Following the “Dutch case” in 2018, the first time a national government had been required by its Court to take action against climate change, nutrient neutrality has become a hot topic with Natural England advising local authorities with protected water environments not to grant planning permissions unless the development can be proven to be “nutrient neutral”. The impact of this advice on development in the Solent region and in Taunton have been widely reported.

In inland freshwater environments, such as the Somerset Levels, it is phosphates that are the issue and in coastal/marine areas, such as the Solent, it is nitrates. It is thought that the issue of proving development to be “nutrient neutral” will become more widespread through the country as Natural England issues advice to other local authorities with sensitive protected water environments.

In terms of the planning process in an affected area a Habitat Regulation Assessment (HRA) will be required for any relevant development. This requirement does not only apply at outline stage, it continues until the local planning authority had made the “implementing decision”.  The relevant local planning authority will be require a HRA:

• at outline stage;
• at reserved matters stage if no HRA was undertaken at outline stage;
• at reserved matters stage even if a HRA was undertaken at outline stage if there has been a material change in circumstances; and
• when discharging conditions on full or outline permissions, whether or not the conditions relate specifically to nutrients.

The HRA must be undertaken in consultation with Natural England who will need to be satisfied that the mitigation measures proposed will achieve nutrient neutrality.

So what might this mean for developers in development transactions?

• Developers must carry out sufficient due diligence and take technical advice as regards the impact of being in a “nutrient neutral area” or the likelihood of being in such an area.
• Will there be a move by developers away from unconditional acquisitions of land with the benefit of outline planning consent to acquisitions conditional on detailed consent or reserved matters approval on the basis of an acceptable HRA and mitigation measures?
• Developers may be more likely to seek to link agreed minimum prices to net developable acres rather than gross acres so as exclude land required for mitigation measures as well as for Biodiversity Net Gain.
• Developers may seek to increase the land they control to accommodate mitigation measures.
• Developers may seek additional rights over further land held by the seller.
• Where developers are already collaborating on larger sites, consideration will need to be given to the developing planning picture.

Some of the above are also relevant in respect of other emerging mitigation requirements such as Biodiversity Net Gain (particularly bullets 3 and 5).

So is this all fine and simply a matter of making the correct revisions to our contracts? Unfortunately not. The difficulty is that some mitigation proposals are very land hungry, such as the setting aside of productive land as fallow in order for it to process the nutrients to a neutral position.  Leaving land permanently fallow and unproductive might be a short-term fix, but a moment’s thought confirms that in the longer term it is simply unsustainable.

The concept of nutrient neutrality is relatively new, but it can have a huge impact on areas such as the Solent, Somerset Levels, or anywhere similar. If Natural England expand their advice to other local authorities not to grant planning permissions, then this will really ramp up the issue of nutrient neutrality.

Following an already protracted equal pay battle, Asda’s retail workers are now one step closer to success following the Supreme Court ruling in their favour. It has been confirmed that retail employees, including shop floor workers and other front of house staff, can be compared with employees who work in the distribution centre. The next step for the retail employees is to prove that the retail workers and distribution workers are of “equal value.”

Background

Under the Equality Act 2010, men and women should receive equal pay for equal work; for this purpose, an employee can compare themselves with a comparator of the opposite sex who is performing work of equal value.

In order to bring a claim, a claimant and their comparator must be employed by the same (or an associated) employer. They must also be employed:

1. at the same establishment; or
2. at different establishments at which “common terms” apply.

For this “common terms” test, it is crucial to show that, if the comparator transferred their job to be in the same establishment as the claimant, their terms would not change. If that would be the case, the two jobs can be compared. This is known as the “North hypothetical test”.

Facts of the case

The supermarket giant, Asda, employs over 130,000 staff. Thousands of Asda’s retail employees have brought equal pay claims. These employees (the Claimants), who are mainly women, have argued that they should be paid at the same rate as their distribution colleagues, who are mainly men. For clarity, none of the retail sites and distribution depots are connected.

Asda, responding to these claims, contended that the two groups of employees are not employed on “common terms” as the retail and distribution locations are separate from one another and the employees at the different types of location have different terms and conditions of employment.

The Claimants succeeded before the Employment Tribunal and Asda unsuccessfully appealed to both the Employment Appeal Tribunal and the Court of Appeal.

Supreme Court Decision

The Supreme Court had to decide whether the (predominately female) retail employees could use the (predominately male) distribution employees as comparators under the “common terms” requirement of the Equality Act 2010.

The Supreme Court commented that because there are no actual comparators in this case, it must be considered whether hypothetical comparators would have been employed on similar terms if they were employed in the same establishment as the Claimants.       It was held that the distribution workers would have been employed on largely the same terms as the retail workers if they were based at the same site.

This decision has clarified that the threshold for the “common terms” test is relatively low and, as a result, Asda retail workers can now compare themselves to distribution workers to decide whether they should receive equal pay.

What this means for employers

Obviously, this result is good news for the Claimants. However, they have only passed one hurdle in a very complex case, which now returns to the Employment Tribunal for consideration of the further elements of the equal pay test. Since the judgment, Asda has given a statement to confirm they intend to continue defending these claims and that they consider retail and distribution workers have “their own distinct skill sets”.

We will update you in due course as to how this case develops. However, it is already a good reminder for employers, regardless of whether or not they are in the retail sector, to take the opportunity to review pay across all areas of their business, to try to limit the risk of being the subject of a similar claim in the future.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Emily Edwards to discuss any issues you are facing.

When selling a property, it is important not only to consider the current value of the property, but the potential for the property to increase in value after it has been sold. This is commonly the case where it is likely that the property may be developed in future (for example, for housing, or for commercial development).

Selling parties are often interested to know how they can use overage agreements to get the most out of their sale by realising the development potential in the property they are selling.

What is overage?

Simply, overage (sometimes used interchangeably with ‘clawback’) means a surplus of money beyond a given estimate. It follows that, in a property sale, an overage agreement is where the seller will be paid a surplus should a specific event happen in the future.

Overage agreements are usually entered into where land that has development potential is sold. For example, an overage agreement might provide that overage needs to be paid if the value of the land increases as a result of planning permission being granted for development or if planning consent is obtained for a development larger than originally anticipated (planning overage). Alternatively, an overage agreement might require a developer to pay the original seller a share of profits arising from plots that it sells (sales overage). Sometimes parties enter into hybrid arrangements.

When is the overage payable?

It is important to consider what events should actually “trigger” an overage payment.

Usually, overage will be payable on the happening of specified “trigger events”, often within a certain period of time. For example, when construction starts on a development, or when land is sold on with the benefit of planning permission (thus being sold at a higher value than the seller originally sold it for). An effective trigger mechanism will need to be included in the overage agreement, and the trigger will vary depending on the exact scenario.

