Battery installations behind-the-meter can help business minimise energy costs and boost green credentials. Big headlines in the industry have attracted attention towards batteries, but what is a behind-the-meter battery solution and can it help your business manage its energy needs?

The price and provenance of energy is more than ever a source of concern for businesses. Getting your energy arrangements right can have considerable implications for the price you pay, and there is an increased focus (and, indeed, pressure) for energy users to increase efficiency, reduce usage and boost their green credentials.

One solution is to look at “behind-the-meter” arrangements.  “Behind-the-meter” means anything on the customer side of their electricity meter. The purpose of all behind-the-meter solutions is to reduce the amount of power that runs from the electricity grid through that meter to the customer, thereby reducing power supply costs.  This can include steps taken to reduce energy usage – insulation, energy efficient lighting etc – or generation of their own electricity, for example with rooftop solar PV panels.

Battery storage is one such solution. These installations are larger versions of familiar technologies such as lithium-ion or lead-acid batteries, and can be charged by power from the grid – the electricity can then be used later. Batteries at this scale can potentially store enough electricity to power a whole building for a significant period.

Battery installations have received significant attention from the media over the past 12 months, with high-profile market participants making big strides – examples include the Tesla Gigafactory South Australia Mega-Battery or the San Diego Gas & Electric Escondido installation. This raised profile has helped forward-thinking businesses become aware of the advantages of utilising behind-the-meter battery technology.

Examples of some of the advantages of using a battery are:

Arbitrage – time-shifting the energy taken from the electricity grid to coincide with cheaper periods in the charging cycle – for example, charging up the battery overnight (when electricity prices are lower) to use that power when the energy prices are at their highest the following day.

Resilience – utilising the battery alongside other energy resilience solutions (such as a generator) to maintain an ‘uninterruptible’ power supply, drawing power from the battery if the power from the grid is disrupted.

Utilising Green Energy – where a business has its own solar or wind power (which may not be generating when the power from them is needed most) the battery can help shift the use of that power to a more useful time, minimising the need to import electricity from external suppliers at more expensive rates.

Triad avoidance and other benefits may also be available, allowing a business to further minimise its costs or potentially even earn a supplementary income stream from their behind-the-meter battery.

Manufacturers, hospitality providers, health care services, leisure centers and other users of large amounts of power – for whom energy is both business critical and a major expense – are well placed to obtain significant benefits from installing a behind-the-meter battery solution. Predictable patterns of high demand for energy (usually coinciding with high-cost peak times) mean that arbitrage can have a considerable impact on costs. If you are looking at a behind-the-meter battery solution some initial considerations are as follows:

Ownership vs Benefit Sharing models

There are several models for delivering behind-the-meter battery solutions, including a business owning its own battery or granting a lease of part of their site to a battery operator to install a battery and sharing the benefits.  The shared benefits model means that the business can either benefit solely from reduced energy bills, or can agree to share other benefits with the battery operator. Both models have advantages (and disadvantages) which will be explored in more detail in a forthcoming article.

Planning

A business will need to consider whether there are appropriate planning consents in place for a battery. This will include the use class of the proposed site, as well as permissions for constructing the installation. If the proposed site is already in Use Class B2 (General Industrial), a battery may be a ‘Permitted Development’ (although this position is not entirely clear-cut). However, you (or the battery operator) may wish to apply for a Certificate of Lawful Development to satisfy any funders, or future buyers.

Limitations of Liability

Ensuring that the limitations of liability in the contractual documents appropriately reflect the risk of any downtime and losses caused by failure of the technology or installation is essential.  For major energy consumers, the losses to the business for an interrupted power supply may far exceed the monetary benefits or savings from the battery itself.

Michelmores’ Energy Team has extensive experience advising on energy projects including behind-the-meter batteries, and understand the drivers and needs of businesses with high energy use when considering behind-the-meter solutions.

Greater involvement of the workforce and other likely effects of the imminent FRC reforms to the UK Corporate Governance Code

How did we get to this point?

Company directors are already legally required to consider the interests of their company’s employees and the need to foster the company’s business relationships with suppliers, customers and others when considering how to promote the success of the company[1].

An increasing awareness of the need for strong and effective corporate governance, not just from our largest companies but also across the wider business community, led to the publication by the Government of a Green Paper in 2016 looking at corporate governance.

Following the consultation period for the Green Paper, a response was issued which outlined proposals for reform to corporate governance in the UK. The responses received highlighted the need for a greater awareness to be raised of directors’ duties under the Companies Act. The government’s response set out nine proposals for reform, across three specific aspects of corporate governance;

1. executive pay;
2. strengthening the employee/customer/supplier voice; and
3. corporate governance in large private companies

The FRC was invited to consider various proposals following this consultation and, as a result, has in turn been consulting on proposed changes to the UK Corporate Governance Code.

When does the revised code come into force?

The revised UK Corporate Governance Code, which is applicable to all premium listed companies, is due to be published on 16 July 2018 and applies to accounting periods beginning on or after 1 January 2019.

How is the workforce/stakeholder voice being strengthened?

Premium listed companies will need to adopt, on a ‘comply or explain’ basis, one of three mechanisms for engaging their workforce:

• designate a non-executive director;
• introduce a formal employee advisory council; or
• appoint a director from the workforce.

This is likely to be seen by staff and wider stakeholders in principle as a positive step towards greater engagement. However, companies will need to ensure that (particularly with the appointment of a director from the workforce and the appointment of a non-executive director), the wider workforce is represented and not just one part. Also, there is a risk of a charge of tokenism and it remains to be seen whether the statutory and fiduciary duties of a director may conflict with the individual’s views as an employee, and may limit the employee/director’s ability to communicate back to the workforce he/she represents.

