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04 August 2016

The only certainty following the referendum is that exiting the EU will substantially alter the legal landscape from a recovery and insolvency viewpoint.

Over the past few years the various EU members have been working hard to eradicate or minimise inconsistencies between the individual regulations which have led not only to confusion but also to “forum shopping” by those facing insolvency. The idea is to provide a level playing field so that businesses in particular know where they stand should a company in another country get into trouble.

The reciprocity that has been established will need to be addressed in some manner to prevent conflicts arising between jurisdictions. The Association of Business Recovery Professionals (R3) has stated that it will be working closely with experts to understand the implications of leaving the EU and shall voice any concerns to the government.

It is a key aspect of due diligence, for potential  trading partners, that the ability to pursue debt is considered and that, at the outset of the contract or engagement, the "what if" scenario of subsequent insolvency is considered.

It remains to be seen what changes will be brought into our insolvency legislation to compensate for the withdrawal from the EU to address this.

 

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04 August 2016

A printing company based in Eastbourne has had two employees sentenced to prison terms following an SFO investigation into bribes paid in return for the award of contracts to the company.

The chairman and sale director were sentenced to 18 months' and three years' imprisonment respectively for corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906. The company itself was also convicted of the same three offences and fined £2.2million. Both men were also disqualified from acting as company directors for six years. The payments were made for the award of printing contracts in Kenya and Mauritania.

This was the first conviction against a company for foreign bribery and highlights the reach of the legislation into activity carried out by UK companies in the developing world. Local expectation and standards of doing business in the developing world can sometimes conflict with the obligations on UK business, and directors should be aware that their legal responsibilities travel with them overseas.

 

Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.

 

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03 August 2016

A Supreme Court ruling allowed a former wife to make a claim for a share of the fortune amassed by her husband 30 years after they parted, as no binding consent order was made when they divorced.

Kathleen Wyatt was granted permission to lodge a belated claim against multi-millionaire Dale Vince, who made his fortune through a green energy company founded in the 1990s, which is said to be worth £57 million.

The couple met and married in 1981 and had a child in 1983, separating just one year later. The wife became a full time single parent with little income and had little contact with her ex-husband.

There is no time limit in the UK within which a spouse must seek an order for financial provision following a divorce, and in 2011 the wife put forward an application. This was dismissed by the Court of Appeal, and the application was taken to the Supreme Court to decide whether due consideration had been given to section 25 of the Matrimonial Causes Act 1973.

Ms Wyatt was granted permission by the Supreme Court to make a claim, and in June 2016, Dale Vince was ordered to pay his ex-wife a lump sum of £300,000. In response to the verdict, Vince stated that he felt there should be a time limit on when claims can be made.

It was certainly unusual to hear of a claim being made after all this time, but without a consent order in place, the opportunity remains open.

More people are thinking about pre or post nuptial agreements following media coverage of high profile cases where these have been involved, such as German heiress Katrin Radmacher. They are certainly a sensible option for anyone getting married, but they are for use at the start of the relationship to set out what you wish to have happen if things go wrong. They are not legally binding in the UK but will be a persuasive factor if both parties received independent legal advice at the time.

What's involved here is the way in which a divorce is finalised. Once you've reached agreement, you can get the court to make it legally binding by applying for what is known as a consent order, and that's what was missing in Wyatt and Vince's case. 

A consent order confirms what has been agreed and can include details on how assets will be divided, including cash, property, pension funds and other investments, and can also include arrangements for maintenance payments, including child maintenance. Both parties have to agree and sign the draft consent order and a judge will consider the terms to see if they appear fair and reasonable, and if so will approve the agreement to make it legally binding.

Going through the process of obtaining a consent order should mean that both parties come out with a fair settlement and there will be no surprises some years down the line.

 

Contact Oratto on 0845 3883765 to speak with a family law adviser or use our contact form to arrange a call-back.

 

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29 July 2016

"If you can't stand the heat, get out of the kitchen".

