Government Loses Appeal to Reduce Solar Subsidies

On 25 January 2012, the Court of Appeal ruled that that the government’s attempts to prematurely halve solar subsidies paid to households with solar photovoltaic (“PV”) panels were unlawful because they breached the statutory scheme for modifying “feed-in tariffs” (“FITs”) under Section 42 of the Energy Act 2008.  This decision upholds the decision made by the Administrative Court on 21 December 2011.

The FITs programme was launched in the UK in order to encourage British householders to invest in solar panels.  Under the programme, owners of solar panels are paid for the electricity they generate at an original rate of 43p per kilowatt-hour.  However, the programme met with unexpected popularity and resulted in the subsidies becoming unaffordable.

The Department of Energy and Climate Change (“DECC”) consulted on phase 1 of the FITs programme in October 2011 and decided that a reduced tariff rate of 21p per kilowatt would be paid to anyone who installed solar panels after 12 December 2011.  This reduced tariff had been expected to come into effect from 1 April 2012 and the decision therefore drew strong objections from environmental groups and businesses who claimed that thousands of jobs could be lost as a result of its early implementation.

DECC secretary Chris Huhne defended the government’s decision by claiming that it would “maximise the number of installations that are possible within the available budget” and indicated that the DECC would seek permission to appeal the Court of Appeal’s judgment to the Supreme Court.

However, John Cridland (Director General of CBI) stated that the judgment should “draw a line under this saga, which saw the government scoring a spectacular own goal and confidence in the renewable sector undermined”.  Ash Sharma (solar expert at IMS Research) also condemned the government’s actions stating that it would create “further confusion amongst the industry and prevent homeowners and businesses from fully understanding the potential risks and rewards of installing their own solar PV systems”.

The government has already put a contingency plan in place which means that any installations past 3 March 2012 will attract the lower rate.  However, the rate which will apply to those who install solar panels between 12 December 2011 and 3 March 2012 will remain unknown until the conclusion of the DECC’s threatened appeal to the Supreme Court.

Peter Bott
Trainee Solicitor
PBott@LawBlacks.com

National Planning Policy Framework continues to cause controversy

In July 2011 the Department for Communities and Local Government published its draft National Planning Policy Framework (“NPPF”) which set out a radical revision of our existing planning framework.  The NPPF was produced because, according to the Minister for Planning, Greg Clark, “planning has tended to exclude…people and communities”.  Clark claimed that the NPPF “changes that by replacing over a thousand pages of national policy with around fifty, written simply and clearly,…allowing people and communities back into planning.”

The key change made by the NPPF is a “presumption in favour of sustainable development”.  With reference to a recent Conservative Party Green Paper, it appears that this presumption means that “all planning applications will be accepted automatically if they conform with national planning guidance”.

However, the NPPF has attracted fierce criticism from influential organisations such as the National Trust and the Campaign to Protect Rural England (“CPRE”) who allege that the NPPF sacrifices long-term environmental and social goals in favour of short-term financial gain.  The CPRE have been particularly forthright in their response, claiming that the NPPF is “unworkable and damaging as a statement of national planning policy”.

In its defence, Clark stated that the NPPF hands power back to local communities to decide what is right for them and is user-friendly and accessible.  It is intended that this will have the effect of reducing planning costs and speeding up the progress of developments.

Nonetheless, while the controversy surround the NPPF continues, it is expected that it will be finalised by April 2012 and thereafter key consent and advisory agencies such as the Environment Agency, Highways Agency, English Heritage and the Health and Safety Executive will be required to promote sustainable development and also ensure that consents are approved quickly.

Please contact our Property Department on 0113 207 0000 if you require advice in relation to residential or commercial planning matters.

Peter Bott
Trainee Solicitor
PBott@LawBlacks.com

Bribe and Gloom

Gifts and hospitality are an everyday part of corporate life with businesses investing money to build relationships and market their products. Although part of the business culture, such practices can give rise to bribery. The new Bribery Act seeks to clamp down on bribery by introducing tough new anti-corruption laws. With the CPS prosecuting their first case under the Act, individuals and companies alike must be aware of their responsibilities and the risks involved.

Bribery occurs when a person offers, seeks or accepts a payment, gift or favour that influences a business outcome improperly. The Bribery Act makes it an offence to pay or receive a bribe. This covers transactions which take place both in the UK and abroad and in the public and private sectors.

A person would be guilty of an offence if they offer, promise or give an advantage to another person intending them to be rewarded for or induced to perform a function of a public nature; an activity connected with a business; an activity carried out in the course of employment or an activity carried out on behalf of a body of persons.

