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Yearly Archives: 2020
How is the Aviation industry managing with COVID-19?
Markets around the world are in treacherous and uncharted waters (US oil benchmark goes negative?!) and the aviation sector looks to be in just about as bad a shape as any. The word ‘unprecedented’ may be in danger of becoming …
Posted in Longer Reads
Tagged airlines, aviation, CoronaVirus, COVID-19
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Liquidation of hacked exchange Cryptopia leads to cryptoasset property ruling in New Zealand
2020 has been a landmark year for cryptoasset decisions. On 8 April 2020 New Zealand had its first major decision in this area. Justice David Gendall at the High Court in Christchurch considered that cryptoassets were property in the context of a liquidation. In doing so he held that users of the exchange are entitled to the assets they hold in Cryptopia accounts, deciding they should be classed as “property” as they were held in separate trust accounts.The matter involved Cryptopia, a crypto exchange formed in 2014 which went into liquidation in 2019 after a serious hack and loss of 30 million dollars of cryptocurrency. Issues arose in the liquidation over who owns the remaining cryptocurrency and what should happen to it.The company had over 800,000 users with positive balances that needed to be reimbursed, as well as 37 creditors and 90 shareholders who wanted their share of the remaining assets.The applicants (the liquidators) applied to the Court for directions under s 284(1)(a) of the Companies Act 1993 for categorisation and distribution of assets in the liquidation.The questions which were asked of the Court were (1) what are the assets in liquidation? (2) and what should be the method of distribution? It was held that: cryptoassets are property; the exchange was a trustee for the account holders of the currency on its exchange platform; and a separate trust exists for each type of cryptocurrency. The Court also gave directions that rules from the NZ Trustee Act in regards unidentifiable account holders would be applicable in regards anonymous account holders.Justice Gendall said that he reached “the conclusion that the cryptocurrencies […] situated in Cryptopia’s exchange are a species of intangible personal property and [are] clearly an identifiable thing of value. Without question they are capable of being the subject matter of a trust.”Similar to the findings of the UK Jurisdictional Task Force in the Legal Statement of November last year, the Courts of New Zealand are treating cryptoassets as property in the context of insolvency. Justice Gendall also echoed the Task Force’s view that cryptocurrency is not mere information, as he dismissed that argument.The decision aligns with the decisions in the UK, France and Australia this year, and Singapore last year, which all held cryptoassets to be property.
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Is it time to go back to work on construction sites?
The good news for this Friday morning is that developers such as Persimmon, Taylor Wimpey and Vistry are all looking to reopen their sites, with the encouragement of housing ministers and that those sites may reopen from as early as Monday.A word of warning however. Despite these contractors going back to work, there are likely to be difficulties. These will lie not only with the need for strict health and safety protocols and continued social distancing but there may also be difficulties with the supply of materials, transporting of workers and delays caused by existing social distancing requirements; build programmes will already have been delayed by at least 3-4 weeks by the cessation of work and are likely to be delayed further in light of these issues. It is therefore time to revisit your contractual obligations relating to your programme of works. If there are long-stop dates or damages payable if target dates are not met, then now is a good time to seek to vary your contractual commitments to give yourself more flexibility on the programming. If you need help or strategic advice on amendments to the build programme or force majeure provisions under development agreements, building contracts or subcontracts, or in the case of funding arrangements with your bank deferring maturity dates under the loan agreements, then please do contact us and we would be delighted to help.
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Coronavirus: Furlough Leave – Updated Government Guidance
The HMRC online portal is now open for applications from businesses to claim 80% of the wages of furloughed employees up to £2,500 per month per employee. More than 140,000 businesses applied using the portal for over 1.3 million employees …
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Tagged furlough, furlough leave, HMRC
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Coronavirus: Housing market needs a stamp duty holiday but swift action is needed
Today (24/4/20) we echo the Royal Institution of Chartered Surveyors (RICS) call for a stamp duty holiday to kick-start a stalled housing market, but warn that swift action is needed to prevent further inaction. Janet Armstrong-Fox, Partner and Head of …
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Tagged CoronaVirus, RICS, Stamp duty
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Good faith’s relationship with the relational contract – new guidance
What is a relational contract? A relational contract in this context is one that has implied good faith obligations. The concept of and conditions for generally implying terms into a contract (other than by legislation) is firmly cemented in English …
Posted in Longer Reads
Tagged contracts, High Court, relational contract
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Coronavirus: Furlough Leave – HMRC portal now open
Around four weeks after first being announced by the government, HMRC went live with its furlough portal at 7am on Monday 20 April. You can access the portal here. There were some inevitable teething problems and the website, as expected, …
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Tagged CoronaVirus, COVID-19, furlough, furlough leave, HMRC
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Bank Fraud: Safeguards and Solutions (part two)
Quincecare duty Banks are under a duty not to execute payment instructions where they have reasonable grounds to believe that the instruction is an attempt to misappropriate the customer’s funds (being put on inquiry); this is known as a bank’s …
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Tagged bank fraud, fraud
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Disputes arising from COVID-19 disruptions – skipping to Court or skipping Court?
