Shipping containers might not be the most obvious choice of building material. However, over recent years, there has been a significant increase in the use of shipping containers forming the basis of a number of high-profile, commercial development schemes.

Back in 2012, food chain Wahaca opened the doors of its restaurant made of shipping containers on London’s Southbank − whilst Hilton Hotel’s new Bristol Airport offering is based on shipping container infrastructure.

Why shipping containers?

Forget the old days where containers were used for shipping and storage. Mainly used for commercial purposes at the moment, the containers can be likened to ready-made building blocks being acquired, converted and then used as spaces from which to run a business.

Because they are inexpensive and relatively small in size as single units, these shipping containers can be fitted-out offsite, therefore reducing costs. The containers also have the ‘upcycling’ appeal popular amongst consumers, providing the perfect setting for a forward-thinking business in 2018. Craft beer stores, bicycle manufacturers, clothing retailers, bakeries and offices have all taken residence in upcycled containers. Whilst the focus is on commercial spaces, shipping containers have been used in a number of residential schemes.

Whilst there are numerous benefits to jumping on the shipping container trend, how easy is it really to base a business in a shipping container, what are the potential pitfalls and where do you stand legally?

Key considerations

Before buying a container there are a number of questions to consider:

• Purpose: The first two questions to answer are: i. what is the shipping container(s) going to be used for and ii. where will the container(s) be sited? The answers to these two questions are the starting point to determine other important considerations, such as the need for access to certain services or the reliance on footfall.
• Finance: How will I fund the purchase or conversion? Can you borrow money to buy a shipping container? Are there any legal considerations re finance?
• Planning, Licences, Permits & Building Regulations: Do I need planning permission to site the container on land, convert it into a habitable space and to run a business from it? How do I buy a shipping container and what paperwork is needed? Do I need consents or licences to discharge waste or water? How do I make utility connections?
• Purchase: How do I align the funding I may receive from a third party or bank with obtaining the relevant consents and permissions to do what I want to do with the actual purchase of the containers?
• Logistics: Once I have purchased the container, how do I transport it to where it needs to be and install it?
• Management: You will also need to consider how the space will be used and by whom and how it will be managed on an ongoing basis.

Asset management and portfolio opportunities

Depending on what the permitted use of the container is, there is also the opportunity to invest in shipping containers, giving someone else permission to use it by granting a lease or licence.

Shipping container developments may provide a unique investment and occupation opportunity with potentially low overheads when compared to projects which often require large upfront capital investment to fund the construction of a building.

There are also opportunities and potential challenges for landlords, including financing/mortgage, insurance, repair, contracts, service rates charges etc.

Are shipping containers here to stay?

There is no doubt that the use of shipping containers has caught the attention of many of the UK’s major developers, both in the UK and internationally. Time will tell whether the potential advantages are realised over time and this style of modular building becomes the norm. However, with any new, less traditional and less tried and tested style of development, there will inevitably be a number of areas that must be carefully considered before embarking on a project. Whilst there are a number of benefits, a well-planned and informed approach is vital to the success of any shipping container scheme or investment.

For more information, please contact Joanna Damerell, Partner in the Real Estate team.

After 2017 saw a record-breaking year of fundraising for the Firm, Michelmores is pleased to announce its new charity partnerships for 2018:

The Amber Foundation

Michelmores’ Exeter office has chosen The Amber Foundation as their next charity partner. The Foundation helps homeless, unemployed young people to regain control of their lives, find their feet and move on to positive, independent futures. They deliver a blend of support, training, experience and opportunity that encourages young people to focus on their strengths and move forward towards work, secure housing and a more fulfilling future.

Bloodwise

The Firm’s London office has voted to support Bloodwise throughout 2018. Bloodwise fund vital, lifesaving research to change the lives of people with all forms of blood cancer. They also campaign to raise awareness and support those affected by blood cancers with information and advice on research, trials and treatments.

See change

The Firm’s Bristol office will be continuing their partnership with See change, the local name in Bristol for the Julian House group, for another year. The charity aims to support and empower socially excluded people to build sustainable, independent lives. They provide opportunity and support to help people move away from rough sleeping, through accommodation, education and training and employment opportunities.

David Thomson, Partner and Head of Michelmores’ Charity of the Year Committee commented:

“Engaging with the communities where we live and work is a priority, and we are delighted to kick-start a new partnership with these fantastic charities.

