You walk into a store, the countdown has begun. 45 seconds to purchase a plain white two slice toaster at a 50% reduction before the offer is retracted. The image of the toaster is engrained in your mind: a recurring dream but you cannot pinpoint when it began. Was it the advertisement you saw at the bus stop or whilst you were waiting for your food in a restaurant? Maybe it was the glowing, and seemingly genuine, review from Mark who insisted it’s “quality!” and without it, you may as well not bother toasting bread at all.

It’s an immediate run to checkout with only 20 seconds remaining, the card is at the ready – to miss a bargain like this would be foolish. The assistant insists you have made the best purchase of your life and before you know it, you are the proud owner of a mediocre toaster.

Small print: packaging, postage and VAT are not included in the purchase price.

This fictitious purchasing journey is enough to put anyone off shopping on the high street, but this practice is not uncommon in the world of several online retailers who expose their customers to relentless sales tactics such as fake reviews, price reduction countdowns and claims of urgency, collectively dubbed “dark patterns”.

In light of the Competition and Markets Authority’s (CMA) investigation into the mattress retailer, Emma Sleep GmbH, and the introduction of the Digital Markets, Competition and Consumer Act 2024 (the DMCCA), sales tactics that excessively demand or deceive customers into making purchases are being scrutinised and online retailers are being held to account for their actions.

The Emma Sleep Investigation

The CMA set out to target retailers who utilise misleading sales practices in a digital sphere by analysing the design of online environments that affect a consumer’s decision making and action, known as Online Choice Architecture (OCA).

OCA practices include the presentation and placement of products as well as the design of the website itself which can benefit a consumer’s purchasing journey by creating a straightforward process, a useful selection of products that suit the consumer’s needs and simplifying the amount of information available.

It can also be designed to benefit the retailer to the detriment of the consumer. OCA can be used to introduce urgency tactics which alter the consumer’s behaviour by encouraging unnecessary purchases, receiving poor services and/or products, or prohibiting the consumer’s ability to search for alternatives.

Moreover, OCA can be used to increase product engagement by sharing products on social networks and encourage data disclosures by consumers.

In November 2022, the CMA launched its investigation into Emma Sleep’s use of ‘urgency’ claims and how the use of countdown timers and time limited discounts misled customers which in turn may be considered a breach of consumer law.

The CMA published a consultation letter in July 2023 confirming the discount claims made by the mattress retailer were not a genuine representation of the savings made by the consumer as the products were rarely sold at full price.

The use of urgency tactics, including countdown clocks such as 24-hour sales which were subsequently replaced by another sale, were considered “as giving a misleading impression that discounts would soon end” which would pressure consumers into buying.

Emma Sleep GmbH did not agree to give sufficient undertakings to the CMA to address its practices. On 29 May 2024, the regulator issued a letter before the claim, threatening proceedings unless the retailer changed its practices.

Under the new DMCCA, the CMAs powers have been strengthened and those who fall foul of consumer laws can be directly penalised by the CMA without the need for court proceedings.

The Digital Markets, Competition and Consumers Act 2024

The eagerly anticipated DMCCA received Royal Assent on 24 May 2024 and is set to hold online retailers responsible for manipulative sales practices. The use of “dark patterns” to sell products and/or services will be deemed an unfair practice under the consumer law which is set to be in force by Autumn 2024.

The DCCA introduces significant changes to consumer rights as well as the regulation of competition in digital markets including mandatory merging reporting requirements and pro-competition interventions.

• Unfair trading: Revoking the Consumer Protection from Unfair Trading Regulations 2008, the DMCCA seeks to protect consumers from unfair commercial practices that are likely to give rise to the “average consumer” making a transactional decision that they would not have otherwise taken had they not been subjected to a misleading action, omission or aggressive practice, the traders failure to include relevant information in the invitation to purchase, or any circumstances listed in Schedule 20 of the DMCCA.
• Subscription contracts: A contract between consumer and trader for the supply of goods, services or digital content that auto-renews or contains a free or reduced trial, after which the consumer automatically incurs liability unless the contract is terminated, will now require informed consent and opt-out notices. Traders are now expected to set out pre-contract information to the consumer clearly and issue alerts when the contract is due to end or renew, allowing the consumer to terminate in a straightforward manner. A 14-day cooling off period will also be available.
• Drip pricing: A term used to describe the act of presenting an initial price for a product and then adding supplemental charges (such as VAT, postage and packaging, and booking fees) at the checkout. The DMCCA will now require traders to set out any additional charges from the outset.
• Fake consumer reviews: The progression of AI has led to a number of fake reviews being generated and posted to reviewing platforms deceiving consumers into believing they are real. Any submission or commission of a fake review will be deemed an unfair practice. Traders must take reasonable and proportionate steps to prevent the publication of fake reviews that are misleading or are concealing incentivisation.

The DMCCA and the actions of the CMA holding large digital retailers to account for demanding and aggressive sales tactics is a significant step for consumer protection rights. The CMA holds significant powers – traders should not ignore any potential issues in the hope that they will “go away”.

Should you wish to discuss any of the issues raised in this article, please do not hesitate to contact Tom Torkar.

Rachel Tilley, an experienced Real Estate lawyer with extensive experience within both the commercial and residential property sectors, has joined Michelmores as a Partner in the Transactional Real Estate team.

Rachel’s expertise ranges from the strategic land sector and large schemes for major national housebuilders to smaller bespoke developments with local landowners.

Advising on a breadth of transactions ranging from small residential development sites to major mixed-use strategic schemes, Rachel provides commercial advice and support to landowners, promoters and developers (including private housebuilders and registered providers of social housing) and local authorities. Rachel enjoys working collaboratively with all parties involved in transactions to overcome challenges and successfully deliver and complete projects.

The addition of Rachel to the Firm is in line with its strategic strengthening of its growing Transactional Real Estate team. The team was joined by highly regarded residential development and strategic land lawyer Julie Sharpe early in 2023, and expert commercial and residential property lawyer Cheryl Brady in September last year.

Of the new role, Rachel said:

“My journey as a Real Estate lawyer started with Michelmores back in 2006 and I am delighted to be returning as a Partner to the Transactional Real Estate team and to be provided with an opportunity to assist both colleagues and clients navigate change and to work alongside collaborative, creative and commercial people to deliver much needed future developments.”

Lucy Smallwood, Head of Michelmores’ Residential Development team, adds:

“We are delighted to welcome Rachel back to the team. Her Transactional Real Estate specialisms provide a fantastic opportunity for us as we continue to grow our residential development and strategic land practice. Her promotion reflects our vision for growth, along with our continued investment in exceptional talent and her contribution will be pivotal as we continue to grow.”

Read more about the Firm’s Real Estate team here

Whilst some may liken them to something out of a H.G. Wells book, others will welcome the Labour government’s abolition of the moratorium on wind. But just how effective will the policy be? We took a dive into the new proposed regime and discussed some of the constraints the new government will need to overcome to achieve their decarbonised vision.

Firstly, however, a brief history. According to the national grid, wind turbines have been around a lot longer than many of us would expect. The first commercial wind turbine was created in the 1850s by inventor Daniel Halladay and businessman John Burnham in Illinois. They patented the first commercially viable windmill, the Halladay Windmill. In the UK, the first windmill for electricity generation was built in 1887 by James Blythe in Glasgow, Scotland. Whilst many in England may think that Scotland has always been at the cutting edge of innovation when it comes to wind turbines, I am sure few of us knew that they were capitalising on the technology before any of us were born!

