In Brief – Walker Morris legal update – February 2016
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Are you ready for the PSC register?
A new obligation on UK companies to maintain a “register of people with significant control” […]
A new obligation on UK companies to maintain a “register of people with significant control” comes into effect on 6 April 2016. This information will need to be filed at Companies House with the annual confirmation statement (which replaces the annual return) from 30 June 2016. The legislation is contained in the Register of People with Significant Control Regulations 2016 (the Regulations).
For most companies the new administrative burden should be a slight one only; however, for some it will be a problem. Non-compliance can result in criminal sanctions.
Which companies are covered?
UK incorporated companies (other than companies on the Official List or AIM – although the exemption does not extend to their subsidiaries) will have to maintain a register of people having significant control over them – the PSC register. The same will apply to LLPs (under different legislation). UK companies with shares admitted to trading on certain defined foreign markets, including the US, are not required to maintain a PSC register.
Overseas entities are not obliged to maintain a PSC register. However, importantly, having an overseas company in the group structure does not mean the trail of identification of the PSC stops at that company.
What actions must the company take?
- take “reasonable steps” to identify PSCs. UK companies (unless exempt) must maintain a PSC register even if they in fact have no PSC. The register will need to contain a statement to that effect. Failure to take reasonable steps to identify PSCs is a criminal offence and the company and officers in default will be punishable with an unlimited fine and/or up to two years’ imprisonment
- give notice to anyone whom it knows to be registrable or has reasonable cause to believe is registrable. Awareness of the existence of a shareholders’ agreement, for example, could be grounds for a reasonable belief. It may also give notice to another person where it knows or has reasonable cause to believe that such other person knows the identity of the PSC. Notices do not need to be sent if the company already knows that someone needs to be registered as a PSC and has confirmed all the information on them that needs to be shown on the register
- if the person believed to be a PSC fails to respond to a request for information, he or she will be guilty of a criminal offence, punishable by an unlimited fine and/or up to two years’ imprisonment. The company will also be able to put a restriction on their shares so that they cannot participate in dividends or share issues or be able to transfer them. The Regulations stipulate the procedure and notice requirements for doing this.
Identifying the PSC
A PSC of a company is someone who satisfies one or more of the following five criteria:
- holds, directly or indirectly, more than 25 per cent of the shares
- holds, directly or indirectly, more than 25 per cent of the voting rights
- holds, directly or indirectly, the right to appoint or remove directors holding a majority of the votes that can be cast at board meeting
- has the right to exercise, or actually exercises, significant influence or control over the company
- has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal entity and which meets any of the above conditions.
Some of these concepts require clarification.
Indirect interest
A person holds shares “indirectly” if it has a majority stake in a legal entity that, in turn, holds the share or rights through a chain of legal entities each of which (other than the last) has a majority stake in the entity below it and the last of which holds the shares or rights in the UK company in question. This is not straightforward by any means and in many cases legal advice is likely to be necessary to help determine the existence or otherwise of a registrable interest.
Significant influence or control
Government guidelines have sought to clarify what this means. “Control” means the power to direct the policies and activities of a company and “significant influence” means that a person can ensure that the company adopts those policies or activities which are desired by the holder of the significant influence. For example, this would catch:
- shadow directors
- a person with veto rights over the company’s decision-making. There are exceptions, such as for the purpose of protecting minority interests or in a period between exchange and completion on a share sale (where the purchaser will normally have certain contractually agreed rights to safeguard its position)
- a person with control of the board
- a person whose recommendations are invariably followed by the board or the shareholders.
There is a “safe harbour” under the guidance which covers typical third-party, regulatory and advisory roles, such as lenders, suppliers, professional advisers, liquidators, regulators).It also covers directors and employees acting in the course of their employment. However, if the influence or control of that person exceeds what would be the norm for a “safe harbour” relationship they may be a PSC. The idea here is to capture people who use an apparently arm’s length relationship to conceal their actual influence or control over the company, such as where a supplier uses their relationship to dictate company policy.
An economic benefit need not accrue (or be intended to accrue) for someone to be a PSC.
Nominee shareholders
Shares held by a nominee should be treated as if held by the person for whom the nominee is acting and, if that person is a PSC, they should be identified as such on the register.
How does the regime apply to companies controlled by other legal entities?
Legal entities may be put on the PSC register (a Relevant Legal Entity, or RLE).To be registered as a PSC, an RLE must be both relevant and registrable. This means that it must meet one of the five conditions listed above and it must itself be subject to a transparency obligation – e.g. by maintaining its own PSC register, by being a Main Market or AIM company or admitted to trading on an EU regulated market or on certain other specified markets, such as the US.A general English partnership, for example, cannot be an RLE (as they are not subject to disclosure requirements).It must also be the first relevant legal entity in the ownership chain.
