The money laundering regulations that apply to banks compel them to notify the Serious Organised Crime Agency (SOCA) if there is a suspicion that a transaction they are being asked to complete is connected with criminal activity or is the proceeds of crime. The transaction proposed are then ‘frozen’ for a period of time, which normally causes a delay of up to a week or more.

The Court of Appeal has recently confirmed, in a case in which damages of more than $300 million were sought because a bank delayed carrying out various transactions whilst SOCA were dealing with its report, that if the bank’s suspicions were genuinely held, it had no liability to the customer for his losses.
 

If you have a large or unusual transaction, there is a chance that your bank may report it to SOCA and this may cause delay. You can take various steps to give the bank the advance assurance that it may need to avoid this course of action. It is also sensible to make sure that any transaction that has the potential to be queried is, if possible, not subject to a tight deadline for completion.

One of the most important things to make sure of in any legal agreement involving the purchase of assets is that the transferor actually owns the assets you are seeking to buy.

Recently, electronics giant Apple found itself facing embarrassment after it launched a claim in China regarding alleged breach of trademark rights. Apple sued Proview Electronics over breach of its iPad trademark. Apple had purchased the worldwide trademark rights to iPad, which had been registered as a trademark in China by Proview Technology, a subsidiary of Proview Electronics. The deal was done with Proview Electronics, which held the trademark rights in the rest of the world.

Proview Technology was not a party to the agreement with Apple. Accordingly, the trademark as regards China was not transferred to Apple by the agreement with Proview Electronics as that company did not own it at the time of the transfer.

Proview Technology has now commenced legal action against vendors of iPads in China on the basis that it has the legal trademark right over iPad in China and it seems Apple is likely to find it necessary to negotiate a new deal

with Proview Technology as regards trademark rights in China.

The moral of the story – if you are buying any asset, make sure it is owned by the vendor.

See further details of developments by clicking here

From 6 April 2011 The Competition Act 1998 extended to cover agreements with regard to land. Such agreements were previously excluded.

The Act seeks to prohibit agreements, etc. which prevent, restrict or distort competition.

The change is important for owners and occupiers of land, because it has been common for agreements (especially tenancy agreements) to contain exclusivity clauses – for example, where a tenant retailer agrees with its landlord that no competitor of the tenant will be allowed retail space in the same development. Such agreements may now be unlawful.

Where such agreements are in place, we recommend having them reviewed in order to ensure that they do not conflict with the principles contained in Chapter 1 of the Act. 

The Office of Fair Trading has issued guidance on the changes, which can be found here.

Contact us for advice concerning the application of the Act in your individual circumstances.

Where a business has different facets and the ownership is legally separate, it is normally possible for the legal structure to be kept as two separate businesses.

This can have advantages where one part of the business supplies goods or services to the final consumer (so that, in effect, the VAT is borne by the supplier) and a separable part of the business trades under the VAT limit (currently £73,000 per year).
 
‘Artificial business splitting’ is commonly used in farmhouse B&Bs and also in the licensed trade. HM Revenue and Customs (HMRC) are not fond of the practice, however, and often seek to claim that unless strict criteria are observed (separate accounts and ownership, for example), the two businesses should be aggregated for VAT purposes.

There are signs that HMRC are taking a tougher attitude to business splitting. They recently brought a case before the London VAT Tribunal seeking to aggregate the income from a B&B business with that of the farm in which it was based. What is most surprising is that HMRC had acquiesced in the two businesses being dealt with separately for more than 30 years.

HMRC lost the case, but it serves as a timely reminder to those who run more than one business, one of which is not VAT registered, that care needs to be taken to organise one’s business structure and practices to avoid problems of this nature.

The employee in this case was made redundant a few days before the company she had worked for went into administration. The administrators subsequently entered into a management contract with another entity under which part of the business was transferred to that entity. The employee brought a claim for unfair dismissal against the new entity arguing that the company’s liability had been transferred under TUPE.

In most cases, under TUPE rules, where a business is transferred to another the employees will automatically transfer with the business and any dismissal connected with the transfer will be unfair unless it is for an economic, technical or organisation reason entailing changes in the workforce. However, TUPE rules relieve transferees of their obligations where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner.

The question the Court of Appeal had to decide in this case was whether an administration is outside TUPE rules, like insolvency and analogous proceedings. The Court of Appeal held that it is not, because an administrator is appointed primarily to rescue the company even though that may not subsequently be possible. Accordingly, the Court said that a TUPE transfer of liabilities will take place where a company is placed into administration and the business is subsequently transferred to another entity.

