Our new step-by-step guide helps business partners navigate disputes over the direction of a business.
The third in our series of FREE helpful flowcharts for Directors and Owner Managers of businesses provides guidance on the best way to manage partnership disputes without damaging the company or dissolving the partnership, showing the route that companies need to take at any stage of a dispute.
You can download the helpful flowchart here.
Landowners are often keen to incorporate an overage agreement when selling land to a developer to make more money from their land, however, a recent court case highlights the need to negotiate these agreements carefully to avoid uncertainty and misinterpretation.
It’s no secret that developing land is often a good way to increase its value; however, not every landowner has the expertise or the finance to carry develop themselves. A developer with this expertise and money is able to buy the land cheaply, carry out the works and sell individual developed units for a significant profit. Landowners may feel they are getting a raw deal in these circumstances; however, there is no need to take on the project in order to benefit from this uplift in value.
What is an overage agreement?
An overage agreement requires a developer to make a payment to the original landowner if they secure the grant of planning permission or development on the land within a pre-agreed time period. The landowner can incorporate an overage into a wider deal with a developer, enabling the landowner to claw back some of the increase in value as a result of the development.
The terms of the agreement are a matter for negotiation between the parties, and the agreement can be as complex or straightforward as the parties wish to make it. Provisions can be included to cover situations where only part of the land is developed, and the parties can agree that the overage provisions will not apply to certain transactions or in certain situations. Although flexible, the overage payment will usually be a percentage of the increase in value of the land as a result of the planning permission or development, and will usually be payable following the subsequent sale of the land. However, whatever has been negotiated, it is important that the agreement is drafted to reflect this.
Sparks v Biden
The importance of a carefully drafted agreement was highlighted in the recent case of Sparks v Biden. Mr Sparks owned a bare piece of land and agreed with Mr Biden that if Mr Biden was able to obtain planning permission to develop the land, Mr Biden could purchase the land to do so. Mr Biden successfully obtained planning permission for 8 houses, and purchased the land from Mr Sparks.
As part of the deal, Mr Biden entered into an overage agreement, whereby Mr Biden would make a payment to Mr Sparks following the sale of the houses he had built on the land. Mr Sparks had assumed that Mr Biden would want to sell the houses as soon as possible after they had been constructed, and there was no clause in the agreement which required Mr Biden to market and sell the properties after completing their construction.
In an attempt to avoid paying Mr Sparks, Mr Biden moved into one of the houses himself and let the remaining properties on short term rental arrangements. Mr Biden argued that he did not have to pay the overage amount as he had not sold the houses, and that he could delay making the overage payment for as long as he liked, until he eventually sold the houses.
As the terms were missing from the agreement, Mr Sparks had no choice other than to take Mr Biden to court to get his overage payment. He argued that Mr Biden should be required to market and sell the properties within a “reasonable time” of completing them. Whilst the court is often reluctant to interfere with the terms of a heavily negotiated agreement, in this instance the court agreed with Mr Sparks. It stated that the arrangement did not make business sense unless Mr Biden was required to sell the properties once constructed.
Lessons to take away
Although the court stepped in to correct the omission in this case, had the agreement been better drafted, the parties could have avoided court altogether.
It can be difficult to predict the future, but care should be taken to consider how the parties’ circumstances may change over the life of the agreement, and the agreement should be drafted to take this into account. As well as saving the time and money of court proceedings, a properly negotiated arrangement also provides certainty for the parties.
If you would like some assistance in negotiating an overage agreement as part of a wider deal, or if you have an existing agreement upon which you would like advice, please contact email@example.com or another member of our commercial property team.
© Howes Percival LLP
It’s back with a bang and once again Dr Gemma Foster has us hooked. I cannot help but be glued to her ever so slightly disconcerting and crazed mission to destroy her ex, the philandering Simon who has returned, two years on and living on millionaires’ row with his mid-twenties wife and small child.
It’s back with a bang and once again Dr Gemma Foster has us hooked. I cannot help but be glued to her ever so slightly disconcerting and crazed mission to destroy her ex, the philandering Simon who has returned, two years on and living on millionaires’ row with his mid-twenties wife and small child. Let’s face it, she’s a woman scorned and not even a dalliance with her new man can ease that pain. Admittedly, choosing her son’s teacher was not ideal, leaving poor Tom with headphones in, refusing to acknowledge her presence.