A search for the ultimate owner will mean having to work up the chain, looking at the PSC register in each case. Entities do not need to be recorded on the PSC register if they hold their interest only via other entities each of which is subject to its own disclosure requirements. Therefore, a company that holds its interest through a chain of other companies will not need to be registered if every company in the chain is a UK company but it will need to be registered if there is a non-UK company in the chain below it.
If the above sounds convoluted it is no surprise. The keyword behind this legislation is “transparency” and the Government has deliberately made it as difficult as possible for “people with significant control” to shelter behind offshore or overseas entities. The application of the PSC regime in the group context may prove tricky to apply in practice and, if in doubt, advice should be sought.
As noted, Mark Market and AIM companies do not need to maintain a PSC register; however, their UK subsidiaries will have to. The subsidiary will need to name the quoted company (or an intermediate holding company) on its PSC register, though not the individual investors.
What must the PSC register contain?
The PSC register must not be empty. If there is no PSC this must be stated.
Where the company is still investigating who its PSCs are, a statement to this effect must be made.
The register must state the ground upon which the PSC is a PSC. Where one of the first three conditions is met, this is split into bands – more than 25 per cent to 50 per cent; more than 50 per cent to 75 per cent; 75 per cent. The appropriate band must be stated.
Where the PSC is identified, the following information must be stated:
Individuals
- name, date of birth, nationality
- country, state (or part of the UK) where the PSC lives
- service address and usual residential address
- the date they became a PSC
- any restrictions on disclosing the PSC register to the public
- which of the five conditions the PSC meets
Relevant legal entities (RLEs)
- name of legal entity, registered office or principal place of business
- legal form of entity and governing law
- any register in which the RLE appears and its registration number
- the date it became an RLE
- which of the five conditions the PSC meets
It is possible to suppress information where there is a serious risk of violence or intimidation to the PSC as a result of the company’s activities.
Public disclosure
A company’s PSC register must be accessible to the public from 6 April. This will either be at the registered office address or another address notified to Companies House. Anyone with a “proper purpose” (which is open to a broad interpretation) may have free access to the register; a £12 fee can be charged for copies. Residential addresses should not be disclosed (unless the same as the service address).

Housing and Planning Bill 2015-16
Background Following the May 2015 General Election, the newly-elected Conservative Government announced several planning related […]
Background
Following the May 2015 General Election, the newly-elected Conservative Government announced several planning related proposals. These included commitments to letting local people“have more say on local planning and let them vote on local issues”; supporting locally-led garden cities and towns; encouraging delivery of much-needed housing and redevelopment of surplus brownfield land; and enhancing provision of business-led collaborative schemes and sustainable onshore windfarms.
In the subsequent Queen’s Speech, two new bills were announced to make the relevant changes to existing planning law. One of these, the Housing and Planning Bill 2015-16 (the Bill), is now steadily progressing through Parliament. Having been introduced into the Commons on 13 October 2015, the Bill has most recently transferred for the initial reading and debating stages in the House of Lords. It is expected to be passed in mid-2016, with the majority of the Bill applying to England only. In light of this, the third reading stage in the House of Commons (held on 12 January 2016) in fact saw the ‘English votes for English laws’ rules utilised for the first time. Parts of the Bill deemed to affect England only, could not be voted on by any MPs except those representing English and Welsh constituencies. Members representing Scottish constituencies were entitled to speak but not to vote.
Provisions
The Bill will introduce wide-ranging changes for the housing and development sectors, particularly in relation to the new Starter Homes (SHs) initiative.
Starter Homes:
- The SH Policy involves properties being offered for sale at a discount of 20% below market rates, to purchasers who are first-time buyers and under 40 years of age, with the property not then being able to be sold or rented out for five years following acquisition (see further below).
- All SHs must be new dwellings, constructed for use as a single dwelling and not previously occupied, or adapted for use as a single dwelling and not occupied since its adaptation. They must be available to purchase (either the freehold or leasehold interest in the building or part being available), but are to be sold up to a certain capped-value – £450,000 in London or £250,000 elsewhere.
- In line with this, there is to be a change in national policy so ‘affordable homes’ no longer just means new homes available only to rent, but includes those that are available to buy. SHs will therefore be classed as ‘affordable homes’ for the purposes of s106 Agreements and with first-time buyers incorporated into the ‘affordable homes’ definition.
