suspension of scheme to new entries possible if 97 per
cent of annual budget met
 currently £67.9 million
 projected payments last financial year = £24 million
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Future updates
 Tariff changes (including mechanism for reduction of payment
if uptake triggers met)
 Introduction of further technologies
 bioliquids
 landfill gas
 air source heat pumps
 Air quality (biomass)
 end of 2013
 Biomass sustainability
 April 2014
 Domestic scheme
 summer 2013
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Further information
 Ofgem website (www.ofgem.gov.uk/e-serve/RHI/Pages/RHI.aspx)
 Enquiry helpline
 0845 200 2122
 [email protected]
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RENEWABLE ENERGY INCENTIVE
SCHEMES
ROCs and FITs
Andrew S Davies
25 April 2013
Renewables Obligation (1)
 Obligation on licensed electricity suppliers to source a
specified proportion of the electricity they provide from eligible
renewable sources
 Statutory obligation – Renewables Obligations Order 2009 (as
amended)
 Steadily increasing proportion (initially set at 3% in 2002,
currently up to approximately 20%)
 Fixed target each year based on MWh of electricity supplied –
e.g. 0.158 ROCs per MWh energy supplied for year ending 31
March 2013 rising to 0.206 ROCs per MWh energy supplied
for current year ending 31 March 2014
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Renewables obligation certificates (ROCs)
 Issued by Ofgem to eligible renewable energy generators
 ROCs are tradeable commodity with fluctuating value – average
March 2013 price = £43.76
 ultimately sold to suppliers to help meet their obligation
commitments
 number issued depends upon
 amount of electricity generated
 technology used (banding system)
 'degression' of banding levels over time BUT 'grandfathering'
 generator retains same banding as when entered scheme
 fixed level of support
 provide extra financial incentive to energy generators if generating
via eligible renewable source
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RO – meeting the obligation
 obligation met by:
 purchasing ROCs from generators on open market then
presenting ROCs to Ofgem
 generating own electricity from eligible renewable sources –
receive own ROCs which present to Ofgem
 paying 'buy-out' penalty to cover shortfall
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ROCs – energy sources
 Eligible renewable sources include (but not limited to):
 Anaerobic digestion
 Biomass
 Energy from waste with combined heat and power
 Geothermal
 Hydro
 Solar photovoltaic
 Tidal
 Wind
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ROCs – the future
 Last available entry date 31 March 2017
 Participants in scheme for 20 year period (up to 31 March
2037)
 From 31 March 2027:
 ROC price fixed by government
 Direct purchase from generators by government
 Aim to reduce market volatility
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Feed-in Tariffs (FITs)
 Introduced 1 April 2010
 Small scale systems
 no greater than 5 MW total installed capacity
 organisations, businesses, communities and individuals
 eligible technologies
 solar photovoltaic
 wind
 hydro
 anaerobic digestion
 micro combined heat and power (up to 2 kV capacity only)
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FITs – what are they?
 Payments
 generation tariff – for electricity produced
 export tariff – for surplus electricity exported to the grid
 Payments
 over 25 years (solar)
 over 20 years (wind, hydro, anaerobic, digestion)
 over 10 years (micro CHP)
 'Degression' of tariffs from April 2012
BUT generators receive prevailing tariff from time to time
'commissioned'
 Not a replacement for ROCs – choice of one or the other required
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FITs – current tariff rates
 Range of current tariffs dependent upon energy type and
capacity of generator (higher rates for lower output systems)
 solar PV = 9.24 to 15.16p/kWh
 hydro = 3.23 to 21.65p/kWh
 wind = 4.15 to 21.65p/kWh
 anaerobic digestion = 6.85 to 15.44p/kWh
 Note that little to no degression seen with anaerobic digestion
tariffs in latest prices (compared to notable degression with
e.g. wind)
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FITs v ROCs – the choice
 No choice if:
 very small - only FITs if below 50KW capacity
 very large - only ROCs if greater than 5MW capacity
 Otherwise make a one-off choice (included following lobbying by
energy sector)
 Increased certainty of fixed price of FITs – may encourage investors
looking for fixed income
 ROCs subject to fluctuating market - greater rewards when high
demand
 ROCs tend to suit larger organisations re fluctuations in price
 ROCs no longer registrable for after 31 March 2017
Note : importance of date of 'commissioning' for both schemes
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CRC ENERGY EFFICIENCY
SCHEME
Darren Walsh
25 April 2013
Introduction
 Mandatory scheme
 Public and private sector organizations
 AIM = "to improve energy efficiency and reduce CO2 emissions
in large organisations"
 Administered by environmental agencies (EA, SEPA. NIEA,
Natural Resources Wales)
 Currently in last year of phase 1 (due to end 31 March 2014)
and first year for phase 2
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Qualification – who must participate?