Of course, it may entertain from a far and the sanctuary of the sofa but the sad reality is that the issues portrayed will resonate very strongly with many who have been through a difficult breakup. Stuck right in the middle of the squabbling, mind games and manipulation some two years on is Tom. At 14, he is clearly impacted greatly by his parents’ on going war of words. He has been thrown from his father’s home and removed into hiding by his mother who luckily still had ample grasp over the situation so as to remove the cigarette poised in his mouth when she found him on the park bench.
Whilst the hope is that viewers will not be taking life lessons from the programme itself and as much as it gives an ill-advised and unrealistic portrayal of how to go about things during and post separation, what it does do is show the taxing, unfair and long-lasting impact on a child or children when they are placed in the middle of their parents’ disputes. Often we associate these problems with the time of separation itself but can see from the programme that the impact on Tom has and is to be long lasting. The boy needs help but so do his parents.
I would like to think that had they had sensible advice at the beginning they would not be in this mess or at least, their problems would be eased this far down the line and they would be able to communicate as parents to Tom for the benefit of all. Even now, they are not a lost cause with support and specialist services available to help families work through difficulties and move forward.
The advice of the family team at Howes Percival is discrete, friendly and commercial. We are all members of Resolution and trained Collaborative lawyers who work with our clients in a constructive manner to achieve a child focussed and fair resolution of the issues arising from separation.
If you have any questions regarding the above or in relation to family law issues generally, please contact Lucy Steele.
The uprated Vento Bands for injury to feelings compensation have been published following consultation.
The uprated Vento Bands for injury to feelings compensation have been published following consultation.
The “Vento Bands” consultation, launched by the Presidents of Employment Tribunals in England & Wales and Scotland in July 2017 (see our newsflash of 27 July 2017), looked at the uprating of bands of compensation for injury to feelings in discrimination cases. The proposal to uprate the bands came as a result of a Court of Appeal case, De Souza v Vinci Construction (UK) Ltd, in which it was decided that compensation for injury to feelings and personal injury in discrimination cases should be increased by 10% to take inflation into account.
The new bands will apply to any claims issued on or after 11 September 2017 and the increases from the current Vento bands are:
Lower – for less serious cases
£500 - £5,000
£800 - £8,400
Middle – for serious cases which do not merit being in the higher band
£5,000 - £15,000
£8,400 - £25,200
Upper – the most serious cases
£15,000 - £25,000
£25,000 - £42,000
For any claims presented before 11 September 2017 it will be open to the tribunal to adjust the bands to reflect inflation, and Presidential Guidance will be issued which will include the methodology for doing this.
The new bands will be reviewed in March 2018 and annually thereafter.
Graham Irons comments: "The new bands represent a significant increase in the potential compensation for injury to feelings. Aside from injury to feelings, successful claimants can also pursue loss of earnings and there is no cap on compensation for discrimination. Equality and diversity training is a useful tool to help minimise the risk of discrimination claims within your organisation."
If you would be interested in Howes Percival’s equality and diversity training, please contact a member of the team.
Alice Liddle discusses how time can affect property arrangements as well as some of the traps and tricks.
Time can fool us. We are often up against it, running out of it, racing against the clock, trying to avoid crunch time. Time can be a thief – both of rights and money – but there are ways of making sure you are not a victim.
Many property documents specify timescales by which certain actions are to be taken or by which certain rights are to be exercised, failing which such rights may be lost. So typically:
In the euphoria and relief brought about by completing a deal, it is all too easy to move onto the next thing. It is, however, important that you continue to keep an eye on time critical dates arising from that deal and, when taking action, interpret timescales correctly.
The way the relevant document is drafted and the expressions it uses can make a difference:
Whatever words or expressions are used, consideration must also be given as to whether or not “time is of the essence”. A time of the essence provision is express or implicit in many – but not all – property arrangements. In a 2001 case, Lord Nicholls of Birkenhead said:
“Inherent in a time limit is the notion that the parties are drawing a line. Once the line is crossed, a miss is as good as a mile."
This neatly sums up the meaning of “time is of the essence”. Time is of the essence in conditional contracts and option agreements, as well as under a completion notice served by a seller on a defaulting buyer who has failed to complete on the due date. Failure to meet the deadline can have dire consequences.
That said, equity still intervenes in some cases. Here is Lord Nicholls of Birkenhead again in the same 2001 case:
"The rigour of this principle is softened when the parties are taken to have intended otherwise".