We will be increasing awareness through a range of fundraising activities, including fun runs, bake sales, parachute jumps and any other challenges our people come up with to raise money. One of the Firm’s flagship events, the annual Michelmores 5K Charity Run, has now raised in excess of £300,000 for local organisations over its 18 year history – with last year alone raising a record-breaking £33,400.

“We are hoping for an even bigger and better year of fundraising than last year!”

For further information on each of the charities, please visit their websites: The Amber Foundation, Bloodwise and See change.

This article was first published by South West Business on 11 December 2017.

The Department for Communities and Local Government (DCLG) published some very welcome guidance clarifying when planning permission is required in relation to three types of rural development. We summarise the guidance and highlight a few relevant issues to consider

Farm shops

Farm shops can be developed either under existing “permitted development (PD) rights” or by obtaining planning permission.

The relevant PD rights are contained in Class R of Part 3 of Schedule 2 to the Town and Country Planning (General Permitted Development) (England) Order 2015, which allows change of use of agricultural buildings to a flexible commercial use, when certain conditions are met.

The terms of the PD rights differ depending whether the farm shop would exceed 150 m2 cumulative floor space. If it does not exceed this limit the applicant just has to send certain information to the local planning authority (“LPA”). This comprises the date the site will begin to be used for any of the flexible uses; the nature of the use or uses; and a plan indicating the site and which buildings have changed use.

Where the development of a farm shop would be greater than 150 m2 cumulative floor space, but does not exceed 500 m2 an application for prior approval must be made to the LPA. This is to allow the local authority to consider any potential impacts of the proposed farm shop development (e.g. changes in traffic, noise, contamination and flood risk) and decide how these can best be mitigated.

Where a planning application is submitted the  new  guidance advises applicants to  consider both national policy (set out in the National Planning Policy Framework) and local plan policies when developing the proposal.

When considering applications for a PD prior approval or planning permission, the LPA may propose granting permission with conditions in respect of the farm shop development. The guidance provides that in imposing any conditions: “local planning authorities should be mindful of the viability of the business and ensure that the conditions are proportionate and reasonably related to issues directly connected to the proposed farm shop. Planning conditions imposed in relation to a prior approval must only be related to the subject matter of the prior approval.”

So size is critical. If the floor space of the proposed farm shop can be reduced to bring the farm shop within a more favourable planning category, then it might be worth redesigning the site to simplify the planning procedure.

Poly-tunnels

The development of poly-tunnels has caused considerable controversy over the last decade as their use has become more widespread. Whether planning consent is required will depend on the individual circumstances, such as the extent, size, scale, permanence, movability and the degree of attachment to the land of the  poly-tunnels.

Some development of poly-tunnels is allowed under existing PD rights, such as Class A of Part 6 of Schedule  2 to the Town and Country Planning (General Permitted Development) (England) Order 2015. However the LPA   is responsible for deciding whether any type of planning permission is required for a particular development.

The new guidance states that when an LPA has to consider planning applications or prior approval applications for poly-tunnels it is important that: “appropriate weight is given to the agricultural and economic need for the development. Circumstances where poly-tunnels can play an important role include to provide protection for plants or young livestock, to secure improved quality produce and to extend the growing season to provide greater opportunity for home grown produce.”

Clearly one of the key factors influencing the granting of consent  for  poly-tunnels  is  the  requirement  to show the “need” for the tunnel. Careful thought and preparation should therefore be given as to how this is presented to the LPA.

On-farm reservoirs

Full planning permission is not a usual requirement for smaller, on-farm reservoirs, where the excavated waste remains on the farm. These may be developed under existing agricultural PD rights, such as Class A of Part 6 of Schedule 2 to the Town and Country Planning (General Permitted Development) (England) Order 2015, which sets out the thresholds for excavation and mineral working where reasonably necessary for agricultural purposes. Prior approval will, however, be required from the LPA.

In considering either a prior approval application or a    full planning application for the development of on-farm reservoirs, the guidance requires planning authorities to: “have regard to the increasing need for sustainability, importantly including the careful management of water, the benefits water storage adds in the sustainability of the farming activity and the contribution that it can also make to flood alleviation.”

The  guidance  requires  mineral  planning  authorities to “consider any applications for mineral extraction, which are submitted in order to dispose of excavated waste from reservoirs, in the wider context of the reasons for the development, such as to improve a farm’s  sustainability and to protect water sources.

Therefore mineral planning authorities should not refuse applications for mineral extraction, which have been submitted as a by-product of the need to develop an on- farm reservoir, solely on the basis that this would exceed their local minerals’ supply.”