Employee advisory councils are already used elsewhere in the EU. UK companies will need to ensure that views communicated by these councils are actually noted and taken heed of.

Compliance with the spirit of good governance

The drive to require large companies to engage with their workforces is aimed at encouraging good practice in the wider business community and marks a noticeable shift towards involving and listening to the voice of the employees and wider stakeholders. It will no doubt take time to see how this plays out in practice. However, care will need to be taken by companies in implementing the principles of the revised UK Corporate Governance Code, to ensure that the whole concept of employee/stakeholder engagement is understood and embraced by those at a senior level, and practical steps taken now to ensure that it is not just seen as a box-ticking exercise.

Is this backed up by any legislation?

In addition to the proposed reforms to the UK Corporate Governance Code, draft secondary legislation[2] has introduced the following:

1. Larger companies to publish a statement regarding compliance with their directors’ duties (known as a ‘section 172 statement’)

All large (private and public) companies will need to include in their Strategic Report a section 172(1) statement to explain how their directors have had regard to the matters in section 172(1)(a) to (f) Companies Act 2006 when performing their directors’ duties.  Unquoted companies must publish this statement on a website (quoted companies are already required to make their annual accounts and reports available on their websites).

2. Statement of employee engagement to be included in Directors’ Report (or Strategic Report)

All companies with an average number of more than 250 employees (regardless of whether the company is listed) must include in their Directors’ Report (or, if they so choose, their Strategic Report) a statement describing the company’s actions taken during the financial year to introduce, maintain or develop arrangements aimed at:

• Informing – providing employees with information of concern to them as employees;
• Consulting – consulting employees or their representatives regularly to take account of their view in making decisions likely to affect their interests;
• Involvement in company performance – encouraging employee involvement in the company’s performance through employee share schemes or other means;
• Educating – achieving a common awareness of all employees of financial and economic factors affecting the company’s performance.

Do AIM companies need to think about anything else?

New AIM applicants are required to state in their Admission Document and on their websites details of the recognised corporate governance code that the board of directors has decided to apply[3].

In addition, from 28 September 2018, all AIM companies must give details on their websites of the corporate governance code their directors have decided to apply, how the company complies with that code and, if it departs from the chosen code, an explanation of reasons for departing from the chosen code.

This is a new consideration for both new and existing AIM companies, who should now start to:

1. Identify an appropriate corporate governance code (e.g. the QCA Corporate Governance Code or the UK Corporate Governance Code);
2. Carefully consider how the AIM company complies with the relevant code; and
3. Prepare a ‘meaningful explanation’ of any departure from the relevant code (as required by AIM Notice 50).

How can we help?

Michelmores’ Corporate team in Exeter, London and Bristol can provide assistance and advice on this topic. Please contact Ian Binnie on ian.binnie@michelmores.com.

The Financial Reporting Council (FRC) has recently published a consultation paper on a new set of corporate governance principles aimed at large private companies following the Government’s Green Paper Consultation on Corporate Governance Reform in 2016 and the BEIS Select Committee’s corporate governance report in 2017. in support for action to “encourage high standards of corporate governance in the UK’s largest private companies” and the need to boost trust, fairness, accountability, responsibility and transparency for the benefit of stakeholders (such as shareholders, lenders, customers, suppliers, employees and the general public).

The publication of the consultation paper also coincided with the new legislation laid before Parliament on 11 June 2018, which will place new reporting obligations on large private companies.

Which companies do the new corporate governance rules apply to?

‘Large’ private companies, which must report on their corporate governance arrangements, are those with:

• over 2,000 employees, and/or
• a turnover of over £200 million and a balance sheet total of over £2 billion.

Certain companies will be exempt from reporting on stakeholder considerations.  These are companies which meet two of the following three criteria:

• a turnover below £36 million;
• a balance sheet total of below £18 million; or
• fewer than 250 employees.

However, as we will explore below, corporate governance is an increasingly important consideration for private companies of all sizes, with further changes anticipated in the near future.

What are the new corporate governance principles?

In January 2018, the Government appointed James Wates CBE to chair an industry group to develop the corporate governance principles in relation to large private companies.

The consultation paper sets out the following draft six voluntary principles (the Wates Principles):

1. Purpose – an effective board should promote the purpose of the company and ensure that its values, strategy and culture align with that purpose;
2. Composition – effective board composition should comprise of an effective chair and a balance of skills, backgrounds, experience and knowledge, with individual directors having sufficient capacity to make a valuable contribution;
3. Responsibilities – a board should have a clear understanding of its accountability and terms of reference;
4. Opportunity and Risk – a board should promote the long-term success of the company by identifying opportunities to create and preserve value, and establishing oversight for the identification and mitigation of risks;
5. Remuneration – a board should promote executive remuneration structures aligned to the sustainable long-term success of a company, taking into account pay and conditions elsewhere in the company; and
6. Stakeholders – a board has a responsibility to oversee meaningful engagement with material stakeholders, including the workforce, and have regard to that discussion when taking decisions.

Whilst the Wates Principles may be attractive in their simplicity, private companies will be free to choose other governance codes to apply (such as the UK Corporate Governance Code or the QCA Corporate Governance Code) if they are deemed more suitable.

‘Apply and Explain’

The Wates Principles function on an ‘apply and explain’ basis. Large private companies should explain how they have applied the principles to achieve their desired outcomes.  This is where the reporting requirements (see below) come into play.

