If an individual owes an amount of money to a creditor, they may take that person to Court and obtain an Order against them to pay back the money that they owe. A Court Order will usually specify that the individual is to make regular payments or pay the whole debt off by a certain time.

If the individual does not abide by the terms of the Court Order, the creditor has a number of options available; one of these is to obtain a Charging Order.

A Charging Order secures the debt owed to the creditor against an individual’s home or other property. Once a Charging Order has been fixed against the property, the creditor has liberty to apply to the Court to force a sale of the property.

There are two stages that have to be fulfilled in order to obtain a Charging Order; these are an interim and final order. An interim order will be given by the Court to stop the individual from selling their property; it will have the same effect as putting a charge against the property in that the creditor would have to be notified if the property was sold. A final order will mean that if the individual did sell the property, the creditor would receive the amount he is owed out of the proceeds of sale. A final Charging Order does not mean that an individual is bound to sell their property, a further application to the Court will be necessary in order for the creditor to force the individual to sell.

Even if a creditor is able to make an individual sell their property there is no guarantee that they will see a return on the money they are owed. If the individual already has other charges against the property in the form of mortgages or other debts, these are to be paid off before the creditor receives their share of the sale of proceeds.

An individual may be able to argue that it would be unfair for the other people living in the home who would be severely affected by having to leave the home. This argument is only likely to stand up if the individual has young children or is looking after disabled or elderly people.

Even if a creditor successfully manages to obtain a final Charging Order against an individual they may still have some options available to them. The individual may be able to apply to the Court to have the final Charging Order set aside, ask for certain provisions to be included in the Order or to alternatively get the Order changed.

If the individual has joint ownership of the property and the debt owed to the creditor is in his sole name, the Charging Order can only be over half of the property. If the property and debt is in the sole name of the individual who owes the money to the creditor, the Charging Order will be made over the whole of the property.

This article kindly provided by Darlingtons Solicitors, who offer a range of advice from specialist litigation solicitors including advice on county court claims and enforcement of judgments.

It is usually the responsibility of the buyer’s solicitor to draft the Agreement.

It is imperative that the Agreement identifies what exactly is being purchased by the buyer. A schedule should be compiled as to what assets are to be included in the sale and what assets are to be specifically excluded.

 An Asset Purchase Agreement often includes:

•  Stock

It is essential that at least a valuation is made on the amount of stock which is held by the business. If a valuation is calculated this figure can be amended on completion upon an investigation on what stock the business is actually holding.

•  Goodwill

Goodwill is the figure which is attributed to the reputation held by a business with its suppliers, customers and potential customers. The buyer will usually require a clause stating that the goodwill is to be protected by the seller until completion.

•  Employees – What is TUPE?

The Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”) is the name of the Regulations which protect employees’ rights on the transfer of the assets of a business.Both parties have a duty to inform and discuss with those employees who may be affected by TUPE and about the process, that their employment will be deemed to automatically transfer to the buyer on completion with their existing terms of employment and their statutory rights.

• Plant and Machinery

It is imperative that an up-to date list of all plant and machinery to be transferred is kept by the parties; this should also include all hire purchase or lease agreements.

•  Contracts

Every business has a range of contracts. This can be a complex area to check. Provisions will have to be included to deal with the liabilities under the contracts that are being taken over. Often, third parties, with existing contracts with the seller, will have to consent to the transfer of contracts to a buyer. The parties will have to consider what will happen if the third party refuses to give consent.

• Premises

There will need to be a formal transfer document in relation to the premises.

• Leasehold

If the property is a Leasehold property this tends to make the process slightly more complicated due to the landlord’s consent being required in the form of a transfer or assignment. This can be costly to the buyer and also time consuming.

•  Intellectual Property

Formal assignments of the sellers IP rights may be appropriate. It is crucial that the register of trademarks, patents and registered designs is updated to reflect the change in ownership.

•  Creditors

The way the Agreement will deal with creditors depends greatly on whether the buyer is to take over the liabilities incurred by the seller post completion. If not, the buyer will require the seller to settle all liabilities with creditors, as it is likely that the creditors will be continued suppliers of the business.

