In July 2019 the government released their response to the public consultation on the biodiversity net gain provisions to be included in the forthcoming Environment Bill.

The Bill has been hailed as “world-leading” by Michael Gove and upon review of the proposed provisions, it is easy to see why.

To provide a flavour of the contents, there is to be an “Extended Producer Responsibility” scheme to ensure producers take responsibility and compensate for the waste they produce. Producers must also improve the labelling on packaging to aid recycling. Consumers will further be encouraged to recycle by participating in a “deposit return scheme” which allows individuals to reclaim their deposit when recycling disposable water bottles. The Bill directs that water companies must collaborate to mitigate against water shortages and become more environmentally friendly. Failure by companies to abide by the new regulations could lead to a referral to the new environmental watchdog, the Office for Environmental Protection. This office will be able to undertake investigations into government and public bodies for failing to follow environmental law.

To return to the recently released government response, the Bill will also impose new requirements for developers to deliver an overall 10% net gain in biodiversity on the land being developed which must be maintained for a minimum of 30 years. The 10% net gain can be obtained either through the enhancement of existing biodiversity, or through the creation of new habitats on a “like for like” basis.  This will usually take place on the development site itself, however, if not possible, the developer will be required to enhance or create a biodiverse site which has been identified on a publically accessible register.

To determine the 10% net gain requirement, biodiversity will be quantified through measurable “Biodiversity Units” which will be calculated using the DEFRA Biodiversity Metric. Different habitats will be assessed using factors such as distinctiveness, condition, connectivity, strategic significance and size, resulting in an assigned amount of biodiversity units. The higher the amount of biodiversity units, the more biodiverse the site is.

There are some (admittedly few) exceptions to the 10% net gain requirement, including sites which do not contain habitats pre-development (but these will be required to incorporate green space) and brownfield sites which face genuine difficulties in delivering a viable development. Nationally significant infrastructure and marine developments are also currently excluded, due to the biodiversity metric not being advanced enough to fully assess these areas.

In recognition of the tight budgets of small developers, developments of less than 10 residential units or sites covering an area of less than 0.5 hectares will be permitted to follow a simplified biodiversity surveying process. The government have not yet released specific details on this.

The government are also promising training to local planning authorities for the systems required for calculating net gain, to enable them to cope with these additional requirements.

It will be interesting to see whether the Environment Act, that is given Royal Assent, manages to maintain the breadth of environmental protection and substance contained within the draft Bill.

The Construction & Engineering team at Michelmores are pleased to be one of the authors to another publication from Constructing Excellence South West. The Guide to Appointing an Architect follows on from the Legal Guide to Offsite Manufacturing which was published last year. This latest guide covers a number of topics which should be considered when appointing an Architect, or other consultants. The authors within the guide include Solicitors, an Architect and an Insurance Broker. Topics include: the RIBA Work Stages; Forms of Appointment; The functions of a ‘designer’, ‘lead designer’ and lead consultant’ the CDM Regulations, Copyright and BIM models, fee arrangements; and Professional Indemnity Insurance cover. If you would like to discuss any of the topics raised in this guide then please contact Alan Tate in the Construction & Engineering team at Michelmores.

Read the guide here: CESW Guide to Appointing an Architect 

British Airways suffered a high profile cyberattack in Summer 2018.

The cause of the attack is currently unclear. British Airways alleged at the time that it was a “sophisticated, malicious criminal attack“. The ICO’s news statement indicates it was due to “poor security arrangements” allowing traffic to be diverted to a fraudulent website.

British Airways announced to the London Stock Exchange on 8 July 2019 that the Information Commissioner’s Office (“ICO”) intended to fine British Airways £183.39 million for 2018 cyberattack. The ICO’s response indicates around 500,000 customers were affected and compromised information included “log in, payment card, and travel booking details as well name and address information“.

Further detail may become clear once the ICO issues the formal Monetary Penalty Notice.

This is the first major UK fine under the GDPR regime. As such, it is a very important step and clear signal of the ICO’s intention in terms of fine levels.

