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24 January 2019

Seeking a better deal for the small supplier

Despite the ongoing political uncertainty in the UK, one thing we can be sure of is that 2019 is going to be dominated by Brexit (whatever form that might take) and, like most walks of life; the legal world will be affected by the UK’s departure from the EU.

However, given that no-one has yet found a Brexit crystal ball which can tell us whether our future is to leave the EU without a deal, with a deal or indeed not to leave the EU at all, this article looks at those predictions for the legal world in 2019 which can be made with some degree of confidence.

2019 might see the government try to redress the balance between small business and large companies on payment terms. Currently a small supplier is often forced to accept unfavourable payment terms with a larger company. This puts pressure on the smaller business’ cashflow. The government sought views in 2018 regarding increasing board responsibility for payment practices and whether to introduce statutory maximum payment periods. The government’s response is awaited in 2019.

Our Courts are likely to be busy again in 2019. Brexit is already having an impact and one case already scheduled to come to Court in early 2019 explores whether Brexit can frustrate a lease. The claim is being brought by Canary Wharf Group over the relocation of their tenant, the European Medical Agency (EMA), to Amsterdam as a result of Brexit. Canary Wharf Group is seeking a declaration that the UK’s withdrawal from the EU and the relocation of the EMA will not cause the lease between the parties to be frustrated.

In January 2019, the Supreme Court will hear an appeal in Tillman v Egon Zehnder Ltd which will be the first case for over a century in which our highest Court has looked at the construction of an employment restrictive covenant. Also in the employment field, the Supreme Court will hear the appeal from Uber on the Court of Appeal decision that Uber drivers are workers and no doubt the ‘gig economy’ will make the headlines again this year.

Following hot on the heels of the launch of the GDPR in 2018, a new ePrivacy Regulation is expected in 2019 which will further reform online privacy. In reality, how client and employee data is managed and utilised will remain on the agenda for many businesses throughout this year.

This year is likely to finally see changes to residential leasehold property ownership. Leasehold home ownership has hit the press recently as large developers are still selling houses on long leaseholds and demanding ground rents or large premiums from the owners should they wish to acquire the freehold. Many buyers are unaware of these costs when buying their property. Last year, the Ministry of Housing Communities and Local Government consulted on how to implement reforms in four areas of the residential leasehold system: banning the sale of new leasehold houses, reducing new ground rents to a nominal level, protections for freeholders who pay service and estate charges, and improving the residential leasehold sale process. The consultation ended in November 2018 and we are likely to see legislation in 2019 to implement some of these reforms.

The Law Commission is also due to consult on reforms to the process for a residential leaseholder to extend his or her lease. A lease is a wasting asset and currently a leaseholder has to go through a complicated and sometimes expensive process to obtain an extended lease from his or her landlord. The Law Commission intends to make proposals to make the lease extension process simpler and cheaper for leaseholders. It is likely that the Law Commission’s recommendations for reform in this area will be put to the government later this year with legislation possible in 2020.

Good luck to you and your business in 2019, we look forward to working alongside you.

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