In Brief – Walker Morris Legal Update – January 2019
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Brexit – what happens next?
Now that the House of Commons has overwhelmingly rejected the government’s Brexit deal, we take […]
Now that the House of Commons has overwhelmingly rejected the government’s Brexit deal, we take a look at what happens next and what it means for businesses.
On Tuesday 15 January 2019, the House of Commons voted overwhelmingly to reject the Brexit deal negotiated between the government and the European Union. The Prime Minister will make a statement on the way forward and table an amendable motion in the House of Commons on Monday 21 January 2019.
After the Withdrawal Agreement was rejected, the Prime Minister said that meetings would be held across the House of Commons to identify what would be required to secure its backing for a deal with the EU. If there are ideas which are “genuinely negotiable” and have sufficient support, these will then be explored with the EU. The extent to which the EU is prepared to re-open negotiations is another matter. So far, the indications are that they are not willing to do so. Any major renegotiation would likely require an extension of the Article 50 exit process to delay the UK’s departure from the EU – currently set for 29 March 2019. A request for an extension for any reason would have to come from the UK, and the EU would have to agree it. With European Parliament elections coming up in May 2019, this has its own complications.
The Prime Minister sought to provide reassurance that it is not the government’s strategy to “run down the clock to 29 March”. However, with a deeply divided House of Commons, all options remain on the table. That includes the very real prospect of a “no deal” Brexit. Other possibilities are a second referendum and the UK unilaterally revoking its Article 50 withdrawal notice, effectively cancelling Brexit, something which it is legally entitled to do.
While the vote was historic and momentous, in practical terms it changes little for businesses, which face ongoing uncertainty. It has been widely predicted for some time that the government’s deal would be voted down. The impact of a no deal Brexit will depend on a range of factors, including the size, nature and location of the business, the sector in which it operates, the relationships it has with suppliers and customers, the extent to which it trades across borders, and other commercial considerations. With the level of uncertainty showing no sign of changing any time soon, businesses should continue with their contingency planning. The government has launched a website Prepare your business for EU Exit. Watch out for our upcoming guidance on a range of commercial legal matters arising under a no deal Brexit, which will be issued shortly. Should you wish to discuss the potential implications of Brexit for your business, please get in touch in the first instance with your usual contact, who will be very happy to coordinate the necessary response.

When is a landlord not a landlord?
When is a landlord not a landlord? It might sound like the beginning of a […]
When is a landlord not a landlord? It might sound like the beginning of a bad joke, but the Court of Appeal had to consider that question in the case of Barrow v Kazim [1]. In so doing, it highlighted a serious point for landlords and receivers to note when they are seeking possession of sublet residential premises. Housing Management & Litigation specialists Karl Anders explains.
What happened in the case?
Kazim owned a building containing residential flats. Kazim had let the building to an agency, who had then sub-let the individual flats to residential occupiers on assured shorthold tenancies (ASTs) under the Housing Act 1988 (the Act) [2].
Kazim, as head landlord, wished to recover possession and served a notice on both the intermediate tenant (i.e. the agency) and the sub-tenants (Barrow and another). The notice was intended to terminate the intermediate tenancy and also to constitute a notice to terminate the ASTs under section 21 (1) (b) of the Act.
The sub-tenants contested the validity of Kazim’s notice, asserting that Kazim was not their landlord for the purposes of giving notice, and therefore no effective notice had been served on them.
The view of the Court of Appeal
The Court of Appeal agreed with the sub-tenants and confirmed what has, to date, generally been believed to be the position. It stated that a notice under section 21 of the Act must be served by the person who is the landlord at the date the notice is given, not the person who will be the landlord at the termination date specified in the notice given to end the intermediate tenancy. Importantly, the fact that an intermediate tenancy will come to an end by the date specified in the notice does not convert the head landlord into the ‘landlord’ for the purposes of enabling it to also serve a valid section 21 notice on the sub-tenant. Instead, the intermediate tenant will remain the sub-tenant’s landlord until such time as the intermediate tenancy ends. Kazim’s notice was therefore ineffective to terminate the ASTs.
What are the key takeaways for landlords and receivers?