The purpose of the reporting requirements is for stakeholders in the company to be able to make an informed decision as to whether the company is achieving good governance outcomes. The explanation also helps encourage company directors to see corporate governance not as a set of prescriptive list of actions or a box ticking exercise but as being ‘about fundamental aspects of business leadership and performance, which every company must interpret and apply for itself‘ (J Wates CBE).

The principles are accompanied by guidance which aims to help large private companies put the principles into practice.  In reality, different companies will apply the Wates Principles in different ways because there is recognition that outcomes are not the same for every company.

How to report your corporate governance arrangements

The Government have tabled new secondary legislation which, from 1 January 2019, will oblige large private companies to state in their directors’ report and on their website:

1. which corporate governance code the company follows, if any;
2. how precisely that corporate governance code is followed and applied; and
3. whether the company has departed from that corporate governance code in any way and, if so, how and why.

Most UK companies will also be required to state how their directors comply with their statutory duty to consider stakeholder interests. All UK companies with at least 250 employees in their UK group must also report on employee engagement.

In this way, many private companies will be bound by minimum reporting standards in a similar way to public limited companies whose shares are traded on a major stock market.

What about the cost?

In applying the ‘best practice’ standard of the Wates Principles, some private companies might take certain actions which may attract additional costs.

For example, the guidance recommends amending policies and constitutional documents to set out “policies and procedures that govern the internal affairs of the company“. Such amendments, which may include amending the company’s articles of association or introducing a shareholders’ agreement, may require companies to seek professional advice and guidance.

Companies may also wish to appoint a director-representative for key stakeholders, such as an employee-director.  This may lead to additional costs in the appointment process, or fees payable under any new service contracts.

What about corporate governance for smaller private companies?

The consultation paper states that it wants the new principles to serve as a demonstration of ‘good practice’ to all private companies. Smaller private companies, particularly those looking to grow in the future or those considering listing on a major stock market may therefore consider adopting the Wates Principles, despite not being obliged to under the new law. This would help the company to prepare for such growth and also to demonstrate that it is operating within the standard requirements of good corporate governance.

What happens next?

The consultation will end on 7 September and the draft Principles will be finalised by December 2018 in time for implementation by January 2019. This is subject to Parliamentary approval of the secondary legislation, which the Government intends to implement around the same time, but it is clear that corporate governance is becoming an increasingly important focus for all private companies.

If you would like some more information on changes to the corporate governance rules, please contact Caroline Lavis on caroline.lavis@michelmores.com or tel. 01392 687641.

An attempt by a seller of property to avoid liability for misrepresentation by seeking to rely on an exclusion clause failed in the Court of Appeal on 19 June 2018: First Tower Trustees Limited & Intertrust Trustees Limited v CDS (Superstores International) Limited [2018] EWCA Civ 1396.

Buyer’s due diligence

Caveat emptor (buyer beware) should be a familiar principle to all those involved in property transactions. Consequently, a buyer of property usually goes to some effort with his due diligence to discover everything he can which might affect his decision to buy a property. If the buyer makes enquiries of the seller, the law requires the seller to supply the buyer with accurate information to the best of his ability. However, the process has developed into an almost contentious process, with sellers frequently stonewalling buyers and telling them that they must satisfy themselves in relation to a particular enquiry. Not only that, but contractual terms designed to protect sellers from liability for misrepresentation have become common place. Such attempts often appear as ‘entire agreement’ or ‘non-reliance’ clauses in contracts. Often these clauses are included in contracts by the parties’ lawyers without the parties themselves realising or truly understanding their effect. Lawyers frequently include them in contracts as a matter of course or (it has to be said) sometimes without thinking, simply because they are a common feature of precedent documents.

Attempted exclusion by the seller

In First Tower Trustees the Court of Appeal found that a landlord of business premises had misrepresented the position about environmental contamination (the presence of asbestos) during its tenant’s enquiries before contract. The agreement for lease contained a ‘non-reliance’ clause which provided that the tenant agreed that it had not entered into the contract ‘in reliance on any statement or representation made by or on behalf of the Landlord other than those made in writing by the Landlord’s solicitors in response to the Tenant’s solicitor’s written enquiries’.

In addition, the lease itself provided that ‘the tenant acknowledges that this lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord’.

Statutory limitations

In property transactions, it is conventional for the buyer’s solicitor to make written enquiries of the seller’s solicitors, who are in turn expected to give written replies. As a matter of law, it is accepted that the parties to a transaction may agree to confine themselves to a particular process which may have the effect of limiting the liability of one party to the other. Lawyers refer to this as ‘contractual estoppel’.

But despite the ingenuity of lawyers in seeking to protect their clients from liability, the law still seeks to protect a buyer from things which a seller may very well know, or ought to know, yet is reluctant to disclose. Historically, the law was that a buyer would have to show that a seller’s provision of incorrect information (his misrepresentation) was fraudulent, i.e. dishonest. The Misrepresentation Act 1967 removed that requirement and only permitted the maker of a false statement to escape liability if he could prove that he had reasonable grounds to believe, and did believe up to the time of the contract was made, that the facts represented were true.

Further, the Misrepresentation Act limits the effect of exclusion clauses, particularly the form of non-reliance clause seen in the First Tower Trustees case. It makes any attempt at exclusion subject to the test of reasonableness found in the Unfair Contract Terms Act 1977, section 11(1), which in turn places the burden of proving reasonableness on the maker of the statement, i.e. the seller.

In the First Tower Trustees case, both the trial judge and the Court of Appeal found that the landlord was aware of potential asbestos contamination. The Court accepted that the parties had agreed in the contract to limit the tenant’s reliance on statements to those given in the written replies to enquiries, because that was their contractual right. However, the Court found that the landlord’s knowledge of the true situation and its attempt to avoid liability by way of the ‘non-reliance’ clause in the lease, was unreasonable within the meaning of the Unfair Contract Terms Act.  The landlord was therefore liable for the tenant’s loss as a result of discovering the asbestos contamination.