The guidance advises applicants to provide a clear explanation of why the extracted material cannot remain on the farm, so that can be considered by the mineral planning authority.

There are often environmental benefits to the creation of on-farm reservoirs and if the planning decision is in the balance, then these could also be stressed to both the LPA and the mineral planning authority.

The Michelmores Corporate team has advised Credit Reporting Agency on its secondary buy-out.

The Cornish company is the holding company for Checkmyfile.com, launched in 2000 and the principal business within the group of international credit reporting and comparison website businesses. The website was the first in the UK and in Australia to give consumers online access to credit reports. The group also operates websites in the UK, the Republic of Ireland, New Zealand, Canada, South Africa, India and Australia.

Henry Taylor, Partner in the Corporate team, added:

“Having worked with the team on their previous buy out in 2015, we were delighted to be able to support the management team again. Credit Reporting Agency has exciting plans for further UK and international expansion and its development of new channels and services.”

Barry Stamp, Managing Director, said:

“We have used Michelmores twice now for significant transactions.  Each time we have been impressed with the quality, speed and clarity of the support given to us.”

Digital working has arrived

Over the last few years there have been severe reductions in the numbers of staff at courts, operating behind the scenes. One of the functions of court staff is to create the documentation needed in the issue of legal proceedings and to follow through and record the process to a final court order when everything is completed. So as to try to improve efficiency, a programme of digitising the processes has been implemented and this will gradually extend to all family and civil proceedings. This process has now reached proceedings in the Family Court: from a modest beginning, the system will be extended to cover most areas of legal processes.

Divorce applications (formerly petitions)

One of the first areas to be affected by the new process is the issue of divorce applications (previously called “petitions”). It needs to be emphasised that the grounds on which it is possible to obtain a divorce have not changed but the procedure to do so has.

It is now compulsory for all divorce applications to be issued on-line. There is a standard form for such applications which can be downloaded from the website of the Court Service. That form has to be completed with all the relevant information for the case being started.

Much of the information is what is required by the law so that, for example, the court can be satisfied that it has the jurisdiction (i.e. power) to deal with the case. This is likely to be important if one (or even both) of the parties lives abroad.

Traps for the unwary

Whilst the new system will not create any particular difficulties for solicitors who are aware of the legal requirements, parties who decide to try to represent themselves without a lawyer may very well find that there are potential problems.

The following are merely some of the “traps” that must be avoided:

• The date and place of marriage must follow the precise form of words used on the marriage certificate. A scanned copy of the marriage certificate must accompany the divorce application.
• Details must be included of all “children of the family”. This does not only include the children of the parties to the divorce but to any children of either of them from previous relationships who have been treated as though they were the children of the parties who are now divorcing
• All divorces are now based on the breakdown of the marriage. That breakdown is established by stating in the divorce application which of the five “facts” is relied on. No other grounds can be raised. Brief details of those facts must be given with precise dates where required.
• If the “fact” relied upon is the alleged adultery of the party receiving the application, then a decision will have to be made by the person issuing the application whether or not to name the person with whom the alleged adultery is said to have occurred. This is an important matter because if the third party is named that he/she will have to be served with a copy of the divorce application. Whilst it is understandable that the person issuing the application may well feel aggrieved and that the third party should be named, that is not necessarily the most sensible or practical course to adopt, not least because it might extend the proceedings and make them more expensive.
• The temptation will be to answer “no” on the divorce application to the question about the likelihood of further applications e.g. relating to finance. The reality is that the party issuing the application may need to ask the court to approve a financial settlement, even one agreed between the parties. The reason for that step is that, in practice, parties to divorce proceedings can only be certain that they will not receive unexpected applications relating to finance, possibly many years later, if the court has formally approved an agreement. To get that approval, one of the parties had to issue an application to the court and the person who raises the divorce application cannot do so (at least without the permission of the court) unless the question has been answered “yes”.

Conclusion

In many ways the arrival of the digital age in the implementation of divorce proceedings is a positive step forward. As will be apparent, however, there are dangers that a wrong step could lead at the very least to delays and possible extra expense, but possibly also to the forfeiture of some important legal rights.

One of the concerns of advice groups is that there will be people who are not familiar with computerised systems. For example, in family law, it is increasingly common for those in their later years to be divorced. Such people often do not have computer skills or even equipment. If they cannot obtain help from friends or relatives, they will have no alternative but to take legal advice.

