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Spring 2018

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wUPDATE The EU General Data Protection

Regulation (GDPR) replaces theData Protection Act 1998 andcomes into force on 25 May2018. The new law gives individuals more control over howtheir data is used, shared andstored and requires organisationsto be more accountable andtransparent about how they use it.

The GDPR will be enforced by theInformation Commissioner's Office(ICO), which has produced awealth of guidance to helporganisations comply with theirnew obligations – seehttps://bit.ly/2A10ayF.

Recognising that micro-businessesface particular challenges inpreparing for the introduction ofthe GDPR, the ICO has launchedan awareness campaign specifically aimed at thoseemploying fewer than ten people.

This includes an introduction towhat the GDPR entails with regardto protecting people's personaldata (see https://bit.ly/2pTq8iV)and an eight-step guide to compliance (seehttps://bit.ly/2IPqZdb).

The ICO also notes that manysector and industry groups aregeared up to help micro-businesses implement the GDPRand can be a good starting pointfor industry-specific advice.

Please contact us if you wouldlike individual advice on GDPRcompliance.

GDPR – ICO Launches Awareness Campaign for Micro-Businesses

When new partners are beingintroduced into a partnership, it iswise to finalise the arrangementsquickly in case the partners fallout. Any lack of formality in thebusiness arrangements can leadto trouble, as a recent caseshows.

The case concerned two GPs whowere in practice together. Theydecided to invite three other doctors to join their practice andrequested their solicitors to prepare a new partnership agreement.

While the terms of that agreement were being finalised,the two partners fell out, which ledto one of them being effectivelybarred from the practice. He thenapplied for an injunction whichwould allow him to return. Theother partner then issued a noticedissolving the old partnership andclaimed that a new partnership (a

'partnership at will', because itsterms had not yet been agreed)had been commenced with thenew partners.

The excluded partner claimedthat the new partnership was notyet in existence and the noticeterminating the old partnershipwas therefore invalid. The newpartners had not yet legally joinedthe partnership.

The remaining doctor and thenew partners argued that the oldpartnership had been dissolvedand that they had created a newpartnership which excluded theother doctor.

The dispute ended up in court,where it was decided that thepartnership between the originalpartners had been validly dissolved and a new partnership(the terms of which had not yetbeen finalised) was in existence

between the remaining doctorand the new partners. They hadnever intended to retain the original agreement, and in anyevent it was possible for them todissolve the existing partnership,without the excluded partner'sconsent, and set up a new one.

The case illustrates the importance in similar circumstances of putting documentation in place quickly.Where new partners are invited tojoin an existing partnership andare working in that capacitybefore the partnership agreementis finalised, there is a goodchance that the court may conclude that a partnership at will has commenced.

For advice on any partnershipissue or the creation or reviewof a partnership agreement,contact us.

Incomplete Partnership Arrangements Lead to Court Appearance

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Commercial Law UPDATE

The idea that the Internet is a free-for-allis nothing more than a persistent mythand the consequences of publishing copyright material online without permission can be severe. In one case,a television news broadcaster founditself in hot water after publishing a lovepoem on its website, to the chagrin ofthe poem's author.

The author had attracted media interestafter penning what was billed as thelongest love poem ever written. One ofthe broadcaster's reporters arranged aninterview with him and persuaded himto send her a copy of the poem. Itappeared on the broadcaster's websitefor just over 24 hours before it was takendown following the author's complaint. He responded by launching a claim fordamages for alleged infringement ofhis copyright.

The broadcaster admitted that theauthor owned the copyright in thepoem but denied infringement on various grounds. However, in refusing tostrike out the author's claim, the High

Court was not satisfied that it amountedto an abuse of process or that the litigation had been conducted in animproper manner. The ruling openedthe way for the author to pursue hiscase to trial.

In such cases, an out-of-court settlement is the most likely result, butthe situation could have been avoidedentirely had the copyright owner's permission been obtained in advanceof publication.

If you are considering quoting anyone else's material or using animage found on the Internet, it isimportant to ensure that you havethe right to do so. Many intellectualproperty rights are jealously guarded.