An offence can also be committed by a company or partnership where a bribe has been paid on their behalf by an employee or agent to gain or retain a business advantage. It is, however, a defence to have adequate procedures in place to prevent bribery. Where a bribery offence has been committed by an organisation with the consent of a senior officer (e.g. director, manager or company secretary) they can also be held liable and proceedings can be taken against them.

The advantage does not have to be financial and the offer can be carried out through a third party. The offence does not have to take place in the UK but the person committing the offence must have a close connection.

Bribes paid by an employee or agent of a subsidiary company will not automatically trigger liability on the part of the parent company even if an indirect benefit is obtained (e.g. payment of a dividend) unless the employee or agent intended to obtain or retain business for any of those companies. However, an indirect benefit from a bribe on the part of a company could give rise to money laundering offences under the Proceeds of Crime Act if they were aware or suspected that the dividend represented the profits obtained from the bribe.

Facilitation payments are small payments demanded by officials to provide a service they are obligated to perform, for example the processing of a visa application. Particularly large or regular payments would make prosecution more likely. However, any person making payments under fear of loss of life, limb or liberty would have the defence of duress available to them.

Charitable donations are permitted but you should ensure that the charity is registered and that monies are being paid to the organisation directly, rather than to an individual. Care should be taken when making a donation if the charity has a connection to a customer or organisation that might influence your company’s business.

All employees should be made aware of the procedure for reporting any breaches of procedures relating to bribery and you should consider whether to include provision in employment policies confirming that any breaches could lead to disciplinary action. Companies could consider providing guidance to their staff on what gifts or hospitality are acceptable, usually by reference to a financial limit.

The appropriate procedures for any particular company will depend more of the level of risk faced by a business of that nature, rather than the size of the company. The six principles of bribery prevention are proportionate procedures, top-level commitment, risk assessment, due diligence, communication, monitoring and review. Together, these principles will assist in establishing an anti-bribery culture. The main requirement of the Bribery Act is for companies to ensure that they have adequate procedures in place to combat bribery and corruption.

Organisations can face unlimited fines and serious reputational damage if found guilty of the bribery offences. Individuals can also be ordered to pay unlimited fines and/or imprisoned for up to ten years.

Munir Patel, an administration clerk at an Essex Magistrates Court is the first person to be convicted under the Act after accepting £500 from a Defendant to ‘fix’ a motoring offence. Mr Patel promised an individual that he could influence the course of criminal proceedings in exchange for the payment. Mr Patel was sentenced to 3 years imprisonment.

The Serious Fraud Office has indicated that it will focus on bribes in excess of £1 million, but this case shows that all bribery will be investigated and will be prosecuted where that is in the public interest.

The more lavish the hospitality the greater the risk it will be viewed as an intended bribe. That said, bribes can also be based on relatively modest expenditure. Generally speaking, hospitality which is reasonable, proportionate and made in good faith will not be penalised. Consideration will be given to what is normal or expected practice in a particular sector or country, but this will not be conclusive. The hospitality needs to have a clear connection with legitimate business activity and transparency is key.

The purpose of the Act is not to outlaw normal and legitimate business practices. Justice Secretary Kenneth Clarke said that companies can “rest assured – no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix”.

Companies should act quickly in assessing their bribery risks and instigating proportionate procedures.

If you require assistance with any issue arising out of the Bribery Act, please contact Luke Patel on 0113 227 9316 or by email at LPatel@LawBlacks.com

 

Landlords Beware

The Localism Act, to come into force in April this year, is set to amend the courts’ powers in relation to a landlord’s responsibility to protect a tenant’s deposit by paying into a relevant scheme, and to provide set information about the scheme to the tenant.

The Housing Act 2004 set out various penalties for landlords who fail to protect their tenants’ deposits, chiefly that landlords cannot serve notice to repossess the property at the end of the fixed term until the deposit is protected, and that a landlord failing to protect the deposit would be liable for a fine of three times the deposit. The period to protect the deposit under the 2004 act was 14 days.

However recent legal rulings have pulled the teeth of the 2004 Act in two ways:

• The courts ruled that even if the deposit was not protected within the 14 day period, so long as it was protected at a later date, no penalty would be payable. Similarly a landlord wishing to repossess could protect the deposit immediately before serving notice, and suffer no penalty.
• Secondly, once the tenancy had ended, the tenant would no longer be covered by the Act and so would lose any ability to bring proceedings against a landlord in breach.

Landlords have therefore been able to take a relaxed attitude to protecting deposits, and the 14 day period given in the 2004 Act has virtually ceased to be relevant.

