In Brief – November 2013
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Walker Morris’ client wins major music trade mark[...]
Walker Morris has achieved a successful outcome in the Intellectual Property Enterprise Court for Andy Powell from the rock band, Wishbone Ash.
Lawyers at Walker Morris have achieved a successful outcome in the Intellectual Property Enterprise Court for Andy Powell from the rock band, Wishbone Ash. The case is one of the most high profile music band disputes in recent years and has important consequences for trade mark rights in the music industry.
Wishbone Ash gained widespread popularity in the 1970s with its third album, Argus, which is widely regarded as a classic of its genre. Through the involvement and guidance of Andy Powell, the last member of the original line up, the band, which has a diehard following across Europe and the USA, is still actively performing.
The case concerned the activities of Martin Turner, a former member of the band, who had left twice to pursue other interests in 1981 and then again in 1991. However, more recently, he formed a band under the name ‘Martin Turner’s Wishbone Ash’ in response to which Andy Powell brought trade mark infringement proceedings against him. Martin Turner, who is represented by Mishcon de Reya, denied infringement and sought to have the European wide trade mark registration in WISHBONE ASH, which is owned by Andy Powell, to be declared invalid .
Disputes between music bands are certainly not new and Wishbone Ash is the latest of a spate of cases involving ex-members seeking to use the names of their former bands, for example Saxon, the Animals, the Sugababes and Frankie Goes to Hollywood. However, this case was unusual by virtue of the fact that the claimant/trade mark owner was the ‘last man standing’ from the original band, which is still performing.
Philip Harris, Trade Mark Litigator and former President of ITMA, acted as Counsel for Andy Powell before the IPEC

APSE and Walker Morris agree innovative partnership
Walker Morris and the Association for Public Service Excellence (APSE) have developed an innovative partnership to help APSE support its members.
Walker Morris and the Association for Public Service Excellence (APSE) have developed an innovative partnership to help APSE support its members in driving forward initiatives related to the renewable and energy agenda. The partnership aims to help create growth, skills, jobs and help address fuel poverty.
As part of the partnership, the Walker Morris Renewables, Energy & Resources Group will provide strategic and practical support on energy efficiency and renewable energy issues combining its experience of the sector with that of its recognised public sector team. APSE’s members will be able to access the partnership in a number of ways; from participating in collaborative working or individually supported initiatives through to access to advice at preferential rates, articles, research and a planned joint training and consultancy programme. The partnership also aims to develop benchmarking for energy efficiency and renewable energy in the sector.
APSE, which works with over 300 councils throughout the UK to promote excellence in all aspects of public service. APSE is the foremost specialist in local authority front line services, hosting a network for front line service providers in areas such as waste and refuse collection, parks and environmental services, leisure, school meals, cleaning, housing and building maintenance.
David Kilduff, Head of the Renewables, Energy & Resources Group at Walker Morris said:
“Walker Morris has worked closely with APSE for a number of years and the partnership is a natural development of that relationship in an area which is increasingly prominent on the local Agenda. We are confident that by combining the resources and focus of our two organisations we can deliver timely and value added support to help local authorities make the most of the opportunities that are out there.
“Changing legislation and tight budgets have brought energy efficiency to the top of the agenda because it has the potential to offer significant savings and many positive social and environmental benefits. By working to develop programmes in conjunction with APSE we will be able to share expertise and learning with APSE members to help guide them to early and successful outcomes.”
Paul O’Brien, Chief Executive of APSE, said:
“The Walker Morris Renewables, Energy & Resources Group offers a unique combination of industry leading energy expertise with decades of public sector experience. Many of the team have worked within the public sector so they understand the issues and pressures that our members face.
“Energy efficiency is a particularly topical and rapid development in this area means that many of our members are seeking advice and guidance. Our partnership with Walker Morris will enable our members to have access to expert opinion and shared learning.”
Walker Morris will be attending and exhibiting at the 2013 APSE annual seminar and exhibition at St Georges Hall, Liverpool, 4-5 September 2013 at Stand 10, and will be hosting informal but confidential free legal surgeries at the Walker Morris stand for anyone who wants to talk through specific issues of concern or just wanting to share ideas.
In addition, David Kilduff, will be speaking about ‘Innovation in Municipal Energy’ at the conference on Thursday 5 September at 11.45am.

Walker Morris Dispute Resolution Team wins national accolade[...]
Legal 500 has announced the winners of its inaugural awards
Legal 500 has announced that Walker Morris is the winner of the Dispute Resolution Firm of the Year (Regional) Award in its 2013 awards, recognising it as the leading law firm in this field from all UK regions except London. The Real Estate Group was also shortlisted for the Real Estate Firm of the Year (Regional) Award.
This is the first year the Legal 500 has launched the awards, which set the benchmark for excellence across the UK legal market. The judging for the categories is based on the research, feedback and submissions produced for the Legal 500 UK guide, which was published last week.