Our recommendation is that legal advice should be taken if divorce is contemplated. This will make it less likely that critical errors are not made in completing the process.

For more information or some preliminary confidential advice please contact Pippa Allsop, Associate in our Family Team, on +44 (0)1392 687747 or email pippa.allsop@michelmores.com

Fracking is frequently seen as a potential solution to safeguarding the UK’s energy supply. However, fracking proposals are always surrounded by controversy and their impact on the locality, especially from an environmental perspective, generates intense debate, motivated by strong views on all sides.

Fracking is the technique used to release and exploit natural gas trapped in shale rock. The process involves drilling into the earth and injecting a high-pressured mixture of water, sand and chemicals to release the gas trapped in the shale rock. The term ‘fracking’ refers to how the shale rock is fractured apart by the high pressure mixture. It has been widely regarded as having transformed the energy market in the US.

In contrast, the fracking industry in the UK remains in its infancy. However, a survey by the British Geological Survey estimated that the total volume of gas in the Bowland Basin shale (covering large swathes of Northern England, the Midlands and parts of North Wales) alone is some 1300 trillion cubic feet. This equates to around 500 years of gas supply for the UK. Shale rock is also prevalent in other areas of the UK, such as South East England and Scotland.

In this update, we examine where we are now in relation to fracking, in the wake of a number of High Court cases, and the further uncertainty instigated by the triggering of Article 50 and compounded by the fallout from the General Election in June 2017.

What is happening on the political landscape?

The Conservative manifesto for the recent General Election maintained their antecedent position to support the advent of fracking as a means of improving UK energy security and stimulating the economy. It pledged to seize opportunities presented by new technology and hailed the discovery and extraction of shale gas as a ‘revolution’ which could help reduce carbon emissions, reduce reliance on energy imports, lower prices for consumers and play a crucial role in rebalancing the UK’s economy.

The manifesto made a number of promises, including legislation to change planning law for shale applications to ensure that non-fracking drilling will be treated as permitted development. It envisaged that major shale planning decisions would be made the responsibility of the National Planning Regime. It also proposed to set up a new Shale Environmental Regulator and make amendments to the previously proposed Shale Wealth Fund, to ensure a greater percentage of the tax revenues from shale gas directly benefit the communities that host the fracking operations.

However, the other mainstream political parties (as well as the DUP and the Green Party) do not share this vision. Labour and the Liberal Democrats both oppose fracking, and in 2015 the SNP implemented a moratorium on fracking in Scotland, while a comprehensive consultation process was carried out (a decision was previously expected in the second half of 2017 on the future of fracking in Scotland). There are also significant obstacles to fracking in Wales and Northern Ireland.

Consequently, for now, given the Election result, it remains likely that there will be continued opposition to any further legislative changes in respect of fracking for the foreseeable future. Indeed, the issue of fracking remained conspicuous by its absence from the Queen’s Speech. Of course, the legislative agenda for the next 18 months is also likely to be dominated by the UK potentially leaving the EU.

Recent case law update

As discussed in the 2016 Winter Edition of Agricultural Lore, there is already a fairly extensive regulatory framework, that governs fracking and has seen it emerge as a prospective energy source for the UK. The emergence of fracking has led to a number of cases where proposed fracking operations have been scrutinised by a Court. We analyse the impact of two recent decisions below.

R (Friends of the Earth Ltd) v North Yorkshire County Council

The case of R (Friends of the Earth Ltd) v North Yorkshire County Council [2016] EWHC 3303 (Admin) provides useful guidance on the extent of a local council’s duties and the Court’s approach to fracking decisions made by local councils.

In May 2016, North Yorkshire County Council granted planning permission for fracking by Third Energy at a site at Kirby Misperton in Ryedale. Following that decision, on 8 July 2016, an environmental campaign organisation, Friends of the Earth and an unincorporated association comprising of local residents, Frack Free Ryedale, applied to the High Court for a judicial review of the planning permission.

In short, the High Court held that the Local Council had properly considered the effect on climate change when considering the environmental impacts of the proposed fracking. It also found that the Local Council had acted lawfully in exercising its discretion in imposing restoration and aftercare conditions, and deciding not to seek a financial guarantee from the fracking operator.

The Court reiterated the planning guidance that a financial guarantee to cover restoration and aftercare costs will normally only be justified in exceptional cases. On the facts, the Court held that the terms of the various planning conditions afforded a considerable degree of protection to residents and that the conditions extended beyond mere restoration to a programme of aftercare, in accordance with the planning guidance. Accordingly, it was not an exceptional case. The Court therefore dismissed the judicial review application.