Copyright Law Still Applies on the Web

Investors inevitably take risks, but they are entitled to expectthat finance professionals in charge of their portfolios will follow their instructions and manage their exposure to risk inline with them. That certainly did not happen in one HighCourt case in which a successful businessman's seven-figureinvestment shrank by more than half over a five-year period.

The businessman had invested £1.5 million in a portfolio runby a finance company in 2009. By the time he removed hisfunds in 2014, his investment was worth only £681,443. Helaunched proceedings against the company, allegingbreach of contract, breach of statutory duty and negligence, claims that were denied by the advisers.

In upholding his claim, the Court found that he had chosento invest in a medium-risk portfolio but that the finance company had breached its mandate by placing much ofhis money in higher-risk assets. The company had alsobreached its contractual obligation to operate a stop-loss

policy by which it should have automatically sold any investment that made a loss of 5 per cent.

The businessman was entitled to be compensated for hiscapital loss. However, the Court rejected his claim for furtherdamages to reflect the growth that his portfolio would haveachieved had it been invested in accordance with hisinstructions. He knew that his portfolio might not prosper, evenif properly managed, and an award under that head wouldhave the effect of removing any risk in the investment.

The final settlement will be the outcome of negotiationsbetween the two sides.

If you have suffered a loss because you relied on negligent advice given by professionals or because theyfailed to follow your instructions, contact us for advice onhow to seek recompense.

Investor Wins Compensation from Finance Professionals Who Let Him Down

The dangers of failing to adhere to environmental law are not just that fines or prosecutions may result. The directors of companies that fail to meet their environmental obligations can also bebanned from acting as directors.

In December, two directors of a wastemanagement company that went bustwere banned from acting as directors ofa company for seven and nine years

respectively – primarily for failing to meet their responsibilities under theEnvironmental Protection Act 1990, whichhad resulted in the risk of serious pollution.

Environmental law has real teeth andthose who fail to comply can face verysubstantial penalties. For advice on thelaw relating to your business, contactus.

Environmental Failures Bring Ban

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Commercial Law UPDATE

An empty office block in Blackpool was given a rateablevalue (RV) of £490,000 by the local valuation officer, whomade the valuation based on the expected rent for whichthe building could be let. The valuation was based on anassumed demand for a similar property.

The property market in Blackpool being saturated, the ownerof the building considered that there was little chance offinding a tenant for it at all, so was unsurprisingly unhappywith the valuation. On appeal to the Valuation Tribunal, theRV was reduced to £1 and that in turn was appealed by thevaluation officer to the Upper Tribunal, which restored theoriginal valuation.

The next step was a hearing before the Court of Appeal. TheCourt restored the £1 valuation, concluding that in theabsence of any evidence of any demand for the officeblock, there could be no legitimacy in a valuation whichrequired an assumed demand to be hypothesised.

If you are having problems with officialdom, we may beable to assist you to achieve a better outcome.

Court of Appeal Uses Real World Valuation Principles

For a person who has no need of theincome from a family company, a dividend waiver, which allows othershareholders to receive dividends butnot the person who has executed thewaiver, can be a useful device.

However, the use of dividend waiverscan present difficulties unless theprocess is correctly managed and the potential issues are given full

consideration. They should never be putin place without professional advice.

One little-known aspect of creating dividend waivers is that because theyare a 'one-sided' agreement (there isno consideration for the waiver), to be valid they must be executed as adeed. However, the drafting, preparation and execution of a deed is a 'reserved activity' under the LegalServices Act 2007 and whilst solicitors

are authorised to carry out this work,many professional tax and accountingadvisers are not.

The Chartered Institute of Taxation hasrecently advised its members that ifthey carry on such activity they must beauthorised to do so under the Act,unless they are exempt.

To ensure your company's affairscomply fully with the law, contact us.

Seeking to Waive Dividends?

Being made bankrupt is never a welcome experience, but failing tocomply with reasonable requests of theOfficial Receiver can make matterseven worse.

