Where a company is experiencing extreme financial difficulties it is well known that such a company can be cash-flow insolvent, (i.e. they cannot pay their debts as they fall due), or balance sheet insolvent (the company’s liabilities outweigh their assets). It is the role of the insolvency practitioner to consider the company’s assets in order to maximise return for creditors.

Currently, according to the Insolvency Statistics for April to June 2015, the total number of company insolvencies in England and Wales decreased and were at the lowest level since Q4 2007. Although the total number of insolvent companies is currently decreasing, considering the insolvent company’s assets, including Intellectual Property, is still of high importance. This should be the case regardless of the financial circumstances of other companies as it is relevant to explore each company’s individual financial circumstances.

Therefore, insolvency practitioners should always review the intellectual property rights of the company. However, believe it or not, no such action is routinely taken at present.

Intellectual Property rights shouldn’t be overlooked in insolvency

The legal definition of Intellectual Property is “Intangible rights protecting the products of human intelligence and creation”. This is deemed to include trade marks, trade secrets, copyrightable works and patented inventions. Although important, and often the most valuable asset to a company, intellectual property is frequently overlooked in insolvency.

It is essential to establish in detail the assets of the insolvent company. For many companies Intellectual Property is a major asset. When considering an insolvent company’s property, insolvency practitioners often do not appreciate the value of intellectual property. This should not be the case, as the company’s intellectual property rights should be fully explored.

The insolvency practitioner should consider, in some cases even before their appointment, any intellectual property owned by the company and any rights that owners of intellectual property have licensed to the company.

Intellectual property should be considered by the insolvency practitioner as their role is to collect and realise all of the company’s assets to maximise their potential. This will ultimately maximise the return for creditors, thus the insolvency practitioner will satisfy their duties and potentially identify any intellectual property which may have realisable value.

The insolvency practitioner, should they identify intellectual property which may have a realisable value, should not only record this but should also look to maximise such value. This may depend on the intellectual property rights of the company. It is therefore likely to be of interest to the insolvency practitioner to consider the following:

• Whether the sale of any valuable brand names earlier on in the process may generate more realisable value;
• Where there are pending registrations for intellectual property rights, a balance should be found between commercial considerations, for example a quick sale, and the possibility of maximising asset values; and
• The knowledge of employees where the value of the intellectual property is primarily made up of confidential information and know-how is key and therefore required to be reflected in the management of the company’s insolvency regarding any disposals.

The relevance of licences

As well as identifying the extent of the company’s intellectual property, the insolvency practitioner should also establish whether any licences of intellectual property have been granted. This will provide the insolvency practitioner with a more informed overview of the company’s current circumstances.

Intellectual property right licences act as a contract to provide the rights to the licensee so as they may carry out acts that otherwise would only be entitled to be carried out by the intellectual property owner. The insolvency practitioner should establish whether the company has granted such licences and if so, to what extent. It should also be established whether the company has had any licences regarding intellectual property granted to it by third party owners.

Any onerous intellectual property licences may be disclaimed by a liquidator only, so long as s178 Insolvency Act 1986 is satisfied. To satisfy the legislation, the licence must be deemed as onerous property. When a licence is disclaimed, the licensee remains entitled to exercise its rights under the licence. The licensee will also have the right to claim any loss from the licence being disclaimed as an unsecured creditor in the winding up proceedings.

As office holders, insolvency practitioners should ensure that they fulfil their duties regarding collecting and realising the company’s assets. This should include ensuring that they are aware of the extent of the company’s intellectual property; both owned and licensed to the company.

Expert advice

If your business is in a difficult financial situation, and you would like some specialist legal guidance as to the value of your Intellectual Property, then please feel free to contact me or one of our Corporate Commercial team on 01908 660966.

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Facebook is forced to stop collecting the personal data of those in Belgium not using the site.

The most recent of a number of European data protection cases has forced Facebook to stop collecting personal data from anyone in Belgium who does not use the social media site. Facebook, which has previously been collecting personal data to progress its business, will look to have the decision overturned. In the meantime it has advised that, following the decision on 9^th November 2015, it will stop collecting information regarding people in Belgium who do not use the site.

The company has confirmed that it collects personal data regarding both those who are members of Facebook and those who are not. Such information is collected by using cookies. Cookies, small text files, attach themselves to the user’s device, regardless of whether they are a member of Facebook or not. Then, upon the user visiting sites such as Facebook itself, or even other websites with links to Facebook such as the use of the Facebook like button, the cookies become embedded.

Facebook has advised that during its use of cookies, for a period longer than 5 years, it has received no privacy complaints. The company has advised that it is on this premise that it will be taking the matter to the Belgian Court of Appeal.

In the meantime, should Facebook fail to comply with the ruling, it has been reported that, further to Belgian law, the company may receive daily fines in the region of £177,000.

Belgium is not the only European privacy regulator to be looking into the company’s privacy conditions and their implications regarding data protection. France, Germany, Spain and the Netherlands are also reviewing the same. Furthermore, many data watchdogs throughout Europe have questioned big companies’ use of technology to collect personal data; the matter has even been considered by the European Court of Justice.

It is clear that data protection, especially in light of the recent Facebook case, is of the utmost importance. As such, it is worth considering the UK data protection regime.