The Localism Act (amongst a wide range of other provisions) will make the following key amendments to the 2004 Act:

• The 14 day period to protect the tenancy (and provide the relevant information to the tenant) is extended to 30 days from receipt of deposit.
• Landlords failing to protect the deposit and provide the relevant information within the new 30 day period may be ordered to repay the deposit and will also have to pay a penalty of 1-3 times the deposit’s value. This will apply whether the deposit is protected late or not at all (although the courts will presumably take into account how soon and under what circumstances the deposit was protected, when deciding what penalty to order). A fine of at least the value of the deposit would seem to be the minimum, and so even the most well-meaning of landlords will face a penalty if the deposit is not protected on time.
• Tenants will be able to bring proceedings for breach of the Act after the end of their tenancies.
• Regarding a landlord’s ability to serve notice to repossess at the end of the tenancy term, under the amendments to be brought in by the Localism Act, a landlord who has failed to protect a deposit by the 30 day deadline will only be able to serve such a notice after refunding the deposit to the tenant, or after the resolution of a tenant’s claim for compensation for the landlord’s failure to protect.
• A landlord’s ability to repossess against squatters, or for non-payment of rent or other breach, is not affected, although it is possible that any penalty for non-protection of deposit may be set off against rent arrears in the same way as awards for dilapidation of property are.

Once these provisions become law, landlords will be forced to take the tenancy deposit deadline far more seriously, both to avoid the penalties and to keep their options open regarding regaining possession of their property. Alternatively, many landlords may simply not take deposits from their tenants at all, thereby sidestepping the legislation minefield entirely. Landlords should be aware, though, that money received from a tenant under any other name that fulfills a deposit-like function (such as an extra month’s rent in advance) may still be viewed as a deposit by the courts.

For more information or advice on these and related matters, please contact Luke Patel on 0113 2279316 or by email at LPatel@LawBlacks.com

Employment Tribunal Statistics

In 2010/2011 there were 218,000 claims received by Employment Tribunals.  The Ministry of Justice statistics illustrates an 8% decrease in claims brought on the previous year but this is still a 44% increase when compared with 2008/2009. In comparison, there were in fact 7% more claims disposed of (closed through eg. withdrawal, settlement or hearing) by Employment Tribunals (244,000) in 2010/2011 than in the previous year.

Of the claims disposed of by the Employment Tribunals in 2010/2011:

• Only 12% were successful
• 32% were withdrawn
• 29% were ACAS-conciliated
• 10% were struck out prior to a hearing

The following claims increased in number in 2010/2011 when compared to the previous year:

• Working Time – up 20%
• Part-time Workers Regulations – almost trebled
• Age discrimination – up 32%

The average tribunal awards were:

• Unfair dismissal – £8,924
• Age discrimination – £30,289
• Religious discrimination – £8,515
• Race discrimination – £12,108
• Sex discrimination – £13,911
• Disability discrimination – £14,137
• Religious discrimination – £11,671

Costs awards are still relatively rare in the Employment Tribunal, however significantly more were awarded in favour of respondents (355 costs awards) than claimants (132 costs awards).

Unmarried and Unprotected: A Will is the Only Option

Writing a Will is one of the most important arrangements a person can make during their lifetime. By writing a Will, you ensure that upon death your estate is divided exactly in accordance with your wishes. You have complete control over who does (and who does not!) receive a share of your assets when you die. Given that this division of assets is so important, it is hard to believe that so many people fail to make Wills.

Recent figures show that around 30 million people in Britain have not made a Will. Could it be that people are simply unaware of the importance of making a Will? Or perhaps ignorant of the law regarding what happens if they do not? It is a common misconception that even without a Will, upon death a person’s estate will be divided amongst the intended recipients automatically. This is simply not the case. When a person dies without having made a Will they are said to have died ‘intestate’ and the distribution of their estate is governed by a set of rules set out by the law known as the ‘intestacy rules’.

Under the intestacy rules, if you are married or in a civil partnership and do not have children, the first £450,000 of the deceased’s estate will automatically pass to the surviving spouse. Anything over the £450,000 threshold (the residue) will then be divided equally into two parts. One part of the residue will pass to the surviving spouse and the other part will pass to the parents of the deceased. If there are no surviving parents, then any siblings of the deceased will inherit this share.

Alternatively, if you are married or in a civil partnership and do have children, the first £250,000 of the deceased’s estate will automatically pass to the surviving spouse. The residue will again be split into two parts, with half being held on trust for the surviving spouse and the remaining part being split equally between the deceased’s children.