 Based on qualifying electricity consumption in qualifying year
(April 2008 – March 2009 for phase 1)
 Whole organisation
 Criteria
 at least 1 x half-hourly electricity meter
 use 6,000+ MWh electricity in qualifying year
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Registration
 Highest UK parent undertaking
 Significant group undertakings ("SGU")
 defined at time of qualification only
 could meet qualification criteria in own right
 can disaggregate
 register as participant itself
 at registration or within three months of purchase by another
participant
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Reporting
 Footprint report  during first phase year e.g. for phase 1 =
April 2010- March 2011, for phase 2 = April 2013 - March 2014
 Annual report
 by last working day in July after compliance year e.g. by end of
July 2014 for year ending 31 March 2014
- gas and electricity supplied and consumed (unless landlord-tenant
rule (landlord responsible if receives/pays for supply) or franchise)
- CRC emissions calculated
- purchase and surrender allowances
 Designated changes eg purchase of SGU from another
participant
 BUT not required if EXCLUSION or EXEMPTION
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Exclusions
 No need to report for:
 outside UK
 'domestic accommodation' – premises intended to be used as a
permanent home – note that hospitals, hotels etc. are included in
CRC scheme and not considered to be 'domestic'
 third party supplier heat
 most forms of transport
 already covered by EU Emissions Trading Scheme e.g.
commercial aviation, energy-intensive industries such as iron
manufacturing and oil refineries
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Exemptions
 If already covered by climate change agreement (CCA) then
may be subject to exemption
1) GENERAL (Article 33 of CRC Energy Efficiency Scheme
Order 2010 (the "CRC Order")



not group
CCA emissions >25 per cent total emissions
lose exemption in subsequent years if conditions don't apply
2) MEMBER (Article 32 of CRC Order)



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group
a member of that group has CCA emissions >25 per cent of that
member's total emissions
member only exempt
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Exemptions
3)
GROUP (Article 34 of CRC Order)


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total electricity to all members group not subject to member
exemption <1,000 MWh
lasts for rest of phase – not lost unless loss of a member
exemption causes conditions not to apply
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CRC Scheme – where are we now?
 Last year phase 1 (provisions (including exemptions) still
apply)
 First year phase 2  qualification based on position as at
31 March 2013  key date
 New legislation due by June 2013
 Transition – uncertainty for participants already in scheme as
to whether the Phase 1 or Phase 2 rules will apply to this
reporting year
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CRC Scheme Phase 2 – main changes
(1)
 Looking to simplify the scheme
 Based on guidance issued by Environment Agency
 Qualifying electricity only if supplied via settled half hourly
meters i.e. those able to measure electricity supply on a half
hourly basis
 Unconsumed supply – if pass on unconsumed supply to third
party, will remain responsible for that supply under CRC
scheme unless there is a meter measuring that supply to the
third party
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CRC Scheme Phase 2 – main changes
(2)
 Alteration to applicability of landlord-tenant rule:
 phase 2 position = rule no longer applies to construction
leases i.e. 30+ years, specific lessee covenants re. utilities
installation, consent for building, removal of works/buildings
at lease termination, lessor covenant to compensate for
improvements made
 CCA
 all electricity/gas used to operate a certified CCA facility will be
excluded
 CCA exemptions no longer apply
 KEY = define the boundaries of your CCA Facilities
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Conclusions
 Important for any high energy-consumption business
 Transition between phases
 CCA exemptions no longer apply for Phase 2
 Watch this space re. new legislation and guidance due – see
EA website for details
 We can assist with quick audit of Phase 1 compliance and the
implications for Phase 2
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Coffee Break
18 April 2013
North West WIN Annual Update
COMMERCIAL
Claire Edwards
Overview - lots of new cases!