The facts of this case are not uncommon. They will also be encountered by receivers upon investigating the occupational status of securities over which they have been appointed. The following key points are worth noting:
- While the common law may provide that any sublease falls away upon termination of a head lease, that is not the case where the sublease is an AST. The Housing Act 1988 intervenes in those circumstances and preserves to existence of the AST.
- Receivers and head landlords can take steps to recover possession from sub-tenants occupying residential premises under ASTs only after they have become the direct landlord of the sub-tenants. The route to possession is therefore sequential, and not concurrent.
In this case Kazim argued that it was unsatisfactory that head landlords should have to wait for an intermediate tenancy to determine and only then be in a position to serve a notice to determine an AST. That practical argument was however given short shrift by the Court of Appeal, from whom a strict legal analysis was inevitable.
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[1] [2018] EWCA Civ 2414
[2] Section 21 (1) (b) of the Act allows a landlord who has served at least two months’ notice on a tenant to recover possession without having to rely on statutory grounds for possession

How to manage the new risk landscape
Over 40 senior General Counsel and in-house lawyers attended our annual in-house training day. This […]
Over 40 senior General Counsel and in-house lawyers attended our annual in-house training day. This year’s theme focussed on the potential risks to businesses in the current climate and the role of GCs in managing risk.
Following the event we have published our ‘Zoom out – How to manage the new risk landscape’ document which not only summarizes key point from the day but also features a summary of our panel discussion debating the GC’s role in risk management and interviews with three of our panel members.

Director-shareholder remuneration – risks of declaring dividends as[...]
In the recent case of Global Corporation Limited v Hale [2018] EWCA Civ 2618, the […]
In the recent case of Global Corporation Limited v Hale [2018] EWCA Civ 2618, the Court of Appeal considered whether payments to the director and shareholder of a company must be repaid on the basis that they constituted dividends which were unlawful pursuant to section 830 of the Companies Act 2006.
Background
The Respondent in this case was a director and shareholder of an engineering company which specialised in tuning motor engines (the Company).
The Company was balance sheet insolvent from 2009 onwards as a result of its business being adversely affected by the financial crisis. The Company was ultimately placed into liquidation on 25 November 2015.
Although the Company remained balance sheet insolvent to the date of its liquidation, it traded profitably and significantly reduced its balance sheet deficiency from 2012 onwards. Nevertheless, the Company had no distributable profits from which a dividend could lawfully be paid.
The Respondent worked full time in the business and received regular monthly payments of around £1,600. In the years prior to the Company’s liquidation, these payments were initially characterised as dividends and subsequently recharacterised as salary payments at the end of the Company’s accounting period, when the Company’s accountants confirmed that the Company had insufficient distributable profits to lawfully pay a dividend.
The Company was placed into liquidation part way through the Company’s 2015 accounting period. The payments received in that accounting period had also been characterised as dividends for tax and accounting purposes. The payments were not recharacterised as salary payments prior to the Company entering liquidation.
The Company’s liquidators considered that the payments may be challenged as unlawful dividends pursuant to section 830 of the Companies Act 2006. Those claims were assigned to the Appellant.
First Instance
At first instance, HHJ Mathews found that the decision to classify the payments as dividends was made “only in principle, with the formal decision left to be made at the year end”. On this basis, the Judge found that the payments were not dividends for the purposes of section 830.
Given that the payments were found not to be dividends, the question arose as to whether the payments were made on any proper basis and, if not, whether the receipt of those payments constituted a breach of the Respondent’s fiduciary duties. The Judge found that the Company was obliged to pay the Respondent a reasonable sum for his services, as the Company would be unjustly enriched if it received valuable services from the Respondent for free. On this basis, the Judge found that the Respondent was entitled to retain the payments and that the payments did not give rise to a breach of fiduciary duty.
Court of Appeal
The Judgment of HHJ Mathews was appealed to the Court of Appeal, which allowed the appeal.
The Court stated that the relevant question was whether the payments constituted dividends at the time they were made. It was found that the payments clearly were dividends, given that they were expressly declared by the directors to be interim dividends and were taxed accordingly.
It was immaterial that the payment may subsequently have been recharacterised as remuneration. The Court found that “the most [such a recharacterisation] can do is to allow the monies to be notionally repaid and then re-applied in a way which does not contravene the provisions of s.830 and is otherwise a lawful application of the assets of the Company.”
