The Report, June 2016 by Benham Publishing Limited

The City of Westminster and Holborn Law Society

REPORT The

Summer 2016

AGRICULTURAL ROUND UP BY EDWARD PETERS

› Cyber Security › Conveyancing Focus › Risk and Compliance › Probate

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ADVERTISING AND FEATURES EDITOR Anna Woodhams DESIGN AND PRODUCTION MANAGER John Barry ACCOUNTS DIRECTOR Joanne Casey MEDIA NO. 1460 PUBLISHEDMay 2016 © Benham Publishing Ltd. LEGAL NOTICE © Benham Publishing. None of the editorial or photographs may be reproduced without prior written permission from the publishers. Benham Publishing would like to point out that all editorial comment and articles are the responsibility of the originators and may or may not reflect the opinions of Benham Media. No responsibility can be accepted for any inaccuracies that may occur, correct at time of going to press. Benham Publishing cannot be held responsible for any inaccuracies in web or email links supplied to us. The City of Westminster and Holborn Law Society welcomes all persons eligible for membership regardless of Sex, Race, Religion, Age, Disability or Sexual Orientation.

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INTRODUCTION

LOCAL ISSUES

PROFESSIONAL PRACTICE

TRAVEL

MONEY LAUNDERING UPDATE

CYBER SECURITY

RISK AND COMPLIANCE

ACCOUNTANCY

CONVEYANCING FOCUS

LEGACIES

AGRICULTURAL LAW

PROBATE

36 President: Hon Secretary:

Hon Treasurer:

Editor:

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Edward Macey-Dare Jonathan Cornthwaite jcornthwaite@wedlakebell.com 020 7395 3122 Bruce Clarke bruce.clarke@lbmw.com 020 7222 5381 Ivan Ho ih@hunters-solicitors.co.uk 020 7412 0050 Susie Hust, 1 The Sanctuary, London SW1P 3JT admin@cwhls.org.uk 020 7960 7115

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Sub Committee Report

REPORT OF THE PROFESSIONAL MATTERS SUB-COMMITTEE APRIL 2016 The most important issues we have considered in the last quarter are set out below. 1.The Burden of Proof in Disciplinary Cases against Solicitors At present the Solicitors Regulation Authority (SRA) applies the civil standard of proof in assessing disciplinary cases against solicitors, notwithstanding that on appeal the Solicitors Disciplinary Tribunal (SDT) is bound by case law to apply the criminal standard. This is an anomaly, but in our view it is one created by the SRA. Admittedly the SRA is under pressure to apply the civil standard. This issue has come to our attention in two ways in the last quarter: • The Insurance Fraud Taskforce Final Report (which has been heavily criticised for favouring insurers’ views over those of claimant solicitors) recommended (in Section 3.26 ) that consideration should be given to reducing the standard of proof from the criminal to the civil one in cases put before the SDT. • In a decision by the SDT dated 16 March 2016 on the appeal by Huseyin Arslan against a decision of the Solicitors Regulation Authority (SRA), the SDT decided that it must continue to apply the criminal standard of proof on the appeal notwithstanding that the SRA applied the civil standard in its original decision. The SRA is understood to be appealing the SDT’s use of the criminal standard to the Administrative Court. Mr Arslan (a clerk) did not have legal representation on his appeal to the SDT, presumably because he could not afford it. In our view this is an issue of great significance to solicitors, and the Law Society should either apply to intervene, or should meet the costs of representation for Mr Arslan on this issue. 2.Solicitors Regulation Authority SRA consultation “Training for Tomorrow: assessing competence” We responded to this consultation. This proposed a common Solicitors Qualifying Examination (SQE). In general terms we welcome this. It is desirable to have uniformity and objectivity in assessing those entering the profession. The present system is not working well. The contents of the SQE are critical. It should include Reserved Activities, since the ability to undertake these is the hallmark of being a solicitor. However it should not be restricted to these. The SQE is proposed to be divided into two parts|: “functioning legal knowledge assessments” and “practical legal skills assessments”. It is important that this leads to an improvement and not to a dilution of quality. Practical experience (as in articles) is an important part of training for qualification. On many issues the SRA had not given enough information to comment fully. That would have to await further consultations. 3.SRA consultation: “The Insurance Act 2015 and consequential changes to the minimum terms and conditions of professional indemnity insurance” The SRA says it is “proposing to amend the minimum terms and conditions (MTC) of professional indemnity insurance [PII]” to treat such PII contracts as “non-consumer contracts, [to which] the Insurance Act requires that… [insureds]… make a "fair presentation of the risk" to insurers…Information which would influence the judgement of a prudent insurer in determining whether (or on what terms) to accept the risk or which would put a prudent insurer on notice that it must make further enquiries concerning the risk must be disclosed…The Insurance Act also requires disclosure of circumstances an insured ought to know (…through a reasonable search of information available to them).” The essential point is that Insurers would not have the right to avoid a policy or refuse to pay a claim for non-disclosure, but only to attempt to recover from the Insured the amount by which

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they have been prejudiced by the non-disclosure. This is not a new concept in PII policies, and these proposals seem to us to be reasonable. 4.Legal Services Board (LSB) consultation Changes to rules made under section 51 of the Legal Services Act 2007 [practising certificate fees] The LSB is proposing that “Monies raised through practising fees must not be applied for any purpose other than one or more of the permitted purposes…” Whilst these would include matters such as “the regulation, accreditation, education and training of authorised persons”, they would not include representative functions. This seems part of the LSB’s agenda to get rid of the Law Society now that it has effectively lost its regulatory function. In reality most practitioners would probably not pay a voluntary levy to keep the Law Society going. There is however a public interest benefit from the Law Society. It has useful committees. It does useful work in putting forward the interest and benefits of a common law system in dealings with foreign jurisdictions. Moreover if the SRA and LSB wish to restrict their regulatory function to Reserved Activities, there is a case for the Law Society to regulate the other activities of solicitors. 5.LSB : “First-tier complaints handling: LSB requirements for approved regulators” We briefly responded to this consultation (which closed on 27 April 2016 after a very short consultation period), which refers to the LSB’s proposal that “Approved Regulators (ARs) must require all individuals and entities that they regulate (authorised persons) to notify clients in writing of their right: • to make a complaint, including how, to whom and within which timeframes • to complain to the Legal Ombudsman at the conclusion of that complaint process if unsatisfied with the outcome.” Currently the LSB gives guidance that clients must be informed of these rights “at the time of engagement, or existing clients at the next appropriate opportunity.” The Consultation proposes to make it a requirement that all clients (including existing clients) should be informed of these rights “at the time of engagement”. This gives no discretion to the lawyer and takes no account of the fact that there will be occasions where it is simply not practical or appropriate to give this advice to a client at the time of engagement. In the radio soap “The Archers” Helen Titchener stabbed her abusive husband. Her family retained a solicitor to act for her. When he went to see her she was still hysterical and in no position to take in matters concerning First Tier and Second Tier complaints (or to give informed consent to his terms of business), and it would have been inappropriate for her solicitor to raise the issue at that stage. He simply had to try to start a dialogue and gain her trust. Similarly a solicitor may be summoned to the death bed of a client to make a will or codicil or to take instructions on other matters. Again it might be inappropriate to raise the LSB’s requirements (and the client would probably not be around to make a complaint). What constitutes the “time of engagement” may be arguable. It is quite common for solicitors to meet a client and start working or giving advice straight away and only later set out their terms of engagement when they know what is required. That is often the appropriate time to advise clients of their rights to complain. We stressed that this must be clarified.

Julian Aylmer APRIL 2016

Introduction

THE PRESIDENT’S COLUMN Dear Members, I hope this edition of the Report finds you in good fettle and full of the joys of summer. Time is moving on apace and I cannot believe that I am now half way through my Presidential year. It is all going far too fast! Edward Macey - Dare, President What have I been up to since the last edition went to press? After much deliberation, I decided to apply for the casual vacancy that had arisen on the Law Society Council for the constituency of the City of Westminster and somehow found myself being elected (in truth, there was no opposition!). I attended my first Council meeting in March and, not having been put off, I decided to apply for reelection from this July, for a further 4-year term; once again, I was elected (again for the same reason!). I have now attended 2 meetings in total and am in the process of finding my feet. That said, I was persuaded by Simon Davis of the City of London Law Society (who I sit next to) to make my maiden speech at my very first meeting – a somewhat daunting experience, I can tell you, as your microphone goes from green to red and suddenly 99 pairs of eyes are upon you (with your mugshot appearing on a big screen at the very front of the chamber) – but, having been bloodied once, I spoke again at the second meeting (this time with less trepidation). I fully intend to continue making an active contribution for the duration of my tenure. Whilst much of Council business is confidential, I will of course do whatever I can to represent the interests of our members – so, if you have any burning issues that you would like debated/discussed, please let me know. On 6th May, I attended the Presidents' and Secretaries' Conference hosted by the Law Society, which provided a useful insight into how other local law societies go about their business. This has sparked several new ideas, which I am now taking back to the Officers' Committee and the Main Committee. More on these anon. On 19th May, the Society played host to members of the Milan Bar and also the Polish Bar, who were over in London for the annual dinner. They were treated, in the morning, to a tour of The Supreme Court (with Professor Sara Chandler and Maria Memoli in tow), followed by a sandwich lunch at my firm's offices (where we were also joined by the Vice President of the Law Society, Robert Bourns). In the afternoon, they were all given a guided

tour of the Palace of Westminster by Arthur Weir, Adam Maberley, Maria Memoli and Professor Chandler. The evening of 19th May heralded the annual dinner at Vintners' Hall. This was, without doubt, the absolute highlight of my year so far – and, gratifyingly, was a complete sell-out. See my separate article. On the morning of Friday 20th May, the International Committee hosted a seminar at my offices on the legal implications of Brexit. The event was attended by lawyers from the UK, Italy, Poland, Spain and Germany. Our 2 guest speakers were Marie Bates from Farrer & Co and Davina Garrod from Akin Gump LLP and we were also very pleased to welcome Carolyn Thurston Smith, a policy advisor from the Law Society who had worked on the Law Society's extensive paper on the legal sector and the EU. The members of the Milan Bar were then treated to lunch in Middle Temple Hall, followed by a tour of Middle Temple itself. Well, what next? The next big event on the calendar is the Legal Charities Garden Party, which you will recall came back under the auspices of the Society last year. Please note that, this year, it takes place on Thursday 16th June in Gray's Inn Fields (not Lincoln's Inn). This new location is fitting for several reasons. Firstly, Gray's Inn was the venue for the inaugural Legal Charities Garden Party in 1968 and this is the first time we have been back since then. Secondly, the "theme" this year is William Shakespeare (2016 being the 400th anniversary of the Bard's death) and "A Comedy of Errors" was first performed at Gray's Inn in 1594. Notwithstanding the Garden Party's slightly unfortunate strap-line of: "Lawyers helping lawyers" (which, to my mind, rather resonates of "Lawyers Helping Themselves"!), and, putting to one side such unfortunate Shakespearean quotes as: "Let's kill all the Lawyers" - please do come along and support this event. Last year, we managed to raise more than £8,000 for our 5 legal charities (in just 2 hours!); and, this year, we hope to raise much, much more.

Wearing another hat (as Clerk of the Distillers' Livery Company) the Master Distiller has very generously agreed that members of the Society will be most welcome to attend our annual Mansion House Banquet on Friday 7th October, at which the Lord Mayor, Lord Mountevans, will be the guest of honour. For those of you who have not had the privilege of dining at Mansion House before – home to the famous Samuel Collection of Dutch Old Masters, with its magnificent Salon and Egyptian Hall - this is a must attend event. Further details can be obtained from the Society's Administrator, Susie Hust. Do come if you can – it really is a wonderful evening. We have several other events in the pipeline, not least: a wine tasting evening at 1 The Sanctuary; a quiz night (with our Immediate Past President as the quiz master); and a gin tasting event, courtesy of the Gin Guild, at the Carlton Club (where our "tutor" for the evening will, appropriately enough, be a retired solicitor – evidently, he's seen the light!). Looking even further ahead, plans for the National Conference of Local Law Societies in 2017 (which we are hosting) and the 25th anniversary of the Federation of European Bar Associations (FBE), which will be held concurrently in London between Thursday 9th November 2017 and Saturday 11th November 2017, continue apace. We aim to have a joint reception on Thursday 9th November, followed by the main NCLLS conference on 10th November and a gala dinner that evening. Further details to follow. So, to conclude, there are lots of things to look back on and savour; and there are plenty of exciting things to come. I continue to enjoy my time as President; I am delighted that the annual dinner was such a success and I look forward to my remaining time in office.

EDWARD MACEY-DARE PRESIDENT

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ANNUAL DINNER

1: Edward Macey-Dare

2: Vintner’s Hall

he Annual dinner took place on Thursday 19th May in the magnificent surroundings of Vintners’ Hall. Guests were greeted by a Presidential receiving line before proceeding into the Drawing Room for a sparkling wine reception.

The Toast Master gavelled for dinner and the entire top table (which included Robert Bourns, Vice President of the Law Society and representatives from 5 local law societies)- then processed in, to universal applause. A 3-course banquet followed (with accompanying wines and port from the Vintners' cellar) and included: Grace in Latin by the Immediate Past President; a (sung) loyal toast; a traditional loving cup ceremony (performed to the sound of bagpipes); 3 speeches; an operatic interlude, courtesy of the Scarlet Divas; and (in livery speak) a Stirrup Cup (i.e. a post dinner reception). Unfortunately, my published guest speaker, the Hon. Mr. Justice 3: Mr Shams Rahman, Ms Nehal Vasani & Mr Jeffrey Forrest Dingemans, had been assigned to hear a murder case in Plymouth just before the event and therefore he was unable to get back to Vintners' Hall was packed to the rafters that night – with over 140 London in time. He had, however, pre-warned me a while ago that guests present, it was full to capacity. Many thanks indeed to my this might happen and had thoughtfully lined up Mr. Justice Teare, entire team - and, in particular, to the Society's Administrator, Susie Hust, for all her help in making the evening possible. just in case. I am therefore extremely grateful to Mr. Justice Teare for stepping in at the last minute and for giving such a graceful and witty response, on behalf of the guests, to the toast made by our Senior Vice President, Nicholas Le Riche. Being both a senior QBD judge and also the Admiralty Judge, Sir Nigel was certainly no poor substitute and he delivered his speech with aplomb; furthermore, we are all now experts on Section 69 of the Arbitration Act 1996! There was also a rather nice (tangential) personal connection, in that he was my brother, Tom's, Head of Chambers at Quadrant, so I have known (of) him for many years. Furthermore, it transpired that Tom (who was also there that evening) was in the middle of a lengthy trial before him, so doubtless they were forced to avoid eye contact throughout the entire proceedings!

