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Tuesday, 31 January 2012

Flood Defence Deficit Could Sink Economy

This is the stark warning from the British Property Federation (BPF), which has added its support to the findings of a damning report from the Public Accounts Committee of MPs (PAC) into the state of the nation’s flood defences.

The PAC has slated the Department for Environment, Food and Rural Affairs (DEFRA), saying that it “had not yet adjusted its long-term investment strategy and could not tell us what the scale of the long-term funding gap would be” in the face of budget reductions, and it “did not accept ultimate responsibility for managing the risk of floods”.

The PAC also said it was very concerned that DEFRA did not accept ultimate responsibility for managing the risk of floods and that that there is no clarity about where the buck stops.

There is currently a pact between DEFRA and the insurance industry, known as the Statement of Principles, which guarantees cover to businesses and households at risk of flooding.

The pact obliges insurers to provide cover for high-risk properties while the government continues to improve flood defences – but the pact ends in 2013.

According to this report from the BBC, the Association of British Insurers (ABI) says up to 200,000 homes will face insurance problems.

The ABI wants the government to share the risk for the most vulnerable properties.

The government wants to see more funding come from local residents and businesses - including landlords.

The BPF says that whilst it broadly supports proposals to increase the amount of investment in flood defences beyond that supplied by the state, it does not believe sums the government are seeking from private contributions are realistic.

The BPF is sceptical that households and businesses would be able to make up the shortfall caused by government spending cuts, and warns the proposed system would not provide sufficient certainty to property investors – and insurers – that the risk of flooding was being managed.

Ian Fletcher, director of policy at the BPF says:

“A lot of focus is on householders, but the impact of flooding on businesses can have significant consequences, which spread into the wider economy and cause damage beyond the immediately flooded area. The UK has a great tradition of universal insurance cover, which is predicated on sufficient investment going into flood defences. We shall rue the day if that is lost.”

What are the risks for commercial property, beyond the obvious physical consequences of inundation?

If the pact is not renewed, some insurers may elect not to cover flood-prone properties. Others might continue to do so, but only in return for a much higher premium.

A property without flood risk cover might become unmortgageable since lenders normally insist on comprehensive cover.

Landlords need to review the leases in their portfolios; they might be held responsible for reinstating flood damage even if it is no longer an “insured risk” if the lease doesn’t contain a suitable exclusion.

On the other side of the coin, if the landlord is no longer responsible, the burden might fall on the tenant.

Having reviewed several large portfolios with SIAM LLP, who specialise in this area, I know from experience that many leases may have been drafted and negotiated without, in hindsight, sufficient thought being given to this important matter.

There’s Too Much Confusion – I Can’t Get No Relief

The second line of Dylan’s much-covered All Along the Watchtower may not have been inspired by landlord and tenant law, but it serves as a good accompaniment to a recent case on forfeiture of a commercial lease.

Most commercial leases give the landlord the right to forfeit (take back) the lease from the tenant if it doesn’t comply with its terms.

The right will usually be set out in the lease and normally arises if the tenant fails to pay the rent, breaches a covenant or (unless the lease is to be used as security for a mortgage) becomes insolvent.

The landlord can forfeit the lease by peaceably re-entering” the premises and changing the locks; or by issuing proceedings for forfeiture, usually in the County Court.

Forfeiture however can be something of a pyrrhic victory for a landlord in a recession; after all, getting back empty premises is not much use if there’s no one else out there to take them on instead. It might just result in the landlord being left with an empty rates liability.

Equally, a tenant might welcome forfeiture and consider itself well rid of the lease burden.

But what if the tenant wants to stay?

Tenants are usually able to apply to the court for relief from forfeiture if they are able to show they can comply with the lease obligations. If the tenant succeeds, it gets the lease back, although it will usually have to pay the landlord’s legal costs.

What if the landlord, especially if there’s no one else on the horizon, is persuaded it should allow the tenant to stay?

Can the landlord itself grant relief?

Not if it wants the old lease back.

In Zestcrest Limited –v- County Hall Green Ventures Limited (reported in the Estates Gazette for 17th December 2011) the County Court confirmed that a private deal done after forfeiture has taken place without going back to the court is treated as a new lease. 

What’s wrong with that?

Well, unfortunately it can have some unwelcome knock-on effects for you as a landlord.

For example, if the lease that has just been forfeited was excluded from the security of tenure provisions of the Landlord and Tenant Act 1954 (1954 Act) (which otherwise gives business tenants rights to renew their lease at the end of the term), the implied new lease would not be.