The Court also doubted the Judge’s finding that companies were bound by an obligation to pay reasonable compensation to directors and noted the decision in Guinness Plc v Saunders [1990] 2 AC 663, in which the House of Lords held that the law would not imply a contract for remuneration when such a contract could only be agreed under the articles of association by an appropriate resolution of the board. The Judge’s findings in this respect had previously been questioned in Toone v Robins [2018] EWHC 569, in which Norris J stated “to award a company director for work done for the company by applying the doctrines of “unjust enrichment” would contradict the long-established principle that a director may not make an unauthorised profit out of his position, a principle that overrides any unjust enrichment claim.”
It was also noted that, even if a claim for unjust enrichment were to succeed, this would need to be proved for in the liquidation, rather than simply allowing the Respondent to retain the payments.
Comment
This case brings clarification to this area of the law and makes clear that director-shareholders cannot simply draw funds from the company on an ad hoc basis and avoid subsequent liability by referring to the value of work they provided the company. This clarification will no doubt be welcomed by liquidators.
As far as director-shareholders are concerned, there are obvious tax advantages in drawing compensation by way of dividend rather than as a salary, although this case highlights the risks of doing so. Any dividend paid at a time when the company has insufficient distributable profits is unlawful. This principle applies regardless of whether the company is currently trading profitably.
Director-shareholders cannot simply hope to re-classify such dividends if necessary and will likely be required to repay the same to the company in the event of a challenge. Once such dividends are repaid to the Company, it appears unlikely that a company would be required to pay the director a reasonable sum for his services under the doctrine of unjust enrichment.
Although the tax advantages of dividends over salary are clear, the most prudent approach for director-shareholders of companies with unascertained distributable reserves would be to take a salary rather than a dividend so as to avoid the issues which arose in this case.

Disclosure, all change please!
What is changing, and why? Whilst the full ‘cards on the table’ approach to disclosure […]
What is changing, and why?
Whilst the full ‘cards on the table’ approach to disclosure in England and Wales may be an important aspect of the litigation process in England and Wales, it can often prove disproportionately expensive. The explosion in the volume of electronic data in recent years is also a significant contributing factor to escalating disclosure costs.
There have been concerns for some time over how to control disclosure costs, particularly in very small and very large cases, to ensure that litigation is conducted as efficiently as possible. A working group set up in 2016 was tasked with identifying problems with the existing regime and devising a practical solution. The conclusion was that the current section of the Civil Procedure Rules (CPRs) which deals with disclosure, Part 31, is no longer fit for purpose and there is a need for more meaningful engagement between the parties and more robust management from the courts.
As from 1 January 2019, therefore, a mandatory two-year disclosure pilot scheme will operate in the Business and Property Courts (BPCs) across England and Wales [1]. In the words of the working group, the new scheme is intended to bring about a “wholesale cultural change”.
It is vital that in-house lawyers and anyone involved in commercial dispute resolution get to grips with the new scheme.
Disclosure Pilot Scheme
Over many years, parties, lawyers and even the judiciary have got into the habit of feeling that anything that is or could potentially be relevant to the case should be disclosed. That results in huge swathes of documents routinely being disclosed, the vast majority of which often have no real bearing on the issues. That is not what is actually required by law. Cases as far back as 2007 [2] have acknowledged that, in fact, the CPRs sacrifice ‘perfect justice’ for the more pragmatic ‘reasonable search’ rules, which do not require that “no stone be left unturned” when it comes to looking for documents to disclose. Whilst this may mean that a relevant document, even a ‘smoking gun’, is not found, this is justified by considerations of proportionality. The pilot scheme effectively provides a mandatory procedural framework which codifies those principles.
The pilot scheme introduces two stages of disclosure: initial disclosure of key documents with the parties’ statements of case; and, in some cases, extended disclosure later in the litigation. Importantly, there is no automatic entitlement to extended disclosure.
One of the central features of the new scheme is a greater focus on the key issues for which disclosure of documents is really required, as opposed to disclosure of anything and everything which may potentially be relevant to any and every issue pleaded. (For example, ‘issues for disclosure’ may not include issues which are purely questions of law, or issues which need to be decided solely on the basis of, say, witness or expert evidence.) The idea is that disclosure should be no wider than is strictly necessary. If extended disclosure is ordered, it may be on an issue by issue basis, with one of five possible models for disclosure (ranging from disclosure of known adverse documents only (Model A), through to a wide search-based train of enquiry disclosure (Model E)), applying as appropriate to particular issues for disclosure.