The general consensus is that landowners should not be held responsible for environmental issues derived from fracking operations on their land. The responsibilities regarding restoration and aftercare of the land should lie with the fracking operator and should be thoroughly addressed in the planning process. Provided that planning authorities adequately consider and secure the restoration and aftercare of a site, through the implementation of appropriate planning conditions, and where necessary, planning obligations, then there is no requirement for a financial guarantee to be provided by the fracking operator. Planning conditions should be written in such a way that, even if the interest of the organisation applying for planning permission was subsequently disposed of, the restoration would still be fulfilled, either by a new operator or by default, the landowner.

Further, in upholding the right of the Local Council to exercise its discretion, the case also indicates that the Courts are concerned only with the legality of the planning authority’s decision; not the merits of the planning permission itself. The Court’s role is to review the way a planning authority reaches its decision, rather than to pass judgment on the planning issues themselves, unless it can be argued that a decision is so unreasonable as to be irrational or perverse. This is a difficult argument to win in Court, as the threshold for irrationality is very high.

R (Preston New Road Action Group) v Secretary of State

More recently, in April 2017, the High Court in R (Preston New Road Action Group) v Secretary of State [2017] EWHC 808 (Admin) dismissed a challenge against a decision in October 2016 by the then Communities and Local Government Secretary, Sajid Javid, granting Cuadrilla planning permission for fracking test drilling in Lancashire.

The decision by the Secretary of State overturned the earlier decisions of Lancashire County Council to refuse planning permission for exploratory developments on a number of sites near Blackpool. The Secretary of State overturned the Local Council’s decisions on the grounds that the Council was wrong to refuse the application due to the visual impact and noise concerns.

A community group, Preston New Road Action Group and a professional clown and campaigner, the ironically named Gayzer Frackman, had applied to the High Court for statutory review of the Secretary of State’s decision under section 288 of the Town and Country Planning Act 1990 (a similar procedure to judicial review).

The Claimants based the application on the Secretary of State’s decision being unfair and unlawful, and argued that the decision was fundamentally flawed in its misapplication of planning laws and policy. They also claimed that the Secretary of State did not properly consider the disproportionate effect that fracking on the proposed sites would have on community residents. In addition, the Claimants argued that the plans had not properly considered climate change from the extracted gas being burned. The Court dismissed the applications and refused to grant permission for statutory review on the basis that none of the Claimants’ grounds to be argued were made out in substance.

Unlike the Friends of the Earth decision, the decision of the High Court has been appealed. Lord Justice Jackson has now granted Preston New Road Action Group permission to appeal the High Court’s earlier decision to the Court of Appeal.

The appeal is based on four grounds, namely that the Secretary of State and the Planning Inspector made errors of law by:

• misinterpreting a policy protecting against harm to the landscape
• wrongly applying the National Planning Policy Framework
• denying a fair hearing during the planning inquiry
• using a wildly different test for assessing the impact on the quality of life of those living nearby

A date for the hearing has been set for August. Cuadrilla has confirmed that it will be continuing with operational work at the site. This will include the drilling of two horizontal exploration wells, although the hydraulic fracturing of those wells will not commence before the ruling of the Court of Appeal. Should the appeal fail, the way would be cleared for Cuadrilla to commence the UK’s first horizontal fracking project.

Conclusion

The two cases set a precedent that fracking applications are likely to be approved, as long as environmental concerns are adequately addressed in the planning process. In essence, a local council is responsible, through the planning process, to ensure that environmental concerns, including restoration of the land and impact on climate change, are adequately addressed through the provision of planning conditions, and, if necessary, planning obligations. Both decisions are also a useful reminder of the difficulties of challenging the interpretation of planning policies.

Despite the political hurdles that further fracking legislation faces, it is evident that the current regulatory framework is sufficient to enable the industry to grow. The fracking industry has the Government’s support in moving towards the commercial production of shale gas, but it is likely that, as the industry develops, more challenges, such as those discussed above, will arise.

The growth of fracking operations is likely to affect farmers and other rural landowners in areas of the country where shale rock is prevalent. Where planning permission has been granted for fracking operations to be undertaken, then it would be prudent for both the fracking operator and the landowner to put in place an agreement between themselves that clearly defines their respective obligations; including access, restoration and aftercare, and payment. In particular, landowners should protect themselves against the possibility of becoming liable for restoration works under planning conditions, in the event that the fracking operator is no longer solvent.

