When acting for a Landlord or a Seller on a commercial property transaction, we will usually receive from the Tenant’s/Buyer’s solicitor Standard Commercial Property Enquiries or “CPSEs” as they are known.
These, when sent to a client, can cause much disdain especially as a vast number of the replies will be “The Buyer should rely on its own survey, inspection, searches and enquiries”.
However, the replies to CPSEs are an important source of information for the Buyer, its solicitor and any lender and may influence whether it enters into the contract. If they prove to be false, the Buyer may expect to be able to abort the transaction (if not yet completed), recover damages or unwind the completed transaction (or a combination of these remedies). It is therefore important that where information is available to the Seller, it is disclosed to the Buyer.
The need for absolute honesty was highlighted recently where an office block owner failed to disclose the existence of service charge arrears to prospective purchasers. The Seller was ordered by the High Court to repay the deposit that had been paid by the Buyer and almost £400,000 in damages for deceit.
The £16,250,000 purchase price for the office block had been agreed and a 5% deposit was paid by the Buyer on the exchange of contracts. However upon learning that the Seller was in dispute with the office block’s principal tenant in respect of the service charge and that there were substantial arrears, the Buyer withdrew from the purchase and did not complete. It claimed for the return of its deposit and damages in respective of the wasted costs involved in its abortive purchase. The Seller argued that the Buyer had itself repudiated the contract and was therefore not entitled to relief.
The Court of Appeal found in the Buyer’s favour indicating that the Seller’s response to the pre-contract enquiries were misleading. The statement that there were no service charge arrears was untrue and “at least reckless”. The deposit was thus returnable in full and the Buyer was entitled to damages of £395,948 as a result of the Seller’s deceit.
Depending on the Seller's knowledge when it made the statement, the remedies will differ but this case highlights the need to give as much information as possible where such information is in your possession.
If the Seller chooses to reply to pre-contract enquires (there is no legal requirement to do so) and makes representations in those replies (note that not all replies to pre-contract enquiries will be representations) then it should give proper consideration to the content of the answers. They should be an accurate reflection of the Seller's knowledge at the date they are given. This is not necessarily the same as the answers being factually correct.
The Seller should make reasonable efforts to check its records for the property, or ask the appropriate people within the organisation (where the Seller is a corporate body and, therefore, has no direct knowledge of the property). This can be difficult for several reasons for example, the Seller may have owned the property for a long time, recapturing information from early in its ownership may be difficult, relevant files may have been destroyed, company employees, who had the relevant knowledge about the property, may no longer be with the company, the proposed transaction may be confidential, which makes it impossible to ask the relevant employees what they know about the property.
Where the seller does not have access to the information, it should expressly qualify its replies to the pre-contract enquiries to make this clear. It is not necessarily sufficient to do so with a phrase such as "Not so far as the Seller is aware", as this may be taken as a representation that the Seller has taken reasonable steps to identify the correct reply.
For more information or advice on this or other related property matter, please contact Shilpa Unarkat email@example.com on 0121 746 3300 or Sundeep Bilkhu on 0121 698 2200, email firstname.lastname@example.org or fill in our online enquiry form.
In a decision of importance to landlords and tenants, the Supreme Court has ruled that property owners cannot be held liable for the consequences of disrepairs of which they have not been notified.
The case concerned an accident in which the subtenant of a flat was injured when he tripped over an uneven paving stone on the pathway leading up to the front door of the block where the flat was located. The subtenancy conferred on him a right to use common parts of the block and he launched a compensation claim against the long leaseholder of the flat.
He was awarded £3,750 in damages by a judge, whose decision was later approved by the Court of Appeal. However, in unanimously upholding the leaseholder’s challenge to that ruling, the Court found that he had wrongly been held responsible for a defect in the pathway of which he had no notice.
The leaseholder was not in possession of the pathway and any obligation to repair it would only have been triggered once he had notice of the disrepair. By entering into the subtenancy, he had effectively lost the right to use the common parts and the subtenant was in any event in the best position to spot the uneven paving stone due to his frequent use of the pathway.
The subtenant had also argued that the leaseholder was, by operation of Section 11 of the Landlord and Tenant Act 1985, under an implied duty to maintain the structure and exterior of the block. However, the Court found that, as a matter of ordinary language, the pathway could not be viewed as part of the exterior of the front hall of the building.
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28 July 2016
Does your business handle personal data?
If you can answer “yes”, then we can help your business comply with the new regulations.