The well-known phrase, designed to prevent individuals becoming embroiled in a position which carries too much pressure for their liking.

There are those who believe that the wording can be easily applied to business, ensuring that people stay within the limits of their talent, comfort and capabilities.

There are few instances when the metaphor mixes with the very literal and fewer still when the tensions created by such a situation have a considerable impact not just on a firm but also a family. One such high-profile example hit the news in January 2015, involving a well-known chef who now faces a considerable cost as a result of a dispute with his father-in-law over a restaurant lease.

The High Court dismissed Mr Ramsay’s claim that he had been duped into paying £640,000-a-year rent for a London gastro pub. Ramsay alleged that Mr Hutcheson had unlawfully used a machine which automatically reproduced a copy of the celebrity's handwriting to 'sign' the lease.

As a result, Mr Ramsay will now have to pay £10.8 million over the course of the remaining 17 years of the 25-year lease as well as £1.6 million in outstanding rent and legal fees to date. The dispute had already seen Mr Hutcheson leave as chief executive of Gordon Ramsay Holdings. Mr Hutcheson's daughter, Tana, had also given evidence in court against her father and brother.

Not all litigation involving families have such a value or a profile attached to them. Nevertheless, there is a lot of common ground between Mr Ramsay's predicament and that of many other entrepreneurs who do business with relatives and end up seeking my advice when difficulties arise.

For me, embarking on a business venture with family members should be even more reason to ensure that all agreements are properly documented. The same can be said when going into business with colleagues or close friends. As unfair as that might sound, it avoids the temptation to cut corners just because you're dealing with someone you know.

Courts and competitors will give companies no more leeway because there are blood ties between the people running them. My team and I have encountered many problems between siblings, parents and their children, and spouses arising from business ventures between them.  My advice is clear; when going into business with a family member, take advice on the structure, purpose and intentions of all parties, and document it carefully. Hopefully you’ll never need to look at it again, but in case you do, you’ll avoid a lot of heartache.  

As Gordon Ramsay can now attest, investing in a family business does not necessarily create the perfect recipe. 

 

 

Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.

Click here to return to the main commercial litigation area.

29 July 2016

In December 2015, the Mercedes Formula 1 team confirmed that they were in the midst of taking legal action against an employee who was due to join their arch-rivals Ferrari at the end of the month.

Benjamin Hoyle was accused of searching and saving Mercedes Formula 1 race data with the intention of transferring this confidential information to Ferrari. 

Mercedes released a statement confirming that “the company has taken the appropriate legal steps to protect its intellectual property".

This is an example of the importance that companies often place on their intellectual property and the steps available to employers to stop employees taking their confidential intellectual property. The steps available to employers in similar scenarios include a High Court injunction to stop the employee from transferring the data to his new company and an injunction to stop the new employer (in the case of Benjamin Hoyle, Ferrari) to use and benefit from the confidential intellectual property. A company's confidential data is often one of its most valuable assets, giving the company the competitive edge in the market. Any misappropriation and misuse can provide a competitor with a significant and unfair advantage, and the employer needs to act quickly to minimise damage or potential damage to its business.

Employers should be aware of behaviour that indicates that employees may be misusing, or considering misusing, confidential information, for example:

  • Working on projects or maintaining regular contact with customers without their line manager's knowledge.

  • Making extensive use of their personal email account or emailing documents to their personal email address.

  • Using a memory card or USB stick at work.

  • Taking documents (whether in hard copy or electronically) out of the employer's premises without authorisation.

  • Working outside their normal working hours, particularly just prior to their employment terminating or when this is not their usual practice.

  • An unusual amount of photocopying. If it is necessary to enter initials or a code before using the copiers it may be possible to detect who has been doing what.

  • Requests for secretaries or other team members to put together business information (for example, lists of customers) without an obvious business reason.

The Hoyle case represents and interesting blend of intellectual property law, breach of contract and employment law.

 

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