A further consideration for agents, landowners and fracking operators, is the adverse impact of protest camps on the land, the local community or the fracking operation, such as the one at Kirby Misperton in Ryedale and Preston New Road in Lancashire. This is particularly a concern for fracking operators, whose ability to raise finance may be harmed by the activities of protest groups.

For more information please contact Ben Sharples on ben.sharples@michelmores.com or 0117 906 9303.

PropTech (short for property technology) aims to utilise technology to allow property service providers to offer more refined and efficient solutions and services. The drivers behind the PropTech movement are accessibility, mobility, flexibility and speed.

PropTech isn’t restricted to one area of Real Estate or one service provider. Any property service provider from live-in landlords to lawyers can benefit from PropTech. For example, landlords can use technology to better market their property, organise viewings and apportion bills; lawyers can use PropTech to assist with data reviews and document production to increase consistency and decrease transaction times.

How is PropTech being used in different areas of Real Estate?

Residential

Residential sales and lettings have been quicker on the uptake of PropTech, probably because of the high level of consumer interaction. Veteran property sites such as Rightmove and Zoopla are widely used and have transformed the way we now search for new homes. Online agents, Purplebricks, spotted a gap in the market and have seen a significant increase in popularity by offering a fixed fee online platform for marketing and selling houses.

Unsurprisingly, given the upheaval and stress involved in buying a house, investors have started backing apps and online providers that make the process simpler. Nested is a start-up that offers sellers a cash deal on their house and then takes over the selling process. If the property remains unsold for 90 days, Nested will lend the seller the money it offered initially (interest free) to enable them to buy a house. Another residential property app, View My Chain, offers buyers, sellers and property professionals the ability to track the key ‘milestones’ in their property transaction. Not only does this provide transparency, View My Chain claim the app leads to lower fall through rates and faster completions.

With it becoming increasingly difficult to get on the property ladder, the residential lettings market is strong. Movebubble is an app that allows users to view property listings in real time so as to avoid seeing properties that have already been rented. It remembers user-preferences to produce better suited results and allows bookings and offers to be made via the app. For those in house shares, Split the Bills will set up your utilities services, split the bills equally between all flatmates, take payment directly from each, and set up one monthly payment for the bills.

Commercial

JLL recently announced that they do not see PropTech as a threat, but as an ‘opportunity to transform their business’. Indeed, many property professionals may soon see their roles change and will have to find new ways to add value to their clients. This is particularly true of transactional professionals, where processes are likely to become standardised and so selling experience will become more valuable.

The trend in Commercial Property, a less consumer facing area of Real Estate, seems to have been to invest in larger, more disruptive technologies. That being said, software that helps commercial landlords and agents manage buildings is proving popular. Liberate Case Management Software has been developed to help automate certain procedures, compile reports on key lease terms, and pre-populate key property documents. Michelmores have invested in this software to add value to our clients, who have live access to a user-friendly platform hosting their data, allowing them to review the report and identify trends and risks. Pooling data in this way allows commercial landlords to manipulate and analyse data in line with its needs. For lawyers, it results in increased accuracy and consistency when drafting documents and has the potential to reduce transaction times.

Smart buildings are a more radical form of PropTech. Smart buildings use sensors and devices to collect data relating to a building’s operation (such as heating, lighting, water usage etc.). This data help owners and investors increase energy efficiency and maximise returns. In the corporate occupier sector this could mean anything from recognising lighting and heating preferences for certain tenants, to assessing how often each desk space is used. In the retail sphere, footfall and consumer behaviour data could help clients plan more effectively in relation to advertising and the use of space.

Development

Drones could become more readily available in construction and development. They could map development sites, record the condition and layout of a site and identify any potential problem areas. For large projects, the mapping and land surveying capability could save time and costs, which can be particularly helpful at site planning stages. In America, Skycatch uses drones to undertake surveys and create 3D models of the construction site, producing interactive maps usable by the professionals working on the project as well as the client. This helps iron out issues earlier, which, given the frequency of projects that run over in terms of time and costs, is said to increase the likelihood of projects being delivered on time and within budget.

The popularity of Virtual Reality will continue to grow as a marketing tool. Given the time and cost saving elements linked to the products mobility, it may be particularly appealing for developers who wish to attract foreign investment. It also allows prospective purchasers/ tenants/ investors a more accurate view of a property that does not yet exist and gives them the ability to identify any modifications or changes that may be needed or desired.