It wasn’t until the late 1970s that the technology began to develop at scale. Catalysed by the US energy crisis of the 1970s, officials launched a research program backed by NASA to find a utility scale energy resource. Fast forward 20 years and the UK saw its first commercial wind farm developed in Delabole in 1991, consisting of 10 turbines. Momentum gathered at a slow pace but gradually grew, and the introduction of Government subsidy schemes in the early 2000’s saw an explosion of growth in this infant industry. By 2010 the UK’s total wind capacity was at 5.4 GW and in a continual trend of exponential growth the following 10 years saw the capacity quadruple to 24GW. However, although the industry was growing, expansion of onshore wind sites began to stall in 2015 and actually suffered a small decline in 2016, slowly regaining momentum thereafter, albeit at a slower growth rate.

So, what changed? In 2015, on the cusp of a general election, the incumbent Conservative Government announced their intention to withdraw subsidy support for onshore wind farms, in an effort to ‘halt the spread of onshore wind farms’. The motive for this move was twofold; the first constituting an alleged disdain from local communities towards wind farms and the second a perception that the country had enough onshore wind capacity to meet its then 2020 EU targets. The Conservatives were re-elected in 2015 and implemented their manifesto pledge by introducing a two-stage local authority test as new planning guidance.

The guidance stated that if a council wants to grant permission for a wind farm which involved more than one turbine it must be:

1. Sited in areas identified as suitable for wind energy in the local or neighbourhood plan; and
2. Granted only where planning impacts identified by communities had been fully addressed.

As councils had not identified suitable areas prior to this guidance, this effectively created a policy vacuum, stalling any plans for imminently prospective sites.

This policy remained unaltered until 2023, when a successive Conservative Government, led by Rishi Sunak, took small steps to ease the moratorium, amending the planning rules to make it easier for onshore wind farms to be built. In a seemingly token effort, the rules were amended to give sites the green light where there was “broad public support”. The act didn’t abolish the two-part test, but merely amended the second part by adding the words ‘and the proposal has community support’. The effort to ease the restrictions seemed to have achieved the contrary, by adding a sub element to the second part of the test, adding a third hurdle to overcome.

The 4 July marked the ascension of a new party into government. The Labour Party took the keys to number 10 and wasted little time in abolishing the moratorium on onshore wind. In a policy statement issued on Monday the 8 of July, the Treasury and the Department for Levelling Up, Housing and Communities and the Department for Energy Security and Net Zero, committed to ‘doubling onshore wind energy by 2030′. To achieve this commitment, they commented that it involved ‘removing the de facto ban on onshore wind in England by revising the planning policy to place onshore wind on the same footing as other energy development in the National Planning Policy Framework’. It has effectively confirmed that the two-stage test, introduced by the Conservatives, no longer applies. In a further effort to bolster their commitment, they propose to consult on bringing wind back into the Nationally Significant Infrastructure Projects Regime enabling decisions on large development to be taken at a national level.

So why the sudden impetus to dramatically increase the level of onshore wind? What has changed since 2015, when the government felt we had adequate levels to cope with our international commitments?

Since 2015, climate change has risen on the political and electorate agenda. Increasingly harrowing reports are suggesting that more needs to be done if we are to limit the ‘catastrophic impacts of climate change’. Part of the answer, to this planetary scale question, involves weaning our economy off fossil fuel-based energy. Whilst this has been considered in previous governments, arguments have been outweighed by the cost of transitioning to a ‘green grid’ and doing so in such a manner as to limit the fall-out to our economy and the impact that would incur on public services. However, a second advocating reason manifested itself in 2022; Russia invaded the Ukraine. In efforts to support the Ukraine, the UK imposed a series of sanctions including limiting trade with Russia. This included the purchase of oil, gas and coal, Russia’s largest exports. This sent the cost of energy skyrocketing, as a supply and demand issue arose, as one of the key global oil exporters had just isolated itself from the global market. This was felt by households and businesses throughout the UK as costs were transferred to consumers. The idea of being self sufficient in energy production seemed all the more appealing in the wake of these events.

However, there are practical issues to overcome if the new government is to achieve its aim. With the relaxation of planning rules, the new blocker to this ambition is the transmission and distribution capacity of the grid. The National Grid has announced that it requires substantial amounts of investment in the next five years to meet decarbonisation targets. Combine this with a growing need for energy with the introduction of electric vehicles, artificial intelligence and its increased server demands etc. our appetite for energy is growing exponentially.

Whilst we anticipate that these alterations to the planning regime will see a flurry of initial activity, as developers race to enter option agreements on viable sites, demand may be curtailed by an inability to connect to the grid. Whilst this announcement can be seen as a step in the right direction, the next step towards a green grid may prove to be more of a leap.

To discuss any of the issues raised in this article, please contact Mark Howard or Laurence Platt.

Addressing the 2023 Labour Conference, then-opposition leader Sir Keir Starmer described “our restrictive planning system” as “a blockage” to essential infrastructure, and “an obstacle” to house building, declaring: “Conference, we must bulldoze through it”.[1] Echoing this statement, Labour’s 2024 manifesto pledges to get Britain building again, aiming to deliver critical social infrastructure and 1.5 million homes within the next Parliament. Though light on detail, the manifesto suggests that these ambitions will be supported by reducing the cost of compulsory purchase orders by reforming landowner compensation rules.

This article explores the context and potential implications of the new government’s proposals on compulsory purchase. You can read more about the Government’s approach to housing here.

What are Compulsory Purchase Powers?

The power of certain bodies (“acquiring authorities”) to obtain private land without the owner’s consent is one of the more highly regulated and controversial aspects of land law. Exercised through compulsory purchase orders (CPOs), the power is intended to prevent individual property rights obstructing the exercise of acquiring authorities’ statutory functions. Typically, CPOs are made to unblock development or infrastructure projects deemed to benefit the greater public good.

For the most part, Parliament has developed the legislation governing CPOs cautiously; aiming to strike a balance between the public interest and the rights of private landowners. Still, CPOs remain a politically contentious issue, particularly in relation to how affected landowners should be compensated.

What changed under the Conservatives?

One of the most significant sources of contention is the concept of ‘hope value’, which contributes to the compensation paid to landowners by attributing value to prospective planning permission on the acquired land. This introduces uncertainty to the valuation of land acquisitions, often resulting in contested compensation claims, and is generally suggested to impede regeneration and infrastructure projects.

The Levelling-Up and Regeneration Act 2023 (LURA 2023) aimed to streamline compulsory purchase procedure to make projects delivering clear public benefits more economically viable. The most consequential change was to allow acquiring authorities to disregard hope value when acquiring land for housing (especially, “affordable housing”)[2], education or NHS purposes.[3] This power inevitably risks disadvantaging landowners who hold (and may borrow on) land for its speculative value, but must sell at its existing use value. Recognising this, the Act requires acquiring authorities to justify that their use of this power is in the public interest.

What can we expect from the new Labour Government?

In its 2024 manifesto, the new Labour government pledged to further reform CPO compensation rules. Their aim is to ensure that, for specific types of development schemes, landowners are awarded “fair compensation”, rather than “inflated prices based on the prospect of planning permission”.[4] The types of schemes affected by the proposal are not identified, however the manifesto claims that the reforms will deliver “housing, infrastructure, amenity, and transport benefits”.

It seems that Labour will extend acquiring authorities’ existing powers to disregard hope value beyond their current limitations (housing, health and education), to a potentially wide range of public infrastructure projects. This is in keeping with the general spirit of Labour’s economic growth plan, which includes making roads, railways, reservoirs, and other major projects faster and cheaper by “slashing red tape”.[5]

Although it is likely that an improvement in the ability to deliver infrastructure will indirectly assist with the provision of more housing, it is not a change which goes beyond what LURA did for housing.