Liability of trustees

This case is also a rich mine on the law relating to the liability of trustees and the procedural rules of litigation. It illustrates the potential liability of trustees, even though trustees themselves may not be directly involved in a transaction, or may not themselves have any knowledge of the matters about which a buyer enquires.

The lessons are clear: Whilst the principle of ‘buyer beware’ still applies, a seller must be aware that if he has knowledge of anything which might contradict the information given to a buyer he should consider the position carefully. The First Tower Trustees case makes it plain that the law may not protect a seller from liability for a misrepresentation, despite the best attempts of his lawyers.

For more information please contact Andrew Baines, Partner and Head of the Property Litigation team on Andrew.Baines@michelmores.com or +44(0)117 906 9336.

It is important to have a crisis management policy to deal with negative material published against you or your company. You can never be too prepared when it comes to crisis management as it is in the first few hours that a well-planned response can have the best impact.

1. In the first instance you should speak to a defamation specialist for advice and potentially a PR agent if there is going to be significant fall-out. PR agents can be really helpful because they can give practical advice about what the newspapers might just do.
2. Ask journalists for any questions in writing and push back on unrealistic deadlines. Don’t be bullied to provide a verbal comment.
3. Assume that what you say to journalists may well be published. In the absence of a contract (and in some cases even then) the phrase ‘off   the record’ is unlikely to be a guarantee that the information will not be published in some form, albeit anonymised.
4. Most publications provide specific contact details for complaints and it is advisable to use them to ensure a complaint is directed to the right person. We often liaise with legal departments of larger publications when seeking the removal of, or corrections to, defamatory material both before and after publication. Again PR agents can be helpful to try to limit creating a sense that there is more to the story.
5. Seek legal advice. We have prevented, removed or limited the damage of a number of articles published online, and in the national and international press.
6. If you are accused of defamation, don’t panic. There are many defences which may be open to you and actions which will limit the extent of any claim against you. Again, seek legal advice and remember that truth is a defence to defamation.
7. Have social media policies in place in the workplace. These may well give you and your company further protection to deal with employees who publish defamatory and/or malicious statements both inside and outside work. A well-worded policy could save considerable time and legal fees.

For an overview of how to protect your reputation, take a look at our tools and tactics you can deploy if defamatory information is published about you or your company.

For more information about how to control and protect your brand and reputation across a range of issues, please contact Jayne Clemens on +44 (0)1392 687724 or email jayne.clemens@michelmores.com.

If a tenant agrees with the landlord to restructure rent payments, whether in arrears or not, the agreement must be documented properly. The judgement of the Supreme Court in Rock Advertising Limited v MWB Business Exchange Centres Limited on 16 May 2018 is a salutary lesson to the former occupier of serviced offices. The landlord, in effect, forfeited the licence for occupation when the occupier fell into arrears of monthly payments and did not accept (as the occupier believed it had) a proposal to restructure the arrears and ongoing payments.

The case

The case concerned an occupational licence.  This is a less secure form of occupation than a lease or tenancy, but the consequences are the same in the case of business premises. This is because a landlord will invariably retain the ability to forfeit or ‘peaceably re-enter’ in the event of a breach of agreement by the tenant. This is typically done by changing the locks when the tenant is absent.

The Rock Advertising case involved a licence in which one of the terms was a “no oral modification” (“NOM“) clause:

“This Licence sets out all of the terms agreed between MWB and the Licensee.  No other representation or term shall apply or form part of this Licence.  All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect.”

The problem for Rock Advertising was that their restructuring proposal was not set out in writing. Representatives of Rock Advertising believed that they had agreed a restructuring with a representative of MWB and this gave rise to a number of arguments, which are commonly deployed in situations where one party wants to try and circumvent a written contract, or achieve some other objective in the absence of any written contract. These strategies usually include (in typical descending order of prospects of success): misrepresentation, an implied term, a collateral contract, and estoppel.

These disputes often occur because parties sign standard form written agreements without one or both parties truly understanding what the written agreement says. The common complaint when events depart from those imagined by the written agreement is that one party alleges that the other assured it of an alternative agreement. Sometimes such claims are successful, but they almost invariably require considerable analysis of the facts; an expensive legal process in which to become involved.

Supreme Court decision

The outcome in Rock Advertising might seem unsurprising given that the alleged agreed variation was not put in writing, but that did not stop the parties arguing vigorously.  The majority of the Supreme Court agreed that there was no implied term that the NOM clause could not be overridden by an oral agreement to do so, or that there was a collateral agreement to that effect.  It was possible that an estoppel (detrimental reliance on an alternative assurance) might have saved them, but there was insufficient evidence to support the criteria for such a plea.

Lessons from this case

This case applies not just to the situation in which rent arrears are restructured; it could equally apply to any other variation of the contract agreed between the parties, where a NOM clause is included.

The lesson, as ever, is to read the lease or contract at the outset and where possible renegotiate any unacceptable terms before the contract is completed. If this is not possible, or if it becomes necessary to renegotiate terms during the term of the lease or licence, the deal struck or any amended conditions should be properly documented and the original contract varied, so that they form part of an enforceable legal agreement between the parties.

For more information please contact Andrew Baines, Partner and Head of the Property Litigation team on Andrew.Baines@michelmores.com or +44(0)117 906 9336.

The winners of the 16th annual Michelmores Property Awards have been announced, celebrating outstanding property and construction projects in Devon, Somerset, Bristol, Dorset and Cornwall, across ten categories.