In the latest edition of UK Legal 500, which serves as an independent guide to the legal profession, the Walker Morris 30-strong Dispute Resolution Team was described as “top-notch” with “some of the leading litigators in the North”. Group head Gwendoline Davies and fellow partner Malcolm Simpson also received accreditations as Legal 500 ‘Leading Individuals’ in recognition of their expertise in the field of Dispute Resolution.
Ian Gilbert, Managing Partner from Walker Morris said:
“The awards are a fantastic achievement for Walker Morris, I am very proud of our Litigation & Dispute Resolution and Real Estate Groups and the awards are a testament to everyone’s hard work over the last 12 months.
Gwendoline Davies Head of the Commercial Dispute Resolution Group at Walker Morris said:
“Our Dispute and Resolution Group is trusted to handle disputes by leading national and international corporations, particularly in the US, Asia and Europe. Therefore we are delighted to have been given this prestigious award, which recognises the bed of talent and expertise we have built from our single site, centre of excellence, in Leeds.”
David Burgess, Publishing Director at Legal 500 commented:
Legal 500 is widely recognised as the most authoritative research guide of the leading law firms operating within the UK. In addition our close relationship with in-house counsel gained through the course of over 50,000 interviews each year gives us the authority to identify the leaders in that market also. Over many months of thorough painstaking research, we have pin-pointed the most capable, expert practitioners and firms operating at the top of their game in a number of different business sectors. The awards bring together the best of the best from not just law firms and barristers’ chambers, but also the very best in-house lawyers and general counsel operating within the UK market.”
A full list of winners can be found at www.legal500.com/awards

Execution of documents: FAQs
We are regularly asked about the formalities of executing documents. The following are ten of […]
We are regularly asked about the formalities of executing documents. The following are ten of the most frequently asked questions.
Which documents must be executed as a deed?
A deed must be used in the following:
- transfers of real estate
- leases of real estate (subject to some exceptions, e.g. leases for a term of less than three years)
- mortgages and charges
- sales of mortgaged/charged property
- appointments of trustees
- powers of attorney
- releases and variations
- gifts of tangible goods not accompanied by delivery
A party may also insist on using a deed where there is no legal obligation to do so but where it is unclear whether there is valuable consideration, or where the party wishes to obtain the benefit of the longer limitation period that applies to deeds (12 years as opposed to six years for simple contracts).
Is there a distinction between a document executed “by” a company and a document executed “on behalf of” a company?
The Companies Act 2006 draws a distinction between documents executed “by” a company (by writing or under its common seal) and documents executed “on behalf of” a company (by a person acting under its authority, express or implied).When a document is executed on behalf of a company, whether or not the company is bound will depend, among other things, on the signatory’s authority to bind the company.
Where a document requires execution “by” a company, the document cannot be executed by a signatory who is not a director (or a company secretary acting with a director) unless the company has granted a power of attorney (which must be way of deed) authorising the signatory to execute the document. Deeds must be executed “by” a company.
Can a solicitor execute a deed on behalf of a client?
A solicitor can only execute a deed on behalf of a client if he or she is authorised to do so by power of attorney.
Are electronic signatures valid?
PDFs, images of a signature sent by email, even just a name on an email, are valid so long as there is clearly an intent to indicate personal authorisation. However, there are evidential considerations as well as risks associated with fraud. Encryption technology is available but is little used in transactions. Of more use in corporate transactions is the Law Society guidance on virtual completions.
What does the Law Society guidance say?
In a nutshell, a deed may be validly executed in counterparts if the entire final version of the document is circulated by email and if each party:
prints off and signs the relevant signature page of the deed only
returns a single email attaching both the entire final version of the deed and a scanned copy of the signed relevant signature page.
The guidance states that this return email and the two attachments constitute the same physical document.
In property transactions, virtual signings are, the Law Society guidance notwithstanding, generally avoided. Transfers of property and grants of leases of over seven years are registerable transactions and the original document needs to be registered. For property transactions the procedure tends to be that each party holds their client’s own executed part, a call is made, the document dated and the parts swapped by registered post.
When does a deed take effect?
A deed takes effect upon “delivery”.In the absence of wording to the contrary, deeds are deemed to be delivered – and are therefore effective – upon execution. This is why we have wording like “Dated but not delivered until the date set out at the top of this agreement”.
Who can be a witness?
A party to a contract cannot be a witness to the signature of another party to the contract. Although there is, we believe, no case law to the point, a director of a company that is party to the contract should not witness the signature of another party.
There is no statutory requirement of independence for a witness but this is best practice. If a deed is later questioned in court, it will not be helpful if the witness’ testimony is called into question by virtue of their relationship to a signing party.
Can the requirement for a deed to be signed by a director and company secretary be satisfied by one individual signing as both a director and company secretary?
No. Section 280 of the Companies Act 2006 makes clear that a provision requiring something to be done by a director and the secretary of company is not satisfied by it being done by the same person acting both as a director and secretary. The deed could, of course, be signed by the director in the presence of a witness.
Can one director sign for several corporate parties?
