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Lifting the Corporate Veil. Company Directors Take Note!

W.L Construction Limited -v- Charles Chawke and Edward Joseph Bohan [2015] IEHC 92

The protection given to directors through the corporate structure, otherwise known as the “corporate veil” can be lifted as seen in the matter of Mr William Loughnane of W.L Construction Limited (“Company”).

Mr Loughnane brought a case against Mr Charlie Chawke for renovation works done to Mr Chawke’s pub. The case which was subsequently dismissed as it was held that the evidence brought forward by Mr Loughnane was “tainted by lies and dishonest”. There was also further doubt on the evidence of the company’s expert quantity surveyor.

The Company had claimed that Mr Chawke had owed €370,000 for the work that it had carried out, however it was later discovered that the actual value had not exceeded €28,691.

The defendant’s application to have the matter struck out was granted as Mr Justice Noonan found there to be an abuse of the courts process and the Company had failed to establish that it had a case against the defendant.

Mr Loughnane joined Mr Chawke as a co-defendant the purposes of costs of the dismissed case. Mr Justice Noonan ruled that only Mr Loughnane was responsible for bringing forward the claim and for the result and accordingly should be held liable for the costs incurred in the matter.

A 21 day stay currently applies and the written judgement is yet to be made.

The decision clearly shows that the corporate veil will be lifted, taking the directors protection from liability along with it, –  should, of course the circumstances require. The court will not tolerate any misconduct in litigation and company directors should take this as a stark warning.

The above does not constitute legal advice and is intended for general guidance. Please contact us for further information.

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Company Matters: Purchasing Shares or Asset’s?

 

When buying or selling a business, a buyer will need to consider how you will buy that business; there are two methods to choose from.  A buyer can either purchase the shares of a company or the assets of a company.  Whichever method is decided upon, it is important to bear in mind that it is rarely straightforward and a buyer will need to weigh the pros and cons of each one depending upon the buyer’s objectives. A good solicitor experienced in corporate matters at this stage of a transaction can be very helpful.

Where a buyer is purchasing shares, the buyer also acquires the company’s liabilities and obligations. Due to the nature of the transaction matters can get complex and the buyer often ends up seeking warranty protection on a whole host of matters depending on the nature of the business being brought; some common areas for warranties include tax, contracts the company has entered and litigation and employees.

Alternatively, where assets are purchased and a sale agreement is entered into, the buyer only purchases those assets that have been set out in the agreement along with any liability attached only to those assets.

The assets will need to be transferred separately by the seller and he will need the cooperation of third parties who may have to consent to any contract assignments; these may be third parties such as banks or customer contracts.

When deciding which method to opt for, there are many other considerations including financial, legal and tax considerations as well as mere preference. Generally, sellers have a tendency to prefer the tax advantages of share purchases, whereas buyers find asset purchases more attractive from a tax standpoint.

Whichever method is chosen good legal advice at the outset can be invaluable. Nath solicitors are experienced in these matters and can help guide you through the transaction from start to finish.

The above does not constitute legal advice and is a general position of the law as at 30th May 2017. Please contact us for further information.

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CHANGES TO THE PERSONS WITH SIGNIFICANT CONTROL (PSC) REGIME

THE FOURTH MONEY LAUNDERING DIRECTIVE

CHANGES TO THE PERSONS WITH SIGNIFICANT CONTROL (PSC) REGIME

The current PSC regime requires information about beneficial owners’ to be disclosed for corporate and other legal entities.

The Fourth Money Laundering Directive (EU) 2015/ 849) (“MLD4”) which takes effect from 26th June 2017 will take this further with two key changes as follows:

  1. At present, changes to the PSC are notified on the annual confirmation statement via changes made to the PSC register. The effect of this means that the information which is open to the public may be outdated by up to a year. Under the MLD4 the PSC register will have to be updated whenever a change occurs in the company; companies will have 14 days to update their register and file the relevant forms at Companies House within another 14 days. The effect will be that the PSC will remain updated at all time and not only once a year through a confirmation statement.
  1. The MLD4 also has a wider a scope of application meaning that the PSC regime will need to include more entities.

Companies House is working towards the original timetable, although matters could be delayed due to the parliamentary elections.

Companies would be wise to familiarise themselves with the  changes that will be coming  and their prescribed time limits. If you need solicitors to help you with your company records and filings we offer a fixed price legal services.

The above is intended as general legal guidance. Please contact us for further information.

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Marketing. How Not to Do It. The Honda Experience.