Once a person is made bankrupt, theyare required to deliver a statement ofaffairs within 21 days and to hand over to the Official Receiver all relevantbooks, records and papers in their possession.

In a recent case, a man had failed toprovide the Official Receiver with theinformation requested after he hadbeen adjudged bankrupt. His non-cooperation was total, leading theOfficial Receiver's representative to giveevidence that he 'has not provided anyinformation in writing or orally about his assets and liabilities, and…has not

complied with any obligation thatwould enable the Official Receiver to investigate his conduct or financialposition'.

After he had been given severalchances to put matters right, the casereturned to court where the judge

concluded that there was nothing in his'evidence or the documents before thecourt which is capable of constitutingreasonable excuse for failure to complywith the obligations'.

The man was found guilty of contemptof court, and his punishment was animmediate term of imprisonment ofeight months.

If you find yourself or your companyin significant financial difficulties,taking early advice is important.Waiting until a crisis point is reachedwill rarely lead to the most satisfactory outcome. Simply buryingyour head in the sand is never thebest course of action to take.

Refusal to Cooperate Spells Trouble

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SIMON BURN SOLICITORS IS A TRADING STYLE OF SIMON BURN SOLICITORS LIMITED REGISTERED IN ENGLAND AND WALES UNDERCOMPANY NO. 06524676 AND AUTHORISED AND REGULATED BY THE SOLICITORS REGULATION AUTHORITY (NO. 516917)

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PARTNER: SIMON L. BURN LLB (DIRECTOR)

We use the word “Partner” to refer to a share owner or director of the company, or an employee or consultant who is a lawyer with equivalent standing and qualification.

The information contained in this newsletter is intended for general guidance only. It provides useful information in a concise form and is not a substitute for obtaining legal advice. If you would like advice specific to your circumstances, please contact us.

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Commercial Law UPDATE

2016

E-Signature ConsultationUnder the Law Commissions Act 1965,the Law Commission is required to submit programmes of law reform tothe Lord Chancellor.

The latest topics put forward for consideration include a review of theuse of e-signatures. These are

becoming increasingly common asthey allow documents to be signedand executed very quickly and theelectronic version is then available forstorage.

However, although their use is commonplace, legislation does not

specifically deal with them, leading tothe possibility that a claim could bemade that an e-signature is not valid.The Commission has therefore selectedthe topic for its 13th Programme of LawReform in order to give their use therequired certainty.

A proposal is under consideration by the Government to give tenants the right to sue landlords that provide accommodation which is unfit for human habitation orbecomes so during the tenancy.

The proposal will apply to tenancies of seven years or lessand will make it an implied term in the lease that the letpremises must be fit for human habitation and will be kept soby the landlord. The requirement will include all the let areas,including common areas.

If the landlord fails to comply, the tenant(s) will be able to suefor compensation or require the landlord to put right anydefects.

Landlords are already required to keep the premises they letsafe. The changes will be introduced in a new Fitness forHuman Habitation and Liability for Housing Standards Bill.

In Principle Planning PermissionOne of the bugbears of UK planninglaw has always been that a lot of workhas to be done before a planningapplication can be consideredbecause an outline planning application must first be made, except for certain proposed brownfielddevelopments. The process can alsoinvolve considerable expense.

However, that is set to change. From 1June 2018, it will be possible to submitan 'in principle' planning application forsmall developments (ten or fewerdwellings on a site of one hectare or

less and involving 1,000 square metresor less of floor space) that consist mainly of housing, with only a limitedamount of detail (such as the maximum and minimum number ofhousing units) being required to be supplied.

On clearing that hurdle, an applicationfor technical details consent must bemade. This must be granted before thedevelopment can proceed.

It is not clear what the requirement thatthe application has to be mainly for

housing means and no doubt thecourts will, over time, provide guidance.The planning authority will be requiredto give a decision on the in principleapplication within five weeks, whichshould also help speed up the process.

There are, however, certain limitationson when the new procedure may beused.

For advice on any planning law matter, contact us.

Tenants to be Given Right to Sue Landlords Who Fail to Keep Premises Fitfor Human Habitation