The wording of the Companies Act 2006 suggests that separate signatures are required for each party. For example, where a parent company and its subsidiaries with the same directors are required to execute a single mortgage debenture in favour of the lender to secure a group loan facility, it will not suffice for the authorised signatories to sign the document only once.
Can the provisions of a company’s articles override the statutory provisions regarding execution formalities?
Provided a company complies with the requirements of the Companies Act 2006 a deed will be validly executed and the counterparty will be able to enforce it, irrespective of the provisions of the articles. It is not uncommon, particularly in the case of older companies, for the articles to contain provisions regarding affixing the common seal. These provisions apply internally and disgruntled shareholders could seek redress if there is a breach – although, as noted, this will not affect the deed’s validity.

Fines for data protection breaches: how serious does the breach need to be?
In overturning a fine imposed by the Information Commissioner against the Scottish Borders Council, the […]
In overturning a fine imposed by the Information Commissioner against the Scottish Borders Council, the UK’s First-tier Tribunal (Information Rights) ruled that the breach in question was insufficiently serious to warrant a financial penalty. This begs the question: how serious does a breach need to be before a fine will be imposed?
The Council had hired a third-party supplier to scan hard copies of pension files containing personal data onto CDs. The supplier disposed of approximately 1,600 of the files into recycling bins at a supermarket, where they were discovered by a member of the public. The files were taken into police custody. No actual harm was found to have been suffered.
The power of the Information Commissioner (ICO) to award a monetary fine of up to £500,000 for data protection breaches is discretionary. However, before a monetary penalty can be assessed, the breach must either be deliberate or something that a controller either knew or ought to have known would result in substantial damage or distress and then failed to prevent.
Principle 7 of the Data Protection Act 1998 (the Act) states: “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”.
One aspect of security that is central to Principle 7 is the issue of disclosure to data processors. Data processors handle data on behalf of data controllers (the data controller in this case being the Council). Direct responsibility for compliance with the Act remains with the data controller – even where the data is handled by the data processor. This means that the data controller will be liable for any breach of security caused by the data processor acting on its behalf. The Act therefore places a duty upon the data controller to ensure that the data processor deals with the data in accordance with the Act.
In particular, there must be a contract between the data controller and the data processor. The contract must be in writing, or else must be evidenced in writing. The contract must contain obligations upon the data processor to act only on instruction from the data controller in accordance with obligations imposed on the data controller by virtue of Principle 7. A failure to have such a contract is a breach – by the data controller – of Principle 7.
In this case there was no formal contract in place between the Council and the data processor and the Council had sought very little by way of reassurance as to the data processor’s security measures. The Tribunal agreed with the ICO that there had been a serious contravention of the Act. However, it went on to find that the breach was not of a kind likely to cause substantial damage or substantial distress. For that reason a monetary penalty was not appropriate.
The personal data in question constituted names, addresses, national insurance details and salary, in some cases bank account details, nominated beneficiaries and reasons for leaving, which could include health-related reasons. However, the Tribunal found that none of the data was “sensitive personal data” under the Act, which would have warranted more robust protection.
The decision runs rather against the grain of current data protection trends which are towards enhancing data protection and security – something reflected in the current draft of the proposed EU Data Protection Regulation. However, organisations would be unwise to rely on it as carte blanche to lower their guard against data protection compliance. The Council was lucky in this case in that no harm was done. It is also worth noting that the Council had a long-term relationship with the supplier, some 25 years, and therefore trusted it – that though is no excuse for failing to put in place a proper data processing agreement.
Organisations need to ensure that they have robust data protection policies and procedures in place which are properly embedded and followed, to ensure that they do not risk sanctions from the ICO.

Health and fitness operators and the OFT investigation into unfair terms
The Office of Fair Trading has concluded its investigation into the membership terms of health […]
The Office of Fair Trading has concluded its investigation into the membership terms of health and fitness operators. The investigation cast a spotlight on unfair terms in consumer contracts and unfair trading practices.
In August 2011, the OFT secured an enforcement order in the High Court preventing Ashbourne Management Services Limited, a gym management company, and its directors from recommending, using or relying on certain unfair contract terms, which breached the Unfair Terms in Consumer Contracts Regulations 1999, and prohibiting a number of its debt collection practices, which breached the Consumer Protection from Unfair Trading Regulations 2008.
Ashbourne’s offending terms imposed minimum membership periods on members and early termination charges which required members who terminated early to pay all subscription fees payable over the entirety of the minimum membership period with no, or minimal discount for accelerated payment. Ashbourne’s practice of registering members with credit reference agencies as defaulters, even when those members were genuinely disputing payments, was held by the High Court to be unfair and contravened the Consumer Protection from Unfair Trading Regulations 2008. [1]
Subsequent to that ruling the OFT put all health and fitness operators on notice that they should check their terms, particularly those seeking to impose minimum contract terms and early termination charges on consumers, to ensure they were compliant. This was followed by an OFT investigation, opened in January 2012, into health and fitness club membership contracts, focusing on a number of providers.
