High Court rules that Foxtons' terms are unfair to landlords
The High Court has ruled that some of the terms and conditions used by Foxtons Ltd in its letting agreements with landlords are unfair.

In giving his judgment, Mr Justice Mann said some of the clauses represented a time bomb for landlords. For example, the terms required a landlord to pay substantial commission when a tenant remained in a property after the initial period of tenancy had expired – even if Foxtons played no part in persuading the tenant to stay and did nothing to collect the rent or manage the property.

Other unfair terms included requiring a landlord to pay commission even after the property had been sold and allowing Foxtons to receive a full estate agent’s commission for sale of the property to a tenant.

Mr Justice Mann held that important conditions such as these needed to be clearly highlighted, not just in the contract itself but also in sales literature and other relevant material. He said a typical consumer would be unlikely to read standard terms very carefully and would not expect important conditions to be slipped into the small print.

The case was brought by the Office of Fair Trading (OFT) under the Unfair Terms in Consumer Contracts Regulations 1999 which protect consumers against unfair standard terms in contracts with traders. The OFT says it expects letting agents to comply with the ruling.

The Chief Executive of the OFT, John Fingleton, said: “This ruling sends out a clear and unambiguous message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print. Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people's attention.

Foxtons were not the only letting agents to have terms of this kind and so the ruling could provide a welcome boost for private landlords.

Buy to let landlords who have unwittingly entered into unfair agreements of this kind may now have a good chance of recovering some of the money they have paid in commissions.

Please contact Peter Sutherland if you would like more information about landlord and tenant issues or matters relating to terms and conditions in contracts.

BACK TO TOP

Directors breached their duties when buying property

The difficulties that can arise when directors are involved with different companies at the same time was illustrated in a recent case before the Court of Appeal.

The case involved a woman and two men who were directors at a finance company. The two men also owned another separate business.

During the course of their work for the finance company the two men came across an attractive investment property which they bought on their own behalf for their other business. The woman objected because she believed the benefit of the purchase should have gone to the finance company.

The business relationship broke down and she took legal action to force the two other directors to buy her shares in the company at a fair price. The judge ruled against her saying that the property investment lay outside the finance company’s scope of business and so therefore she had not been prejudiced.

However, that ruling has now been overturned by the Court of Appeal. It held that the two men had come across the investment opportunity during the course of their work for the finance company and therefore the finance company should have been offered the chance to take advantage of it.

That had not happened and the men had therefore breached their fiduciary duties – that is, their obligation to act in the best interests of the company they are representing.

The case has now been referred back to the lower court to determine to what extent the woman’s interests had been prejudiced and how much compensation she should receive.

Please contact Peter Sutherland if you would like more information about this or any aspect of company law.

BACK TO TOP

Steep rise in tribunal claims poses a threat to employers
The recession has sparked a huge rise in tribunal claims which have created costly and time-consuming problems for employers.

Many of the claims relate to issues such as working time and equal pay but, not surprisingly perhaps, there has also been a rise in the number of cases involving redundancy.

The latest full year figures from the Tribunal Service show that the overall number of claims rose by 43% in 2007/08 to a record high of 189,303. The provisional figures for 2008/09 show that this trend looks set to continue. Between April 2008 and February 2009, the number of claims relating to redundancy payments rose from 7,313 to 9,220. There were also substantial rises in claims over unfair dismissal, breach of contract and failure to inform and consult over redundancies.

There are several reasons for the increases. The recession has put pressure on many firms who have felt the need to lay people off, reduce hours or scale down benefits. All of these procedures can become a minefield when it comes to employment law. The problem has been made worse in some cases because the recession took hold so quickly.

Some firms have been taken by surprise and have rushed into changing working practices or making staff redundant without following the correct procedures. This haste has left them open to claims from disgruntled staff.

In the past, many employees who lost their jobs would find new work quite quickly and so would not feel the need to pursue a tribunal claim. The recession has made it much harder to find work so people have fewer options. They may choose to take legal action to make up for their lack of income.

The other difficulty for businesses is that employees are more aware of their rights these days and are prepared to pursue claims relating to pay and conditions.

Looking to the future, employers will have to get to grips with the new Equality Bill which introduces stronger measures to tackle various forms of discrimination and could lead to a further rise in claims relating to age, disability and equal pay.

Many of the claims will be genuine but there is also a danger of a victim culture emerging in which someone who doesn’t get their way in the workplace feels entitled to make a claim.

BACK TO TOP

Company entitled to damages from director who set up rival firm
A company is to receive compensation from a former director who set up a rival firm.

The company provided engineering and technical personnel for clients including the United States Defence Department. Its operations director, who was also an employee of the company, was responsible for the management of the business.

While still working for the company, the director set up a rival firm. He didn’t tell the company that he had done so. He also approached some of the company’s customers and took confidential documents.

The company claimed damages for conspiracy, breach of contract and breach of fiduciary duty – that is, the duty directors have to act in the best interest of the company employing them.

The court held that once he had resigned, the director was entitled to compete against his former company in any way he chose. However, he had been in breach of his duty because while working for his former company, he had failed to alert them that he was about to set up a rival business.

He had also taken documents and approached customers.

The court granted an order for damages to be assessed and also granted an injunction preventing the director from providing rival services until a year after his resignation.

