The Equality Act (Sexual Orientation) Regulations 2007 make it unlawful for a person providing goods, facilities or services to members of the public to discriminate on the grounds of sexual orientation. The legislation covers a wide range of public and private services, including healthcare, insurance and the provision of hotel or holiday accommodation. Whilst there are exceptions regarding circumstances in which it is not unlawful to discriminate, some people seem to be unaware of the scope of the law, so fail to realise that it does apply to them and must normally override any personal beliefs or prejudices they may hold.

This was illustrated by a recent report that the owner of a guest house in Berkshire refused accommodation to a gay couple, who had booked a double room, because it was against her policy to accommodate same-sex couples. The men reported the woman’s conduct to Thames Valley Police, which is investigating what it has logged as a homophobic incident.

A further case illustrates the problems that can arise within an organisation if an employee is asked to provide a service which they regard as contrary to their religious beliefs. In Ladele v London Borough of Islington, the Court of Appeal dismissed the appeal of a Christian registrar who claimed that she had been discriminated against because of her religious beliefs when she was disciplined after refusing to perform civil partnership ceremonies. The Court found that the Regulations meant that Ms Ladele’s employer had little choice but to insist that she perform the ceremonies. Lord Neuberger said, “It appears to me that, however much sympathy one may have with someone such as Ms Ladele, who is faced with choosing between giving up a post she plainly appreciates or officiating at events which she considers to be contrary to her religious beliefs, the legislature has decided that the requirements of a modern liberal democracy, such as the United Kingdom, include outlawing discrimination in the provision of goods, facilities and services on grounds of sexual orientation, subject only to very limited exceptions.

Guidance on the Regulations can be found at http://www.communities.gov.uk/documents/communities/pdf/441528.pdf.

Adjudication – Jurisdictional Challenge Pitfalls
Construction disputes are often settled by adjudication, which is intended to be a quicker and less expensive way to settle such disputes than traditional litigation. You can refer a dispute to adjudication if:

• there is a ‘dispute’;
• the contract is a ‘construction contract’ as defined by the Housing Grants, Construction and Regeneration Act 1996; and
• the dispute has arisen ‘under the contract’.

However, adjudication itself presents several legal pitfalls. For example, jurisdiction is often an issue in the adjudication of construction disputes, because if the adjudicator’s decision proves unsatisfactory, a challenge on the grounds of jurisdiction can prevent enforcement of the decision until the jurisdictional issue is settled. A jurisdictional dispute is one in which an adjudicator’s authority to act is challenged. There are several grounds on which this may occur – for example, if it is denied that the dispute is a construction dispute or that it has arisen as a result of the contract.

In order to challenge an adjudicator’s decision on jurisdictional grounds, it is necessary to reserve the right to do so in proceedings and also to make the reservation clear at the appropriate time – delay can prove fatal.

In a recent case, a company in dispute with another failed to make clear the general reservation of its position during the adjudication process. When the two specific reservations it had made failed, the adjudicator’s decision was enforced by the court. This was despite the fact that it was clear that the adjudicator lacked jurisdiction: by failing to reserve its position, the loser had left themselves with no basis for a challenge.

There are other ways a firm may inadvertently lose the ability to challenge the decision of an adjudicator – for example, an acceptance of part of a decision made by the adjudicator may bind you to accept the whole of it.

If you are involved in a construction dispute, it is important to take legal advice at each stage and certainly with regard to the conduct of any adjudication proceedings.

Guarantee Does Not Survive Assignment
It is normal that where a lease is assigned, the lease will require the existing tenant to guarantee the performance of the tenant to whom they have assigned the lease. Such arrangements are governed by the Landlord and Tenant (Covenants) Act 1995 (LTCA) and are known generally as authorised guarantee arrangements, or AGAs. One question that has been unanswered until now is what happens in the situation in which there is a guarantor for the lease of the original tenant (A), which is then assigned to another tenant (B). Does the guarantor’s guarantee survive the transfer of the lease, so that the guarantee originally given with regard to tenant A’s lease then serves as a guarantee with regard to tenant B?