Avid readers of Digging the Dirt may recall this is similar to the situation where a tenant serves a break notice, then changes its mind and decides to stay with the landlord’s blessing – in which case the law implies a new lease has come into effect.

For more about the dangers of unintended consequences when new leases are implied in circumstances like these, see my post of a year ago – Lease Break Clauses: What If You Change Your Mind?

So, even if both parties decide to set the forfeiture aside, there has to be an application by consent to the court for relief.

Once the court makes the order, the lease is treated as though it had never been forfeited in the first place and it carries on as before – so if it was excluded from the 1954 Act, for example, it stays excluded.

As it happens, in the Zestcrest case, the tenant did make an application to the court for relief (because the landlord insisted) but then said that it was unreasonable to have been forced to do so by the landlord and that the landlord should reimburse the tenant’s costs. 

The tenant failed with that argument and the court said it was essential for the landlord, in view of the fact that the original lease had been excluded from the 1954 Act, to have formal relief from forfeiture.

Now, there must be some way out of here...

Sunday, 29 January 2012

Head Space: Richard Rogers’ Vision for Cities and the NPPF

There's an interesting piece by Charlotte Higgins in the Guardian this weekend on the architect Richard Rogers and his partners, Graham Stirk and Ivan Harbour.

The celebrated architect of the Pompidou Centre in Paris and the Lloyd’s of London building is still passionate about his work and the potential for architecture – public space held by buildings – and championing high-density cities; brownfield development over greenfield.

Rogers has also been speaking in the Lords about the draft National Planning Policy Framework (NPPF).

Higgins reports:

“He agrees that the planning laws are due for rationalisation. But he fears the proposed reforms will loosen planning regulations too much: we could end up "like the south of France or the southern coast of Spain, with the whole south-east peppered with buildings". He agrees with the National Trust's campaign against the reforms, but from the other end of the argument – their potential effect on cities and towns, rather than just on the countryside. Cities that sprawl lose energy, he says. It's not so long ago, he warns, that post-industrial city centres, such as Manchester's, were bleak places, more or less uninhabited. Drawing residents back to the heart of cities has made them more attractive, safer, livelier.”

Can architecture alone save the inner city?

Some cities, like Paris, have managed to retain more residential dwellings at their core (admittedly old rather than new – they weren’t bombed), but in truth they are now largely the preserve of the wealthy; with the poor banished to dystopian ring-road suburbia.

Does a similar fate await London?

Rogers’ ideas sound noble in the abstract; but what is the vision behind a £140m penthouse apartment in Knightsbidge?

Will the future shape of inner city living be determined by architects and planners; or by spiralling prices and rents (and cuts to housing welfare)?

We need to draw residents back to the heart of cities, but also to find a way of making the club less exclusive.

Photo by stevecadman via flickr

Friday, 27 January 2012

Phoenix from the Flames – Pre-Pack Administrations Live On

The government has scrapped plans to reform the controversial practice of “pre-pack” administrations, causing fury with landlords.

Administration has become the predominant process for dealing with insolvent companies where there is a prospect of keeping the business of the company alive.

“Pre-pack” administrations are a fast-track insolvency procedure that avoids a failing business being sold on the open market; instead the sale of the company’s assets is set up by an insolvency practitioner before the company goes into administration and is then completed immediately after the start of the administration.

It’s become a practice frequently adopted by failing retail organisations.

Recent examples of pre-packs are Bonmarche, Peacocks and Blacks Leisure.

Pre-pack sales to connected parties, such as company directors, can be done at great speed and presented to creditors as a fait accompli. 

This is similar in effect to the outlawed practice of creating so-called “phoenix companies”; which used to involve liquidating a failed company, with the same business re-emerging immediately afterwards as a new company without the debts of the old one.

Some landlords, as major creditors, have been losing out as the new organisations created out of pre-packs pick and choose which stores to continue trading from.

The British Property Federation (BPF) has criticised the scrapping of reforms first suggested 18 months ago by Business Innovations & Skills minister, Ed Davey, which would have required insolvency practitioners to notify creditors in advance of a pre-pack and allow them three days to scrutinise the proposals to ensure they represented the best deal for creditors, and to give them time object if they wish. 