Although the Real Estate sector has been slower to invest in technology than other sectors (such as financial services), PropTech is now starting to take off. Given the increase in investment, property professionals will need to start adapting to ensure they are making the most out of the technology available to better service their clients.

For further information please contact Stephen Newson, Partner in our Real Estate Team.

The new Pre Action Protocol for Debt Claims (PAPDC) is due to come into force on 1 October 2017 and will impact how businesses recover their debts, potentially making it a much more lengthy process. The PAPDC has been developed for use in dealing with volume debt in order to address a perceived imbalance in rising consumer debt. It has been designed so as not to apply to business to business debt.

However, there will be a significant impact on businesses who deal with individuals and to those who contract with sole traders. If your business deals with one of the circa 3.3m sole traders in the UK, you will need to consider the impact that the PAPDC may have on your credit control systems and debt recovery processes.

The changes mean it will be more costly and take more time for creditors to take action against those debtors who ‘won’t pay’ without the threat of court action.

The main changes are:

• the Letter Before Action must include enclosures and additional documents in a specific format
• there is greater risk that debtors could take advantage of the new protocol’s procedures to cause additional cost to the creditor and delay payment by up to 90 days
• the onus will be on Creditors to ensure that debtors have provided all relevant financial information
• creditors will need to give reasons why a repayment plan offered by way of instalments is not acceptable if not agreed
• creditors will need to manage any debt recovery system more closely to ensure the relevant deadlines are met, and that information about how the debt arose is given where required by the PAPDC
• there will be additional costs to a business for:
  • dealing with collating and providing information when requested to do so by the debtor
  • engaging with a small claims mediation service where requested
  • ensuring the debtor has been allowed ‘reasonable’ additional time in order to take independent legal advice.

These additional steps will incur a business cost and could mean that it is more commercially viable to write off a debt than to recover it, especially where there is no likelihood of recovery even after the claim is successful in the small claims court.

Failure to comply

Failure to comply could mean that if you do issue a pre-emptive claim, then proceedings could be stayed until the defects in the PAPDC are rectified; in addition any costs awarded could be limited at the discretion of the judge who may also reduce the amount of any pre-judgment interest recoverable.

How we can help

We have produced a guide to the new PAPDC, outlining the impact this may have on your credit control and debt recovery procedures, as well as providing a checklist of how you can effectively manage the transition to the new system.

Our experienced team would be happy to help with any queries which you may have and would be happy to discuss how we can help you avoid potential pitfalls and support you work towards the change-over to this new system.

Download a copy of our PAPDC guide here

Michelmores is welcoming local charities, based within Devon, to apply to become the Firm’s Exeter office charity partner for 2018.

The Firm will organise various fundraising activities for the chosen charity throughout the year, including the Firm’s largest fundraising event, the Michelmores 5k Charity Run, which in 2016 raised over £26,000 for Exeter-based charity Balloons.

The Firm particularly welcomes charities to apply who are able to support teams of up to 20 staff to volunteer for them on a ‘CSR day’, given to all Michelmores staff.

Michelmores’ Exeter office currently supports Balloons, a charity that provides crucial pre and post bereavement support to children and young people who have lost someone significant in their lives, in Exeter and the surrounding areas.

Applications will be shortlisted by the Firm’s Charity of the Year Committee, with the final shortlist going to a staff vote. The closing date for entries is 29 September 2017.

David Thompson, Partner and Chair of the Charity of the Year Committee commented:

“It has been fantastic to support the wonderful work that Balloons continue to offer to children and young people in the local area.

“We are excited to have the opportunity to offer this support to a new, local charity – and are looking forward to receiving the applications!”

Download your application form

Chinese investment in renewable energy technology continues to run far in excess of other nations. R&D spending alone in 2016 is estimated at $1.9bn, and solar PV deployment is set to exceed 100GW by 2018. By comparison, as of January 2017, deployment in the UK stood at 12.3GW.

China’s ambition to be the dominant force in renewable power is well demonstrated by their latest achievement, a 40MW floating solar PV array in Huainan, in the Anhui province. Floating PV arrays have a variety of advantages including the cooling effects of the water under panels increasing efficiency, reduction in evaporation of water supplies and reducing the use of land which can instead be used for agriculture. Previously, the largest floating solar PV array in the world was a 6.3MW array in the UK.