Among the key issues that shaped this election cycle, the need for affordable housing took centre stage for many voters.[6] It is primarily in this context that Labour proposes its planning reforms. Labour aims to meet its 1.5 million new homes target by building a generation of new towns, urban extensions and regeneration projects; with a focus on increasing social and affordable housing. Labour has stated its intention to make “full use of intervention powers” to realise these ambitions.

It is worth remembering that new towns such as Milton Keynes were built on greenfield sites where there was little or no hope value to be taken into account, and as such much of the land was acquired at existing use value. Like any government with a majority, Labour has the latitude to do that again.

If the Manifesto pledge is to be taken forward, it appears to us that tweaking the need to justify that the use of the power to disregard hope value is in the public interest, might be the easiest way to advance that cause.

Final thoughts

Ultimately there are few surprises in Labour’s manifesto, which broadly aligns with the party’s messaging on the topic of land and planning, and reflects the promises of the last Labour conference. Labour’s proposed changes to CPO compensation rules aim to make the delivery of housing and infrastructure quicker and cheaper by reducing land receipts and investing the savings in new development. The strategy is effective but vague, and will draw opposition from landowners for making it significantly less profitable to own and/or purchase undeveloped land.

For Labour, it is a potentially uncomfortable circumstance that the removal of hope value to facilitate housebuilding, long promised as a shadow government, was substantially achieved by LURA 2023. As such, perhaps there will be an appetite to demonstrate more is being done, and extensions of the LURA changes might look an easy win. We query whether this would be enough to satisfy the calls of Labour’s progressive base to bring a swift and decisive end to the housing crisis.

We will revisit this topic as the new government’s proposals evolve into policy.

If you need assistance with any of the issues raised by this article, Michelmores has a wealth of experience in compulsory purchase law, and all aspects of property, planning and strategic land use. Please get in touch with  Mark Howard, Richard Walford, Helen Hutton, Fergus Charlton or Adam Corbin, who will be happy to help.

This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.

[1] Keir Starmer, Labour Conference, Exhibition Centre Liverpool. 10 October 2023.

[2] Section 15A(5), Acquisition of Land Act 1981.

[3] Section 14A, Land Compensation Act 1961; Sections 15A and Schedule 2A, Acquisition of Land Act 1981; and sections 190(1)(c)-(d) and (2), LURA 2023.

[4] “Change” Labour Party Manifesto 2024, p 38.

[5] Ibid, p 32.

[6] In June, up to a quarter of voters polled by YouGov identified “housing” as the most important issue facing the country.

When a planning application is for a significant development, it is likely to be classified as an Environmental Impact Assessment (EIA) development. The determination of these applications requires, among other things, the submission of an Environmental Statement (ES). The ES considers the impacts of the development on the environment and is to be taken into consideration by the decision maker.

The EIA process is a statutory procedure: failing to follow that procedure when required is likely to create a sound ground for a judicial review the otherwise successful grant of a planning permission.

Having established that a development is an EIA development, the next step in the procedure is scoping the various topics to be covered in the Environmental Statement. This is called scoping. The topics cover the various likely impacts of the proposed development. Flood risk, noise impacts, the impact on nearby sites protected for reasons of heritage or habitat, and the impact on protected species of flora and fauna are all commonly covered.

The scope of the environmental statement is of interest to the many stakeholders in the planning process. Developers want to know what mitigation they require to avoid unnecessary impacts. Decision makers keenly want to know that all the significant effects of the development have been reasonably taken into account in the planning balance. The general public want to know that the local and global environmental issues they consider relevant to the planning decision have been properly investigated and understood before a decision is reached, and they can shape the environmental statement by ensuring that local issues on which they may have intimate knowledge are adequately covered.

Greenhouse gas emissions have been a feature in environmental statements for many years. A development’s directly controlled contributions to global warming, arising from sources that the development has most control over, a commonly and uncontroversially included in environmental statements. So too are a development’s indirect greenhouse gases releases arising from the consumption of electricity or gas. In both cases the steps to minimise these sources of greenhouse gas emissions are considered, mitigation is identified and proposed, and alternative scenarios considered, with the outcome trying to balance the residual global warming impacts against the benefits of the development. In the case of renewable energy schemes, the impact is the positive contribution to offsetting fossil fuels usage, which plays positively in the planning balance where negative impacts on say the visual appearance of the scheme in the landscape may otherwise lead to a conclusion that the application be refused.

But what about the proposed development’s most indirect contributions to global warming? A new shop selling goods made from plastics that have been made on the other side of the globe. A proposed new road made with tarmac and to be used by countless cars and lorries. New houses to be occupied by people who will themselves directly and indirectly consume fossil fuel. How should an environmental statement grapple with these contributions to global warming? Indeed should an environmental statement grapple with these impacts at all?

These were the questions that the Supreme Court was asked to consider in the case of Finch v Surrey County Council.

The development at the heart of the Finch decision was the extraction of oil from the Surrey Downs. The Council had initially requested the environmental statement include the greenhouse gas emissions arising from the future combustion of the extracted oil. The applicant persuaded the Council this was too indirect a source of emissions to be readily accommodated in an environmental statement, so the decision to grant planning permission for the oil extraction did not take these emissions into account.

The subsequent challenge went all the way to the UK’s highest court, and attracted submissions from a range of interested parties. The claimant’s argument was that it was unlawful of the Council to determine the application for this EIA development unless the environmental statement considered the impact of the future burning of the oil.

Certain facts regarding the ultimate fate of the ‘to-be-extracted’ oil were accepted by the parties as being uncontroversial: there was a virtual certainty, indeed an inevitability, that the extracted oil would release the greenhouse gas carbon dioxide whereas if left in the ground it would not itself contribute to global warming. Even though these greenhouse gas releases would not arise at the point of extraction which was the subject of the planning application, the Court considered that these indirect emissions were an inevitable consequence if permission for the extraction was granted, and that the environmental statement was deficient because it failed to take them into account. The Court quashed the decision to grant the planning permission.

Applications for onshore oil and gas extraction are few and far between in England and Wales. So how does the judgement in Finch play out in the wider world of development? Of course there will be some confusion, uncertainty and consternation arising from Finch, but the Court’s reasoned majority judgement set out helpful comments as to why it reached the conclusion it did, and which form guidelines for how the judgment should influence the scoping of environmental statements.

The inevitability of the extracted oil resulting in indirect greenhouse gas emissions was central to the Court’s conclusion, despite those emissions not arising directly from the development described in the application. In the absence of any indeterminacy regarding the future use of the oil its greenhouse gas potential had to be taken into account, and moreover there was a readily available protocol for calculating these emissions. Whereas had there been a series of uncertain or vague intervening stages between the oil extraction and the release of greenhouse gases then those emissions may not have had to be taken into consideration. The Court also noted that there would be no need for the environment statement to measure or assess putative environmental effects which are incapable of assessment.

Campaigners pitted against any scheme will always want the decision maker to take all the scheme’s putative environmental impacts into account, but that is not necessary for the purposes of an EIA. Rather practitioners at the coal face of scoping environmental statements can readily and reasonably justify the exclusion of indirect effects that ‘may possible’ arise from a development or where the emission’s effects have no reasonable prospect of being quantified with any certainty. A decision maker could already justify the absence of the consideration of fanciful impacts. That same decision maker can readily and reasonably justify the absence of the consideration of greenhouse gas impacts that fall into the category of ‘possibly occurring’ because that occurrence is the conclusion of a series of innumerable intervening events occurring ‘downstream’ from the project being considered and which renders the occurrence of those releases something less than inevitable. Similarly where the measurement of those impacts is just too difficult to quantify due to the uncertainty of their occurrence, they can be omitted from the environmental statement. This later exclusion is of course a moving feast, as scientific understanding and modelling capabilities improve over time.

