In June 2022, there were updates to the EPC calculation methodology, that are typically seeing worsening of EPCs that use gas and do not comply with the latest building regulations. Typically, non-domestic properties of this type have experienced a 1-grade drop.
Landlord building implications
Was your EPC lodged prior to June 2022? Does your property use gas?
If your property falls into both of the above categories, your current EPC was calculated using the old methodology, at renewal of EPC, you may be at risk of a worse EPC score or rating, even if you have completed improvement works. Depending on the property, a worse EPC may negatively impact:
Tenancy contracts/green lease clauses
Existing funding or investment agreements (if clauses are linked to the EPC rating)
Current Minimum Energy Efficiency Standards, if you are currently close to a D or E rating.
To understand the potential implications to your EPC, it may be time to commission a new EPC assessment (this does not necessarily need to be lodged if your current EPC is still valid), to enable accurate forward planning if issues arise.
Landlord lease implications – new leases and tenant alterations
It is now commonplace for commercial tenants to be under an obligation for their alterations to not negatively impact the EPC rating. The concern for tenants arises where works have been carried out since the EPC was initially lodged (prior to June 2022). Upon completion of the works (if these works necessitate a new EPC), there is a significant risk that the overall EPC rating could come down. Tenants may face challenges proving that the completed works are not the cause of the downgraded EPC rating, which could complicate their position.
Actions going forward – mutual benefit/clarity
To provide clarity for both landlords and tenants on the current position of the building where:
The EPC was lodged prior to June 2022
Gas is used at the property.
Consider commissioning a new EPC assessment (as previously mentioned this does not necessarily need to be lodged if your current EPC is still valid). This can then be used to evidence a correct baseline which ensures clarity for both a landlord and tenant on the EPC rating of the property (allowing the tenant to accurately assess the impact of any alterations they may be planning) and gives the landlord an ability to plan what future investment will be required to ensure they continue to have a good and marketable asset well into the future.
Record number of shortlistings at the STEP Private Client Awards 2024/25: Forsters’ named finalists in six categories
24 June 2024
News
Forsters’ Private Wealth team has been shortlisted in the most number of categories of any firm, with six nominations in the STEP Private Client Awards 2024/25:
Private Client Legal Team of the Year (large firm)
International Legal Team of the Year (large firm)
Family Business Advisory Practice of the Year
Employer of the Year
Digital Assets Practice of the Year
Trusted Advisor of the Year, Nicholas Jacob TEP
The STEP Private Client Awards are seen as the hallmark of quality within the private client sector, recognising and celebrating excellence among private client professionals. Attracting entries from across the globe, submissions are judged rigorously by a top tier of independent panel of experts comprising of internationally renowned practitioners in the wealth management arena. Finalists are recognised for a wide range of capabilities including their; ability to demonstrate their capacity to undertake complex and demanding client issues; world-class innovation and commitment to the industry.
Forsters’ six nominations demonstrates the breadth of specialisms that the team advise our private clients on and showcases the strength of the trusted relationships that we build with both our clients and our intermediary network.
The news follows our continued success at the annual STEP awards, where Forsters have been named winners in at least one category since 2018 and most recently won three awards at the ceremony last year.
The winners will be announced at the Awards Ceremony on 19 September 2024. The full shortlist can be found here.
Setting up and running your own business is an amazing achievement. It requires vision, creativity, motivation and stamina. On occasion, it can even bring you fame, riches and fortune. But it can also result in reams of paperwork and cause sleepless nights. And as someone once said to me about children “It doesn’t get easier, it just changes”, so the same can be said for your business throughout its lifecycle. From setting up to exit, it will force you to consider issues that you might not previously have known anything about and it will need you to make many decisions, sometimes very quickly. What it certainly is not is mundane.