Commercial contracts would not have anticipated the current commercial pressures which have arisen from the coronavirus outbreak. Naturally, this has led (or will lead) to unfulfilled obligations in commercial contracts, without a clear contractual solution for how to proceed. While the non-breaching party could bring a claim for breach of contract, recourse to the Courts at this time may not be the most effective way forward. This is particularly so where the breach is clearly a temporal one and the relationship between the parties is expected to return to normal once the global emergency subsides.The downside of litigation during COVID-19Besides the obvious shortcomings of litigation (costly; time consuming), businesses should consider the following additional factors relevant to the current crisis:No interim relief: You are unlikely to be able to get interim relief from the Court, especially where there is an inability on the counterparty to perform its obligations. If the breach is having an immediate impact on cash-flow, filing a claim will not relieve this pressure.Uncertainty in the final outcome: Arguments relating to the doctrine of frustration or interpretation of Force Majeure clauses can be complex and are fact dependent. How the Court will ultimately deal with those arguments in each case is uncertain.Backlog: While the UK Courts have quickly adapted to ensure that cases can be dealt with remotely (e.g. video-link hearings), there will no doubt be a backlog resulting from adjourned hearings and other limitations on the Courts at this time. Similarly, the predicted rise in claims due to COVID-19 will no doubt place further strain on the Court system.To avoid these difficulties, businesses should assess whether commercial discussions could lead to an effective solution by agreement. If the parties cannot come to an agreement on their own, alternative resolution mechanisms should be considered.Possible alternative resolution mechanisms Mechanism Summary MediationA negotiation process where an independent third party (usually an experienced Solicitor or Barrister) acts as a “mediator”.The mediator does not make a decision, rather, they assist parties to identify issues, assess options and negotiate an agreement to resolve their dispute.Mediation will be particularly useful for those parties seeking to find an interim solution, with a view to preserving the longer-term commercial relationship.In normal circumstances, a face-to-face meeting would occur, however, video-conferencing could easily be utilised at this time. There have already been a substantial number of successful video mediations in the UK during the COVID-19 era, in particular, using Zoom.Early Neutral Evaluation (“ENE”) An independent evaluator (usually an expert within the relevant business sector, former Judge or Barrister) is appointed to give the parties an assessment of the merits of their case and express a view on what the outcome would be if the matter proceeded to Court.The evaluator does not resolve the dispute, but the intention is that the parties use the final evaluation as a basis for negotiation following the ENE.The ENE process is usually a paper exercise, so it would be suitable for the current lockdown measures.Expert determination Expert determination is a binding dispute resolution process that can offer a relatively quick means of determining disputes of a specialist or technical nature (where legal and factual issues are limited).It is commonly used in two contexts: (1) where some form of valuation is required; or (2) where an expert scientific or professional opinion is central to the dispute.Depending on the preference of the parties, the determination could be made on the papers or there could be an oral hearing (in the case of the latter, it would need to be undertaken by video-conference). As noted above, there are a number of disadvantages to proceeding down the path of litigation at this time. If businesses are currently entangled in a COVID-19 related dispute, it is recommended to seek legal advice on whether another resolution mechanism would be more effective at this time, particularly where the parties see the current position as temporary and wish to preserve commercial relations.Of course, however, if the relationship between the contracting parties has come to end (through termination or otherwise), businesses may wish to adopt the strategy of pursuing the above alternative resolutions in conjunction with more traditional litigation through the Courts.
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