• Debtors

Like debtors, it is up to the buyer whether he would like the control to be retained by the seller or passed to him on completion. Often the buyer would prefer to take control of the creditors and the debtors so as not to damage the goodwill of the business.

• Warranties

Warranties about the business are given by the seller.

• VAT

If the business is purchased as a “going concern”, then VAT will not usually apply as long as both parties are VAT registered.

Completion

After the documentation has been finalised then the Agreement and other ancillary documents can be signed.

If there are pre-conditions to completion, then it is normal to have a period between exchange of contracts and completion. Usually, however, exchange and completion is simultaneous.

Completion Agenda

There are usually practical issues that a buyer has to sort out at completion like (for an asset purchase) VAT registration, payroll, PAYE and National Insurance, and buildings and contents insurance. A completion agenda will be prepared and used as a checklist by the buyer to ensure that he completes all of these obligations.

For a share purchase, detailed board minutes dealing with the share transfer will be required.

The above guide courtesy of the corporate law department of Darlingtons Solicitors.

The rules in relation to costs and cases in the Employment Tribunal are different to the rules in the Courts as laid down by the Civil Procedure Rules 1998.

The Employment Tribunal rules are governed, inter alia, by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004. The general principles are that costs are not recoverable by either side.

There are exceptions to this rule. Under Rule 14(1) the Employment Tribunal has powers to award costs if a party, or his/her representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived.

This means that a party bringing proceedings needs to think carefully about the merits of their case, and the way they conduct proceedings during the case. If for example, they consistently miss Tribunal deadlines or withdraw the case at a late stage without good reason then there is a good chance that the other side will make an application for costs against them.

 Employers defending cases should also think carefully about whether they can make an application for costs at the end of a case. The Barrister will ultimately present this argument to the Employment Tribunal on the grounds of unreasonable conduct by the Claimant.

The Employment Tribunal also has a discretion to request that a party asking for a postponement or adjournment pay any costs cause by that adjournment.

The Employment Tribunal has the power to award costs to either side up to a maximum of £10,000.

Both sides need to consider how they conduct the case. If the case if frivolous or they act disruptively or abusively the Employment Tribunal will not take kindly to this and there is the risk of a costs award.

So whilst generally speaking costs awards are unusual, both sides need to understand the risks involved if they do not conduct their cases properly.

The other issue that both sides need to consider is funding. There can be significant expense in bringing a case to the Employment Tribunal. One point to bear in mind is that ACAS will get involved with cases on an early basis and attempt to conciliate/instigate settlement between the parties, thus avoiding the full expense of proceeding the a full Tribunal hearing. The parties will need to pay for a Solicitor to prepare the case up to hearing and a Barrister to present the case at the Employment Tribunal.

Employers should consider whether they wish to make a settlement offer, even on a commercial basis, at the start of proceedings. They should also consider whether they have insurance cover in place to cover the legal costs associated with defending a claims as well as the costs of any award made by the Employment Tribunal.

Employees should think carefully about how they will fund a case to the Employment Tribunal. They should review any legal expense insurance policies that they have. It is sometimes the case that home insurance policies provide legal expense insurance cover. This often relates to employment fees, with the standard position being that they will provide funding once the case is issued with the Employment Tribunal. Funding will be dependant upon a Solicitor agreeing to their terms and conditions. The Solicitor will need to provide the provider with regular updates and review any settlement offers. Generally speaking a legal expense insurance provider will only fund a case with a +55% chance of success.

Claimants should bear in mind that once an award is obtained it will then need to be enforced against a company. They should consider carefully the solvency of that company and their ability to meet the judgment. There is nothing to be gained by succeeding in a claim against an insolvent company who will then not be able to meet the judgment against them.

It is important that all parties consider the commercial aspects of bringing a claim, or defending a claim, in the Employment Tribunal from an early stage. Advise should be sought and you will need to balance the costs and risks involved. A case will take some time to be resolved and long term financing must be resolved at the beginning. Failure to do so will jeopardise the case both from a Claimants point of view and a Respondent. A defence or claim cannot be managed properly without correct funding in place.

Legal background

The Employment Relations Act of 1996 defines redundancy as a dismissal due to the employer ceasing to carry on the business for the purposes of which the employee was employed or if the employer is ceasing to carry out the business in the place where the employee was employed. This technical definition is narrow, in fact redundancies also cover a lot of other situations.