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It really was the most fantastic success and it is a testament to how far we have come this year in revitalising the Society. We even managed some free publicity, as I was able to secure a discreet column about the dinner in the Court Circular section of the Daily Telegraph on Friday 20th May. Many thanks to everyone who attended – and also to our 4 sponsors: St. Philip's Chambers; Willis Towers Watson; Thames Water Property Searches; and Title Solve.

EDWARD MACEY-DARE PRESIDENT

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4: Mr Justice Teare

5: Ms Jessica Heine, Mr Julian Hay & Ms Magurita Geary

6: Ms Katie Longstaff & Mr James Wackett

7: Sarah Ballingal & Mr Barry Fernald

8: St Phillips Commercial Chambers

9: L-R Mr Artur Wierbicki, Ms Monika Pirani, Mr Jose Olivares, Professor Sara Chandler, Mr Darius Gibasiewicz & Ms Maria Memoli

12: Mr Robert Bourn & Guest

10: L-R Ms Hania McAlpine, Ms Paula Littlewood, David McAlpine & Mr Tudor Alexander

13: L-R Mr Joseph Reed, Mr Edward Henderson, Ms Victoria Newman, Ms Emma Munday & Margurita Geary

11: Mr Nick Le Riche

14: Mr Jose Olivares & Patrycja Grochecka

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Local Issues

COUNCIL MEMBERâ&#x20AC;&#x2122;S REPORT At the Presidents and Secretaries Conference on 7th May 2016, Vice President Robert Bourns introduced the Governance Report prepared by consultant Nicola Nicholls. The main thrust of the report was that the current structure of Law Society Council with 5 Boards (Membership; Regulatory Affairs; Business and Oversight; Legal Affairs and Policy together with the Management Board), is no longer fit for purpose. It is proposed to have a smaller council with no link to local law societies, and a Management Board which will include 3 lay members. Election to the new smaller council will be from electoral colleges depending on size of firm, and including more City and In- House lawyers than currently. The link to local law societies will be broken. A progress report on the Governance Review was given to Council on 30 March and concerns had been raised at the lack of accountability to Council that the new Management Board would have. It is envisaged that a smaller Council and Management Board would be able to respond in a flexible and agile way to changes facing the profession, not the least of which would be the loss of the practising certificate fee income.

Law Society Council meeting 10 February 2016 The Council meeting started on a happy note by congratulating Carolyn Kirby, Council member for Mid and West Wales, on her OBE for services to justice and cancer care, and Professor Sara Chandler, Council member for the voluntary sector, on becoming QC honoris causa. Council members than got down to business on a series of reports and policy papers.

Promoting the profession - market and regulatory change Council heard that the Law Society had launched at the end of January a report on the future of legal services, identifying the drivers for change in the market. The Competition and Markets Authority is undertaking a study of the supply of legal services in England and Wales, which is looking particularly at whether customers can drive effective competition by the nature of their buying decisions, whether they are well protected if things go wrong, and how regulation impacts on competition for the supply of services. The Law Society view is that it is not equitable for solicitors to be disadvantaged by burdensome regulation while unregulated competitors provide services without the same levels of protection for the public. Council noted HM Treasury's policy paper which trailed a forthcoming consultation by the Ministry of Justice on the separation of the representative bodies from the regulatory bodies in legal services. This could provide an opportunity to ensure that the Law Society is able to support the profession and its clients. The Law Society view is that regulation of legal services needs to be simpler, with the regulator setting minimum rules so that consumers are protected when they buy legal services from any provider, and that the legal profession must remain independent of the State and should take responsibility for professional standards.

Representing the profession - legal updates The Law Society is developing proposals in response to the possible introduction of fixed fees in some clinical negligence cases - entailing a measure of front-loading to strengthen the triaging of claims and improve the prospects of early settlement while ensuring that access to justice is maintained. Council discussed the importance of continuing strong efforts to secure clear statutory protection of legal professional privilege in the Investigatory Powers Bill. Explicit statutory provision was seen as affording key protection against possible future erosion of legal professional privilege. It was noted that the Law Society has responded to 25 consultations since the last report, and are continuing to engage actively with the SRA consultation on legal education and training.

Supporting the profession - engagement and other activity The CEO reported on a wide range of activity and events. The relationship management team has been meeting with in-house lawyers, an increasingly important sector of the membership. My Law Society, which allows members' website experience to be tailored to their interests, is now live. From an international perspective, the Law Society hosted an event to mark the EU ratification of the Choice of Courts Convention, an important mechanism for promoting international trade and investment.

Equality, diversity and inclusion Council discussed the Law Society's equality and diversity framework 2016-2019, which provides the strategic direction for the Society's work in this area, and was pleased to note its close alignment to the Society's business plan. Priorities will include the Diversity and Inclusion Charter, by which the Law Society promotes diversity and inclusion within the profession; work with a range of groups to improve career progression for currently under-represented groups; work to facilitate solicitor access to the judicial appointments process; rolling out equality impact assessment across all the Society's functions; and a number of measures to sustain and improve internal Law Society practice.

Photo: Sara Chandler

Law Society Council meeting summary: 30 March 2016 Council met again on 30 March 2016 with another busy programme of reports and papers. Among these, Council was updated on progress on the review of the governance of the Law Society. The independent lead, Nicola Nicholls, has conducted a number of meetings with Council members and a range of external stakeholders, as well as a programme of research with other comparable organisations. Nicola shared ideas for ensuring that the Law Society's governance remains fit for purpose and supports the organisation in delivering its strategy.

Promoting the profession - market and regulatory change Following HM Treasury's publication of 'A Better Deal: boosting competition to bring down bills for families and firms', Council heard of preparations for the Society to respond to any consultation on the future revised regulatory framework for the profession. There was broad consensus among Council that, to support and protect the public, regulation of legal services should be simpler and better, and that the legal profession should continue to be, and be seen to be, independent of the state. This would involve regulation setting and enforcing the minimum regulatory rules consistently so that the buyers of legal services are protected. It would also involve the solicitor profession taking responsibility for professional standards, entry into the profession, and awarding the professional title of solicitor. Council noted that further work was being done on how various possible models would work in practice and looked forward to further debate in due course. Council heard about the Society's submission to the Competition and Markets Authority (CMA) study on the supply of legal services in England and Wales, which can be found here: http://www.lawsociety.org.uk/news/press-releases/law-society-response-to-scopeof-cma-study-into-the-legal-services-sector/. Close liaison has continued between the Law Society and the CMA including using the Society to facilitate engagement with members of the profession at large. Council also noted the publication, shortly before Easter, of the Law Society's report into the wider economic value of legal services.

Representing the profession - legal updates Council noted the work that is being done, with the Bar, the Ministry of Justice (MoJ) and the Legal Aid Agency (LAA) to update the criminal crown court fee schemes for litigators and advocates, with working groups including members of the Law Society Access to Justice and Criminal Law Committees. The CEO reminded Council that, although the inclusion of legal professional privilege on the face of the Investigatory Powers Bill was a success, work was continuing in association with the Bar on a number of outstanding concerns. Council also heard about continuing work on civil legal aid, in particular working with the Bach Review of Legal Aid. The Law Society is calling for the restoration of legal aid where its removal has had the most significant impact on disadvantaged groups. On civil courts structure, Council noted the Law Societyâ&#x20AC;&#x2122;s response to the interim Briggs report calling for the profession to be actively involved in the development of the proposed on-line court.

Supporting the profession - engagement and other activity The President gave oral evidence on court fees before the Justice Select Committee, and Council heard a report on the meeting between the President and Vice President and the EU Justice Commissioner, as well as a meeting with the President and the Lord Chancellor on legal regulation. The President's report drew attention to a number of visits to local law societies to support the profession's work on business and human rights. In line with his presidential plan, he also highlighted work to support the role of solicitors in undertaking property transactions, and thought leadership on technology and law.

Presidential Plan 2016-17 Council was warmly supportive of Robert Bourns' plan for his forthcoming year as President which starts in July, focusing on a programme of work to connect further with members in England and Wales to identify best practice and bring members together, promoting pride in the profession, access to justice for all, and access to the profession for the best candidates regardless of social background. PROFESSOR SARA CHANDLER QC (HON) Past President CWHLS, Council Member for the Voluntary Sector

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DIARY JUNE 16th TBA 23nd

30th

JULY TBA 7th 21st

LEGAL CHARITIES GARDEN PARTY - Gray's Inn QUIZ NIGHT DISABILITY DISCRIMINATION Speakers: Ed Beever, Sarah George & Shane Crawford How can a duty to make reasonable adjustments arise? What, in law is a PCP? Capability dismissals of disabled employees – what is the difference between claims of failure to make reasonable adjustments, discrimination arising from disability and indirect discrimination? Including recent relevant case law. Objective justification as a defence to s.15 EqA claims, does it differ from objective justification of indirect discrimination? THE REGISTERED LEGAL CHARGE FROM STRENGTH TO STRENGTH: Simon Clegg: The registered charge-from strength to strength The implications of Scott v Southern Pacific Mortgages Ltd and Swift 1st Ltd v Chief Land Registrar. Dominic Crossley: Discussion and analysis of recent cases in real property WINE TASTING BANKING AND FINANCE (@BDB) TBC Sean Kelly: “Interest rate swap claims. The current state of play” WHISTLEBLOWING Andrew Burrow: Protected disclosures after Chesterton and Underwood: a review of the law on what's in the public interest. Shane Crawford: Practical considerations in making and responding to protected disclosures. To whom can the disclosure be made?

SEPTEMBER TBA 8th

15th 29th

OCTOBER TBA 9TH

GIN TASTING IP Phillip Harris: “Extensions of Time in UK Trade Mark Registry Proceedings” Jonathan Gale: “Intellectual Property Rights in Computer Programs MONEY LAUNDERING- Joanne Cracknell TBC PROFESSIONAL LIABILITY Simon Clegg: The liability of solicitors to third parties James Morgan: Illegality as a defence to professional liability claims DINNER WITH PRESS PRIVATE CLIENT Sarah Harrison: “The Rectification of Wills and Trusts” Anna Metcalfe: “Removing personal representatives and trustees; The procedures compared”

We want your trainees! Trainees are vital to the success of the Legal Charities Garden Party. Volunteers are required from 4 pm - 9 pm on 16th June 2016 at Grays Inn. Full induction plus a donation to a charity of their firms choice. Please contact Susie Hust on susie.hust@lbmw.com

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Half Bottle of Bubbly to each successful Volunteer

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AND SO TO WESTMINSTER As we hosted our guests from the Milan Bar Association, Poland, Germany and Spain, members of the CWHLS International Committee and Main Committee seemed to be stepping back in time. On the day of the CWHLS Annual Dinner, 19 May, we visited the Supreme Court of England and Wales on a guided tour and to observe a hearing in the company of 29 lawyers from Milan and Maria Memoli, Council Member of the Law Society who of course speaks fluent Italian. As our guests spoke English, I was not at a loss. A visit to the Supreme Court Justices fills me with pride in the guardians of the rule of law and our judicial system. While we were there, the Supreme Court justices delivered their judgement on the celebrity privacy case where the injunction gained in the English courts was upheld despite the disclosure elsewhere of the names of the celebrities involved in what the English Press hoped would be a scandal sufficient to sell huge numbers of newspapers. Meanwhile in Court Two our guests observed a Tax and unjust enrichment case. We left the Supreme Court to enjoy lunch at 1 The Sanctuary with Robert Bourns, Vice President of the Law Society of England and Wales, and to a warm welcome from CWHLS President Edward Macey-Dare. We were joined by Arthur Weir and Adam Maberley who kindly agreed to act as guides for our guests, now joined by more guests from Poland on a tour of Parliament. We were reminded that Parliament is housed in the Palace of Westminster, and it heightened our guests’ understanding of the City of London, formed by the

merchants and bankers, and the City of Westminster, the royalty, a source of tension in the middle ages. Our guests joined us in the Vintners Hall for the Annual Dinner, and were thoroughly charmed by the dinner, the Loving Cup ceremony, the piper and the sopranos in the Minstrels’ Gallery. Our guests were enchanted with the history of our venue, and the traditions that English lawyers enjoy. Next morning the International Seminar on the legal implications of Britain leaving the European Union went very well, hosted again by our President in 1 The Sanctuary. Speakers Marie Bates from Farrer & Co, and Davina Garrod from Akin Gump LLP gave an interesting introduction to the topic. We were delighted to be joined by Carolyn Thurston Smith, a member of the Law Society team who wrote the Law Society’s policy paper on The Legal Sector and then European Union. A lively discussion was had by all by contributions from our international guests, not only from Italy but also from Poland, Spain and Germany. CWHLS is twinned with the bar associations in Barcelona and Berlin. As we bid farewell to some of our guests who were leaving after the seminar, the lawyers from Milan walked along the river to the Middle Temple for lunch, followed by a visit to the Temple Church, the Law Society, the Royal Courts of Justice and Kings

College at Somerset House. It was a most entertaining two days. The weekend before CWHLS International were in the European Court of Human Rights for the FBE Congress in Strasbourg, where we met Judges and lawyers from the Court for our programme of discussions. Members of the FBE Commission met to carry on their work, and we would be delighted to hear from CWHLS members who would like to participate. The next congress will be in Luxembourg from 13 to 15 October 2016, when the topic will be “The Lawyer in dialogue with the European Court of Justice.” Please join us, you will receive a very warm welcome. As a really advance notice, please save the dates 9 to 11 November 2017, when the FBE Congress will be in London, and hosted by CWHLS. The theme will be “The role of lawyers in protecting the planet”. The FBE will be celebrating the 25th Anniversary of the Federation. Please get involved now, join us in the International Committee, and be part of this landmark event. Professor Sara Chandler QC (Hon), Past President CWHLS, Joint Chair CWHLS International Committee.

