Hillyer McKeown Blog

Brits top online shopping poll in Europe
Research suggests that UK shoppers spent more online than anywhere else in Europe last year and accounted for almost a third of all European sales.
UK consumers spent £38bn online in 2009, averaging £1,102 per shopper . According to the Centre for Retail Research (CRR) online sales now account for almost 10% of total retail sales in the UK. Germans were the next most prolific spenders online last year with a total spend of £29.7bn, while the French spent £22bn.
The centre forceats total online sales in the UK hitting £42.7bn this year. The amount of online shoppers in the UK is likely to increase now that they can spend more on the internet from stores in non-EU countries before being charged duty.
Previously HM Revenue and Customs charged customs duty on items bought online or through mail order if the package had a value of £120 or more. This has now been increased to £135. Smokers can also now bring as many cigarettes as they like into the UK for personal use from Bulgaria, Romania, Lithuania and Estonia.

Directors Beware – Personal Liability in Fraudulent Misrepresentation

The Court held in the case of Invertec Ltd v De Mol Holding BV and Anor [2009] EWHC 2471 (Ch) that a company had made fraudulent misrepresentations during the due diligence phase of a company acquisition. As the person who had made the fraudulent misrepresentation on behalf of the company, and the person who had been the sole negotiator and signed the transaction documents on behalf of the company, the director of the selling company was found personally liable for the damages awarded.
Invertec were awarded damages in the sum of £1,512,113.00 in respect of the initial consideration paid for the company’s shares together with £532,000 in respect of the consequential losses suffered as a result of the fraudulent misrepresentations.
This case serves as a stark reminder of the importance of providing accurate and detailed disclosure in the disclosure letter which in turn will provide protection to the selling company from a breach of warranty claim or a defence to such a claim. This decision further highlights the fact that the Courts are not afraid to attach personal liability in cases where a Director is found to have made fraudulent misrepresentations.

Acceptance of offers out of time

During the course of proceedings, it is usual for parties to enter into settlement negotiations, and a good tactician can use this to their advantage to put undue pressure on the other party. Once an offer has expired, provided it has not been accepted by the other party, you would expect that they would be barred out of accepting the offer at a later date. Unless the offer has been formally withdrawn, this is in fact not the case.

The Court in the case of Sampla v Rushmoor Borough Council [2008] EWHC 2616, reiterated that in cases where a Part 36 offer has been rejected previously, or where an offeree has made a counteroffer or has simply failed to respond to the original offer within the time limits stated therein, the Court can give permission to the offeree to accept the offer out of time unless it is formally withdrawn. There are exceptions to this rule, in particular where there has been a significant shift in both parties’ perception in the outcome of the case or where a trial may be almost at an end, thereby resulting in only minimal savings to the parties.

This case is indicative of the Court’s attitude towards encouraging settlement, however parties are warned that whilst a Court, in principle can give permission to a party to accept an offer out of time, there is no guarantee that it will be given particularly if it would not be just and fair to do so given the circumstances of the case. Parties are warned not to

Parties should therefore not become complacent and give due to consideration to offers when they are received. Parties should equally be alive to the prospect that offers of settlement which are not formally withdrawn may be accepted by a party at a later stage in the proceedings, at which time the offer may not be so beneficial to the person offering.

As January is the known for being the busiest month for Divorce proceedings to get underway we thought we should dispel some of the most common misconceptions.

COMMON MISCONCEPTIONS

Mothers always succeed in disputes over the children

In family proceedings it is quite common for parents to share the residence of the children with them spending an equal amount of time with the two parents. This often depends on the father’s availability to look after the children and to be able to continue working.

Common Law Marriage

There is no such thing as “Common Law Marriage” as it was abolished in 1753.

Many couples that co-habit are under the mistaken impression that after one year or three years living together that they have the same rights as a married couple.

Pre-nuptial Agreements are not legally enforceable

Pre-nuptial Agreements are not legally binding in the UK, but if they have been properly drawn up, the Family Courts will attached a great deal of weight to the Agreements within divorce proceedings.

