Business Brief: September 2018

Welcome to the September issue of the Business Brief. You may have already read that we’ve been shortlisted by the Law Society, the national body representing solicitors in England and Wales, for an Excellence award in the field of Learning and Development. If you’re a client or introducer reading this you’ll be pleased – but hopefully not surprised – to know that we invest heavily in making the excellent lawyers we recruit outstanding. If you’re a lawyer reading this and would like to work in a firm that values personal development, you should get in touch.

We find out whether we’ve won the award in October, but just being shortlisted is an honour – there are nine shortlisted firms out of a possible 9,000. Thanks for reading our Business Brief, and we hope you find something useful for your business.  As ever, the content is written by our own solicitors with our network of clients and introducers in mind… putting their learning and development to practical use.

If you have any comments or suggestions, please email us or call David Getty on 01323 435900.

This month's articles:

Landlord unreasonable for refusing consent for planning permission

The Court of Appeal recently held that a landlord was unreasonable when it refused a commercial tenant’s request for consent to apply for planning permission for a change of use.

In this instance the tenant had a lease of a building which consisted of a basement and ground floor (used for retail), a first and second floor (used for offices or purposes ancillary to retail use) and a third and fourth floor (used for residential purposes).

The lease permitted the tenant to use the property (in whole or in part) for residential use. However, in order to be able to use the commercial floors as residential units the tenant needed change of use planning permission from the local authority. The lease required the tenant to obtain the landlord’s consent to apply for such a planning permission.

The tenant duly requested the landlord’s consent, which was refused.

The landlord did not consent to the change of use application because if the tenant changed the building’s use to residential, it would have increased the chances of the tenant being able to buy the entire building under the enfranchisement procedure.

The court found that the landlord had acted unreasonably. It held that the purpose of the clause that required the tenant to seek consent was to protect the landlord from planning enforcement action, not to restrict the use of the property to prevent the possibility of enfranchisement.

For further information please contact Cathy Allen.

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European Court of Justice (ECJ) decision clarifies workers’ rights to holiday pay

There have been a large number of high-profile cases recently concerning the status of workers. There was some uncertainty in these cases as to what rights, if any, workers had to holiday pay where they had not been given any paid holiday for the duration of their employment because their employer refused to recognise their status as a ‘worker’, which would have entitled them to four weeks’ paid annual leave.

The ECJ held that in circumstances where an employer has refused to recognise a worker’s right to paid annual leave, the worker has the right to be compensated for all of that leave on termination, whether or not he or she actually took that leave. The court found that there was no additional requirement to show that the worker was prevented from taking leave. The court further found that there was no restriction or limitation to the number of years for which holiday pay could be awarded. This is to be contrasted with untaken annual leave in sickness absence cases where there is a restriction in the carry-over period for untaken leave which is 15 months, and also the maximum period of recovery in minimum wage claims, which is six years.

For further information please contact Paul Maynard.

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Supreme Court decision on an oral variation of a contract

In a case where a contract contained a ‘no oral modification’ clause (referred to as a NOM clause) the parties later sought to vary the terms of the contract orally. There did not appear to be any dispute as to whether there was an oral variation. The question for the court to consider was whether the variation was valid and, if not, whether the terms of the agreement were to remain as set out in the written contract.

The court considered the functions and purpose of a NOM clause to include, for example, seeking to prevent attempts to undermine formal written agreements and avoid disputes.

The court found that the oral variation was invalid because to give effect to it would override the parties’ intentions as to future changes in their contractual relations. However, each case will always be decided on its facts. There is a possibility that where parties expressly agree to vary the contract orally, and in doing so expressly refer to dis-applying the NOM clause, the court may uphold that variation. Where NOM clauses exist the safer option is to agree variations in writing.

These clauses are not to be confused with an ‘entire agreement clause’, which operates differently.

For further information on commercial agreements please contact Gemma Ritchie.

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Another decision on whether a worker was an employee

There has been a flurry of cases in the last 12 months or so to decide whoare ‘workers’ in employment law. These include the widely-reported cases involving Uber, Deliveroo, and Pimlico Plumbers.

The Employment Appeal Tribunal (EAT) recently ruled against a worker and held that she was not entitled to the rights enjoyed by employees.

The case concerned a worker who provided support to vulnerable people in police custody, known as an ‘appropriate adult’. What was important in this case was the fact that she was not required to work at all. If she did decide to work she would confirm her availability and this would be put into a rota. If she was called out during her availability as set out in the rota then she would have to work. If she did not work upon being called out then she would get a strike and if she had three strikes she would not be offered any further work.

In this case the company that engaged her removed her from the rota after a number of strikes and she claimed unfair dismissal and alleged that she was an employee.