UK data protection law

In the UK it is the Data Protection Act 1998 which primarily governs how personal data is collected and stored. The statute also implemented the EU Directive 95/46/EEC which imposes great obligations on data controllers so as to protect individuals. The Data Protection Act 1998 widely defines both “processing” and “personal data” as this is what it applies to. As such, any information relating to individuals held by a business operating in the UK is affected.

Section 1(1) of the Data Protection Act 1998 imposes obligations on those who process, namely defined as obtaining, recording, holding, using, disclosing or erasing, personal data. Under Section 18 of the Data Protection Act 1998, data controllers who intend on processing personal data must first notify the Information Commissioner.

Schedule 1 of the Data Protection Act 1998 sets out the following data protection principles to ensure data controllers process data correctly:

1. “Personal data shall be processed fairly and lawfully and, in particular, shall not be processed unless:

a)     at least one of the conditions in Schedule 2 is met; and
b)     in the case of sensitive personal data, at least one of the conditions in Schedule 3 is also met.

2. Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with the purpose or those purposes.
3. Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes in which they are processed.
4. Personal data shall be accurate and, where necessary, kept up to date.
5. Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.
6. Personal data shall be processed in accordance with the rights of data subjects under this Act.
7. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.
8. Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.”

Data controllers may be found to have criminal liability as well as civil liability following a breach of data protection laws. It is encouraged that the parties involved attempt to resolve the matter themselves. Otherwise, where no resolution has been achieved with the data controller, the following sanctions, as actioned by the Information Commissioner, may be enforced:

• Serving data controllers with any of the following notices:

a)     information notices (unless the information regarding the way they process data is legally privileged);
b)     special information notices; or
c)     enforcement notices, so as to ensure the data protection principles are complied with by the data controller.

• Imposing a fine (up to a maximum of £500,000) for “serious contraventions” as referred to in section 55A of the Data Protection Act 1998. This must be after a notice of intent has been served upon the data controller. The data controller must then be provided with a reasonable amount of time to provide an opportunity to respond to the Information Commissioner.
• Where the Commissioner has a warrant from the court they may also, in certain circumstances, inspect and seize any relevant documents and/or property under a power of entry.

The effect on publicity, further to non-compliance, must also be considered for many companies.

How UK data protection laws apply to the use of the internet

In 2012, the UK was referred to the European Court of Justice following criticisms of its failure to implement EU rules. The UK had been referred as it was found that the EU rules of confidentiality regarding communicating electronically were not being implemented as required. The UK reviewed and amended its legislation so as interception of user’s electronic information required consent before access. As such, the matter was closed.

It is therefore important that data protection, especially with the progression and development of online communications and information storage, is appreciated in all aspects of collecting and managing personal data.

Need to speak to an expert about a data protection issue?

Nowadays, you will be used to having to click to agree that you have read and understood the terms of a software update or new application you have downloaded for your computer or mobile devices.

These terms you flick through very quickly govern how the software company you are using will use your data and of course how you will use their software. They are called ‘End-User Licence Agreements’ (EULAs) and allow the licensor (the software company) to licence the user to use certain types of software.

There are three forms of EULAs:

• Click-wrap;
• Browse-wrap; and
• Shrink-wrap.

The purpose of most EULAs is to allow the copyright holder to sue both in contract and copyright should any such copyright be infringed by the consumer. Clauses, such as limitation or exclusion clauses, may also be found in EULAs. The Consumer Rights Act 2015 requires there to be a contract between the trader and the consumer in order to ensure protection under the Act. It has been questioned whether all forms of EULAs have the necessary characteristics to satisfy being a contract for such purposes.

Are the EULAs capable of satisfying the requirements of being a contract?

The characteristics required of the EULAs to be capable of being a contract are the usual necessary requirements of (1) offer, (2) consideration and (3) acceptance. It is necessary to consider whether each individual form of EULA is capable of being a contract.

Click-wrap:

A click-wrap agreement is a form of EULA used where an agreement to terms and conditions is required before electronic media or software is installed or purchased online. Participation is required of the user as they must indicate acceptance in clicking a box marked ‘I accept’ or ‘I agree’ after reading the terms and conditions. It can then be clearly identified that the terms and conditions read by the user are the terms offered by the trader. In reading the terms, the user considers them and then provides acceptance upon clicking the agreement box. The trader provides the licence in return for consideration, such as money or an agreement of how to act, provided by the user. The Law Commission has stated that these actions are likely to be found by the courts to constitute a contract. However, there is no English judicial guidance to confirm the same.

Browse-wrap:

A browse-wrap agreement is a form of EULA where the user is bound by an agreement as a result of browsing the website. As there is no agreement box as with click-wrap agreements, the browse-wrap agreement must be clear in its indication that it is an agreement and state clearly where its terms and conditions can be found. There is no obligation for the user to review the terms and conditions before an agreement is determined. A browse-wrap agreement is found to constitute a licence under copyright law, however, the Law Commission has stated that it would be unlikely for the courts to determine that the same is capable of being a contract.