 

Honda Motor Europe (HME) were fined by the Information Commissioners Office ( ICO) on 20th March 2017 breach of data protection laws in marketing. Honda were warned they could receive a fine up £500,000.  They were Honda were fined £13,000.00.  As  of May 2018 with the new General Data Protection Regulation (GDPR)  these fines will increase to up to 4% of a company’s worldwide turnover.

HME sent 289,790 emails to customers seeking to clarify the customer’s choice for receiving marketing emails. HME said that they  believed the emails were not   marketing emails but were customer service emails to help the company comply with data protection laws in clarifying customers’ choices for receiving marketing.

HME couldn’t provide evidence that the customers had ever given consent to receive emails of the type that were sent and that was a breach of the Privacy and Electronic Communication Regulations (PECR) under which a company must show how it has obtained consent (we will not go into details here but can send information if you require it).

In HME case, HME received the customer details from their authorized dealers, through their website, during promotional events where customers could sign up on completion of a disclaimer form relating to activities at the event.

Each dealer is a separate legal entity but they are expected to comply with data protection laws and adhere to these. The customer’s data is input to the HME database by the dealers. The relevant consents are recorded on the database; however, completion of the preferences field was not mandatory and dealers had not completed these in some cases.

HME sent out the emails but it was not clear on what basis they had consent to so do.

They sent  the emails to those who had previously indicated some form of marketing consent but again it was not clear what the preferences were.

It was decided by the Information Commissioner that although this was not deliberate action on the part of Honda this was negligent action on then part of Honda because they knew or ought to have known that there was a risk that data protection laws would be contravened.

If you are conducting marketing activities now is a good time to review your marketing practices in time to put in measures to help you assess data risk and implement data compliance before the new GDPR comes into effect; you may then be faced with subject access requests or worse still investigations.

Nath solicitors are specialists in advising businesses on the new GDPR and can help you with your marketing assessment and activities to ensure data risk assessment and  compliance in in place before the new GDPR is implemented.

 

 

The above is not legal advice but intended as a guide ; if you require further information please do not hesitate to contact us.

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Seeking a way around commercial property legal disputes

As they say, there are two sides to every story. Never more so than getting into a dispute whether as a landlord or a tenant. The bottom line can ultimately be costly and damaging for both parties.

 

If it’s a commercial property dispute, then things can escalate to the point that landlords face lost income and stress of solving issues, and tenants are aggrieved at the lack of communications and decide to get awkward in the face of a growing row with a landlord.

 

Whatever, the length, breadth and width of a commercial property dispute, Nath Solicitors are here to ensure that first and foremost the only way is resolution. We can advise both landlords and tenants on their rights, and also on a host of dispute areas.

 

Disputes and litigation come in all manner of shapes and sizes so it’s imperative that rather than take a hard-line attitude and digging your heels in, you seek out Nath Solicitors.

 

We can provide cost-effective, efficient solutions for your needs and ensure your interests and expectations are met in any dispute.

 

Landlords

From the landlord’s point of view, these areas of concern can include:

 

Buildings change of use, damage, extensions and disrepair

Contract reviews and breaches

Forfeiture

Lease negotiation, renewal, extension and termination

Recovery of service charges

Recovery of possession

Rent reviews/rent arrears

Advice on Landlord and Tenant Act 1954

Insolvency

 

Our wealth of commercial experience means the prosperity of your business is at the forefront of our minds. We have experience in acting for  retail, offices, restaurants, bars and warehouses.

 

Nath Solicitors are experienced in the area of commercial property litigation and we will always advise you on the best course of action. Whether this is about repairs, mediation, pathways to avoid costly court actions or advising tenants and landlords of their obligations, we can do them all.

 

Tenants

As a respected commercial law firm, Nath Solicitors is all too well aware of how commercial property tenants can be left horribly exposed in a dispute with a landlord.

 

We are skilled in focusing on identifying potential legal pitfalls before harmful disputes arise. We spot what might be wrong with the structures you have in place, the contracts, what your rights are and your boundaries.

 

Our size means you will receive the highest quality, personal service from a solicitor who will consult and keep you informed throughout the process.

 

We also provide an after sales care service and can assist with matters such as building insurance, service charge issues, lease extensions, restrictive covenants and boundary issues.

 

Legal representation in court

Whether a landlord or a tenant, we can represent either side in a dispute, to bring or defend a claim before the County Court or the High Court.

 

County Court: These deal with civil matters up to the value of £100,000 in such matters as claims for debt repayment and breach of contract in relation to goods or property.

