Update: commercial property

Bribery Act

The Bribery Act 2010 is due to come into force on 1 July 2011 and has generated much publicity. It will repeal and replace the common law bribery offence and various statutory offences which prohibit corrupt behaviour. The Act is intended to strengthen the UK's approach to anti-bribery and to impose a structure for investigating and eliminating bribery. The penalties for non-compliance are potentially severe '“ a maximum prison sentence of ten years for individuals or an unlimited fine.

The much-publicised new offence is failure by a relevant commercial organisation to prevent any associated persons from bribing people for the organisation's benefit.

To break down the definition: a 'relevant commercial organisation' is a company or partnership incorporated or formed in the UK, or a company or partnership incorporated or formed outside the UK which does business in the UK. An 'associated person' is anyone who performs services for or on behalf of the organisation. This would include employees, consultants, agents and subsidiaries.

Bribing a person depends on there being an offer or promise, or the actual giving, of a financial or other advantage which is intended to bring about or reward the improper performance of an activity or a function.

It will be a defence for the organisation to demonstrate that it had in place 'adequate procedures' designed to mitigate the risk of bribery.

Adequate procedures can be drawn together in an anti-bribery policy. There are six guiding principles that the Ministry of Justice suggests that organisations should consider when putting together an anti-bribery policy. These cover four main areas:

(i) identifying risks for the organisation, given the sector in which the organisation operates, the way it conducts its business and the geographical market in which it operates;

(ii) formulating a policy which seeks to address and minimise these risks;

(iii) communicating the policy to staff, suppliers and customers; and

(iv) making clear what the sanctions are for the failure to comply with the policy.

One area which has caused much debate is where the line can be drawn between bribery and legitimate corporate hospitality. An anti-bribery policy will need to address this issue. In reality, it will be a matter of exercising common sense.

The Ministry of Justice has put together guidance on what amounts to appropriate corporate hospitality. The guidance recognises that 'reasonable and proportionate' hospitality is an established and important part of doing business. It says that, in general, the higher the expenditure and the more lavish the hospitality provided, the greater the influence that it is intended to influence another and to constitute bribery. As this will depend on the nature of business and the type of client being dealt with, each organisation will need to form a view on what is acceptable corporate hospitality. The timing of any hospitality and its purpose will also need to be considered.

The Bribery Act will raise the profile and significance of preventing bribery and will introduce a new corporate bribery offence. The thrust of the guidance on the Act is that it is not intended to penalise well-run commercial organisations. In practice, companies will be required to draw up policies now to be communicated to staff and suppliers by 1 July 2011 to ensure that they do not risk falling foul of the new law.

Right of light

The decision of the parties in the case of HKRUK II (CHC) Ltd v Heaney to settle their case at the end of March 2011, before it was to be heard in the Court of Appeal, is likely to have been greeted with dismay by developers.

The earlier High Court decision in September 2010 had held that damages were not a suitable remedy for Mr Heaney, who had suffered an actionable interference with his right to light by virtue of the neighbouring development undertaken by HKRUK, which had added an additional two floors to the building.

Accordingly, the judge at first instance ordered that part of the top two floors of HKRUK's new development (part of which had been let) should be taken down, instead of awarding damages. The decision of the High Court seemed to overturn the theory, which was felt by some practitioners to be starting to prevail, that a court was only likely to award an injunction where damages were not a suitable remedy, and that injunctive relief became rather more difficult to obtain once a development has been completed. Instead, the court maintained that damages are likely only to be a suitable remedy where:

• the injury to the neighbour's legal rights is small;
• the injury is capable of being measured in money terms;
• the injury can be adequately compensated by a 'small' money payment; or
• it would be oppressive to the developer to grant an injunction.

Developers (and their advisers) who had no doubt hoped that the Court of Appeal would take the opportunity of clarifying this difficult area of law, are now likely to be faced with ever more difficult negotiations with adjoining landowners who, using the threat of injunctive relief, may seek higher compensation before agreeing to release right of light.

Developers and their advisers will no doubt ensure that rights of light are analysed on all new projects and are resolved at an early stage. Establishing an early dialogue with affected neighbours with a view to settling claims seems to be essential, unless affected rights can be dealt with by way of a suitable title insurance policy or the development can be designed in a manner which will not lead to actionable interference with rights of light.

Demolition

Following the landmark ruling in SAVE Britain's Heritage v Secretary of State for Communities and Local Government [2011] EWCA Civ 34, demolition works now constitute 'development' and will require express planning permission unless they are both (a) permitted development and (b) not environmentally significant.

Finding in favour of the applicant, the Court of Appeal made two significant determinations:

• the exemption of demolition works from the definition of 'development' under the Town and Country Planning (Demolition '“ Description of Buildings) Direction 1995 was unlawful; and
• demolition can potentially be a 'project' for the purposes of the EIA Directive (as transposed by the EIA Regulations 1999).

As a consequence of this decision, demolition works now constitute development (i.e. they will require planning permission). Demolition works benefit from PD rights under part 31 of the General Permitted Development Order 1995. Therefore, the demolition of listed buildings, buildings in a conservation area, scheduled monuments and buildings that are not dwelling houses or adjoining dwelling houses will all activate the somewhat cumbersome prior notice procedures set out in part 31. Under this part, prior application must be made to the local planning authority before any relevant demolition works can be undertaken.

The purpose of the application is to enable the authority to require prior approval of the method of any proposed demolition.

In addition, developers will also now need to consider the environmental impact of any demolition works. If the proposed works are considered by the LPA to have an environmental impact significant enough to require an environmental impact assessment, the works will cease to be permitted development and will instead require formal environmental assessment and a grant of full planning permission (this is because EIA development cannot benefit from PD rights).

In relation to existing permissions, developers will need to review any unimplemented permissions to check that demolition works are expressly included in the grant. If not, steps will need to be taken to obtain prior approval for demolition from the local planning authority in relation to demolition works that have not yet been commenced and which are likely to have significant environmental effect. For developers already on site, it is likely to be too late to comply with these new requirements. The government is currently considering its position in light of this case.