Shrink-wrap:

A shrink-wrap agreement is a form of EULA that requires the removal, by the user, of the shrink-to fit wrapper on a product such as software. This removal indicates the user’s consent to any printed agreement on the product. There is no requirement for the agreement and any terms and conditions provided to be read by the user before purchase. Therefore, as an agreement is usually made upon consideration being provided and the trader accepting the user’s money, it can be argued that the user has agreed to using the product only and not to its terms and conditions. There is also the possibility of the user not being able to view the terms and conditions until after they have removed the shrink-to-fit wrapper, in which case it is impossible for them to have agreed to such terms when they gave consideration. The Law Commission has stated that it is very unlikely that shrink-wrap agreements will be found to constitute a contract.

Need some expert advice on this subject?

If you are a software company and would like to talk through your contractual terms, please feel free to contact me or any one of our Corporate Commercial team on  01908 660966.

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A recent article, reported in the Northampton Chronicle and Echo, has covered the current attempts of Northampton Borough Council to delay the winding-up petition hearing it is facing so as to allow time for attempts to rescue the Club to continue.

A hearing is to be held to consider the matter, with the Club to be placed into Liquidation as early as 16th November 2015. Discussions have been had between the Borough Council and Her Majesty’s Revenue and Customs (HMRC), with the result of HMRC confirming that they will not look to adjourn or delay such actions. It will therefore be down to the Judge at the hearing to consider any opposition to the Liquidation and request for adjournment.

The Council has stated that it will do all it can to prevent the Club going into Liquidation and has also been advised by the Football League that only in the case of the Club being placed in Administration would there be deduction efforts regarding the team’s points. At present, there will be no points deducted from following the presentation of the winding-up petition.

There are also current considerations regarding a consortium with Oxford United Football Club. With a view to Oxford United obtaining the controlling interest of Northampton Town. Therefore, there are currently a number of possible outcomes regarding a possible consortium and also following the result of the Club’s Petition for Administration, which is expected to be heard by the Court by the end of the month. But when should the presentation of a winding-up petition be considered?

Winding-up petitions

A winding-up petition is presented to the Court at the start of the winding up process. Namely, the petitioner is beginning proceedings so as to have the company involved placed into a Compulsory Liquidation. The consequences of a winding-up petition being presented against a company may be very serious; they may be with respect to the following:

• Dispositions of company property, if dated after the petition, are potentially void should the company be wound up by the Court.
• The commercial reputation of the company may be substantially damaged.
• Whilst the petition is in place, the company may find it more difficult to obtain credit.
• There will also be costs to consider regarding the legal action of dealing with the winding-up petition; both potentially in terms of legal advice and instructing the attendance of solicitors or counsel for the hearing.

The circumstances in which winding-up petitions should be considered are outlined in section 122 of the Insolvency Act 1986. The statute confirms that a company may be wound-up where:

• A special resolution has resolved that the Company should be entered into Compulsory Liquidation.
• The Public Company’s trading certificate, which is required under section 761 of the Companies Act 2006 (requirement as to minimum share capital), has not been issued and more than a year has elapsed since the Company was registered as a public company on its original incorporation.
• The company satisfies the meaning of an old public company as set out in Schedule 3 of the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009.
• From a year of incorporation, the company has failed to commence business, or its business has been suspended for the period of a whole year. • The company is unable to pay its debts.
• It is found to be just and equitable by the Court for the company to be wound-up.

A company may also be wound-up where it is not insolvent. This would be the case where, for example, it would be in the public interest to have a company wound-up. Also, it may be that following a dispute between shareholders of the company, a winding-up petition by one of the shareholders may be on just and equitable grounds. This is recognised in section 122(1)(g) of the Insolvency Act 1986.

A company may oppose a winding-up petition put to it, so long as it complies with Rule 4.18 of the Insolvency Rules 1986 which stipulates that the company must file its evidence regarding its opposition at least 5 business days before the hearing. In practice, should the company not file its evidence prior to the hearing, but does indicate that it wants to oppose the petition, the Court may provide directions in accordance with the company now filing evidence regarding its opposition and also perhaps regarding the petitioning creditor’s reply.

Need expert advice on this subject?

If after reading this post, you feel that you would like further legal guidance on insolvency issues, please feel free to contact me or one of our Corporate Commercial team on 01908 660 966.

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On 1 October 2015, subject to Parliamentary approval, new Regulations placing further obligations on Landlords will come into force. The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 will apply to all residential properties in the private rented sector with the purpose of reducing the number of injuries or deaths from smoke or carbon monoxide poisoning. The new Regulations are expected to help prevent up to 26 deaths and 670 injuries per year through placing three duties onto Landlords.

The Law as it stands

On 11 March 2015 the Energy Act 2013 (Commencement No. 2) Order 2015 was made which bought into effect s.150 of the Energy Act 2013. The effect of s.150 required Landlords to fit an alarm of a standard to be specified in regulations and stipulates that there will be a penalty for not doing so. However, the main problem with the Order is that it did not specify what type of alarm and the penalty for failing to comply with the Act. This has caused widespread confusion for Landlords and is all set to change with the enforcement of the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 should they be approved by Parliament.

The new Regulations set out the alarm requirement, the penalty process and the level of penalty should the Landlord fail to comply with the Regulations. This will ultimately create a greater certainty for Landlords regarding their obligations and also provide a greater degree of protection for occupiers.

How will the new Regulations affect Landlords?