Some overage arrangements will terminate after a single overage payment is made, whereas others will provide for sums to be paid multiple times, on the recurrence of a certain event happening (for example, where multiple plots are sold at the same site).

Selling parties should exercise caution in deciding when overage will become payable, given the unpredictable nature of property development. These are often matters of some negotiation in property sales, and it is always best to seek expert advice.

How much overage should be paid?

When calculating how much overage should be paid to a seller, it is important not to overly-complicate things. A simple mathematical formula is usually used which often deducts the base value of the property from the enhanced value, with account being made for certain allowable deductions.

Calculations will start to look a little more complex when it comes to overage payable on larger developments. Including worked examples of the overage calculation in the agreement can be a helpful way to show how the calculation should work. Ultimately, the amount of overage that should be paid will depend on the circumstances in question, and careful attention should be paid when documenting the calculation.

Is overage always the answer?

Careful consideration should always be given as to whether overage is appropriate to the transaction in question. Overage arrangements can be complex and the legal fees for negotiating overage arrangements can be significant. It should not be seen as a substitute for deferring an element of the consideration but rather as the ‘icing on the cake’ should a trigger event occur.

If you have any questions concerning overage payments, or you are considering a sale of land subject to overage, please get in contact with a member of our Transactional Real Estate Team.

Background

It has, to date, been difficult for businesses to show trade mark infringement in the use of services such as Google AdWords. Google AdWords is an online advertising service which allows bidders to place an advertisement on the Google results page when certain keywords are entered into the search engine by consumers. This is known as ‘keyword advertising’.

There has been controversy previously, as demonstrated in the Interflora v Marks & Spencer case, over the use of keywords that are trade marked in relation to goods or services. On the basis that search engine operators are often not using the trade marks in the course of trade themselves, there has been a lack of clarity in relation to what constitutes trade mark infringement and given the costs involved, it is often avoided.

In Cosmetic Warriors Ltd and another v Amazon.co.uk Ltd and another, the court has taken the opportunity to clarify the circumstances in which the use of a trade mark in relation to keyword advertising and website search results will constitute an infringement. The court has importantly demonstrated that it is not afraid of finding against major e-commerce retailers such as Amazon.

The three classes of alleged infringement

John Baldwin QC, sitting as a deputy judge, held that Amazon.co.uk Ltd and Amazon EU SARL (together ‘Amazon’) had infringed the Community trade mark ‘Lush’ belonging to Cosmetic Warriors Ltd and Lush Ltd, (together ‘Lush’) under Article 5(1)(a) of the Trade Marks Directive 2008/95 EC.

Lush brought three classes of alleged infringement:

• the first class concerned keyword advertising by Amazon through the Google AdWords service which included the trade mark ‘lush’;
• the second class concerned keyword advertising by Amazon through the Google AdWords service which did not expressly include the trade mark ‘lush’; and
• the third class concerned search results delivered on Amazon’s own website when a consumer entered the word ‘lush’ into the search bar.

Importantly, in the first two classes of alleged infringement, there was no overt message to explain that Lush products were not available for purchase on the Amazon website. The deputy judge noted that, following the Google France case, keyword advertising could constitute use of the trade mark in the course of trade. The question to be asked is, whether one of the functions of the trade mark is adversely affected by that use.

The first class of infringement – sponsored adverts for Amazon containing “Lush”

Amazon had secured keyword advertising to generate a sponsored link to its website when a consumer typed the word ‘lush’ into the search bar of the Google search engine. The deputy judge held that the average consumer would expect to find Lush products available on Amazon’s website as a result of seeing the sponsored advertisement. The reasoning for this judgment pivoted on the consumer’s perception of Amazon as a reliable supplier of a wide range of goods, which would not advertise products that it did not have available for purchase. It was therefore held that Amazon had infringed Lush’s trade mark in this class.

The second class of infringement – sponsored adverts for Amazon that did not contain ‘lush’

The deputy judge held (distinguishing the facts of Interflora v Marks & Spencer) that the average consumer was aware of sponsored links and would view Amazon’s advertisement as just another company offering similar products to those searched for. The deputy judge acknowledged that consumers would expect an advertisement for Lush products to include reference to the word ‘lush’, therefore he rejected Lush’s allegation of infringement.

The third class of infringement – use of ‘lush’ on Amazon’s website

The third class of alleged infringement (and arguably the most important to Amazon) concerned the search results delivered on Amazon’s own website when a consumer entered the word ‘lush’ into the search bar. The deputy judge highlighted the two issues to this infringement – the use in the course of trade and whether this affected the function of the trade mark. Amazon argued that the consumer was at the core of the Amazon search process and that Lush’s attempt to remove that control would restrict competition. The deputy judge contended that:

“the right of the public to access technological development does not go as far as to allow a trader such as Amazon to run rough shod over intellectual property rights”.

The deputy judge held that when a consumer chooses to type the word ‘lush’ into the Amazon search engine, Amazon was not using this trade mark in the course of trade. However, in the instances where Amazon’s sophisticated software was utilised to predict a consumer’s search terms or create a repeat of the word in the related searches line, this was use in the course of trade. The deputy judge noted expert evidence that the average consumer would expect that the products suggested via a drop-down menu would be the original products and not those of competitors.

The third class of alleged infringement therefore centred on whether the use of Lush’s trade mark by Amazon damaged the origin, advertisement and investment functions of the trade mark. The deputy judge held the following:

• Origin – The average consumer would not be able to ascertain, without difficulty, that the goods which were displayed did not originate from Lush. This situation was different to the sponsored advertisements in the first two classes of alleged infringement as a consumer on Amazon’s website has an initial expectation that the products were original Lush products.
• Advertisement – Amazon’s use of the trade mark to attract consumers’ attention to third party goods without qualification was damaging to Lush’s reputation and marketing efforts.
• Investment – Lush operated an ethical trading business which had consciously avoided selling its products on Amazon due to its unethical reputation, perceived by many consumers.

The impact of the decision

This judgment has given welcome clarity on several points. Use in the course of trade in relation to the online marketplace has been further discussed. The deputy judge stated that it was clear from the cases of Google France and L’Oreal v eBay  (although different on the facts) that if third party sellers were using the trade mark on their goods and Amazon was merely the online marketplace, it would not be using the trade marks in the course of trade. As Amazon was both the designer and operator of its search engine which it used to maximise sales, the deputy judge was satisfied that this was a commercial communication by Amazon. This extended beyond a service which enabled customers of its website to display signs corresponding to trade marks. This did therefore constitute use in the course of trade.

