Lexit before Brexit

The judiciary has just reminded us of its role as the guardian of our constitution which, although unwritten, is clear about the division of powers between the executive and the legislature.

Despite the people having spoken in a referendum, Mrs May is not able to trigger Brexit without an Act of Parliament to authorise it.   So held three eminent judges last week, who ruled that the government’s attempt to give notice under article 50 of the Lisbon Treaty would otherwise be unlawful.

It was Parliament which first subjected us to European law, making it directly applicable in our own domestic law by the European Communities Act 1972.  Under our constitution, this can only be changed by further Parliamentary authority.  The 1972 Act did not reserve executive power, even with popular support, for the government to reverse the position and cast out European law on its own, so a fresh Act of Parliament is needed for this to happen.

The government is entitled, by virtue of the Crown prerogative, to act independently in matters of international law.   However, as Brexit would also affect the laws of the land, the government’s claim to be able to use Crown prerogative for giving notice under article 50 was “flawed at this basic level.”

MPs are elected to make our laws and we can’t pass the role to the executive, even on one off issues by referendum.  Brexiteers may consider that this is undemocratic, Leavers that it prevents mob rule but the High Court has said it is the law.

If the government loses its appeal to the Supreme Court in January (and assuming Mrs May doesn’t contemplate a further appeal to the European Court of Justice!) a bill will in due course be laid before Parliament.   Whatever political twists and turns accompany it, the result will no doubt be an Act of Parliament to authorise Leave, in support of the referendum decision.  Brexit therefore still seems inevitable but the issue behind the current constitutional diversion begs the question “what actually would be the effect on our own laws when European law no longer applies?”  We’ll give some thoughts on this next time…

Link to art 50 http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-European-union-and-comments/title-6-final-provisions/137-article-50.html

 

Changes to the Companies Act 2006 - The PSC or 'persons with significant control' register and "confirmation statements"

The PSC Register

As from 6 April 2016 most UK companies and LLPs are required to keep a new statutory register called the PSC register in order to ensure that their ultimate beneficial owners and controllers are identified and that details of their holdings are made public. It is one of a number of recent amendments to the Companies Act 2006 and is designed to combat tax evasion and money laundering. 

 

PSCs are individuals who meet one or more of the following conditions:

- they hold more than 25% of shares in the company;
- they hold more than 25% of voting rights in the company;
- they hold the right to appoint or remove the majority of the board of directors of the company;
- they do not fall under the conditions above, yet have the right to exercise, or actually exercise, significant influence or control over the company; and/or
- they hold the right to exercise, or actually exercise, significant influence or control over the activities of a trust or firm that would, if they were an individual, satisfy one of the first four conditions.
 

Confirmation Statements

As from 30 June 2016 the information held on the PSC register will be required to be filed at Companies House as part of the company’s “confirmation statement”.

The confirmation statement will replace the existing annual return and will broadly cover the same areas but with some amendments to reflect the other changes to the filing regime also being introduced (including the information held on the PSC register). It should ease the administrative burden on companies as it will not require information previously filed at Companies House to be repeated.  Instead a confirmation will be given by the company that all specified information has either already been filed as required, or is being delivered with the confirmation statement.

Unlike the annual return, there will be no set date each year on which the confirmation statement needs to be made.  It can be made at any time, although no more than 12 months must elapse between confirmation statements. Once a confirmation statement has been made a new 12 month period starts to run.

 

Adverse Possession - 1066 and all that

For William the Conqueror, possession was not nine tenths of the law, it was ten tenths.  In the thousand years since then and still today (save for the last 13 years in the case of registered land) physical possession has been the foundation of land ownership under English law.

Adverse possession of land (sometimes known as ‘squatters rights’) is when someone is in physical possession of the land, without the express permission of the owner on the deeds.  After 12 years adverse possession, the prior owner will be time barred from recovering the land, which will then belong to the squatter.

There are qualifications to this.  The squatter must demonstrate ownership intention (for example, in the case of a field, by fencing it off and working it) and may not occupy the land by “force or secrecy” but otherwise, if he can prove 12 years possession (by statutory declaration and such other independent evidence – e.g. of payment of rates and bills – as can be provided) then he can apply to the government Land Registry to be registered as the new owner.

The main qualification, since 2003, is with registered land, i.e. of which the ownership has already been registered at the Land Registry, being the case now with most land in the country.   The old rules continue to apply only to unregistered land (i.e. where the owner on the deeds has not yet applied to become a registered owner).   It is still possible, under the new rules, for a squatter to apply to the Land Registry for ownership of already registered land by virtue of adverse possession but notice of the application would be given to the prior registered owner, who can then defeat the squatter’s claim by mere objection to it.

The result of the new rules is rather odd, in that ownership of land is decided (once there has been adverse possession) by simple process rather than underlying land law and can be lost by an easy oversight on the part of the prior registered owner.   A practice point for registered owners who are not owner/occupiers is to ensure that the Land Registry has their up to date contact addresses.  

Land law is complex and the above is necessarily a simplification of the rules but these are still an example of how English common law is rooted in pragmatism.

Living in the office? Make it official!