In conclusion, the scope of environmental statements has been expanded, but not in an unbounded way. The impact of indirect effects that are inevitable and quantifiable should be included in the environmental statement, and this may alter the planning balance, but where those indirect effects are something less than inevitable or there is a settled consensus that the impacts cannot be readily quantified, then they need not be included in the environmental statement.

To discuss any of the issues raised in this article, please contact Fergus Charlton.

Judgment in this matter was handed down by the Court of Appeal last Friday. I have written previously about the High Court decision, in an article entitled ‘Nutrient neutrality: Are developments with outline consent caught by the requirements?‘ and the issue is whether an appropriate assessment is required at reserved matters stage when outline planning consent has already been obtained.

The bad news for the developers is that the appeal from the High Court decision was refused so the Habitats Regulations have to be complied with before a final authorising decision can be made. I set out a 20 second summary with further detail below for those that would like a little more information.

20 Second Read

The requirement for an appropriate assessment under the Habitats Regulations will be required when the local planning authority (LPA) “is making the final decision in a sequence authorising the development to proceed.” This means that where outline permission is granted the appropriate assessment can be carried out at the reserved matters approval stage or discharge of conditions. There is no requirement for the LPA to consider only the subject matter of the conditions themselves when deciding whether or not an appropriate assessment is required. The impact and implications of the whole development must be considered not just the scope of the reserved matters or conditions in question. Further, there is nothing wrong in applying paragraph 181 of the National Planning Policy Framework (NPPF) to protect Ramsar sites as this is a legitimate policy goal.

Further Detail

The issues in the appeal are the same as set out in my previous article, so I will try not to duplicate that content and just provide some of the Court of Appeal’s thinking on the subject.

The first ground of appeal was that the Habitats Regulations confined the appropriate assessment provisions to the grant of outline planning permission and were not engaged at the later reserved matters stage. Legislation must be given its “natural and ordinary meaning” and that the High Court Judge was wrong to reach a different interpretation by adopting a “purposive approach.”

This was rejected by the Court of Appeal who confirmed that the correct approach when construing legislation is to have regard to context and in the light of its purpose. Legislation is enacted to solve real world problems and must be construed with that purpose in mind.

There is nothing in the Habitats Regulations which excludes the requirement for an appropriate assessment to be undertaken either when reserved matters are being approved or when conditions are being discharged, if the authorisation in question is necessary for the project to be lawfully implemented. Regulation 63 is widely drafted and refers to “any consent, permission or other authorisation” for a plan or project.

If the appellant’s argument was correct then there would be situations where the LPA would be powerless to prevent a development going ahead even though it had become apparent (since the granting of outline planning permission) that the granting of an implementing decision would cause the sort of harm the Habitats regulations were designed to prevent.

The analysis of the Court of Appeal does not impinge on any private rights as if any development should fail at the final hurdle of an appropriate assessment at reserved matters stage then the original outline planning permission would still be valid just not capable of implementation without further consideration. There would, for example, be no question of revoking the original outline planning consent resulting in compensation being payable.

The regime for environmental impact assessments was considered and the court’s conclusions on the meaning and effect of the Habitats Regulations are consistent with decisions made in that context. The case law on environmental impact assessments has consistently recognised that such an assessment may be required after the initial consent has been granted.

The second ground of appeal was that the Habitats Regulations do not extend to Ramsar sites and that paragraph 181 of the NPPF did not plug the gap. The appellant relied on case law[1] where a local planning authority had placed obligations on the developer to improve the highways when the proposed development had no effect on the capacity of the local road network. This was an irrelevant consideration and tantamount to the buying and selling of planning permission.

The Court of Appeal determined that the NPPF policy in paragraph 181 was engaged because of the consequence of the development being authorised and the object of the policy which was to protect relevant sites which include Ramsar designations.

The third ground of appeal was that the LPA should only be considering the subject matter of the conditions in the context of an appropriate assessment. That was also rejected by the court as none of the relevant legislation qualifies the scope or content of the appropriate assessment. It is the impact of the development as a whole which is considered not any individual element thereof.

It is not known whether an appeal to the Supreme Court is planned but an application for a leapfrog appeal from the High Court was refused on 24 August 2023.

If, as many expect, Labour do form the next government then their manifesto pledge is ‘implementing solutions to unlock the building of homes affected by nutrient neutrality without weaking environmental protections’. There is no further detail, but a change of tack is inferred and we will have to wait and see what they propose.

To discuss any of the issues raised in this article, please contact Ben Sharples.

[1] Aberdeen City and Shire Development Planning Authority v Elsick Development Co. Ltd [2017] P.T.S.R 1413

There has been a small flurry of food related advertising and labelling issues that have arisen over the last few months. The topics covered are food labelling, the use of geographical indications and copycat products. After looking at these, we go on to discuss the latest developments which attempt to crack down on greenwashing.

Oatly AB v Dairy UK Ltd

In November 2019, Oatly filed a trade mark application for “POST MILK GENERATION”. The UK Intellectual Property Office accepted the application but then Dairy UK (the trade association for dairy supply in the UK) objected to its registration.

Dairy UK argued that the term “POST MILK GENERATION” for a non-dairy product was likely to deceive the public into thinking it was a dairy product when it was not. Dairy UK argued that the term “Milk” was inextricably linked to the dairy industry.

In January 2023, the UKIPO agreed with Dairy UK’s arguments and rejected the trade mark for goods registered in the classes for various oat-based food and drink products.

Oatly appealed to the High Court and the court found for Oatly.

It held that the trade mark, “POST MILK GENERATION” was distinctive and not descriptive of the goods for which it was registered. Dairy UK argued that the EU Regulation which establishes common markets for the advertising and sale of agricultural products prohibits the use of the term “milk” on goods unless:

• they come from milking an animal
• are exclusively from animal milk; or
• animal milk is “an essential part” in either quantity or characterisation.

Oatly argued that the Regulation applied to:

• the description of a product rather
• than the use of a trade mark.

In other words, the Regulation only applied when describing the nature of the goods and not when “milk” was used as part of an indicator of the commercial origin of the goods. The Court found that Oatly’s products were neither identified nor marketed as milk despite the inclusion of the word, milk, in the trade mark.

Comment: The relationship between food labelling regulations and intellectual property rights is complex and need to be considered on a case by case basis. Therefore, this case is not a green light for the use of “milk” generally on plant based products. In fact, it is quite the opposite. Oatly’s trade mark “POST MILK GENERATION” was allowed precisely because it was “not descriptive” so as to fall foul of the EU Regulation. If it had been descriptive, it could not function as a trade mark.

The Food Standards Agency – vegan labelling and allergies

The Food Standards Agency has launched a campaign highlighting the risks to people with animal based allergies of food labelled as vegan. Research conducted by the FSA has shown that consumers are extrapolating food labels too far finding that consumers with an animal-based allergy were too often confident that products labelled as ‘vegan’ were safe to eat.

The FSA says this confidence is incorrect and is putting people at risk.

Therefore, people who have allergies to milk, eggs, fish and crustaceans or molluscs, still need to check the precautionary allergen statement on products labelled ‘vegan’ in order to decide if it is safe to eat. Common mistakes include taking “vegan” labelling to indicate:

• a food is safe to eat for those with animal allergies
• a food will be tolerated by those with food hypersensitivity, and
• there was no need to check for a precautionary allergen label.

“Free-from”

The campaign also explains what the ‘free-from’ label means.

To use a free-from label, food businesses must follow strict processes to eliminate risks of cross-contamination with whatever you want to claim you are “free-from”.