 Endeavours
 Ampurius Nu Homes v Telford Homes
 Liability
 Kudos Catering v Manchester Central Convention Complex
 Material Breach, Termination and Affirmation
 The Trademark Licensing Co Ltd v Leofelis SA
 Good Faith
 Compass Group UK & Ireland Limited v Mid Essex Hospital
Services NHS Trust
 Yam Seng Pte Ltd v International Trade Corp Limited
 The Late Payment of Commercial Debts Regulations 2013
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Endeavours - Ampurius Nu Homes v
Telford Homes (2012)
"Telford will use its reasonable endeavours to procure completion
of the Works by the Target Date or as soon as reasonably possible
thereafter"
• The credit crunch intervened and Telford was unable to obtain
sufficient funding, suspended work and claimed this was not a
breach provided it had used reasonable endeavours to obtain
funding but had been unable to do so
Held
• Lack of funding was not a defence
• Reasonable endeavours was designed to cover physical conduct
of the work e.g. inclement weather and shortage of materials
• The subjective difficulty that Telford experienced in raising
funding was irrelevant
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Endeavours
• An "endeavours" obligation will not always impose the same
level of obligation from one contract to another
• Reasonable – does not require the action if it disadvantages
the party; only one reasonable course is required, not all
reasonable courses
• Best – Onerous but not absolute; take all steps a prudent,
determined and reasonable party is acting in its own interests
and desiring to achieve the result; may impose an obligation to
invest or run risk of failure but not require risk of bankruptcy
• All reasonable – compromise between best and reasonable
(closer to best); use endeavours until all reasonable
alternatives are exhausted
• Conclusion – be clear about the objective to be achieved and
list steps to be taken?
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Liability – Kudos Catering v Manchester
Central Convention Complex (2013)
5 year catering contract ended 2 years early.
Both claimed repudiatory breach. Kudos
claimed £1.3m of lost profit
18.6 Indemnity and Insurance
"MCCC shall have no liability whatsoever for any loss of goodwill,
business, revenue or profits, anticipated savings or wasted
expenditure."
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Liability – Kudos Catering v Manchester
Central Convention Complex (2013)
CoA held – loss of profits was not excluded.
Need to consider the wider context and parties
commercial intentions.
• Kudos would have earned profit. If upheld then the clause could
deprive Kudos of any sanction for MCCC's breach of contract,
reducing the contract to an unenforceable statement of intent
• MCCC had not put forward a commercial justification for such a
wide exclusion of liability. CoA concluded there was none, and that
a literal interpretation of clause 18.6 would be contrary to business
common sense
• Held that the clause applied only to MCCC's liability for defective
performance, not for a refusal to perform
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Liability – Lessons
Lessons?
• Give a remedy for material breaches
• Explain why a clause is drafted in a particular way
• Flag onerous provisions e.g. use correct headings
• Cover liability on repudiation expressly
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Material Breach, Termination and
Affirmation
• Repudiatory breach – is the breach of contract sufficiently material
to allow the innocent party to treat the contract as at an end and
claim damages
• If A relies on B's alleged repudiatory breach and terminates, and the
basis for termination turns out to be untrue, the non-terminating
party may itself sue for wrongful termination
• After acquired knowledge of a (different) repudiatory breach can be
used to justify the termination (Boston Deep Sea Fishing case)
• What about damages?
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The Trademark Licencing Co Ltd v
Leofelis SA (2012)
• Use of the Lonsdale brand in Europe, exclusive licence granted but
Lonsdale licenced another person in Germany
• While a party can use after acquired knowledge of a repudiatory
breach to justify the termination, they cannot use the same
repudiatory breach as a ground for claiming damages
• Where terminating party unaware of the repudiatory breach and
termination would have happened in any event, terminating party
not entitled to profit from the decision to terminate by some later
emergence of fact
• Ensure repudiatory breach has occurred before taking steps to
terminate a contract
• Loss can only be claimed if it flows from the breach that the party
had knowledge of
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Good faith – an implied duty?