The Regulations will place three ultimate duties on a ƒ??relevant landlordƒ?? of a ƒ??specified tenancyƒ?? from 1 October 2015 under Regulation 4:

• A smoke alarm must be installed on each storey of premises that are wholly or partly used as living accommodation;
• A carbon monoxide alarm must be installed in any room that is used wholly or partly used as living accommodation and contains a solid fuel burning combustion appliance; and
• The smoke and carbon monoxide alarms are in proper working order at the start of any new tenancy.

The Government however, to help Landlords prepare for the new regulations, have suggested that Englandƒ??s 46 fire and rescue authorities are to aid this transition and support private Landlords in their own areas with the provision of free alarms purchased through governmental funding. The amount of funding provided via the Government has been announced at ?œ3 million which will provide around 445,000 smoke and 40,000 carbon monoxide alarms split between the 46 authorities. It is then at the discretion of the relevant local fire and rescue authority to determine their own arrangements for the distribution of such alarms to Landlords.

Who and what will the Regulations affect?

The Regulations will only place duties on the ƒ??relevant landlordƒ??. This is the immediate Landlord of the premises and, therefore, will not apply to a registered provider of social housing.

The Regulations will also only place the duty on Landlords of a ƒ??specified tenancyƒ??. A specified tenancy encompasses a tenancy, sub-tenancy, lease, sub-lease, and licence of residential premises which grants one or more people the right to occupy the premises as their only or main residence in return for the payment of rent.

However it is important to note that the Regulations will only apply to new tenancies. This means that there is no need for Landlords to panic ƒ?? as long as action is taken regarding tenancies entered into on or after 1 October 2015 they will have performed their obligations under the Regulations.

Therefore, there is no need for Landlords to install a smoke and carbon monoxide alarm in accordance with the Regulations on any agreement entered into before 1 October 2015.

Repercussions for non-compliance

Should there be reasonable grounds to believe that a Landlord has not complied with the three duties under the new Regulation, a local housing authority must serve a remedial notice on the landlord. This notice must be in writing and will specify the premises to which it relates to, the duty which is believed to have been breached and the action which must be taken in order to remedy that breach.

Once the local housing authority has reasonable grounds for non-compliance with the Regulations, they must serve the notice on the Landlord within 21 days. Once the Landlord has received such notice, there are two options available:

1. They must comply with the notice within 28 days beginning with the day the notice is served; or
2. They may make written representations against the notice within 28 days beginning with the day the notice is served.

If the Landlord fails to comply with the notice and remedy the breach, provided that the occupier of the premises consents, the local housing authority will arrange for an authorised person to carry out the action in order to remedy the breach.

What are the penalties for non-compliance?

Non-compliance with the duties imposed on the Landlord may result in a penalty charge, subject to a cap of ?œ5,000. A penalty charge can only be imposed where a local housing authority, on the balance of probabilities, believes that the Landlord has breached its obligations under the Regulations and failed to comply with the remedial notice given. There are provisions for a Landlord to appeal throughout the process.

Key points to remember

In summary, there are four key elements of the Regulations to note:

1. The Regulations will only apply to agreements entered into on or before 1 October 2015 so there is no duty on Landlords to install smoke and carbon monoxide alarms in accordance with the Regulations on pre-exiting agreements.
2. The Regulations impose three simple duties onto the Landlord:
   1. A smoke alarm must be installed on each floor of the premises;
   2. A carbon monoxide alarm must be installed on each floor of the premises where there is a solid fuel burning combustion appliance; and
   3. The smoke and carbon monoxide alarm must in a proper working condition at the start of the tenancy.
3. If there are reasonable grounds for believing that there has been non-compliance with the Regulations a remedial notice will be served by the local housing authority which must be actioned by the Landlord within 28 days.
4. Failure to remedy the breach of the Regulations may result in a penalty charge of up to ?œ5,000.

Expert advice

If you would like any further legal guidance on a residential lettings issue, feel free to contact our myself on 01908 660966 (Milton Keynes) or by email. Alternatively you can also contact my colleague Suzie Raygada in Northampton on 01604 828282 or via email.

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On 15 July 2015 at 10:34AM the National Police Air Support Unit released an aerial photo of, what looks to be, Michael McIntyre on Twitter with the caption ‘whilst on tasking in central London this morning we spotted a certain energetic funny man…can you guess who?’. Shortly after the picture was posted online, Twitter exploded with outrage and complaints of breaches of data protection.

 Despite removing the tweet, a Metropolitan Police spokesperson said in a statement that “this tweet does not, as far as we know, constitute a breach of data protection legislation”.

So how does the Data Protection Act 1998 apply?

The Data Protection Act 1998 imposes broad obligations on those who collect personal data, as well as conferring broad rights on individuals about whom data is collected. Therefore, the Act can be used by both private individuals and celebrities to prevent publication of photographs or film of them, where such photographs or film constitute personal data.

The first element to consider is whether the data has been ‘processed’. ‘Processing’ has been given a wide definition and includes, among other things, obtaining, recording, holding or disclosing personal data. Therefore, the definition encompasses a wide range of activities which involve personal data.