Although these rules are not ideal and are in no way appropriate for all family set-ups, at least it can be said that the spouse is provided for in both situations. The real issue arises when a couple are not married.

It is unnerving to think that in today’s society, where cohabitation is so common, that there is no provision for unmarried couples in the intestacy rules whatsoever. The current rules state that any children of the deceased would inherit the estate absolutely. If the unmarried couple did not have children, the estate would pass in full to the deceased’s parents and if no parents will pass to any surviving siblings (if no siblings, grandparents and if none to various family members after that).

The Law Commission published a report in December which recommends a reform of this area of the law so that certain unmarried couples have the right to inherit upon each other’s death under the intestacy rules. It proposes that couples who have been living together for five years or more have a right to inherit under the intestacy rules. Where a couple have a child together, it proposes that a claim could be made after two years of living together.

Although these proposals are a step in the right direction in encouraging fairness to unmarried couples, these proposals are in the very early stages of the law making procedure and these changes may never be put into place. Even if these proposals do become law and the intestacy rules are widened to include unmarried couples, how would a couple prove that they satisfy the criteria? What evidence would there be to prove the date a couple started cohabiting?

This whole issue can be avoided if a Will is made that directs exactly what assets are to be left to the partner upon death. The fact is that in cases of both married and unmarried people, the intestacy rules are intended to be a ‘last resort’ in dividing up an estate after death. The ‘one size fits all’ nature of the intestacy rules can never reflect a person’s wishes entirely and in some circumstances can leave no provision for loved ones whatsoever. The rules are hugely outdated having been written in 1925 and cannot adequately reflect modern day family set-ups almost 90 years since their creation.

Every family set-up is unique. It is so important that everyone has a Will to reflect their own circumstances. The only way to avoid these problems and to give you complete control as to who your estate is passed to upon your death is by making a Will.

Making a Will is a simple and straightforward process. If you would like to make a Will, please contact our Private Client Department on 0113 207 0000.

Lucy Rigden
Trainee Solicitor
LRigden@LawBlacks.com

The Bribery Act 2010 at Christmas

The Bribery Act 2010 (“the Bribery Act”) became UK law on 1 July 2011. The Act contains two general offences of the giving/promising of a bribe and the receiving/requesting of a bribe (sections 1 and 2 respectively); and two further commercial offences of bribery of a foreign public official and failing to prevent bribery on behalf of a commercial organisation (sections 7 and 6 respectively). A business will be liable under section 7 if one of its employees or agents commits bribery on its behalf, even if it has no knowledge of the conduct.

In the upcoming festive season many businesses will be giving and receiving gifts and hospitality to and from clients and suppliers. In the absence of careful consideration, this could trigger an offence under either section 1 or 2 of the Act for the individuals concerned, and also under section 7 for the employer (or the business of which the individual is an ‘associated person’ – eg. in agency scenarios). The penalties are potentially huge, including unlimited fines and 10 year prison sentences.

In light of the above, Royal Mail have recently issued guidance to its workers proscribing £30 as the maximum value allowed to be accepted as Christmas tips by post workers. This poses the question – when can a Christmas gift constitute bribery?

Guidance issued by the Government highlights the importance of proportionality when giving and receiving corporate hospitality and gifts. The offence of bribing another person, or receiving a bribe, is such where the giving of the ‘gift’ is intended to bring about the improper performance of a relevant function of the receiver. ‘Improper performance’ means performance which breaches an expectation that the receiver will act in good faith and impartially. The test is what a reasonable person would expect in relation to the performance of that function or activity. Any gift should be proportionate in the circumstances; for example giving an extravagant gift to a new contact just before submitting a tender to their business would likely be inappropriate, however giving a bottle of wine to a long-standing business contact is highly unlikely to constitute bribery.

When assessing gifts where bribery is alleged the authorities would look at the value, the way in which it was provided and the level of influence that the receiver of the gift has on the business decision in question.

Therefore it is unlikely that the usual small token gifts often exchanged by businesses at Christmas would trigger an offence under the Bribery Act, although, if an individual or a business feels it necessary to hide or cover up the giving of any gift or hospitality then this would infer questionable status of the gift.

Some guidance for businesses when taking part in the giving and receiving of Christmas gifts in particular may be:

• Ensure transparency in procedures relating to the giving and receiving of gifts and make these clear to all staff and agents.
• Keep a record of gifts given and received to promote transparency.
• Make it clear that any gifts or hospitality should reflect the desire to cement good relations or improve the business image and NOT give the impression to the recipient that they are under any obligation to confer any business advantage.
• Ensure that any gift is appropriate in all the circumstances. Consider the ‘reasonable person’ test.