The deputy judge also clarified the use of trade marks in keyword advertising through services such as Google AdWords and also on a company’s own website. Three key points can be taken from the decision:

• third party trade marks cannot be used as a keyword and in the related sponsored advertisement when the goods under that trade mark are not available for sale on the advertiser’s website;
• third party trade marks may be used as keywords as long as the sponsored advertisement does not incorporate those trade marks, the reason being that consumers are familiar with sponsored advertisements from competitors; and
• use of a third party’s trade mark as a search term on the advertiser’s website may infringe the third party’s rights if the goods under those trade marks are not available for sale. In fact advertisers should go one step further and make the customer aware that the goods are not available on the advertiser’s website.

The wider effect of this judgment may be minimal, noting that Amazon is intending to appeal the decision. However, in the interim this case indicates that sponsored links and AdWords can be used in relation to competitor’s goods but use of a trade mark should be avoided.  As the deputy judge placed weight on the reliability and wide product range offered by Amazon, it is evident that the expectations attached to the average consumer are still likely to vary on a case-by-case basis. For businesses who are concerned that larger retailers’ advertising may capitalise on their trade marks, this case should encourage them to look into how their trade marks are being used and consider whether such use should be challenged.

This case does demonstrate the court’s willingness to take a bold approach to the activities of one of the largest online retailers. This judgment offers greater clarity and peace of mind to businesses in relation to when they may be successful in litigation and therefore should incur the extensive costs of issuing proceedings. It will be interesting to see how Lush fares if this decision is simply the first pitched battle of a continuing conflict.

For further information on the issues raised in this article, please contact Tim Richards, Partner at tim.richards@michelmores.com or Associate David Thompson at david.thompson@michelmores.com.

On 5 March, the Minister of Women and Equalities, Liz Truss, called for flexible working to become part and parcel of daily life. This includes allowing employees to have the option to work part-time/flexi time, work from home and job share. Whilst this seems beneficial to the workforce, are there any benefits for employers in increasing flexibility?

The Call for Flexible Working

With more people working flexibly due to Covid-19, the Equalities minister has said that now is the time to offer flexible working as a standard option for employees.

Research from the Government-backed Behavioural Insights Team (BIT) and Indeed, the job website, found that, where flexible working arrangements are offered, job applications increase by up to 30%. This was the largest research carried out of its kind in the UK, analysing nearly 20 million applications.

Currently, flexible working is usually requested by employees, however, Liz Truss explains that by “making flexible working the norm, rather than something employees have to specially request, will help open up opportunities to people regardless of their sex or location”.

By increasing the flexibility of jobs, it is hoped that employment will be enhanced in areas away from major cities and provide greater opportunities for women who are twice as likely to work flexibly as men.

Minister for Women, Baroness Berridge, commented that “we continue to see the benefits of flexible working, now more than ever. These findings add to existing evidence showing how both men and women stand to benefit from working from home and returners programmes”.

What are the Benefits of Flexible Working?

The Government Equalities Office published its findings in a paper “Encouraging employers to advertise jobs as flexible“. It recognises that many individuals would prefer to work flexibly (including 93% of non-workers) and that this desire has only increased through the outbreak of the Covid-19 pandemic. However, currently, only 22% of jobs are advertised as flexible. Nevertheless, once in a job, 60% of workers end up working flexibly. This further illustrates the demand for flexible working.

The paper explored some reasons as to why employers may be unwilling to advertise jobs as flexible, when they are, in fact, willing to offer flexibility. This included a “status quo bias which favours full-time work and ambiguity aversion which may discourage consideration of a range of flexible working patterns”.

The benefits of flexible working may be clear for employees, who are able to work around other commitments, such as childcare. However, what are the benefits for employers when it comes to offering flexible working?

There are a number of benefits that can come from offering employees flexibility in their working, the increase in employee morale and engagement being one. This can have ricocheting effects in reducing employee turnover and absenteeism. A survey carried out by CIPD found that “flexible workers are more likely to be engaged which yields significant advantages for employers – potentially generating 43% more revenue and improving performance by 20%, compared to disengaged employees.”

Furthermore, CIPD’s research found that flexible working allows companies to adapt to fluctuating market demand and increase competitiveness.

Implementing Flexible Working

Covid has meant that flexible working has naturally increased due to necessity. However, as people begin to return to work, employers may need to consider updating their contracts and policies to enable their staff to continue to work flexibly.

Currently, employees who have accumulated at least 26 weeks’ continuous employment are eligible to make one written flexible working request in any 12 month period. Once received, an employer is required to deal with the request in a reasonable manner, which will likely involve arranging meetings with the employee to discuss their request and any concerns. An employer has three months to respond from the date of the request, unless both parties agree to extend this time limit.

Given that many employees have been working from home for the majority of the past year, there may be an assumption that they have already successfully proven to their employer that home working is possible. In some cases, this may be correct. However, some employers may seek a return to normality in terms of office hours and presenteeism for various reasons. An employer who takes this course of action will need to produce evidence as to why continuing to allow the extent of flexibility currently in place would not work for the business in the long term.

Our article “How should employers handle flexible working requests following lockdown?” provides further information on flexible working requests, which will likely increase as lockdown eases.

Final Notes for Employers

As we come out of lockdown, businesses will need to continue to review their methods of working. It will be worth considering whether allowing staff to continue to work flexibly is something they are able to provide and whether this will remain beneficial to them as an organisation.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such.

Separation is for most people a very difficult time. Quite apart from the emotional aspects, including very often feelings of failure and loss, there are likely to be many practical matters which need to be sorted out. These may include the arrangements for children; possibly dealing with a house sale and move; considering whether one party is going to have to provide financial support, and/or sorting out other financial arrangements in a fair way.

There are other issues, which are often overlooked until the unexpected happens. One example is whether it is necessary to take steps to separate the parties’ digital lives. On separation, it is invariably more appropriate and often essential, that things are rearranged so that each party is in sole control of their own digital lives.

Here are some important considerations about protecting your digital life on separation.

Accounts and passwords

Like many couples, you may well have shared with your former partner access to a number of websites and platforms through the use of a common password. It may be that some of these are sites which you use regularly including, for example, online banking and savings accounts. Others could include access to social media and leisure activity sites, such as Netflix and Facebook etc.

The wise course, as soon as a separation is likely, is to change the user names on such sites and also the passwords. This is particularly important in the case of accounts where a liability might be incurred or one from which money could be removed without agreement. It may well be that this step will involve closing down use of a particular account and creating a new account in your sole name.

Make a list of all the passwords you could possibly have shared and create new ones for each one. It may sound obvious, but make sure that your new passwords are not those that your former partner might be able to crack.

As an extra precaution, access to any gadgets which are yours alone should be restricted by a fresh password which only you know.