The OFT has now reported that:
- Dave Whelan Sports Limited and Harlands Group Limited have worked constructively with the OFT to improve their terms and conditions and associated documents and sales processes and signed undertakings to address the OFT’s concerns
- LA Leisure Limited has also worked constructively with the OFT and signed undertakings which address most of the OFT’s concerns, although the OFT has reserved its position on the company’s continued use of contracts with minimum terms in excess of 12 months
- the OFT closed its investigation into Bannatyne’s Fitness Limited, David Lloyd Leisure Limited and Fitness First Clubs Limited in March this year, after those companies signed undertakings to address the OFT’s concerns
- the OFT closed its investigation into Virgin Active Limited in April 2012 after the company made some amendments to its standard terms and debt collection letters.
The undertakings accepted by the OFT included undertakings to explain key terms and membership features in the sales process, including by the use of “product presenter” and “key points” documents – something which will also be relevant to organisations operating in other sectors. Otherwise, the undertakings secured by the OFT largely reflect its 2002 Guidance on unfair terms in health and fitness club agreements.
[1] [2011] EWHC 1237

Planning for Renewable Energy
The UK is under pressure to harness more renewable energy. How does this interact with […]
The UK is under pressure to harness more renewable energy. How does this interact with local planning considerations?
With climate change concerns rarely out of the news and ever-increasing oil prices, the need to harness renewable energy and push ahead with large-scale renewable projects is key. Whilst electricity production from sources such as wind and solar power is often criticised for its intermittent and variable nature, International Energy Agency (IEA) research has aimed to dispel such myths. The IEA has highlighted how use of renewable technologies contributes to diversification of electricity sources, increases overall flexibility of the system, and ensures resistance to central crises and alerts.
Under European legislation, the UK must ensure that 15 per cent of its overall energy consumption comes from renewable sources by 2020. The planning regime has an important role to play. However, the visual and ecological impacts – of wind farms in particular – are controversial. Planning for renewable projects can present numerous difficulties and hurdles. In its 2011 ‘UK Renewable Energy Roadmap’, the Department of Energy and Climate Change emphasised that “projects are generally more likely to succeed if they have broad public support and the consent of local communities. This means giving communities both a say and a stake”. Recent legislation, guidance and planning appeal decisions attempt to facilitate this local proactivity. But are the developments a step in the right direction?
What does the NPPF say about renewable energy?
In March 2012, the Department for Communities and Local Government (DCLG) published the National Policy Planning Framework (NPPF), outlining England’s overall planning policy and replacing most previous guidance and policy statements. In particular, the NPPF replaced ‘Planning Policy Statement 22: Renewable Energy’ and ‘Planning Policy Statement: Climate Change’. Following the NPPF coming into force, local planning authorities (LPAs) must now:
- ‘factor-in’ the NPPF as a material consideration when determining a planning application
- take it into account when preparing local plans
- follow its presumption in favour of sustainable development.
The NPPF aims to encourage a positive approach to renewable energy from LPAs. It requires an LPA to:
- have a strategy promoting energy from renewable and low carbon sources
- actively identify suitable areas and supporting infrastructure
ensure adverse impacts (including visual and landscape concerns) are addressed, but design policies to maximise development of alternative energy - plan for developments in ways to reduce greenhouse gas emissions
follow appropriate guidance in the National Policy Statement when assessing wind power developments’ impact - support improvements to existing buildings to heighten energy efficiency
- introduce local building-sustainability requirements, so there is consistency with central policy on zero-carbon buildings.
How are the NPPF’s requirements to be achieved in practice?
The Planning and Energy Act 2008 gives LPAs the power (albeit not the duty) to impose policies so there are ‘reasonable’ requirements on developers to adhere to energy efficient standards and targets in any new developments. The Act seeks to deal with the problem that around 50 per cent of the UK’s total carbon dioxide emissions currently derive from existing (and some new) buildings that are not energy efficient.
Supplementary guidance was published by DCLG in July 2013 (the Guidance), aiming to help local authorities at a practical level:
- understand which developments are to be considered by LPAs
- identify suitable areas for renewable and low carbon energy sites
- develop criteria-based policies and positive strategies
- accurately provide for ‘buffer zones’ (or separation distances).
The Guidance serves as an important reminder that the planning process used to determine development depends on the size of the proposed project:
- in some instances, it is possible to install the necessary infrastructure, such as wind turbines, at a domestic level within current permitted development rights, provided specified limits and conditions are met. Permission is not required here
- LPAs assume responsibility for renewable and low carbon energy developments with 50 megawatts or less of installed capacity, under the Town and Country Planning Act 1990
- larger renewable and low carbon developments (that is, those with an output in excess of 50 megawatts) are considered by the Secretary of State. In such instances, the local authority is simply one of a number of statutory consultees.