The proposed fine emphasizes the possible consequences of breaching the GDPR and the need for data protection and cybersecurity to be boardroom issues. The ICO can fine controllers up to the greater of €20 million and 4% of global turnover. For some time commentators wondered how the fines to be imposed for breaches of the GDPR will be implemented. Some of you may recall my colleague, Tom Torkar‘s article on Equifax and Facebook being fined £500,000 (the maximum possible under the old data protection regime) for their failure to protect the personal data of UK citizens where Tom highlighted the ICO’s comment in relation to the Facebook breach that the “fine would inevitably have been significantly higher under the GDPR”, indicating that they will not be afraid in the future of imposing super fines on companies that reflect the severity of the breach. This proposed fine equates to 1.5% of British Airways’ global turnover for the calendar year ending 31 December 2017.

Today’s reaction to the proposed fine in the press and social media should remind all controllers of the reputational damage and cost one can suffer if a cyber incident becomes public.

As regards the formal Monetary Penalty Notice, it will be interesting to see if it provides the view of the panel of non-executive advisors to the Commissioner’s Office regarding the investigation findings and representations made. The Regulatory Action Policy refers to the panel possibly being convened for “very significant penalties (expected to be those over the threshold of £1M)“. Given this is the first major UK fine under the GDPR and the level of the proposed fine, we anticipate such panel will have been convened.

The Monetary Penalty Notice may also provide some further detail as to the cause of the breach. There are online suggestions a company insider may have “tampered with the website and app’s code for malicious purposes“.

Process Going Forward

According to the ICO’s own Regulatory Action Policy, British Airways will now have at least 21 days to make representations about the imposition of the penalty and its level.  This period may include a face-face meeting between the ICO and British Airways where British Airways submit mitigating factors and no doubt will request a reduction in the proposed fine. Willie Walsh has already indicated British Airways will “take all appropriate steps to defend the airline’s position vigorously, including making any necessary appeals“. The ICO has also liaised with other EU national data protection authorities whose residents have been affected. The ICO’s statement advised that such other authorities “will also have the chance to comment on the ICO’s findings“.

Given the severity of the fine and British Airways announcement to the London Stock Exchange, we anticipate it will be longer than 21 days before any fine is announced.

UPDATE:

The day after the intention of the UK’s Information Commissioner’s Office (ICO) to levy a record fine against British Airways, Marriott International announced to the US Securities and Exchange Commission that the ICO intended to fine it £99.2 million for the personal data breach that it originally announced in November 2018 in connection with security vulnerabilities within the hotel group Starwood which Marriott purchased in 2016.

Businesses should note that super fines now appear to be the norm under the GDPR for significant personal data breaches that the ICO investigates.

This particular case also emphasises the importance of undertaking thorough technical due diligence when purchasing any target. Marriott appear to have been held responsible for security vulnerabilities that were exploited two years before they purchased Starwood. The ICO’s statement in response to Marriott’s announcement suggests the fact it took Marriott two years post-completion to discover the vulnerability and subsequent breach was an aggravating factor in the level of the proposed fine.

Further detail may become clear once the ICO issues the formal Monetary Penalty Notice.

Fiona Pearson has co-authored an article in the respected journal, Corporate Rescue and Insolvency, on the Hague Convention on Choice of Court Agreements. In summary, as a Member State of the European Union, the United Kingdom participates in a number of agreements relating to jurisdiction and enforcement in civil and commercial matters, principally the Brussels Regulation, the Brussels Regulation (recast) and the Lugano Convention. Those agreements will, however, cease to apply to the UK when it leaves the EU. The Hague Convention, to which the UK is currently a party by proxy as a Member State of the EU, will instead – following the UK’s accession to that Convention in its own right – provide a basis for the recognition of jurisdiction and enforcement in the future. However, not a like-for-like replacement or watertight solution.

You can access a copy of their article here, with kind permission from LexisNexis.

The winners of the 17th annual Michelmores Property Awards have been announced, celebrating outstanding property and construction projects in Devon, Somerset, Bristol, Dorset and Cornwall, across ten categories.

Taunton’s Hydrographic Office was awarded the coveted Building of the Year prize, for its new development to accommodate the world’s leading geospatial companies. The building is highly sustainable and maximises natural daylight to better support employee wellbeing.