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30th JUNE 2016 ST PHILIPS CHAMBERS PROPERTY SEMINAR Simon Clegg & Dominic Crossley of St Philips Chambers will present: The registered legal charge-from strength to strength & Discussion and analysis of recent cases in real property St Philips Chambers is an award winning multi-disciplinary set of barristers, widely recognised as one of the most innovative and forward-looking chambers in the UK. Specialist groups are supported by dedicated clerking teams with the experience, depth of knowledge and personal service essential in today’s demanding commercial environment. St Philips has offices in London, Birmingham and Leeds, enabling them to offer coverage to clients nationally and internationally.

Simon Clegg: The registered legal charge-from strength to strength The implications of Scott v Southern Pacific Mortgages Ltd and Swift 1st Ltd v Chief Land Registrar. Dominic Crossley: Discussion and analysis of recent cases in real property

Registration: 6:00pm • Start time: 6:30pm followed by drinks/nibbles after for networking. at 1The Sanctuary, London SW1P 3JT

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••

30th JUNE 2016 ST PHILIPS CHAMBERS PROPERTY SEMINAR Please return to: Susie Hust, 1 The Sanctuary, London SW1P 3JT Please send me ..........................tickets at £10 each (members and members' guests). I enclose a cheque in the sum of £ ........................................payable to CWHLS Name……............................................................................................................. Name of firm /organisation.................................................................................................................................................................. Address................................................................................................................................................................................................ .............................................................................................................................................(Post Code).............................................

12 The Report

Education and Training Sub Committee Report

REPORT OF THE EDUCATION AND TRAINING SUB-COMMITTEE The Education and Training Sub-committee submitted a response on behalf of the Society to the SRA’s consultation paper, “Training for Tomorrow: Assessing Competence”, which put forward proposals for a centralised examination, the Solicitors Qualifying Examination or SQE, at the point of qualification. The Society’s response was not in support of the proposals, which appears to have been the position taken by most other respondents to the consultation. Since the consultation closed on 4th March, the SRA has been considering the responses in order to make its decision as to whether to proceed with introducing the SQE. If the SRA does decide to introduce the SQE, then a further consultation is anticipated on what the entry requirements should be for the SQE. What this could mean, in effect, is that the SRA will no longer prescribe, or validate, pathways to qualification. In other words, it may not require a law degree or GDL, or Legal Practice Course, although it has indicated that a period of work-based learning is likely to continue to be required, although not necessarily in its current form of the period of work-based learning or training contract. Other changes members should be aware of are: • The introduction of Legal Apprenticeships from September 2016, and the imposition of a levy of 0.5% on all employers with a pay bill of more than £3m from April 2017, irrespective of whether or not they employ Legal Apprentices. • The repeal of the CPD regulations from 1st November, after which solicitors are required to adhere to the SRA’s Continuing Competence regime. Whether or not firms are already adopting the continuing competence option under the CPD regulations to comply with the CPD requirements, all solicitors will be required to do so from1st November, 2016.

SUB-COMMITTEE MEMBERS WANTED The Education and Training Sub-committee is seeking new members. With all the reforms to legal education and training, participating in the sub-committee provides a good way for firms to keep abreast of current developments and also the opportunity to engage and help influence the process. If you are interested, please contact the sub-committee’s chair, Melissa Hardee at

melissa.hardee@hardeeconsulting.com

“LEGAL TRAINING HANDBOOK” The Legal Training Handbook by Melissa Hardee has just been published by Law Society Publishing, and CWHLS members are being offered a 20% discount off the purchase price. The “Legal Training Handbook” shows firms how to meet the training needs of their business. It provides comprehensive guidance for those managing the business, as well as those delivering and managing training, and covers all aspects of legal training. The book is very timely, and explains the changes from the wide-ranging reforms to the legal education and training framework, and what firms need to do to meet the new requirements.

Order today and save 20% with code CWH16.

The Report

Legacies

Planning for the future can help make a real difference It’s hard to know what the future might bring, but one thing that is for certain is the number of people living with breast cancer is expected to double by 2030. This is where the challenge lies for The Haven; while the good news is that survival rates are improving, it also means that more people will be living with the disease and its affects for longer.

SBA The Solicitors’ Charity is currently recruiting Area Representative volunteers in London and is particularly keen to increase its coverage of West, South-West and East London. This is an opportunity for you to help fellow solicitors in times of need. Volunteers play an important role within SBA’s work by visiting people who are facing personal financial difficulties in their homes. They assist with the completion of our application form and verify the relevant underlying documentary evidence on our behalf. By volunteering as an Area Representative, you can do much to make positive changes to those suffering personal financial hardship, but there are also advantages to you. Here are some of them:

Therefore in the years to come, many more people will need us. We’re the only breast cancer charity providing free, one-to one, tailored care and support to anyone affected by breast cancer. The programme offers a wide range of complimentary therapies, counselling and nutrition advice. For thousands of people we are a lifeline, but as the rate of breast cancer is set to double, we need to double our efforts. This is why gifts in Wills play a vital part in helping us plan for the future; knowing that we can rely on future funds allows us to confidently embark on our plans to reach more people and invest in expanding our services in local communities. We want to open more centres across the country so we can reach the next generation facing this terrible disease. It costs £1000 to provide The Haven programme for each visitor. We look after thousands of people each year and without the voluntary donations we receive, we could simply not deliver our promise to be there for those who need us the most.

14 The Report

•

Sense of achievement You can witness lives improving directly from the benefits of your involvement

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Add experience on your CV Studies carried out by TimeBank show 73% of employers hire people with a history of volunteering

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Integrate into a wider community of solicitors Become better known

Each Area Representative has their own reasons for volunteering but, whatever their motivation, they have two things in common: they all understand the pressures of life in the law and they want to make a difference by helping those who turn to SBA in times of need.

Ideal candidates Legacies will help us to create a future where everyone with breast cancer has a Haven. If you would like to find out more about leaving a gift in your Will, visit thehaven.org.uk/giftinwill We are very keen to work with local solicitors to offer a promotional Will writing week for our supporters. If you would like to raise the profile of your company in South West London, Surrey and Hampshire, build up relationships with new clients and raise money to support The Haven, please get in touch.

laura.hignett@thehaven.org.uk or go online: thehaven.org.uk

Good communication and people skills are essential. Volunteers need to be able to listen, empathise and avoid all appearance of being judgemental. An understanding and commitment to confidentially is fundamental. Though flexibility in being able to undertake a visit is often needed, Area Representatives always retain the option to decline a case if it is not compatible with other demands on their time. Volunteers typically cover three to four cases per year and each of these involves roughly four hours work. All reasonable travel expenses are reimbursed. Find out more about how SBA supports solicitors in times of crisis. To discuss opportunities for volunteering as an SBA Area Representative, please contact Sue or Dervilla via the details below. We'd be delighted to hear from you. E: bensec@sba.org.uk T: 020 8675 6440

Professional Practice

Misfeasance Claims: Back to Basics What is misfeasance? The defendants need to have “been concerned, or [have] taken part, in the promotion, formation or management of the company” who “has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company”. A good place to start is with the duties in ss.171–177 Companies Act 2006: • s.171: to act within powers; • s.172: to promote the success of the company; • s.173: to exercise independent judgment; • s.174: to exercise reasonable skill, care and diligence; • s.175: to avoid conflicts; • s.176: not to accept benefits from a third party; and • s.177: to declare interest in a proposed transaction or arrangement. Who can be liable? The people vulnerable to a misfeasance claim are (s.212(1)): (a) someone who is or has been an officer of the company; (b) the liquidator or administrative receiver of the company; or (c) someone who has otherwise been concerned, or has taken part, in the promotion, formation or management of the company. This means that it applies to de facto directors, but not shadow directors: see Revenue and Customs Commissioners v Holland [2010] UKSC 51; [2010] 1 W.L.R. Who can bring a claim? A s.212 claim is only available in liquidation, not administration (although there are mirror provisions in Schedule B1 paragraph 75 onwards). According to s.212(3), an action can be brought by the Official Receiver, liquidator, creditor or contributory (the latter needs the Court’s permission— s.212(5)). What remedies are available? According to s.212(3), the remedies are: • “to repay, restore or account for the money or property or any part of it, with interest at such rate as the court thinks just”; or • “to contribute such sum to the company’s assets by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the court thinks just”. How do you bring a claim? (In conjunction with another claim…?) The claim is started by an ordinary application, preferably supported by evidence in the first instance so as to take advantage of respondents who do not engage from the outset. It is often brought in conjunction with other Insolvency Act applications, for example ss.213, 214, 239. It can also be brought alongside s.847 CA (claim for repayment of illegal dividends). Defences/relief The ordinary defences are to attack the facts underpinning the application, or to focus on the mens rea of any acts or omissions which respondents are accused of. The respondent can claim contribution from professional advisers, or can rely on professional advice received to underpin an entire defence. Often the defendant will claim relief under s.1157 CA, usually predicated on the basis that anything they did wrong was an innocent mistake. The Court has a wide discretion and it is often fact-sensitive. It is not available where there are claims based on objective, rather than subjective, tests— for example ss.214, 238, 239 IA.

Is there anything else to note? A respondent cannot set off against a misfeasance award any sums he is owed, for example under a loan account. Reliance on professional advice A respondent to a misfeasance claim can try to defend it or seek relief under s.1157 CA by relying on the fact that he received professional advice before entering into a transaction. Alternatively, and often the wiser choice, respondents will try to claim a contribution from their professional advisers. This is no panacea for a respondent, however, because each case turns on its own facts, but sometimes it can be successful: see Mumtaz Properties Ltd v Ahmed [2011] EWCA Civ 610; [2012] 2 B.C.L.C. 109 Two recent cases show some key differences in the approach taken by the courts: (a) Top Brands Ltd v Sharma [2014] EWHC 2753 (Ch) (which went on appeal on the defence of illegaility [2015] EWCA Civ 1140): a respondent liquidator had been negligent in the handling of a company’s affairs, that company having been a vehicle for VAT fraud under the liquidator’s nose. Payments were made to third parties without proper enquiries being made and the time spent in dealing with the company’s affairs was woefully inadequate. At the trial of the application, the respondent relied on having taken legal advice on the third-party payments from a wellknown national specialist firm, whereupon she was told that the paid sums were the subject of a Quistclose trust (which they were not). The respondent could not rely on the professional advice because her handling of the company was so negligent and her instructions to the solicitors were incomplete and/or inaccurate, so any advice received was irrelevant. (b) Hedger v Adams [2015] EWHC 2540 (Ch) (also known as Pro4Sport ): a respondent director of the company learned from an insolvency practitioner that the company was near to insolvency, so he transferred company assets to a new company, of which he was a director, for deferred consideration under a payment plan backed only by a ROT clause rather than a personal guarantee. The deferred consideration was a fair market value assessed by a professional adviser, who thought that ordinary openmarket sale would not yield the same price. When the company entered liquidation, theliquidator adopted the agreement with the new company and continued to receive regular instalments. The new company initially maintained payments but also entered insolvency, leaving a large shortfall. The Court found no misfeasance by the director. There are some rare cases where professional advice is insufficient for a defence but sufficient for relief under s.1157 CA. There are steps to take before accepting that a respondent should have some bargaining strength in pre-action negotiations based on his reliance on professional advice. By Amit Gupta and Ali Tabari St Phillips Chambers If you have any queries in relation to this article please contact James Wackett, Senior Clerk,St Philips Chambers - London on 0207 467 9449.

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Professional Practice

Re-Imbursement Of Landlord’s Costs Of Pursuing A Forfeiture One of the enduring pleasures (or, for some, vexations) of landlord and tenant practice is the frequency with which commonplace problems can lead to all sorts of juristic entanglements.

An example will illustrate Most modern leases contain a tenant’s covenant in essentially the following terms: “to pay to the Landlord all proper costs (including legal costs) reasonably incurred by the Landlord in any proceedings under sections 146 and 147 of the Law of Property Act 1925 or in contemplation thereof or in connection with any action taken by the Landlord for the Tenant to remedy any breaches of the terms of this Lease”. In Forcelux v. Binnie [2010] HLR 20, the Court of Appeal held that such a covenant entitled a landlord to recover its costs of preparing and serving a s.146 notice, as well as the landlord’s costs of its forfeiture proceedings (including the tenant’s counterclaim for relief). Suppose, then, that a landlord of commercial premises takes forfeiture proceedings against its tenant for breach of covenant, having first served a s.146 notice. After a lengthy trial, the court makes an order for possession, but grants the tenant relief from forfeiture, on condition that the breach is put right, and that the tenant pays the landlord’s costs of the litigation. The tenant then fails to comply with the conditions for relief, and, shortly thereafter, goes into liquidation. The landlord duly recovers possession of the premises. But what of the landlord’s litigation costs? Let’s say that the lease contains a Forceluxstyle tenant’s covenant to reimburse costs, and also that the tenant’s director joined in the lease as guarantor. That being so, surely all’s well for the landlord? Well, perhaps. It is important to remember that the guarantor’s covenant exists only in respect of the tenant’s obligations in the lease. In other words the guarantor does not guarantee the performance by the tenant of the conditions to which the grant of relief was made subject, nor does he guarantee the tenant’s compliance with the costs order made by the court.

The Report

What’s more, forfeiture brings an end to the lease - and to all of the covenants contained it in. And a landlord with a valid forfeiture claim exercises its right to forfeit by issuing possession proceedings, and serving them on the tenant. This gives rise to a potential problem. Under the usual wording of the tenant’s covenant to pay costs, liability under the covenant is unlikely to arise before the landlord has actually incurred the costs in question. But in our example, most of the landlord’s costs will have been incurred after issue and service of the forfeiture claim. If the lease was forfeited when proceedings were served, then, in respect of most of the landlord’s costs, the covenant to reimburse will have ceased to exist before the tenant’s (or guarantor’s) liability accrued. At this point, the landlord may find itself having to confront two apparently conflicting lines of authority - including decisions of the Court of Appeal and House of Lords. In the landlord’s favour is a series of decisions to the effect that by issuing and serving proceedings, the landlord irrevocably elects to forfeit the lease. But whether the lease is actually forfeit depends on the outcome of the landlord’s claim (together with the outcome of any claim by the tenant for relief). On this approach, the lease - and the tenant’s covenant to reimburse costs - still exists at the point the costs in question are incurred by the landlord. In the tenant’s favour is a line of authority to the effect that where the landlord has a valid claim, the issue and service of the landlord’s proceedings itself effects a forfeiture. The court’s order for possession merely confirms the forfeiture - and the forfeiture itself may be retrospectively “undone” by the grant of relief to the tenant (who is entitled to remain in possession in the meantime). On this basis, the covenant to reimburse ceases to exist before the accrual of liability in respect of most of the costs.