- Councils are placed under a new legal duty to guarantee the provision of 200,000 SHs on all reasonably-sized new development sites. These would be offered to first-time buyers at the 20 per cent discount. As stated in the wording of the Bill: “An English planning authority must carry out its relevant planning functions with a view to promoting the supply of starter homes in England”.
- The Secretary of State it to have the power to issue regulations so that planning authorities may only grant planning permission for residential development, of a centrally-prescribed description, if an established SHs requirement is met to defined levels. The regulations here may, for example, provide that permission is only granted if a party enters into a section 106 planning obligation to provide a certain number of SHs; or pays the local authority a sum which the authority will then use to provide the SHs.
- The Secretary of State will be able to issue a ‘compliance direction’ to local authorities if the authority fails to undertake its SH functions. The relevant council will be instructed to pay no regard to policies contained in local development plan documents if they are incompatible with the SH Policy.
Planning reforms supporting small builders
A new duty will be placed on councils to assist with land allocation. Smaller developers will be able to buy sites in England with planning permission in place. The aim is for 20,000 custom and self-build homes a year to be built by 2020.
Rogue landlords
Councils will have the power to blacklist and, in certain instances, ban landlords who fail to abide by the law.
Recovery of abandoned premises
Those (including landlords) operating within the legislative framework will be given assistance to recover abandoned homes quicker.
Sale of council assets
Changes are to be introduced to ensure high-value council assets (including housing) are sold and so can be used to support people into home ownership.
Pay to Stay
New provisions will allow tenants on higher incomes, living in social housing, to have a rent that reflects their ability to pay. Others who require support are to continue to receive this at an appropriate level.
Local Plans
The Government will be provided with targeted powers to ensure all councils have Local Plans in place by 2017. The Mayor of London or a combined authority can be directed to prepare a development plan where the authority is not making progress.
Planning permission changes
- New measures are to be introduced to ensure brownfield land is clearly identified and registered, so as to bring forward more land and allow new homes to be built quicker, but ensure protection for the green belt.
- It is also proposed that large-scale housing projects, as defined, will be able to progress under the Nationally Significant Infrastructure Projects regime – bringing a streamlined application and decision-making process.
- There is to be the introduction of a dispute resolution procedure for negotiations on section 106 Agreements. The aim is to ensure less time is expended on the preliminary negotiation process, with a higher number of agreements successfully concluded so as not to unduly delay the grant of planning permissions.
Compulsory purchase
Proposes changes to the right to enter and survey the land in relation to compulsory purchase, the use of force to do so and associated provisions.
Comment
The Bill is still at its early stages before being confirmed as law and receiving Royal Assent, with the possibility of further amendments and changes. The SH definition is not new and it follows that introduced in a written ministerial statement on the Starter Homes Policy during March 2015. The Bill does though extend the number of sites on which SHs can be built.
There remains a considerable amount of discretion with the Secretary of State to subsequently introduce regulations that link with the Bill – so as, for example, to amend the definition of or specify further characteristics to qualify as a ‘first time buyer’. The earlier ministerial statement stipulated that the homes could be sold at full market rates after five years. This latter detail is absent from the Bill. However, again, it is an element that the Secretary of State could provide for in future.
The ability for the Secretary of State to issue a ‘compliance direction’ to councils may ensure that implementation of the SH Policy is able to get underway promptly. It potentially means every council will not have to adjust its local plan, but can just disregard the relevant element of local policy which outlines the area’s full, objectively-assessed need for market and affordable housing.
The 20 per cent discount for SHs could create difficulties in certain locations. A large concentration of SHs in some areas may distort the market and reduce demand for full-price homes, but leave developers without any compensation for the 20 per cent discount that must be offered. While it may remove other section 106 obligations, as SHs can be provided as ‘affordable housing’, this will not necessarily always be advantageous. It is not clear from the terms of the Bill whether existing affordable housing requirements, within extant section 106 agreements, will be able to be converted to SHs. This may be clarified in the legislation itself as a result of later amendments or as part of subsequent regulations. Likewise, much may depend on the specific terms of the planning obligation/section 106 agreement in question.
Publication of the Bill has coincided with a number of other important changes in the sector, including:
- agreement of the deal between the Government and housing associations to extend the Right to Buy to housing association tenants from next year (as mentioned above)
- launch of the Own Your Home campaign
- extension of the previously temporary permitted development rights, allowing conversion of underused office buildings to residential, subject to prior approval of certain matters. A Walker Morris briefing note on this change is available if required.
For further information or advice on the changes and their impact, contact the Planning & Environment team at Walker Morris.

Are you ready for the new health and safety Sentencing Guidelines?