As counter-intuitive as it may seem, vegan food can still be prepared in areas alongside products such as eggs, milk, fish, crustaceans or molluscs, whereas free-from foods cannot.

Protected Geographical Indications

Protected Geographical Indications (PGIs) are designations granted to products because of specific characteristics, reputation, authenticity, and/or origin. PGIs provide legal protection for the names of products with a specific geographical connection or that are made using traditional methods.

Over 3500 products are covered, such as Champagne, Melton Mowbray Pork Pies and Parma Ham, meaning that in order to describe your product as such, it must:

• be produced within the prescribed geographic region, and
• conform to the relevant standards

Exporters need to be aware of an update to the EU PGI regime which extends PGIs to cover “any misuse, imitation or evocation” of a PGI even if the true origin of the products is indicated. The New Regulation is very wide and seeks to prevent the use of descriptors stating a product is in the ‘style’ of, ‘type’, ‘method’, ‘as produced in’, ‘imitation’, ‘flavour’, ‘like’ or similar” to a PGI.

Thatchers’ Cloudy Lemon Cider loses case against Aldi’s imitation

The Thatchers case involved the discount supermarket, Aldi, producing a look alike of a market leading Cloudy Lemon Cider product. Thatchers is a Somerset-based cider maker, which, in 2020, launched its Cloudy Lemon Cider product in UK supermarkets.

Thatchers’ Lemon Cider is sold in cans decorated with illustrations of lemons, and a UK trade mark was registered by Thatchers in May 2020 for the Thatchers’ Lemon Cider logo. Two years after the launch of Thatchers’ Lemon Cider, ALDI launched a newly branded version of its own lemon cider, which is part of its “Taurus” cider range.

Thatchers started legal action against ALDI in the High Court for trade mark infringement and passing off. The trade mark featured a combination of descriptive words and images of lemons.

Therefore, in its defence ALDI said that:

• the Thatchers trade mark, packaging and the words “Cloudy Lemon Cider” were not sufficiently distinctive to be considered an “indication of origin”.
• the lemon designs on a white background used on the Thatchers Lemon Cider can were not distinctive, and
• the only distinctive element of the Thatchers trade mark indicating origin was the Thatchers brand name.

The decision

The dominant features of the trade mark was found to be the “THATCHERS” brand. ALDI’s “TAURUS” brand and bulls head device on its product served to prevent confusion.

The use of the colour yellow on both cider products and lemon products was ubiquitous, and the use of lemons and lemon leaves on lemon-flavoured beverages including lemon ciders was very common.

For the reasons given when reaching a finding of no likelihood of confusion in the context of trade mark infringement, the judge was satisfied that there was no misrepresentation that ALDI is connected in trade with Thatchers. Accordingly, both the trade mark infringement claim and the passing off claim failed.

Greenwashing

The Competition and Markets Authority is taking a much more interventionist role in an attempt to control greenwashing. The CMA took action against ASOS, Boohoo and Asda in respect of its investigation as to how these three companies labelled their clothes.

The CMA was concerned by:

• Statements regarding fabrics: such as “eco” or “responsible” without further explanation. and
• Use of imagery: such as green leaves, logos or icons in a way that suggested a product was more environmentally friendly than it is.

On 27 March 2024, Boohoo, ASOS and George at Asda entered into agreements ending the CMA’s investigation without any admission of liability but with undertakings not to continue or repeat any act which the CMA believes infringes consumer law and which harms the collective interests of consumers. The retailers must ensure all green claims are accurate and not misleading.

While the undertakings are specific to the fast fashion sector, the following six key principles set out in the CMA’s Green Claims Code will be enforced generally with respect to all consumer goods:

• be truthful and accurate
• be clear and unambiguous
• not omit or hide important information
• compare goods or services in a fair and meaningful way
• consider the full life-cycle of the product or service
• be substantiated.

All producers must consider their obligations under consumer protection law when making environmental claims and put in place robust internal processes to ensure that these principles are complied with.

If you would like to discuss any of the issues raised in this article, please contact Iain Connor.

The 21^st Michelmores Property Awards were held on Thursday 27 June 2024 with a glittering awards ceremony and gala dinner at Sandy Park Conference Centre in Exeter. The evening was hosted by well-known actor, comedian and regular face on TV, Lucy Porter, and celebrated outstanding property and construction projects in the South West across eleven categories.

This year, the sector embraced sustainability not just in the development of new low carbon buildings, but by innovations in the approach to refurbishing and repurposing older stock. Michelmores launched a new award category – ‘Regeneration Project of the Year’, to recognise the growing number of refurbishment schemes taking place.

Taking home the prize for this esteemed new category was Neighbourhood North. Located in the heart of Bristol, this 1980s building was transformed to a headquarter office building with a BREEAM outstanding rating, demonstrating that the retrofit and delivery of state-of-the-art office space is both compatible and commercially attractive. The regeneration created a less cluttered façade and contemporary appearance, while retaining a large portion of the building’s original brickwork and glazing. This resulted in approximately 163 tonnes of CO2 savings, achieving 31% lower embodied carbon than the RIBA 2030 target and 28% lower upfront carbon.

Winterstoke Hundred Academy in Weston-super-Mare took home the prestigious Building of the Year award in addition to scooping the Education Project of the Year accolade. The judges were extremely impressed with this thoughtful building, designed inside and out with natural materials and natural light. Every space at the Academy was designed to be multi-use and the standout main corridor is set up to host events for the school, offering long views through the beautiful building. Continuing the sustainability theme, the Academy is Net Zero carbon in operation and, as well as ensuring that biodiversity and retained habitats were protected, the project team worked with an ecological consultancy to develop an innovative BNG solution as part of a complex greenfield project, and suite of educational engagement activities.

Further south in Somerset, the North Taunton Woolaway Project won the award for Residential Project of the Year (36 homes and over) while further north, Sladebrook Road in Bath took home the award for Residential Project of the Year (35 homes and under). North Taunton Woolaway was praised for being an ambitious regeneration project that supports growth within the local economy and offers health, environmental and employment opportunities, while the council-led development provides homes of exceptionally high-quality, setting the standard for other local authorities and the private sector.

Sladebrook Road is a neighbourhood of nine low energy family homes in the heart of Bath. The project was applauded for creatively delivering a compact layout that the judges thought responded sensitively, yet playfully, to the local context, streetscape and topography whilst knitting into the existing neighbourhood.

Two new health facilities were acclaimed for their state-of-the-art medical provision and importance to the community. The winner of the Project of the Year Award (under £5m) was named as the Dartmouth Health and Wellbeing Centre in Devon, while the Lowen Ward and Trelawney Scanning Suite in Cornwall was awarded the Project of the Year Award (over £5m). Dartmouth’s Health and Wellbeing Centre was praised for its benefit to the residents of Dartmouth – the careful space planning and colocation of the wellbeing facility ensured that patients continue to receive the care they desperately needed in their community. The Lowen Ward and Trelawney Scanning Suite comprises three MRI suites, an ultrasound imaging suite, Haematology Oncology provisions, and more. The judges were particularly impressed that the project completed six weeks earlier than originally programmed, with patients being located into the facilities the next day, highlighting the extreme need for its presence in the community.

Although not a winner, this year the judging panel also wanted to give credit to the Merrivale Road project in Plymouth awarding the much-needed development Highly Commended in the Residential Project of the Year (35 homes and under) category. Plymouth City Council transformed this disused building into self-contained flats for young people leaving care who are ready to live more independently. The accommodation has a 24-hour staff presence to offer guidance to the young people so that they are supported but managing their own homes. The future-proofing and considerate detail of the regeneration were said to be remarkable. The judges felt that the project would drive change in the area as well as serving an invaluable purpose with strong social benefits.