With this in mind, the corporate team at Forsters, together with some of our specialist colleagues, has written a series of articles about the various issues and some of the key points that it may help you to know about at each stage of a business’s life. Not all of these will be relevant to you or your business endeavours, but we hope that you will find at least some of these guides interesting and useful, whether you just have the glimmer of an idea, are a start-up, a well-established enterprise or are considering your exit options. Do feel free to drop us a line or pick up the phone if you would like to discuss any of the issues raised further.
We’ve already discussed various topics, such as, set up, directors, funding, employment and shareholder-related matters, but now let’s concentrate on Commercial Contracts.
Endeavours clauses
An endeavours clause is a provision in a contract that requires a party to use a certain level of effort to try and achieve a specified result. These clauses are commonly used when a party is willing to attempt to fulfil an obligation without committing to do so absolutely. There are several “levels” of endeavours clauses, each of which require different amounts of effort, such that it can be unclear as to how far a party must go to try and meet the obligation.
Failure to fulfil an enforceable endeavours clause constitutes a breach of contract, which can have various repercussions, including your being liable to pay damages to the other party and termination. As such, it is crucial that you have a clear understanding of the scope of any endeavours clause before agreeing to it.
Levels of endeavours clauses
There are three “standard” endeavours clauses (“best endeavours”, “reasonable endeavours” and “all reasonable endeavours”). For two of these, case law has resulted in a fairly clear understanding of what will be required from the endeavouring party (the obligor). Accordingly, the extent of a party’s obligations will depend on the agreed wording of the clause.
Best endeavours
A best endeavours clause (for example, “The Company shall use best endeavours to deliver the Goods to the Buyer within the timescales set out in clause 9”) imposes the most onerous standard on the obligor.
Whilst not an absolute obligation, the starting point is that a best endeavours clause “means what the words say; they do not mean second-best endeavours” (Sheffield District Railway Co v Great Central Railway Co).
Essentially, the obligor must put itself in the shoes of the person to whom the obligation is owed (the obligee). Therefore, by agreeing to a best endeavours clause you commit to doing everything possible to achieve the desired result, even if it means sacrificing your own commercial interests and incurring significant costs. For example, in a case between Jet2.com and Blackpool Airport, the Court of Appeal held that the airport was obliged to open outside of its usual operating hours to accommodate Jet2’s flight times. By agreeing to use best endeavours to promote the budget airline’s flights, the airport had inadvertently agreed to open during night-time hours, regardless of the inconvenience and financial cost involved.
If you are the obligor, we recommend that you take legal advice before agreeing to use “best endeavours” but, at the very least, you should think extremely carefully about the steps that such a clause will require you to take (and the cost and practicalities of these).
Reasonable endeavours
“Reasonable endeavours” (for example, “The Purchaser shall use reasonable endeavours to obtain the necessary approvals, consents and licences by 20 April 2024”) is the least burdensome of the three standard clauses, but even so, it should not be agreed to lightly.
Case law has determined that the standard imposed by a requirement to use “reasonable endeavours” is a question of “what would a reasonable and prudent person acting properly in their own commercial interest… have done to try” to achieve the objective (Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd). This implies an objective approach based on the reasonable obligor, not the obligee as is the case for “best endeavours”.
The courts have considered the obligations behind a “reasonable endeavours” clause in minute detail. Crucially, the obligor is not typically required to sacrifice its own commercial interests and may be entitled to consider the impact on its profitability. In addition, the likelihood of achieving the desired result should be considered and once the obligor has taken all reasonable steps to achieve the objective, it is not required to continue trying.
Although less demanding than a “best endeavours” clause, this obligation is still significant and will form an enforceable commitment that may be challenging to meet. In particular, any attempt to manipulate circumstances to avoid fulfilling the obligation will likely constitute a breach.
All reasonable endeavours
The third commonly used endeavours clause is “all reasonable endeavours” (for example, “The Contractor shall use all reasonable endeavours to complete the Project by the Long Stop Date”). Whilst such clauses are commonly seen as a compromise between best and reasonable endeavours, this is not necessarily the case, and their meaning is controversial.