Shared gadgets

Couples often share technology. This could be, for example, a shared tablet, kept perhaps in the kitchen for quick use by each of you for reference purposes or to pay bills or to access bank accounts. That gadget could well contain all the passwords each of you use, a history of all your browsing, or even have images on it you may not want to be seen by a third party.

Before wiping details from a shared gadget, it would be sensible to back up ‘your’ information on a separate device. Once any personal information has been backed up, it is usually best to reinstate factory settings on the former shared gadget.

Follow the same steps with any computers, phones, or other electronic items with the capability of saving data like banking info, your tax returns, instant messages, or anything you don’t want your former partner taking with them or even seeing.

Clean up your social media

You may have shared a Facebook account or other social media site where you kept mutual friends, photos, or conversations. Perhaps you both made comments on Twitter and jointly posted updates the appropriateness now seems dated. This is the time to close such accounts and, if you wish to do so, create your own private profile. This advice applies even if you are on continuing good terms with your former partner.

A very important rule to follow is to be extremely cautious about making posts on social media after a separation. Sometimes, former partners or others can misconstrue what has been said and this can create real difficulties.  Even very high levels of privacy can be breached, deliberately or by misunderstanding.

Make sure all your privacy settings are up to date and consider whether there are any potentially problematic posts you may have made in the past which need to be deleted.

These relatively simple steps will reduce or even remove any potential damage your former partner could do in the future. Such damage could be financial or even reputational i.e. someone making derogatory and/or untrue comments. Thinking about these issue early on will mean that you have one less problem to worry about.

If you or anyone you know, are affected by the issues raised above and would like more information or some preliminary, confidential advice, please contact Pippa Allsop or one of our other experienced experts in our family team.

IR35 – What is it and where does it apply?

IR35 is tax legislation aimed at preventing avoidance or reduction of tax and National Insurance Contributions (NICS) by workers and those hiring them through the use of an intermediary between the end user (‘the client’) and the worker. Workers who, if no intermediary was used, would have employee status, are “deemed employees” by HMRC and have to pay income tax and NICS as if they were employed by the client. This work is termed “off payroll”.

The scheme has been in force since April 2000 and has been heavily criticised throughout its time, for unfairly targeting certain organisations and for its ambiguity. As such, the legislation has been updated as of 6 April 2021 for private sector clients. This has already been implemented in the public sector (as of April 2017).

What is an intermediary?

An intermediary is any person or organisation from which a worker receives (or is entitled to receive) a payment or benefit which is not chargeable to tax as employment income. In many cases, the intermediary is a limited company which will be referred to as a “personal services company”.

In the case of a company, in order to be classed as an intermediary, it must not be an associated company of the client (i.e. under the same control or one controlled by the other). The worker must have a material interest in the intermediary company; or the payment or benefit received by the worker from the intermediary can “reasonably be taken to represent” payment for the services provided by the worker to the client.

Employment Status

Determining a worker’s deemed employment status is not straightforward, as evidenced by the vast numbers of cases such as Uber (considered in our article “Supreme Court Ruling – Uber drivers are workers“) heard in the Tribunals and higher courts. To determine an individual’s employment status, it is necessary to ascertain both the terms of the actual contractual arrangements between the parties and the actual working arrangements in practice. In other words, it is not enough to go by what is written in a statement of terms or contract of employment; rather, the parties must look at the true nature of the relationship in practice. Where intermediaries are used, the employment status of an individual can be determined by assessing whether or not the individual would be an employee, but for the existence of the intermediary.

In arrangements involving a client and an intermediary there will be two key contracts, the first one between the intermediary and the client and a second one between the intermediary and the worker.

In arrangements which involve an agency providing workers to the client, there may be three contracts. The first between the client and the agency, the second between the agency and the intermediary and the third between the intermediary and the worker. In order to establish the correct employment status, all of these will have to be subsumed into one “hypothetical” contract.

HMRC has published guidance on how to “check employment status for tax” (CEST) and has a tool which can be used to establish employment status on their website. This can be relied upon as evidence for an individual’s status for tax and NICs purposes, if the status is ever questioned by the worker or client. However, this will only be the case where the questions are answered in a way which accurately reflects the terms and conditions under which the individual provides their services to the client.

What were the previous rules?

Prior to 6 April 2021 in the private sector and April 2017 in the public sector, it was the intermediary’s responsibility to decide on a worker’s employment status for each contract they held.

What are the rules as of 6 April 2021?

The new rules mean that the responsibility for determining the status of the worker has shifted from the intermediary to the end client. However, this change only applies to medium and large private sector clients. Where the services are provided to a small client, it is the intermediary who remains responsible for deciding a worker’s employment status and whether the rules apply.

The off-payroll working rules will now apply if each of the following tests are met:

• The client is not a small entity;
  • An entity qualifies as small if one of the following is met:
    • The company’s first financial year is not relevant to the tax year; or
    • The ‘small companies regime’ applies to the company for its last financial year by satisfying two of the following:
      • it has a turnover of less than £10.2million;
      • it has a balance sheet total of less than £5.1 million; and
      • has no more than 50 employees
• The entity has a UK connection;
  • An entity has a UK connection for the tax year where it is resident or has a permanent establishment in the UK.
• The agency legislation does not apply, and the worker is not a visiting performer;
  • A visiting performer is an entertainer, sportsman or sportswoman (“a performer”) who is non-UK resident for a tax year and performs a relevant activity in the United Kingdom in the tax year.
• The worker is providing services to the client and not to an outsourced service provider
  • An outsourced service provider is where a customer contracts with a separate entity for the supply of an outsourced service, rather than the supply of a worker. And;
• The worker is subject to UK tax or NICs.

What are an end-user’s new obligations?

Businesses will need to review their current workforce and identify any individuals who are supplying services through their own limited company or another form of intermediary. It will then be important to put processes into place to identify future individuals working in this way. If a business identifies relevant individuals or agencies that the business engages with, it will be necessary to determine whether or not the off-payroll working arrangements apply in these circumstances.

If off-payroll applies, then the relevant parties will need to be informed of this by using a Status Determination Statement (SDS) as explained below. It will also be necessary to agree with the agency who will need to operate PAYE and the correct income tax and NICs contributions that need to be made.

Finally, businesses should ensure that they have a designated individual (or team) to take responsibility for understanding the regime and ensuring that it is correctly and effectively implemented. Records should be kept of status determinations, along with the reasons for them and any applied HMRC guidance. A regular review should be timetabled to ensure that all records are up-to-date.

What is a Status Determination Statement?

An SDS is a statement from the client declaring a worker’s deemed employment status following an IR35 assessment. The statement must also include reasons for reaching the conclusion on the employment status.

The SDS must be shared with the worker and the intermediary, agency or any other organisation the client contracts with. This is necessary, whether the off-payroll working rules apply or not.