The Sentencing Council’s Guidelines for “Health and safety offences, corporate manslaughter and food safety and […]
The Sentencing Council’s Guidelines for “Health and safety offences, corporate manslaughter and food safety and hygiene offences” (the Guidelines) came into effect on 1 February 2016. The Guidelines will apply to any case sentenced on or after 1 February, regardless of when the offence occurred.
The Guidelines are likely to result in considerably higher penalties for businesses, particularly larger businesses, which are found guilty of a health and safety or food safety offence.
It has long been recognised that until now fines in health and safety cases have been difficult to quantify and generally too lenient. Previously there was no formal guidance for a sentencing court in a health and safety case which has not resulted in a fatality. Such a position is difficult to reconcile with the fact that health and safety offences do not need any harm to have actually occurred, rather the creation of, or failure to prevent a known risk, is sufficient. The Guidelines will therefore help with a more consistent approach to sentencing and will ensure that fines will be sufficiently substantial to have a “real economic impact” on the offending organisation.
In determining the appropriate level of fine, the Guidelines introduce a nine step approach to sentencing. The first step is to consider the gravity of the offence (taking into consideration the harm risked and the likelihood of it arising) as well as the culpability of the organisation concerned. Once the harm and culpability of the offender have been categorised, the court will look at the financial circumstances of the offender in order to determine the appropriate range of sentences and starting points for fines. The offenders are categorised based on turnover as follows:
- Large organisation – turnover of more than £50 million
- Medium-sized organisation – turnover of between £10 million and £50 million
- Small organisation – turnover of between £2 million and £10 million
- Micro organisation – turnover of up to £ 2 million.
By linking fines to turnover, the size of fines is likely to increase significantly compared to the average level a couple of years ago. For example, the starting point for large organisations committing the most serious offence, with very high culpability is £4 million with the potential for a fine of up to £10 million. The starting point for the highest category offences for medium-sized, small and micro-organisations is £1.6 million, £450,000 and £250,000 respectively. These starting points eclipse, by some margin, the level of fines ordered in most of the corporate manslaughter convictions to date. The starting point for the larger organisations is also higher than some of the biggest and most serious health and safety cases (with multiple fatalities) sentenced to date such as the Hatfield and Potters Bar train crashes (£3.5 million and £3 million for Network Rail) as well as the Buncefield explosion (£3 million for Total UK).
For the more serious offence of corporate manslaughter, the suggested starting point for large organisations is £7.5 million with scope for fines of up to £20 million. For breaches of food safety and hygiene regulations the starting point for large organisations for “very high culpability” offences is £1.2 million with scope for fines of up to £3 million.
Although it is not stated in the Guidelines, the court may examine the group relationship when assessing turnover. In cases where the board of a subsidiary company simply does what the parent company tells it, it could be argued that the economic reality is that the parent and the subsidiary are part of the same “organisation” and, as such, their turnover could be aggregated for sentencing purposes.
Provision is also made for “very large” organisations namely those with a turnover of well in excess of £50 million. The Guidelines state that, in these cases, it may be necessary to move outside of the stated ranges but do not give any guidance as to how this will work in practice. However, the courts are now recognising that fines in the hundreds of millions may, in some cases be appropriate, in order to bring home to corporate offenders and those who run them, the need for proper compliance.
Once the appropriate band has been established to determine the range of fine, the court will:
- consider any aggravating or mitigating features
- ensure that the fine is proportionate to the means of the offender
- consider other relevant factors, such as the impact of the fine on staff, customers and the local economy
- give credit for an early guilty plea, if applicable.
Individual company directors who are found guilty of “consent, connivance or neglect” in relation to a corporate offence will face potentially unlimited fines and terms of imprisonment of up to two years. Under the Guidelines individual culpability is split into different categories – in this case “low”, “medium”, “high” and “very high” – and harm is also split into four categories. The sentence will be imposed by reference to the relevant brackets. For an offence which has a “low” level of culpability but where the level of harm is in the highest category, a maximum term of imprisonment of 26 weeks is possible. Even if the harm category is in the lowest bracket, a custodial sentence may be the starting point depending on the level of culpability. There is now a much greater likelihood of custodial sentences than we see at present and for longer terms.
We have already been seeing much larger fines for health and safety offences, possibly in readiness for the Guidelines. In January 2016 (before the implementation of the Guidelines) a fine of £1.8 million was imposed on port operator C.RO Port London Ltd following a guilty plea to safety offences which led to a worker suffering serious injury while mooring an ocean-going vessel. The Health and Safety Executive (HSE) found that the incident was totally foreseeable and could easily have resulted in a fatality. Other recent substantial fines imposed for health and safety offences include, one of £1 million imposed on Balfour Beatty Civil Engineering Ltd, following the death of a worker caused by a lorry-mounted crane slipping and hitting the victim on the head. The HSE explained the accident could easily have been avoided by using the right equipment in the correct fashion. In another case, UK Power Networks (Operations) Ltd (UKPN) was fined £1 million after a runner was fatally electrocuted by a low-hanging high voltage cable. The HSE found that UKPN had failed to fully assess the risk posed to the members of the public and had failed to manage the risk despite members of the public having notified it that the cable was hanging at a dangerously low level after slipping from its original height.