The second element which needs to be satisfied is that the data which has been processed by an individual or business (data controllers) amounts to ‘personal data’. Again ‘personal data’ has been given a relatively wide definition and includes data which relates to living individuals (data subjects) who can be identified from the data, or from the data and other personal information.

In August 2007, the Information Commissioner (who is responsible for enforcing and overseeing the Data Protection Act 1998) issued a technical guidance note on what constitutes personal data for the purposes of the Data Protection Act 1998. The guidance clearly sets out that information relating to individuals, including photographs and film, is only likely to constitute personal data under the Act if two criteria are satisfied:

• A living individual can be identified either from the photograph or film alone, or with other information which is in the possession of the data controller. In practice, photographs or film are only likely to be caught if they are held along with other personal data about the individual, or if the photograph or film is of a person so well-known that the photograph or film would identify him/her anyway; and
• The photograph or film relates to the person in their personal or family life, business or profession. This is the case when it is either “obviously about” that person or if it is “linked to” that person so that it provides particular information about him or her.

Simon McKay, a criminal and human right’s lawyer, and author of a leading textbook on covert policing law has stated that the Metropolitan Police are a data controller and the photograph is personal data, within the definitions explained above, and therefore there are compliance issues with the Data Protection Act 1998 through publishing the photograph on Twitter.

Schedule 1 to the Data Protection Act 1998 then sets out a number of key data protection principles. The most relevant in this situation would be principle one and two which require that:

1. Data must be processed fairly and lawfully. This is regarded as the most important principle as it requires that data must not be obtained through unlawful means or unfairly. The fairness requirement can only be established if at least one of the following conditions are satisfied:
   1. The individual has consented to the processing;
   2. The processing is necessary to perform a contract with the individual, or for taking steps to comply with a request made by the individual with a view to entering into a contract;
   3. The processing is necessary to comply with a legal obligation of the data controller;
   4. The processing is necessary to protect the vital interests of the individual;
   5. The processing is necessary for the administration of justice, or for the exercise of any function conferred by statute; or
   6. The processing is necessary for the legitimate interests of the data controller or a third party to whom the data is disclosed, except where it is unwarranted because it is prejudicial to the individual.

• Data must be obtained only for specified lawful purposes and not further processed in a manner which is incompatible with those purposes. According to Article 6(1)(b) of the Data Protection Directive (1995/46/EC), personal data must be collected for specified, explicit and legitimate purposes, and not be further processed in a way incompatible with those purposes.

From the information provided above, there are clearly compliance issues with the two principles above. Firstly, even though the photograph was obtained through lawful means, CCTV air surveillance, how the photograph was then disclosed does not appear to meet any of the conditions of ‘fairness’ mentioned in principle one. Secondly, it is evident that even though the photograph was obtained through specified lawful purposes, it was then processed further in a manner which appears inconsistent with those lawful purposes. Therefore, this seems to support Simon McKay’s statement regarding the compliance issues with the Data Protection Act 1998.

Simon McKay has further commented that there is legal precedent that related to the McIntyre case. “The courts have held the arbitrary publication of photographs by the police without a pressing need to do so is unlawful.” Taking the picture was not an issue, but the decision to post it online could therefore cause problems regarding compliance with the Data Protection Act 1998.

For these reasons, it is understandable why the Information Commission Officer is now investigating this incident and has explained that ‘processing personal data and disclosing images of this nature without a justifiable policing purpose’ could amount to a breach of the Data Protection Act 1998.

Other areas of potential breach

Through considering well-established case law, there is also a potential conflict with Article 8 of the European Convention on Human Rights, the right to privacy. In Andre Wood v Commissioner of Police of the Metropolis [2008] the High Court emphasised that the mere taking of photographs was not adequate to amount to an interference of an individual’s right to privacy and that more would be required. Therefore, highlighting that the taking of the photograph of Michael McIntyre would not constitute a breach of his right to privacy. However, the interference with Article 8 may arise through the publication of this photograph on Twitter. In Von Hannover v Germany [2004] the European Court of Human Rights held that the taking and publishing of photographs of Princess Caroline of Monaco in a public place did violate her right to privacy under the Convention. The key issue here would be; in what capacity was Michael McIntyre in when the photograph was taken, public or private?

A final consideration would be whether there has been breaches of the CCTV Code of Practice which provides that images should only be used for their stated purpose, which, in most circumstances, is to combat crime and anti-social behaviour. In response to the picture being posted on twitter the Surveillance Camera Commissioner Tony Porter has stated that ‘public disclosure of anyone’s image for the purposes of fun is a clear breach’ of the Code of Practice. Therefore, this may cause further problems for the National Police Air Support Unit staff, especially for the individual(s) who posted the tweet.

Expert advice

 If any further legal guidance is required on a data protection or privacy issues, feel free to contact our Corporate Commercial team through Christopher Buck on 01908 660966 or by email at Christopher.Buck@franklins-sols.co.uk

More often than not when we think of court rooms in conflict we think of that famous court room scene in a Few Good Men between Jack Nicholson and Tom Cruise. Classic “Prosecutor versus the Accused” (American Style). However, in real life, and here in the UK, it may not get as dramatic as Hollywood – but we do have some instances, which stand out just as much.