A recent case showed the limitations of the applicability of an AGA. The original tenant’s performance of its obligations under the lease was guaranteed by another company, with the guarantee running until the ‘next lawful assignment of the lease’. The original tenant assigned the lease and it and the original guarantor entered into an agreement with the landlord to guarantee the performance of the new tenant. The original tenant was later dissolved and the new tenant did not pay the rent, so the landlord sought to rely on the AGA to obtain its outstanding rent from the guarantor.

This seems straightforward but, unfortunately for the landlord, Section 16 of the LTCA specifically provides that the liability of the guarantor ends on assignment of the lease. Whilst the landlord could rely on a guarantee from the outgoing tenant (useless, as it had ceased to exist), it could not rely on the guarantee given by that company’s guarantor. Therefore, the guarantee given was void.

This decision has serious implications for landlords and tenants alike.

PAYE Reminder – Penalties on the Way
Employers are reminded that from May 2010, the whole amount of PAYE due must be paid on time or a penalty may be levied. This already applies to large employers, but will now apply to all employers. The first penalty notices will be issued in April 2011, after a review of PAYE compliance for the 2010/2011 year. In many cases, say HM Revenue and Customs (HMRC), a warning notice will be issued first, rather than a penalty.

Penalties will not be levied where there is a ‘time to pay’ agreement in place and you stick to the agreement. For more information on time to pay agreements, see the HMRC website at www.hmrc.gov.uk/pbr2008/business-payment.htm.

Guidance on the penalties will be published shortly on the HMRC website.

Jail and Confiscation of Assets for Tax Fraudsters
A couple who hid property development profits of more than £4 million in an offshore tax haven were jailed recently after admitting charges of cheating the revenue and false accounting.

The couple ran a builder’s merchant business and abstracted stock from it which they used for property development, building at least 20 houses with the materials. The profits from the illicit trade were banked in the Isle of Man and their business records were falsified to give the appearance of normality.

The pair came unstuck because their extravagant lifestyle brought them to the attention of HM Revenue and Customs (HMRC) investigators, who uncovered tax fraud going back to 1995.

HMRC brought criminal charges, which led to the couple receiving sentences totalling six years. In addition, they were ordered to pay £4 million by the court.

HMRC are increasingly bringing criminal prosecutions, which allow confiscation orders to be made to seize criminal profits under the Proceeds of Crime Act 2002. Cases involving sums much smaller than this are now regularly brought to court.

If you are made the subject of an HMRC investigation, especially one involving HMRC’s Special Compliance Office (SCO), you are advised to take legal advice as soon as possible. The SCO is HMRC’s elite investigation unit and is brought in when serious fraud is suspected.

According to HMRC’s internal guidelines, they are particularly interested in potential fraud cases involving:

• the personal representatives administering an estate or the person acting as an attorney;
• false invoices;
• undeclared bank accounts;
• fraud appearing to involve professionals, such as accountants or solicitors; or
• a suspicion that an individual is encouraging others to commit fraud.

HMRC in VAT Payment Date Shock
An announcement by HM Revenue and Customs (HMRC), made without any prior notice, will cause consternation among cash-strapped small business owners and managers.

On 24 February, HMRC announced that, as from 1 April, VAT will be treated as having been received on the day the payment is cleared by HMRC’s bank. This means that payments of VAT will have to be sent earlier than before to avoid them being considered as late. The Institute of Chartered Accountants in England and Wales is recommending that VAT cheques are posted at least a week ahead of the due date.

Businesses that pay their VAT by cheque, especially those using cheques from building society accounts, which can take up to a week to clear, should take note and make sure the payment is in the post in good time.

The change only affects small businesses – most businesses have been required to file their VAT returns and pay their VAT electronically since 1 April 2010.

