Company Security rules from 6 April 2013

Introduction
The rules for registering security created by UK companies and limited liability partnerships ("LLPs") are set to be reformed next month in the biggest shakeup of the Companies House registration regime in years. The new regime will provide a single UKwide security registration regime that applies to all UK companies and LLPs. There will be an assumption that all types of security will be registrable at Companies House unless specifically excluded. This is a welcome simplification and will help to address the current confusion around whether the security is a type which must be registered. Electronic registration will also be possible for the first time in a modernisation of the current system.
The Department for Business, Innovation and Skills ("BIS") first published the draft Companies Act 2006 (Amendment of Part 25) Regulations 2012 on 9 August 2012 and these were updated again on 14 January 2013 following a lengthy consultation exercise. The new regulations are expected to come into force on 6 April 2013. A detailed overview of the key changes and their impact in practice is set out below.
Types of charges

All charges will be registrable other than some limited exceptions set out in the regulations (such as a rent deposit taken as security in connection with the lease of land). The term "charge" includes a mortgage and Scottish security (but not a pledge) and so covers virtually all types of security.

It is worth noting that the original draft regulations published in August 2012 expressly excluded pledges and liens from the definition of "charge", however the updated regulations only expressly exclude pledges. By their nature, liens depend upon possession and common law has not sought to characterise them as charges, therefore the absence of the express exclusion of a lien as a charge in the regulations should not mean that a lien is therefore registrable security. A lender may, however, wish to take a cautious approach in relation to contractual liens and so seek to register these in accordance with the regulations.

Time limit for registration
Registration of security continues to be time critical. The "period allowed for delivery" is 21 days beginning with the day after the date of creation of the charge and Companies House will reject filings received after the 21day period. An extension may be possible, as at present, following an application to the court in limited circumstances.

Statement of particulars

It will be possible to deliver a certified copy of the security instrument (instead of the original security instrument as is currently required) with a brief statement of particulars. The "section 859D statement of particulars" must include the following information:

• the name of the beneficiary of the charge or the security agent or trustee;

• whether the instrument is expressed to contain a floating charge and whether it covers all the property and undertaking of the company;

• whether the terms of the charge prohibit or restrict the company from creating further security that will rank equally or ahead of the charge (a negative pledge); and

• whether the instrument creates a fixed charge or mortgage over any land, ship, aircraft or intellectual property that is registered (or required to be registered) in the UK. If it does, short particulars need to be included on the form submitted for registration.

The requirement to include a short description of registrable land and intellectual property is new and care is needed as an inconsistency between the details included in the charge and on the form could result in registration being rejected. Intellectual property includes "(a) any patent, trade mark, registered design, copyright or design right; and (b) any licence under or in respect of any such right".


The certificate of registration of the charge will still be conclusive evidence that the complete documents required for registration purposes were submitted to the Registrar on time; therefore it would appear that once secured, the certificate could not be reopened.

Separate provisions set out the section 859D statement of particulars that will be required when a charge is not created or evidenced by an instrument.

Personal information relating to an individual (other than his name), bank account numbers of companies or individuals and signatures may all be excluded from the certified copy of the security instrument submitted to Companies House. However, as is currently the case with an MG01 form, commercially sensitive information cannot be excluded.

One final difference relates to the requirement to indicate whether the charge instrument includes a negative pledge (as described above). The inclusion of this information on registration forms currently is a matter of good practice. This will now be mandatory.

If after a charge has been created, it is amended to include a negative pledge or varies or regulates the order of priority, then the instrument and a section 859D statement of particulars may be delivered to the Registrar. This is voluntary and there are no time limits for doing so.

Evidence of registration

Each charge that is registered will be allocated a unique reference code ("URC") which will appear on the register and the certificate of registration of the charge (which is conclusive evidence that the documents required were delivered before the end of the relevant period allowed for delivery). The URC will enable those searching the register to track a charge more easily.