 

High Court: High Court claims are usually for important, higher value or complex litigation; we can assist with all kinds of High Court claims including breach of contract and property related claims

 

Our hands-on business experience means we can analyse the complicated legal issues that arise in commercial situations. Our priority is to communicate these straightforwardly, free of legal jargon.

 

No one likes to go to court. It’s expensive and time consuming and incredibly stressful. So if you’re at the end of your tether and need advice in a commercial property legal dispute, then call us now.

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Do You Need a Partnership Agreement?   

 A Partnership does not need an agreement to exist. Such partnerships are called partnerships at will and are governed by the provisions in the Partnership Act 1890 (1890 Act); however, the effect of this is that it exposes the partners to   vulnerability and to the default provisions of the 1890 Act which may have unintended and undesired results.

Partners and individuals who are considering forming a partnership should consider the effects of not having a partnership agreement in place; such as where one partner gives notice to the partner(s), without any provisions to the contrary, the default provisions in the 1890 Act mean that the entire partnership could be brought to an end and would be have to be dissolved upon the notice of one of the partners.

A Partnership agreement therefore can override these provisions; thus, enabling partners to leave smoothly and without having the partnership being brought to an end.  The agreement would specify the circumstances in which the partnership would be dissolved.

In addition, the 1890 Act does not take into consideration the contributions of any one partner over another. As per the default provisions, all profits as well as losses are to be borne by the partners equally.  This is despite the individual financial contribution and the time and commitment of each partner towards the partnership. On the other hand, a carefully drafted partnership agreement can set out how the profits and losses are to be apportioned to each partner.

A well drafted partnership agreement will therefore enable a partnership to operate in a manner that is specifically tailored to suited to it.

Formalising a partnership in such a way will also provide much-needed guidance and direction when disputes between partners arise. This could be on advising what steps could be taken in certain situations and how such matters are to be resolved; this would no doubt reduce the disruption caused by a dispute and also help reach resolution in a quicker and cheaper way.

As you can see that a Partnership agreement is an invaluable tool to any partnership and should not be taken lightly. For partners who already have a Partnership agreement in place, it is also worth having your Partnership agreement reviewed and updated to ensure it covers your current requirements.

At Nath Solicitors, we are experienced at drafting bespoke Partnership agreements tailored to match our client’s intentions and requirements. For further information, please contact us today.

 

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Contracts and Consequential Losses. Limiting Liability.

Limiting liability against consequential losses.

 

A fundamental clause in any commercial contract is the limitation of liability clause most commonly inserted by a supplier as a means of protection to limit the extent of liability to a maximum amount or even to exclude particular types of loss in the event that something goes wrong.

Such a party to a commercial contract will almost certainly try to exclude indirect or consequential losses. These are losses which would not normally flow from a breach of contract and would be a special type of loss where the party in breach was made aware of the impact of the type of loss that would have arisen. There would also be attempts to exclude loss of profit, revenue and even goodwill.

In relation to the losses such as the loss of profits, the courts have held the view that such financial losses depend on context to determine whether they could be considered to be a direct or indirect loss.

The High Court has again reviewed the definition of “consequential loss” in the case of Star Polaris LLC v HHIC-Phil Inc (2016). EWHC 2941 (Comm).

Background

The matter concerned a ship (Star Polaris) which after 8 months of being delivered suffered serious engine failure. This required extensive repairs. Compensation was sought by the ship’s buyers as a result. The claim for compensation was to include not only the costs of repair, but also the loss in value incurred to the ship, the costs to tow the ship as well as the agency and survey costs.

The contract which the buyers entered into with the ship’s builders included a guarantee of 12 months. Further that  the ship’s builder’s were to be required to have certain obligations to remedy any physical defects. However, the contract also contained clauses stating that ship’s builder’s liability were to be expressly excluded after making delivery in respect of any “consequential or special losses, damages or expenses unless otherwise stated herein.”

The interpretation of what was meant by consequential loss was a major source of argument between the parties.  The arbitrators stated that the wording used would suggest that, with the exception of making a repair or a replacement, all other financial losses would be excluded.

 

High Court Decision

The matter ultimately reached the High Court which agreed the arbitrators interpretation. The High Court ruled that when considering the meaning of “consequential loss”, consideration must be given to the context of how it is used in the contract.

It was found that the intention of the parties in this context was to have the phrase to be interpreted in the context of “cause and effect”.

The outcome of this matter is particularly significant, as it shows that when interpreting the meaning of “indirect or consequential loss”, consideration must first be given to the context in which it had been applied.

When entering into a contract both parties should ensure that the contract is well drafted and that they are both fully aware of the terms that they are agreeing to in order to avoid future disputes, which could costly. Nath Solicitors can help with commercial contracts to save you costly disputes.