Tolvaddon House in Camborne, won the Project of the Year (over £5m) category. Tolvaddon House is the new head office for social and affordable housing developer LiveWest, previously located across five different offices in the South West. The building features a range of flexible working spaces, offering staff a high-quality work environment.

Winner of the Residential Property of the Year category (36 units and over) was Great Court Farm, in Totnes. Formerly a working dairy farm, the site has been transformed into a collection of luxury homes, including coach houses, bungalows and barns.

Bristol’s ‘Being Brunel’ visitor attraction took home the prize for Leisure & Tourism Project of the Year. The project saw the restoration of the partly derelict 20^th century dockside buildings which run alongside the SS Great Britain, a Grade II listed building and Brunel’s drawing office. The buildings have been transformed into a new visitor experience, based on the life and legacy of Isambard Kingdom Brunel.

The John Laurence Special Contribution Award, which spotlights outstanding property and construction professionals in the region, was awarded to Steve Hindley CBE, Chairman of Midas Group for his career-long commitment to the South West property world.

The other winning projects for 2019 include: Chester Long Court in Exeter – Residential Project of the Year (35 units and under); The Farmers Arms in Woolsery, Devon – Innovative Property Investment Project of the Year; St Helen’s Church on Lundy Island – Heritage Project of the Year; Kingswood Prep School in Bath – Education Project of the Year; Tre, Pol & Pen near Launceston – Project of the Year (under £5m).

Emma Honey, Head of Real Estate at Michelmores, said: “Congratulations to all of this year’s Michelmores Property Awards winners. Once again, the quality of the entries has been exceptional, highlighting the excellence of the South West’s property and construction sector. Well done to all of the winning projects, the teams involved, and to those shortlisted.  

“I would also like to extend my thanks to our esteemed judges and sponsors, without whom this fantastic event would not be possible.”

The award-winning property and construction projects were announced at a Gala Dinner on Thursday 13 June at Sandy Park Conference Centre in Exeter, hosted by actor and writer Sally Phillips.

The 2019 Michelmores Property Awards winning projects in full:

In our spring 2018 edition of Agricultural Lore we reported on the first instance decision in the farming proprietary estoppel case of Habberfield v Habberfield [2019].

The Court of Appeal has now presided over the case and upheld the first instance decision of Justice Birrs, who awarded the successful claimant, Lucy, a sum of £1.2m in satisfaction of her claim.

Jane, the defendant who is Lucy’s mother, appealed on the following grounds:-

1. that an offer made to Lucy in 2008, which would have resulted in Lucy receiving a viable dairy farm, meant that it was not unconscionable for Jane and her late husband, Frank, to resile from their assurances;
2. the award was disproportionate to the detriment; and
3. the cash award should not have to be paid during Jane’s lifetime.

The appeal and cross-appeal were dismissed.

Court of Appeal decision

The Court of Appeal found that:-

• Lucy’s rejection of the offer was not a complete defence to the claim; it was a factor to be taken into account when determining how the equity was to be satisfied.
• The 2008 offer was not put to Lucy on the basis that if she rejected it that she would lose all prospects of future inheritance. Lucy continued to rely on the assurances that had been made to her after 2008 and the Judge at first instance had been right to conclude so.
• When looking at proportionality, Lucy’s expectation is not determinative of the relief to be granted. The question was whether the award was out of all proportion to the detriment suffered. Unless there are exceptional circumstances, it would not be equitable to award a claimant more than their expectation.
• Payment had to be made during Jane’s lifetime. The inevitable consequence of this is that the farm must be sold.

The Court of Appeal took the opportunity to emphasise the wide discretion that Judges have when determining proprietary estoppel claims. This makes it increasingly difficult, if an estoppel claim is litigated through the courts, to predict with any certainty how the Court might apply its discretion and what the outcome might be.

Guest v Guest [2019]

In yet another recent successful farming proprietary estoppel case, Guest v Guest [2019], the judgment of which was handed down back in April, the Judge was clear that the breakdown in family relations meant that a clean break solution had to be achieved. In exercising his discretion, the Judge decided that the appropriate remedy was for a lump sum to be paid to the claimant, Andrew, by his parents, David and Josephine, the defendants.

