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Spring 2001
In this issue The Errant
Director The regime for disqualification of company directors changed considerably this month, with the commencement of the Insolvency Act 2000. It provides for the first time that a director may avoid disqualification proceedings by giving an undertaking to the Department of Trade and Industry not to act as a company director or be concerned in the management of a company for an agreed period of time. The new undertakings will:
It is anticipated that undertakings will reduce the costs of disqualification proceedings but a director giving an undertaking will have to meet the costs of the DTI up to the point when it would normally issue proceedings. By that time of course the DTI will have conducted a full investigation and may already have incurred significant costs. The new regime is good news for the DTI whose strike rate will undoubtedly improve. It remains to be seen whether it will bring about justice for those directors who have an arguable defence but limited funds at their disposal. The better position, in our view, would be to make public funding available to directors in such cases. For further information concerning disqualification undertakings and director disqualification proceedings please contact Clare Harris cxh@meadeking.co.uk or Keith Mahoney kwm@meadeking.co.uk New Employment
Figures A Plate Full
of Protocols Amongst other things the Rules introduced the idea of pre-action protocols. They were intended to develop a culture of pre-action behaviour for potential litigants intended to try and avoid the need for proceedings to be commenced. There are currently four protocols in place:
The idea of protocols is sound. They encourage better and earlier exchange of information and better investigation of the merits of the case at an early stage. They can put the parties in a better position to settle matters without resorting to court. If proceedings are issued then at least the pre-issue work should assist in running cases more efficiently. But does the system, or for that matter the litigant, require a protocol for every kind of dispute? There are currently many protocols being considered in addition to the four in force e.g. road traffic accidents, holidays, debt collection, housing disrepair and mortgage possession. From the construction viewpoint we have received mixed reactions. Members of the building industry who are used to the hand-to-hand fighting that can develop in construction cases are divided. Some resent the up front cost of the investigation work, which is often not recoverable, and prefer the frontal assault method. Others have seen the merit in sharing information at an early stage and have adopted the Construction Protocol as they adopted the Housing Grants Construction and Regeneration Act. The introduction by the HGCRA of adjudication whilst contracts continue has produced an era of increased openness and frankness in dealing with contractual issues. Should the pre-action process be kept as simple
and as user friendly as possible? Will the potential introduction of a protocol
for every sort of claim help in dispute resolution or just make everything more
expensive? The jury is out. Are the
English a nation? The court disagreed. It also said that nationality and racial origin can be subjectively determined i.e. if a British mongrel says that he is wholly English then that should be treated as his race for the purposes of race discrimination wherever his grandparents may have been born. The same principle is likely to apply to the Irish and, Ann Robinson permitting, even the Welsh. Employment Law
1: Young People The case illustrates not only the importance of
proper maintenance and work procedures but also the special attention which
employers need to give to the training and employment of very young adults. The
Management of Health and Safety at Work Regulations 1999 place a duty on
employers to consider the special requirements which apply to people under the
age of 18. Employers must consider on an individual basis the particular
training and supervisory needs of any young persons. They must bear in mind the
personal maturity and competence of the individual concerned in deciding on the
tasks which they should be permitted to carry out. Employment Law
2: What is gross misconduct? Employment
Law 3: TUPE Pitfalls The case concerned a contract for the maintenance of properties let by Teignbridge District Council. Brewer were awarded the contract and put their own men to work on it. They did not take over any of the previous contractors' employees or their assets. The employees of the previous contractor argued that TUPE applied and that they should have been taken over by Brewer. The EAT agreed that this might well constitute a transfer even though no assets and no employees were taken over. Indeed, it said that where the business activity was labour intensive (as in the case of a maintenance contract) then it might well be that the employees themselves constituted the main part of the business. The new contractor could not escape a transfer simply by arguing that he had not taken over any of those employees. The consequences for an employer who does not
recognise that there is a TUPE transfer can be serious. If the employees of the
old contractor are not taken on then they may be able to claim an automatic
unfair dismissal. Wider Powers
for Charity Trustees The new Act removes the need to split trust funds between wider and narrower range investments. The prohibition against delegating responsibility to portfolio managers is also removed. The general power of investment has been reversed so that, unless the charity constitution states otherwise, a trustee may 'make any kind of investment that he could make if he were absolutely entitled to the assets of the trust'. In recent years the Charity Commission has been willing to authorise wider investment powers, but the Act makes the wider power of investment the 'default' position. With that extra power comes additional responsibility. The Act spells out the duties of trustees to exercise their investment powers in the best interests of present and future beneficiaries and to avoid conflicts of interest. They must:
The Charity Commission's monitoring powers are likely to become more evident in this aspect of charity governance. In charities with a modest investment portfolio this is likely to encourage trustees to seek professional management or at least regular professional advice. As they have wider powers, they may be criticised if they stick to the Trustee Investments Act criteria and the charity's investments do not perform as well as if there had been a less conservative approach. Trustees should in any event review their investment policy if they have not done so recently. The new Act should also give extra cause for
thought for those who are thinking of setting up a new charity. If they wish to
impose restrictions on the investment of the charity's assets e.g. in land, or
for ethical or other reasons those restrictions need to be spelt out in the
constitution of the charity. Powers of
Attorney Previously attorneys appointed under an Enduring Power of Attorney made before 1st March 2000 did not need to comply with the 1999 Act. Where the Enduring Power of Attorney has already been registered with the Court of Protection this exemption still applies but in all other instances Enduring Powers of Attorney must comply with the Act. The basic principle is that where land is in the name of two or more people and one of them has appointed an attorney to deal with his interest in the property there must be at least two separate signatures on any transfer deed. Those who have granted or received either
ordinary or Enduring Powers of Attorney covering property should check the
powers to ensure they comply with the Act. Sticking to the
Point The aim is to 'do away' with the endless irrelevant detail contained in the forms of enquiries used by many lawyers. It is hoped the clearer and shorter standard form will be sufficiently comprehensive for the buyer whilst containing only questions which are pertinent and reasonable. Published jointly by the British Property
Federation and "The London Property Support Lawyers Group", the enquiries are
subject to a consultation period before being released after the 4th
May. Competition
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