The BPF had in fact argued that three days would be insufficient and wanted a longer notice period, but now will get nothing because yesterday, reports the Telegraph, Ed Davey said the reform would not go ahead at all, saying the government is not convinced the benefit of a change in regulations "outweighs the overall benefit to business of adhering to the moratorium on regulations affecting micro-business", which the BPF say the government has known about all along.

The Telegraph reports that the Association of British Insurers has also criticised pre-packs extensively. It claimed in a submission to Parliament that they are being actively marketed by insolvency advisers as a way of dumping debt and casting off troublesome creditors.

Other criticisms of pre-packs include:

·         Lack of transparency – unsecured creditors often don’t know what’s about to happen.
·         Lack of accountability – no approval of the court or creditors is required.
·         The return for creditors may not be maximised because there is limited marketing of the business compared with an open market disposal.
·         It’s a short term fix which may not necessarily subject the company to the restructuring it needs to survive long term.

There are two sides to this story though.

Landlords may not like this but there are pragmatic reasons why pre-packs often represent the best outcome going in today’s tough world, whatever you may think about moral hazard.

Benefits of pre-packs include:

·         They are quick and the lower costs may result in better returns for creditors.
·         Minimum erosion of supplier, customer and employee confidence, which in a “people” business like retail is vital.
·         The opportunity to save jobs – clearly of paramount importance.
·         It might be the only realistic alternative to liquidation, which would benefit no one.
·         Unsecured creditors probably wouldn’t have got anything anyway.

Landlords also need to bear in mind that if a company is liquidated, the liquidator can disclaim the lease and walk away, leaving the landlord with nothing but a looming empty rates liability.

It’s a thorny issue morally though; and if you are one of the landlords that loses out it will seem very unfair.

Accountancy Age says the regulator of the profession, the Insolvency Service, is going to review existing pre-pack legislation to see how more confidence and transparency could be injected into the process.

The phoenix may yet have its wings clipped.

Photo by Velo Steve via flickr

Wednesday, 25 January 2012

Solar Saga – On It Goes as Government Loses FITs Appeal

The Court of Appeal has today ruled against the government's proposed reference date of 12 December for FIT cuts.

The proceedings were referred to in my post last week Solar Update – Feed-In Tariffs and here’s more from the BBC.

Under the government's contingency plan, the current tariff of 43p will remain until the end of March, following which it will be halved.

However, Energy and Climate Change secretary, Chris Huhne has announced that the government is considering appealing the latest decision to the Supreme Court, and if it were to be successful the reference date for the FIT cut would revert to 12 December 2011.

A DECC spokesperson said:

"The Court of Appeal has upheld the High Court ruling on FITs. We are now considering our options."

The Guardian reports that DECC's legal fees have cost taxpayers £58,000 so far, though this does not include the costs of their opponents, which the Court of Appeal said DECC must also pay.

DECC has 28 days to lodge an application for permission to appeal to the Supreme Court.

The government says there are "no guarantees" on any tariffs offered to consumers after 12 December.

There is also uncertainty about the sustainability of the reduced rate - as a rush of installations now may use up the scheme's remaining budget.


26/1/12 UPDATE

Chris Huhne has issued a ministerial statement which includes confirmation that the government is seeking permission to appeal to the Supreme Court. He says:

"The reason for appealing is that we want to maximise the number of installations that are possible within the available budget for FITs, rather than use available money to pay a higher tariff to half the number of installations."
In an attempt to deal with uncertainty, the government intends to publish the phase 2 consultation by 9 February. Follow the link for more information.

The BPF comments:

"... it is disappointing that the implementation of cuts to solar FITs at very short notice and without meaningful consultation has created so much confusion."
This is, unfortunately, a mess.

Tuesday, 24 January 2012

Tenants in Distress & Reforming the Law on Bailiffs

Last June – in my post Sending Out an SOS – I asked what ever happened to reform of the law of distress?

New proposals recently announced by the Ministry of Justice (MOJ) have thrown more doubt on the subject.

You can read about distress in my 2011 post, but briefly a landlord of commercial premises has right to levy distress (or “distrain”) for unpaid rent as soon as it becomes overdue.

It’s a self-help remedy allowing the landlord (or more likely a certificated bailiff acting on its behalf) to enter the premises and seize the tenant’s goods without any legal process whatsoever, provided some  basic conditions are satisfied, and retain them until the rent arrears are paid or the seized goods are sold to off-set the rent arrears. Even the bailiff’s statutory fees are payable by the tenant.