New Guidance

On 3 March 2021, HMRC published changes to its off-payroll working rules guidance. Most notably, the changes include:

• Confirmation that if a worker has no interest in a company, the company will not be a relevant intermediary.
• Confirmation that a client’s status determination statement (SDS) can be provided through an online portal and expanded guidance on when a new SDS should be provided. The revised guidance confirms that clients retain their obligations even if they subcontract the tasks of determining the worker’s status or producing the SDS.
• Guidance on the new targeted anti-avoidance rule (TAAR) announced as part of the Spring 2021 Budget.

The revised guidance also provides information on correcting payroll inaccuracies and confirms that deemed employers cannot recover employer NICs from the amounts treated as employment income. Further, it clarifies that clients can stand by their SDS if disputes are instigated without any reason or new information.

What do employers need to do immediately?

The Government has said that businesses will “not have to pay penalties for inaccuracies in the first 12 months relating to the off-payroll working rules, regardless of when the inaccuracies are identified, unless there’s evidence of deliberate non-compliance”. While this gives employers a period of grace to get up to speed with the new rules and how they apply, it will still be important for them to understand whether or not the rules apply to their workers and to ensure that they have the correct procedures in place to comply. The first step will be to identify any workers who fall under the off-payroll working rules and ensure that the correct tax and NICs are made for them.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such.

On 8 March 2021, all schools and colleges across England will have been expected to reopen to all students to provide face-to-face learning, although secondary schools and colleges can operate a phased return in the first week to allow for mass testing. After that, all students will be expected to attend school in the usual way unless they are shielding, vulnerable or are self-isolating.

Unions have expressed their disappointment with the Government’s decision and we expect that many people working in the education sector will feel anxious about the return. This can bring with it some challenges for senior leadership teams when trying to efficiently manage the return of both students and staff. We have sought to outline some key questions that educational institutions may be asking over the course of this week.

How should you deal with members of staff who refuse to return to work on 8 March because of concerns surrounding Covid 19?

There will be members of staff who are reluctant to return to school. This may be linked to worries over their own personal wellbeing, or the wellbeing of their family members.

Under the Employment Rights Act 1996 (ERA), an employee is protected from (i) being subjected to any detriment by any act, or any deliberate failure to act, by his employer; or (ii) being dismissed by his employer:

1. in circumstances of danger which the employee reasonably believed to be serious and imminent and which he could not reasonably have been expected to avert, he left (or proposed to leave) or (while the danger persisted) refused to return to his place of work or any dangerous part of his place of work, or

2. in circumstances of danger which the employee reasonably believed to be serious and imminent, he took (or proposed to take) appropriate steps to protect himself or other persons from the danger.

As such, an employee is protected where they have a reasonable belief of serious and imminent danger. In these circumstances, an employee may be entitled to refuse to return to work, or to propose measures for the school to implement to alleviate the danger. If an employee believes that he/she is subjected to a detriment because of this, he/she may be entitled to bring a claim to an Employment Tribunal. As such, where an employee refuses to return to work, schools should be mindful as to how to respond.

A detriment may range from a change to their usual terms and conditions to disciplinary action or suspension. The key question will be whether the employee’s view is reasonable. This will depend on several factors. For example, (i) Government guidance in place at the time; (ii) any detailed and up to date risk assessments carried out by the school which identify the risks and set out the proportionate control measures in place to mitigate them (ideally with employees’ involvement and feedback); and (iii) correspondence from the school/college outlining these measures and providing clear communication channels for staff to use if they have any particular concerns.

What happens if a child or member of staff displays symptoms of Covid 19 whilst they are in school?

Ideally, schools should address this potential situation under their risk assessments and adopt a suitable procedure to follow where these circumstances materialise.

The Government guidance is clear that a symptomatic individual should be sent home and advised to follow the “guidance for households with possible or confirmed coronavirus (COVID-19) infection“.

If a child is awaiting collection from the school by their parent or guardian, they should be moved, if possible, to a room where they can be isolated behind a closed door, depending on the age and needs of the child, with appropriate adult supervision if required. Ideally, a window should be opened for ventilation. If it is not possible to isolate them, they should be moved to an area which is at least 2 metres away from other people. If they need to go to the bathroom whilst waiting to be collected, they should use a separate bathroom if possible. The bathroom must be cleaned and disinfected using standard cleaning products before being used by anyone else.

If a distance of 2 metres cannot be maintained (such as for a very young child or a child with complex needs), PPE (such as a face shield) must be worn by staff caring for the child while they await collection. Any member of staff who has provided close contact care to someone with symptoms (whilst wearing PPE or otherwise), and all other members of staff or pupils who have been in close contact with that person with symptoms, (whether or not if wearing a face covering), do not need to go home to self-isolate unless:

• the symptomatic person subsequently tests positive
• they develop symptoms themselves (in which case, they should arrange to have a test)
• they are requested to do so by NHS Test and Trace or the PHE advice service (or PHE local health protection team if escalated)
• they have tested positive from a LFD test as part of a community or worker programme

How should you treat members of staff who are clinically extremely vulnerable?

Members of staff who are clinically extremely vulnerable are advised to shield and therefore avoid attending work. The guidance advises that “Staff should talk to their employers about how they will be supported, including to work from home. Schools should continue to pay clinically extremely vulnerable staff on their usual terms.”

Those who are shielding are entitled to Statutory Sick Pay (SSP). However, the guidance is ambiguous as to whether schools who adopt the Burgundy Book provisions must continue to pay those who are clinically extremely vulnerable their full pay (being six months full pay during the first six months of absence under the Burgundy Book) where they are unable to work from home in any capacity. Contractual sick pay under the Burgundy Book is contingent on the individual being ill (as opposed to them receiving SSP). Unions have taken the view that full pay should be provided during this period and will likely push back where only SSP is provided, on the basis that it breaches the employee’s contract. However, there is scope to argue that full pay is only due where the employee is able to carry out some form of alternative work from home.

With this is mind, a cautious approach to reducing pay should be taken on the basis that anyone who is clinically extremely vulnerable may be disabled within the meaning of the Equality Act 2010. Where the school has reason to believe this is the case, it will need to be mindful that it is not subjecting a member of staff to discrimination because of their disability. They will also need to consider reasonable adjustments – such as alternative duties to enable them to continue to work.

Anyone who is living with someone who is clinically extremely vulnerable, or where someone is classed as clinically vulnerable, can still attend work where home-working is not possible.

How should you treat members of staff who are pregnant?

We have received several queries regarding how pregnant staff should be treated, particularly surrounding whether they should attend work after 28 weeks of pregnancy. The guidance clarifies that pregnant women are classed as “clinically vulnerable” (rather than “clinically extremely vulnerable”). It therefore follows that they can still attend work where home-working is not possible.