The decisions in the landlord’s favour include: Dendy v. Evans [1910] 1 KB 263; Driscoll v. Church Commisioners for England [1957] QB 330; City of Westminster v. Ainis (1975) 29 P&CR 469; Meadows v. Clerical Medical and General Life Ass. [1981] Ch 70; Peninsular Maritime v. Padseal (1981) 259 EG 860; Ivory Gate Ltd v. Spetale (1998) 77 P&CR 141; and Mount Cook Land v. Media Business Centre Limited [2004] 2 P&CR 25. In the tenant’s corner are (among others): Jones v. Carter (1846) 15 M&W 718; Serjeant v. Nash Field & Co [1903] 2 KB 304; Canas Property Co Ltd v. K&L Television Services Ltd [1970] 2 QB 304; Associated Dairies v. Harrison (1994) P&CR 91; and Billson v. Residential Departments [1992] 1 AC 494. In the Ivory Gate case - perhaps the most helpful to the landlord - the Court of Appeal felt able to limit the apparent breadth of certain remarks in Billson - a House of Lords authority favouring the tenant. But in Ivory Gate, the Court was not apparently referred to its earlier, binding decision in Serjeant v. Nash Field - which, in the tenant’s favour, appears strongly on point. It is hard to see how the Court in Ivory Gate could have arrived at its interpretation of Billson had it been aware of the Serjeant v. Nash Field decision. In addition, Serjeant does not appear to have been cited in a number of the other decisions tending in the landlord’s favour. Potentially, therefore, the authorities favour the tenant (or its guarantor). But the matter cannot be said to be clear, and there is ample scope for debate, to put it mildly. The present problem did not arise on the facts in Forcelux. But our hypothetical example is by no means a far-fetched one. Further judicial contribution to the debate might therefore be expected, at some future time. In the meantime, those drafting new leases might do well to tighten up the wording of Forcelux-style clauses, to head off problems of the present kind - be they pleasures or vexations. By Anthony Tanney, Falcon Chambers

Travel

REALLY GETTING AWAY FROM IT ALL WITH SIMPLEXITY TRAVEL For anyone who craves privacy and exclusivity, a resort, hotel or villa set on its own private island has to be the ultimate indulgence.

For anyone who craves privacy and exclusivity, a resort, hotel or villa set on its own private island has to be the ultimate indulgence. Just imagine an idyllic location off-limits to everyone but the resort staff and a few other guests… a world of luxury reached only by helicopter or boat that is a million miles away from the madding crowd. One company that understands the specific logistics and arrangements that are required for this type of holiday is Simplexity Travel.

One of the UK’s most successful and innovative travel management companies, Simplexity Travel has been organising complex travel arrangements for everyone from A listers to blue chip CEOs since 2011 and as such has enviable contacts with a host of private retreats around the globe. Using a specialist like Simplexity Travel can help with every aspect of the itinerary, not just the location itself. Put simply the company can offer a one stop shop, able to deal with everything, whether scheduled flights, private jets, helicopter transfers or yacht hire. What’s more, all its Account Managers are available 24 hours a day, 365 days a year, so no matter what time it is, they are on hand to help with whatever you may need. It’s these special touches, the ones that go above and beyond anyone else in the industry, that allow Simplexity Travel to provide an all-encompassing experience. Simplexity Travel is also one of eight travel companies in Europe that are part of Virtuoso (a luxury travel network), putting it on a level playing field with companies such as Centurion. People book through organisations such as these because they might get an upgrade or an additional amenities pack when they check-in, whereas Simplexity Travel has that service already – without the need to spend thousands of pounds extra per year. Simplexity Travel’s reach is vast, and its private resort destinations plentiful.

For those whose budget really is limitless there is the daddy of them all, Necker Island. Located in the beautiful and unspoiled British Virgin Islands, it was to Richard Branson’s 74-acre paradise that Princess Diana came to escape the paparazzi. Kate Moss held her 40th birthday party here, whilst Google co-founder Larry Page got married on the island. Ordinary mortals can enjoy the same pampering, staying in the ten bedroom Main House (recently rebuilt after a fire destroyed the original in 2011), or in one of the six individual Bali Houses dotted around the island, all the while being waited on hand and foot by 31 staff. Petit St Vincent is another glorious Caribbean resort on its own private island, with just 22 cottages providing the ultimate comfort and tranquillity. No internet. No televisions. Just two miles of whitesand beaches and natural tropical woodland. Oh and a cellar containing over 3,000 bottles of fine wine. The final member of this Caribbean triumvirate is Peter Island, a romantic, laid-back 1800-acre private resort offering five white sand beaches, 20 coves (some of which can be booked so that you have them to yourself), a yacht club and spa. Twice named by Conde Nast Traveler as one of the “Best Places to Stay in the World,” guests here reside in one of 52 spacious rooms, with white timber-frame walls and pitched roofs. Looking for a private retreat slightly closer to home? Simplexity Travel can fulfil any request. How about Scalpay, Scotland with its sweeping views, wood-burning fires and resident seals? Or Tagomago, a 98 acre private paradise located less than a kilometre from the coast of Ibiza that has hosted the likes of Cristiano Ronaldo? The beautiful private islands in Simplexity Travel’s portfolio offer you the chance to escape to your own little universe. After all who wants other holidaymakers when they’re on vacation?

For more information on Simplexity Travel Management, please see www.simplexitytravel.com or call Mark Smith, Head of Business Development, on 0203 535 9290 or email info@simplexitytravel.com.

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Professional Practice

Reasonable adjustments for disability absence - a step forward, but two steps back? PRACTICE POINT Attendance management policies are capable of causing substantial disadvantage to disabled persons. However, a Claimant needs to identify with greater clarity the PCP relied on at the earliest stage of proceedings. To do so, try taking one or two steps back from the treatment itself so as to be able properly to identify the fundamental feature which caused the disadvantage.

“Disability” is a different concept to discrimination on other grounds. We know well that other types of discrimination typically occur when less favourably treated (direct) or where there is proportionate disadvantage (indirect), but disability issues can often mean treating a disabled person more favourably: Lady Hale in Archibald v Fife, 2004, stated it perfectly clearly: “the DDA at does not regard the differences between disabled persons and others as irrelevant and it does not expect each to be treated the same way. It expects reasonable adjustments to be made to cater for special needs – necessarily entails an element of more favourable treatment”. A reasonable adjustment is a step required of an employer to eliminate disadvantage. Disadvantage is arrived at by reference to a requirement imposed in the workplace. A “provision, criterion or practice” (PCP) is one such requirement. Reasonable adjustments for those who suffer sickness absence from work has been the subject of uncertainty and in 2015 the Court of Appeal in Griffiths v Sec of State for Work and Pensions addressed the issue head on. This article unravels its real learning points. Griffiths concerned an employer’s absence management policy. G’s absence had triggered a written warning under the policy. The reasonable adjustment sought was to disregard disabilityrelated absence. It was argued that a sickness absence policy which triggered warnings was the PCP causing substantial disadvantage in the present case. To be fair to the parties this analysis was probably the prevailing wisdom at the time. Griffiths has laid to rest this debate and in so doing has taken the general understanding of disability law a significant step forward. It is important to distinguish between the attendance policy itself and its operation in any particular case. The policy itself was capable of treating disabled and non-disabled identically. What was needed was a focus on the application to G as a particular employee. This must be right: in doing so, it enables a proper discovery of “the fundamental feature which causes the Claimant disadvantage”. It is only when the particular disadvantage is identified is it then possible to identify what might be a reasonable adjustment. Thus the PCP which caused the

particular disadvantage was “a requirement to maintain a certain level of attendance in work in order not to be subject to risk of disciplinary action”. Griffiths referred to an earlier case of Carranza v General Dynamics Information Technology, 2015. The Carranza decision in fact was an application of the “particular disadvantage” approach and, it is submitted, indisputably right. The first step is always to identify the relevant PCP and with it the nature of the substantial disadvantage. But how in practice does this work? It works by taking a step back or more precisely possibly taking two steps back from the act that causes the harm. In that way, the end treatment (on which a claimant is prone to lay most emphasis) is separated from the state of affairs causing disadvantage. In Griffiths and Carranza, the claimants both complained of the practice of disciplining those who are on long term absence. Taking one step back, it can be quickly ascertained that in fact it this is the application of the sickness absence policy. At least until Griffiths became well known, the policy itself will have been regularly presented as the relevant PCP in tribunals across the country. But that was unsatisfactory. Instead, take two steps back and you may hit upon the “fundamental feature” causing disadvantage: perhaps, as in both Griffiths and Carranza, “the employer’s requirement for consistent attendance at work” . The reason why this is critical is because only then does it become possible to continue the analysis without which the practitioner is in no position to identify what, if any, step it would be reasonable to take to avoid the disadvantage. At the same time, hesitant claimants can be encouraged that there may be more than one PCP and there is no required format for the description of the PCP. Consider Environment Agency v Donnelly UKEAT/0194/13, in which the PCP was a “requirement to walk a distance from her car to the office in the prevailing cold weather and possibly on uneven surfaces”. Turning back to Griffiths, the case may be likened to a rollercoaster for litigating parties. On the one hand, as above, claimants can now gain

encouragement to progress their absence management complaints using appropriate and achievable PCPs. On the other hand, there is however a sting in the tail because the effect of Elias LJ judgment could be in fact to raise the bar for claimants in establishing what in fact might amount to a reasonable step. Two points are made here. First, whilst in principle it can be said that an adjustment which extends a consideration point could be said to be capable in principle of ameliorating disadvantage because it might have the effect of making it less likely that an employee would be disciplined, whether it would in practice have that effect would “depend upon the length and frequency of disability-related absences” (para 66). Perhaps only where absence is limited and occasional (para 78) could it be said that an extension of a consideration point would be principled. In long term cases it may simply be inappropriate. Elias LJ is in effect saying that in such cases, a claimant may be well advised to leave s.20 on one side and concentrate firepower on a more “robust” s.15 claim (para 80). Secondly, there may be cases, where the disadvantage was not directly related to reintegration into the workplace, but is the stress and anxiety (or financial hardship, see O’Hanlon v Customs and Excise [2007] ICR 1359) resulting from the situation. Tribunals should not be expected to undertake the invidious task of assessing such subjective criteria and in fact, “not treat them as objects of charity which may in fact sometimes tend to act as a positive disincentive to return to work” (para 68). Griffiths has clarified the relevance of attendance management policies in disability absence cases. Its real impact may however be to encourage greater reliance on “discrimination arising from” cases rather than reasonable adjustments.

By Ed Beever, St Phillips Chambers If you have any queries in relation to this article please contact James Wackett, Senior Clerk, St Philips Chambers - London on 0207 467 9449.

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Money Laundering Update

Be diligent with your Client Due Diligence and other Anti-Money Laundering measures There has been much emphasis recently on the risks to law firms from cybercrime, that the risk of money laundering to the legal profession has taken a back seat. The strategic report prepared in July last year by Europol’s Financial Intelligence Group stated that despite the global rise of cybercrime and virtual currencies, “cash is still king” as criminals continue to use cash and it is still the preferred method to launder proceeds of crime (2015, p. 6-7) and the risk is still prevalent. The services provided by law firms can make them attractive targets for those wishing to launder the proceeds of crime. The findings of the UK Government’s National Risk Assessment of Money Laundering and Terrorist Financing (“NRA”), published last October, suggests that the legal sector poses a high risk to money laundering. The NRA states that there are “known professional enablers” operating with the legal profession who are complicit in money laundering (2015, p. 43). The UK will be the subject of a mutual evaluation by the Financial Action Task Force (“FATF”) in 2017/2018, which will assess the efficacy of the UK’s prevention of money laundering and counter terrorist financing measures. Outcome 7.5 in the SRA Code of Conduct 2011 provides that you must comply with legislation applicable to your business which includes anti-money laundering legislation. The Solicitors Regulation Authority (“SRA”) has repeatedly highlighted money laundering as a risk to the legal profession and stressed that there is no room for complacency. The SRA Risk Outlook 2015/2016 indicated that money laundering was a priority risk and it identified areas for improvement for the profession such as inconsistencies in the standard of client due diligence carried out and the frequency of training. This view was reiterated in the SRA’s Anti Money Laundering Report following the AML Thematic Review conducted last summer, which highlighted the following areas for improvement: • deputising the Money Laundering Reporting Officer (“MLRO”) • contingency planning to provide appropriate cover when the MLRO was absent • in some instances the MLRO was inexperienced and/or inadequately trained • policies and procedures not being reviewed often enough • understanding of the enhanced due diligence procedures • appropriate AML training for accounts staff Furthermore, in the recent judgment of

Purrunsing -v- (1) A'Court & Co. (a firm); (2) House Owners Conveyancers Limited [2016] EWHC 789 HH Judge Pelling identified, amongst other issues, failings by the First Defendant to conduct adequate client due diligence. We set out below a brief reminder of the need to carry out client due diligence and ensure all relevant staff receive anti-money laundering training.

Client Due Diligence The requirement to conduct client due diligence is set out Regulation 5 of the Money Laundering Regulations 2007 (“MLR”) and you should: • verify the identity of your client; • verify the identity of the beneficial owner who is not the client • assess and obtain information on the purpose and intended nature of the business relationship Carrying out client due diligence is appropriate before: • you establish a business relationship with a client or deal with a one-off transaction for a client • where there is reason to believe inadequate client due diligence has been carried out on an existing client • if a client’s details have changed (such as their name or address) • if the client has not been in regular contact with you (`say more than two or three years); or • where there is a suspicion money laundering or terrorist financing Do not forget the enhanced due diligence requirements for clients that you do not meet face-to-face or clients that pose a higher risk of money laundering or terrorist financing such as politically exposed persons. You are advised to take adequate measures to compensate for the higher risk such as obtaining additional identification documentation and/or you may choose to carry out electronic verification which can confirm the validity of the identification documents provided by your client. In addition to verifying the identity of your clients, you should consider verifying their source of funds. Whilst you are not expected to interrogate your clients about their financial status it is important to understand your client's source of funds as part of knowing your client and the client due diligence process. The MLR provides that verifying the source of your clients’ funds supports the ongoing monitoring of your clients (Regulation 8).