The scheme also places a new emphasis on early cooperation between the parties. It requires the parties to jointly complete, before the first Case Management Conference, a Disclosure Review Document (DRD), which sets out the parties’ proposals for the appropriate disclosure model[s]. The DRD is also the method through which the parties share information about how documents, including electronically stored information (including metadata and so-called ‘deleted data’ and the like) [3], are stored and how they might be searched and reviewed. The parties are also required to discuss and seek to agree on the use of software or analytical tools, including technology assisted review software and techniques, with a view to reducing the burden and costs of the disclosure exercise. The DRD also requires the parties to give their best estimates of the likely costs involved in the disclosure exercise, to enable the court to make an informed decision as to the nature of the extended disclosure order to be made in the case – if any.
Another key feature of the new scheme is that it expressly imposes new duties on parties and their legal advisers which are more onerous that those set out in CPR 31 and existing Practice Directions. The duties relate to the preservation of potentially disclosable documents and to the parties’ and legal advisers’ conduct of the disclosure exercise itself. The duties are serious and backed up by sanctions for non-compliance, so clients should expect to receive detailed advice and assistance from their lawyers in that regard on a case-by-case basis.
Practical advice
In-house lawyers and anyone involved in commercial dispute resolution and, in particular, litigation in the BPCs should familiarise themselves with the new disclosure pilot Practice Direction and associated documents, and ensure that their internal processes and procedures reflect the requirements of the scheme.
In particular, staff training as to new legal and procedural duties and requirements, and as to the principles underlying both disclosure and legal privilege (which can allow otherwise disclosable documents to be withheld from the opposing party and from the court in certain circumstances) will be vital.
If you would like any further information or advice, of if you would like any assistance with training or with reviewing your firm’s internal dispute resolution processes, please do not hesitate to contact Gwendoline Davies or any member of Walker Morris’ Commercial Dispute Resolution Team.
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[1] The scheme is set out in a new Practice Direction to the CPRs, PD 51U
[2] Nichia Corp v Argos [2007]; Digicel (St Lucia) v Cable & Wireless [2008]; Shah v HSBC Private Bank [2011]
[3] For more information about disclosure and edisclosure, please see the Chambers Global Guide to Ediscovery and Disclosure and the chapter on Disclosure and Inspection from Walker Morris’ Little Green Book of Dispute Resolution

Public procurement challenges: Update on recent cases
We have written previously about the significant legal and procedural hurdles raised by public procurement […]
We have written previously about the significant legal and procedural hurdles raised by public procurement challenges. In this briefing, Commercial Dispute Resolution specialists, Gwendoline Davies and Lynsey Oakdene, consider two recent court decisions in the context of public procurement challenges: the first on disclosure and confidentiality; the second on setting aside an automatic suspension of the procurement process.
Disclosure vs confidentiality
In Marston Holdings Limited v Ministry of Justice (HM Courts & Tribunals Service) [1] the claimant, Marston, applied for specific disclosure of tender documents submitted by Excel, one of the successful bidders in a public procurement exercise for the award of a single national contract, or regional contracts, for the supply of approved enforcement agency services on behalf of the Ministry of Justice (MoJ). Marston was awarded the top quality mark for the potential national contract, but it failed against other tenderers for the regional contracts. In the end, no national contract was awarded and regional contracts were awarded to a number of others including Excel.
Marston issued proceedings seeking to challenge the procurement exercise on the basis of defects in the evaluation of the tenders and arguing that it should have been seen as the overall most economically advantageous tender for the national contract. The MoJ had provided early disclosure prior to issue of the claim. It admitted that there had been discrepancies and inconsistencies which led to revisions and alterations to the evaluation of the tenders, and that changes were made to scores during the evaluation exercise, but said that any error in the approach taken would have affected all of the tenderers, and Marston would not have been awarded the national contract in any event.