Background
 Traditional hostility towards an implied
doctrine of good faith
 Many civil law jurisdictions, and more
recently Canada, Australia and the US
recognise a general duty to act in good
faith when forming and performing commercial contracts
 Scots law recognises a broad principle of good faith and fair dealing
 EU legislation has increased significance of the concept of good faith
in English Law
Are we moving towards English courts applying an implied duty of good
faith to English contract law in certain circumstances?
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Mid Essex NHGS v Compass Group
(trading as Medirest) [2013]
 Hospital FM Outsourcing Agreement
 Payment mechanism based on performance
 Financial deductions:
 £84,450 – out of date chocolate mousse
 £96,060 – 3 day old bagels
 £46,320 – out of date ketchup sachets
 Express obligation to "co-operate with each other in good faith…and
take all reasonable action as is necessary for…the Trust…or any
Beneficiary [e.g. patients] to derive the full benefit of the Contract".
 An implied term that the Trust would not exercise its discretion to
award itself payment deductions or service failure points arbitrarily,
capriciously or in an irrational manner?
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Compass – Take away points
 The express obligation in this context to co-operate in good faith
means "work together honestly endeavouring to achieve the two
stated purposes"
 While discretions involving absolute contractual rights are unlikely to
be subject to an implied term of the type at issue, those involving an
assessment or a choice as to the range of options in which the
interests of both parties are relevant, are likely to be
 Although you may be able to expressly exclude the implied term,
Jackson LJ warned that doing so would be "extremely difficult"
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Yam Seng PTE Ltd v International
Trade Corp Ltd (2013)
• Exclusive distribution agreement to YS
• YS terminated for ITC's repudiatory breach
• failure to supply product
• beach of exclusive territorial grant
• provision of false information
• YS pleaded an implied term in the agreement that parties would
deal with each other in good faith
• Held: D was in breach of contract and 2 breaches were repudiatory
in nature, justifying termination by YS
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An implied term (obiter – Leggatt J)?
 Judge acknowledges existence of such an implied term in certain
contracts (employment/partnership)
 No general duty of good faith under English law
 No difficulty in implying such a duty based on the presumed
intentions of the parties
 context sensitive
"Relational contracts" [joint venture agreements, franchise agreements
and long term distribution agreements] may require a high degree of
communication, cooperation and predictable performance based on
mutual trust and confidence and … expectations of loyalty which
are…implicit.. and necessary to give business efficacy to the
arrangements"
 Question of fact to be decided on a case by case basis
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The Late Payment of Commercial Debts
Regulations 2013 ("2013 Regulations")
 The 2013 Regulations came into force on
16 March 2013 and resulted in
amendments to the Late Payment of
Commercial Debts (Interest) Act 1998
("Late Payment Act")
 Changes to sections 4 and 5A of the Late
Payment Act
 Contracts concluded before 16 March
2013 will be excluded from the amended
provisions
 Debtors will be forced to pay interest and
reimburse reasonable recovery costs of
the creditor, if they do not pay for goods
and services on time
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The Late Payment of Commercial Debts
Regulations 2013 ("2013 Regulations")
Business to Business contracts
Contract is
silent on
payment
terms
Interest will accrue unless payment is made within 30 days of the
later of:
(i) receipt of invoice
(ii) receipt of goods or services
(iii) verifying acceptance of the goods or services
Contract
contains
express
payment
terms
If parties agree a payment date up to 60 days from the later of:
(i) receipt of invoice
(ii) receipt of goods or services
(iii) verifying acceptance of the goods or services
Interest will accrue from that date.