Education and Awareness Education and awareness are key measures to counter the growing threat of money laundering and it is a mandatory requirement of the MLR (Regulation 21). This was another area identified as lacking in the SRA Risk Outlook 2015/2016. All relevant staff ought to receive training about the threat of money laundering and terrorist financing to law firms, guidance on how to detect and training on the firm’s policies and procedures. If relevant staff have not received anti-money laundering training within the last two years is it recommended that they attend an appropriate training course as soon as possible. In addition to the above, do not forget to review your policies and procedures regularly, or at least annually, as you are required to implement systems and controls to prevent money laundering and to counter terrorist financing. If you have not already done so, check to ensure that your policies and procedures refer to the NCA rather than the Serious Organised Crime Agency (or even the National Criminal Intelligence Service) and check whether there been changes in key staff such as the money laundering reporting officer and/or their deputy that need to be reflected in the policies and procedures. It is likely that further guidance will be produced nearer the time about how to prepare for the transposition of the Fourth Anti-Money Laundering Directive and the FATF Mutual Evaluation but by regularly reviewing your anti-money laundering policies and procedures, having a consistent approach to client due diligence and ensuring all relevant staff receive regular training on the prevention of money laundering and combating terrorist financing will only help you be more prepared and compliant with your legislative and regulatory obligations. To learn more about the issues concerning client due diligence discussed in this article, the City of Westminster and Holborn Law Society will be running a seminar on this topic at 1 The Sanctuary, London SW1P 3JT on Thursday 15 September 2016 at 6pm presented by Joanne Cracknell of Willis Towers Watson. For more information please contact Susie Hust on admin@cwhls.org.uk. By Joanne Cracknell, Divisonal Director, Willis Tower Watson

The Report

Security Cyber CyberSecurity

Why Cyber Security Matters Cyber security is rarely out of the news and this won’t change in the near future. In our own research amongst SMEs, we found that 76% of companies are concerned about cyber security, with 17% having experienced a cyber attack. From a lawyer’s perspective the issues are twofold: • the legal steps to help prevent the issue arising in the first place; and • explaining to clients why their particular business might be adversely impacted, even though it’s not a high-profile business.

The Threat The potential impact of cyber-security issues on the SME can be seen from the Court of Appeal’s reversal in March 2015 of a decade of case law which had prevented claims for compensation under the Data Protection Act 1998 for emotional distress caused by the breach of data security rules.

A key consideration which is often neglected is ‘people security’. Whilst companies can have the very best tech in place and invest heavily in new systems, the fact is that around a third of data security issues are people-based, ie caused by human error or carelessness. In 2014, a cyber-claims study found that 34% of claims for data loss was down to lapses in “people security”, with 11% of the dataset being rogue employees; 10% for lost or stolen laptop devices; and 13% for staff mistakes (this was the highest cause after hacking!).

Until the decision in Google Inc. v Vidal-Hall, the English Courts had interpreted the law as meaning that compensation was only available where a Claimant had suffered some sort of financial loss as a result of a data protection breach: typically, this was associated with financial services companies where a fraudster might access personal finance information from the accidental disclosure of financial data. This had the consequence that most breaches of the Act, which normally only relate to the emotional distress could not be the subject of a claim, as there was no financial loss suffered. This has all changed now as the Court of Appeal decided that data protection law should be interpreted more widely as meaning that compensation should not be limited to cases where financial loss can be shown, as that was not the intention of the original EU legislation. The decision in Google Inc. v Vidal-Hall is likely to have a number of potentially wide-ranging implications, of which many of your SME clients holding customer data should be aware, in particular, the likelihood that there will be more claims for compensation now that there is no requirement to show financial loss. Although the Court of Appeal commented that it was likely that individual awards of compensation would be relatively modest (so far they have been in the low thousands of pounds), there could be a growth of class actions in which a large number of individuals have suffered emotional distress or invasion of privacy, leading to larger overall damages awards. In addition to the increased risk of claims of compensation as a result of a cybersecurity breach, the accompanying reputational damage and loss of trust are likely to hit SME businesses even harder as, for many, this is one of their key trading propositions. It would be unfair to say that we expect our telecoms provider to mess up occasionally, but we really don’t expect the same of SME businesses where there’s a more personal relationship with its clients.

The Legal Action List Legally, your client needs to show that every reasonable care has been taken to prevent a loss of data or cyber-security breach. Our recommendation is that in order to ensure that they can demonstrate they are complying with data protection rules, your clients should ensure that they take all appropriate measures, which include: • having clear data protection/cyber security/privacy policies in place; • actively monitoring the policies to ensure that they are being followed in practice; • having a sound IT infrastructure in place; • carrying out a cyber-security risk assessment tailored to the business; • incident management – how to respond to a breach; • staff/employee education on security risks; • guidance on the regulatory/legal regime in place.

The Report

(Source: http://www.netdiligence.com/NetDiligence_2014CyberClaimsStudy.pdf )

Organisations must make sure they have robust policies covering cyber / data security, data protection and IT and communications, which are communicated to employees, together with an explanation of the role that well-trained staff can play in minimising the risk of cyber security breaches. Your clients need to explain clearly to staff how they will monitor compliance with the policies, the sanctions imposed for any breach of the policy and the procedure through which those sanctions will be enforced. The key is that employees must understand that they are required to comply with these policies and that a breach of any of the policies is an HR issue that could ultimately lead to dismissal.

The Future The pace of legal regulation in relation to data protection/cyber security is hotting up with the recent passing of the General Data Protection Regulation by the EU. From early 2018, your clients will: • generally need to notify national authorities and affected individuals in the event of a data breach; and • be subject to massively increased fines (potentially E20 million or 4% of annual worldwide turnover. So, time to take cyber security seriously. By John Warchus and Katherine Maxwell, Moore Blatch

Cyber Security

Cyber Security: Are you Covered by Your IT Managed Service Provider? There’s been a sharp increase in news stories from law publications around cyber security. Between Friday afternoon scams, rising reports of data breaches and - dare we say it - major headline news such as Panama, cyber security is rarely out of the media spotlight. Adding to this is the Information Commissioner's Office (ICO), who regularly highlights in both their blog, website and other communications just how easy and probable it is in today’s digital environment to suffer a cyber breach. In 2015 such cyber breaches racked up a bill of £34bn to UK companies (before any consideration of the priceless cost of reputational damage). Fifty percent of these breaches were caused by inadvertent human error. The UK was the most targeted country in Europe for attacks and frighteningly 1 in 20 emails sent resulted in a successful breach. On top of digesting the above mentioned dangers, today’s law firms also have to consider tightening regulation around data, the protection of huge amounts of sensitive information and the impending advance of cyber criminals growing in sophistication. It’s a lot to take on. Unfortunately though, law firms are a lucrative target - and very much worth the trouble for cyber criminals. “Doesn’t cyber security fall under my managed service provider’s remit?”

Am I Covered by my Managed Service Provider (MSP)? The answer is unfortunately, probably not. Managed Service Providers adhere to, and have a good level of security, but they are not security specialists. Nor should they be; managing complex infrastructure, software, hosting, development, support, updates and all things IT is a different role entirely to cyber security. Cyber security is comprehensive and complex - it needs a specialist. It’s a bit like marking your own homework. One cannot be given both the responsibility of directing the movie and being the critic, or cooking the food and judging its quality.

and general business disruption. The costs of a breach range, according to the 2015 Information Security Breaches Survey, from £75k at the lower end for SMEs to over £3m for larger firms. And with regard to the probability of suffering a breach, 90% of large organisations and 74% of SMEs suffered one in 2015.

What to Expect from a Cyber Security Specialist Security specialists take a holistic approach derived from globally tested methodologies and hold best practice security accreditations. Technology operates as the enabler of cyber security but you need the right governance in place and you need your users, i.e. your employees, to follow the procedures and policies in place too. The below list aims to highlight some of the differences in the roles of cyber security and IT managed services by showing what a cyber security specialist will deliver for your practice: ● Forensic capabilities - an example of this in action would be to ascertain why an accounts team received a fake email from the MD requesting a transfer of funds or a fake email from your bank asking to provide account credentials ● Regular system tests/penetration tests to stay in line with known vulnerabilities and trends

Cyber Essentials Cyber Essentials is a Government run scheme put in place because 80% of cyber-attacks are preventable. It’s also a great place to start in protecting your practice. Some salient data points our own forensics team have gathered whilst implementing Cyber Essentials into law practices in the last 12 months include the following: ● On average Law firms tend to fail 40% of basic cyber security controls ● Out of the basic security control failures we found 55% were under the direct remit of the Managed Service Provider.

Conclusion You are probably not protected from breaches through your MSP and ignorance is no longer bliss - you will be scrutinised should you suffer a breach not only by the regulator, but by your clients. Not only are you not probably covered by your MSP, indemnity insurance rarely covers cyber breaches either as it is designed for third party protection and in the case of a data breach, the third party may have no idea their data has been breached in order to warrant a claim. Risk management and a combined approach is our primary advice here.

● Advice on processes, policies and accreditations needed to support protective technology (technology is 1/3 of the cyber solution) ●Training to raise the risk awareness of your support staff and partners ● Monthly and quarterly reporting of traffic going in and out of your IT network ● Alerts if anyone attempts to steal data or other digital assets

ThinkMarble ThinkMarble are cyber security specialists for the legal sector. We deliver enterprise class cyber security at an affordable price.

The Consequences of Suffering a Breach

● Security planning ● Crisis management

You can identify potential threats to your practice and whether you are covered by your IT provider/department with our free, no obligation cyber assessment.

If you suffer a security breach you’ll potentially have to pay a fine to the ICO (In 2014 173 law firms were investigated) in addition to costs associated with administration, loss in revenue

● 24/7/365 Rapid-response service

https://www.thinkmarble.co.uk/. By Andy Miles, CEO of ThinkMarble

The Report

Cyber Security

Cyber Security through the Litigation Process Cyber Security is a topic that has been at the top of everyone’s agenda at some point in the past few years. Details of a successful hack, attempted cyber-fraud or effective cyberactivism appear in the news on a weekly basis. This prompts all CIOs (Chief Information Officer), IT managers and security professionals that now, more than ever, security must be on the minds of all those who work with computers, from technology companies such as IT Group to solicitors, barristers and corporates alike. The Law Society’s Gazette has reported that law firms lost £85 million in the past 18 months, and 1 in 10 law firms were successfully targeted. In April 2016, the Telegraph reported on a couple who had lost over £200,000 through an email discussion with their property solicitor; or so they thought. Cyber-criminals are continually finding new avenues of attack in an attempt to swindle, con and fraudulently gain from their illegal activities. The worrying trend this past year has been the increase of the interception of email conversations between those in the law industry and their clients, breaking into email accounts and diverting large payments resulting in a loss for both the client and the law firm. By breaking in to the account of a solicitor, a cyber-criminal is able to

read, delete and potentially alter the contents of the message. Instructions to send money to a bank account could have been sent legitimately but the sort code and account number altered. Alternatively, the email could have been sent to trick the client into paying outright; similar to the well-known ‘Friday afternoon fraud’. Even if you successfully adopt best practice techniques to reduce the risk of these threats (don’t panic, some of the basic advice and tips are set out below!), there is one further technique that we encounter regularly at IT Group. Email Spoofing is when a malicious attacker tricks your email into displaying an email address that is different to the actual originating email address. Using Forensic tools, we can determine when an email address is made to look different from the true address, but most email programs are incapable of performing this function (for now). This often-used technique could be used to supply bank details or instructions that appear to come from the law firm. The best way of defending against this attack is discussed below. Ultimately, the methods to mitigate the chances of any of these attacks occurring are based on old fashioned simple housekeeping: Ensure that all passwords used inside the law firm are of a sufficient strength. You will undoubtedly all have been told to ensure you use both letters and numbers and ideally non-alpha numeric characters such as “£$% etc, but did you know that simply changing the letters to numbers (for example, l3tme1n instead of letmein) adds no extra security from the majority of hackers? Consider using a random password generator and using that as your password. Additional methods that can significantly improve security is the use of Two Factor Authentication, which can be implemented on the majority of email services. This requires any user on a new/different computer logging into your email system for the first time to input a code that has been sent (usually via text, or some other similar method) totally separately. This second factor should not be available in the majority of cases to the hacker and access will therefore be denied. This is currently considered one of the strongest methods that can be used. Simple Apps such as Google Authenticator make this process very straightforward creating a code on a mobile phone to be input into the computer to add the two factor protection. Of course, the ultimate defensive measure is one of the oldest security methods in the book. When instructions come in for a payment to be made, ring the company/client and ensure that the bank details are correct – preferably from a voice you recognise if at all possible. By bypassing the email process, you could be eliminating the chances of a hacker sitting between you and the client intercepting the email. On the flip side, encourage your clients to ring you before making any payments if payment details are received just to check they are originating from you. This will help to minimise the risk of an attacker successfully getting a client to transfer money to the wrong account. Author: George Jennings

The Report

Cyber Security

How to ensure your practice management software is truly cloud based. The market for cloud-based practice management is growing rapidly and so is the number of companies providing this service. If you’ve already decided that the convenience and cost benefits of a cloud-based legal practice management solution are suited to your firm, how do you go about ensuring that you’re purchasing a truly cloud-based product? Here’s what you should look out for. Hidden Costs Cloud computing services can cost as much as 50% less than traditional software over a period of three years. If you start to notice hidden costs such as installation, configuration, maintenance, and upgrades among your server-based or partially cloud-based software, it may be time to start asking questions. For most cloud-based systems firms are only required to pay a monthly subscription per user. There are no updates, software, or servers to purchase and migration, customer support, and training is included. In addition, there should be no fixed commitments or contracts, leaving users free to cancel their subscription at any time.