Here the Secretary of State will refer to the ‘National Policy Statement for Energy’ and ‘National Policy Statement for Renewable Energy Infrastructure’ when deciding whether to grant consent. Under the overarching Energy NPS, the urgent need for new major energy infrastructure is ‘taken as read’. This is welcome news for many developers – meaning the need for renewable energy and associated infrastructure does not have to be evidenced in their applications. However the Guidance does state that, whilst the need for renewable energy and reduction of UK greenhouse gas emissions is important, environmental and local community considerations must not be automatically overridden.
Planning considerations relating to specific renewable energy technologies are highlighted in the Guidance. Similarly, the Renewable Energy NPS outlines requirements for applications for ‘nationally-significant infrastructure projects’ using one of the relevant technologies.
Wind turbines: the locals’ ‘nemesis’
Despite the greater clarity provided via such guidance, wind turbines raise a number of planning considerations and concerns for potential developers, including:
- noise, ecological and heritage impact
- safety
- interference with air traffic and Ministry of Defence operations
- interaction with the strategic road network
- interference with electromagnetic transmissions for radio, television, phone signals etc.
- shadow flicker and reflected light
- negative cumulative landscape and visual impact.
Turbines continue to receive substantial negative ‘press’. In May 2012, a Private Members’ Bill was introduced into Parliament for the second time. Although a further reading is yet to be scheduled, the Bill provides for a minimum distance between residential premises and wind turbines, according to the turbine’s size. This is in addition to the Onshore Wind Turbines (Proximity of Habitation) Bill 2010-11, which would have given local authorities the power to specify recommended set-back distances between turbines and habitations. In the recent case of R (RWE Npower Renewables Ltd) v Milton Keynes Borough Council [1], the High Court found Milton Keynes’ attempt to fix minimum separation distances in the Supplementary Planning Document conflicted with its local plan and government wind energy policies. Whilst the Supplementary Plan was therefore not ‘legal’, the actual separation distances were not found unlawful. The court reinforced that, despite the presence of any local planning documents, LPAs should still assess the acceptability of visual and noise impacts of wind turbines on a case-by-case basis. The case reinforces the inherent tensions between the NPPF (with its presumption in favour of sustainable development), the government’s encouragement of alternative energy, and the Localism Act 2011 (giving councils greater flexibility regarding local plans).
How the cumulative landscape and visual impacts from wind turbines should be assessed remains unclear. The Guidance states the two elements should be considered separately – the cumulative landscape impact being (1) the effect of a proposed development on the landscape’s fabric, character and quality, and (2) the level to which it would become a defining characteristic of the landscape. The cumulative visual impact concerns the degree to which the project will be a feature in a particular view or series of views and its impact on people experiencing the views. The criteria to be considered in any assessment is to include:
- sensitivity of the landscape and visual resource
- the magnitude and size of the change
- impact on zones of visual influence (the area from which a structure is theoretically visible)
- sequential effects as an observer moves around
- common routes and ‘journey scenarios’ through the landscape
- existing focal points in the landscape
- the sense of distance, remoteness or ‘wildness’ of the site.
A recent appeal case confirmed that such established approaches must take priority when assessing turbine impact. Although the 12 turbines in question were to be erected within a strategic search area for wind energy development, the inspector had been right in giving less weight to this. Following approaches adopted by other inspectors, she had ‘correctly’ decided:
- the turbines could be described as ‘prominent’ if they were easily seen and ‘dominant’ if they drew the eye so that little else was seen
- they would be ‘overwhelming’ if they made an observer want to move away.
The case also reinforced that the tests for assessing residential and visual amenity impact should not be applied ‘mechanistically’. Further, considering whether residents’ outlook would be affected and their dwellings made unattractive places to live was seen as a useful approach.
That prospective developers may face a ‘lose, lose’ situation at the planning appeal stage, however, appears a possibility from the recent refusal of a nine-turbine farm in south-east Scotland. Whilst the reporter noted the considerable support for wind turbine development in Scottish Government policy, this is not to be unconditional. On the one hand, the proposal was found unsatisfactory in landscape terms because it intruded into an area devoid of commercial-scale wind farm developments. But on the other hand, the cumulative relationship to existing turbines in the wider landscape apparently meant a wind farm-dominated landscape would have been the unacceptable result.
What does the future hold?
Between June and early August 2013, the Government announced plans for further changes to the planning process for onshore wind development. Amongst the proposals are the requirement for compulsory pre-application community engagement for significant developments and increased community benefit packages. Again, the concept of sustainable development and localism seem to be ‘at odds’. According to the Renewable Energy Planning Database, between January and December 2012, 215 onshore wind project applications received planning consent, compared to 115 being refused. Whilst the level of approvals is a positive sign, energy project-developers are still likely to face difficulties during the planning process. How far the new guidance ‘eases the way’ remains to be seen.
_____________________
[1] [2013] EWHC 751 (Admin)

PRISM casts new light on cloud security concerns
Issues of data management and date security continue to be in the spotlight. Recent media […]
Issues of data management and date security continue to be in the spotlight.