As if to demonstrate the impact of the Guidelines, earlier this week ConocoPhillips (UK) Limited was fined £3 million for two uncontrolled and one controlled but expected gas releases on an offshore platform approximately 70 miles from the Lincolnshire coast. The hefty fine was imposed despite a lack of harm to any workers.
These cases are a timely reminder of the financial consequences that can flow from a failure to ensure adequate health and safety procedures – to say nothing of the immeasurable damage to the reputation of an organisation and the potentially catastrophic human consequences.
Organisations should immediately (unless they have already done so) risk-assess and review existing systems and procedures to ensure health and safety compliance and ensure all staff are appropriately trained and supervised. It is also vital that organisations ensure appropriate contemporaneous records are kept and are easily accessible if required. In the corporate group context, serious consideration should be given to how health and safety compliance is tackled at the subsidiary level as well as at the parent company level.
How we can help
The Walker Morris Regulatory and Compliance team offers a complete range of health and safety services, including delivering training, drafting health and safety policies, carrying out audits and, if the worst does happen, we can help you manage the consequences of an incident, accident or subsequent prosecution. The importance of properly managing a serious incident and subsequent investigation can be the difference between an acquittal and a multi-million pound fine.

Pleading fraud – some reminders from the courts
In two recent cases, the Commercial Court has provided some important reminders to parties looking […]
In two recent cases, the Commercial Court has provided some important reminders to parties looking to allege and plead fraud in civil proceedings.
Fraud is, by its very nature, wide-ranging and constantly evolving. The courts are wise to this and have long recognised the need for a flexible, non-restrictive approach, in order to be able to confront fraudulent behaviour in whatever form it may appear.
Under English law, there is no defined cause of action of civil or commercial fraud. Instead, there is a range of options available depending on the factual circumstances of the particular case, including deceit or fraudulent misrepresentation, claims arising out of conspiracy, bribery, breach of fiduciary duty, breach of trust and inducing breach of contract. The common theme is deliberate action on the part of the wrongdoer, often involving dishonest conduct.
Each cause of action has its own constituent parts which the claimant must plead and prove.
Advantages
There are a number of advantages to pleading fraud, including:
- the courts are more willing to adopt an expansive approach to the measure of losses suffered by the claimant and damages are not restricted to losses which are “reasonably foreseeable” (so there is wider scope for recovery)
- there is no defence of contributory negligence available for fraud
- the usual limitation period for bringing a claim may be postponed, with time starting to run instead from the date of discovery of the fraud (or from when the claimant could, with reasonable diligence, have discovered it)
- parties cannot limit or exclude liability for fraud (the principle that “fraud unravels all” [1])
- company directors may be held personally liable in certain cases.
Disadvantages
On the flip side, fraud allegations are serious and they can have far-reaching and damaging consequences for defendants. There is a stigma attached to the word “fraud”. For this reason, the courts will subject a fraud plea to a rigorous degree of scrutiny. The level of seriousness afforded to fraud allegations is reflected in the provisions of the respective codes of conduct for solicitors and barristers.
The need for clarity – identify the relevant cause of action, the relief claimed and what has to be proved
In McEneaney and others v Ulster Bank Ireland Ltd and others [2], various investor claimants applied to the court for permission to introduce claims of fraud against the defendant bank and investment banking firm involved. Broadly, the litigation concerned investments in a company owning property at London’s Canary Wharf (the property had declined considerably in value and the claimants lost their investments). The application was refused on the basis that the fraud claims were made out of time.
The Judge went on to say, however, that he would also have accepted the defendants’ argument that permission should be refused because the claims were not adequately pleaded. He provided the following reminders:
- Allegations of fraud must always be properly particularised: “…the more serious the allegation of misconduct, the greater is the need for particulars to be given which explain the basis for the allegation. This is especially so where the allegation that is being made is of bad faith or dishonesty. The point is well established by authority in the case of fraud.” [3];
- An allegation of fraud is not supported by an allegation that the defendant made a representation that he knew or ought to have known to be untrue [4].