This 60 day period can be extended so long as it is in writing
and not "grossly unfair". Grossly unfair – all circumstances
considered in particular: deviation from good commercial practice
and contrary to good faith and fair dealing; the nature of the goods
and services; another objective reason
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The Late Payment of Commercial Debts
Regulations 2013 ("2013 Regulations")
Business to Public Authority contracts
Contract is
silent on
payment terms
Interest will accrue unless payment is made within 30
days of the later of:
(i) receipt of invoice
(ii) receipt of goods or services
(iii) verifying acceptance of the goods or services
Contract
contains
express
payment terms
If parties agree a payment date of more than 30 days
from the later of:
(i) receipt of invoice
(ii) receipt of goods or services
(iii) verifying acceptance of the goods or services
Interest will still accrue after the 30 days
No possibility to extend this period
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The Late Payment of Commercial Debts
Regulations 2013 ("2013 Regulations")
 Verification process introduced: maximum period of up to 30
days for a purchaser to confirm that goods or services conform
with the contract
 Statutory interest rate: Unchanged - Bank of England reference
rate plus at least 8%
 Compensation for recovery costs: In addition to fixed sums that
were previously available (£40, £70 or £100 depending on the size
of the debt) to compensate for the cost of recovering a debt, as a
result of the 2013 Regulations the supplier is also entitled to the
reasonable costs of recovering the debt that are not met by the
fixed sum
 The rights for a supplier under the Late Payment Act are not
compulsory – it does not have to claim interest
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Cost Reforms
LITIGATION
Jonathan Eatough
The Jackson Reforms
 The "Big Bang" on 1 April 2013
 What does this mean for commercial litigation?
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Proportionality
 Lies at the core of the reforms
 The new rules on proportionality come into force on 1 April 2013 but will not
apply to:
 cases commenced before 1 April 2013
 work carried out before 1 April 2013 in cases which are commenced after that date
 New CPR 44.3(5) - disproportionate costs will no longer be recoverable even
if they were necessarily incurred
 New overriding objective - to deal with cases "justly and at proportionate
cost"
 Implications
 greatest impact on low to medium value cases
 parties will end up bearing more of their own costs
 affect directions - approach to disclosure, number of witnesses, expert evidence
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Costs & Funding
 Costs
 introduction of court-controlled budgeting
 up-front mini-assessment of costs
 budget is a cap on the costs that a successful party can recover
from the losing party unless there is "good reason"
 Funding
 CFA's - abolition of recovery of success fees and ATE premiums
from the losing party
 introduction of contingency fee/damage based agreements
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Disclosure
 Introduction of a "menu" of disclosure options
 Applies to multi-track cases only where first CMC is on or after
16 April 2013
 Implications:
 forward planning - need to be in a position to agree an approach to
disclosure by the first CMC requiring a good grasp of documents
 budget - new CPR 31.5(3)(iii) requires a disclosure report,
including an estimate of the cost of disclosure, to filed and served
14 days before the first CMC
 co-operation - parties and their lawyers need to work together at
an early stage to attempt to manage disclosure
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Part 36
 Introduction of a new "additional sanction" for defendants who
fail to beat a claimant's Part 36 made on or after 1 April 2013
 Percentage of the damages or costs awarded as follows:
 10% for amounts up to £500,000
 5% for amounts above £500,000 up to £1m
 The maximum "additional sanction" is capped at £75,000
 To incentivise claimants to make offers
 Consider reviewing/making a Part 36 offer to take advantage
of new sanction
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Experts
 Increased focus on expert issues to control and limit expert
evidence
 From 1 April 2013 in order to receive permission for expert
evidence you must:
 provide an estimate of the costs (to be included in the budget)
 identify the issues to be addressed
 Introduction of "Hot-tubbing"
 Implications:
 identify issues to be determined by expert evidence early on
 obtain an estimate of the cost of expert evidence early on
 consider whether "Hot-tubbing" is appropriate
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North West WIN Annual Update
REGULATORY
John Gollaglee
Health and Safety
Fee for Intervention
Corporate Manslaughter
Fee for Intervention (HSE)
 Cost recovery for previously free advice provided by Health
and Safety Inspectors
 In force October 2012
 Only applies to premises regulated by the Health and Safety
Executive (not local authority or environmental health officer
regulated premises)
 Current hourly rate is £124 (no VAT charged)
Purpose
 Designed to make those who breach health and
safety legislation pay for the costs of correcting
their breach
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Fee for Intervention (HSE) (2)
Application
 Applies to almost all businesses and same hourly rate
charged irrespective of size
 Costs split where multi-dutyholder intervention occurs
Scope
 Costs charged in respect of
 carrying out visits
 writing notification of contraventions (including improvement
and prohibition notices and preparing reports)
 taking statements
 getting specialist input for complex issues and
 office work in support of the above
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The material breach test
 Fee for Intervention can only be charged where the HSE
Inspector believes there has been a "material breach" of the
legislation.