‘Ghost Director’ Jailed After Ignoring Ban
A chartered accountant, who ‘ghost managed’ a number of companies when he had been banned from acting as a company director due to previous transgressions, was recently jailed for eight months. When the companies got into financial difficulties, the truth as to who really managed them came out. He was also banned from acting as a director for a further 10 years.

In another case, an accountant who assisted in a VAT scam in which £16 million was falsely claimed was given a six-year sentence.

Corporate Manslaughter Case Adjourned
The first prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007 has been pending for some time and is eagerly awaited as it will provide guidance in practical terms for the likely level of fines in such cases, following the issue of sentencing guidelines in February 2010.

The case, which involves the death of a young geological engineer and which was due to start at the end of February, has been postponed until September because of the ill health of the Managing Director of the company.

The Act allows the court to levy a fine on conviction which could, in principle, be unlimited. However, the sentencing guidelines state that ‘fines for companies and organisations found guilty of corporate manslaughter may be millions of pounds and should seldom be below £500,000. For other health and safety offences that cause death, fines from £100,000 up to hundreds of thousands of pounds should be imposed. In deciding the level of fine, account must be taken of the financial circumstances of the offending organisation.

Suicide Bid Injunction Granted
Injunctions are not often the most effective tool in litigation, but are a practical way to stop something from happening which causes damage.

In a recent case, an injunction was sought successfully by a maintenance contractor in order to prevent another firm from proceeding with an ‘abnormally low’ (£17.5 million) bid for a maintenance contract for Norwich Council, which the contractor valued at £23.5 million.

All public sector contracts above a certain value must be tendered. It has proved to be a problematic area, with many instances of bid-rigging and other abuses. However, this is the first time an injunction has been sought to prevent anti-competitive predatory pricing.

The case sets a precedent for other firms facing predatory below-cost tender competition to apply for injunctions to prevent the award of contracts.

Market Your Product for What It Is
Diageo, the producer of Smirnoff vodka, has won a passing off action in the High Court against Intercontinental Brands (ICB), the makers of Vodkat. This was the first time the English courts had been asked to consider whether vodka producers have the same rights as the makers of champagne, whisky, advocaat, sherry or Swiss chocolate.

Following the launch of Vodkat in 2005, other similar products have come onto the market, such as Vodkova, Vodska and Voshka. Vodska and Voshka have since been withdrawn, however, following complaints from Diageo. ICB sold approximately 600,000 bottles in 2005 alone and by the end of summer 2009 had spent a total of £6.3 million marketing Vodkat.

Smirnoff vodka is 37.5 per cent alcohol by volume (ABV), whereas Vodkat is a mixture of vodka and fermented alcohol and is therefore cheaper. Although the labelling of Vodkat was recently changed so that the product is now described as a ‘classic schnapps drink’, the Court was of the view that this attempt at differentiation was ‘too little, too late’.

The Court considered that the distinction between the two products was not understood by all consumers and the confusion could result in a loss of sales for Diageo. Furthermore, even if a loss of sales could not be demonstrated, allowing ICB’s marketing of Vodkat was likely to erode the distinctiveness of the term ‘vodka’. Mr Justice Arnold said, “It will cease to be a term reserved for 37.5 per cent ABV spirits, and will come to be seen as a term applicable to lower strength products which include fermented alcohol.”

The Court was of the view that the introduction of products that are misleadingly similar but not the same as existing products will continue to grow unless the trend of ‘me-too products’ is kept in check. It ruled in favour of Diageo and ICB will therefore need to re-brand its product if it wishes to continue to sell it.

Intellectual Property Healthcheck
The Intellectual Property Office has an online Intellectual Property Healthcheck tool, which gives free guidance to businesses on how to protect their intellectual assets.

The guidance is broken down into four Intellectual Property elements. These are:

• Covering Patents;
• Trade Marks;
• Designs; and
• Copyright.