The Court insists on the reasonable behaviour of all participants in the litigation process, even the party’s experts who are called in to support or verify facts in a case. A failure to conduct the litigation proceedings in a reasonable way can lead to indemnity costs being awarded against the offending party. This can include consorting to contribute to the proceedings for ulterior commercial purposes.

As an illustrative example, I’d share the case of Siegel v Pummell [2015] EWHC 195 (QB). The defendant’s expert was deemed to have approached the case in a combative and dismissive manner. That, in itself, was not grounds for an award of indemnity costs however, Judge Wilkie found the conduct of the said expert when giving oral evidence was so out of the ordinary that it justified the heavier cost award being made.

The expert had been unable to demonstrate to the Court the grounds for his opinion and so the Court took the unusual step of inviting the expert to provide a written statement during the course of his oral evidence as to what exactly his evidence was and the basis upon which he was saying that there were short comings in the claimant’s evidence. When the written statement was produced, the opposing expert had to be recalled to deal with new issues raised. The behaviour of the defendant’s expert was considered outside of the norm.

The case serves as a reminder to claimants and defendants alike that there is an obligation upon even witnesses to act reasonably. A failure for all to do so, could lead to additional costs.

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The time has come for commercial parties to review their contracts in light of new Brussels I Regulation. This new update enhances jurisdiction agreements between commercial parties in the European Union.

Parties entering into a contract often agree a governing law and jurisdiction clause within that contract. A governing law clause enables the parties to specify the system of law that will apply to the interpretation of the contract and its effect if a dispute arises. A jurisdiction clause enables the parties to agree, at the outset of their contractual relationship, which countryƒ??s courts they wish to have jurisdiction to resolve disputes arising from the contract.

The recast form of the Brussels I Regulation on jurisdiction and the enforcement of judgments in civil and commercial matters (Regulation 1215/2012/EU) will come into force on 10^th January 2015. The recast Regulation addresses one of the major problems with the existing Regulation by strengthening the protection given to jurisdiction agreements.

What was in the existing Regulation?

Under the existing Regulation, where the parties to a contract had agreed within the contract that the courts of one member state had exclusive jurisdiction to resolve disputes between them but, nonetheless, one party opted to breach that agreement by commencing proceedings in the courts of another member state, the court first seised in respect of the dispute had jurisdiction until it decided otherwise.

To help illustrate the existing Regulation, Iƒ??ll give you the following example:

• An English based company entered a supply contract with an Italian based company.
• The supply contract provided that the courts of England had exclusive jurisdiction to resolve disputes between the parties.
• The English company fulfilled its supply obligations but the Italian company failed to pay over alleged problems with the goods supplied.
• To prevent proceedings being commenced by the English company in England in accordance with the contract, the Italian company could act in breach of the jurisdiction agreement by commencing proceedings over the alleged problems in Italy.
• The Italian courts would then be the court first seised.
• The English courts would then be obliged to defer to the Italian courts until such time as the Italian courts decided they did not have jurisdiction.
• This would mean that the English company could not commence proceedings to recover the debt pending a decision by the Italian courts as to their jurisdiction.

In the above example, a decision by the Italian courts as to their jurisdiction, or lack thereof, could take some time. Commencing proceedings in the way put forward in this example in a ƒ??wrong courtƒ? is a tactic which has become known as the ƒ??Italian torpedoƒ? because the courts in Italy are often used when this tactic is deployed due to their perceived slowness in reaching decisions. In the past, this ƒ??Italian torpedoƒ? tactic has been deployed to cause delay and inconvenience to the other party so as to improve oneƒ??s negotiating position in respect of settling a dispute.

How does the recast Regulation make a difference?

The recast Regulation addresses this issue by giving a member stateƒ??s courts chosen by the parties in a contract precedence over all other courts regardless of when proceedings are started. Under Article 31(2) of the recast Regulation, if the parties have conferred exclusive jurisdiction on a particular court, that court may proceed to hear the case even if it was not the court first seised. ƒ??Italian torpedoesƒ?, which up to now have undermined contractual jurisdiction agreements, should therefore become things of the past as the incentive to start proceedings elsewhere having agreed that the courts of one member state are to have exclusive jurisdiction will be removed.

In this way, the recast Regulation strengthens the protection given to jurisdiction agreements. There is now a clear incentive for commercial parties to review their contracts to ensure they have a clearly drafted governing law and jurisdiction clause when they are trading across borders within the European Union.

Commercial parties whose contracts include a foreign element (for example, where there is a foreign party or where some of the obligations relevant to the contract are to be performed in another country) should undertake such a review exercise because, if there is no effective jurisdiction clause, the correct forum for the settlement of disputes within the European Union will be determined by various European Union instruments. The basic principle underlying such instruments is that, in the absence of an agreement on jurisdiction, a defendant should be sued in their country of domicile and this remains untouched under the recast Regulation.

At Franklins Solicitors we have a history of assisting with commercial contract drafting and negotiation. If you require any legal guidance on a commercial contract issue, feel free to contact me on 01908 660966 or by e-mail at Christopher.Buck@franklins-sols.co.uk.

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Central to company law is the concept of the “corporate veil”. Once a company is incorporated, it is an artificial legal person totally distinct from those who run and own it. Every law student is familiar with the case of Salomon v Salomon & Co Ltd which first laid down this concept.