Accessibility The biggest advantage of a truly cloud-based system is freedom. Users should have secure access to their files, cases, and matters from any device with an internet connection. Lawyers should have the freedom to work from any location — from home, from the office, from court, and even while travelling. When researching legal practice management providers, ensure that vendors provide, at a minimum, this freedom and capability.

data security companies they work with to ensure the safety of your information. Highly credible companies include McAfee, TRUSTe, and Norton. The benefits of cloud-based practice management platforms are clear and relevant to law firms of all sizes. Firms can now enjoy an array of features that were formerly only accessible to their larger competitors as long as they ensure that the software they are purchasing is truly cloudbased. As the world’s leading provider of cloud-based legal practice management software, Clio is flexible enough to cope with the full range of contentious and non-contentious practice areas. If your firm is ambitious and looking to grow, then Clio is the perfect solution for your practice management needs. For a free trial visit: www.clio.co.uk

Installation Accessible through web browsers, cloud-based practice management platforms require no installation or maintenance of dedicated software and hardware. This allows law firms to remain agile, and seamlessly move their practice to the cloud, — minimising the amount of time and money invested into deployment, maintenance, and training. Additional users can be added to the platform as required, meaning that as your firm expands, the software grows with it. New features and product releases are administered centrally so there is no downtime or intervention required by the user. Ask about the installation turnaround time for your new cloud-based legal practice management software. If it’s anything longer than the couple of days, then it’s probably not an entirely cloud-based product.

Server Location If your legal practice management software provider has mentioned installing hardware in your building, they cannot claim to be a cloudbased solution. In addition to this, ensure that your firm meets all regulatory requirements by checking that all your data is hosted in European data centres. If you choose a provider that has servers outside the EU, you may not be compliant with data protection regulations and your data may be subject to the laws of the country it is being held in.

Security The cloud provides a higher standard of protection for confidential data than most law firms can provide on their own. Most data centres for cloud-based applications have passed a rigorous set of industrystandard auditing requirements ensuring the strictest levels of digital and physical access. Ensure you ask your software provider what third-party

The Report

Risk and Compliance

Consumer Credit and CPDThe New Compliance Regimes 2016 sees two important new issues for solicitor to consider in their compliance with the SRAâ&#x20AC;&#x2122;s rules. The final resolution of the long running consumer credit issue and the need for all firms to transition to the new CPD structure.

Consumer Credit The changes to consumer credit have resulted from the ending of the blanket approval previously granted to the Law Society. The SRA had a temporary exemption while they decided how to proceed. Initially it looked as though the SRA would decline to regulate solicitors at all for consumer credit work, leaving all firms who needed to offer credit to seek direct permission from the FCA. In the end, however, pressure and good sense has prevailed and the SRA has decided to offer a form of regulation. In the meantime the legal position has changed as well and the rules around short instalment credit have been relaxed slightly. This form of credit has always been exempt from regulation. This means that any credit arrangements which: â&#x20AC;˘ Are agreed before the debt is incurred; â&#x20AC;˘ Are for not more than 12 months; â&#x20AC;˘ Involve 12 or less repayments; â&#x20AC;˘ Are for a fixed sum; â&#x20AC;˘ Are for our services; â&#x20AC;˘ Involve no charge or interest at all; and â&#x20AC;˘ Are not secured on land. Will be outside the ambit of consumer credit. However, the view of the SRA is that this exemption only applies where the credit is agreed prior to the debt falling due. Therefore, where a bill has already been rendered and payment by instalments is then offered this exemption will not apply. It would be sensible therefore for firms to ensure that where they might be prepared to offer instalments that they ensure this is discussed in advance with the client.

A further relaxation has been created for legal work which only tangentially involves credit. This includes debt advice work and the pursuance of consumer credit debt. Where the above exemptions do not apply or the firm wants to offer a more complete credit option with fees or interest being charged then they will need to take charge of the Exempt Professional Firms regime. This is the system which has caused so much consternation as it must be regulated by the SRA under licence from the FCA. The SRA has taken this responsibility on and the regime is not in place. There is no substantial addition to the rulebook but the SRA has issued guidance highlighting how the already existing key outcomes and principles link to the consumer credit regime and how they might be complied with. Key things that need to be done to ensure that compliance is being achieved is for the solicitor to: â&#x20AC;˘ Ensure the client understands the arrangement and its consequences for them; â&#x20AC;˘ Consider the appropriateness of the arrangement proposed for our client; â&#x20AC;˘ Provide the client with sufficient information to allow them to assess and understand the arrangement themselves; â&#x20AC;˘ Assess the credit worthiness and ability to pay of the client; â&#x20AC;˘ Monitor the arrangement throughout its lifetime. This will require a short statement of the clientâ&#x20AC;&#x2122;s needs, a consideration of other arrangements, a clear statement of the credit deal on offer, a process to assess the ability of the client to fund the arrangement, and ongoing monitoring to make sure that they are paying on time and have no further problems.

CPD Changes Lawyers have long been familiar with the need to do 16 hours of CPD courses each year. One of the weaknesses of this system has been that in some case the training being done is not particularly relevant to the individual lawyerâ&#x20AC;&#x2122;s practice and the drive to do the set number of hours becomes more important than actually obtaining relevant updates and extending knowledge. The new regime has no specific number of hours and no requirement that training be obtained from approved providers. From the CPD year beginning in November 2016 all lawyers must self-assess against the range of basic competencies set down by the SRA and their individual practice needs. They must then undertake appropriate training to fill identified gaps. In theory, therefore, a lawyer who knew everything necessary for their work area, was totally up to date, and had no skill shortages could do no training at all and meet the requirements. Such a lawyer, however, is likely to be very rare. More realistically, a senior

conveyancer who had kept up to date and had all the necessary skills might only need a half day of legal updating. By contrast a junior litigator might need to carry out 30-40 hours of training in CPR updates, specific legal areas, and core skills. The need will depend entirely on the individual and their requirements. By the same token, simply continuing to do 16 hours of training will not be acceptable because there will have been no assessment of training need and the 16 hours carried out may not be suitable. While there will not be any specific checks made all solicitor must make a declaration that they have carried out an assessment each year and fulfilled its findings. If you come to the attention of the SRA for some other reason they have made clear that they will be looking at training records as part of any other investigation.

By David Smith, Partner and Head of Compliance at Anthony Gold

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The Report

Risk and Compliance

Being Authorised by the FCA You’re authorised! What next? Nicola Crump of Signature Compliance gives an overview of what it means to be a newly authorised firm operating in the consumer credit market and provides guidance on what firms should be focussing on in respect of evidencing their compliance.

Responsibility for regulating the consumer credit sector transferred to the Financial Conduct Authority (FCA) from the Office of Fair Trading (OFT) in April 2014. In the Financial Conduct Authority’s Data Bulletin Supplement in April 2016 it is noted that by the end of December 2015, 32,070 firms had applied for authorisation, this figure includes both new applications and firms with interim permission who were previously licenced by the OFT. According to the FCA’s data, by the end of December 2015 27,093 applications were determined with 95% of these resulting in a firm being authorised (25,645 applications were approved, 40 applications were refused and 1,408 were withdrawn by firms). For those firms who embarked upon the application process having interim permission, they will have noticed already the difference between the OFT and FCA, with the FCA having a broader range of powers and more resources than the OFT. The FCA’s application process, particularly for ‘full permission’ is lengthy, complex and demonstrates the regulator’s appetite for firms to adequately demonstrate its ability and willingness to meet the Handbook rules, including but not limited to the high-level principles and the threshold conditions. For those 25,000 plus firms now authorised, what is next? Firms would certainly be foolish to think that once they are authorised, the focus upon compliance within their firm should in any way lessen. In fact, this is when the hard work begins. First, it is important for every firm to revisit its Regulatory Business Plan to ensure any changes since the date of application have been noted and the regulatory impact considered. Firms should also continue to develop their compliance framework, ensuring they have adequate systems and controls in place which accurately reflect

the nature, scale and complexity of the firm’s business model and the risk the regulated activity may pose to consumers. In so doing, firms should scrutinise systems and review their compliance policies, compliance procedures and staff training to ensure their compliance framework is fit for purpose and that firms’ systems and controls more generally are adequate and appropriate. Risk assessments and risk registers often serve as helpful tools which can assist in the identification, monitoring and assessment of the firm’s systems and controls. Ordinarily, those operating in the consumer credit sector should have key policies in place, which, subject to the business model and type of regulated activity, will include: Data Protection, Responsible Lending, Creditworthiness and Affordability, Collection of Payments, Privacy and Data Sharing, Financial Crime, Vulnerable Customers, Whistleblowing, Complaint Handling, TCF and Financial Promotions. Management information should, together with a suitable compliance monitoring plan, serve as a key control tool against which the firm’s systems can be assessed. More specifically analysis of this information will help firms evidence that it is delivering the right outcomes for consumers. Firms may use a TCF dashboard as part of their periodic management or board meetings to review relevant management information. However, where firms do review such information, firms should ensure that any actions raised are recorded and tracked through to action. The FCA is not likely to be satisfied that a firm’s systems and controls are adequate unless those systems and controls provide for the proper implementation resulting actions and a procedure for documenting the same.

A firm should use its risk register to drive its compliance monitoring plan, focusing on the higher risk areas such as: new business/sales, complaint handling, creditworthiness and affordability assessments and collecting payments in arrears. A robust monitoring framework should consist of three lines of defence: with a check, a check on the checker and finally someone ensuring the check on the checker was properly undertaken. Once authorised, firms will also have to meet the FCA’s regulatory requirements on Approved Persons, controllers of the firm, regulatory sales reporting and complaints reporting. For debt management firms there are additional requirements relating to prudential resources and client money. Further, following authorisation, the FCA will undertake ‘Supervision’ of firms which is based around three pillars of activity: • Pillar 1 – Proactive firm supervision • Pillar 2 – Event-driven, reactive supervision • Pillar 3 – Issues and products supervision (known as ‘thematic’ work) Regulatory compliance can be overwhelming for some firms, but with a clear plan in place, an embedded commitment to treating customer’s fairly and documentary evidence of compliance through systems and controls, firms should be able to operate compliantly and competently within the FCA’s regulatory space. By Nicola Crump, Signature Compliance

The Report

Risk and Compliance

Can we stop using the C-word? I hate the word ‘compliance’. Can’t stand it, in fact. You might find that strange for someone who specialises in supporting Compliance Officers.

Don’t get me wrong, it’s not because I don’t like the work. Five years on, I still love helping our small firm clients. Reducing the burden on COLPs, improving quality, reducing complaints and the risk of PII claims. It’s the word itself. It irks me. What’s worse is that I feel compelled to use the C-word throughout our own website (jonathonbray.com) and marketing messages, simply because that’s what the search engines recognise and understand. I feel tainted by association with the C-word. Why do I hate it? ’Compliance’ to me conjures Orwellian images of mindless drones following oppressive rules put in place by a faceless overseer. Secret police in leather trench coats. Covert operatives hiding in the shadows, eliminating those who dare to do things differently. To me it represents inflexibility. It is finding the reasons in the rules why we cannot do what we want to do. It is ‘the tail wagging the dog'. It is entirely negative.

For me, that’s part of the reason I think that so many solicitors roll their eyes when the regulator (and us consultants) waffle on about the C-word. There is very often no love, no desire to take it as seriously as it should be. It’s something imposed, not internalised. But the reality, for solicitors at least, should be something much different. We all know that Outcomes focused regulation is intended to get away from traditional rules. Prescription is (at least in theory) replaced with flexibility. Firms can decide how best to achieve the high level principles and outcomes contained in the ‘rulebook’. At its heart, OFR is meant to be positive! Yes, there is a trade-off in terms of certainty, but for the first time in a generation, lawyers are free to interpret regulation and make it fit around their own business. To demonstrate and justify how they achieve the principles and outcomes. To innovate and boldly go… And the 2011 experiment is being extended. To many, OFR was an unfinished and hurried project. The Code of Conduct still contains outcomes that look suspiciously like rules. The Accounts Rules can still trip you up every day for the most minor infringements. As for the rest of the Handbook, it is entirely inaccessible. Nobody has read it. The SRA is in the process of re-drafting the entire Handbook, reducing it from over 400 pages to a mere 50 pages (hooray!), resulting in a Code of Conduct of just 10 pages (double hooray!). OFR is here to stay and it’s time we start putting a positive spin on this stuff. I usually prefer to talk about ‘Risk Management’ with our clients rather than the C-word. Risk Management is much more about taking ownership of professional duties and embedding them in systems and cultures. It is proactive, and gives firms a greater feeling of freedom. It is definitely more positive. But even ‘Risk Management’ sounds a little grey and uninspiring, doesn’t it? We need a new word! Any ideas? Tweet me @Jonathon_Bray Jonathon Bray is a former solicitor and now helps small firms outsource their C-word. He is also a recognised ABS specialist. www.jonathonbray.com By Jonathan Bray

The Report

Accountancy

EU poll swings on Minister’s Speech Following the Chancellor’s Budget speech to the House of Commons in March, McBrides Chartered Accountants invited their clients to attend a Budget Presentation on March 17th with guest speaker the Rt Hon James Brokenshire MP.

As the minister for Immigration, Mr Brokenshire was invited to speak about his decision to vote to stay within the EU. He told the assembled audience: “This is a profound decision that we will be taking. There are a lot of real questions that need to be answered on what we would do if we were outside of the EU. I think we all recognise for business that the ability to harness the market is significant.”

Before being elected as the MP for Old Bexley and Sidcup, Mr Brokenshire was a partner at the London office of international law firm Jones Day where he specialised in company law, corporate finance, takeovers and floatations.

Pictured: Nick Paterno with Guest Speaker 48% of people entering the event said they wanted ‘Out’ of Europe with a slim the Rt Hon James Brokenshire MP majority of 52% voting to stay ‘In’. Following the speech from Mr Brokenshire event: “The discussion on Europe was energising and thought-provoking. With the vote was re-run and the 'In' vote was so many factors for businesses to boosted significantly with 66% of the consider it will be important to see how delegates wishing to remain in Europe. the debate progresses.” Nick Paterno, who leads a specialist team at McBrides who advise legal professionals across England on accountancy and tax matters, said at the end of the

Delegates at the McBrides Budget Presentation were asked to vote in a mock EU referendum as they entered the event and also asked to vote again when they left two hours later.