If you have experienced a similar situation and would like to see if you have grounds to claim for damages please contact Faizal Essat.

BACK TO TOP

College not bound by 70 year old restrictive covenant
A court has ruled that a college was not bound by a 70-year-old covenant which would prevent it from building on some of its land.

Norwich City College wanted to develop its campus but was informed that there was a restrictive covenant stating that nothing could be done to the land that would create a nuisance to the surrounding neighbourhood.

The college therefore sought a declaration under the Law of Property Act 1925 that the freehold land on which its campus stood was no longer affected by the restrictive covenant which was drawn up 70 years earlier.

The court heard that the current college grounds were part of a much larger estate which was sold off in several sections in the 1930s. The judge examined the wording of the covenants and concluded that they were designed purely to protect the interests of the vendor at that time as he sold the land off in small sections.

The vendor did not want purchasers to do anything that might affect the parts of the estate which remained unsold at that time. However, the wording made it clear that the protection was merely for the benefit of the original vendor and that benefit did not pass on to subsequent purchasers.

Therefore, it could not prevent the college from proceeding with its development.

For more information on restrictive covenants please contact Peter Sutherland. We offer a FREE 30 minute consultation to take advantage of this offer please call Peter Sutherland directly on 0115 988 6714.

BACK TO TOP

Government announces timetable for new planning regime
The Government has published its timetable for implementing the new planning regime for major infrastructure projects.

The Infrastructure Planning Commission (IPC) was introduced by the Planning Act 2008. It’s designed to speed up the application process for large projects such as wind farms, power stations and railways. It’s hoped to reduce the time taken to make decisions from up to seven years to less than one year.

The IPC will also give the public more opportunities to express their views.

Ministers have now announced that the IPC will be up and running from October and will then begin accepting applications from the energy and transport sectors next year.

The Department for Communities and Local Government has published a route map for implementation. The IPC will begin accepting applications for the energy and transport sectors from 1^st March 2010, for the waste water and hazardous waste sectors in April 2011 and the water supply sector in April 2012.

The Housing and Planning Minister John Healey says the timetable will enable developers to speak to the IPC and seek advice before it starts taking applications.

The route map and tables have been published at www.communities.gov.uk/planningandbuilding/planning/planningpolicyimplementation/reformplanningsystem/planningbill/.

BACK TO TOP

More firms taking legal action to recover debts
UK companies are stepping up their approach to dealing with bad debts, according to a new survey by the business information provider, Creditsafe.

Its research shows that one in four businesses intend to take legal action over the coming year to enforce the recovery of outstanding debts. The tougher approach comes as six out of 10 businesses believe they will have to contend with an increase in defaulted payments for the rest of this year.

The survey also revealed that one in five businesses intend to introduce more stringent penalties for late payment. In some cases, this will involve charging interest at 100%. The Creditsafe research discovered that a television production agency has modified its terms and conditions to allow it to charge 100% interest on invoices not paid within its 30 day settlement period.

A Creditsafe spokesman said: "While enforcement of contractual penalties used to be a last resort, increasingly companies are embracing legal action as soon as payments slip beyond the timeframe set out in their terms and conditions.

“We could see the courts increasingly overburdened with claims and increasing numbers of involuntary insolvencies as firms demand immediate payment of outstanding invoices."

The survey confirms that more and more businesses are prepared to take action to protect their liquidity position and, of course, it is the firms who are the most proactive who are the ones most likely to recover money owed to them. Firms who sit back and wait are the ones most likely to lose out.

In most cases, the matter can be resolved without having to go to court. A solicitor’s letter outlining the action that may be taken if the overdue amount is not paid is often enough to ensure that the debt is settled promptly.

Please contact Fazial Essat or Marcus Brown if you would like more information about recovering debts.

BACK TO TOP

Tenant’s notice to exercise break clause was not valid
Two companies belonging to the same group have failed to exercise their right to break a commercial lease because only one of them served notice on the landlord.

One of the firms involved was dormant and was a completely owned subsidiary of the other, active company. Together they had been granted a ten-year lease on a warehouse.

The active company then served notice on the landlord that it wanted to exercise the break clause. The name of the dormant company was not mentioned in the notice.

The landlord argued that the notice was invalid as it did not come from both companies. The companies responded by saying that a reasonable landlord would have known that giving only one name had simply been an administrative error, especially as one of the companies was dormant, and so the notice was valid.

However, the High Court has ruled in favour of the landlord. The judge said the notice was invalid because it created real doubt as to whether it came from both companies, especially as there had been nothing in the communications between the two sides to suggest that a reference to one of the companies should be taken as a reference to both.

Please contact Peter Sutherland if you would like more information about commercial leases or any aspect of commercial property law.

BACK TO TOP

WE OFFER A FIRST 30 MINUTE FREE CONSULTATION
We have easy on-street parking outside the office.

Andersons Solicitors

About Andersons | Business services | Individual services | Who's who | Useful links | Contact & find us |
Email us | © Andersons Solicitors in Nottingham

Andersons Solicitors, 40-42 The Ropewalk Nottingham NG1 5EJ

Tel. 0115 947 0641  Fax. 0115 950 4252                                                     Click here for location map