Having said this, there are a number of instances where either the Companies Act, the Insolvency Act or case law requires or permits the corporate veil to be pierced. One such area is in respect of wrongful trading by directors.

A director can be held personally liable for wrongful trading under section 214 of the Insolvency Act. This is trading the company on beyond the point of no return. Here, two pieces of forensic evidence from accountants is critical for any liquidator considering pursuing such a claim:

• First, there must be established a date at which the directors should have realised that the company had reached the point of no return, in other words a date when they should have realised that the company had no reasonable prospect of avoiding an insolvent liquidation.
• Secondly, there must be established the downturn suffered by the company from that date.

The number of wrongful trading cases which actually get to court are perhaps surprisingly few. In part, this is because the action has to be brought by a liquidator who will, almost inevitably, be bringing the proceedings from a point of weakness. The more insolvent the company, the less money the liquidator will have to commence proceedings against delinquent directors. Moreover, there is little or no incentive for a creditor who feels they have been particularly prejudiced by the wrongful trading to offer to fund the proceedings because any recovery made by the liquidator goes into the pot for creditors generally as the court has no power to target the award in the direction of a specific creditor.

However, the Court of Appeal has recently recognised the possibility of a creditor suing a director and recovering for their own benefit. This can be viewed as a potential alternative to a wrongful trading action. The right arises under a little used statutory provision from the early nineteenth century. Section 6 of the Frauds (Amendment) Act provides that:

The language is archaic and is certainly not easy to understand. Nor is it helped by being expressed in the negative. However, when it is changed into the positive, its significance becomes more apparent. It then says that an action may be brought:

• against a person who has made a representation in writing
• wrongfully
• as to the ability of another person
• to pay for goods or credit supplied to that other person.

In Contex Drouzhba Ltd v Wiseman, the Court was faced with the following facts:

• Wiseman, a director, signed on behalf of their company a document which contained a promise that the company would pay for goods to be ordered in the future.
• The trial judge found that, as a matter of fact, the company did not have the capacity to pay, nor had it any realistic chance of gaining that capacity.

It is settled law that a director cannot avoid liability for their own wrongdoing by claiming they were merely acting on behalf of their company. Accordingly, the director was not able to defend the claim on the basis they had signed the document on behalf of the company rather than in their own personal capacity. Against this background, the Court of Appeal found the director to be personally liable for their own wrongful deceit.

Why is this case significant?

This is a useful case and a potential alternative for insolvency practitioners and creditors to consider in respect of wrongful trading actions. Sellers might even consider asking the directors of a company buying goods or services from them to write a letter confirming the ability of the company to pay for whatever is ordered. Then, in the event of the company being unable to pay, the directors could be personally sued.

We have a long history of advising on insolvency law issues and assisting those involved in, or affected by, insolvency issues. If you have an insolvency issue and would like to contact us – we would be happy to share our wealth of expertise in this area. So please do feel free to contact me on 01908 660966 or by e-mail at Christopher.Buck@franklins-sols.co.uk.

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Exporting goods overseas is a good way of increasing a business’ customer base. However, it is not without risks and if a business has not exported outside of the United Kingdom before, then there are a number of legal issues and factors they should consider.

In this post I detail the following for you:

• Route to market
• Contracts
• Logistics – getting the goods to where they need to be
• “Incoterms”
• Local product standards
• Getting paid
• Value Added Tax (VAT)
• Intellectual property protection (patents, trademarks, etc)

Route to market

The first consideration is the exporter’s route to market; for example, will they be supplying to end-users directly (whether via the internet, local trade shows or opening up a local subsidiary and office incorporated and set-up in the territory) or through a local intermediary such as an agent, a distributor or a licensee or joint venture partner.

Many exporters prefer to connect with a local intermediary and exploit their local knowledge and connections rather than sell their goods directly into a new territory.

Options include the use of a:

• Distributor. Here the exporter sells their goods to a distributor and they then sell them on locally, usually in a defined territory, adding a margin to cover their own costs and profit. In this scenario, there is no contract between the exporter and an end-user as the involvement of the distributor means there are different levels in the supply chain. This means that United Kingdom and European competition law can be relevant within the European Union. Competition law impacts upon what terms in a distribution contract are enforceable and the inclusion of certain blacklisted terms (which can include certain pricing provisions) can potentially render an entire contract void and unenforceable. As such, it is important to receive suitable legal advice.
• Agent. An agent sells the exporter’s goods on the exporter’s behalf, or introduces them to potential customers. In both cases, this is usually in a defined territory and in exchange for commission. Agents usually require more supervision than distributors, simply because they may be in a position to contractually commit the exporter as their principal.   Under the law of England and Wales, and elsewhere throughout the European Union, agents are given quite significant legal protection, including the right to compensation when their appointment is terminated. Whilst it is not legally permissible to exclude such rights, with suitable legal advice exposure to such claims can be mitigated.
• Licensee or joint venture partner. An exporter may wish to join forces with a local business under a licensing or joint venture arrangement and get a share of the business and the profits.

The route to market will in turn impact upon the type of contractual protection the exporter should be looking to put in place.