Tax changes on goodwill welcomed Goodwill is an important asset for any business and the Chancellor announced in the last Budget that restrictions have been lifted on the availability of Entrepreneurs’ Relief connected to goodwill. This could mean that more of those looking to incorporate will be able to recognise the value of aspects of the business which they have worked hard to create such as good working relationships with clients, client lists and reputation, at a low tax rate. Didn’t we always have that though? Prior to the Chancellor’s Autumn Statement to The Commons in 2014 partners could secure ER on the value of goodwill in their business when selling it to a limited company on incorporation (assuming the relevant conditions for the relief were met) so that the gain they realised on sale of this goodwill was taxed at just 10%. However this common and tax efficient way to realise some of the value in the business on incorporation was denied from the 3rd December 2014 onwards when selling goodwill to a related company. This initially meant that even retiring partners were denied the 10% tax rate where their retirement was simultaneous with the incorporation. That same Autumn Statement also saw the Chancellor withdraw corporation tax relief for the company acquiring the goodwill. While the 2014 changes removed, in many instances, the option to release value from the business at 10%, there have for many years been aspects of the legislation which have meant that incorporation can be effected on a tax neutral basis, so it was to these provisions that business incorporations reverted. The 2014 Autumn Statement Entrepreneurs’ Relief restrictions were later redrafted to secure a favourable position for retiring partners but at Budget 2016 Mr Osborne took an unexpected step to unwind further the restrictions. In essence, the definitions have been redrawn for certain incorporations. Where a partnership incorporates and an

individual partner owns personally, or through a corporate entity or trust, less than 5% of the ordinary share capital and voting rights in the newly incorporated business, this restriction will no longer apply. And this favourable change has been backdated to 3 December 2014. This news could be useful to minority partners or larger partnerships or LLPs where a greater number of partners gives rise to lower percentage interests.

Pertinent to partnerships This news is pertinent to partnerships as clearly this incentive is not available to a sole trader incorporating their practice and becoming the sole shareholder – they will own more than 5% of the new limited company! While this change could put tax efficient value release back on the table in some incorporation scenarios, it does not revert to the pre Autumn Statement 2014 position with the loss of Corporation Tax relief in the acquiring company (although perhaps that was always too good to be true). It’s important to remember that there are a wider range of factors at play when you decide to incorporate - it’s not just about taxes! If you are considering incorporation for your practice though, it’s important to understand the tax implications. By Nick Paterno, Legal Services partner at McBrides The Report

C G P The

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Conveyancing Focus

The Client-focused conveyancing case management system that keeps everyone InTouch. In 2012, we bought our first house. In total we viewed 44 different houses. We did what we thought was correct. We went to viewings, we fell in love with a house, we put an offer in, Job done, or so we thought... Wrong! The first offer fell through. We tried again, we fell in love with another house. We put another offer in, it got accepted, we were going to be home owners and thenâ&#x20AC;Ś â&#x20AC;Śit fell through, leaving us confused and disappointed. We persevered and finally, our third offer on a different house got accepted. We were ecstatic. Our experience of the conveyancing process over the next few months, was an emotional rollercoaster. We had to quickly understand a myriad of complexity â&#x20AC;&#x201C; searches, house insurance, drawing up a will, SDLT and so on. What started out as an exciting adventure had now turned into a mess of complications and confusion. The crux of the problem was, we had no knowledge or understanding of the process. We often felt frustrated by not knowing what was happening. Iâ&#x20AC;&#x2122;m sure that we annoyed the hell out of the estate agent and conveyancer. We were always ringing them asking â&#x20AC;&#x201C; â&#x20AC;&#x153;whatâ&#x20AC;&#x2122;s happeningâ&#x20AC;?, â&#x20AC;&#x153;when can we move inâ&#x20AC;?, â&#x20AC;&#x153;this costs what?!â&#x20AC;? The whole process made us think that we couldnâ&#x20AC;&#x2122;t be the only buyers that felt this way when buying a house. And so we started to wonder, what could we do about it?

You will be in good company with InTouch InTouch is used by regional and high street firms; from solicitors like Murray Hills and Bird & Co, to Licensed conveyancing firms like PDR Property Lawyers and Michelle Oâ&#x20AC;&#x2122;Shea & Co. We even have a hybrid agency/solicitors taking advantage of InTouch.

Efficiency at the heart of everything InTouch is above all easy to use and designed to help you run a more efficient practice. Our aim is to improve the conveyancing process, and we think that technology is a key part of the service. More and more buyers & sellers are starting to expect easy and clear technology to help them understand what has to happen and what they can do to help the process.

Donâ&#x20AC;&#x2122;t get left behind Donâ&#x20AC;&#x2122;t let your clients feel like we did when bought our first home. Keep them in the loop, keep them excited, show them you care! Keep them InTouch. Itâ&#x20AC;&#x2122;s time to get InTouch â&#x20AC;&#x201C; 0115 888 11 55 www.intouchapp.co.uk

InTouch is born The result was InTouch. Our first solution went live January 2014. In the two and bit years since then we have continually improved the software - thanks to feedback from conveyancers & agents.

How InTouch can help you Conveyancers are able to upload and send all their letters and e-mail through InTouch. The powerful reports generated by InTouch enable practices to understand how their business is running. Quotation calculatorâ&#x20AC;&#x2122;s are included free of charge to help conveyancers draw in new clients out-ofhours and also via their introducers.

Data Security InTouch inside highly secure, specialised Microsoft Azure Data centres, adhering to UK auditing standards. All data and documents are encrypted, and we continually improve our security standards as the industry changes. We actually document our security practices on our website, with the aim of educating lawyers on best practice techniques, raising the standard of security within the conveyancing community.

Cloud based technology You can access InTouch from anywhereâ&#x20AC;&#x201C; you can even sit on the beach and keep your clients up to date. In fact, one house buyer recently left a review saying he was able to enjoy his holiday in New Zealand because he received updates through the InTouch portal telling him how his house was progressing.

Seamless integration Another benefit of InTouch is that it integrates seamlessly with general practice management systems, accounts packages, search providers, and also Microsoft Word & Outlook. We focus purely on supporting the conveyancing process, thus making sure we can provide the best conveyancing case management system possible.

Training and Support Switching to InTouch is straightforward and easy. Firstly, we offer training that will get all your staff using InTouch in easy, simple steps. Customers are not tied into minimum contracts or setup fees. The InTouch model is a simple â&#x20AC;&#x2DC;pay per caseâ&#x20AC;&#x2122; one, that ensures we only make money if we provide you a good service. Check out www.intouchapp.co.uk for details of the pricing.

COOPERSRESTAURANT CO UK The Report

Conveyancing Focus

Why conveyancers must employ enjoyable technology Recently I found a fascinating book full of very interesting statistics. Did you know that every day the amount of data created grows by 2.5 quintillion bytes? That’s 18 zero’s! Or did you know that less than 0.5% of all available data is ever analysed and used? Referring to information of this magnitude the buzzword ‘big data’ is often used, which is simply a term to describe structured and unstructured data. However, I’m more interested in how this growth of data affects law firms. According to the book ‘The Human Face of Big Data’, the average person now processes more data in a single day than they did throughout a whole lifetime in the Middle Ages. The majority of this data is, of course, driven by the internet and the sharing of information and creation of content associated with it. So, with the sheer volume of data and amount of stimuli we process day-to-day, what impact does this have on our lives? On a daily basis employees, colleagues and peers are consuming incredible amounts of information in both personal and professional capacities, between which, the lines are often blurred. So while we’re taking time to process and analyse the multitude of data during our working day, it’s leaving us with less time to manage operational or administrative tasks. Working in the conveyancing sector, there is a huge input and output of information generated throughout the process. All this resulting information then needs to be organised,

analysed and stored in a way that is easy to access. That’s not easy when we’re constantly processing and filtering data, so choosing a system that can help do this efficiently is imperative. Furthermore, as client expectations continue to increase, so too does the demand for a faster and more economical service, placing additional pressure upon the conveyancer. Nowadays we are used to technology in our personal lives that help us easily organise, analyse, store and access information. This begs the question, ‘why can’t the clever technology that I use in my personal life, be available in my work life?’, and as a busy legal professional, I hope this resonates with you. Commonly raised data challenges in the conveyancing industry include filing matters, reconciling disbursements, and rekeying information for SDLT submissions or AP1 transfers. Now, the good news is that while the issues around the volume and management of

information are present, there is simple, intuitive technology built to evolve how conveyancers manage their matters in the most efficient way possible. Choosing to use these systems means less logins and passwords to remember, eliminates the issue of lost disbursements, rekeying errors, and houses all information related to your matters in a central system, providing one source of truth. Opting for the right technology for your firm gives time back to you and your staff, creates efficiencies and minimises risk - why would you work any other way? By making the change to simple, enjoyable technology, you can change the way you work, store and analyse information related to your matters, and thus, take the headache out of the conveyancing process. By Scott Bozinis, CEO InfoTrack

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Conveyancing Focus

Make Residential Conveyancing Profitable. The orderly transfer of the ownership of land is one of the cornerstones of our society. For most people, purchasing a home is the largest investment they will make in their lives. Due to the lack of familiarity with the process and the real and perceived risks, buyers rely on their trusted solicitor to represent them. However, as conveyancing has commoditised the conveyancer needs to do more work for less money and as a result many small law firms are surrendering conveyancing work to conveyancing ‘shops’. This needn’t be the case.

Communicate efficiently with your client; With fixed fee work, unnecessary phone calls eat into your profit margins, avoid concerned calls by keeping your client well informed. A good system allows you to:

Through the introduction of great technology you can make residential conveyancing profitable. A sophisticated case management software system will allow your firm to:

• Locate matter correspondence in an instant and with ease; • Integrate your email with your case management software allowing you to send and receive emails directly from the matter; • Send your client a ‘pack’ of documents, create a composite pdf of those documents, in the correct order, so that it is easy for your client to understand.

Access a library of ‘automated’ and up to date conveyancing legal forms and precedents; Also allowing you to incorporate your own correspondence into the software so that you and your staff produce every document, for every matter, in the same way. This standardisation will bring quality and efficiency. Benefit from integrated searching; Order all your searches and have results returned directly to and from the matter and the cost of the search debited against the matter ledger, turn transactions around faster; provide your clients with detailed costs relating to the searches and dramatically reduce the cost of the administrative work. Ordering all your property searches including the Land Registry, AP1's and SDLT from one provider will completely automate the conveyancing process.

Market your conveyancing services; The market is intensely competitive. Most people do their research online before making a purchasing decision, even if they have received a recommendation. If you don’t have a great website that clearly sets out the services you offer and the value that your firm will add to the process, then you are losing work to the firms that do. In conclusion, most buyers prefer to deal with their local trusted lawyer for their conveyancing needs. As a small law firm owner profitability comes with building your conveyancing practice and the best way to do this is through utilising the best technology available. Learn more about building a healthy conveyancing practice. Download your free whitepaper from https://www.leap.co.uk/whitepapers/ today. By Peter Beaverstock, CEO LEAP UK

The updated residential CON29DW and CommercialDW Drainage and Water Enquiries are now available to all Thames Water Property Searches’ customers We are delighted to announce that customers now have full access to the updated residential CON29DW and CommercialDW Drainage and Water Enquiries. We are delighted to announce that customers now have full access to the updated residential CON29DW and CommercialDW Drainage and Water Enquiries. As a result of changes in legislation, we have worked in consultation with The Law Society to implement these vital modifications, which will ensure that the Enquiries provide conveyancers with the most up-to-date information available when advising their clients on the impact of water and wastewater networks in relation to property purchases. The key changes to both Enquiries – which went live on May 9th 2016 – include: • Inclusion of details on private pumping stations • Impact of sustainable drainage systems (SUDs) on newly adopted sewerage networks • Removal of water quality information as this is not property specific; however this information will still be available on the TWPS website • Provision of water hardness information.

We are an official supplier of CON29DW and – as a member of The Drainage and Water Searches Network (DWSN) – have 16 years’ experience delivering residential and commercial drainage Enquiries to our national customer base. We are also one of the UK’s leading providers of property searches in the UK, offering an extensive range of searches throughout England and Wales all under one roof. Conducting multiple searches with us is a transparent and straightforward process. Our easy-to-use online dashboard highlights searches relevant to each property and keeps customers fully informed on those all-important expected delivery times. Complex cases do arise so our knowledgeable customer service team is always on hand to help and advise. To discuss these amendments in detail or to discuss our comprehensive range of services, please call: 0845 070 9148 or visit: www.thameswater-propertysearches.co.uk

It is intended that all official CON29DW suppliers will be compliant by 4th July 2016. The Report

Legacies

Canine Care Card Some dog owners worry what might happen to their dog if they were to pass away first, leaving their beloved fourlegged friend without an owner. Thankfully, Dogs Trust, the UK’s largest dog welfare charity, offers the Canine Care Card, a special free service that aims to give owners peace of mind, knowing that the charity will look after their dog if the worst should happen. Not only does this offer reassurance to dog owners, it also helps to ease the minds of friends and family during what is already a distressing time. Dogs Trust has taken in a whole host of dogs across its 20 rehoming centres in the UK as part of the Canine Care Card scheme and helped them settle into new homes. Two of these dogs were duo Telia and Freddie who arrived at Dogs Trust Darlington aged eightyears-old after their owner had sadly passed away. The loveable pair were firm favourites with staff and volunteers, both enjoying long walks and playing in the water whenever they got a chance. Telia had been diagnosed with arthritis prior to her arrival at Dogs Trust and was able to get all the care she needed while she awaited her forever home. Dogs Trust never puts down a healthy dog, and works hard to match every dog with a responsible, loving home. Happily, Telia and Freddie were soon settling in with a loving new family after being cared for at Dogs Trust Darlington.

The Report

Adrian Burder, Dogs Trust CEO says, “Thanks to Dogs Trust’s Canine Card Card scheme, dogs in need of a new home are given a lifeline, meaning that Telia, Freddie and many dogs like them are able to get a second chance at happiness and bring joy to a new family. If you decide to become a Canine Care Card holder, we will issue you with a wallet-sized card. It acts in a similar way to an organ donor card and notifies people of your wishes for your dogs, should anything happen to you. Dogs Trust also strongly recommends that you mention the care of your dog in your Will. That way, there can be no confusion about your wishes.”

Agricultural Law

AGRICULTURAL ROUNDUP Edward Peters, barrister, of Falcon Chambers, looks at some recent developments in the field of agricultural law.