After 12 years with his employer the claimant in a recent case against a City Council left to take up another post. Although two satisfactory references were provided from previous employers, one reference provided by the ex-employer in this case was challenged. The reference contained positive statements about the ex-employee but it also left some questions unanswered and mentioned concerns about recordkeeping. The author said she could not elaborate on these concerns because they had not been investigated and she pointed out that they would have led to a formal improvement plan if the ex-employee had remained with the Council (rather than disciplinary action).

An earlier offer of employment was withdrawn in light of the reference and the ex-employee was unemployed for a year.

A  County Court had found that the reference was true and accurate but held it to be unfair because it carried with it an ‘unanswered, uninvestigated, unparticularised, unspecific allegation …. which the ex-employee had no opportunity to refute or answer ..’

On appeal, the Court of Appeal had some sympathy for the ex-employee but took the view that the reference could not be said to be unfair. It said that accuracy and truth go to the facts which form the basis of the reference and that fairness goes to the overall balance of the reference and any opinion contained within it.

Employers should exercise caution when issuing references and take legal advice if unsure whether a reference will be deemed fair.

In this case the employee was a financial controller. One of his responsibilities was to monitor the company’s bank accounts. The company fell victim to a fraud in which approximately €1.7m were lost from one of its bank accounts over the course of a couple of months. However, the employee did not detect or report the fraudulent transactions until after significant sums had been lost.

The company took the view that he was grossly negligent in failing to spot the fraudulent transactions and summarily dismissed him. In the dismissal letter the company cited ‘misconduct’ as the reason for his dismissal.

The employee brought a claim for unfair dismissal and in responding to his claim, the company cited ‘capability’ as the reason for his dismissal.

The Employment Tribunal found that the dismissal was due to both capability and conduct but that conduct was the primary reason for dismissal. It took the view that there had been serious negligence on the part of the employee and accordingly held that the dismissal was fair.

The employee appealed arguing that the Employment Tribunal should not have found that the dismissal was fair on the basis of ‘misconduct’ since the company had asserted in its answer to the claim that the reason for dismissal was ‘capability’. However, the Employment Appeals Tribunal took the view that the change of label was not of any significance since the decision to dismiss had at all times been based upon the same set of facts.

The Employment Appeals Tribunal said that since the change of label caused no prejudice to the employee the Employment Tribunal was not prevented from dealing with the claim on the basis of misconduct. Accordingly the appeal was dismissed.

When you are required to transfer a property once sold or at the end of the lease, you are required to give the new occupant vacant possession.

This is a strict requirement, meaning that the property must be capable of being occupied immediately. As such, it must be empty of people and the belongings of the person vacating it.

In a recent case, a tenants who was vacating a let property as a result of the termination of the tenancy wanted to continue to occupy the property for a few days after the break date in order to complete works necessary to comply with its repairing obligation under the lease.

The tenant requested the landlord’s permission, but there was no response to the request. The tenant kept the premises secure but retained the keys to the property after the break date.

The Court of Appeal agreed with the landlord that vacant possession had not been given to it and the tenant had therefore failed to comply with the conditions attaching to the break clause.

This case shows how important it is to ensure compliance with lease terms. In this case, a desire to avoid a small cost relating to completion of the repairs to the property has landed the tenant with a much greater liability.

 
In 2009, 563 people were prosecuted successfully for violation of copyright. The majority of these prosecutions related to counterfeiting of goods such as designer goods, tobacco products, DVDs, car parts and aircraft parts. Cases have even been found of fake drugs being supplied for victims of cancer.

 
Cash forfeitures under the Proceeds of Crime Act 2002 in cases related to IP crime totalled more than £21 million in 2010/11.

 
If you are concerned about the safety or the misuse of your intellectual property, contact us for advice.

Most landlords who have tenants on assured shorthold tenancies will be aware of their obligations to tenants with regard to the protection of their deposits and the provision of information to tenants regarding the chosen tenancy deposit scheme.

The compliance regime for landlords seems very rigorous as a penalty of three times the deposit can be levied for failing to comply with the rules of the scheme. A recent court case established, however, that a landlord cannot be subject to a penalty for non compliance with the rules regarding the holding of deposits provided that they take the necessary action before the matter comes to court. It would be understandable, therefore, if landlords considered that there was a similarly relaxed attitude regarding the provision of the required information.

However, a landlord who failed to provide a tenant with information on the deposit protection scheme in use was recently made to pay the triple penalty, despite the fact that by the time the case came to court the tenancy had ended and the deposit had been returned to the tenant.

Landlords beware!