Nonetheless, pregnant staff should be considered under the school’s risk assessment and, whilst there is no obligation, it may also be beneficial to carry out a separate individual risk assessment for each pregnant individual. Employers should consider whether adapting duties and/or facilitating home working may be appropriate to mitigate risks, particularly for pregnant employees after 28 weeks’ gestation, or with underlying health conditions, both of whom may be at greater risk of severe illness from Covid 19.

What can you do when someone refuses to wear a mask?

The guidance is clear that, under national lockdown, in settings where pupils in year 7 and above are educated, face coverings should be worn by adults and pupils when moving around the premises, outside of classrooms, such as in corridors and communal areas where social distancing cannot easily be maintained. It goes onto recommend that face coverings should be worn in classrooms or during activities unless social distancing can be maintained. This does not apply to younger children in primary schools and in early years settings. Previously, the Government only advised wearing masks when in corridors and communal areas where social distancing couldn’t be easily be maintained. Schools should have a process for managing face covering in school that is communicated clearly to pupils and staff.

The guidance also makes it clear that some students and staff are exempted from wearing face masks. This applies to anyone who:

• can’t put on, wear or remove a face covering because of a physical impairment or disability, illness or mental health difficulties; or
• needs to speak or help someone who relies on lip reading, clear sound or facial expression to communicate.

Where an individual does not wear a mask (whether exempt or not), this should be factored in to any risk assessment. If a member of staff who is not exempt from wearing a mask refuses to wear one, the school should try to understand the reasons behind the refusal.

You may be able to discipline anyone who doesn’t have a legitimate reason for not wearing a mask, on the basis that they are disobeying a reasonable management instruction. Given the novelty of this situation, at the time of writing, we are aware of only one Employment Tribunal judgment where dismissal following an employee’s refusal to wear a masked was fair. Please see our case update here for more information. It should be noted that this decision was fact specific and an employer’s decision to dismiss an employee for refusing to wear a mask will not always be deemed fair. As always, it will be of paramount importance to follow the school’s disciplinary procedure.

Finally, the guidance also notes that ‘no one should be expelled from education on the grounds that they are not wearing a face covering‘.

What happens in someone refuses to consent to a lateral flow test?

The Government has produced guidance on testing in schools (found here) and confirmed that rapid testing using Lateral Flow Devices (LFDs) will support the return to face-to-face education by helping to identify people who are asymptomatic.

All schools and colleges should offer regular twice weekly testing to their staff. Testing is not mandatory for staff and they do not need to provide proof of a negative test result to attend school or college in person, although participation in testing is strongly encouraged.

For consenting secondary school pupils, they will take the first three tests in school before moving to home testing. Such testing can be phased during the week commencing 8 March, to manage the number of pupils passing through the test site at any one time. The school should offer 3 tests, 3 to 5 days apart and vulnerable children, children of critical workers, and children in years 10 to 13 should be prioritised. Testing is voluntary but strongly encouraged. The school must have specific consent to test the pupil as it will constitute processing their special category personal data. Data protection laws require the consent form for children (i.e. anyone under 18) to be in ‘clear language that they can understand’. Where the school believes that the child is not able to understand and give their consent, the child’s parents should provide consent on their behalf.

Individuals with a positive LFD test result will need to self-isolate in line with the guidance for households with possible coronavirus infection. It appears that this is even the case where the pupil later tests negative via a more reliable test. Those with a negative LFD test result can continue to attend school unless they have individually been advised otherwise by NHS Test and Trace or Public Health professionals (for example as a close contact).

Staff in primary schools will continue to test with LFDs twice a week at home, as per existing guidance on testing for staff in primary schools and nurseries. Primary age pupils will not be tested with LFDs.

No jab, no job – can you refuse to employ individuals who don’t have the vaccine?

Currently, the Government has no legal basis on which to force individuals to be vaccinated. It is instead setting out to persuade individuals that the vaccines are safe and it is in the population’s best interest for as many people as possible to get vaccinated.

The Health and Safety at Work Act 1974 provides that employers must take all reasonably practicable steps to reduce workplace risks to their lowest possible level. Whilst this does not necessarily include providing “in-house” vaccinations, it can include encouraging staff to take the vaccine when they are offered it, in order to reduce the risk of spreading the virus across the workforce. Likewise, employees have a duty under the Act to “to take reasonable care for the health and safety” of themselves, although the impact of this clause in relation to Covid-19 vaccination has not been explored in the courts.

Some employers are saying that they will require all employees to be vaccinated, unless they have a reasonable reason for refusing. However, decisions to dismiss on this basis should be treated with caution. There may be alternatives available which should be considered first, such as requiring permanent homeworking or a temporary change of role to reduce contact with vulnerable individuals. Where someone unreasonably refuses to have the vaccine following a reasonable management request and there are no alternatives it may, in some circumstances, be acceptable to dismiss.

Under general discrimination law, school’s will also need to ensure that their practices and policies in place regarding the vaccine do not adversely affect a group of people with a protected characteristic (for example, those with a disability). For further information, please see our article on “No jab? No job!” here.

Wow, it’s March already. The daylight hours are getting longer and the majority of us are starting to feel hopeful for spring and the easing of lockdown restrictions. It’s also the month that we trainees start thinking about our next seat rotation.

I wanted to share my experience in a Real Estate seat which often puzzles most as to what the work we do entails.

So, what is PPP & Projects?

PPP stands for Public-Private Partnerships. At its core, it seeks to facilitate the investment in national infrastructure – hospitals, schools, roads, waste management etc. – without increasing public debt.

For example, private lenders might agree to fund the construction of a hospital on behalf of the government for a particular NHS Trust. A Project Company (a special purpose entity created to isolate the financial risk of the project) can then take responsibility for the design and build, and subsequent services provision on the Trust’s behalf. The Project Company itself enters into a number of agreements, including with Facilities Management companies (and sub-contractors) for services such as cleaning, maintenance and/or catering. The private parties will then be remunerated provided performance meets specified standards.

Successes have been mixed and these types of projects and outsourced services have some detractors. Whilst there are many success stories, age-old debates are resurrected when there is a high-profile failure; such as, in recent times, the collapse of construction giant Carillion.

Procurement and maintenance of projects also concerns public sector contracts and therefore public expenditure on goods, works and services. For this reason, procurement is regulated. EU procurement law seeks to create a “level playing field” for all businesses across Europe who seek to benefit from such opportunities. Following Brexit, domestic regulation and preparation for future regulatory reform dominates. The UK will also follow the WTO’s Government Procurement Agreement, and has agreed the EU-UK Trade and Co-operation Agreement.