The courts have indicated, without deciding the point, that it is “probably a middle position somewhere between” reasonable endeavours and best endeavours. However, it has also been suggested that in meeting an all reasonable endeavours obligation, an obligor would be required to take all reasonable courses of action, thereby sacrificing its own commercial interests to comply with the obligation.
The current stance is that a court will interpret it based on the context of the contract and the parties involved. This obviously results in uncertainty as to what an obligor will actually be required to do in practice to comply with such a clause. As such, obligors should be cautious when agreeing to an all reasonable endeavours clause; it would be prudent to consider such a clause to be equally as burdensome as a best endeavours clause and to take legal advice before agreeing to such wording.
Alternative options
Over time, variations of the three most commonly used endeavours clauses have come into being. You may see phrases such as “commercially reasonable endeavours” and “all reasonable but commercially prudent endeavours”, which are used to try and soften a reasonable endeavours obligation. However, case law on these terms is inconclusive, making it unclear how the courts might differentiate between them. Consequently, including such clauses in a contract is risky and may result in uncertainty regarding the parties’ obligations. As such, it is advisable to avoid using these variations.
It is also relatively common to see terms such as “best efforts” instead of “best endeavours” and “all reasonable steps” instead of “all reasonable endeavours”. Although the courts are likely to treat these as interchangeable phrases, we suggest sticking to the tried and tested “endeavours” wording.
Practical takeaways
Ideally, any endeavours clause should clearly outline the steps a party must take to fulfil its obligations. For example, if one party needs to spend money to achieve the result, the contract should specify this and include the maximum amount to be spent. Similarly, if a party is required to speak to certain people within a set timeframe, the contract should list who these people are, what needs to be discussed and include a deadline for the discussions
Draft any endeavours clauses very carefully and seek legal advice if you are unsure about the requirements and the extent of your obligations. Failing to meet an endeavours clause may result in your being in breach of contract
Limit yourself to “reasonable endeavours” or “best endeavours”. Avoid using vague or diluted language as it can create uncertainty and, if the matter goes to court, you might discover that your obligations are more burdensome than you had anticipated
If you are the obligor, maintain an accurate record of the steps taken towards satisfying your obligations. Such evidence could be extremely helpful to you if a dispute arises
Disclaimer
This note reflects the law as at 14 June 2024. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
The Index recognises the top family lawyers for high net worth clients in the UK, ranking individuals that have the ability to combine expert legal knowledge with an emotional understanding of a client’s situation to produce the best results.
Forsters boosts Dispute Resolution with appointment of Steven Richards
11 June 2024
News
Disputes Partner Steven Richards joins Forsters from Foot Anstey to add specialist fraud and contentious insolvency expertise to the firm’s full-service Dispute Resolution practice.
Forsters, the leading London law firm, announces today that Steven Richards is to join the firm on 11 June 2024. Steven has over two decades of experience advising on a wide range of commercial litigation and contentious insolvency matters. He joins Forsters from Foot Anstey where he led the dispute resolution practice for several years before heading up the firm’s fraud team. Prior to that Steven trained and practised at Jones Day (formerly Gouldens).
Steven’s appointment marks a period of continued growth for Forsters following the recent arrival of highly ranked and market recognised Employment Partner Jo Keddie and her team from Winckworth Sherwood. The firm, which celebrated its 25th anniversary in 2024, moved to new premises in Baker Street in January this year.
Steven has extensive commercial litigation experience and has a strong track record of acting on big ticket, complex disputes and achieving successful outcomes for a range of both domestic and international clients. He advises high net worth individuals, private companies, insolvency practitioners and financial services organisations on a wide range of disputes and has a particular expertise in civil claims involving allegations of dishonesty and fraudulent conduct. He also has significant experience in dealing with corporate disputes, banking and finance litigation, professional negligence, contentious insolvency, insurance claims, business critical issues and injunctive relief.
The addition of Steven Richards to Forsters’ Disputes Resolution practice will boost its already thriving general commercial litigation capability, while adding specialist contentious and insolvency expertise.