As often happens with procurement challenges, there were ‘confidentiality rings’ in place: one for the members of the parties’ legal teams; the other for a client representative of Marston. If Marston’s legal team considered it necessary for the client representative to review any documents, a written request had to be made to the relevant party, identifying the information sought and why it was reasonable and necessary to provide access. Inspection could only take place in hard copy at Marston’s legal team’s office. The court had to decide whether disclosure of the full Excel tender documentation was necessary for it to fairly and proportionately dispose of the issues in the case. Excel opposed the application, submitting that disclosure of the full documentation was not relevant to the issues. The parts relevant to the specific questions challenged in Marston’s pleading had already been disclosed into the confidentiality ring.
Specific disclosure was ordered by the court, which had very wide powers. The fact that documents might be confidential was not an automatic defence to any order for disclosure. Disclosure was necessary and proportionate. Marston had made out a prima facie case for its challenge based on the fact that it was awarded the top quality mark. The other bids were significant because, in order to ensure that it might be awarded the national contract, Marston would have to establish that it was ahead of the first five winning bidders for the regional contracts. It was therefore necessary for all of the tenders to be considered. The discrepancies, inconsistencies and changes during the evaluation raised an issue which the court had to look at. It would have to look at the way in which the evaluation and moderation exercise was carried out across the board to determine the claim.
Provided that there was adequate protection for the confidential information, which there was in this case, all of Excel’s tender documentation was disclosable. The court held that the documents should be disclosed first to the legal team confidentiality ring, followed by a discussion as to whether redactions needed to be made before placing the documents in the Marston client confidentiality ring.
Where does the balance of convenience lie?
In Bombardier Transportation UK Limited and other cases v London Underground Limited [2], the defendant London Underground (LUL), supported by successful bidder Siemens, applied for the lifting of the automatic suspension which had arisen on the issue of claims by Bombardier, Hitachi and Alstom under section 45G of the Utilities Contracts Regulations 2006 (UCR 2006). The proceedings concerned a procurement exercise in respect of the Deep Tube Upgrade Programme, with up to £2.5 billion worth of potential contracts lasting 40 years. Bombardier and Hitachi acting as a joint venture (JV), and Alstom, were shortlisted but ultimately unsuccessful bidders. Various proceedings were issued seeking to challenge the procurement as contrary to the UCR 2006. The automatic suspension prevented LUL from entering into the relevant contracts with Siemens. At the same time, Hitachi, supported by Bombardier and Alstom, applied for an expedited timetable for the trial.
The judge (who also decided the Marston application) swiftly dispensed with an application from LUL’s counsel for the court to sit in private for part of the hearing because he wished to refer to confidential material in the pleadings and evidence. The arguments did not justify overriding the principle of open justice. The court had the benefit of unredacted versions of full written submissions, pleadings and evidence. Counsel were entitled to refer to the redacted sections to develop their submissions and properly put their clients’ case. That was achieved by counsel drawing attention to the relevant parts on which they wished to rely without quoting from them in open court.
As to the suspension lifting application, the court had to consider the following issues, applying the well-established American Cyanamid [3] balance of convenience test:
- Was there a serious issue to be tried?
- If so, would damages be an adequate remedy for the JV and /or Alstom if the suspension were lifted and they succeeded at trial?
- If not, would damages be an adequate remedy for LUL if the suspension remained in place and it succeeded at trial?
- Where there was doubt as to the adequacy of damages for any or all of the parties, which course of action was likely to carry the least risk of injustice if it transpired that it was wrong – where does the balance of convenience lie?
As to issue 1, LUL had conceded that there was a serious issue to be tried for the purpose of the application, but sought to rely on perceived weaknesses in the claims as factors tipping the balance in favour of lifting the suspension. The judge considered that the pleadings in each claim disclosed an arguable cause of action and that it would be inappropriate for the court to attempt to weigh the likely strengths and weaknesses of each party’s case without the benefit of full evidence and reasoned submissions.
As to issue 2, the claimants submitted that damages would not be an adequate remedy. They argued that: loss of the procurement, which was highly prestigious, very high value and of global interest, would adversely affect their reputation in the global market; they would lose the opportunity to develop and exploit technological advancements and innovations; there would be an adverse impact on their strategy for investment in factories and employment in the UK and other entities within the supply chain; there would be great difficulty in accurately and fairly quantifying the loss; and a recent Supreme Court decision [4] raised the real prospect that if the suspension were lifted and the claimants established their claims, they would be deprived of any damages.