The Registrar will include the following documents in the register (to the extent that they were required for registration purposes):


• the certified copy of the instrument creating or evidencing the charge;

• the order extending the period allowed for delivery of the section 859D statement of particulars; and
• the certified copy of the instrument creating or evidencing a charge over any property or undertaking acquired by the company.

Consequences of failing to register


There are no longer criminal sanctions for a failure to register but an unregistered charge will be void against a liquidator, administrator or creditor of the company. If a charge becomes void against such persons, then the money secured by it will become immediately payable.


Foreign law security


The regulations provide that all charges will be registrable, save for those expressly excluded. The term "charge" is an English legal term that the regulations define to include mortgages and Scottish security. A foreign law security instrument may not be described as or include the word "charge" in it, although it may still be equivalent to the English law concept of a charge or mortgage; for example, security over a US registered patent or a foreign law pledge on shares. The cautious approach will be to submit for registration all security created by a UK registered company even if over assets located abroad or if the security is not expressly characterised as a charge.

It would therefore be prudent to register any foreign law security instrument, created by a UK company, which is sufficiently similar to the English concept of a charge or mortgage to prevent the consequences of failure to register from arising.


The practicalities


Other points to note from a practical perspective are as follows:

• The new registration requirements will apply to charges created on or after 6 April 2013; therefore a charge created on 5 April but submitted to Companies House on 7 April would need to be registered under the current regime (using form MG01).


• Registration of the satisfaction of secured debt or the release of a charge must be carried out in accordance with the new regime from 6 April 2013, regardless of whether the charge was created before 6 April or after; however differing information will be required according to when the original charge was created.

• Form 466, required for the registration of particulars of an instrument of alteration to a floating charge created by a company registered in Scotland, will remain in force (and subject to the 21day filing limit). For Scottish Floating Charges ("SFCs") created before 6 April 2013, the current filing requirements will apply. For those SFCs created on or after 6 April, a certified copy of the alteration will be required, the 21day filing limit will apply and the section 859D statement of particulars to be delivered will require less information as prescribed in Sch 2 of the regulations.


• Electronic filing will be available via WebFiling or Software Filing. When registering a charge electronically, it will be possible to submit certified copies of the security instrument electronically in PDF form (up to 10MB in size).

• To facilitate WebFiling, lenders (or anyone other than the company itself who is presenting the particulars for registration) will have to make a one off application for a lender authentication code or presenter authentication code to enable them to register charges. Software Filing allows the transfer and acknowledgement of electronic company data between presenters and Companies House and requires the purchase or development of suitable software to enable this. The online application forms for both WebFiling and Software Filing are available to download from the Companies House website. Companies may file charges against their own company using the company's authentication code.


• The fee for electronic filing is proposed to be £10 (although this is still to be confirmed); the fee for paper filing will remain at £13.
• There will be a new series of forms for companies and equivalent forms for LLPs which will require less information than the current "MG" forms. There will be separate forms for registration of charges created by an instrument and those created where there is no instrument. The form numbers will range from MR01 to MR10, with additional forms RM01 and RM02 available in respect of giving notice of the appointment of a receiver.
• Companies and LLPs are no longer required to keep an internal register of security. Copies of the full security instrument must be available for inspection instead.

Uk Intellectual Property Office introduces new Mediation Service

Ocassionally, disputes can arise in relation to Intellectual Property (IP) rights. Mediation is a type of alternative dispute resolution, a way of resolving disputes without going to court. It is cheaper and quicker than litigation and the outcome is usually beneficial to all parties.

A court will expect you and the other party in dispute to have attempted to resolve matters before starting legal proceedings. It will also expect you to have properly considered a form of alternative dispute resolution.

Mediation allows you and the opposing party to talk about the dispute with the help of an independent person, a mediator. The mediator’s role is not to make a decision on the dispute but to help you to find a solution that both parties can accept.