"A material breach is where you have broken a health and
safety law and the inspector judges that this is serious
enough for them to notify you in writing"
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An 'appeal'?
 It is possible to 'appeal' against a Fee for Intervention invoice
 Level One 'query' (within 21 days)
 Invoice is reviewed by an HSE Senior Manager (independent of the
line management which generated the invoice)
 Level Two 'dispute' (within 21 days of the reply to the 'query')
 Invoice is reviewed by a panel of HSE Staff and an independent
representative.
 All HSE costs incurred in handling the dispute must be met by the duty
holder, unless the dispute is upheld.
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Fee for Intervention – Prosecutions
 Is there a problem created by paying a Fee for Intervention
invoice?
 Does payment of Fee for Intervention invoice constitute
acceptance of a "material breach"?
 Does acceptance of a "material breach" preclude an effective trial
in due course?
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Corporate Manslaughter – where are we now?
 Past prosecutions
 Cotswold Geotechnical (Holdings) - £385,000
 MW Farms - £187,500
 Lion Steel Limited - £480,000
Note: Sentencing Council Guidelines state that a fine of £500,000 is usually the
starting (lowest) point for the court
 Current prosecutions
 PS & JE Ward
 MNS Mining Limited
 Mobile Sweepers (Reading) Limited
 The future?
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Corporate Crime and investigations
Defence legal costs
Bribery Act 2010
Recovery of Legal Defence Costs abolished
 The change
 Rules on Defence Costs Orders amended
 Schedule 7 to the Legal Aid, Sentencing and Punishment of Offenders Act
2012
 In force October 2012
 The impact
 In any criminal proceedings involving a defendant company
commenced after 01 October 2012, any defence costs order made cannot
include legal costs incurred by a company (unless proceedings are in the
Supreme Court).
 The response
 The importance of adequate legal defence costs insurance and
nomination
 Or, a 'fighting fund'
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Bribery Act 2010
 In force since July 2011
 Enforcement Activity
 not a single corporate prosecution
 two prosecutions of individuals
 prosecutors have continued to consider and finalise bribery and
corruption investigations involving facts that pre-date the Bribery
Act
 Under the Surface
 Civil Settlements – Rolls Royce and others
 result of internal investigations
 significant impact on M&A activity
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North West WIN Annual Update
REAL ESTATE
Steven Jennings
General Overview
 There have been no significant changes in legislation in
relation to Real Estate over the last 12 months
 But the case law continues to reflect the economic climate
 Conditional break clauses
 Business rates on empty property
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Tenant's break options
 Options – strict compliance needed
 Conditions eg:
 compliance with covenants – "material", "substantial" etc
 payment of a premium
 rent and service charges up to date
 vacant possession
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Recent cases
Rent etc up to date
 Avocet Industrial Estate –v- Merol
 tenant failed to pay £130 in default interest – lease continued
 PCE Investors –v- Cancer Research UK
 break date 11 October
 break required tenant to pay rent up to date
 tenant paid rent apportioned from quarter day (29 September) to
11 October
 not sufficient – full quarter's rent should have been paid
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Vacant possession
NYK Logistics –v- Ibrend Estates
 80,000 sq. ft. warehouse and office block
 giving vacant possession a condition of tenant's break
 tenant's contractors on site doing dilapidations work after
break date
 tenant's security guard also still there
 break failed
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Rates on empty business premises
Rates on empty business premises
 Non Domestic Rating (Unoccupied Property) (England)
Regulations 2008
 Regulation 5 – occupation for at least six weeks
 Makro Properties –v- Nuneaton Council
 warehouse – 13,000 sq. metres
 pallets of paperwork – 0.2% of the space
 Makro in occupation
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North West WIN Annual Update
CORPORATE
Nick Roome
Topics – recent developments
1. Audit Exemptions and Accounting Framework
2. Corporate Governance and Board Effectiveness
3. Entrepreneurs' Relief
4. Share Buybacks
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New regulations (1)
• The Companies and Limited Liability Partnerships (Accounts
and Audit Exemptions and Change of Accounting Framework)
Regulations 2012 – in force 1 October 2012
• Provide audit exemption for qualifying subsidiaries
• Provide exemption from preparing and filing accounts for
qualifying dormant subsidiaries
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Conditions for subsidiary audit exemption (1)
• Current position
• Members unanimous agreement (in respect of financial year)
• Parent provides statutory guarantee of all liabilities as at the
end of that year
• Company is included in parent's consolidated accounts for that
year
• Filing requirements met
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Statutory guarantee (1)
• All outstanding liabilities
• Wider than debts: extends to contingent liabilities and liabilities
in tort
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A good idea? (1)
• Directors duties – guarantee cuts across concept of limited
liability
• Does guarantee require a provision in parent accounts?