So, for instance, timescales about operating rent reviews are seldom "of the essence" nowadays – especially after the key United Scientific case - although you should never rely on this: it depends on the construction of the wording.
There are also practical considerations to bear in mind. Notice periods may expire at the weekend or during the festive break at the end of the year. Similarly, certain actions may have to be taken during holiday periods.
To avoid increasing stress levels (or even worse repercussions), the key points are to:
To adapt from a Dr Seuss poem: don’t let it get too late too soon.
If you would like further advice or have any questions, please contact Alice Liddle (firstname.lastname@example.org).
© Howes Percival LLP
 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd  AC 749
 Valentines Property Ltd v Huntco Corp Ltd  N.Z.L.R 305
 United Scientific Holdings Ltd v Burnley BC  AC 904
With local planning authorities required to grant more and more planning permissions to meet their housing land supply targets, local planning authorities and developers are increasingly faced with local action groups and parish councils seeking to persuade the Secretary of State to call-in planning applications for his own determination. In light of this, planning law specialist, Jamie Childs, examines the powers of the Secretary of State to call-in planning applications and provides practical advice for developers and local planning authorities faced with call-in requests.
The planning team at Howes Percival has a formidable record of working with developers and local planning authorities to defeat judicial reviews of decisions to grant planning permission. See the following article for one of our latest successes.
However, we are increasingly seeing local action groups and parish councils seeking to persuade the Secretary of State to call-in planning applications for his own determination to take the decision making power away from the local planning authority as an alternative or additional measure to judicial review. Through call-in, objectors may request the Secretary of State to assess the merits of the development and request that planning permission is refused. Judicial review on the other hand is not usually an opportunity for the Court to interrogate the merits of a development proposal, but instead scrutinise a local planning authority’s decision making. The use of call-in and judicial review leads to significant cost and delay for new developments. At worst these could lead to a refusal, or a quashing, of planning permission.
As will be seen from the commentary below, call-in powers should not be used in all, but only in exceptional cases. However, as those who have been through the process will know requests to the Secretary of State to call-in planning applications causes unnecessary uncertainty and delay in securing planning permissions for much needed developments.
The current position
The Secretary of State has a general legal power to call-in planning applications for his own determination which is set out in the Town and County Planning Act 1990. He also has the power to give directions requiring the grant of any planning permission to be delayed until he has decided whether or not to call-in an application.
There is no power for the Secretary of State to call-in a planning application where a decision notice has been issued by the local planning authority, although he may call-in at any time up to this point.
However, it is entirely clear that although the Secretary of State’s power to call-in is wide, this should only be used in certain defined circumstances. For example, in 2012, Greg Clark the then Minister of State for DCLG, said that “[t]he Government believe that planning decisions should be taken in, and by, local communities, and so use their call-in powers sparingly. Essentially, the powers are used when matters are of national significance”.
It is clear that there is no legal obligation on the Secretary of State to call-in a planning application and this power should only be used if there are issues of more than local importance involved. Indeed, the following list of examples, known as the “Caborn principles” clarify that the call-in power may be used where a development proposal:
If an application is called-in there will be a public inquiry and a Planning Inspector will make a recommendation to the Secretary of State who then takes the final decision.
Examples of the use of power to call-in
The vast majority of recent call-ins (and the last four at the time of writing) have been as a result of the Secretary of State’s wish to be informed about the consistency of a proposed (often large scale) development with a neighbourhood plan. Prior to this, examples of developments called-in include wind turbine schemes and a large residential development scheme involving a new canal bridge.
In practice, there are only a handful of planning applications called-in each year. On 19 March 2015 the Planning Minister confirmed that only an average of 8 applications were called-in in each of the five years preceding that question.
It is clear that objectors to planning applications view call-in powers as a last ditch way of taking decision making powers away from local planning authorities and giving them the chance of securing a refusal by the Secretary of State. A call-in will also delay the grant of a permission, usually at much less cost than through the pursuit of a judicial review.
However, in reality only a minority of schemes which include issues of national importance (such as whether the Government’s approach to neighbourhood planning is working) should be and are called in. When threatened with a request to call an application in, local planning authorities and developers should make robust representations to the Secretary of State setting out why their schemes do not satisfy the Caborn principles of call-in. This action seeks to serve the dual aims of both avoiding a decision to call-in and assisting the Secretary of State in making a decision as swiftly as possible to avoid delay in granting planning permission.
Please contact a member of the planning team should you wish to discuss further.
© Howes Percival LLP