This is not the first record solar installation in China – the country currently has the largest and second largest PV sites in the world: the 1.5GW ‘Tengger Desert Solar Park’ and the 1GW ‘Datong Solar Power Top Runner Base’ (which is due to expand in two more phases of development to 3GW). Also noteworthy is the Datong Panda Power Plant – a 250 acre site shaped like a panda – which has been designed to help raise awareness and interest in renewable energy amongst China’s youth.

China is particularly challenged by pollution from fossil fuel consumption, as well as increasing demands for energy. Ambitious renewable energy deployment plans stretching to 2020 and beyond, coupled with decommissioning of coal stations are a good start to turning the country’s relationship with fossil fuels around.

Commitment by the Chinese government to this course of action is welcome in the global fight against climate change, and much needed at a time when the USA has taken a step away from international climate change agreements – although, as the US has pointed out, even on current plans China is expecting to continue to increase greenhouse gas emissions until 2030.

Perhaps the developments being made in China will assist the development and deployment of green technologies here in the UK. Whilst the scale of a 1GW+ PV site may not be replicable on the British Isles, a 250 acre PV Friesian might inspire the next generation to push forward to a fossil-free future.

Since July last year, when Ofgem published an open letter on the topic, there has been an increasing likelihood that ‘smaller’ (sub-100MW) embedded generators would see a reduction in the level of embedded benefits they receive from electricity suppliers, in particular for helping them to avoid or reduce the costs of using the transmission network at peak times. The times of high demand in winter, known as the TRIADs, are particularly relevant in this respect. Ultimately, this imposes an additional burden on consumers. Because of changes in the profile of generation, including the growth of renewable energy, the costs for consumers have been rising. Ofgem estimates that the current arrangements would result in a shift of costs from embedded generators to consumers of £650m by 2020/2021. ‘Non-intermittent’ generators, such as gas, diesel, CHP, AD and hydro are likely to be the most affected, although the impact will vary, depending on the individual deals between the generators and the licensed electricity suppliers who receive power from these sources.

On 20 June 2017, Ofgem announced (in outline) its decision to adopt a proposal to address this issue. At this point, further acronyms become unavoidable. The preferred proposal is known as ‘WACM 4’. Through a collaborative process with the industry, 25 proposals were explored for modification of the rules governing the use of the transmission system, known as the ‘Connection and Use of System Code’ or CUSC. 23 of the possible approaches were known as ‘Workgroup Alternative CUSC Modification proposals’ (WACM). The key concern of Ofgem was that the payments received by embedded generators referred to in the consultation as ‘the Transmission Network Use of System (TNUoS) Demand Residual or ‘TDR’ were too high. This, they say, has resulted in a distortion of the sharing of the burden of the costs of the transmission network, to the point where the whole of the electricity market is or might be affected.

In essence, WACM 4 will result in the reduction of TDR, so that it is at the same level as avoided Grid Supply Point (GSP) costs. A GSP is the place where the transmission and distribution networks meet. Ofgem acknowledge that the use of embedded generation can reduce the need to reinforce the GSPs and, therefore, their decision is that the benefit which flows through to embedded generators in future should reflect that reduction in cost.

There is a lack of consensus over the impact of this change but, in broad terms, triad avoidance payments to generators seem likely to drop to around 10% of current levels by 2021 (and, perhaps, to only 5% of the levels of payment which would have prevailed by 2021, if no changes were made to the CUSC).  Figures suggesting overall impacts on the total revenues of renewables generators of between 5% and 12% are being quoted by those affected. On the other side of the coin, Ofgem suggest that the change will save £20 per household per year.

Ofgem appear to have decided against any ‘grandfathering’ of existing generators, so all projects will be subject to the new approach, although this is to be phased in from 2018 to 2020. There is further information yet to come from Ofgem, as well as a wider-ranging review of the costs of the transmission network which is still ongoing.

Ofgem were due to announce their decision back in May, but the election intervened. There are other ‘stalled’ announcements affecting the energy sector which are likely to emerge in the next few weeks from BEIS / Ofgem. Watch this space!

UPDATE:

On 6 October, 2017, the following update appeared on Ofgem’s website:

“Ofgem has been served with a claim for judicial review concerning its decision to approve WACM4 of CUSC modifications CMP264 and CMP265. This decision stands unless quashed by the court. We are defending the claim. National Grid Electricity Transmission plc has been named by the claimants as an interested party to the proceedings.”

Press reports indicate that the claim is backed by a number of generators who have bid for contracts in recent capacity market auctions, who are concerned about the impact on their projected revenue streams.

For further information, please contact Ian Holyoak at ian.holyoak@michelmores.com