The lump sum to be awarded was 50% (after tax) of the market value of the dairy farming business that was carried on at the farm together with 40% (after tax) of the value of the farm land and buildings. A significant sum is going to have to be raised by David and Josephine, which is likely to lead to the farm or parts of it having to be sold.

In proprietary estoppel cases so much depends on the witness evidence at trial and the view taken by the judge. Early resolution is always in the best interests of the parties.

Owners of newly built homes frequently find construction defects in their buildings, but sometimes those defects are ‘latent’ and do not transpire until some time after the purchase. They are likely to have purchased their new home from a developer under a contract of sale of land which, although it will contain warranties about the standard of construction of the building, is typically subject to a six year limitation period. If the limitation period for a claim in contract has expired they may have no contractual remedy by the time the defect comes to light. In such a scenario can the homeowner instead bring a claim against the developer (if it is still solvent), or the actual builder, in negligence?

Lord Bridge’s “Exception” in Murphy v Brentwood

The case of Murphy v Brentwood [1991] UKHL 2 is well-known within the construction industry. Mr Murphy sued Brentwood District Council for negligently approving the design for the construction of concrete raft foundations for a house. The designs included insufficient steel reinforcement and this was overlooked and, as a result, cracks in the house and its foundations were discovered 11 years after construction. However, no-one had been injured, nor was any other property damaged; only the house itself was defective. Murphy later sold the house for a price £35,000 lower than the market value would have been if the foundations had been built correctly. In the absence of any surviving contractual remedy against the developer, Murphy sued the Council on the basis of an alleged duty of care by its building control team, seeking to recover his £35,000 loss (a “pure economic loss”).

In his 1991 decision, Lord Bridge in the House of Lords held that where a defect, “becomes apparent before any injury or damage has been caused, the loss sustained by the building owner is purely economic.” These economic losses are, “recoverable if they flow from breach of a relevant contractual duty, but… in the absence of a special relationship of proximity they are not recoverable in tort“. As no personal injury or damage to property had been caused and the relationship between the Council and Murphy did not satisfy the ‘special relationship of proximity’ test, Murphy was unable to recover his loss from the Council.

However, in obiter, Lord Bridge’s went on to propose the following exception to this rule:

“…if a building stands so close to the boundary of the building owner’s land that after discovery of the dangerous defect it remains a potential source of injury to persons or property on neighbouring land or on the highway, the building owner ought, in principle, to be entitled to recover in tort from the negligent builder the cost of obviating the danger, whether by repair or by demolition, so far as that cost is necessarily incurred in order to protect himself from potential liability to third parties“.

Therefore, in a situation where the defect could lead to personal injury or damage to property on neighbouring land (or a highway), can the homeowner successfully claim against the housebuilder in negligence (for a breach of a duty of care owed to the homeowner)?

Reconsidering Murphy

Lord Bridge’s proposed exception in Murphy was revisited in the recent case of Thomas and another v Taylor Wimpey Developments Ltd and others [2019] EWHC 1134 (TCC). In this case, Mr and Mrs Thomas brought claims against the housebuilder in respect of defective log retaining walls in the rear gardens of their new-build home. The homeowners brought the claim on the basis of common law negligence (relying on Lord Bridge’s exception in Murphy to allege that the builder owed them a duty of care in relation to these defects), as well as under section 1 of the Defective Premises Act 1972 for defective construction and, separately, for misrepresentation. Claims were also brought against the insurer of the homes under an NHBC new home warranty policy and against the solicitor who represented them when purchasing their homes. The scope of this note addresses only the claim against the builder for common law negligence in light of Lord Bridge’s exception in Murphy. In respect of that claim, the housebuilder denied that it owed any duty of care to the homeowners. HHJ Keyser QC had to deal with 5 preliminary issues, the first of which concerned whether Taylor Wimpey owed Mr and Mrs Thomas a duty of care in negligence.

In coming to his decision, HHJ Keyser QC considered the following precedents:

1. The Court of Appeal decision in  Robinson v PE Jones [2011] EWCA Civ 9,  which considered that the only basis for recovery of economic loss outside a contractual relationship is an “assumption of responsibility” for the homeowner by the builder, described by Lord Bridge in Murphy as a, “special relationship of proximity“; and
2. The High Court decision in George Fischer Holding Ltd v Multi Design Consultants Ltd (1998) 61 Con LR 85, in which HHJ Hicks QC did not apply Lord Bridge’s exception as it was, “minority obiter dictum [non-binding], contrary to the ratio [binding] of the decision of the House“.