Okay, and what can I be involved in as a trainee?

The Projects team advises a full range of public and private clients, including Universities, NHS Trusts and private sector operators. As a trainee, you can expect to be involved in the following:

• Non-contentious areas – Reviewing contracts, preparing advice on contractual interpretations, drafting and amending documents, assisting with contractual negotiations, preparing completion “bibles” and undertaking post-completion tasks in relation to: Project Agreements; Facilities Management Contracts; Supplementary Agreements (varying the Project Agreement and/or Facilities Management Contract); and PFI School conversion funding documents and board minutes.

• Research – Research tasks come up regularly and mine have included: procurement laws, Brexit implications, estoppel and Mercury completion. Research in this seat often focusses on niche areas, which can make for interesting reading and starts to develop your working commercial and technical knowledge.

• Clients – During remote working, I have attended conference calls with clients and all parties’ calls with the opposite parties and their lawyers where necessary to progress complex drafting issues and overcome impasse. You will typically draft the attendance note, which can be challenging in the first few months with lots of new acronyms! However, calls are particularly helpful in starting to understand the commercial drivers of each party, the industry “bigger picture” and key players.

• Contentious areas – Opportunities to work with Construction, Commercial Litigation and BRI colleagues on defects issues, payment mechanism operation, changes to parent company guarantors and adjudications; either arising on initial site construction, or subsequent works and/or operation. Also, opportunities to draft correspondence with Counsel, reservation of rights letters and review settlement agreements.

The Projects seat provides a really interesting insight as to how the social infrastructure around you is built and operates. It is also a great opportunity to learn and apply different areas of law. Of course, there is always a great deal to learn if you decide to do a seat or qualify into this area, but the work is varied and the sector continues to evolve post-Brexit.

Following the recommendations made in the Independent Review of Building Regulations and Fire Safety led by Dame Judith Hackitt (Hackitt Report), the Construction Products Association (CPA) has opened a consultation on its proposed code for construction product information (Code). Construction & Engineering Partner, Alan Tate, looks at more depth into this report and what this means for those involved in construction projects.

The consultation can be accessed by visiting https://buildingsafely.co.uk/consultation/ and closes on 31 March 2021.

The Hackitt Report identified the need for products to be “properly tested, certified, labelled and marketed” appropriately and such a system should be clearer, simpler and have an effective system of specification. It addresses the key aspects of:

• a transparent testing regime
• an improvement of testing methods
• clearer labelling and product tracing and
• an enforcement and surveillance regime.

With this in mind, all construction product manufacturers should provide information that passes five “acid” tests (namely, that the information is clear, accurate, up-to-date, accessible and unambiguous). These five points stand behind the 11 clauses of the new Code and the aim of the consultation is to gather views on the implementation, ongoing management and policing of the Code once it is launched.

What are the new clauses for manufacturers of construction products?

The 11 clauses state that a manufacturers of construction products must:

1. have in place a documented sign-off process for creating ‘Product Information’.

• A named individual should be nominated to be responsible for the ‘Product Information’ at its instigation and the final ‘Product Information’ should be signed off by a technically competent person and there must be an audit trail of records and processes undertaken.

2. have in place a formal version control process for all ‘Product Information’.

• In essence this clause aims to establish a formal process of naming and distinguishing between a series of draft documents concerning ‘Product Information’ which lead to a final (or approved) version.

3. not use misleading or ambiguous wording, phrasing or imagery and embrace the use of plain English to ensure accurate representation of ‘Product Information’ and performance claims.

• The clause aims to prevent manufacturers using words or phrases that exaggerate and/or do not accurately represent, a ‘Construction Product’s’ performance or capability.

4. provide specific information where claiming compliance to, or achievement of, any Certification, Classification or Industry Standard.

• Clause 4 aims to ensure that details of a product’s certification is publicly available on the manufacturer’s website, and/or the certificate number and provider must be stated for a third party to check.

5. provide verifiable information when making any product performance claims which are outside of Certification, Classification or Industry Standard tests.

• In practice, this clause means that all stated performance data relating to a construction product must be referenced back to a valid dated test or specified technical assessment.

6. make available on [its] website the descriptive and physical characteristics of the ‘Construction product.

Such information includes, but is not limited to:

• Manufacturer and Product Name
• Packaging
• Product Type
• Material
• Weight/Size/dimensions
• Shelf life

7. ensure ‘Product Information’ is consistent with ‘Manufacturer’s’ supplied products.

• manufacturers must demonstrate an internal process for reviewing the accuracy of ‘Product Information’ concerning construction products and that there is a process to advise suppliers of changes to the ‘Product Information’ brought about by a manufacturing or component change.

8. publish on its website and make easily accessible, clear information on handling, installation, operation, maintenance and disposal of ‘Construction Products’.

9. when making any claims of guarantees/warranties, ensure that its (the manufacturer’s) website states what is covered, excluded, and required to comply with its terms. The guarantee/warranty should be transparent, and in a format recognised by the relevant sector of industry.

10. ensure technical helpline contact details (telephone and/or email) are visible on its website.

• There should be a maximum of two clicks from any page to access a telephone number or email.

11. have in place a robust training programme (for new and existing personnel) to ensure that anyone conveying ‘Product Information’ is competent to the level of knowledge required for their role.

Whilst the Code is subject to change arising from the consultation, it is clear that these obligations imposed on manufacturers reflect the shift towards an effective regulatory framework. By ensuring accountability at an early stage in the supply chain, the clauses go some way towards eradicating what has been described in the Hackitt Report as the sector’s “race to the bottom caused either through ignorance, indifference, or because the system does not facilitate good practice“.

For those currently involved in construction projects, it is important to check and seek clarification from manufacturers that the products meet the performance requirements for which they are being used.

For more information on how this report can affect your construction project contact our Construction & Engineering team.

Kubilius v Kent Foods Ltd ET/3201960/2020

In this recent case, which was heard on 19 January 2021, the Employment Tribunal (ET) considered whether the sanction of dismissal without notice of Mr Deimantas Kubilius (the Claimant), after he refused to wear a face mask, was unfair.

Background

The Claimant commenced employment with the Respondent on 25 July 2016 as a Class 1 Driver. The Respondent was a distribution company which transported food products from suppliers to customers. As part of the Claimant’s role, he was required to carry out driving work for a key customer (the Customer) of the Respondent. The Respondent’s Staff Handbook expressly required employees to follow customers’ instructions regarding PPE requirements and to comply with their PPE instructions when visiting their sites.

On 21 May 2020, the Claimant was required to visit the Customer’s site. Later that day, the Customer reported an incident to the Respondent involving the Claimant, part of which involved him refusing to wear a mask after repeated instruction by the Customer, on the basis that “he was in his cab and he didn’t have to“. He was consequently banned from the site. The Claimant argued that he was not required to wear a mask in his cab as the Government guidance stated (at that time) that wearing a face covering was optional.