Recent media reports have revealed the existence of a computer system called PRISM through which officials at the US National Security Agency can apparently track and store information flowing through server networks located in the US and operated by Google, Facebook, Microsoft and other technology companies.
Many of the operators involved have expressly denied knowledge of PRISM, and claimed that they do not participate in any surveillance programme that involves granting direct access to their systems. However, the revelations seem certain to undermine customer confidence in the relative security of cloud-based data storage solutions, particularly those offered by public cloud service providers based in the US.
PRISM reflections
Industry surveys undertaken in the light of the recent disclosures have suggested that the majority of potential users of cloud-based systems are now “less likely” to use a US-based public cloud service provider because of PRISM. Analysts at the US-based Information Technology and Innovation Foundation believe PRISM will have an “immediate and lasting impact” on the competitiveness of US firms if foreign businesses conclude that the risks of storing their data with US-based public cloud services outweigh the benefits. They suggest that such concerns could ultimately threaten up to $35 billion in contracts over the next three years.
The view from Europe is much the same. Neelie Kroes, the European Commissioner for Digital Agenda, recently said “if European cloud customers cannot trust the US government then maybe they won’t trust US cloud providers either…..if businesses or governments think they might be spied on, they will have less reason to trust the cloud, and it will be cloud providers who ultimately miss out”.
Is the cloud going private?
The industry view appears to be that while PRISM won’t kill the cloud, it is likely to prompt potential users of cloud storage solutions to seek out alternative, more secure, online services.
At present, the most widely recognised cloud computing model is the public cloud, which involves a provider making resources, such as applications and storage, available to users over the internet, either free or offered on a pay-per-usage model. The main benefits to the user of a public cloud service are twofold. First, it is easy and inexpensive to set up, because hardware, application and bandwidth costs are covered by the provider. Secondly, the service is highly scalable and economical, because under the most common pricing models you will only pay for what you use.
In contrast, a virtual private cloud represents an on-demand configurable pool of shared computing resources allocated within a public cloud. As the name would suggest, a virtual private cloud offers users a certain level of isolation, through allocation of a Private IP subnet and use of encrypted communication channels, resulting in increased security and control.
In the aftermath of PRISM, we can expect providers of cloud-based services to react to growing customer concerns over security by increasing the availability of alternative, more secure, solutions, such as managed cloud, or on-premise private cloud, at the expense of the more established public cloud service model.
Is the Safe Harbour still safe?
In a related development, the European Commission recently confirmed that the existing ‘Safe Harbour’ arrangement between the EU and the US is under review.
Existing EU data protection laws prevent companies from transferring personal data outside of the EEA unless the company can show either that “adequate protections” have been established in respect of the particular transfer, or that the destination country has otherwise been pre-approved by the Commission as having introduced an adequate data protection regime. Although the US is not recognised as having introduced an adequate data protection regime, the Commission and the US Department of Commerce have developed Safe Harbour as a scheme that allows for the transfer of personal data from Europe to the US if the US recipient is (self-)certified under the scheme as having adequate data protections systems in place that meet the minimum required standards, as outlined in the EU Data Protection Directive.
In the light of the PRISM revelations, the European Parliament has called on the Commission to review the Safe Harbour arrangements, following reports that US-based data recipients that are certified under the Safe Harbour scheme were amongst those who were involved in the PRISM programme. The Commission has since confirmed that the arrangements are indeed under review.
However, despite the recent headlines, it is perhaps more appropriate to consider the Commission’s review of Safe Harbour within the context of its wider ongoing review of EU data protection laws. Such review, launched in January 2012, is intended to reform and update the EU’s data protection framework within a new General Data Protection Regulation, which would apply across all 28 EU member states, and replace the existing “fragmented and outdated” regime. So whilst the uncovering of the PRISM programme may not directly bring about the collapse of Safe Harbour, it is likely to have a bearing upon the outcome of the ongoing review.
Further information
Walker Morris has a broad range of experience in helping clients to safeguard the security of their data, and advising them in respect of their data transfer arrangements. Data management and security will continue to be a key issue for clients who require secure methods and locations for storing ever-increasing levels of personal data.
Please contact us if you would like to discuss further any of the developments considered above, or any data protection matters more generally.

Safe and Sound Settlement
Dealing with disputes and litigation can be fraught with difficulty and risk but so can […]
Dealing with disputes and litigation can be fraught with difficulty and risk but so can be concluding and documenting a successful compromise or resolution. Creating a binding, solid settlement can itself be a complex matter and several recent cases highlight important points to be aware of.
Reaching a reliable resolution
The case of Frost v Wake Smith and Tofields Solicitors [1] concerned a long-running and acrimonious dispute between two brothers, Mr David Frost (the Appellant) and Mr Ron Frost (RF), over the division of their shared property and business interests. The Appellant had instructed Wake Smith and Tofields Solicitors (WST) to act on his behalf. A mediation took place in November 2003, during which a form of agreement was reached between the parties. The solicitor at WST drafted an agreement which laid out the basis of a resolution of many of the issues (the Agreement), which was signed by both parties. The Appellant believed that an agreement had been reached from which RF could not resile. Following the mediation, however, it became clear that RF did not regard himself as bound by the Agreement. WST received advice from Counsel that the Agreement was unenforceable because of its vagueness and the fact that it dealt with the interests of third parties.