Lord Bridge’s exception was inconsistent with the more recent Court of Appeal (‘CA‘) decision in Robinson, as it sought to create a basis for recovery of economic loss on the basis of tort which was not based on an “assumption of responsibility”. The reader may well ask why it is that ‘first purchasers’ (like Mr and Mrs Thomas), do not automatically qualify for the ‘special relationship of proximity’ or an ‘assumption of responsibility’ when they had been in contract with the developer or builder? The clearest explanation why this is not the case can be found at paragraphs 65 – 89 of the CA’s Robinson judgment; basically, where builders and developers are concerned, one cannot assume that just because there was a contract, there was a parallel duty in tort (i.e. negligence), let alone one which could survive the expiry of the contractual limitation period. In this case, HHJ Keyser QC took the view that, “[T]he argument that recovery ought to be permitted because expenditure would be required to obviate the risk to third parties would, logically, imply that, where the risk of injury was only to persons on the premises, the owner ought to be able to recover the cost of moving from the premises“. Such a decision would muddy the waters in this area of law; in particular the decisions in the Murphy and Robinson cases.

On the basis of the above, HHJ Keyser QC rejected the homeowners’ argument, stating that “Lord Bridge’s qualification [exception] in Murphy does not represent the law“. This was because, primarily, Lord Bridge’s exception was set out in the non-binding section of the judgment and was not supported by the binding section or the reasoning behind that binding section of the other Law Lords in the case. Lord Bridge’s exception was largely unsupported by subsequent case law (for example, in the Robinson and George Fischer cases cited above).

HHJ Keyser QC also noted that Lord Bridge’s exception had no compelling policy justification. This is because, in such circumstances, the builder would already have potential liability in contract, under the Defective Premises Act 1972 and in the tort of negligence (in respect of injury to persons/property).

Therefore, HHJ Keyser QC concluded that Lord Bridge’s obiter dictum comments in Murphy v Brentwood [1991] UKHL 2 did not create an exception to the rule prohibiting tortious claims for pure economic loss in certain circumstances. On that basis, he did not need to consider whether the Mr and Mrs Thomas’ claim in negligence had become statute barred, and he went on to hold that claims under the Defective Premises Act 1972 and the Misrepresentation Act 1967 were statute barred since they accrued more than six years before Mr and Mrs Thomas issued proceedings.

What does this mean for you or your business?

This decision confirms that Lord Bridge’s exception does not represent the position at law in relation to liability of a housebuilder for purely economic loss suffered by a homeowner.

It should be remembered that, where a property owner is required to repair defects to protect against the risk of personal injury or damage to neighbouring property, the owner may be able to bring a claim against the housebuilder under the Defective Premises Act 1972. New homes, as in this case, will also usually be covered under a warranty policy such as that provided by the NHBC. Such warranties typically last ten years and are insisted upon by the Council of Mortgage Lenders. It is unlikely, therefore, that a homeowner would be left to pick up the pieces without recourse. As HHJ Keyser QC noted, there is therefore no policy justification for an additional route of claim for purely economic loss.

From the housebuilder’s perspective, this judgment does not affect the fact that economic losses can still be recovered under the Defective Premises Act 1972, or where losses arise from a breach of a contractual duty, or indeed tortious liability where there is a “special relationship of proximity” with a homeowner (which Robinson suggests will be a rare scenario).

For more information

If you require advice in connection with any construction related query, please contact alan.tate@michelmores.com or any other member of the Construction and Engineering Team.

Increasingly Local Planning Authorities (“LPAs”) are requiring developers to take a holistic view of their project as a whole and consider its impact on the surrounding community and countryside.

Obligations imposed by the LPA on a developer to compensate and mitigate the negative aspects of their development are often contained within a section 106 Agreement. A section 106 Agreement outlines specific contributions and/or concessions from the developer to allow the LPA to grant planning permission for an otherwise unacceptable development. Such obligations frequently include mitigation strategies aimed at reducing the impact of the development on the environment by requiring the developer to provide additional or alternative areas of green space.

