- New Companies Act measures will impact on directors
- Default retirement age of 65 remains lawful – for the time being
- Construction firms fined a total of £129m for rigging bids
- Firm fails to impose ban on former director canvassing customers
- Email correspondence did not add up to a ‘binding contract’
-
- Funding of care for the elderly comes under scrutiny
- Receptionist in age discrimination case receives £6,000
- Husband wins appeal over divorce settlement which judge miscalculated
- Father wins appeal to have contact case heard by a different judge
- Court restores will in favour of elderly woman’s family
New Companies Act measures will impact on directors
A new raft of measures introduced in the Companies Act 2006 came into effect on 1st October and will impact on directors and the way they run their businesses.
The changes cover a wide range of subjects from directors’ addresses to the filing of accounts and notification of changes to your company’s articles.
The issue of addresses has received a lot of attention because you must now provide Companies House with both your residential address and a service address for each directorship you hold.
These service addresses will be publicly available but the residential addresses will only be available to regulatory authorities and to credit reference agencies. The service address must be a place where documents can be delivered and a receipt obtained if required. This could be the company’s registered office but can not be a PO Box or DX number.
A director can choose to use his residential address if he wishes, in which case it would not be apparent from the public record that the two addresses are the same.
However, your residential address will automatically become your service address and become publicly available unless you register a separate service address. You may want to do this if you want to protect your personal privacy.
There are also changes to the arrangements for inspecting company registers. Registers can be held at the company’s registered office or you can have a Single Alternative Inspection Location (SAIL). You have to notify Companies House if you want to set up a SAIL or change it at a later date. You can only have one SAIL for a company at a time.
Directors will need to be aware of changes to filing annual returns and accounts. The deadline for filing accounts has been reduced from ten to nine months after your year end. It means that if you normally have to file by 31st January, you will now have to file by 31st December.
It’s also important to keep your records up to date and make sure they tally with the official record. Companies House should be informed of changes as they happen rather than leaving it until the annual return.
Any amendments to your company’s articles must be notified within 15 days. Failure to do so could result in a £200 fine and could leave you liable to a criminal offence.
The Act also makes it easier to set up a company and introduces new model forms of articles of association. You can continue with your present constitution if you wish, or you may prefer to switch to the new articles and treat it as an opportunity to review the administration of your company.
All Companies House forms have been changed to include more information and guidance notes. You will now need to use these new forms, as anything submitted on old forms will be rejected.
Please contact us if you would like more information about the new measures or any aspect of the Companies Act.
Default retirement age of 65 remains lawful – for the time being
The High Court has ruled that it is lawful for employers in the UK to oblige employees to retire at 65 even if those employees want to continue working.
However, the situation could soon change because the Government has brought forward a planned review of the Default Retirement Age (DRA). It will now begin next year and it’s widely expected to raise the age level or even abolish it altogether.
The High Court ruling followed a challenge to the DRA by Age Concern, Help the Aged and the Equality and Human Rights Commission. They argued that the UK was contravening the European Directive on Equal Treatment which bans discrimination on the grounds of age.
The case was put before the European Court of Justice (ECJ) in 2007. It ruled that obliging UK workers to retire when they reach 65 is not unlawful as long as it can be “justified by legitimate aims” relating to social and employment policies.
The issue then reverted back to the High Court to decide whether those conditions were being met.
Mr Justice Blake rejected the challenge by the campaigners on the basis that the default retirement age was justified when it was introduced in the Employment Equality (Age) Regulations 2006. However, he said he might have reached a different conclusion if the DRA had only been introduced this year or the Government had not announced a review.
He added that the case for raising the age was compelling and he could not see how 65 could remain as the default age once the review had been carried out.
Announcing the review, the pensions minister Angela Eagle said: "The government is responding to the changed economic landscape.
"As Britain's demographics change it is sensible that we have the debate on what works for business and individuals. The retirement laws need to reflect modern social and economic circumstances."
We shall keep clients informed of developments.
Construction firms fined a total of £129m for rigging bids
The Office of Fair Trading (OFT) has fined 103 construction firms a total of £129.5m for colluding with competitors when bidding for contracts.
The OFT investigation found that the firms had engaged in illegal anti-competitive bid-rigging activities on 199 tenders from 2000 to 2006.
The bid-rigging was mostly in the form of cover pricing. This involves firms that are supposed to be competing against each other actually deciding to co-operate instead.
The firms that can’t or don’t want to take on the contract put in artificially high tenders so the customer is misled into believing that there is real competition.
