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Setting the boundaries – can a homeowner claim for economic loss caused by defective housebuilding?
Setting the boundaries – can a homeowner claim for economic loss caused by defective housebuilding?

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.

A Developer’s obligation to provide (not just) green space, but “Suitable Accessible Natural Green Space”
A Developer’s obligation to provide (not just) green space, but “Suitable Accessible Natural Green Space”

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 sponsors the Banker on a Bike’s solo cycle ride around the world
Michelmores sponsors the Banker on a Bike’s solo cycle ride around the world

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.

Facebook, fake adverts and defamation
Facebook, fake adverts and defamation

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.

The case of Carillion – what to do when a contractor goes insolvent
The case of Carillion – what to do when a contractor goes insolvent

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.

Ralph Collison of Alder King wins The John Laurence Special Contribution Award
Ralph Collison of Alder King wins The John Laurence Special Contribution Award

The winners of the 15th 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

Promoting sustainable cities – City Science publishes landmark report

Many UK cities have been through transformative growth in the last ten years and show no signs of slowing down. Our population is flocking, on an unprecedented scale, to sprawling urban areas which account for the vast majority of natural resource consumption and greenhouse gas emissions. Security of energy supply is an essential prerequisite to future economic success and meeting the growing demands of modern cities. However, long term solutions are required that factor in the impact on the environment, housing, services, infrastructure and quality of life.

A report by City Science has been commissioned by Exeter City Futures to present a road map for achieving an ambitious goal – an energy independent and congestion free city region by 2025. The report pulls together a detailed assessment of Exeter’s current and future energy needs and resources, its transport system and the economic impact of a strategic plan for the greater Exeter area. The vision pioneers a model that enshrines sustainability and quality of life at the heart of the city’s next phase of growth.

It is a must read for Exeter’s citizens and stakeholders, and of interest to anyone who wants to live in a thriving urban centre.

Read City Science’s Report

Michelmores welcomes two new Associates in Bristol

Two new Associates, Sarah Phillips and Matt Verrell, have joined Michelmores’ Bristol office.

Sarah joins the Firm’s Planning team from an in-house role at Urbis Living, having previously worked at CMS Cameron McKenna and Clarke Willmott. She advises on a range of planning and environmental matters, including initial strategic advice, co-ordinating applications, judicial review, negotiating and drafting planning and highway agreements, and carrying out due diligence on sites.

Meanwhile, Matt joins the Firm’s Banking, Restructuring & Insolvency team from Fladgate in London, having previously trained and qualified at Allen & Overy. Matt will work alongside Banking, Restructuring & Insolvency team on a wide variety of finance matters.

Malcolm Dickinson, Michelmores’ Managing Partner commented:

“We are very pleased to welcome Sarah and Matt to the Bristol office, strengthening both our Planning and our Banking, Restructuring & Insolvency teams. The Bristol office has continued to attract the very best legal talent and has seen steady growth since opening in 2012.”

Michelmores supports Row for the Ocean – campaigning for plastic free coastlines
Michelmores supports Row for the Ocean – campaigning for plastic free coastlines

The Firm hosted an event on 25 January in partnership with ‘Row for the Ocean’ – raising awareness of their voyage across the Atlantic Ocean to campaign for a plastic free Exeter.

The Exeter-based rowers, Ros, Kirsty and Kate (collectively Row for the Ocean), will row unaided for over 3,000 miles across the unforgiving Atlantic Ocean in December 2018, in order to raise awareness of the growing ocean plastics crisis. The Firm is proud to be an Affiliate Partner of the team.

Michelmores helped the crew to row a distance equivalent to the first 1% (30miles) of their voyage, inviting staff, clients and contacts to compete in a team-relay indoor rowing challenge at the Firm’s Exeter office.

Kirsty Barker, member of Row for the Ocean said:

“It was great to see everyone getting so stuck in, and we were super impressed by everyone’s performance. We definitely saw that the rumours were true – Michelmores are a sporty lot! As such a prominent local company, we’re proud to carry the Michelmores logo across the Atlantic.”

For more information or to sponsor the team, visit their website at www.rowfortheocean.co.uk

Mediation – what is it and why use it?

Mediation has become a very significant feature of the dispute resolution landscape.

Read our FAQ to provide a simple explanation of all you might want to know about it.

Download Mediation FAQ

Linking is infringing – Court rules hyperlinks to unauthorised content do infringe copyright
Linking is infringing – Court rules hyperlinks to unauthorised content do infringe copyright

The Court of Justice’s (the CJEU) recent ruling in GS Media BV v. Sanoma Media a.o. case (C-160-15) clarifies that posting a hyperlink to copyrighted material which is freely available on another website is an infringement of copyright.