In 2009, the Appellant issued a negligence case against WST. The appeal concerned whether the solicitor at WST was in breach of duty in failing to ensure the legal enforceability of the Agreement. The Court of Appeal dismissed the case and held that WST had not been negligent. Key to this ruling was the fact that the agreed terms were not yet sufficiently certain and complete to constitute an agreement which was capable of being legally binding in any event.
Settlement barred set-off, but not counter-claim
IG Index Ltd v Ehrentreu [2] was an unfortunate case which involved a binding settlement agreement, but which nevertheless did not actually constitute a resolution to the dispute.
The parties had entered into a contract for betting on the Stock Exchange. One of the defendant’s bets went catastrophically wrong, to the tune of some £1.2 million. The parties entered into a settlement agreement, in which the defendant acknowledged the full debt and agreed to pay in instalments. However, when the defendant did not pay and the claimant issued enforcement proceedings, the defendant argued that its liability was reduced or extinguished by way of set-off or counter-claim, as a result of the claimant’s conduct in connection with the bad bet.
To understand the case it is essential to understand the subtle differences between each of the pleaded concepts in the defendant’s arsenal. Set-off is a mere ground of defence, often described as a shield not a sword, which arises purely out of, and inherently connected to, a claim. A counter-claim, however, is a weapon of offence which, although often raised in reaction to a claim, is actually an action in itself.
The Court of Appeal held that the settlement agreement had excluded the ability for the defendant to rely on set-off (even though there were no clear words to that effect) because the agreement dealt not only with an acceptance of liability, but also with timings for payment and cash-flow, with which all forms of set-off are concerned. However the settlement agreement did not deal with, and did not extinguish, the defendant’s counter-claim, which he remained free to pursue.
The Ehrentreu case flags the danger for those negotiating and agreeing settlements of misunderstanding or overlooking the subtleties of tactical comebacks open to defendants, such as the ability, here, to counter-claim.
Status of ‘Subject to Contract’
Phrases such as ‘subject to contract’ and ‘without prejudice’ are often brandished in contractual and settlement correspondence without the negotiating parties really understanding their significance and effect.
In Newbury v Sun Microsystems [3] both parties were legally represented when it came to resolving their dispute. Sun Microsystems’ solicitors sent a letter offering to pay a sum to Mr Newbury by a certain date, to settle his claim. The letter stated “such settlement to be recorded in a suitably worded agreement” but it was not marked ‘subject to contract’. Mr Newbury accepted. Later, when the parties were negotiating the wording of the settlement agreement, Sun Microsystems sought to change the payment date, and to include other matters. It argued that this was possible in line with the letter’s requirement to obtain a “suitably worded agreement”. Mr Newbury objected and argued that the letter constituted a complete offer, the terms of which had been accepted and were binding. The High Court agreed, commenting that the absence of the words ‘subject to contract’ was a factor that it had taken into account when deciding the case.
WM Comment
Drafting successful settlements draws on fundamental contractual principles; it requires an understanding of technical and tactical aspects; it often involves a language all of its own; and it frequently arises only at the end of a stressful and long and hard-fought dispute. It is impossible to advise comprehensively in this article as to the pitfalls and points of which all settling parties should be aware, and in any event the facts surrounding any one settlement agreement are often as important as the law itself. However these three recent cases do demonstrate some crucial points to note:
- for a settlement to be binding it must be clear, certain, comprehensive and capable of binding all of those on which it places obligations
- settlement practitioners must fully understand, and must properly cater for in any binding agreement, all relevant concepts such as set-off and counter-claim
- terms such as ‘without prejudice’, ‘without prejudice save as to costs’ and ‘subject to contract’ can have technical meanings and implications which must be appreciated and applied as appropriate in settlement negotiations, correspondence and documents
- the parties’ agreement of terms to resolve a dispute might not be the conclusion of a case. It can be the beginning of a new negotiation which requires consideration and care in itself, to guarantee a successful completion. Don’t scrimp on settlement – when it comes to fully and finally resolving a case, it is safest to take specialist advice.
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[1] [2013] EWCA Civ 1960
[2] [2013] EWCA Civ 95
[3] [2013] EWHC 2180 (QB)

The “sale” of food with expired “use by” dates
The Supreme Court has ruled that it is sufficient, for the purposes of a prosecution […]
The Supreme Court has ruled that it is sufficient, for the purposes of a prosecution pursuant to regulation 44(1)(d) of the Food Labelling Regulations 1996, for the prosecution to prove that the defendant had food in its possession for the purpose of sale which was the subject of a mark or label showing a “use by” date which had passed.