Green space in development

The recognition that developments should be incorporating green spaces was translated into statute through the Planning Policy Guidance 17, published in 1991 and updated in 2002. This emphasised that ‘open spaces, sport and recreation all underpin people’s quality of life’ (page 1) and placed responsibility for determining the standards of open space with the local government for the area.

This guidance was expanded in the 2018 revision of the National Planning Policy Framework (“NPPF”) to recognise not just the anthropological motive for protecting the environment but also to protect “the intrinsic character and beauty of the countryside” (Para 170(b)).

Green space in legislation

A Special Protection Area (“SPA”) is a designated site worthy of special protection under Article 4 of the European Union Directive on the Conservation of Wild Birds. This Directive has coordinated conservation efforts across European Union countries to aid in the protection of all wild bird species. Due to the nature of (and in) SPAs, they also frequently contain Sites of Special Scientific Interest (“SSSIs”) and are dedicated as Nature Reserves. For example, the Thames Basin Heaths SPA contains 13 SSSIs. SPAs are therefore internationally recognised as vitally important for the protection of wildlife and biodiversity conservation.

SANGS

Where a development is within, or in proximity to a SPA, the developer is likely to be required to either contribute to or provide a Suitable Accessible Natural Green Spaces (“SANGS”). These are areas designed as an alternative green space for recreational activities, with the goal of mitigating the increased population pressure on the protected area by detracting potential visitors from the SPA.

SANGS can be created by: opening up existing green space that is currently inaccessible by the public, modifying existing green space to make it more attractive to potential visitors to the SPA or converting land that is not currently green space.

To qualify as a viable alternative to the SPA, these areas must be of a certain quality and type. The three main requirements for the green space (as contained in the description) are for it to be: suitable, natural and accessible.

1. Is the green space suitable?
   Natural England has released guidance on the types of sites that could be suitable as a SANGS and which features of a SPA should be replicated in the SANGS to qualify it as a viable alternative. As these spaces are offered as an alternative site to the protected SPAs, these areas should not contain high levels of biodiversity that would be susceptible to damage and degradation.
   The specific character of the SPA in question and the reasons visitors choose to frequent that site should be understood and replicated by the developer when seeking to create a viable SANGS.
2. Is the green space natural?
   In order to determine whether an area of green space can be defined as ‘natural’ or artificial, English Nature suggests using an ecological survey to review the “intensity of intervention, whether this is management or any other form of disturbance” (page 12).
3. Is the green space accessible?
   Accessibility is a crucial aspect of a SANGS, and there is a recognised spectrum of accessibility from visibility of the site through to physical access described by English Nature. However, for the purposes of a SANGS “the ability of visitors to physically gain access to a site” is a pre-requisite (page 17).

Legislative uncertainty

The NPPF imposed a requirement to “protect and enhance valued landscapes, sites of biodiversity or geological value and soils (in a manner commensurate with their statutory status)” (my emphasis and para 170(a)).

The obligation of a developer to incorporate SANGS within schemes situated in close proximity to a SPA reflects this statement and is a crucial technique for reducing the ecological footprint on the protected environmental area.

However with the ongoing uncertainty surrounding Brexit and the statutory protection of SPAs being reliant on legislation originating from the European Union, it is uncertain what future requirements will be imposed on developers for the protection of biodiverse green spaces.

If you have any questions relating to the provision of Green Spaces or other Planning queries then please contact the Planning Team at Michelmores.

Michelmores has sponsored the Banker on a Bike – Steve James, who will be taking on a solo cycle around the world over a period of five months. Steve will pass through four continents, 22 countries and set himself the challenge of completing over 100 miles per day.

Steve has always enjoyed challenging himself with extreme events, but this will be his biggest test yet, with the ride being both physically and mentally challenging., The total distance Steve needs to cycle, as laid down by the Guinness World Records, is 18,000 miles. The distance must be completed, where possible, by travelling in a predominantly easterly or westerly direction and he must pass through two points on the globe that is diametrically opposite. For the purposes of Steve’s trip that will be Madrid, Spain and Wellington, New Zealand.