• Impact on parent solvency (S.123 Insolvency Act 1986
balance sheet solvency test)
• Guarantee is irrevocable: parent liable even if subsidiary sold
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Other points to consider (1)
• Contractual restrictions on parent guarantee
• What are anticipated costs savings?
• Is audit required for other reasons?
• Potentially class 1 transaction for listed parent
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Dormant subsidiary accounts exemption (1)
• Current position
• If company fulfils like conditions to those for audit exemption, it
may be exempt from requirement to prepare and file accounts
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Corporate governance and board
effectiveness: ABI report (2)
ABI report published December 2012
Focuses on:
• board diversity
• succession planning
• board evaluation
as fundamental to ensuring an effective board
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Board diversity (2)
Report concludes that:
• more women are being appointed
• disclosure of gender diversity is improving
BUT ABI:
• considers lack of female executives in boardrooms remains a
concern (for shareholders)
• is not in favour of legislative approach
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Recommendations: board diversity (2)
Report recommends:
• clear and specific disclosure
• greater disclosure of steps to achieve balance of skills and
experience
• companies should disclose proportion of women in senior
management and whole organisation
• development of initiatives to develop women in the
organisation
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Recommendations: succession planning (2)
Report recommends:
• meaningful (rather than "boilerplate") disclosure
• active engagement in succession planning (for board and
senior management)
• companies should report on initiatives to develop next
generation of senior management (however youthful current
management are)
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Key role of chairman (2)
Chairman's role:
• tailored to suit needs of each company
• create right board dynamic
• assist in setting agenda and ensuring (right) issues are
debated
• manage board relations with executives
• to be an ambassador and fully engaged in company's
business
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Entrepreneurs Relief (3)
What is Entrepreneurs Relief?
• qualifying capital gains taxed at 10% (v.s. typically 28%)
Criteria required to qualify for Entrepreneurs Relief:
• lifetime limit – first £10m of qualifying capital gains
• Shares
• trading company (or holding company of)
• officer/employee (company or group)
• 12 month period
• 5% votes, 5% ordinary capital
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Entrepreneurs Relief – structuring (3)
• Transaction structures and ER planning
• voting
• nominal values
• extended period if within 12 months
• management companies
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Entrepreneurs Relief – EMI options (3)
• EMI options
• from 6 April 2013, qualify for ER
• no need to meet 5% test
• option period counts to 12 months
• applies to shares realised on exercise
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Share buybacks (4)
Changes to share buyback provisions: 30 April 2013
Off-market buyback:
• ordinary resolution (not special)
• de minimis on reserves requirement - £15,000 or 5% share
capital
• treasury shares – all companies
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Share buybacks (4)
Buybacks for employee share schemes
• private company – approve multiple buybacks by ordinary
resolution
• payment by instalments
• financed out of capital with solvency statement and special
resolution
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North West WIN Annual Update
Networking Lunch
25 April 2013