The judge was satisfied that the loss of the contracts was likely to have a substantial adverse effect on the claimants’ reputation which would cause losses that would be very difficult properly to quantify. In most cases, unsuccessful bids are part of the normal commercial risks taken by a business and will not have any adverse impact apart from potential wasted costs of the tender and lost profits. Not every failed bid will result in damage to reputation causing uncompensatable loss. In this case, the procurement was distinctively prestigious because of its size, location and value. Success would enhance the winning bidder’s reputation in the global rolling stock industry and provide evidence of competence and expertise that could be used to increase its chances of securing other high-value commercial opportunities. Failure through unlawful procurement procedures would deprive the unsuccessful bidder of those advantages and place it at a disadvantage in competing for other commercial opportunities. The judge was not persuaded by the claimants’ other arguments.
As to issue 3, LUL submitted that, in addition to the financial losses that could be compensated by way of damages, it would suffer very considerable non-financial prejudice to the delivery of its core public functions and public service mission if the suspension were maintained and the introduction of the new trains delayed until after conclusion of the proceedings. Loss of public benefits such as comfort and accessibility, and wider economic benefits, such as housing and employment, do not have a direct financial cost or would be very difficult to quantify for the purpose of claiming damages. The judge rejected the claimants’ submission that delay in implementation of the project could be avoided if the suspension were not lifted, saying that it was ‘fanciful’ for the claimants to suggest that a project of this scale could be re-sequenced to fit around their legal challenge. Having rejected that suggestion, it followed that LUL would suffer non-financial losses and it was likely that damages would not be an adequate remedy if LUL were to succeed at trial.
As to issue 4, the judge noted that the court may have regard to the public interest when determining where the balance of convenience lies. The starting point in assessing the balance was to consider how long the suspension might have to be kept in force, which required the court to consider the claimants’ application for an expedited trial. The claimants submitted that the parties could be ready for trial by spring/summer 2019. The judge disagreed. The trial would not be ready before November 2019, given that disclosure looked to be a substantial exercise likely leading to amendments to the claims, the trial would probably involve large numbers of documents, and it was likely that expert evidence would be required given the technical nature of the procurement under challenge. Time would have to be allowed for judgment and a potential appeal. The application was refused.
LUL submitted that introducing the new trains would enable it to offer a significantly improved service in terms of capacity, frequency, comfort and accessibility. There was credible evidence that reliability of the existing stock was decreasing and age-related failures were difficult to predict. They would likely cause more and more disruption. The judge decided that further delay was not justified in this case. The evidence showed that there was a strong public interest in introducing the new trains as soon as possible. Maintaining the suspension was likely to cause years of delay to the works and the public benefit had already been deferred as a result of the collapse of an earlier public private partnership. The judge was unconvinced by the claimants’ arguments, which included that LUL was unable to point to actual urgency that would arise from the suspension remaining in place, and the detriment to the public interest if LUL had to pay twice. She also disregarded LUL’s submission that the court should take into account further delay that would be necessary in the event that LUL was required to re-run the procurement exercise. The balance of convenience lay in lifting the suspension and permitting LUL to enter into the contracts with Siemens.
WM Comment
There is a delicate balance to be struck between disclosing documents relevant to the issues in dispute, for example to enable the claimant to plead its case properly, and maintaining the confidentiality of bidders’ commercially sensitive information. The Marston decision reiterates the fact that, while the court will take account of the issue of confidentiality, confidentiality is not a bar to disclosure. The Bombardier decision reiterates that the need to protect confidential information must be balanced by the basic principle of open justice.
There are a variety of measures which can be put in place to deal appropriately with confidential documents, both pre-action and post-commencement of proceedings, including the use of redactions and confidentiality rings and undertakings. The Guidance Note on Procedures for Public Procurement Cases (found at Appendix H of the Technology and Construction Court guide) sets out guidance on these issues, including catering for interested parties and the approach parties should take in providing one another with information, taking into account any genuine concerns with regard to confidentiality (whether they are their own, or those of third parties).
In Bombardier, not unsurprisingly, the court was clearly heavily swayed by LUL’s public benefit argument for the lifting of the automatic suspension. Commercial parties who find themselves in a similar position to the claimants in this case should proceed with caution. Public procurement claims raise unique and significant challenges for potential claimants. Obtaining early specialist legal advice is key.