Most types of IP dispute are appropriate for mediation. In addition to it being cheaper and quicker, there are other advantages. Mediation can: involve discussion of a broader range of issues than those that are the subject of the litigation; result in a positive outcome for all parties involved eg through licensing or commercial agreements; and help parties to maintain or even create business relationships.

Introduction to the IPO Mediation Service

The IPO mediation service was set up to help businesses and individuals resolve IP disputes quickly and effectively. A flexible fee scale has been introduced and it may be possible to arrange mediation over the telephone for some cases. The accredited mediators can help you to resolve disputes involving unregistered rights, such as copyright and design rights, as well as patents, trade marks and registered designs.

The IPO mediation service can help you resolve:

disputes about infringement of an IP right

disputes about IP licensing

trade mark opposition and invalidation proceedings on relative grounds

disputes over patent entitlement eg whether a co-inventor was employee or consultant

copyright licensing disputes between collecting societies and users of copyright material regarding the terms and conditions of licences

Some disputes where mediation may not be an alternative to litigation include:

trade mark disputes concerning the distinctiveness of the mark

trademark opposition and invalidation proceedings on absolute grounds

disputes involving IPO decisions eg refusal of a patent application or request for extension of time

How mediation works

If you agree to mediation you and the other party will be required to sign a mediation agreement. The agreement is to confirm that both parties agree to:

use mediation to try and resolve your dispute

use one of our accredited mediators

the location and sharing of costs associated with the mediation

On the day of the mediation the appointed mediator will meet with you and the other party separately, and together, to discuss the issues. Mediation discussions are confidential and cannot later be used in court if the dispute is not resolved.

After you have reached an agreement, the mediator will encourage and if necessary help you to record at least the main points of the agreement in writing. This helps to reduce the risk of further disputes that may arise later about what was actually agreed.

Further details and a list of other mediation providers is available.

For further information on telephone mediation and details of mediation fees (76Kb) please contact:

Email: mediation@ipo.gov.uk

Tel: 0300 300 2000 - Outside the UK telephone +44 (0) 1633 814000

Mediation Service

Intellectual Property Office

Concept House

Cardiff Road

Newport

South Wales

NP10 8QQ

United Kingdom

Please note that you must accept liability for the transmission of any information you send us or ask to receive from us via e-mail.


Action Required: 1st April 2013 - Small Claims Limit increases

Action required

1st April 2013 - Small Claims Limit increases from £5000 to £10000; it could cost you financially not to issue a claim of between £5000 - £10,000 before this date!

Many cases that we help clients with are for debts / unpaid invoices of between £5000 - £10000. These cases have previously been allocated to the Court's Fast Track.This has meant that if our client's case were defended and our client won, they could recover our legal fees from the losing party.

In Small Claims matters, the Court limits the amount of legal fees that are recoverable from the losing party. This is called fixed fee recovery. The amount of the fixed fee recovery that a winning party can claim is linked to the value of their case.

It is believed that after 1st April 2013, the fixed fee a client will be able to recover from the losing party, on a debt of between £5000 - £10000 is £100

The legal fees for pursuing a claim of between £5000 - £10000 will inevitably be more than £100. This is particularly true where the debt is disputed!

If you wait to issue a claim, for a debt of between £5000 - £10000, until after 1st April, there will be an increased irrecoverable cost to you. Where the claim is defended, this irrecoverable legal cost may be hundreds or even thousands of pounds depending on the complexity of the case.

If you or your clients have a debt of between £5000 - £10000, it is well worth issuing your claim before 1st April 2013 so that you can recover a greater amount in respect of the legal costs associated with pursuing the claim.


Business gets a boost in Osborne’s Spring budget

Business gets a boost

Business can breathe a sigh of relief following the latest statement from the Chancellor, with a package of measures designed to stimulate UK plc.

The Spring budget was delivered against the gloomy backdrop provided by the Office for Budget Responsibility, which downgraded the 2013 growth prediction it had issued last December, down from 1.2% to 0.6%.