The OFT says this practice distorts the tender process and makes it less likely that other potentially cheaper firms are invited to submit bids.
An OFT statement said: “In 11 tendering rounds, the lowest bidder faced no genuine competition because all other bids were cover bids, leading to an even greater risk that the client may have unknowingly paid a higher price.
“The OFT also found six instances where successful bidders had paid an agreed sum of money to the unsuccessful bidder (known as a 'compensation payment'). These payments of between £2,500 and £60,000 were facilitated by the raising of false invoices.”
The infringements affected projects worth more than £200m including schools and hospitals as well as several projects for the private sector.
Bid rigging is illegal under the Competition Act 1998 and Article 81 of the EC Treaty. Companies that breach the rules can be fined up to 10% of their annual worldwide turnover.
Please contact us if you would like more information.
Firm fails to impose ban on former director canvassing customers
A firm has failed in its bid to impose a blanket ban preventing a former director from canvassing its customers.
The director had started out as an employee at the company working as an engineer. His terms of employment contained a covenant stipulating that if he resigned he would not canvass any of the company’s customers until a period of six months had passed.
He later became a director and continued working as an engineer. Some years later he handed in his notice and resigned his directorship.
The company then became aware that he was canvassing customers and took legal action. The director agreed to abide by the covenant until the six months had elapsed.
However, the company then sought a blanket injunction preventing him from canvassing customers. It submitted that even though the six-month agreement had ended, he still owed a continuing fiduciary duty – that is, the duty to act in the company’s best interest – based on the fact that he had been one of its directors.
However, the High Court has rejected the application saying it was surprising that the company wished to use fiduciary obligations as a way of justifying a blanket prohibition. Such a ban would not be appropriate given that both sides had previously agreed to a six-month period.
Please contact us if you would like more information about these issues.
Email correspondence did not add up to a ‘binding contract’
The Court of Appeal has ruled that a series of emails between a university and a language school did not add up to a binding contract because they lacked the necessary detail about the services to be provided.
The school had been providing places at the university since 1998 for European students wishing to learn English. The arrangement was based on a series of standard annual contracts containing specific details of the services provided and acknowledging each side’s intention to continue the relationship the following year.
However, the 2005 contract did not contain any mention of the 2006 season. During 2005, the university emailed the school to say there would be fewer rooms available in 2006 due to refurbishment.
The school responded by saying the reduction was unacceptable and in breach of the contract. The university reiterated that places were limited and the school should make alternative arrangements.
In 2007, the university took action to recover money owed by the school for the 2005 season. The school accepted the money was owed but said it should be offset by the fact that the university had breached its contract in 2006.
The recorder ruled in favour of the school but that has now been overturned by the Court of Appeal. It held that the working relationship between the two sides had always been defined by annual contracts containing specific details.
There was no reference to 2006 in the previous year’s contract and the subsequent emails between the two did not contain enough detail for the school to argue that an offer had been made and accepted.
In addition, any acceptance of a contract offer would have to set out the terms on which the offer was being made. This had not happened in this case and the school had merely relied on what had happened in previous contracts.
Please contact us if you would like more information about any aspect of contract law.
Funding of care for the elderly comes under scrutiny
The current system of funding care for the elderly has often been criticised because some people have to sell their homes and pay hundreds of thousands of pounds for their care while others pay nothing at all.
It means that for some people, the inheritance they hoped to pass on to their children gets used up in care costs.
Now the Government has begun a public consultation on proposals to reform the system.
The proposals are contained in a Green Paper called, Shaping the Future of Care Together, which highlights the time bomb facing us as the population ages. It estimates that there will be 1.7m people requiring care by 2026.
Their care bill will be too great for the taxpayer to support and so the Government is looking at three possible ways to meet the cost. One involves a dual approach in which the state and the individual share the costs, the second is an optional insurance scheme which would cost individuals up to £25,000 over a working lifetime and the third is a compulsory insurance scheme which would cost up to £20,000.
People who pay into the insurance schemes would receive care for free when they needed it.
The proposals may be a step in the right direction but are still only at the consultation stage and with an election coming up before too long, they may never come into effect.
It means that the current system is likely to remain in place for several years.
The capital threshold at which the elderly start paying for their care is only £23,000 – only a fraction of the cost of an average house - so it means some old people will still have to sell their homes while others get care for free.
Even if one of the new proposals does eventually come into effect, it will only cover the cost of the care – other expenses like accommodation and food will still need to be met by the individual or their families.