If I institute the Divorce Proceedings I will obtain a better financial settlement

This is not the case except in extremely rare cases, so it does not matter who divorces who or on what ground when the finances are decided by the Court.

There is always a 50/50 split of assets on divorce

Although the starting point in many divorces is splitting the assets 50/50, there are cases for example after a short marriage or where there are very limited assets where one party will obtain more than 50%.

The High Court has held that the sale of an alcoholic drink, made from vodka and fermented alcohol, under the brand name VODKAT amounted to passing off the product as vodka. Arnold J ruled that the term “vodka” denoted a clearly defined class of goods. He found that the term “vodka” had a reputation giving rise to a protectable goodwill, and consumers had come to regard the term “vodka” as denoting a particular class of alcoholic beverage, namely a clear, tasteless, distilled, high-strength spirit. Relying on substantial evidence of actual confusion, and the defendants’ failure to explain what VODKAT was, and to differentiate it from vodka, the judge held that the defendants had marketed VODKAT in such a way that was calculated to deceive a substantial number of members of the public into believing that the product was vodka or a weaker version of vodka. The judge also found that a revised get-up for VODKAT, although less objectionable, still amounted to passing off since, in the light of the previous history, the change was not enough to avoid confusion.

Squatter is awarded adverse possession of Thames Riverbed

In the case of London Authority v Rupert Gerald Ashmore [2009] EWHC 9 54 (CH), the High Court held that a squatter was entitled to obtain title to the riverbed of the Thames by way of adverse possession.

The facts
In 1983, Mr Ashmore sailed his flat bottomed barge boat to Albion Riverside, near Battersea Bridge in London where he dropped anchor and tethered the boat to the bank; he did so without permission from the Port London Authority (the “PLA”). Title to the riverbed was not registered however the PLA, as the paper title owners decided that it wanted to register its title to the Thames riverbed and they claimed that Mr Ashmore, who had at that time been moored for 26 years without permission was trespassing and sought an injunction to remove him. In this defence, Mr Ashmore claimed that he had acquired squatters rights over the area of the riverbed upon which the bottom of his barge touched for more than 12 years, which is the limitation period for acquiring title by adverse possession. For most of that time however, the boat floated on the river, but, twice a day at low tide it came to rest on the riverbed. Accordingly, the PLA argued that Mr Ashmore’s adverse possession claim could not succeed on the basis that “possession” was effectively broken twice a day when the tide came in and lifted the boat from the riverbed. They argued that possession was therefore not continuous and not exclusive given that somebody could theoretically swim under the barge during this time.
The Court disagreed and held that the squatter did not have to be in physical contact with the land at all times. The Court went on to say that, if continuous contact was necessary this could be established through the anchor which moored the boat.

This case acts as a reminder to all land owners to act quickly if they believe that anyone is trespassing on their land. In such cases, land owners should consider either formalising the trespasser’s occupation by way of Lease or Licence or issuing proceedings to evict the trespasser without delay

Should Landlords have to shoulder the burden of failing shops?

With a lot of retail companies feeling the pinch and going into administration, it is bringing about a trend of Landlords who have no choice but to accept deals, allowing retailers to walk away from leases with little or no penalty or to accept serious reductions in the passing rent.
Blacks, the leisure retailer recently entered into a company voluntary arrangement (CVA), this is a deal with creditors to accept less money than they are owed. Blacks went cap in hand to their landlords to agree a deal whereby it could walk away from its under-performing stores without penalty. The Landlords had little choice but to agree. After all it saved 4000 jobs.
It is worth remembering that a lot of commercial property is publicly owned and therefore it is the public’s money that is taking a hit.

What about Black’s shareholders? Did they give up shares, in fact on the day the CVA was announced the value of each share went up by 50%.

If the Landlords had not agreed then the alternative would be for the Company to go into administration meaning the Landlord would have lost more money.

But is it right that Landlord’s should shoulder the burden of failing shops?