In other words, allegations of fraud must be clear and express and pleaded separately from (and before) any allegations of negligence, even where they are based on similar lines of argument. A “rolled-up plea” is unacceptable. This will be the case where the cause of action requires proof that the defendant had knowledge of a particular fact or matter. In McEneaney, the revised claim did not clearly allege knowledge on the part of the bank or distinctly plead any representation made by the investment banking firm that could support a claim in deceit.
Drawing inferences
One area of particular difficulty for claimants is proving the subjective state of mind of the defendant. In an attempt to get around this, claimants will often ask the court to draw inferences from the circumstances of the case.
In JSC Bank of Moscow v Kekhman and others [5], the claimant had pleaded a fraudulent conspiracy involving the first defendant and applied to the court to amend its pleading to include allegations of fraudulent misrepresentation. The first defendant argued that the claimant had failed to properly plead fraud in relation to both pleas, submitting that the primary facts must necessarily lead to the inference that the defendant is guilty of fraud and there is no proper fraud plea unless the particulars pleaded are consistent only with the defendant’s dishonesty.
The court disagreed – this was overstating what is required for a valid plea of fraud. The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. There must be some fact “which tilts the balance and justifies an inference of dishonesty” [6]. The Judge went on to explain that, when the court is considering whether the plea of fraud is a proper one, it is concerned only with whether facts are pleaded which would justify the fraud plea. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge.
Higher standard of proof?
The relevant standard of proof in a civil claim (including in respect of fraud) is “balance of probabilities”. In reality, due to the nature of a fraud allegation, the evidential burden on the claimant is likely to be amplified. This is because, since fraud is usually less likely to occur than negligence, for example, stronger evidence will be required to establish, on the balance of probabilities, that a fraud occurred.
Is it necessary?
While there may be circumstances in which it is necessary to plead fraud, parties should be mindful of the possibility that other types of claim may deliver the results they are looking for and will, on the whole, be easier to plead. Examples include negligent misstatement and claims under the Misrepresentation Act 1967.
______________________
[1] Referred to by Lord Bingham in the House of Lords case HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6.
[2] [2015] EWHC 3173 (Comm)
[3] Observed by Lord Hope in another House of Lords case – Three Rivers District Council v Governor and Company of the Bank of England [2001] UKHL 16. Paragraph 8.2 of the Practice Direction to Part 16 of the Civil Procedure Rules provides that the claimant must specifically set out any allegation of fraud in his particulars of claim where he wishes to rely on it in support of his claim.
[4] Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340
[5] [2015] EWHC 3073 (Comm)
[6] Lord Millett in Three Rivers

Modern slavery – a warning for business
On 20 January, this year Mohammed Rafiq, who ran a bed-making business based in Dewsbury […]
On 20 January, this year Mohammed Rafiq, who ran a bed-making business based in Dewsbury called Kozee Sleep, was convicted in the Leeds Crown Court of human trafficking. Rafiq’s conviction follows that of two Hungarian men who were found guilty last year of having supplied Rafiq with slave labour and is, reportedly, the first of a UK business owner/manager for human trafficking offences in the UK.
The Court heard how men were trafficked from Hungary, with the promise of good jobs and housing, and were forced to live in cramped, squalid conditions, working minimum 60-hour weeks.
Strikingly, Kozee Sleep supplied a number of High Street retailers, including John Lewis and Next, had signed up to the retailers’ ethical trading policies and audits undertaken by the retailers had disclosed nothing untoward.
The activities of rogue businesses are one thing but the case has two important lessons for more reputable businesses as well.
The first concerns the employment of illegal workers. Under the Immigration, Asylum and Nationality Act 2006, an employer will be deemed to have committed an offence if found to have employed a person aged 16 or over who is subject to immigration control unless that person has current and valid permission to be in the UK and has valid permission to do the type of work they have been employed to do. Employers found to be in breach face fines of up to £20,000 per illegal worker. On top of this, the Government’s Immigration Bill, currently working its way through Parliament, will extend the criminal offence of knowingly employment an illegal immigrant to include circumstances where an employer had “reasonable cause to believe” that a person is an illegal worker, with an increased custodial sentence on indictment for that offence to five years.
It is vital therefore that employers implement the necessary procedures to ensure they are not employing illegal workers.
The second lesson concerns the Modern Slavery Act 2015 (the Act), which came into force last October. Section 54 of the Act obliges UK businesses (or overseas businesses “carrying on business” in the UK) and which have an annual turnover of £36 million to publish an annual statement on their website which explains the steps they have taken to combat slavery and human trafficking in their supply chain.