Tate St Ives was awarded the accolade of Building of the Year, after undergoing a complete refurbishment of the existing galleries and a four storey extension providing a new gallery, conservation and learning spaces and office accommodation. It reopened to the public in October 2017 and now accommodates a quarter of a million visitors each year which is a fantastic economic boost for Cornwall.

Another Cornish success was winning Education Project of the Year for the development of Callywith College. A landmark campus for Bodmin and the whole of Cornwall, this state-of-the-art further educational facility includes recreational areas, such as a 3G sports pitch, and which is accessible to the local community.

In Plymouth two projects stood out for their regeneration of previously derelict and deprived areas. The judges were particularly impressed with the Nelson Project which won the Alternative Property Investment Project of the Year. This Plymouth City Council flagship ‘Plan for Homes’ development comprises of 24 high quality homes, 12 dedicated to military veterans, six to people with learning difficulties and six as general need affordable accommodation. The most outstanding element was the rehabilitation programme of military veterans who built the development and have now gained construction skills.

Winner of the Residential Project of the Year (36 Units and Over), was formerly a fortified MOD estate which was closed to the public. Mountwise is now a thriving community of 250 high quality homes with a further 59 apartments, surrounding a cricket pitch and has an on-site café, retail space and several office spaces in the centre of Plymouth.

Bristol benefitted from two exceptional, though very different, developments. Winning Leisure & Hospitality Project of the Year, Aerospace Bristol, the nine-acre site on Filton Airfield, covers over 100 years of aviation history and combines two First World War Grade II listed hangars with a fantastic new building that houses the last flown Concorde. This has become a great visitor attraction to the area.

Meanwhile, the restoration of a Grade II listed terrace and the repurposing of a 1970’s extension overlooking the floating harbour in the Redcliffe Conservation Area in Bristol took home the award for Residential Project of the Year (35 Units and Under). The restored facade is now a significant landmark in Bristol.

National College for Nuclear, Southern Hub, Cannington was awarded Project of the Year (over £5m). This cutting edge nuclear training facility based in Cannington, includes a virtual reality environment, a reactor simulator and training rooms, sports facilities and student accommodation. The new facilities will develop the UK’s nuclear curriculum while creating career opportunities and delivering economic growth in the South.

The John Laurence Special Contribution Award, which spotlights outstanding property and construction professionals in the region, was awarded to Plymouth-based Ian Potts of Architects Design Group for his significant contribution to the property landscape of the South West.

Other winning projects for 2018 include,

Lloyd’s Lounge in Exeter awarded Project of the Year (under £5m), and Higher Mill at Buckfast Abbey, awarded Heritage Project of the Year.

Emma Honey, Head of Real Estate at Michelmores, said: “Once again, the standard of entries we received for this year’s Property Awards was outstanding. From a cutting edge nuclear training facility in Somerset to a residential development that rehabilitated military veterans through a self-build training programme in construction skills, the range and breadth of projects has been fantastic and has demonstrated the excellence of the property and construction sector in our region. My congratulations go to all of our winners and to all those shortlisted.”

The winners were announced at an Awards Dinner on Thursday 7 June at the University of Exeter, hosted by comedian and actor Josh Widdecombe.

The 2018 Michelmores Property Awards winning projects in full:

Project of the Year (under £5m), supported by Grenadier Estates

Lloyd’s Lounge, Exeter – submitted by Morgan Sindall

Project of the Year (over £5m), sponsored by LHC Architecture + Urbanism

National College for Nuclear, Southern Hub, Cannington – submitted by Midas Group

Education Project of the Year, sponsored by TClarke

Callywith College, submitted by Kier Construction

Leisure & Tourism Project of the Year, sponsored by JLL

Aerospace Bristol, submitted by Kier Construction and Hydrock

Heritage Project of the Year, sponsored by Attention Media

Higher Mill, Buckfast Abbey, submitted by Form Design Group

Alternative Property Investment Project of the Year, sponsored by Midas Group

The Nelson Project, Plymouth, submitted by Form Design Group

Residential Project of the Year (36 Units and Over), sponsored by Kier Construction

Mount Wise, Plymouth, submitted by Ward Williams Associates

Residential Project of the Year (35 Units and Under), sponsored by Natwest

Redcliffe Parade, Bristol, submitted by Alec French Architects

Building of the Year, sponsored by Girling Jones

Tate St Ives, submitted by BAM Construct UK

The John Laurence Special Contribution Award, supported by The Michelmores Charity of the Year, The Amber Foundation, who help homeless, unemployed young people move on to positive, independent futures.

Ian Potts, Architects Design Group

Click here to view the shortlist in full

The winners of the 16^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 The Nelson Project, Plymouth – winner of Alternative Property Investment Project of the Year sponsored by Midas Group.

The Nelson Project is a Plymouth City Council flagship ‘Plan for Homes’ development. This scheme utilised a derelict site with the objective to rehabilitate military veterans through a self-build retraining programme in construction skills. The project comprises of 24 high quality homes, 12 dedicated to military veterans, six to people with learning difficulties and six as general need affordable accommodation.

The winners were announced at an Awards Dinner on Thursday 7 June at the University of Exeter, hosted by comedian and actor Josh Widdecombe.

View the full list of winning projects

The winners of the 16^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 Aerospace, Bristol – winner of Leisure & Tourism Project of the Year sponsored by JLL.

A family attraction offering aerospace exhibits and hands-on activities to showcase over a century of aviation history. The nine-acre site on Filton Airfield, includes two First World War Grade II listed hangars, and a new building housing the last flown Concorde, with conference facilities including a lecture room, three meeting rooms and a studio space.