Steve is looking to raise money for two charities, Cancer Research UK and the Exeter foundation. Cancer Research UK is the largest cancer charity in the world that is dedicated to saving lives through fundamental research. The Exeter Foundation is the charity of the Exeter Chiefs. It is an umbrella charity that distributes to other charities and community projects in the greater Exeter area.

Louise Edwards, Marketing Director at Michelmores, commented “We are absolutely delighted to sponsor Steve on this amazing adventure, in aid of such worthy charities. We will be tracking his progress over the coming months, and look forward to cheering him back across the finish line at Sandy Park in September.”

The bike ride began at Sandy Park, home of the Exeter Chiefs rugby team, on Sunday 14 April.

If you would like to support Steve’s ride, click here to access his fundraising page.

Background

Martin Lewis, founder of MoneySavingExpert, recently settled his claim against Facebook for publishing adverts which falsely claimed that Mr Lewis endorsed financial products. The products included high-risk schemes such as binary trading, which Mr Lewis does not endorse, and scams which used Mr Lewis’s reputation to persuade vulnerable people to invest. Facebook was required to remove all the fake and defamatory adverts. After Facebook failed to do so, Mr Lewis began legal proceedings against Facebook.

What happened?

After almost a year, Facebook agreed to a settlement of £3 million donated to Citizens Advice to set up a UK Scams Action project, and a scam adverts reporting tool for the UK with a dedicated team to deal with reported adverts on Facebook.

Facebook already has a tool to report adverts, but “dark adverts” targeted to individuals which are not shown on timelines make it very difficult for someone affected by defamatory adverts to have all fake adverts removed.

Why is this important?

Facebook argued that they were a platform, rather than a publisher. Although this was never established in court, if Facebook was found to be a publisher it could have serious effects on many social media websites which show adverts, as the websites could then be liable for any defamatory content.

Arguably, Mr Lewis was able to use this case to set the record straight and to go some way towards repairing, at least in part, the damage to his public reputation. He was able to demonstrate that he does not support the financial products falsely using his name, and to enable the introduction of projects to target future scam adverts. He has now made it publicly clear that he opposes these scams and protected his reputation as a supporter of consumers.

The matter of whether or not Facebook would have been treated by the Court as a publisher in this case, and indeed others, remains to be seen.

For more information on this topic, please contact Jayne Clemens.

Even a cursory look at the statistics published by the Insolvency Service shows that the construction industry is still a sector which suffers from one of the highest number of insolvencies. The latest statistics reveal that, on average, 2,600 companies go insolvent every quarter. These are both small companies and, as recent events have shown with Carillion, large national companies. When this happens, the disruption to the projects and services the insolvent contractor has been providing can be very significant. If you are an employer of an insolvent company, it is important to put together a plan to minimise and manage this disruption. The plan will develop as further information becomes available but there are a number of key points which need to be considered straight away.

From a legal perspective, these include:

• considering whether this insolvency has given rise to a health and safety issue
• establishing the type of insolvency process and keep constant dialogue with the appointed insolvency practitioner
• reviewing the terms of the contracts and service agreements in respect of the insolvency and termination arrangements
• considering the payment position and the likely cost to complete the project
• considering  if any notices should be given in respect of any security documentation such as bonds and guarantees (parent company guarantees are unlikely to be of assistance)
• reviewing any offers from the alternative contractors or service providers who are in dialogue with the appointed insolvency practitioner
• checking the termination provisions of any JV agreements, contract or subcontracts you are a party to, to see whether the provision calls for automatic termination of the relevant agreement.

It is important to quickly establish the current situation on site or the services which the insolvent company was in the process of carrying-out – in particular, whether there are any urgent works or services which need to be carried out for health and safety reasons. If there is anything under this category, then these works and services should be carried out and a record of why they needed to be done and what has been done should be produced. Also, with health and safety in mind, the site or other facilities should be made secure so you have control of the site and facilities. Once the site and facilities are stable from a health and safety perspective then other aspects can be looked at.