This decision departs from the opinion of the Advocate General (AG) in June 2016. This case relates to a Dutch news website, GeenStijl, operated by GS Media (GS Media), which posted links to Playboy photographs of a Dutch TV presenter.

The photographs were hosted on various websites without the consent of the copyright holder. GS Media had ignored requests to take down links to the copyrighted material. The Appeal Court in the Netherlands sought a preliminary ruling from the CJEU on posting hyperlinks to copyright work.

The AG’s opinion recommended that links to copyrighted material should not be considered a breach. The AG did not consider that hyperlinks to protected content, which could be accessed without restriction on a third party website, fulfilled the criteria of being a ‘communication to the public’ within the meaning of Article 3(1) of the Copyright Directive (Directive 2001/29EC). The hyperlink simply made access easier.

In considering the AG’s recommendations, the CJEU decided that although linking when unaware of copyright infringement and in a not-for-profit context was acceptable, there should be a set of exceptions where a hyperlink could be considered a copyright breach in itself.

Firstly, if persons undertaking the hyperlinking knew, or should have known, that the copyright-protected work on the original website was published without consent of the copyright holder, the hyperlink itself also constituted copyright infringement.

In addition, the Court established that where persons posted hyperlinks for financial gain, they are presumed to be aware of the illegal nature of the publication on the original website and therefore are infringing copyright by hyperlinking to it. In the present case, the Court found that as it was undisputed that the copyright holder had not authorised the publication of the photographs on the internet, and that GS Media was aware of this fact. It could not rebut the presumption that the posting of the links was made in full knowledge of the illegal nature of that publication. In those circumstances, GS Media effected a ‘communication to the public’ within the Meaning of Article 3(1) of the Copyright Directive.

While the CJEU ruling recognised the importance of a free flow of information online for fundamental rights such as freedom of speech and expression, it also emphasised the need to maintain what it described as a ‘fair balance‘ between the interests of copyright holders and the fundamental rights of users of protected objects. It is that balance that the ruling sought to achieve by creating a distinction between knowingly posting a link to copyrighted material and doing so unaware and with no intention of seeking financial gain.

The implications of the ruling are wide ranging and whilst will be welcomed by copyright owners seeking to protect their material, the ruling could have significant consequences for businesses, in particular search engines, who frequently post hyperlinks to content hosted by third parties.

For more information please contact a member of our Intellectual Property team.

Life as a trainee in the Big Smoke
Life as a trainee in the Big Smoke

As I am undertaking the final seat of my Training Contract in London, I have now experienced a seat in each of Michelmores’ three main offices (London, Bristol and Exeter). Each office is slightly different – be it due to its décor, the focus of the work undertaken or the atmosphere, and so it has been a fantastic opportunity to be able to experience all three! It has enabled me to build relationships with colleagues across the Firm and to experience a wide variety of work.

Being the only trainee in London (and in Bristol at the time) means that I get the chance to work with lots of different teams across the whole office, assisting with a range of matters. For example, I attend the Royal Courts of Justice and have to dodge the paparazzi that regularly wait outside! I have attended Companies House, the Supreme Court and the Ministry of Justice. I have also been sent to a client’s office to work alongside them for a week in order to assist them on a matter. Being a trainee at the Firm’s London office offers you the chance to be involved in numerous matters, whilst exploring London during the working day.

I previously lived in London for four years whilst I was studying and I had initially vowed never to come back – I started to feel that London was always so busy and I didn’t like being pushed and shoved whenever I got on a tube! However, when the opportunity to experience London arose again I realised that it was too good to miss. The work and matters I am involved in and the buzz of being a trainee solicitor in the city makes it all worthwhile!

Not to mention being able to walk out of the office door and take ten steps to the local bar with my colleagues to while away the evening, being able to choose from a huge variety of places to eat, drink and explore, spending rainy days in the numerous museums and spending the rare sunny days on Clapham Common with friends.

Michelmores’ trainees are also fortunate enough to be able to stay in the Firm flat, which is based in Clapham Common. For those of you who haven’t visited this area, I cannot recommend it enough. There are plenty of bars, pubs and restaurants to choose from. The Common is huge and always full of people training for football or rugby, feeding the ducks on the pond or sunbathing. The local people are really friendly and there is a local artisan market on a weekend.

As a London trainee, you are exposed to fantastic clients, you experience the adrenaline of having big deals to complete and you are able to get involved with other teams. I would highly recommend that everyone take up the opportunity to undertake a seat in the Big Smoke!

How can we direct you?