The General Data Protection Regulation (“GDPR”) will be replacing the current Data Protection Directive as of 25 May 2018!
All businesses handling or processing personal data will be adversely affected and will have less than two years within which to comply with the new regime.
Amongst other significant changes, the new regime requires;
- Companies must be able to demonstrate that an individual gave their consent to the processing of its data protection. The onus is on the business to prove that consent was obtained.
- Businesses that rely on consent as a legal basis for processing personal data will need to review their existing practices to ensure that any consent they obtain indicates affirmative agreement from the data subject.
- Businesses to implement technical and organisational measures. This includes conducting data protection impact statements where appropriate.
- The appointment of a data protection officer (where mandatory) with expert knowledge of data protection.
- Developing and implement a contingency data breach response plan.
- Psuedonymiseation of personal data
- New obligations on data processors. Non-compliance is subject to fines of up to 4% of annual worldwide turnover of the preceding financial year or 20 million euros, whichever is greater.
Get in touch today and we’ll guide you in the right direction. We will help you with;
- Reviewing changes to your companies consent mechanisms
- Advise on the requirements of the GDPR
- Implementing your businesses’ technical and organisational measures
- Developing the strategies that your business will have to adapt to
- Reviewing privacy notices and make any changes necessary
- Reviewing customer contracts to ensure compliance
- Advise on the requirements of Binding Corporate Rules (BCRs) for your group
General data protection additional information.
Employers are not legally permitted to delegate their duties to keep their staff safe – even if they are working in challenging environments overseas. In one case which makes that point, the family of an investment banker who died when a helicopter crashed into the Andes have won the right to multi-million-pound compensation.
In the course of his job, the man was on a mission to inspect a hydro-electric plant in Peru when the helicopter went down, costing 11 executives and two crew their lives. It had taken off in deteriorating weather conditions and crashed amidst unforgiving terrain from a height which was right at the top of its operational limits.
In upholding a damages claim brought by his widow and two young children, a judge found that his employer bore legal responsibility for his death. In challenging that ruling before the Court of Appeal, the employer pointed out that it had not arranged the flight and that the crew were fully trained and locally accredited.
The man was a high-level employee, with great autonomy, and he could be expected to decide for himself whether it was safe to get on the flight. The employer also asserted that it was wholly unrealistic, from its base in London, to carry out a risk assessment of events on the other side of the world.
In dismissing the appeal, however, the Court found that the employer had breached the non-delegable duty of care that it owed to ensure the man’s safety and that that had caused his death. The flight through the mountains was anything but routine and was inherently dangerous.
However independent-minded the man may have been, he would have obeyed an instruction from his employer not to get on board. The employer knew, or ought to have known, of the risks involved but had carried out no inquiries at all.
The amount of the family’s compensation has yet to be assessed but, given the man’s stellar earnings, the award is bound to run well into seven figures.
Freezing orders are an essential tool by which the courts ensure that alleged wrongdoers have no opportunity to disperse their assets prior to judgment or enforcement action. However, a Court of Appeal case has underlined the salutary duty on those who apply for such orders to give full and frank disclosure.
The case concerned a falling out between three brothers who were all directors of an online gaming company. Two of them had accused their sibling of transferring the company’s assets and business opportunities to another company over which he had sole control. He was also alleged to have received £3.8 million in unauthorised remuneration. He denied those allegations and countersued his brothers, claiming that they had unfairly prejudiced his interests as a minority shareholder.
Via the company, the brothers brought proceedings to recover assets and money which their sibling was alleged to have misappropriated. They obtained an asset freezing and property preservation order against him and various companies that he controlled. A search and seizure order was also executed at his home.
He argued that those orders had been improperly obtained on the basis of false and misleading assertions. There had, he submitted, never been any real risk that he would seek to dispose of assets or evidence. In dismissing his appeal, however, the Court found that the disclosure made before the orders were granted was sufficiently full and frank and painted a picture of alleged dishonesty.
Many people believe that everything on the Internet should be free. However, one case in which a businessman received a four-year jail term for wholesale breaches of film industry copyrights showed how very wrong that assumption is.
The man made £280,000 in advertising revenue from operating a series of websites which enabled Internet users to download pirated copies of films, in some cases before they were officially released. Film studios estimated that his activities over a five-year period had cost them in the region of £12 million.
He ignored a cease and desist notice served upon him by the Federation Against Copyright Theft and twice migrated his operations between websites in an attempt to avoid detection. He was ultimately jailed after pleading guilty to two charges of conspiracy to defraud and one of concealing criminal property. The latter count related to more than £80,000 in cash found at his home.