During the first few days of a company becoming insolvent, it is sometimes difficult to find out the facts. Often, comments made in the press and media tend not to be technical in nature and as such, can be unreliable. Therefore, it is important to establish the type of insolvency process the company has entered into through the official channels, like the London Gazette, as the process will determine your relationship with the authorised insolvency practitioner. Also, it is likely to dictate what you are entitled to do under the particular contract.

It is also important to review the current payment arrangements in light of the insolvency, and consider whether monies which were going to be paid should be stopped and issue ‘payless’ notices accordingly. It is relatively common for contracts to state that no further payments are due and payable upon insolvency but the terms of the actual contract must be reviewed. This is also the time to look at the terms of any bonds which are in place and the mechanisms needed to commence calling on the bonds.

As the commissioner of the works or services, it is very likely that you will be contacted directly by the insolvent contractor’s supply chain. This can be particularly tricky as the supply chain will be looking to you to pay unpaid monies directly to them. Of course, both you and the supply chain are both creditors under this insolvency. As such, proper advice should be taken on whether a direct payment should or could be made.

Of course, the fundamental questions arising from a contractor’s insolvency are:

• who is going to continue with the works or services?
• how should a new contractor or service provider be found?

If you decide that you need to re-procure the works or services and are classified as a ‘contracting authority’ then the ‘EU Regulations’ need to be considered. It is relatively common for the authorised insolvency practitioner to receive offers from other contractors who wish to take-over all or some of the projects or services. If the authorised insolvency practitioner is willing to look at this option then it is likely that the proposed new contractor will approach you confirming they are in discussions with the insolvency practitioner in respect of the particular project or services. It is then a question of whether the offer from the replacement contractor or services provider is attractive enough for you to agree to the transfer of the contract to the new contractor or service provider. In respect of providing alternative services, it is worth considering whether this is an opportunity for all or part of the services to be carried out in a different way, for instance by directly employed employees. This approach was taken by a number of organisations when several services providers became insolvent a few years ago. Those organisations set-up subsidiary companies and are no longer exposed to situations like this.

This issue can also be urgent where you are in a direct contractual relationship with a consortium where one of the shareholders is the insolvent party or one of its subcontractors is the insolvent party. Some Joint Venture agreements and subcontracting agreements would provide for termination in the event of insolvency of one of the parties and the main trigger for this would be most likely to be liquidation (whether voluntary or compulsory, as is the case with Carillion). However the insolvency of a shareholder may not give you an automatic right of termination. In these circumstances it is important to understand what impact that insolvency may have on the consortium – are funders entitled to enforce security due to the insolvency and how will this impact on the consortium’s ability to continue to deliver under your contract. Similarly where a major subcontractor is the insolvent party what are the consortium doing to ensure the continued delivery of service. As with all situations involving insolvency, it is important to check what security you have. For example, by way of collateral warranties.

Clearly, there is lots to consider when a contractor becomes insolvent and a plan will develop as more information is known. In respect of Carillion, we understand that it is applying for, or has applied to the Court for, a compulsory liquidation. As such, the liquidator’s function will be to collect and realise the company’s assets. As a creditor you will be asked to provide a ‘proof of debt’ which will subject to the liquidator’s assessment and payment (if any) will be made to the creditors from the income and assets. Having said this, the Court could be asked by the liquidator to make an administration order. If so, then the administrator’s function will be to seek to rescue the company as a going concern or, seek a better result for the company’s creditors as compared to a winding-up.

Either way, a proper plan needs to be put in place to deal with both the legal and practical aspects so that the extent of the delay and disruption is minimised as much as possible.

The winners of the 15^th annual Michelmores Property Awards have been revealed, celebrating outstanding property and construction projects in Devon, Somerset, Bristol, Dorset and Cornwall, across ten categories.

Congratulations to Ralph Collison, Alder King – winner of The John Laurence Special Contribution Award, sponsored by Interserve

Ralph, a Consultant at Alder King, has become a well-established figure in Devon’s business community over the past 29 years. He has been involved in many high-profile developments which have been fundamental in changing the landscape of the South West, including advising Land Securities on the development of Princesshay in Exeter City Centre and buying the Science Park site in Exeter for Eagle One.

The winners were announced at an Awards Dinner on Thursday 15 June at the University of Exeter, hosted by comedian and actor Marcus Brigstocke.

View the full list of winning projects