An investigation was carried out and the Claimant was suspended on full pay pending its outcome. It was considered that the Claimant’s account of events showed a breach of the requirements in the Employee Handbook to maintain good relationships with customers and suppliers and to cooperate to ensure a safe working environment. The Respondent took steps to ask the Customer to rescind the ban on the Claimant, however, this was refused.

The disciplinary hearing took place on 12 June 2020. At the meeting, the Claimant reiterated that the Customer’s request was wrong; he was in his own environment and the Government guidelines stated that wearing a mask at work was optional. The Respondent dismissed the Claimant on the basis that a deliberate refusal to comply with a health and safety instruction was a serious breach of contract. If the Customer’s site ban had been rescinded, it may have considered a final written warning as an alternative to dismissal, but this had not been the case.

The Law

Subject to some exceptions, the general rule is that, where an employee has completed two or more years’ service with their employer, they have a right not to be unfairly dismissed. Broadly speaking, a dismissal will be unfair, unless:

• the employer can show that the reason for dismissal was one of five potentially fair reasons (see below); and

• the ET finds that, in all the circumstances (including the size and administrative resources of the employer), the employer acted reasonably in treating that reason as a sufficient reason for dismissal.

The five potentially fair reasons are as follows:

• Capacity or qualifications

• Conduct

• Redundancy

• Breach of statutory duty or restriction

• Some other substantial reason

Third-party pressure to dismiss an employee may amount to ‘some other substantial reason’ and therefore a potentially fair reason for dismissal. In looking at whether dismissal was an appropriate sanction, the question is not whether some lesser sanction would, in the ET’s view, have been appropriate, but rather whether dismissal was within the band of reasonable responses.

For further information, please see our article on Unfair Dismissal Procedures here.

What did the Employment Tribunal decide?

The Respondent argued that it dismissed the Claimant because of his conduct or, alternatively, because of third-party pressure which amounted to ‘some other substantial reason’, and that his dismissal was fair.

The ET found that the principal reason for the dismissal was the Claimant’s conduct.  The Respondent had a genuine belief that the Claimant was guilty of misconduct and the investigation fell within the reasonable range of responses. The fact that there was company documentation which set out an obligation on the Claimant to comply with PPE instructions at the Customer’s site, and he had admitted that he refused to comply with this, also meant that there were reasonable grounds for the Respondent to conclude that the Claimant had committed misconduct.

Whilst another employer might have chosen to issue a warning, dismissal fell within the range of reasonable responses. Taking into account the relevant circumstances, including Claimant’s lack of remorse and the practical difficulties caused by the site ban, the ET held that the dismissal had been fair.

What can employers take from this?

This judgment by no means provides that all employers are entitled to dismiss an employee without notice if they do not wear a mask. However, it does highlight that, in certain circumstances, an employee’s refusal to wear a mask can be considered gross misconduct and constitute a potentially fair reason to dismiss.

This is the first case that addresses this issue and is only a first instance decision which has not been considered by the higher courts. Therefore employers should be mindful that a very different outcome could be delivered on different facts. However, this judgment supports a view that dismissal will be permissible in certain settings. For example, a dismissal for refusal to wear PPE is more likely to fall within the band of reasonable responses in respect of employees who work with vulnerable individuals; for example. paramedics or carers, where the requirement to comply with strict health and safety rules is likely to be paramount.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. 

There exists in English law a concept that exercise of a right for a long period of time should be capable of legitimisation. This was considered in a recent High Court case concerning rights of drainage.

The case

The Claimant in the case of Bernel Limited v Canal and River Trust [2021] had acquired land near Macclesfield, which it intended to develop. The site comprised an existing dwelling and its garden, and a large adjoining field, on which the Claimant was building nine new houses.

The Defendant was an adjacent landowner. A pipe of uncertain origin ran across the Claimant’s land and discharged on to the Defendant’s land and into a feeder canal.

The Claimant needed to be able to drain the surface and foul water from the development on to the neighbouring land, but had not been able to reach an agreement with the Defendant about this. To try to circumvent the need for an agreement, the Claimant asserted that it in fact had a preexisting right, on two alternative bases:

1. the pipe was a natural watercourse (in that it had been installed along the course of a naturally-occurring stream) and so the intended drainage was permitted under the riparian rights the Claimant had as landowner; or
2. the necessary rights had been acquired by prescription under the doctrine of lost modern grant.

The Defendant’s position was that the pipe was a sewer or drain bringing effluent from septic tanks further up the street, and water from field drains, rather than naturally flowing surface water.

The doctrine

The doctrine of lost modern grant gets its name from the concept that the use is presumed to have its origin in a legitimate deed of grant, which has been lost. However, there is no need to prove the existence of such a deed or the parties to it when bringing a claim, and even demonstrating that no grant was in fact ever made may be insufficient to rebut the presumption.

For a claim that an easement has been acquired by prescription under the doctrine of lost modern grant to succeed, there are two key requirements which must be met:

• The use must have been enjoyed for at least 20 years without other lawful explanation; and
• The use must have been ‘as of right’, that is without force, without secrecy and without permission.

The Judgment

The Court found that, although riparian rights would have enabled the Claimant to do as he wished, the expert evidence showed that the pipe was not a natural watercourse – and so the claimed riparian rights did not exist.

The prescription claim also failed, as the Court found that the evidence did not establish 20 years’ discharge of surface water or effluent from the Claimant’s land into the pipe. The septic tank of the existing dwelling was not connected to the pipe, and there was no evidence of any significant amounts of surface water from the site having otherwise drained off the site through the pipe.

Establishing an easement by long user

Although the Claimant’s prescription argument failed, the Judge explained what other findings he would have made, if the evidence had shown 20 years’ use. Of particular interest were his comments about the physical extent of the ‘dominant’ land, and whether the proposed use amounted to a radical change in
the site.

For every easement, there is ‘dominant’ land (the land asserting the use) and ‘servient’ land (the land burdened with the use). In this case, it was found that the dominant land could only ever have been that of the existing dwelling and its garden, and land in the immediate vicinity of the pipe – not the whole site.

Based on that finding, the Judge held that the development of the site constituted a ‘radical change’ in its identity, which is grounds for the servient land owner to object, if such change results in a substantial increase in the burden on the servient land.

If the claim had instead been for intensification of the burden from the existing dominant land, any pre-existing right would have expanded to include that. The Judge also noted that had he found that the dominant land constituted the whole of the site, the proposed user would not be excessive as the evidence was that the burden on the servient land would not have significantly increased.