Should you have any queries arising from any of the issues highlighted in this briefing, please do not hesitate to contact Gwendoline, Lynsey or any other members of the team, who will be very happy to help.
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[1] [2018] EWHC 3168 (TCC)
[2] [2018] EWHC 2926 (TCC)
[3] American Cyanamid Co (No.1) v Ethicon Ltd, [1975] UKHL 1. The balance of convenience test is intended to identify the course of action that should be taken by the court at an interim stage that will cause the least risk of injustice if it proves to be wrong. The balancing exercise is required because the court does not know at that time what the final outcome will be.
[4] Nuclear Decommissioning Authority v EnergySolutions EU Ltd (now called ATK Energy EU Ltd), [2017] UKSC 34, which determined that breaches of procurement law would only be actionable for damages where the claimant was able to prove that the breach was “sufficiently serious”.

Plastics: The Scope of the Single-Use Plastic Directive[...]
The Chancellor of the Exchequer’s autumn budget has outlined the UK’s intentions to address waste […]
The Chancellor of the Exchequer’s autumn budget has outlined the UK’s intentions to address waste by encouraging the recycling of plastic, shortly after the European Commission proposed the introduction of a Single Use Plastic Directive.
Plastics Tax and Producer Responsibility
The Chancellor’s statement outlined the introduction of a tax to reduce the environmental consequences of plastic. Expected to commence in April 2022 the tax will apply to importers and producers of plastic packaging. Although the precise nature of the tax has not been detailed, only plastic packaging that has at least 30% recycled plastic content will be exempt from the tax.
Alongside the plastic tax, the government have announced changes to the current Packaging Producer Responsibility System. The intention is to heighten responsibility for businesses in relation to the treatment of plastic packaging after use, increasing involvement in the recycling and clean-up of their products. The Treasury’s intention is for the system to promote easily recyclable packaging and deter the use of hard to recycle plastics.
Additionally, the government is increasing funding by £10 million for research and development into plastics and a further £10 million for innovation into recycling and minimising waste.
The divergence between the UK and EU approach to reducing waste was highlighted by the Chancellor’s direct rejection of the so called ‘latte levy’, the introduction of a charge to disincentivise the use of, often single use, plastic cups. It was suggested this measure would be inappropriate in isolation and unlikely to generate change. In contrast, the EU’s proposed directive targets specific disposable items that make a disproportionately large contribution to marine and beach waste.
Although support has been shown for the Chancellor’s proposals, concern has been expressed over the available supply of recycled plastic, fundamental to achieving the 30% requirement. It is hoped the increased spending on innovation, research and development and the revenue from the tax will enable a sufficient supply of recycled plastic for suppliers to reach the 30% requirement.
Single Use Plastic Directive
The directive aims to reduce the volume of waste plastic claimed by the European Commission to account for over 80% of marine waste. It focuses on prevalent discarded items including: plastic bottles, straws, food packaging and cotton buds, and has been extended by the European Parliament to include items made of expanded polystyrene and oxo-degradable plastic. The directive updates the existing EU concept of Extended Producer Responsibility by introducing additional obligations on importers and producers to mitigate the consequences of their products upon the environment.
For manufacturers, the implications are varied. The directive outlines specific mechanisms, dependent upon the item, that aim to reduce aggregate plastic waste. For products with renewable alternatives, bans will be introduced, and where bans are inappropriate industries may be required to finance waste management; increase awareness of the implications of plastic; and/or alter labelling to reflect a product’s plastic content, how to dispose of it and its environmental consequences. Additionally, State facing obligations have been proposed, requiring the introduction of reduction and collection targets, one example being the introduction of a 25% reduction in the use of food containers for fruits and vegetables by 2025.
Criticism has arisen regarding the expediency of the drafting and there remains uncertainty surrounding the potentially far reaching implications of the directive. The proposed definition of a single-use plastic product includes items only ‘partly’ containing plastic. The wide-scope of the directive may prove onerous for manufacturers. The European Council have reacted positively towards the directive but seek further clarification on the definition of single use and have requested guidance detailing examples of relevant products.
Whilst uncertainties surrounding Brexit make the implications of the directive indeterminate, the Autumn Statement indicates that the UK is taking a markedly different approach to plastic consumption, addressing plastic packaging more generally but relying on fewer mechanism for change.