The headline-grabbing measures of the Budget included bringing forward the raising of the personal tax threshold to £10,000 from April 2014 and the axing of the planned September 3p increase in fuel duty.

But all commentators agree that the task of the Chancellor was to deliver a budget for growth, so it was not surprising that the focus of George Osborne’s Spring Budget 2013 was on measures aimed at stimulating business in Britain through changes to business taxes.

• Mainstream corporation tax rate will be cut to 20% from 2015, removing the dual-rate distinction between large and small companies. This makes Britain one of the most attractive places in Europe for multi-national companies to invest in.

• The first £2,000 of employer National Insurance contribution costs will be exempt. As well as meaning an estimated 450,000 small firms will pay no employer National Insurance, this is aimed at encouraging micro businesses and sole traders who might be thinking of taking on an employee but are put off by the costs.

• The Research and Development Tax Credit is to be introduced at the rate of 10% rather than the 9.1% rate previously announced. Again, this is intended to encourage multi-national companies to establish R&D centres in the UK.

• There were measures aimed at encouraging entrepreneurship including relaxing the Seed Enterprise Investment Scheme Rules and providing Capital Gains Tax relief on the sale of a controlling interest in a company.

• Stamp duty will be removed on the sale of shares traded on markets such as the Alternative Investment Market so as to stimulate investment in smaller businesses with rapid growth potential.

The Chancellor announced a shared equity scheme which will provide up to 20% of loan finance to purchasers of new homes. This is intended to tackle the problem of housing shortage across the UK. It will also help people to get on the home-ownership ladder and stimulate the construction industry.

And there’s further good news for the construction sector with an injection of £15bn for new road, rail and construction projects promised by 2020, starting with £3bn in 2015-16.


Business gets a boost on bringing in debts

Changes in the statutory protection for late payment of commercial debts sees a tightening up on how quickly commercial debts should be settled and the opportunity to recover costs, but businesses wanting to use the legislation need to make sure their contract terms do not over-ride the terms of the Act.
The changes came into force on 16 March 2013 for contracts entered into after that date. One key change is that commercial businesses will be expected to pay their supplier invoices within 30 days, unless they have both agreed a longer time limit, of no more than 60 days.
And all public bodies will now be required to pay their suppliers within 30 days, except for some healthcare and economic activities.
Statutory interest will now be a minimum of 8% above the European Central Bank’s reference and interest will start to run automatically if the period for payment is not specified, or where it is deemed to be "grossly unfair". The interest charges will automatically kick in at 30 days from the latest date of either receiving the supplier's invoice, or of receiving or accepting the goods or services.
And unless a ‘reasonable’ longer period is agreed, any purchaser must confirm that goods or services conform with the contract within 30 days.
Another important change is the right to claim compensation for reasonable costs incurred in recovering a debt, when the amount exceeds the established fixed charge sum of 40 Euros.
Explained commercial expert Brendan O’Brien of Breeze & Wyles Solicitors LLP: "It’s important that business recognises that the new provisions will not apply to contracts made before the commencement date of the new legislation, which was 16 March 2013. They also need to be sure that their own contract terms, or the terms imposed by the customer, do not override the legislation if they want to make use of it."
He added: “As well as the tighter control on the length of time customers can take to pay an invoice, the law is on your side to claim a more generous rate of interest on late payments. It offers a rate of 8% over the European Central Bank rate, which makes it considerably higher than most commercial contracts. But if you have a different rate of interest in a contract, you will not be able to claim the statutory rate of interest, so again you need to check your small print.”
The updated legislation – made under Directive 2011/7/EU - aims to strengthen legislative provisions to tackle the culture of late payments in commercial transactions within the European Union.
ENDS
This information is not intended as legal advice