Larkstone Watersports Hub in Ilfracombe took home the prize for the Leisure and Tourism Project of the Year, for being an incredibly well thought-through project, offering improved access for watersports activities that provide social and economic benefits for the local community and wider tourism. The Hub, which now offers canoe club facilities, boat storage and a destination café, revitalised an area in need of regeneration in a unique and sensitive location.

The Heritage Project of the Year award went to Bayspace in St Ives. The sensitive refurbishment of this important and imposing Grade II listed building in St Ives brought a neglected building back to life while offering an important facility for the town and wider West Cornwall community. With sustainability as its key driver, the judges appreciated that many of the features included renewable and recycled fixtures as well as a minimal intervention approach to restoration and a carbon-conscious approach to specification.

Representing masterplanning in its true essence, Collaton Park scooped up the award for Masterplanning for the Future, due to its impressive inclusion of a community parkland café with public showers and WC’s as well as a vast area of allotments and orchards. The Collaton Park scheme of 125 homes also boasted additional sustainability measures that impressed the judging panel, including PV, EV charging points and air source heat pumps for every home.

Peter Lacey, who’s exemplary career has ranged far wider than architecture, was awarded this year’s John Laurence Special Contribution Award. He was recognised by the judges for having always placed social values very highly, particularly in the field of education, and for being a great advocate for the business and economic growth of the City of Exeter.

As always, the 21^st Michelmores Property Awards, brought together all those who contribute to the region’s exciting property, real estate and construction sectors. The Awards have long championed sustainability and innovation, and place environmental and socio-economic values at the heart of its judging criteria.

Of this year’s Awards, Emma Honey, Head of Property at Michelmores said:

“We are so proud to continue to host this exciting event that celebrates outstanding property and construction projects across the South West. The last few years have brought with them a flurry of innovation in the sector, with industry leaders showing creativity to rethink and reimagine a better future for the industry, and our communities. The popularity of our new category, Regeneration Project of the Year, demonstrates this and shows just how much interest there is in the sector in supporting a low carbon future.“

For more information on the Awards, visit our website.

Category	Winning Project
Project of the Year (under £5m)	Dartmouth Health and Wellbeing Centre Watch video.
Project of the Year (over £5m)	Lowen Ward and Trelawny Scanning Suite Watch video.
Regeneration Project of the Year	Neighbourhood North Watch video.
Education Project of the Year	Winterstoke Hundred Academy Watch video.
Leisure & Tourism Project of the Year	Larkstone Watersports Hub Watch video.
Heritage Project of the Year	Bayspace St Ives Watch video.
Residential Project of the Year (35 homes & under)	Sladebrook Road Watch video.
Residential Project of the year (36 homes & over)	North Taunton Woolaway Project Watch video.
Masterplanning for the Future	Collaton Park Watch video.
Building of the Year	Winterstoke Hundred Academy Watch video.

There are many issues to consider when it comes to protecting your land for potential future development including knowing who owns the watercourses and your boundary features and another hot topic to also consider is water scarcity.

Watercourses

A developer when considering a site for development must consider how to deal with surface water accumulating on that development. Watercourses have an important part to play in development. If a site includes a watercourse within the site or on the boundary, this may allow for the developer to attenuate the surface water on the site and allow for a subsequent controlled flow into the watercourse on the site. This may avoid the need for a developer to seek easements from neighbouring owners or requisitioning a connection from a water authority.

A watercourse could be natural or artificial and for the purposes of this article, we will focus on natural non-tidal watercourses only. A watercourse has a regular channel with banks or sides and is one that usually flows in a certain direction – it doesn’t need to flow continuously and therefore a stream that dries up in the summer can still be a watercourse.

Being able to prove ownership of the bank of the watercourse will enable a future developer to undertake works required to discharge surface water into the watercourse such as a water outfall or new head wall. It is important therefore to ascertain if you own the watercourse or if you merely have rights to drain into the watercourse.

Quite often title to the bed of watercourses is unregistered. It may be possible for the landowner to register the bed of the watercourse with the help of their solicitor. The first step would be to check the historic title deeds to see if the Land Registry has made a mapping error. If not, a search should be undertaken to ensure the land is not registered to someone else. Assuming it is not the landowner could make an application to the Land Registry under the “ad medium filum aquae” rule could be made – ad medium filum aquae meaning “to the middle line” of the watercourse. If the landowner owns both sides then registration of the whole of the watercourse should be achievable. If the landowner owns one side only of the watercourse, an application should achieve registration to the middle line of the watercourse thereby still enabling works that may be required for the surface water outfall to be constructed.

The ad medium filum aquae presumption can be rebutted if there is evidence to the contrary, for example, evidence that the previous owner did not own or did not intend to convey the bed of the watercourse to the landowner. It is worth noting that the ad medium filum rule does not apply to tidal rivers.

In addition, consents may be required to carry out works to or near the watercourse from other bodies such as the Environment Agency and an Internal Drainage Board depending on the classification of the watercourse.

The law relating to watercourses is complicated and the nature of the watercourse and classification will impact what can or can’t be done and it is important to seek legal advice.

Boundary issues

Ownership gaps between properties can be a major issue for developers. Therefore, knowing the extent of the land you own and who owns the adjoining land and the hedges, verges, water drains, or ditches is important when considering land for development. The importance of these features and who manages them can be often overlooked by landowners because they may not even be aware of the gap.

When a developer looks at a piece of land for development they will want to make sure there are no gaps between the parcels of land that they are buying or between the adopted highway and your red line boundary. If there is a gap, then potentially there could be a ransom strip which could be claimed by a third party as belonging to them, which could prevent development. Often when we are talking about gaps we mean very small areas of land which could be as little as a metre or less in width.

If a gap is identified your solicitor may be able get the gap incorporated into your already existing title because the Land Registry made a mapping error when they first registered the land. If the gap is between your property and the adopted highway your solicitor may be able to make an application under the ‘ad medium filum viae’ (to the centre line of the road) rule if certain conditions apply such as you have always considered the land yours and you have maintained that area and the Council claim that the land is not adopted. As with ad medium filum aquae, the ‘ad medium filum viae’ rule is the legal presumption that you own up to the middle line of the road and this presumption can be rebutted as mentioned above.

It is important to retain original copies of old deeds and correspondence as these can be important in terms of evidencing ownership or claiming rights over ‘gap land’.

Obtaining defective title indemnity insurance can be a solution to this defect in title. Defective title indemnity insurance will in return for payment of a one off premium pay up to a capped amount towards the costs of dealing with any third party claim. Unfortunately, title indemnity insurance can be expensive and it does not prevent third parties bringing claims. The Highway Authority may refuse to rely on the benefit of such a policy and refuse to enter into a highways agreement to adopt the roads in a development and therefore the roads may need to remain private. Furthermore, the Utility Provider may refuse to adopt services laid within the ‘gap land’ which may mean services need to be laid in another more expensive and longer route.

If on the other side of the ‘gap land’ the land is owned by a private landowner, then this needs to be dealt with very sensitively as your neighbour might try and claim that ‘gap land’ as their own and discussing the gap with them will probably mean you are unlikely to obtain a title indemnity insurance policy in relation to that defect or potentially invalidate any existing policy.

Water scarcity

Water scarcity may not seem like a big concern given all the rain we have had this year. 2023 marked a milestone as the first time that the Environment Agency submitted objections to a new housing development on grounds of the shortage of a sustainable water supply. It’s encouraging that water scarcity has now been recognised as a material planning issue. Much coverage has been given recently to the multi-billion infrastructure upgrades which have been brought about by recent Government announcements in response to criticism of the industry. These new upgrade projects can be to the advantage of landowners. For example, water companies are looking at investing in new reservoirs or taking new abstraction licences from other water bodies.