Please note that the above does not constitute as legal advice. Should you have any queries, please do not hesitate to contact us.

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Tenants: Get Your Landlord’s Lenders Consent to Your Lease

The importance of tenants obtaining the landlord’s lender’s consent.

Whilst the common goal for most prospective tenants’ is to get the formalities connected to the lease completed as fast as possible, it is important to slow down enough to ensure that the Landlord’s lender has provided his consent to the grant of the lease.

What is the worst that could happen?

Well, the implications depend on the type of lease you are entering into.

A lease granted for a period of more than seven years.

There is a requirement for any lease that is granted for a term a period of more than seven years to be registered at the Land Registry. The Landlord’s title will contain the lender’s charge and will usually be protected by a restriction on dispositions of the landlord’s title, requiring evidence that the consent of the lender has been obtained.

The effect of not obtaining the lender’s consent is that a prospective tenant’s application to register a lease cannot be successful they cannot obtain the legal title, as disposition requires the grant of a lease.

A lease for a period of seven years or less

If a lease grants any easements these must also be registered and as above also falls within the definition of disposition which requires the grant of a lease.

Other implications

Restrictions and easements aside, other implications of failing to obtain the lender’s consent also exist such as, where the landlord defaults, leaving the lender as a mortgagee in possession or where the lender appoints a receiver.

The lender can then sell the property on to someone else who is not party to the lease and who may decide that they want the tenant to leave the property.

The lender may even be able carry out enforcement actions even where the landlord does not default.

Can the requirements be amended?

It is possible for the landlord to negotiate its funding agreements with the lender to the effect that certain specified short leases can be granted without needing the lender’s consent and would reflected in the restrictions on the title.

The Law of Property Act 1925 (LPA) also contains powers to grant leases and whilst these would be binding on both landlord and lenders they do not include funding agreement.

Comments

It is clear from the above that the tenant should not undervalue the importance of obtaining the consent of the landlord’s lender.

A key point to note is that the lender is not obligated to provide a decision quickly or even to grant a lease. As prospective tenants tend to be impatiently eager about completing the process as quickly as possible, it would be recommended that tenants raise this issue quite early on in their negotiations to avoid any unnecessary delays.

Please note that above is for guidance purposes and does not constitute as being legal advice. Should you require further information please contact us today.

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NEW DATA PROTECTION REGULATION LOOMING. ARE YOU PREPARED?


Elizabeth Denham, the Information Commissioner attended the Institute of Chartered Accountants (ICA) on 17th January for a lecture where she warned that:

“When it comes to data protection, small businesses tend to be less well prepared…But small organisations often process a lot if personal data, and the reputation and liability risks
are just as real…”

As many should  now be aware that the new General Data Protection Regulation (GDPR) comes into force in May 2018 and it is critical that businesses big and small start preparing now and implementing measures to ensure their compliance with the new regulations. Choosing the right solicitors with the right expertise to help you with this is crucial.

It should be noted that the UK will still be a part of the EU when the GDPR is enforced and even after the UK leaves the EU, business that wants to operate in the EU will still need to be compliant.

The Information Commissioner stressed that the biggest change concerning the GDPR is accountability. The responsibility will be on the companies to understand the risk that they are creating for others and taking adequate measures to mitigate those risks. The Information Commissioner stated that; “It’s about moving away from seeing the law a box ticking exercise…”.

The Information Commissioner revealed that the government’s recent cyber risk survey showed that despite 69 per cent of businesses stating that their senior management ranks cyber security as a high priority, in reality only half of business had taken any real steps to identify cyber risks.

The Information Commissioners Office received almost 200,000 calls on their helpline last year and issued more than £1million worth of fines last year to organisations found to not be compliant with the regulations. It is a clear warning therefore that there will be no excuses come May 2018 when the GDPR is enforced for getting it wrong!

As you can see; central to the Information Commissioners address at the ICA was that the GDPR’s arrival is imminent and everyone is at risk. Businesses must learn to embrace the changes and adapt.

At Nath Solicitors, we understand that with the new regulations looming, businesses may find themselves feeling lost and confused and not know where to even begin. We would therefore encourage you to get in touch with us today and find out how we can help you.

 

 

 

 

 

 

 

 

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BREAKING NEWS BREXIT REQUIRES ACT OF PARLIAMENT

The Supreme Court has ruled by a majority of 8 to 3  that an Act of Parliament will be needed in order to trigger Article 50 for the UK to leave Europe.  More to follow.

 

Shubha Nath

Solicitor

 

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