Business gets a boost in Osborne’s Spring budget

Business can breathe a sigh of relief following the latest statement from the Chancellor, with a package of measures designed to stimulate UK plc.
The Spring budget was delivered against the gloomy backdrop provided by the Office for Budget Responsibility, which downgraded the 2013 growth prediction it had issued last December, down from 1.2% to 0.6%.
The headline-grabbing measures of the Budget included bringing forward the raising of the personal tax threshold to £10,000 from April 2014 and the axing of the planned September 3p increase in fuel duty.
But all commentators agree that the task of the Chancellor was to deliver a budget for growth, so it was not surprising that the focus of George Osborne’s Spring Budget 2013 was on measures aimed at stimulating business in Britain through changes to business taxes.
• Mainstream corporation tax rate will be cut to 20% from 2015, removing the dual-rate distinction between large and small companies. This makes Britain one of the most attractive places in Europe for multi-national companies to invest in.
• The first £2,000 of employer National Insurance contribution costs will be exempt. As well as meaning an estimated 450,000 small firms will pay no employer National Insurance, this is aimed at encouraging micro businesses and sole traders who might be thinking of taking on an employee but are put off by the costs.
• The Research and Development Tax Credit is to be introduced at the rate of 10% rather than the 9.1% rate previously announced. Again, this is intended to encourage multi-national companies to establish R&D centres in the UK.
• There were measures aimed at encouraging entrepreneurship including relaxing the Seed Enterprise Investment Scheme Rules and providing Capital Gains Tax relief on the sale of a controlling interest in a company.
• Stamp duty will be removed on the sale of shares traded on markets such as the Alternative Investment Market so as to stimulate investment in smaller businesses with rapid growth potential.
The Chancellor announced a shared equity scheme which will provide up to 20% of loan finance to purchasers of new homes. This is intended to tackle the problem of housing shortage across the UK. It will also help people to get on the home-ownership ladder and stimulate the construction industry.
And there’s further good news for the construction sector with an injection of £15bn for new road, rail and construction projects promised by 2020, starting with £3bn in 2015-16.
ENDS
Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.


Expansion of Small Claims Limit - 1 April 2013

1st April 2013 - Small Claims Limit increases from £5000 to £10000; it could cost you financially not to issue a claim of between £5000 - £10,000 before this date!
Many cases that we help clients with are for debts / unpaid invoices of between £5000 - £10000. These cases have previously been allocated to the Court's Fast Track.This has meant that if our client's case were defended and our client won, they could recover our legal fees from the losing party.
In Small Claims matters, the Court limits the amount of legal fees that are recoverable from the losing party. This is called fixed fee recovery. The amount of the fixed fee recovery that a winning party can claim is linked to the value of their case.
It is believed that after 1st April 2013, the fixed fee a client will be able to recover from the losing party, on a debt of between £5000 - £10000 is £100.
The legal fees for pursuing a claim of between £5000 - £10000 will inevitably be more than £100. This is particularly true where the debt is disputed!
If you wait to issue a claim, for a debt of between £5000 - £10000, until after 1st April, there will be an increased irrecoverable cost to you. Where the claim is defended, this irrecoverable legal cost may be hundreds or even thousands of pounds depending on the complexity of the case.
If you or your clients have a debt of between £5000 - £10000, it is well worth issuing your claim before 1st April 2013 so that you can recover a greater amount in respect of the legal costs associated with pursuing the claim.


OFT: Pay Day Lenders: Change or lose your Licence!