The EAT found her letter of appointment to be particularly pertinent and unambiguous in the fact that there was no requirement for her to offer any availability. The three-strikes rule only applied in periods of her availability. There was no finding of mutuality of obligations in the periods where she did not offer availability, i.e. no requirement for her to be available to work and no requirement for the company to offer her work.

The contractual documentation was key in this case and is the initial starting position in cases of this nature.

In another similar case the court found a courier to be a ‘worker’. The case concerned couriers who work at the delivery company Hermes.

The employment tribunal found in favour of the couriers and held that they were ‘workers’, meaning they were entitled to certain ‘worker’ benefits.

In this case the court took into account that whilst the couriers could arrange for cover if they were unable to work, the company retained the right to reject the couriers’ choice of cover. Further, the couriers had to ensure a certain standard of service in relation to the cover obtained. As with other similar cases the level of personal service that was required was a major consideration.

Cases such as these are highly fact sensitive, so each case will turn on its facts.

For further information on all aspects of employment law please contact Paul Maynard.

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Address of directors at Companies House

All directors must provide Companies House with a residential address and a service/registered office address. If a director’s residential address is shown at Companies House as the office/service address, he or she can now apply to amend it online so that it is replaced with an alternate address, thereby removing the residential address from public record. He/she does not need to have a reason or provide any evidence to change it.

For further information on compliance with Companies House requirements please contact Gemma Ritchie.

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Exclusion clause in business-to-business contract held valid and enforceable

The Court of Appeal has found that a wide exclusion clause, which excluded liability for loss and damage resulting from a supplier’s negligence, delay or failure, was reasonable and valid in the circumstances of the case.

The court took into account the fact that:

  • the parties were of similar size (both turning over between £2m and £5m);
  • there was a warning at the beginning of the supplier’s terms and conditions that highlighted the fact that the terms did not provide for the imposition of any damages;
  • the contract price was less than £7,500 whereas the claim for damages was over £6m;
  • the party seeking damages had insured their loss via a third-party insurance company; and
  • the supplier did offer a more expensive package that included insurance to cover the risk of loss, which was not taken up.

On the facts of the case the court found in favour of the supplier. It is worth noting that in this case the party making the claim had recovered damages through its own insurance company and it was the insurer that was effectively bringing the claim against the supplier to try to recover that loss.

For further information on business to business contracts please contact Mark Williams.

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Waiver for misrepresentation in a commercial lease held unreasonable

The Court of Appeal has held that a clause in a commercial lease, which had the effect of excluding liability for misrepresentation, was unreasonable and unenforceable. Each case will always turn on its own facts and in this case the particular clause precluded reliance on pre-contract enquiries, which are important in property matters. The clause read ‘the tenant acknowledges that this lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the landlord’.

For further information on commercial property disputes please contact Daniela Catuara.

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Disciplining an employee on sick leave

The Employment Appeal Tribunal (EAT) recently found in favour of an employee in a case where the employee had been disciplined for being on sick leave for a total of 60 days in a 12-month period. The employee had been issued with a written warning and was no longer entitled to contractual sick pay for future absences.

The tribunal was required to consider what the employer’s justification was for disciplining the employee in this way. The employer had a legitimate aim, which was to ensure adequate attendance levels and improve this particular employee’s attendance, which had been poor for a number of years. However, the EAT held that the action taken in the form of a written warning and withdrawing sick pay was not a proportionate means of achieving the employer’s legitimate aims.

The tribunal considered various factors, including the fact that the employer had not followed some of its own processes, such as referring the employee to occupational health. Also there had not been any discussion between the disciplining manager and the employee’s line manager as to how the warning may affect her.

For further information on dealing with employees’ absence please contact Nicholas Febrer.

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Residential tenants’ right to undertake energy efficiency improvements

Under the MEES Regulations, tenants of certain residential property (including assured shorthold tenants) have the right to request their landlord’s consent to carrying out energy efficiency works to the property. This right is not to be confused with works to be carried out where the EPC rating for the property falls below a certain rating. The EPC rating is irrelevant.

In making a request the tenant must secure suitable funding for the requested improvements. The landlord must not unreasonably withhold consent regardless of  the terms of the tenancy/lease.

The works are limited to a prescribed list of improvements set out within the relevant statutory provisions. Further they will only be relevant to permitted improvements if they can be funded in a particular way at no cost to the landlord. There is currently an ongoing consultation as to whether the provisions on costs should be changed so that the landlord is required to contribute.

There is a statutory procedure to follow in respect of both the tenant’s request and the landlord’s response.

For further information please contact Daniela Catuara.

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Disclaimer and copyright notice

This service is provided free of charge for information purposes only. The information and opinions contained in this bulletin are not necessarily comprehensive and do not purport to give professional advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this service.

© Gaby Hardwicke September 2018

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