One way to ease the problem is for people to start planning now for their old age so they can minimise the cost and the stress. For example, it may be possible to protect some assets by using trusts. It needs careful planning but could save elderly people and their families thousands of pounds in future.
Please contact us if you would like more information about funding care for the elderly.
Receptionist in age discrimination case receives £6,000
A 66-year-old receptionist who brought an age discrimination claim against a medical practice has received £6,000 in an out-of-court settlement.
Ruth McNeil left a permanent job with Marks and Spencer last September to work for the practice in Lothian in Scotland. However, when she presented her P45 giving her date of birth she was told she could not be offered a contract.
She brought a claim of age discrimination with the backing of the Equality and Human Rights Commission in Scotland.
Ms McNeil said: “To have been offered a job I was really looking forward to on the basis of a successful interview, only to be told that due to my age I could not be kept on was devastating.
“I was never asked my age at the interview and never thought, given my skills and experience, that it would have been relevant. To make matters worse I was told that I did not look my age and it was suggested that had they known I would never have been employed.”
The medical practice has agreed to pay her £6,000 compensation. The practice cannot be named under the terms of the settlement.
Discriminating against employees and job applicants on grounds of age is illegal under the Employment Equality (Age) Regulations 2006.
Please contact us if you would like more information about this issue or any other matter relating to employment law.
Husband wins appeal over divorce settlement which judge miscalculated
A husband has succeeded in reducing the divorce settlement to his former wife by £15,000 after the judge was found to have miscalculated when setting the original figure.
The couple were both in their sixties and retired when their marriage broke down. They agreed to an equal division of assets including the matrimonial home. The husband agreed that to reach an equal division relating to the home and his pension, he would need to pay his former wife a lump sum.
When they could not agree the exact amount, the matter went to court and the district judge set the figure at £35,000. The husband appealed on the basis that the judge had miscalculated. However, the decision was upheld by a circuit judge so the husband took the case to the Court of Appeal.
That has now ruled in his favour saying the payment had been assessed on an inaccurate basis. There had been some double-counting when assessing the assets and equity. The court therefore reduced the lump sum payable from £35,000 to £20,000.
Please contact us if you would like more information about divorce proceedings or any aspect of matrimonial law.
Father wins appeal to have contact case heard by a different judge
A father who claimed a judge in contact proceedings was biased against him has won his appeal to have the case heard again by a different judge.
The father had applied for contact with his son. The boy’s mother opposed the application because she said the father had subjected her to domestic violence. A fact-finding hearing was held to examine the allegations.
The judge accepted the mother’s allegations and said they were so serious that the father’s application for contact was almost bound to fail. The father then asked that the judge should step down from hearing the case because he had shown bias against him.
He said that the judge had effectively decided the issue of contact before the full hearing had even begun. He asked that the fact-finding hearing be heard by a different judge who could then go on to determine the issue of contact.
The judge refused so the father took the case to the Court of Appeal. It has now ruled that although the judge had not shown any bias, he had been wrong in making what appeared to be a decision on the issue of contact without having heard any detailed evidence or argument. The Appeal Court held that the judge’s findings about the domestic violence should stand, but the issue of contact should be determined by a different judge.
Please contact us if you would like more information about this or any aspect of family law.
Court restores will in favour of elderly woman’s family
A will which excluded an elderly woman’s family and left all her estate to her carer’s son - who she hardly knew - has been declared invalid by the High Court.
The court heard that the woman had made several wills over the years with the guidance of her solicitor and always left most of her substantial estate to members of her family. Her health then deteriorated and she began to suffer from vascular dementia.
She later suffered a stroke and decided that she needed to employ a new carer. Shortly afterwards, substantial cheques were drawn on the woman’s account in favour of the carer. A new will was drawn up without the guidance of a solicitor which left all the estate to the carer’s son.
When the woman died the family challenged this final will saying that at the time she made it, she lacked testamentary capacity – that is, she lacked the mental awareness to know what she was doing and to ensure that the will represented her true wishes.
In cases like this, the person making the challenge has to be able to raise real doubts about the validity of the will. The family were able to do this because two medical experts gave evidence that the woman had lacked testamentary capacity.
The burden then fell on the carer’s son to show that the woman did have testamentary capacity. The judge held that he had not provided any such proof and the disputed will should be declared invalid. The woman’s previous will, drafted by a solicitor leaving the estate to the family, was therefore reinstated.
Please contact us if you would like more information about wills and probate.
Links to useful organisations
|
Back to legal articles