There are opportunities for landowners to negotiate abstraction royalties, set aside land or change their existing land use practices. We are just starting to see several of the first few projects and transactions coming through. To give some examples, we’ve seen the Ofwat Innovation Fund looking at sponsoring farmers to create water storage batteries, utilising soil sponges in wetlands as well as turning existing lakes and ponds into reservoirs or supply reserves.

The Government is looking at encouraging farmers to undertake more efficient water management in their agricultural practices. It has set a target under its Defra Plan for Water Commitment to increase on farm storage of water by 66% by 2050. Other measures in consideration under the plan involve farming in a way that reduces run off and demand for supplemental water supplies. In East Cambridgeshire for example, the Government is looking at creating credit schemes to encourage nature based solutions to promote water retention. Water Positive Development – as it is being called – is expected to be rolled out in other regions once it has been proven in Cambridgeshire. We are also seeing water companies working with local authorities working up contingency plans which may involve utilising reserves held by private landowners.

If you sell off part of your land it is also essential that you consider if you need to retain any water abstraction rights/licences in order for you to continue to use your retained land effectively.

If you would like to discuss any of the issues raised in this article, please contact Cheryl Brady, Richard Walford or Elizabeth Newson.

A new European Commission decision highlights the non-compliance risks in relation to competition ‘dawn raids’.

The Competition and Markets Authority (“CMA”) (and the concurrent regulators: Ofcom, Ofgem, ORR, Ofwat, CAA, FCA, PSR and NIAUR) have powers to conduct ‘dawn raids’ where they have a reasonable suspicion that a competition law infringement has been carried out. They tend to use these powers in relation to suspected cartels, but they are also available in relation to other infringements including abuse of dominance investigations.

A recent UK High Court case confirmed that the CMA can carry out a raid at a person’s home on the same basis as at their business premises. The CMA at your family’s front door (or the door to your home office

In the latest European Commission case, International Flavours & Fragrances (“IFF”) has been fined €15.9m for a senior employee deleting WhatsApp messages during a dawn raid. The Commission’s forensic IT specialists detected that the employee had deleted messages with a competitor and were able to recover the messages. The fine would have been significantly greater but for IFF’s immediate cooperation with the Commission, admitting the deletion on the spot and helping the Commission restore the data to its fullest ability on the same day.

This is similar to the UK case where a senior Fender employee had claimed that certain notebooks had been disposed of when in actual fact they had asked a junior Fender employee to store them off-site. This resulted in a fine of £25,000 (just below the maximum of £30,000 at the time). Note that the CMA’s powers to impose financial penalties have recently been significantly increased by the Digital Markets Competition and Consumers Act 2024 to bring them more into line with European levels of fines.

Failing to cooperate with dawn raids can lead to significant penalties. For example, E.On (€38m) and Suez (€8m) have previously been fined for breaching seals during an inspection and Czech energy company Energetický a průmyslový holding was fined €2.5m for accessing a blocked email account and diverting incoming emails during an inspection.

Similarly, obstructing dawn raids has been considered an aggravating factor in the seriousness of an infringement and has led to increases in fines for companies at the end of an investigation. For example, Bischof + Klein’s fine for participation in the industrial bags cartel was increased by 10% because an employee deleted a document during an inspection and KWS’s fine for participation in the bitumen cartel was similarly increased by 10% for refusing entry to an office of a KWS Director during a dawn raid.  Furthermore, Sony’s fine in the professional videotapes cartel case was increased by 30% as a result of a junior employee shredding documents from a file labelled “Competitors Pricing” and Sony refusing to answer oral questions which were aimed at obtaining explanations concerning the documents found at the premises.

While the UK rules are slightly different from those applied at EU level, the basic principles are the same. In particular, businesses are required to cooperate fully with investigators on-site despite the business disruption and anxiety caused by the dawn raid.  It is also clear that businesses will be held responsible for the actions of their employees, even ‘rogue employees’ acting in breach of business policies. It should be noted that individual can commit criminal offences in destroying documents or providing false or misleading information to the CMA leading to up to two years imprisonment and/or a fine.

The best advice is always to ensure good communication with the investigating team and to engage internal and external legal support as quickly as possible to ensure the process runs smoothly and does not have greater negative implications than it needs to, in terms of business disruption and ultimately, potential financial penalties.

At Michelmores we have experience assisting clients during dawn raids and in training client teams – from reception/security teams to senior management – on how to manage a dawn raid if it happens and having the right processes in place. Please contact Noel Beale or your usual Michelmores contact if you have any queries or would like an further information.

Since 2015 we have seen wholescale change to agriculture across the UK as we have moved from the EU Common Agriculture Policy to our own domestic agriculture policy in each of the devolved nations. Although the law relating to agricultural tenancies has always been governed domestically, other issues, fundamental to the success of agricultural businesses, have gone through wholescale change, which has prompted new modifications to tenancies.

As part of those developments, this year, we now have a new Landlord & Tenant Code of Practice, new changes on the horizon for tenancies governed by the Agricultural Holdings Act 1986 (AHA), as well as new opportunities arising from longer term natural capital schemes.

1. New Landlord & Tenant Code of Practice

In our recent article “Agricultural Landlord and Tenant Code of Practice for England: A new era?” we explained the main areas of the code. We will now consider how it affects the drafting of agricultural tenancies and how it will be enforced.

How is the code going to affect new tenancy agreements?

The code is entirely voluntary and does not affect underlying law or the terms of a written tenancy agreement. There is encouragement from within the industry to incorporate it into tenancy agreements and this, for new tenancies, can be done in a variety of ways. The most common is to include a clause requiring the parties to take account of its terms, during and on termination of the tenancy.

On wider drafting issues, the code encourages fairness, a written tenancy agreement and the inclusion of a schedule of conditions at the outset of every tenancy. Blanket bans on participation in environmental and other opportunities are discouraged. These all seem very sensible measures and have been addressed in our in-house tenancy agreements for some time.

The interesting question which then arises is what will happen if the parties breach the code whether or not there’s a clause in the tenancy agreement requiring them to comply with the code? Are we going to see parties suing each other for breach and, if so, how is that going to play out?

Enforcing the code

In general terms, the code is setting out what the parties should do unless there is a good reason to suggest otherwise, which inevitably involves a subjective element to that judgment. This will make taking action to enforce the code through mechanisms like forfeiture more difficult; tenants are quite likely to obtain relief from forfeiture because of the subjective element involved. So, it is unlikely that the code will be enforced in that way.

However, where it is likely to have more impact is in the way the parties conduct disputes and even when considering whether the dispute is worth pursuing at all. The code’s principles of clarity and communication in working through disagreements are set out, as is a statement that dispute resolvers, such as arbitrators, who have authority to make costs awards, may wish to take into account, whether the parties have acted in accordance with the code, when making their award.

So, for example, where a party loses a case, they generally have to pay the winner’s costs. But the arbitrator then has discretion to decide how much those costs are and they can take the parties’ conduct into account when assessing that quantum.

In view of the fact that all three industry bodies which appoint arbitrators, namely the RICS, the CAAV and the ALA, have endorsed the code, it follows that their members are likely to be influenced by its recommendations.

In addition, the RICS has said that “RICS Regulation will be mindful of the existence of this voluntary Code and will take due note of what best practice looks like”, so RICS members may feel additional pressure to adhere to the terms of the code.