Contracts

Any business embarking on exporting, whatever its route to market, should ensure that it puts contractual protection in place with its buyers and partners, as the case may be. Any contract with a buyer should cover:

• Transport
• Delivery – Where to, by when and using what method.
• Risk mitigation, limitations of liability and insurance cover
• Payment – How much, method and currency.
• Customs charges and clearance – Usually the exporter is responsible for United Kingdom customs procedures and their buyer looks after customs at their end.
• Dispute resolution – What happens if there is a dispute – including what laws will be applicable and what courts will have jurisdiction to hear disputes. It is important to provide for this in order to avoid being bound by Conventions on choice of law and jurisdiction. If the laws and the courts of England and Wales are to be referenced, then solicitors in those countries can advise and assist. However, if foreign laws and courts are to apply then local legal advice will need to be retained in any such jurisdiction.       The choice of law will also impact upon the liabilities which may be lawfully limited or excluded under the contract.

Logistics (getting the goods to where they need to be)

If the exporter is going to assume responsibility for delivering the goods, rather than requiring collection by a buyer from its warehouse, then it will need to consider how to best get the goods to where they need to be. There are four methods of transporting goods; rail, sea, road and air. An exporter outsourcing its logistics requirements will need to decide which is the most appropriate method in the circumstances and their choice may be impacted upon the type and size of the goods, how quickly they need to reach their destination and how much they can afford to pay for the transport bearing in mind how much they can in turn recoup by way of delivery charges.

When exporting goods, it is quite likely that the routing of the goods to their ultimate destination will not be straightforward. For example, the goods might be picked up from the exporter’s warehouse by a haulier, driven to a port and loaded onto a ship, unloaded at the destination port and then driven to their final destination. All parties which the exporter engages to provide its logistics solution will be seeking to contractually limit their risk and exposure for such matters as time delay and damage to the goods in transit and these are areas which the exporter will need to consider negotiating or insuring against. In turn, these are areas which will impact upon the kinds of contractual protection which the exporter will need to put in place in respect of its contracts with its buyers.

There are also likely to be customs duties to be paid as well as port duties and taxes and, depending on the type of goods, both import and export licences may be necessary. No matter what form of transportation is used when exporting goods, some form of waybill will be required. For example, if exporting by sea, a Sea Waybill or Bill of Laden will be required. If the exporter is utilising outsourced logistics solutions, then their chosen freight forwarder may well deal with all required documentation and procedures and the exporter should make sure they know whether or not this is the case.

Incoterms

A division in responsibility for delivery may be the exporter’s preferred route, rather than it assuming total responsibility for delivering the goods. For example, they might agree that they will deliver the goods on board the ship and the buyer will arrange shipment and onward delivery from the destination port.

To delete the number of detailed provisions required in a contract between the exporter and their buyers regarding logistics, it is possible to make use of the trade terms defined by the International Chamber of Commerce. These are known as Incoterms.

Each Incoterm is a shorthand way of stating how responsibilities are divided. For example, EXW (Ex Works) means the goods are collected by the buyer from the exporter’s warehouse, FOB (Free on Board) means the exporter will place the goods on board a ship nominated by the buyer, and DDP (Delivery Duty Paid) means the exporter will be responsible for delivering the goods right through to the nominated destination.

Local product standards

Notwithstanding the choice of law chosen in any contract between an exporter and a buyer, the exporter’s goods will need to comply with any mandatory local products standards within any territory it exports to. As such, it is inevitable that local advice is likely to be required at some stage and this is one reason why working with a local intermediary is a common route to market.

Getting paid

An exporter may be used to giving credit to Trusted customers in the United Kingdom but they will probably need to be more cautious when exporting goods, particularly if exporting outside of the European Union. Even if their buyer is in the European Union and their contract with their buyer is subject to the laws and jurisdiction of England and Wales, they will face the additional costs of enforcing a judgment from their home court in the foreign court where the buyer is based in the event of non-payment. There is also always a risk of the buyer becoming insolvent.

Therefore, unless they have a good trading relationship with the buyer or Trust its creditworthiness, they will need to consider obtaining payment before delivery and retaining legal ownership of the goods until delivery. Under a Bill of Lading, control of the goods can be retained until the Bill of Lading is released to the buyer and this can be resisted until payment has been received.

Opening a Letter of Credit may be a suitable alternative approach. This involves the buyer’s bank guaranteeing that payment will be released to the exporter once all the agreed paperwork (for example, a Bill of Lading) is shown to the bank. An alternative form is a Standby Letter of Credit, under which the bank simply guarantees that if the buyer does not pay, then it will. However, Letters of Credit do incur an additional cost and this may need to be factored into the exporter’s pricing strategy.

Value Added Tax (VAT)

The exporter will need to discuss Value Added Tax with its accountant as the treatment of this tax on exports is different when compared to domestic sales.

Intellectual property protection

An exporter will need to put appropriate intellectual property protection in place for each country they plan to sell into, as registered intellectual property rights such as patents, trade marks and design rights are only recognised in the countries in which they have been registered. They will also need to consider registering local domain names and undertaking due diligence to ensure that they are not likely to infringe the intellectual property rights of a third party by exporting into a new territory.

If you would like to informally discuss whether any of the issues addressed above affect you or are relevant to your business, then please feel free to contact me on 01908 660 966 or by e-mail at Christopher.Buck@franklins-sols.co.uk

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