Since 2013, it has been possible to convert offices to residential use without having to apply for ‘traditional’ planning permission. Instead permission has been obtainable via a much simpler ‘prior approval’ process, saving an applicant time and cost and reducing the risk of refusal.

This temporary right was due to lapse in May 2016 but the Government announced last month that it is to continue longer term across the country (although there are some areas such as London and Manchester where the rights will not apply).

The Government has committed to the delivery of one million extra homes by 2020 and the announcement is a means of supporting this commitment while at the same time helping to preserve agricultural and greenbelt land by using up redundant office space instead. Planning minister Brandon Lewis said these “measures will mean we can tap into the potential of underused buildings to offer new homes for first-time buyers and families long into the future, breathing new life into neighbourhoods and at the same time protecting our precious green belt". The Government considers that it will provide opportunities for first-time buyers by providing more affordable homes.

Further details of the scope of the on-going prior approval mechanism will be published in due course but the key  points included in the Government announcement are:

1. Those who already have approval under the existing temporary rules will now have until May 2019 to complete the change of use and those who secure prior approval will have 3 years to complete the change of use. 
2. The new extended rights will allow the demolition of office buildings and their replacement by new build residential, subject to approval of final plans and to other conditions yet to be announced.

The extended relaxation of planning restrictions is good news for many commercial property owners and developers. However, the likely reduction in office stock may bring its own problems for businesses and society.
 

At the game

Dixon Phillips were in amongst the scrum of Cambridge professionals who touched down at the 68th annual Steele-Bodger rugby match at Cambridge University's rugby ground this week.

Michelle Oliver, Paul Dixon, Oliver Phillips and Matt Dempsey lined up at a packed Grange Road for the always well-supported Cambridge event.

The Light Blues fared better than the England team had on their own turf in the recent Rugby World Cup by banking a 36-33 victory over the select Steele-Bodger's XV in what is the traditional final dress rehearsal ahead of next month's Varsity Match against the old enemy, Oxford University, at Twickenham.

It is also one of the main professional networking events of the year, so we made a try at converting opportunities, throwing ourselves into the line, binding with clients and contacts and tackling the opposition. Three quarters went home after extra time but one of us played on with another pack, propping up the bar into the night and conceding a penalty in the morning...

 

 

That's how we roll

Dixon Phillips have been rolling high both on the lanes at the annual Handelsbanken bowling evening and at the blackjack tables at the COEL casino night.

Oliver Phillips and Matt Dempsey were on opposing teams, Tayabali Tomlin & White and McTear Williams & Wood respectively, at the Cambridge Leisure Park where all 28 lanes were filled with local businesses from accountants, solicitors and estate agents. Matt scored respectably and Oliver less so, but both struck out on the charity raffle as part of the Handelsbanken bowling event which raised more than £4,000 for its chosen charities.

 
Oliver then swapped his bowling shoes for a dinner jacket and joined Paul Dixon to try their luck at blackjack, roulette and wheel of fortune along with other COEL clients and contacts at 12a Club. Oliver was a winner last year but over-confidence was his downfall this time – John Russell of Cater Jonas taking the gambler crown with the most COEL dollars in his pocket at the end. It was a rocking night, with excellent company, music and food to accompany the fun (but professionally managed) gaming tables.

 

 

Limitations of Liability and the Unfair Contract Terms Act 1977 (UCTA)

Under UCTA any terms in a company's standard terms of business which seek to exclude or restrict liability need to be deemed reasonable to be upheld and be enforceable.

The High Court has recently decided that various limitations of liability in standard term contracts were unreasonable under UCTA. (Saint Gobain Building Distribution Ltd (t/a International Decorative Surfaces) v Hillmead Joinery (Swindon) Ltd).

The usual thinking is that limitation of liability clauses have a good chance of passing the reasonableness test if the buyer at least has some remedy, for example, replacement of the goods or a refund. If such remedies are available, then it is often considered reasonable to exclude any liability beyond what is commonly referred to as indirect or consequential loss.

In the present case, the judge was not prepared to accept clauses whose effect would deny the buyer of any remedy in certain circumstances, even if total denial would only occur in those circumstances, and a refund or replacement was available in other circumstances.

The case raises a number of old and new points for suppliers to consider:

• Where the UCTA reasonableness test is likely to apply, it is dangerous to exclude the implied statutory terms without offering something reasonable as an alternative, for example, a warranty of compliance with a written specification.
• It may be dangerous for a seller to exclude "all liability" in certain particular circumstances, even if some limited liability is accepted in other circumstances. The safer course may be not to exclude liability completely in any particular circumstance, but subject all different types of liability to an overall cap, covered by insurance, and expressed as a generous percentage of the value of the contract.
• It may be prudent for a seller to accept liability for some defined forms of loss that might otherwise be considered indirect and not recoverable, but again subject to an overall cap.

The decision in the present case is consistent with the view of some lawyers that a prudent rule of thumb is to employ drafting which results in the buyer ending up with at least a right to compensation that amounts to something like 125% or 150% of the invoice value. The case did, however, turn very much on the facts, and in other cases it has been held reasonable to cap liability at the contract price.

Dixon Phillips solicitors would be pleased to have an initial, no obligation discussion or meeting with any local business which has a query or concern about commercial law issues.