With the coming into force of the Act, UK businesses will need to take a much more proactive approach towards the audit of their supply chains than they may have taken in the past. They will really need to “get to know” their suppliers (and the suppliers of those suppliers), whether based in the UK or overseas. The Government has published guidance to assist with compliance and suggested a focus in the statement on the following areas:
- information about the business’s structure, its business and supply chains
- the business’s policies relating to modern slavery
- its due diligence processes in relation to slavery and trafficking in its business and supply chain
- the parts of the business where there is a risk of modern slavery and the steps it has taken to assess and manage that risk
- its effectiveness in ensuring that modern slavery is not taking place, measured against appropriate performance indicators
- information about the training about slavery and human trafficking available to staff.
However, each business is different, facing different risks, and we are advising clients on the steps that they can take to ensure an effective understanding of their supply chains, which address the particular risk areas they face.
Compliance with the reporting obligation can be enforced by an injunction but the greater cost to a business of non-compliance is the reputational consequences that may flow. The lesson from Mohammed Rafiq’s conviction is that “modern slavery” may be a lot closer to home than reputable UK businesses might think.

Planning permission in principle
Background The Housing and Planning Bill 2015-16 (the Bill) is one of two bills currently […]
Background
The Housing and Planning Bill 2015-16 (the Bill) is one of two bills currently in the pipeline which will introduce wide-ranging changes for the housing and development sectors. Certain elements of the Bill have received considerable amounts of media attention and been the focus of extensive news coverage, such as the Starter Homes initiative and alterations to the compulsory purchase regime. Yet the concept of ‘permission in principle’ is a particularly interesting aspect of the new proposals. Provisions under the Town & Country Planning (General Permitted Development) (England) Order 2015 already grant permission for specified development without a full-form planning application having to be made. Until now, this approach has not usually been applicable to actual sites.
Provisions
The Bill will grant automatic planning permission in principle on brownfield sites, with the objective being to deliver the greatest number of new homes possible, while also protecting green belt land. In the first instance, local planning authorities (LPAs) will be required to prepare, maintain and publish a register of land that adheres to the prescribed description and criteria – i.e. that has been previously-developed. This will form the ‘Brownfield Register’. In compiling the Register, the LPA must have regard to the local Development Plan, national policies, and centrally-issued advice. Regulations would detail precisely what type of land should be included, as well as when LPAs have discretion whether to include or the power to exclude land when it deems appropriate.
A development order can then grant permission in principle for development of a certain type and certain scope on land allocated for development in a qualifying document. The reference to a ‘qualifying document’ means a “plan, register or other document…made, maintained or adopted” by the LPA that “indicates that the land in question is allocated for development for the purposes of [the legislative] section” and contains “prescribed particulars in relation to the land allocated and the kind of development for which it is allocated”. So effectively this will be land allocated in the Brownfield Register, as well as the local Development Plan and relevant Neighbourhood Plans.
In the first instance, it is envisaged this will be available for housing developments only. However, there is also the possibility for permission in principle to be derived from an alternative route – that is, by grant following an application to the LPA. The government’s current intention is for this to be used by small builders on minor housing schemes (fewer than ten units). Such applications will still, though, be subject to the usual application rules that apply to all planning applications relating to:
- notice being given to landowners
- powers to decline to determine where repeat applications are involved
- appeals and calling-in of decisions by the Secretary of State.
Once permission in principle has been granted, it will be necessary for ‘technical details consent’ to be issued. Any application for technical details consent must be made within a certain time-frame (yet to be decided) and contain full details. The technical details application must be within the remit of the matters approved during the permission in principle stage. It is at this latter point where conditions can be imposed. Essentially, a full permission is therefore a combination of the ‘permission in principle’ and the ‘technical details consent’.
Comment
Details and precise provisions are to follow in secondary legislation, so certain elements of how this will operate in practice remain unclear. It is largely just general concepts that are outlined in the Bill.
As currently drafted, there appears to be no mechanism for independent examination, appeal, or Ministerial intervention in relation to a Brownfield Register. This could raise difficulties for those who find land under their ownership entered on a Register, with little prospect of redress. Thought will also have to be given to consultation and publicity requirements in the immediate locality where a Brownfield Register will take effect. At present, the local plan and neighbourhood plan processes do not involve owner notification, alerts to neighbours, or the display of site notices.
Careful consideration will also be needed regarding whether permission in principle will:
- be available to authorise demolition;
- allow certain changes of use
- take into account designated (listed buildings and conservation areas) and undesignated (locally-listed buildings and ACVs) heritage assets.
Another concern is that the procedure still seems overly lengthy, in many ways differing little from the current approach to most large-scale applications with their dual outline-reserved matters application stages. Certainly though, there is maintenance of the well-established ‘rule’ that an LPA cannot renege once it has deemed a particular development acceptable in principle. The regime also has the potential to lessen the risk of proposals being refused where sites are unsuitable. Applicants could thus benefit from savings due to a reduced number of applications (with their associated costs) being required.