The winners were announced at an Awards Dinner on Thursday 7 June at the University of Exeter, hosted by comedian and actor Josh Widdecombe.

View the full list of winning projects

Following a string of recent proprietary estoppel decisions, a new case brought by a disinherited farmer’s daughter has provided further clarification of what is required to bring a successful proprietary estoppel claim.

The case

The case of Habberfield v Habberfield [2018] was heard by Mr Justice Birrs in the Chancery Division of the Bristol Civil Justice Centre.

The claimant, Lucy Habberfield, brought a claim against her mother, Jane Habberfield, on the basis that she had devoted her entire working life to the family farm near Yeovil, Somerset. She alleged that this was as a result of assurances by her father that she would take over the farm and be given ownership of it. Lucy in fact left the farm in 2013, after a fight with her sister in the milking parlour. On her father’s death in 2014, Lucy was informed that her father had left the whole of his interest in the farm to her mother.

The judgment

Lucy was successful in proving her claim against her mother. The Judge found that she had been promised ‘a viable dairy farm’. The Judge awarded Lucy £1.17 million (to be settled in cash, or by a sale of the farm). The value of the farm was around £2.5 million, so the amount awarded represented a significant proportion of the property.

In his judgment, Mr Justice Birrs confirmed a much used summary of the requisite elements of a proprietary estoppel claim, namely “a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance.” He reiterated the warning in earlier cases “against subdividing proprietary estoppel into watertight compartments”. He confirmed that the Court’s ultimate purpose is to prevent “unconscionable conduct” and that this “permeates all elements of the doctrine.”

It is argued that a number of the assurances made by Lucy’s father were questionable; these included representations that Lucy would ‘take over the farm’ when he could no longer farm, which the defence team argued meant taking over the farm business, rather than actually having assets transferred to her; whenever Lucy asked for time off she was told that “the cows would not be there when she got back”; and receiving low wages for her work, as she could not expect to receive the benefit of her work both now and in the future. The Judge took a broad brush approach, holding that the combination of all of the assurances made to Lucy gave her the reasonable expectation that she would be inheriting land and property at the farm.

Statement of current intention v promise

Importantly, the defendant’s legal team sought to rely on the recent judgment of His Honour Judge Matthews in James v James [2018] (another farming case). In that case a distinction was drawn between a statement of current intention as to a future gift and a promise of that future gift. Mr Justice Birrs in Habberfield agreed that such a distinction does exist, but that its significance is likely to be fact specific. In his view the representations given to Lucy could not have been understood as simply statements of current intentions as to future gifts The statements comprised assurances that in return for what Lucy was being asked to do now, she would receive something in the future.

The Judge also reinforced the principle that greater weight would attach to representations that stood for a lengthy period of time, especially in situations where the claimant has to devote a long time doing something in return for what had been promised to them – in this case, working long hours on the farm.

Conclusion

The conclusion to be drawn from this and other proprietary estoppel cases is that the outcome is notoriously difficult to predict and will nearly always turn on the credibility of witnesses, in particular the claimant and the defendant, assuming the defendant is available for cross examination.

For more information please contact Rajvinder Kaur, Associate in the Agricultural Team, on 0117 906 9352 or email rajvinder.kaur@michelmores.com.

Two recent planning cases have shed new light on how the planning assumptions contained within sections 14 to 16 of the Land Compensation Act 1961 (“LCA 1961“) should be applied in conjunction with the Pointe Gourde principle. The cases are:

• Homes and Communities Agency v J S Bloor (Wilmslow) Ltd [2017] UKSC 12; and
• Boland v Bridgend CBC [2017] EWCA Civ 1004

The Pointe Gourde principle has previously been considered but in summary provides that market value assessed under section 5 of the LCA 1961 cannot include any increase in value attributable to the underlying scheme of an acquiring authority.

JS Bloor case: The facts

JS Bloor was the former owner of two plots of grazing land, acquired together with an additional adjacent parcel of land for a total of £1.3m (“the Land“). The Land was earmarked for the development of the ‘Kingsway Business Park’.

As set out in the North West Development Agency’s 2002 ‘Regeneration Prospectus’ Kingsway Business Park is a 170ha site in Rochdale adjacent to Junction 21 of the Trans-Pennine M62, originally in 75 separate ownerships.

Eventually, the Acquiring Authority (a predecessor to the Homes and Communities Agency (“HCA“)) acquired the Land by General Vesting Declaration on 4 January 2006 pursuant to ‘The North West Development Agency (Kingsway Business Park, Rochdale) Compulsory Purchase Order 2002’, made 15 May 2002, and confirmed on 5th October 2004

The Land had an elaborate and rather hopeless planning history commencing in the 1960s, including various allocations, and an unsuccessful application for housing. The latter perhaps not terminally, as that application was turned down on the basis that it was not part of a comprehensive development.

As at the valuation date the applicable planning documents included: Regional guidance (RPG13) approved in March 2003; and the Rochdale Unitary Development Plan (“UDP“) adopted in March 1999. The Land was listed in RPG13 as one of 11 Strategic Regional Sites, and allocated under the UDP, which allowed for individual development if it was compatible with the objective of a strategic business park development; and or “limited residential development … provided it is part of a comprehensive development scheme for predominantly business uses …”.

In August 2006 JS Bloor made an application for a Certificate of Appropriate Alternative Development, which was recommended for refusal on the basis of a failure to comply with the UDP, the application was then withdrawn.

The decisions

At the Upper Tribunal (Lands Chamber) (“UT“) the battle lines were drawn around the difference between the existing use value, said by the Acquiring Authority to be around £50,000 and the development value, said by JS Bloor to be elevated by hope to around £2.6 million.