Fair or unfair dismissal

In theory dismissals by redundancy are fair however it will usually be up to the Tribunal to decide whether the employer has acted reasonably and whether the redundancy was  within a range of reasonable actions available to the employer. In this area, procedural fairness, being seen to have carefully and objectively considered all options, is paramount for employers. Everything should be docvumented to show a genuine consultancy exercise hjas taken place with employees.to dismiss the employee.

The Employment Relations Act 1996 laid out statutory redundancy pay and a formula for how this is to be worked out. Half a weeks pay is awarded for each year worked between an employee’s 18^th and 22^nd birthday, one weeks pay is awarded for each year worked between 22^nd and 41^st birthday and one and a half’s week pay is awarded for each year worked after 41^st birthday. In working out this formula, only the most recent 20 years are to be taken into account. If an employee is to receive contractual redundancy pay, this will be in conjunction with their statutory redundancy award.

For an employee to be considered for redundancy pay they must have at least two years continuous employment.. The statutory maximum amount of pay that will be awarded to an employee is £400 per week. If an employer is wishing to encourage voluntary redundancies they may take the step of offering more than £400 in order to incentivise some of the volunteers.

An employees’ service before their 18^th birthday will not count towards any awards for redundancy, the same is in effect for any periods of work an employee carries out over the age of 65.

Employer good practice

In order to reduce the risk of having an action of unfair dismissal brought against the employer, it may be wise for the employer to identify a pool of people to include in  the redundancy process. However, when doing so it is pertinent to ensure that the pool of people were selected fairly otherwise the employer risks the dismissals being seen as unfair. It is not advisable to simply rely on length of an employee’s service as the sole criteria for the pool of people for many reasons including the fact that that older people may have been employed by the company for the longest and therefore it could be seen as being age discriminatory against younger people.If an employee is offered alternative by the employer or other suitable employment and refuses this he becomes ineligible for statutory redundancy pay. It also works in the alternative such as if an employer has alternative work and fails to offer this to the employee than the redundancy process would be deemed to be unfair and the employee would be entitled to a greater compensatory award.

Selection of employees who are employed part-time should also be carefully assessed. Part-time workers are entitled to the same employment rights as full-time workers. Redundancies are a last resort for companies and it is an action which should be taken after all other avenues have been explored by the company. It is not permitted for the company to keep paying overtime or hiring staff elsewhere in the business as the same time as going through a redundancy process.

TUPE & Redundancy

If an employer is buying another business it is very important that they are aware of the TUPE regulations in relation to the employees of the business that they are buying. If the business is to be bought by an asset purchase, the TUPE regulations will apply. If this is the case the only way for the employer to dismiss an employee would be under an ‘ETO’ exception. An ‘ETO’ exception is an exception on the grounds of an economic, technical or organisational reason. It is advisable for an employer to seek legal advice if they believe that they may have triggered the TUPE regulations.

In writing this blog and other legal blogs, I find myself reading about many legal topics, but one area which always interests me is fraud. There seems to be more and more of it and it seems to be seeping deeper and deeper into society.

The worrying thing is that fraud, which has always been around in society, seems to be being carried out by more and more of the general population. There is almost a tangible erosion in moral standards, an attitude that if you can “get away with it and Blogs is doing it, why not me”.

If this trend continues, the lines between right and wrong become more and more blurred and society will suffer. We already all suffer from fraud, either because money lost at the Government level through fraud means higher taxes or money unavailable for other welfare services or in the private sector, it filters through to higher insurance premiums as has been seen in car insurance due to unprecedented personal injury fraud.

In the latest example of the fraud issue, there is a growing issue of council tenants sub-letting homes. The scale of the problem is estimated at 50,000 people unlawfully sub-letting their council homes.

It appears that the Government are planning to get tough on this type of fraud. Reforms are apparently planned whereby if fraud is detected the Local Authority will be able to cancel the tenancy, evict the tenant and a prison sentence could also be the result.

These potential changes would be very welcome, as it is clear that we have reached the point where a stick rather than a carrot is needed. At present, the unlawful sub-letting has no criminal penalty, is believed to cost around £5 billion a year and there are 1.8 million families waiting for a council home.