Where the commercial offence under section 7 is concerned, there is a full defence under the Bribery Act if the business in question had ‘adequate procedures’ in place to prevent bribery. Adequate procedures will be procedures that are proportionate to the business in the circumstances, taking into account the risk of bribery in that particular business or industry. It is therefore important for businesses to ensure that they have formally assessed the risk of bribery and put in place sufficient clear and transparent procedures, and of course ensured that these are communicated to all staff and agents (as Royal Mail have done).

Notably, no prosecution can be made under the Bribery Act in England and Wales unless either the Director of Public Prosecutions or the Director of the Serious Fraud Office is personally satisfied that the prosecution would be in the public’s interest and that a conviction would be more likely than not. The Bribery Act is not intended to prohibit reasonable hospitality and gifts and it is unlikely that a business or individual would unwittingly be caught out.

Stephanie Round
Paralegal
SRound@LawBlacks.com

Changes to Council Tax?

On 31 October 2011, the Department for Communities and Local Government (DCLG) published a consultation document on reforms of the current council tax system. The consultation is seeking views on:

• Extending the discretion over second homes discount. This would allow authorities the power to charge full council tax on second homes.
• Abolishing council tax exemption for  vacant dwellings
• Allowing authorities to charge an “empty homes premium” for properties that have been empty for two years or more, to encourage the properties to be brought back into use.
• Making it a default position that council tax payment by instalments should be over 12 months, rather than ten as is currently the case.
• Changing the existing legislation so that properties that have solar panels installed will be unable to take advantages of business rates. This is to avoid any tax complications associated with schemes where third-party providers take possession of roofs of properties and install solar panels at their own cost, with residents taking advantage of the free electricity generated (known as “rent-a-roof” schemes).

The consultation closes on 29 December 2011 and responses should be e-mailed to: counciltax.consultations@communities.gsi.gov.uk.

Whilst this is just a consultation we would expect the majority of these proposals to be implemented by April 2012.

Glen Salt
Partner
GSalt@LawBlacks.com

Stamp Duty Land Tax (SDLT) exemption

On 25th March 2012 first time buyers will no longer benefit from the Stamp Duty Land Tax (SDLT) exemption whereby, provided both buyers have never owned a property before, no SDLT is payable up to the property value of £250,000.

Unless the coalition makes any interim changes, after 24th March, first time buyers will pay the same SDLT on their property purchases as other buyers, namely, 1% between £125,000 and £250,000.

HMRC provisions states that in order to benefit from the exemption, the buyer(s) must:

• intend to live in the property as their only or main home
• not have previously owned property or land either in the UK or anywhere else in the world – including property bought with anyone else

As many property transactions take several weeks to reach completion (handover of keys), for prospective buyers to benefit from the current exemption, they will need to instruct their solicitors (after having found a property of course!) as soon as possible. If any first-, second- or multi-time buyers have any questions about the ins and outs of property purchases or SDLT, please do contact any member of our residential conveyancing team.

 

Johanna Robinson
Solicitor
Residential Conveyancing
JRobinson@LawBlacks.com

New Child Maintenance Proposals Published

The government hopes that most separated couples will in future be able to agree child maintenance directly between them but there will always be cases when that is not possible. Proposals for the new statutory child maintenance scheme have therefore just been published which attempt to address failings with the current system.

The new scheme is intended as a fall-back option for parents who cannot agree and is intended to be quicker in terms of making assessments, fairer to parents and less costly to operate to the tax payer. It will also include measures which make assessments less reliant upon what non-resident parents disclose about their incomes as payments will be assessed on their latest tax year income, with that information provided directly by HMRC. It is hoped that this will speed up the assessment process and avoid delays associated with non-resident parents providing information about their income.

Unlike the previous scheme the level of maintenance payments will be reviewed every year to ensure that they remain fair and correct. Likewise parents who share the care of their children exactly equally will no longer be required to pay maintenance to the other. At the present time the parent not in receipt of the child benefits is still expected to pay something, albeit a significantly reduced amount.

Finally, there will be an on-line service which will enable parents using the scheme to see a detailed history of their case, to check the progress of their application and to make payments.

We feel that the new proposals will help address the inherent problems with the existing system but only time will tell if these measures will be regarded as a success. Many separated parents however have little faith in the existing scheme and will welcome the government’s efforts to improve the system.

Paul Lancaster
Partner
Family Law Department
Email: PLancaster@LawBlacks.com