In challenging the length of his sentence before the Court of Appeal, his lawyers pointed to certain medical and psychological difficulties from which he suffered. Despite the large criminal profits generated, they argued that he was not interested in money and did not lead a lavish lifestyle. In rejecting his appeal, however, the Court noted that the offences were sophisticated, persistent and revealed a high level of culpability.
Contact John Irving or Roy Colaba email@example.com or firstname.lastname@example.org if you would like help or advice on copyright issues. 0121 698 2200
Failing to respond swiftly to litigation can be extremely costly. One mortgage lender found that out when its £1.4 million legal charge over a residential property was effectively rendered worthless by its failure to file a legal document on time.
The house was lived in by a bankrupt businessman and his wife, both of whom were signatories to the mortgage. The company sought possession of the property in order to enforce its security. However, its claim was resisted by the wife, who lodged a counterclaim by which she sought declarations that the mortgage was either unenforceable or entirely void.
She argued that the company was not licensed by the Financial Conduct Authority to enter into regulated mortgage contracts and that the mortgage was in any event void, having been executed after a petition for her husband’s bankruptcy had been presented. She also submitted that the house was held in trust for the couple’s daughter and that she had been induced to sign the mortgage by undue influence.
The company did not file a defence to the wife’s counterclaim and, as a result, a judge dismissed its claim as against her and granted her the declaratory relief she sought. The company challenged that decision on numerous grounds, but the High Court found that the possession action had rightly been struck out.
For advice on banking litigation matters please contact Kam Majevadia or on property litigation, contact Sundeep Bilkhu on 0121 698 2200, email email@example.com or fill in our online enquiry form.
Trade unions often hold firm views as to what their members should or should not be asked to do by their bosses – but one High Court case has underlined that they must not overstep the mark and induce employees to breach their contracts of employment (Govia Thameslink Railway Limited v The Associated Society of Locomotive Engineers and Firemen  EWHC 985 (QB),  All ER (D) 20 (May)).
The case concerned Govia Thameslink Railway, which operates the Gatwick Express service. The company had given an instruction to its staff to operate 12-carriage trains with a driver alone and no conductor. The Associated Society of Locomotive Engineers and Firemen (ASLEF) believed that this would put both the travelling public and its members at risk. However, the company sought an emergency injunction on the basis that the union had encouraged, procured or persuaded its drivers not to obey a lawfully given instruction.
Ruling in the company's favour, the Court found that it had a strongly arguable case that its employees were obliged to operate the driver-only trains. There was also a strong argument that ASLEF's communications with its members amounted to an inducement not to comply with such an instruction. There was also a less powerful, but still arguable, case that the union knew that, if persuaded to act in accordance with that inducement, its members would be breaching their contracts of employment.
The Court heard further argument as to the precise wording of the injunction.
The Immigration Act 2016 received Royal Assent on 12 May. It contains a wide range of measures, which include new rules intended to crack down on businesses that employ those who do not have permission to work in the UK and to prevent employers from exploiting vulnerable migrants.
The Act will:
- extend the existing criminal offence of knowingly employing an illegal migrant to include cases where the employer is considered to have 'reasonable cause to believe' that a person is an illegal worker;
- increase the penalty for knowingly employing an illegal worker from a maximum custodial sentence of two years to one of five years; and
- equip immigration officers with enhanced search and seizure powers to collect evidence, and introduce a power to close, for up to 48 hours, the premises of employers who continue to flout the law by employing illegal workers. What happens next will depend on whether or not the employer can prove that they have carried out 'right to work' checks.
The Act will also make illegal working a criminal offence in its own right, punishable by a maximum custodial sentence of six months and/or a fine. This measure will allow wages paid to illegal workers to be recoverable under the Proceeds of Crime Act 2002.
To crack down on exploitation in the labour market, which often appears to involve vulnerable migrant workers, the Act will create a new Director of Labour Market Enforcement to oversee the relevant enforcement agencies in order to provide a coherent enforcement strategy to deal with non-compliance.
Over the coming months, following consultations on the detail, regulations will be produced implementing the measures contained in the Act.
The Government has made available a range of factsheets, covering the various sections of the Act, at https://www.gov.uk/government/collections/immigration-bill-2015-16.
Advice for employers on the checks on an individual's right to work in the UK that should be carried out can be found at https://www.gov.uk/government/collections/employers-illegal-working-penalties.