Very recently DEFRA announced that it will be appointing a Commissioner for the Tenant Farming Sector (CTFS) this autumn. The role is planned to be a source of “neutral and confidential advice for tenants, landlords and advisors who have concerns about poor behaviour and complaints that the Code of Practice on responsible conduct is not being followed”. Indications are that this will simply be a method of helping to resolve issues before they escalate to more formal dispute processes.

2. Changes to AHA tenancies

The Agriculture Act 2020 introduced some changes to AHA tenancies and the last of those changes comes into force on 1st September 2024. From that date, on succession applications, the commercial unit test will no longer form part of the eligibility test. Instead, succession applicants will only have to satisfy a 2-stage eligibility test comprising:

• close relationship test; and
• principal source of livelihood test.

They will also have to satisfy a revised suitability test, which will replace the current test. For this, the tribunal needs to take into account all relevant matters, including the capability and capacity of the applicant to farm, taking into account the need for high standards of efficient production and care for the environment. The tribunal then also needs to look at a person’s experience, training and skills in agriculture and business management.

The two new elements in all of that are, first the reference to care for the environment, which now sits alongside efficient production and, secondly looking at a person’s experience and skills in business management. These changes reflect the shift in government policy towards promoting the protection of the environment, which we have seen in many different contexts.

With the commercial unit test falling away, we may see some fairly large-scale enterprises now eligible for succession, which would have been cut out by the previous test. This change reflects the government’s desire to promote food production and large scale, efficient operations and also to encourage the handing down of businesses to the next generation.

This may result in more succession applications coming through on retirement, rather than on death, which effectively gives the successor a trial run at succession to see where any weaknesses or arguments lie.

For greater detail about these changes please see the article on our website “Agriculture Act 2020: England finalises new AHA succession rules”.

3. Natural Capital Scheme opportunities

The top tier of DEFRA’s Environmental Land Management Scheme comprises the Landscape Recovery Scheme (LRS), which is intended to involve large scale projects, covering a wide area, using blended public and private finance and is likely to require collaboration between multiple landowners and occupants.

DEFRA has made it clear it is keen for tenants to be part of that collaboration and there is plenty of opportunity for landlords and tenants to cooperate, both under existing tenancies and new agreements.

LRS legal framework

We expect LRS to work through a series of interconnected agreements. A lead applicant will be appointed by all the parties to deal with DEFRA. That applicant will often be a company set up for the role, known as a “special purpose vehicle” (SPV). The SPV will enter into a contract with DEFRA outlining the whole scheme. Beneath that, each landowner will contract to take on the relevant obligations and commitments for their respective areas of land.

The landowners will also enter into conservation covenants or s106 planning agreements with local planning authorities (or other responsible bodies) which will bind their land to ensure performance of the environmental commitments (such as tree planting).

Where tenancies exist, the LRS obligations will be delegated further down the chain through sub-contracts between the landowners and their tenants for the relevant areas of land.

How can tenants be involved?

First, by managing land within the LRS in collaboration with their landlord – for this existing tenancy agreements may need to be varied by agreement.

Secondly, tenants can be appointed as contractor land-managers by landlords on in hand land within the LRS, Thirdly, tenants can become shareholders in the SPV, jointly with landlords, and their shareholding can reflect each party’s input, taking account of time, financial contribution, risk etc.

Lastly, tenants could also be involved in the management of the SPV as directors, employees etc.

Inheritance tax changes

One issue which has been holding landowners back from entering longer term schemes has been the knotty issue of IHT and the fact that land in new environmental schemes do not currently qualify for Agricultural Property Relief.

Fortunately, the government addressed this problem in the latest budget and confirmed that the scope of APR will be extended to encompass ELMS from 6th April 2025. For more details of this tax change see the article on our website “Budget update: Taxation of environmental land management and ecosystem service markets”.

If you would like to discuss any of the issues raised in this article, please contact Vivienne Williams or Caroline Baines.

Partnerships are extremely efficient planning vehicles for tax and succession purposes, particularly in a rural business or landed estates context. They can be used to manage assets and income generated now, as well as being a mechanism for facilitating the orderly transfer of assets to the next generation. A key starting point is to identify the issues which frame the future direction and ultimate succession of a rural business. Once those (sometimes difficult) conversations have taken place, a partnership can often be the preferred business structure.

Partnership property

The link between the partnership and the succession plan is pivotal. A crucial part of the process is to understand what assets are held within the business. Often, due to tax reasons and how the assets have been purchased or inherited over time, the main assets (such as the family farm) are held within the partnership and are therefore partnership property. Partners own a share in the partnership, and it is that partnership share (as opposed to the assets themselves) that can be transferred on death in accordance with the terms of their will (provided the terms of the partnership allow them to do so).

If there is no partnership agreement and the arrangement is undocumented, or governed by a very out of date document (both of which we commonly see), this could result in significant unintended consequences on the death of a partner.

The partnership agreement must therefore dovetail with the partners’ wills since the partnership agreement will override. Partnership agreements can be drafted to include, for example, ring-fenced Land Capital Accounts, provisions for the appointment of successor partners, and “buy back” clauses, to help facilitate the continuity of the business upon the death of a partner.

Partnerships and tax

Partnerships play a key role in many inheritance tax (IHT) planning strategies for rural businesses, maximising both Agricultural Relief (APR) and Business Relief (BPR), for example, by helping frame a composite trading business as part of a ‘Balfour’ planning strategy.

They can also be used to strengthen claims for Business Asset Disposal Relief – a valuable Capital Gains Tax (CGT) relief if the business is sold.

It is important to be careful in relation to CGT and stamp duty land tax (SDLT) when assets are moved into, within, and out of a partnership.

SDLT is calculated by reference to the market value and the income entitlement acquired by the other partners ‘sum of lower proportions’ analysis, which is complex. Generally, as long as the same persons or connected persons are entitled to the land before and after the transaction, there will not be any SDLT arising. But parties aren’t always connected, particularly where trustees are acting as partners, and so tax liabilities can sometimes be inadvertently triggered.

This underlines the importance of having a considered and robust partnership structure in place, as any potential tax issues can usually be navigated through proper structuring and advice.

New developments

With the general election now set for 4 July 2024, changes to the tax regime under a new government cannot be ruled out.

In April 2024, the Institute for Fiscal Studies (IFS) released a comment article recommending changes to the IHT regime. One of their proposed recommendations is to cap the amount of BPR and APR relief at £500,000 per person, which would obviously have profound effects on all business owners, and rural business owners and landed estates especially.

That said, there is likely to be strong pressure on politicians not to make a change that would raise taxes for those passing on family farms and businesses, and there are longstanding public policy reasons to support the existence of those reliefs.

In the March 2024 Budget, the government confirmed that they will extend the existing scope of APR to include environmental land management from 6 April 2025. This appears to be a positive first step towards establishing a tax framework which will help facilitate the growth of the Natural Capital economy, although further guidance and legislation is required, and consultations are ongoing. Whether an incoming government will implement the proposals in their current form is now uncertain.

The emergence of Natural Capital as a new asset class is leading to interesting conversations about its effects on value. Increasing or decreasing values depending on the nature of the use of land has the potential to affect Balfour structures and their tax treatment. It is very important for tax (and the overall succession plan) to be part of the conversation when arrangements are being formulated, particularly as the longevity of many natural capital schemes means they will directly impact the next generation.

Summary

It is an uncertain time for the rural community, particularly from a tax perspective with the general election now on the immediate horizon.

When changes or opportunities arise, it is important for rural businesses and landed estates to have robust structures and forward plans in place, to provide agility and flexibility to react accordingly.

If you would like to discuss any of the issues raised in this article, please contact Iwan Williams or Josie Edwards.