Benedict Walton, Head of Commercial Dispute Resolution at Forsters, said: “Clients turn to our disputes practice for the most complex commercial claims. Steven’s addition to the team adds significant bench strength in the important areas of fraud and contentious insolvency. I’ve known Steve for many years and he brings a fantastic track record of high profile litigation experience, successful practice building and a progressive and collaborative working approach, all of which will be highly beneficial as the team continues to strengthen and grow.”
Steven Richards said: “I am really excited to join Forsters at a time when the firm is growing and going from strength to strength. Forsters’ diverse client base and culture feels like a natural fit for me and my practice. The firm is the right place from which to serve my clients who will have access to market leading contentious expertise from the wider practice which, in turn, will help them navigate their most complex business challenges.”
Natasha Rees, Senior Partner of Forsters, commented: “Forsters is enjoying a period of strong momentum as a business and so we are really pleased to welcome Steven Richards to the partnership. He will be an excellent addition to the Disputes practice and of instant benefit and value to clients across the firm.”
Helen Streeton featured in PERE’s ‘on the minds of the experts’
3 June 2024
Views
The residential sector remains attractive, with strong supply and demand dynamics across markets, but it is not without its challenges. PERE looks to the experts to answer questions on the residential sector and Helen Streeton, Partner and head of our BTR sector, shares her thoughts as one of the industry leaders.
Question: What is the current appetite for residential property investing and how has that changed in recent years?
Helen shares “Investments into BTR continues despite economic headwinds as demand outstrips supply. In 2023, the BTR market saw £4.5 billion invested. Housebuilders continue to face challenging conditions, meaning that investment is greatly needed to tackle the UK’s housing shortage.”
Forsters’ Asia team win ‘Estate Planning Team of the Year’ for Greater China at the WealthBriefingAsia Awards 2024
3 June 2024
News
Named ‘Estate Planning Team of the Year’ (Greater China) at the 2024 Wealth Briefing Asia Awards, Forsters Private Wealth Asia team were recognised for their unique approach to advising HNW individuals and families, trustees and family offices in the region on international cross-border estate and succession planning.
The annual WealthBriefingAsia Awards programme recognises the most innovative and exceptional firms, teams and individuals. The awards have been designed to showcase outstanding organisations, deemed to have ‘demonstrated innovation and excellence during the last year’.
The award winners were announced at the ceremony on 30 May 2024 in Singapore.
Forsters’ dedicated Private Wealth Asia team
With an established track record in Greater China, including Hong Kong and the wider Asia region stretching back 33 years, Forsters’ Private Wealth Asia team are renowned for their expertise in estate and succession planning with a cross-border focus.
Taking a unique approach to estate planning particularly in the context of family governance for multigenerational business families; the team make it a priority to understand the psychology of the families they advise and marry this with the practical and commercial aspects to preserving family wealth and mitigating the risk of family disputes.
Only after taking the time to get to know the family, and understand their dynamics and needs, do the team create the bespoke structures that help establish family harmony and ensure the successful transition of wealth from one generation to the next. Many clients have built international businesses with assets and family members based across the world; lending added complexity to their planning needs.
The award showcases Forsters’ continued commitment to serving families in Asia and follows the team’s recent promotion of Alfred Liu to Partner. Nick Jacob and Daniel Ugur are also two of only three lawyers recognised in the Chambers HNW Guide as foreign experts for Singapore. This team, which also includes Private Client Global Elite Rising Leader, Patricia Boon, travel to the region monthly to advise clients and have cultivated strong relationships with many private wealth advisors based there.
The Private Wealth Asia team is part of Forsters’ Asia group advising clients based in the region on a wide range of services including:
Estate & Succession Planning
Family Governance
UK Tax
Trusts Structuring
UK Residential & Commercial Property
Matrimonial & Divorce
Contentious Trusts & Estates.
Please do get in touch with any of the team, to find out more about our Asia services.