The only redress a tenant has is to bring an action within 5 days (which can be extended to 15 days) - an obscure remedy called replevin - to recover goods that have been illegally seized.

(By the way, those paying close attention at the start of the Jeff Bridges’ version of True Grit will have heard replevin referred to in a crucial piece of plot development, so now you know what they were on about, if you didn’t already!)

The previous government wanted to replace the law of distress and created a new procedure called ‘Commercial Rent Arrears Recovery’ (CRAR), enshrined in Part 3 of the Tribunals Courts and Enforcement Act 2007 (TCEA), which received Royal Assent on 19 July 2007.

But, nearly 5 years later, the relevant part of TCEA has still not been brought into force.

CRAR would still allow a landlord to enter and seize goods, but only by following a tighter procedure and only to recover for “pure” rent arrears, not arrears of other payments, such as service charge.

Under CRAR, a landlord must first serve an enforcement notice on the defaulting tenant – crucially removing the element of surprise. Following the expiry of a notice period, only an enforcement agent can then enter the premises to remove goods. CRAR would only be available where a minimum amount of rent remains unpaid.

Statutory regulations are needed to set out the details of CRAR, such as the minimum level of arrears, the form of notice and the required notice period, but those regulations have never been drafted.

There had been some indications that the government was going to implement CRAR in April, but that now seems unlikely.

Instead, on Friday 13 January 2012, the MOJ announced a proposal to create a new legally binding regulatory regime for bailiffs.

There will be a consultation in the spring, “with a view to the proposals becoming law as soon as possible”.

The MOJ’s proposals overlap with some of the principles enshrined in CRAR. 

For example, they both seek to regulate what goods can be seized, the manner in which they can be seized and the use of reasonable force. 

But there’s no indication in the MOJ announcement of whether any notice requirements will apply, and no mention at all of CRAR.

The new regime seems to be about controlling how bailiffs act, rather than the legal basis on which they are entitled to act.

This is a live issue because landlords are using distress more and more, especially against struggling retail tenants.

It’s a popular remedy for landlords.

There may be goods on the premises which have a significant value, enabling the landlord to make good all or most of the arrears quickly, without forfeiting the lease and so avoiding, or putting off, being left with empty premises and ultimately a rates liability.

Landlords are concerned that CRAR, especially the need to give the tenant prior notice, would reduce the effectiveness of distress as a remedy.

In a civilised society, however, this needs to be set against the fact that this ancient common law remedy, by allowing the landlord to be judge, jury and executioner all in one, does not sit well with the conventions enshrined in the Human Rights Act or principles of procedural fairness – it was abolished long ago for residential property.

Although as I said last year, there does not seem to be any strong lobbying from tenants’ organisations for reform.

The MOJ announcement of the new regulatory regime comes at the end of its press release which was mainly about the publication of updated National Standards for Enforcement Agents.

This is only a voluntary code, however.

It outlines the minimum standards of behaviour expected of bailiffs. They include prohibiting the use of unlawful force to gain access and a duty of confidentiality concerning the debt, and other standards of operation which apply particularly in a residential context, where bailiffs operate on matters not related to distress.

What are we to make of the fact that the MOJ announcement makes no mention of CRAR?

Will there ever be any formal announcement on the future of CRAR? [Yes! See below].

Meanwhile, if you want more guidance on bailiffs, either as a debtor or a creditor, the information available on DirectGov has been updated.

Update 17 February 2012

The MOJ today announced the legal regulation of bailiffs. Follow the link to the MOJ's press release.

In short, the MOJ has launched a consultation which sets out how ethical activity should be enshrined in law so bailiffs can continue to enforce the payment of debts and fines. 

The consultation has also confirmed the government's intention to abolish distress for rent and replace it with CRAR. So the days of distress might be numbered after all.

Landlords remain concerned that CRAR (particularly the requirement to give the debtor notice prior to taking control of goods) would impede the effective recovery of rent arrears. This is one of several areas on which views are now sought.

There has been quite a lot of comment in the media. Here, for example, is a report from the BBC


The consultation closes on 14 May 2012.

Friday, 20 January 2012

SOPA Opera...or Falling off a Blog

Wednesday was a black day for Wikipedia; literally as it shut down in protest over the Stop Online Piracy Act SOPA and Protect Intellectual Property Act PIPA, the controversial anti-piracy legislation being considered by the US Congress.