The OFT is giving the leading 50 payday lenders, accounting for 90 per cent of the payday market, 12 weeks to change their business practices or risk losing their licences, after it uncovered evidence of widespread irresponsible lending and failure to comply with the standards required of them.
The OFT has also today announced that, subject to consultation, it proposes to refer the payday lending market to the Competition Commission after it found evidence of deep-rooted problems in how lenders compete with each other.
The action was announced in the final report on the OFT's compliance review of the £2 billion payday lending sector. The review found evidence of problems throughout the lifecycle of payday loans, from advertising to debt collection, and across the sector, including by leading lenders that are members of established trade associations.
Particular areas of non-compliance included:
lenders failing to conduct adequate assessments of affordability before lending or before rolling over loans
failing to explain adequately how payments will be collected
using aggressive debt collection practices
not treating borrowers in financial difficulty with forbearance.
The fifty leading lenders, each of which was inspected, will have to take rapid action to address the specific concerns the OFT identified with each of their businesses. They must demonstrate within 12 weeks that they are fully compliant, or risk losing their licence. Failure to cooperate with this process will trigger enforcement action.
Payday lending is a top enforcement priority for the OFT. Customers often have limited alternative sources of credit and are frequently in a vulnerable financial position. Combined with this, the high rates of interest charged by many payday lenders can make the consequences of irresponsible lending particularly acute.
The OFT has also uncovered evidence suggesting that this market is not working well in other respects and that irresponsible lending in the sector may have its roots in the way competition works.
Lenders were found to compete by emphasising the speed and easy access to loans rather than the price and also to be relying too heavily on rolling over or refinancing loans. The OFT believes that both these factors distort lenders' incentives to carry out proper affordability assessments as to do so would risk losing business to competitors. Too many people are granted loans they cannot afford to repay and it would appear that payday lenders' revenues are heavily reliant on those customers who fail to repay their original loan in full on time.
Despite payday loans being described as one-off short term loans, costing an average of £25 per £100 for 30 days, up to half of payday lenders' revenue comes from loans that last longer and cost more because they are rolled over or refinanced. The OFT also found that payday lenders are not competing with each other for this large source of revenue because by this time they have a captive market.
The OFT believes that these fundamental problems with the operation of the payday market go beyond non-compliance with the law and regulations. It believes that a full investigation by the Competition Commission is needed to identify and, if appropriate, impose lasting solutions to make this market serve its customers better. The Financial Conduct Authority (FCA) will regulate consumer credit from April 2014 and it will be able to use the analysis and conclusions of the Competition Commission in developing its rules and applying its powers. The FCA will have significant powers and resources beyond those available to the OFT, including powers to cap interest rates and to impose a ban or a limit on the number of rollovers lenders may offer.
Clive Maxwell, OFT Chief Executive, said:
'We have found fundamental problems with the way the payday market works and widespread breaches of the law and regulations, causing misery and hardship for many borrowers. Payday lenders are earning up to half their revenue not from one-off loans, but from rolled over or re-financed deals where unexpected costs can rapidly mount up.
'We are proposing to refer this market to the Competition Commission, which has wider powers to get to heart of the problems in this market and to identify and impose lasting solutions that protect consumers.
'Irresponsible lending is not confined to a few rogue payday lenders - it is a problem across the sector. If we do not see rapid, significant improvements by the 50 lenders we inspected they risk their licences being removed. Payday lending is a top enforcement priority for the OFT.'
The OFT is advising consumers to think carefully before taking out a payday loan and to be aware of their rights and where to go if they have a problem. Consumers struggling to repay debts can contact Citizens Advice for free, impartial advice on: 08454 040506 or at www.adviceguide.org.uk. Individual consumers with complaints should approach their lender in the first instance. If they are unhappy with the response, they can take their complaint to the Financial Ombudsman Service on: 0800 023 4567 or at www.financialombudsmanservice.org.uk.
The Market Investigation Reference consultation paper (pdf 295kb) published today sets out the OFT's proposed decision and invites comments by 1 May 2013. The OFT expects to make a final decision on referring the payday market to the Competition Commission by June 2013. More information about the MIR consultation is available on the consultation page.