Background
In Torfaen County Borough Council v Douglas Willis Limited [1], inspectors from the local authority’s (the Council) trading standards department visited the respondent company’s (Willis) premises, where they found a number of packages of frozen meat with “use by” dates which had passed. Willis, in the business of buying, processing and selling meats, was tried on 23 charges of selling food “after the date shown in the ‘use by’ date relating to it” contrary to regulation 44(1)(d) of the Food Labelling Regulations 1996 (the Regulations).
The charges were dismissed by Gwent Justices. The justices accepted that there was no offence under the Regulations, concluding that since the food items were all frozen at the time of the inspection, they were not then “highly perishable” and so did not require a “use by” date under the Regulations. The Council appealed by way of case stated, arguing that the prosecution only had to show that Willis was “selling” (within the Regulations’ definition) food which was the subject of a “use by” label displaying a date which had passed.
The Regulations
The Supreme Court’s judgment drew attention to specific Regulations, including the definition of “sell”, meaning “offer or expose for sale or have in possession for sale”, and the requirement pursuant to regulation 5 that “…all food to which this Part of these Regulations applies shall be marked or labelled with…(c) the appropriate durability indication”, being either “an indication of minimum durability” or, “in the case of food which, from a microbiological point of view, is highly perishable and in consequence likely after a short period to constitute an immediate danger to human health, a ‘use by’ date”.
Regulation 44(1) deals with offences, with the Supreme Court referring to the offences where: “any person:
(a) sells any food which is not marked or labelled in accordance with [the Regulations]; or…
(d) sells any food after the date shown in a ‘use by’ date relating to it; or
(e) being a person other than whichever of [the manufacturer, packer or seller] was originally responsible for marking the food, removes or alters the appropriate durability indication…”
The Divisional Court’s decision
The Divisional Court held that the prosecution did not have to show that the food was in a highly perishable state at the date of the alleged offence but that it did have to show that the food had at some stage been in a state which required it to be labelled with a “use by” date, and that date had passed. The Council appealed to the Supreme Court.
The Supreme Court’s Decision
The Supreme Court found that the Divisional Court was correct to reject Willis’ argument that the prosecution had to prove that the food was in a highly perishable state at the time of the alleged offences under regulation 44(1)(d). On the wording of that paragraph, the prosecution had to prove that (i) the food was in the company’s possession for sale, (ii) that the food had a “use by” mark or label “relating to” it, and (iii) that the date shown had passed. There were no grounds for the additional requirement that the food was in a highly perishable state at the time of the offence: this would seriously weaken the intended regulatory scheme and protection provided to consumers. In the Supreme Court’s view, such an interpretation would enable a retailer of perishable food, which had passed its “use by” date, to freeze this food and then sell it without the consumer knowing how long it had been unfrozen.
The Supreme Court disagreed with the Divisional Court’s finding that the prosecution would have to show that the food had at some time been in state which required it to be labelled with a “use by” date, noting the practical problems with this construction, particularly if the food was frozen at the time of inspection. On the Divisional Court’s construction, “questions would arise as to when the marking had been done and what had been the state of the food at the time of the marking, which would be matters unknown to the inspectors”, meaning that “an enforcement authority might be understandably reluctant to incur the expense of launching a prosecution if it were likely to become involved with issues of that kind”.
In the context of the Regulations, the words “relating to” are synonymous with “referring to”, “or, in other words, as meaning simply that the food sold is subject of a mark or label with a ‘use by’ date. It denotes a factual connection rather than a legal requirement”. The Supreme Court therefore disagreed with the Divisional Court reading a requirement for the prosecution to show that it was required that the product had a “use by” mark or label into regulation 44(1)(d).
The Supreme Court also drew the distinction between the offences set out in regulation 44. The court noted that paragraph (a) deals with the “sale of food which ought to have been, but was not, marked or labelled”, pointing out that once this food has been marked the Regulations protect the customer by prohibiting the removal or alteration of the marking (except in limited circumstances) and by prohibiting the sale of the food after the “use by” date shown.
To clarify this, the court referred to the example raised by the Divisional Court, where a “use by” label is placed on food by mistake. The retailer who purchased that food would commit an offence under regulation 44(1)(e) if he removed the label without the authority of the original labeller, and paragraph (d) would prevent the retailer from selling the product to a consumer after the relevant date had passed.
Comment
The Supreme Court appeared keen to avoid any erosion of the protection of consumers provided by the Regulations, choosing to adopt a literal view of the meaning of the separate offences created by the Regulations and emphasising the practical problems which could occur in the enforcement of the Regulations if additional meanings and requirements were read into them.
Suppliers of products which fall within the ambit of the Regulations should be aware of the Supreme Court’s ruling, the variety of offences which can be committed and the wide definition of “sell” found in the Regulations. Organisations may wish to ensure they have sufficiently robust stock-taking procedures to ensure that foods which have passed their “use by” date are disposed of as quickly after that date as possible to avoid any potential liability.
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[1] [2013] UKSC 59