In addition, two new diagnostic tools have been added, on Licensing Intellectual Property and Confidential Information.

The Healthcheck tool is free to use once you have registered. See http://www.ipo.gov.uk/iphealthcheck.htm.

Keep IP Under Wraps Until it is Safe
Protecting intellectual property (IP), such as an invention which warrants patent protection, can be a complex process. There are several tests which have to be satisfied for a patent to be granted, one of which is that a patent cannot be granted for an invention which has already been ‘made available to the public’.

Recently, a patent for an ‘on board’ cable storage system for a hover-mower was revoked because another similar system had been developed previously and this had been made available to the public – when it had been kept in the inventor’s garage and shown to only four people outside the inventor’s family.

The case arose when the inventor successfully sought to revoke the company’s patent.

Business Insolvencies Fall
The number of companies in the UK declared insolvent fell in February, according to research commissioned by the global business information services company Experian.

The total number of business insolvencies fell by 15.1 per cent during February 2010 compared with the same month last year (from 2,160 in February 2009 to 1,834 in February 2010), bringing the rate of insolvencies down from 0.11 per cent to 0.10 per cent.

The highest rate of insolvencies was in the North East, with 0.15 per cent of businesses failing during the month. However, the region also had one of the biggest improvements in insolvency levels – 0.15 per cent in February 2010 compared with 0.20 per cent in February 2009.

London had the highest number of insolvencies, with 452 companies failing in February. This compares with a figure of 428 for February 2009.

Insolvency rates were highest amongst medium-sized companies. Rolf Hickmann, managing director of pH, an Experian company, said that this is because such companies are “too large to be flexible and too small to rely on a strong and established structure.

Regulation of Lap Dancing Venues
Hitherto, local people have only been able to object to the establishment of a lap dancing club in their area on the basis that it would infringe one of the four licensing objectives set out in the Licensing Act 2003. These are:

• the prevention of crime and disorder;
• public safety;
• the prevention of public nuisance; and
• the protection of children from harm.

From 6 April, however, lap dancing clubs have been reclassified as sex establishments and local authorities now have new licensing powers available to them. Those that adopt the new regime will be able to require all lap dancing clubs in their area, including existing venues, to apply for a sex establishment licence if they want to continue to operate lawfully. Local people will be able to oppose an application for a lap dancing club on the basis that it would be inappropriate given the character of the locality. Local authorities will be able to impose a wide range of conditions on a licence and set a quota on the number of lap dancing clubs they feel would be appropriate for a particular area, rejecting any further applications once the quota has been met.

There are transitional arrangements in place in order to enable existing lap dancing clubs to move to the new regime. To give existing venues time to comply, there will be a period of 12 months from the day on which the new provisions come into force locally within which clubs must apply for a sex establishment licence.

New Minimum Wage Rates Announced
The Government has announced that it has accepted the recommendations of the Low Pay Commission (LPC) on new rates for the National Minimum Wage (NMW) that will come into force on 1 October 2010.

As announced last year, the adult rate of the NMW is to be extended to 21-year-olds when the new rates come into effect.

The revised rates are as follows:

• The adult hourly rate of the NMW will increase from £5.80 to £5.93;
• The development rate (which will cover workers aged 18-20 years) will increase from £4.83 to £4.92; and
• The rate for 16-17 year olds will increase from £3.57 to £3.64.

The Government also announced that it has accepted the LPC’s recommendation to introduce an apprentice minimum wage of £2.50 per hour. The new rate will apply to those apprentices who are under 19 or those who are aged 19 and over but in the first year of their apprenticeship.

In addition, the LPC recommends that there should be specific guidance on the NMW for the entertainment sector and that HM Revenue and Customs should investigate whether contract and agency cleaners in the hotel sector are receiving their entitlement under the NMW Regulations for their hours worked.

From 1 October 2010, the accommodation offset will rise from £4.51 per day to £4.61.