April 1: Introduction of Jackson Reforms to Litigation in the UK

From April 1st 2013 (and no this is not an April fool) there will be material changes to the way civil court claims are managed. Some of these changes will improve the position for Claimants and some will make it more difficult for Claimants who wish to pursue an action through the Courts.
In a lecture on 5th March 2013, Mr Robert Hill, member of the Civil Procedure Rules Committee and Regional Costs Judge described these changes as on par with the introduction of the County Court / High Court structure in England and Wales in the 20th Century. My point? These are substantial changes to our Court system and the impact of these changes needs to be considered carefully by all involved in litigious matters (claimants / defendants and lawyers alike).
Potential claimants should identify whether it is worth them issuing a County Court claim before 1st April in order to avoid the application of some of these changes to their case.
Where a Claimant has a claim of between £5000 - £10000, issuing a Court claim after 1st April may cost the Claimant hundreds, or even thousands, of pounds in irrecoverable legal fees - legal fees that would have been recoverable had the claim been issued before 1st April.
Some of the key changes include;
1. An increase in the value of claims allocated to the small claims track from £5000 to £10000.
2. The ability of Solicitors to offer Contingency Fee Agreements (now referred to as Damages Based Agreements) in litigation cases.
3. Assessment at an earlier stage of the true legal costs of litigation forcing lawyers and clients to prepare cases in a more proportionate and cost effective manner.
The purpose of these changes is to drive down disproportionate legal fees and to enable a litigating party to be more aware of the likely cost of litigation from the outset. This enables a Claimant to issue a claim with their eyes wide open as to the true cost and risks.
Our debt recovery proposal, launched 16 months ago offers Claimants low cost and fixed fee legal services because Breeze and Wyles identified as a concern the disproportionate legal fees often associated with litigation.
For further information regarding our service or to discuss whether it might be beneficial to issue a potential claim before 1st April, please contact our Maria Koureas-Jones.


Whose email is it anyway?

Business must take steps to protect the content of business emails through contractual agreements and operational processes such as archiving, as the courts will not treat the contents of emails as their property
Who owns an email? That was the question facing the High Court recently when an employer challenged a former MD to hand over emails he had exchanged whilst in the role.
But the judgement in Fairstar Heavy Transport NV v Adkins and another backed up earlier rulings on ownership of information to say that no one can claim the content of emails, because proprietary rights do not exist in information.
The ruling is a reminder to business to tighten up on contracts and internal processes if they want to protect the content of email exchanges.
Explained commercial expert Brendan O'Brien of Breeze & Wyles Solicitors LLP: "From a legal perspective, It means that any contractual agreements, such as employment contracts, consultancy agreements or business contracts, should include obligations about the use and retention of emails. It also should cover for the return of emails and protect against distribution of confidential information."
He added: "Operationally, companies should make sure that all company emails are regularly archived, as well as daily backing up, ideally off-site. It is best to avoid emails being sent from personal email accounts but if this happens, or external consultants are involved, then there needs to be a way to capture and archive those email exchanges as well."
The Fairstar case arose when the company was taken over and the employment of Mr Adkins, the managing director, was terminated. The new owners tried to obtain emails held by Mr Adkins that related to business transactions before the takeover, particularly a $37 million cancellation charge under a ship building contract. When he refused to hand over the emails, the company went to court to try and claim that in today's business environment, an email is a form of property.
But the judge rejected this view, reinforcing previous rulings which suggest that no proprietary rights exist in information, and citing a House of Lords case from 1967 which held that information is not property that can be controlled, except where disclosure to a third party would be a breach of confidence.
In rejecting Fairstar's case, the judge said that if an email were to be considered a form of property, this would have impractical consequences. For example, was the sender the owner? If so, they could ask for it back or for it to be deleted. Instead, he said, there was protection against misuse through copyright, reasonable restrictions on the use of confidential information, and through contract law.
ENDS
This information is not intended as legal advice - Fairstar Heavy Transport NV v Adkins and another
Fairstar Heavy Transport NV v Adkins and another

http://www.bailii.org/ew/cases/EWHC/TCC/2012/2952.html