Whilst there will never been any sympathy for Commercial Landlords, people should remember that they often have some of their own money tied up in their premises!
We are all in favour of supporting jobs however there needs to be a balance between what’s fair and otherwise any failing business will be able to wave a CVA and walk away from its obligations.

Commercial Landlords should ensure their properties are well-maintained

In most commercial leases, the repairing obligation for the property rests firmly with the tenant.
However a word of warning: in these tougher economic times, is the Tenant likely to be there or worthy of a dilapidations claim at the end of the term.
Most commercial leases have a provision allowing the Landlord to undertake interim dilapidation inspections to ensure that the Tenant is implementing all necessary repairs to comply with the terms of the lease.
Landlords often take a relaxed approach to dilapidations during the course of the lease but the idea of the provision is to protect their asset throughout the term of the lease.
Likewise, if a Landlord is partly responsible for the repair and maintenance of a property and then recoups the cost via a service charge, it is only possible to do so once the work has been carried out.
It is therefore imperative that Landlords are more pro-active in ensuring that their property is fully maintained to minimise the risk of having no Tenant to recoup the service charge from or to stand a claim for terminal dilapidations.

Reasonable Notice Period
All too often businesses agree to supply goods, provide services or enter into a working relationship with another party without putting anything in writing or even without formally agreeing terms of engagement. This can lead to problems in the long run, especially if one of the parties subsequently decide they “want out” of the agreement.

Businesses often feel that they are able to just “walk away” from these agreements because nothing was ever put in writing. Be warned, this is a common misconception that can leave your business in hot water. A party who wants to terminate an agreement should provide the other party with ‘reasonable notice’ of termination. Determining what constitutes ‘reasonable notice’ however is not as easy as it sounds and will depend on the particular circumstances of the case.

In the recent case of Jackson Distribution v Tum Yeto [2009], the Court took into account the following factors when considering what constituted ‘reasonable notice’ in that case:

1. The degree of formality in the relationship between the parties;
2. The length of the relationship and the extent of early investment by the Claimant;
3. The percentage of the Claimant’s turnover made up by the Defendant’s products;
4. How quickly the Claimant would be able to replace the business lost;
5. Other factors relevant to each specific case, such as the nature of the business relationship and the amounts the parties later invested in that relationship.

In that case, the Court held that a period of 9 months constituted reasonable notice. The case emphasised the importance of entering into a formal written agreement in any commercial arrangement, particularly where high value transactions are concerned. It further emphasised from a commonsensical point of view, the benefit of having a written agreement in place in order that both parties were aware of the scope of their contractual obligations to one another.
Failure to agree clear written terms in any contractual relationship can expose your business to litigation, particularly where the parties become embroiled in costly litigation on the question of whether a party has provided ‘reasonable notice’ of their intention to terminate an agreement. It may further expose your company to the risk of being made to pay damages to reflect the notice you should but failed to give the other party when terminating the agreement; this applies whether the agreement was in writing or not. Should you have any concerns about your legal position in such circumstances or should you require any assistance in drafting an appropriate written contract to use in a commercial transaction, you should seek legal advice.

Speed of reaction critical in F1 case
A recent High Court case has emphasized the importance of acting expeditiously when enforcing or exercising rights under a contract.
Etihad Airways was the sponsor of the Force India Formula One Racing Team under its previous name Stryker. Other investors included the Kingfisher beer and airline businesses. In November 2007 the Team changed their name to Force India. At the end of January 2008 Etihad objected to the name change and terminated the contract without notice as it claimed the name change was a breach of contract.
However, the High Court has ruled that Etihad was too late to object as its behaviour following the change of name over the intervening three months suggested it had accepted the change. It was therefore deemed to have acquiesced to the change and as a result lost the right terminate the contract on this ground. As such the termination without notice was a wrongful repudiation of the contract and meant that in fact Etihad and not Force India had acted in breach of contract, as such the Court ordered Etihad to pay $4,600,000 to Force India for the breach.
It is therefore important for parties to ensure that if they wish to terminate a contract for a breach by the other party they do so quickly and ensure that their behaviour in the interim period does not suggest that they have in fact deemed to have accepted the amended term.