The UT awarded £746,000, the Court of Appeal remitted the matter back to the UT applying the law in a different manner (in the Acquiring Authority’s favour), commenting that the UT “…appears to have overvalued the reference land for the purposes of compensation”.

The Court of Appeal was of the view that the UT had incorrectly applied weight to ‘the extensive policy support for residential development on part of the reference land’, because it should have stripped out (arguably) all potential for such development on the basis of the Pointe Gourde principle.

The Court of Appeal’s view was that the UT should have considered the planning potential of the reference land, without regard to the development scheme and its underlying policies and therefore its effect on value. In that no scheme world it should have examined what wider no scheme specific policies might apply, but should not apply the current and emergent UDP because that was the basis of the Order.

The Supreme Court restored the UT’s original decision. The Supreme Court was of the view that the Court of Appeal should not have treated the required disregard of the scheme as extending also to all the policies, past and present, which supported development on the Land. The Supreme Court endorsed the approach of the UT in  taking account of the “historic, current and emerging policies” promoting a business park, and considering “the extensive policy support for residential development” on the Land.

The Supreme Court endorsed the approach of the UT, commenting that the Tribunal:

“…properly took account of the pattern of development as seen by them on the ground, and the long history of identification of this land for substantial development. They did not ignore potential policy objections, such as under or policy EC/6, but took the view that they would not have sufficient weight to rule out the possibility of development in the absence of the KBP scheme. That reasoning discloses no error of law.”

The Supreme Court also considered submissions made on behalf of the HCA that effectively the market value disregards (including the Pointe Gourde principle) applied not only to the assessment of compensation under Section 5 of the 1961 Act, but also to the planning assumptions in sections 14 – 16 of that Act. The result of such a submission, if successful, would have been that the planning status of the Land would be fixed by the scheme of development envisaged under the Order, but no compensation (reflecting any uplift) would have been payable, because that planning status was due to the scheme itself.

By way of example, if land was acquired for purpose X, that was the only planning consent applicable to the subject land, and as such purposes Y, or Z could not be considered, but an uplift in value due to purpose X could not be recovered either. The Supreme Court confined the application of the Pointe Gourde principle to the assessment of compensation under section 5 stating:

“The statutory assumptions work only in favour of the landowner, not against him, and do not deprive him of the right to argue for prospective value under other provisions or the general law.”

The Boland v Bridgend CBC case

That application has also recently been considered by the Court of Appeal with regard to section 17 of the 1961 Act in Boland v Bridgend CBC [2017] EWCA Civ 1004:

“In considering a section 17 application, a decision-maker must proceed on the basis that the relevant scheme for development in the public interest is cancelled, so far as the land that is the subject of the proposed compensation assessment is concerned, at the date of the notice that it is proposed to acquire the land compulsorily. The ‘no scheme world’ is confined to the assessment of compensation under Part II of the 1961 Act, which involves the consideration of broader factors than does section 17 in Part III.”

Is this now ancient history?

In JS Bloor Lord Carnwath points out that the complexities in these matters may be resolved by the changes to sections 14 – 18 of the CPA 1961 first brought about by the Localism Act 2011 s.232, and more recently to section 5 by the Neighbourhood Planning Act 2017 section 32 (see also previous article).

The current drafting of section 14 of the CPA 1961 defines the approach to deciding the scheme of development underlying the acquisition:

(8) If there is a dispute as to what is to be taken to be the scheme mentioned in subsection (5) (“the underlying scheme”) then, for the purposes of this section, the underlying scheme is to be identified by the Upper Tribunal as a question of fact, subject as follows—

(a) the underlying scheme is to be taken to be the scheme provided for by the Act, or other instrument, which authorises the compulsory acquisition unless it is shown (by either party) that the underlying scheme is a scheme larger than, but incorporating, the scheme provided for by that instrument, and

(b) except by agreement or in special circumstances, the Upper Tribunal may permit the acquiring authority to advance evidence of such a larger scheme only if that larger scheme is one identified in the following read together—

(i) the instrument which authorises the compulsory acquisition, and

(ii) any documents published with it.

Although the wording of subsection 8 above is pleasantly clear, the essence of the exercise, which the tribunal needs to undertake, is essentially unchanged. The tribunal needs to consider (on the basis that it is deciding appropriate alternative development):

• The extent of ‘the scheme’.
• The planning ‘alternative reality’ without the scheme.
• The planning policies which might apply in the ‘alternative reality’.
• The likelihood of those policies applying (and permitting development).
• The extent to which the value of subject land might be increased in the ‘alternative reality’.

The difference in the law now is that the tribunal assesses value based on the assumption that: at the relevant valuation date, planning permission for the development could reasonably have been expected to be granted, even though no action has been taken (including acquisition of any land, and any development or works) by the acquiring authority wholly or mainly for the purposes of the scheme.

This effectively excludes arguments that the scheme is cancelled in respect of the subject land alone, but not surrounding land, and as such the subject land benefits from uplifts in value due to the scheme as a result of things like improved infrastructure.

Conclusions

The conclusions which can be drawn from these two decisions include the following:

• As previously stated, if ‘the scheme’ is actually the only ‘game in town’ with regard to any particular package of land, then it will fall to be disregarded, and the claimant left with perhaps only a small additional sliver of hope value in addition to the base value.
• On the other hand, if (as happened in JS Bloor) development opportunities abound whether the compulsory scheme occurs or not, a more substantial slice of hope value might be added to the base value.
• Clearly, and rather encouragingly, in JS Bloor the Supreme Court was keen to uphold the findings of fact of the UT, in the circumstances where the panel brought its expertise to bear, following a detailed analysis of the applicable planning policies and development potential.
• The tribunals need material upon which to decide these matters, highlighting the importance of well researched credible expert evidence, and elegant case presentation.
• The matters raised in this article clearly demonstrate the value in landowners coming together to promote development land, or else risk losing out on the opportunity to benefit from uplifts in value due to development potential.