Even once the Bill receives Royal Assent, it is likely to be some time before the full effect of the new approach is felt. An impact assessment published alongside the Bill noted that the government expects it “will take time for full implementation to occur, as brownfield registers do not currently exist and the measure will apply to site allocations in future plans and not retrospectively”. However, the assessment noted that “the total number of developments annually that could benefit from permission in principle will grow as plans and registers come on stream and make site allocations”. Looking to the number of applications granted for major development in 2014/15 by way of a comparator, up to 7,000 sites per year could benefit from the proposal.
The concept of permission in principle, with its application to housing projects in particular, reinforces the government’s focus on providing new homes. In addition to the above, the Bill provides for large-scale housing projects to progress under the Nationally Significant Infrastructure Projects regime – bringing a streamlined application and decision-making process. Further, there is to be the extension of temporary permitted development rights, allowing conversion of underused office buildings to residential (subject to prior approval of certain matters). Having been introduced in 2013, the development rights are being retained beyond the current expiry date of 30 May 2016.
For further information, contact the Planning & Environment team at Walker Morris.

Where are we up to with e-signatures?
The concept of the electronic signature has been around since the turn of the century […]
The concept of the electronic signature has been around since the turn of the century but we are still a long way from gaining critical mass. There are, however, just the first suggestions of a possible momentum shift. The European Commission hopes that its Electronic Identification Regulation [1], the majority of the provisions of which come into force on 1 July this year, will give further impetus to this shift.
The position in the UK is governed by the Electronic Communications Act 2000 (the ECA). The ECA allows for contracts to be signed by electronic means. Section 7 of the ECA confirms that electronic signatures may be admissible in legal proceedings to determine the authenticity of any electronic communication in which they are incorporated. This makes it possible for a person to validly “sign” a document without the need for a “wet ink” signature.
A Law Commission report in 2001 advised that statutory requirements for “in writing” and “signature” could be fulfilled by electronic means. The threshold requirement for a valid signature is whether the conduct of the signatory indicates an authenticating intention to a reasonable person i.e. that he or she agreed to be bound by the contract.
After a lively start to the century, things have quietened down and the developments, such as there have been, have come through the courts rather than legislative channels. For example, in a 2012 case an email that contained the name of a party was held by the Court of Appeal to be “in writing” and “signed” (and, as such, satisfying the requirements for a guarantee under the Statue of Frauds 1677) as the inclusion of the name gave authenticity to the contract [2]. This, however, is the case with simple contracts – not with deeds, for which there is still no clear authority. Prudence dictates wet ink signatures for deeds and, in any event, Land Registry practice is not to accept electronically signed documents for registration.
Part of the reason for the slow take-up of electronic signatures is the complexity of the E-Signature Directive [3] (implemented in the UK by the ECA and the Electronic Signatures Regulations 2002). The Directive distinguishes between “electronic signatures” and “advanced electronic signatures”. Under the Directive, ordinary “electronic signatures” may or may not be admissible depending on the circumstances. By contrast, “advanced electronic signatures” will be. However, the procedure for generating an “advanced electronic signature” is not wholly straightforward – it must be based on a qualified certificate and created by a secure signature creation device. Certification service providers (CSPs) were established to verify the advanced electronic signatures and much of the focus of the 2002 Regulations and subsequent discussion has centred on the regulation of the CSPs rather than on the lawfulness of electronic signatures in different contexts.
The Electronic Identification Regulation does not solve this difficulty. The purpose of the Regulation is to establish rules for mutual recognition of electronic identification schemes within the EU and thereby facilitate cross-border e-commerce. The Regulation covers electronic signatures, electronic seals, electronic stamps and electronic registered delivery services. However, they all follow the existing position, namely that an electronic signature should not be inadmissible and denied legal effect simply because it is electronic but that only an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures, is automatically accorded the same legal effect as a handwritten signature.
It is doubtful that the Regulation will prompt an uptake in electronic signatures by commercial parties. The Commission’s focus at present is on the public sector, for example in e-procurement. So far, it is in the fields of e-government and e-banking that most use is made of electronic signatures. It is possible that a big take-up by public bodies (and banks) may have a knock-on effect on the private sector and that business people who are using electronic signatures to access, for example, healthcare or tax records, may start to ask why they cannot do the same in their corporate and commercial transactions.
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[1] Regulation (EU) No 910/2014
[2] Golden Ocean Group v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265
[3] Directive 1999/93/EC