Agricultural occupancy conditions In Shortt v Secretary of State for Communities and Local Government [2015] EWCA Civ 1192 the Court of Appeal considered the meaning of â&#x20AC;&#x153;dependentsâ&#x20AC;? in an agricultural occupancy condition. The condition was: "The occupation of the dwelling shall be limited to persons employed or last employed solely or mainly and locally in agriculture as defined by Section 290(1) of the Town and Country Planning Act, 1971, or in forestry and the dependants (which shall be taken to include a widow or widower) of such persons." The owners of the dwelling, Mr & Mrs Shortt, claimed that they had been in breach of the condition at all material times, and were therefore immune from enforcement action and entitled to a certificate of lawful user. Mrs Shortt had farmed 22 ha. of land, but at a substantial loss. It was the income of Mr Shortt, a successful businessman, which had supported them and their children financially. The Court of Appeal rejected their claim, holding that the word â&#x20AC;&#x153;dependentsâ&#x20AC;? did not contain a requirement as to financial dependency on the agricultural worker, but was equally apt to cover a non-financial dependency such as exists within a family relationship.

Bad Husbandry under Case C In Chapman v Lumb (FTT (Ag Land), 5/11/2015) the landlords succeeded in their application for a certificate of bad husbandry under the Agricultural Holdings Act 1986 (Schedule 3, part 2, para. 9). The Tribunal applied the tests set out in R (Davies) v Phillipps [2007] EWHC 1395 (Admin) and Goldsmid v Hicks (SE/AT/1547), and concluded that the permanent pasture was not being maintained in good condition, that there was serious overstocking, & that necessary repairs and maintenance were not being carried out. The Tribunal concluded there was no realistic prospect of improvement, because the Respondent was â&#x20AC;&#x153;unhappily caught between a rock and a hard place, where because of the current parlous condition of the farm and mismanagement he cannot switch to a reduced stock system nor maintain his current system of farming going forward.â&#x20AC;?

Tax: hobby farming and the â&#x20AC;&#x153;reasonable expectation of profitâ&#x20AC;? test In Silvester v The Commissioners for Her Majestyâ&#x20AC;&#x2122;s Revenue and Customs (FTT (Tax), 5/11/2015) the Tribunal held that the restriction on loss relief for farming losses under s. 67 of the Income Tax Act 2007 was not limited to â&#x20AC;&#x153;hobby farmingâ&#x20AC;?, but included farming carried out on a commercial basis with an expectation of profit. The Tribunal also considered the correct approach to be taken when applying the â&#x20AC;&#x153;reasonable expectation of profitâ&#x20AC;? test, and the meaning of â&#x20AC;&#x153;activitiesâ&#x20AC;? in s. 68 of the ITA 2007. In Scambler v The Commissioners for Her Majestyâ&#x20AC;&#x2122;s Revenue and Customs (TC/2014/05306, FTT (Tax), 7/12/2015) the Tribunal held that the activities referred to in s. 68(3)(b) of the ITA 2007 were the activities carried on at the start of the loss period, not the year of the loss claim. The Tribunal noted the difficulties of applying the test in s. 68(3)(b) to a farming business, such as Mr Scamblerâ&#x20AC;&#x2122;s dairy farm, â&#x20AC;&#x153;where such a significant component of the businessâ&#x20AC;&#x2122;s profitability (the milk price) is outside the farmersâ&#x20AC;&#x2122; control. â&#x20AC;Ś On his milk yield â&#x20AC;Ś each 1 penny decline in the milk price meant an annual

drop in income of ÂŁ18,000â&#x20AC;?; but concluded that the volatility in the farm gate price of milk was not sufficient to satisfy the test in s. 68(3)(b): â&#x20AC;&#x153;the future milk price was unknown, but that did not mean that it was reasonable to expect no profits for the next five years.â&#x20AC;?

Drafting of FBTs: recent revisions to the RICSâ&#x20AC;&#x2122;s precedents The RICS has a set of precedents for various forms of farm business tenancy agreements, and cropping & grazing licences. Recent legislative changes have led to the RICS Agricultural Tenancies Monitoring Group revising the precedents in various respects. Milk quota abolition. Following the 2015 abolition, specific provisions dealing with milk quota have been removed, and the dairy/non-dairy agreements merged; but some general references to â&#x20AC;&#x2DC;quotasâ&#x20AC;&#x2122; have been retained, to encompass remaining quota schemes (beet quota will subsist until 2017) and any future â&#x20AC;&#x2DC;quotasâ&#x20AC;&#x2122; which may be introduced. The basic payment scheme. The provisions concerning subsidies and environmental regulations are drafted in an all-inclusive manner, with the aim of applying to all such schemes, even if they are altered or introduced during the term of the agreement. However, specific references to the Single Payment Scheme (SPS) have been replaced by references to the Basic Payment Scheme (BPS), and references to environmental schemes have been updated (including Glastir and the relaunched Countryside Stewardship scheme). The RPA has issued guidance regarding when land will be considered to be â&#x20AC;&#x153;at the disposal of the applicantâ&#x20AC;? for the purposes of the BPS, and various consequential amendments have been made to the agreements: in particular, to the covenants to keep in good agricultural and environmental condition, and to the licenseeâ&#x20AC;&#x2122;s positive obligations in the grazing & cropping licences. Dispute Resolution clauses. Dispute resolution clauses in tenancy agreements are topical: the Deregulation Act 2015 has widened the means by which disputes concerning 1986 Act tenancies can be resolved, and the court system places ever more emphasis on ADR. The agreements have therefore been revised to include updated and additional forms of dispute resolution clauses. Repairs & insurance. The Agriculture (Model Clauses for Fixed Equipment) (England) Regulations 2015 introduced new Model Clauses concerning repairs and insurance under 1986 Act tenancies, following a process of extensive consultation. The agreements have therefore been revised to include the option of incorporating the new Model Clauses in place of the existing expressly drafted provisions concerning repairs and/or insurance. Edward Peters is a barrister at Falcon Chambers, a Fellow of the Chartered Institute of Arbitrators, and the barrister member of the RICS Agricultural Tenancies Monitoring Group. He specialises in all aspects of real property and landlord and tenant law, including agriculture. http://www.falcon-chambers.com http://www.falcon-chambersarbitration.com

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_ ZZZ LQWRXFKDS FR XN The Report

Probate

Probate: how it works It is the sad truth that death will affect us all at some stage in our lives. Having to cope with the loss of a loved one can be devastating without the added burden of having to also consider legal matters.

ne of the first steps after someone has passed away is to register their death at a local Registry Office. It is also necessary to begin gathering information on the deceased person’s assets and liabilities and the government’s Tell Us Once service, which is available through the Registry Office, is a great way to start this by notifying all relevant government departments in one go. It is then usually necessary to obtain probate, which is an order issued by the Probate Registry, part of the English court system, confirming the person who has the legal authority to deal with the estate. Before an application can be made for a grant of probate (or letters of administration if there is no will), the person making the application (known usually as the executor) must assess the size and complexity of the estate and ascertain whether inheritance tax will be payable. Gifts to surviving spouses or civil partners and gifts to charities are generally free of inheritance tax. Otherwise, inheritance tax will be payable where the value of the estate exceeds an individual’s inheritance tax nil rate band. The inheritance tax nil rate band is currently £325,000 and is due to remain the same until 2021. Inheritance tax is paid at a flat rate of 40% on the value of the estate exceeding the available inheritance tax allowances. Where the deceased had been previously widowed, it may be possible to claim up to a further full inheritance tax nil rate band, bringing the allowance up to £650,000 on the basis of current figures. However, it is important to note that this allowance must be claimed through the relevant forms and is not automatic. Further changes to the inheritance tax rules have been recently announced are 36

The Report

due to brought into force shortly with introduction of an additional nil rate band (to be phased in over a five year period from 6 April 2017). The additional nil rate band will apply where the deceased leaves property to direct descendants and could provide an extra allowance of up to £350,000 in specific circumstances, providing a total allowance of up to £1 million. However, advice should be sought on the exact position and the best way to maximise the allowances available. To assess the inheritance tax position, the deceased’s assets and liabilities should be valued as though they were being sold on the open market at the date of death. When considering property valuations, it is advisable for the executor to obtain at least three valuations from local estate agents. In some cases, it may be beneficial to obtain a formal valuation from a surveyor especially if inheritance tax is payable and the exact value of the property could be a matter of negotiation with HM Revenue & Customs. Assets held jointly should also be considered as well as personal possessions. In some cases, it may be beneficial to obtain a professional valuation of the personal possessions, particularly if there is inheritance tax to pay. The inheritance tax value of those possessions is their sale value which is often considerably less than their replacement value which many of us regularly consider when insuring our contents. It is also essential to consider whether any gifts were made by the deceased in the last 7 years of their life. Gifts not only include assets given away but also assets that may have been given away but where the deceased still retained some benefit. HM Revenue & Customs expect full enquiries to be carried out and it is recommended that bank statements are reviewed thoroughly over this 7 year period.

A common concern is how the inheritance tax will be paid. Some of the tax due must be paid before probate can be granted and this can often be paid directly from the deceased’s bank accounts via the direct payment system. It may also be possible to elect to pay inheritance tax by way of 10 yearly instalments in relation to the deceased’s property and certain other assets, which reduces the immediate tax that must be paid. Once the grant of probate has been issued by the Probate Registry, the deceased’s assets can then be encashed or transferred. Once any outstanding debts have been settled, the estate can then be distributed in accordance with the terms of the will or the law of intestacy (if there is no will). There are occasions where a beneficiary may wish to vary the benefit they have received from the estate, either partially or in full, and re-direct their gift to a new beneficiary (e.g. a child). It is possible to achieve this by way of a deed of variation. For the deed to be effective, it must be correctly executed within two years of the date of the deceased’s death and can lead to considerable inheritance tax savings. Overall, it can be very time-consuming and stressful to deal with the administration of an estate. By instructing a solicitor, it is possible to alleviate some of the pressure, avoid potential traps and ensure that opportunities are taken to maximise the estate and minimise tax. Hart Brown offer a “free” half an hour consultation prior to deciding on whether to contract a solicitor. by Sonia Dhesi, Ian Hart Brown

Probate

Protecting Property When somebody dies, the largest element that makes up their estate is usually their home. This is often their own property, filled with a lifetime of memories, keepsakes and belongings. After the owner’s death, this building and its contents take on a very different role and to an administrator. The property is viewed in more simple terms and is very often the estates most valuable asset. As you all know, it is the role of the estate administrator to ‘manage’ and ‘realise’ these assets, but there is so much more work involved in these two words than meets the eye. They bring a whole new set of challenges to manage. These include the largely unpredictable British weather and the evenings provide criminals with perfect opportunities for acts of burglary and vandalism. Insurance company Aviva shared

their claims statistics for the ten years between 2002-2012, and reported a 150% increase in claims for malicious damage to homes during this period. More vulnerable empty properties such as probate properties are at even greater risk of damage from vandalism and weather. Empty properties such as these hit the headlines last year when an article in the Telegraph stated: ‘More than 700,000 residential properties in England are left unoccupied, according to the charity Empty Homes. These vacant properties are often managed by people taking responsibility for the estate or affairs of another person or while a property is awaiting sale. However, many wrongly assume that existing buildings and contents cover would provide adequate protection should something go wrong and as a result, hundreds of thousands of homes are currently uninsured’. With the demands of your workload you would perhaps struggle to see how you might arrange them all yourself. This is another area, in addition to our more widely

known research, where our experienced staff at Fraser & Fraser would work with you, providing you with a trusted partner to offer support throughout the lifecycle of your case.

Things to consider: - Maintenance & Security - Empty Property Insurance - Property Valuations - Energy Performance Certificate - Probate sales - Property Clearance If you are administering an estate with which you require our assistance or are experiencing difficulties, contact one of our case managers now to discuss how we can help: legal@fraserandfraser.co.uk or 020 7832 1430

The Report

Probate

Heir locators’ fees - Who should pay? Professor Lesley King, Private Client Head of Practice at The College of Law, Bloomsbury, looks at the options available to legal professionals and their clients. The process of administering most estates is relatively straightforward. Personal representatives (PRs), with or without professional help, collect in the assets and, having settled liabilities, pay what remains to the beneficiaries. Administration expenses such as the cost of the funeral and the professional fees of solicitors, estate agents, valuers and accountants are met by the estate. However, sometimes there are problems identifying and/or locating those entitled to share in the estate. In such cases the PRs will rely on the services of professional genealogists, sometimes known as ‘heir hunters’. These firms are extremely good at what they do and will normally have little difficulty identifying and locating the beneficiaries. However, there are some problems for PRs in relation to paying for these services. There are broadly two options available. The first is an agreement that the heir hunter should receive a share of the beneficiary’s entitlement, often called a ‘contingency fee’. The second is that the professional charges for their services, which may be on a fixed-fee arrangement or based on the time taken to complete the work (typically known as time and expenses).

The Report

No PR who instructs a firm on the basis of either time and expenses or a fixed fee service could be criticised for having done so. On the other hand, there are risks associated with the contingency fee model. Under a contingency fee model, once the heir hunters have located a beneficiary, they will ask him or her to sign an agreement instructing the PRs to pay a percentage of the beneficiary’s share in the estate to the heir hunter. It is not unusual for fees of 30% and more to be charged. Alternatively, the heir hunters might ask the PRs to sign an agreement stating that they will pay a proportion of the share of located beneficiaries to the heir hunter. Either way, the beneficiary is deprived of a proportion of their rightful entitlement. There is, of course, nothing wrong with a beneficiary deciding to share their entitlement with a third party (deeds of variation are commonly entered into to do exactly that) but in this instance the PR is imposing an obligation on the beneficiary to do so. It is difficult to see how this can be justified. In an article on this subject in Private Client Business 293 (2005), Richard Wilson and Constance Mahoney of 9 Stone Buildings said: “In the authors’ view, whilst there is no authority which provides assistance on this point, it is possible that a beneficiary might successfully argue that the personal representative has acted in breach of duty by

appointing an heir locator on such a basis, and should be personally accountable for the share that the beneficiary has paid to the heir locator.” PRs cannot require a beneficiary to agree to assign a share of their entitlement to the PR. Therefore, it must follow that an agent acting on their behalf must be similarly prohibited. There is also an issue as to whether PRs can properly disclose information about the estate to someone who is going to use that information to make a profit for themselves. Clearly where beneficiaries have to be located, there are unavoidable fees involved and PRs are entirely justified in incurring such costs. However, they are in a fiduciary position and must act in the best interests of the estate. If services have to be obtained, the PRs should use the most cost effective method of obtaining them. This is a difficult area of the law to interpret and practitioners should think carefully about how the work involved in tracing beneficiaries should be funded and where the costs should fall.

This is a redacted version of an article that was first published on Title Research’s website in February 2016. To read the full article, visit: www.titleresearch.com

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