For more information please contact Adam Corbin, Barrister and Senior Associate in the Agriculture team.

In this update, we examine how the Court has dealt with anti-fracking protestors and other recent developments relating to hydraulic fracturing or ‘fracking’.

Fracking operators have been consistently targeted by intensive and often vitriolic protest campaigns, often involving direct action by protestors. However, the High Court has now provided a clear blueprint for fracking operators seeking to reduce the adverse impact of these protest activities.

INEOS Upstream Ltd v Persons Unknown [2017]

In July 2017, petrochemical multinational, INEOS obtained a pre-emptive, interim injunction, without notice to the protestors, to prevent a range of unlawful conduct on or near the proposed fracking sites and its offices. The matter returned to the High Court in November 2017, to establish whether or not the injunction should remain place.

On 23 November 2017, Mr Justice Morgan granted INEOS a peremptory injunction, known as a quia timet injunction (being an injunction in anticipation of a breach of a legal right), restraining a wide range of unlawful conduct by protestors. The Defendants were well known protestors, who had taken direct action against other fracking operators, and who could potentially disrupt INEOS’s activities. An interesting aspect of the case was that only the identity of two of the Defendants was known, the others were described as “Persons Unknown”.

The decision was made in anticipation of disruption by protestors to INEOS through marches, static demonstrations, obstruction of the highway or site accesses (including the tactic of “slow walking”- protestors obstruct vehicles by walking slowly in front of them), the use of lock-on type devices and office incursions or occupations, the likes of which have occurred on other fracking sites across the UK.

INEOS’s causes of action included trespass, actionable interference with private rights of way, public nuisance, harassment and conspiracy to injure by unlawful means. The protestors opposed the applications on the basis that the grant of injunctions would be disproportionate (being too broad in scope); improperly brought against persons unknown; there was no imminent and real risk of harm; and granting such injunctions would impede the Defendants’ rights to protest.

Mr Justice Morgan granted the injunctions restraining trespass, private nuisance, interference with the right of access to and from the public highway, and unlawful means conspiracy. These sorts of injunction are rare and were only granted on the grounds that there was an imminent and real risk of infringement of INEOS’s rights. Mr Justice Morgan also held that a Court considering whether to grant a final injunction would take the view that a fracking operator’s property rights should prevail over the protestors’ right to protest.

The successful application by INEOS provides a blueprint for the arguments needed to succeed with, and the evidence required to support, the application. The decision is also notable for the fact that the injunctions also covered interference with INEOS’s upstream supply chain.

R (Preston New Road Action Group) v Secretary of State for Communities and Local Government and another [2018]

The background to the appeal brought by the Preston New Road Action Group is complex and was described in detail in the 2017 Summer Edition of Agricultural Lore.

On 12 January 2018, the Court of Appeal held that the decision to grant permission for exploratory works to Cuadrilla had not involved the misconstruction or misapplication of local and national planning policies and that the environmental impact assessment had addressed all concerns adequately. The appeals were dismissed and the right to appeal the matter further to the Court of Justice of the European Union was denied, the Lord Justices deeming the contentious matters “acte clair”, with no scope for reasonable doubt.

As a result of this ruling, Cuadrilla has effectively been given the go ahead to explore the site and consequently begin the first horizontal fracking project in the UK. Cuadrilla has also been granted permission by West Sussex County Council to begin exploratory testing in Balcombe.

INEOS granted permission to pursue land access rights over National Trust land

On 22 February 2018, INEOS stated that it had been granted permission by the Oil and Gas Authority to pursue an application in the High Court, to allow access to the National Trust’s Clumber Park in Nottinghamshire. INEOS wants to carry out seismic testing on the land, but the National Trust has refused access to-date, stating:

“We have no wish for our land to play any part in extracting gas or oil”.

Lynn Calder, Commercial Director of INEOS Shale, stated:

“These surveys are both routine and necessary across the UK, including on National Trust land……The National Trust’s position is very disappointing as we have had positive relationships with a range of stakeholders and landowners during surveys”.

Conclusion

The goals of fracking operators are evidently increasing in ambition and scope. However, these developments must also be viewed in a wider context. The Government’s publication, ‘A Green Future: Our 25 Year Plan to Improve the Environment’, makes no express reference to fracking (nor does it expressly refer to renewable energy, rather the more ambiguous “cleaner, sustainable energy”). Fracking was also conspicuous by its absence in the Government’s ‘Clean Growth Strategy’, published in October 2017.

These glaring omissions dovetail with the Government’s rhetoric surrounding a proposed ‘Green Brexit’. On a more local level, fracking operators have also seen a number of their applications rejected by local councils in recent months, including an application by INEOS in South Yorkshire.

Notwithstanding this, while fracking remains a viable and active solution to a transition to a reduced carbon economy, rural landowners and others with interests in areas where shale rock is prevalent, should be aware of any developments, and familiarise themselves with the obligations of fracking operators in relation to access, payments and any restoration and aftercare of the land.

Finally, landowners, tenants and fracking operators must be aware of their options and rights in relation to any protest activities on their land; if these actions adversely affect their business, they should consider applying to the Court for an injunction.

For more information please contact Ben Sharples on ben.sharples@michelmores.com or 0117 906 9334.