Good news for advocates of the dusty old Dewey Decimal system; bad news for anyone wanting easy access to a free (mostly) accurate web-based encyclopaedia.

What might these new laws, if enacted, mean for blogging?

The proposed US bills are designed to tackle online piracy, with particular emphasis on illegal copies of films and other forms of media hosted on foreign servers.

Content owners and the US government would be given the power to request court orders to shut down sites associated with piracy.

Advertisers, payment processors and internet service providers would be forbidden from doing business with infringers based overseas.

SOPA also requires search engines to remove foreign infringing sites from their results.

What’s more, the bills propose that anyone found guilty of streaming copyrighted content without permission 10 or more times within six months should face up to five years in jail.

There’s more on the proposals here from the BBC.

I can understand why commercial organisations might want to clamp down on copyright infringement (which is illegal anyway).

But the proposals seem a tad draconian, to say the least.

This from the Guardian:

“There would be an onus on search engines, ISPs and suppliers of the wider web infrastructure to block not merely individual pages that trespass on intellectual property, but entire sites which may (even unwittingly) play host to such transgressions. Websites, blogs, even community chatrooms, could be sued to destruction for linking to anything which turns out to involve "piracy"...The proposed restrictions on the freedom to link are central, for hyperlinks are the very warp and weft of the web.”


“The proposed law that would result from Sopa and Pipa will only work if you are put under 24-hour digital surveillance.”

The result, he argues, would be the blackout of your domain from search engines; in effect, invisibility.

Linking to other websites would become a game of risk.


“The scary bit of legalese here is the idea that the law would apply not just to actual copyright violations (the nominal goal of the law) but to any site that was "facilitating the activities" of copyright infringement, a term nowhere defined but vague enough to include mentioning the existence of such sites, which is enough to make them findable. Like a fast-spreading virus, the proposed censorship moves outwards from the domain name system, to include any source of public web content in the US.”

“Any source of public web content” would include blogs.

It may be that this is targeting commercial exploitation of other people’s property, rather than simply the dissemination of free information.

But it’s not at all clear where this might end.

Will protection of copyright lead to an attack on free web-based publishing?

Ian Hislop, editor of Private Eye, a magazine I’ve enjoyed for decades, gave a fascinating and entertainting testimony this week at the Leveson enquiry

However, one of the things he mentioned was what he sees as the dangerous culture of free – in other words getting something for nothing on the internet (the Eye has only a rudimentary website).

Although I understand what he means by needing to support professional journalism, it disappointed me in a way that the editor of a magazine that started out (and continues) as a low budget anti-establishment organ printed on cheap paper should now be railing against things published on the internet as being “just stuff” and saying that “credence and imprimatur” are only accorded to material printed on, his words, “dead wood” (paper).

The same dead wood published by those Hislop, quite rightly, likes to mock and deride?

You never know, if the internet had been around in the ‘60’s, Lord Gnome might even have launched a blog instead of a printed journal.

Is SOPA the beginning of the end of the new frontier or a storm in a teacup?

I don’t know, frankly. The last time I paid close attention to the law of intellectual property (as opposed to the stupid type built out of bricks that no one wants any more) people were still buying their music on funny black frisbee-like objects that broke easily but had nice sleeves for rolling...erm...cigarettes on.

According to the BBC SOPA's supporters are trying to reach consensus on the bill before putting it to a vote in the House of Representatives, which suggests that any vote may be some way off.

Nevertheless, having rashly linked in this post to sites run by wikipedia, the US Government, the Guardian, Private Eye and the Leveson enquiry, maybe I should be preparing to run for the hills.

UPDATE

SOPA and PIPA were dropped by Congress shortly after this post. The proposals had simply become too toxic. Will they be revived at some point in future? Possibly, but probably in a different form.

Thursday, 19 January 2012

Solar Update – Feed-in Tariffs

DECC has announced today that it has laid before Parliament proposals to make provision for a reduced tariff rate (from 1 April 2012 onwards) for new solar PV installations with an eligibility date on or after 3 March 2012 under the Feed – in Tariffs scheme (FITs).

DECC is appealing against the court ruling (referred to in this earlier post) that challenged its proposal for a December reference date. 

They are waiting for the judgment of the Court of Appeal.

However, not wanting to wait, DECC has today put in place a contingency that will bring a 21p rate into effect from April for installations put in from 3 March. 

If successful on appeal, DECC retains the option of introducing a December reference date.

The FIT saga still has a long way to go.

DECC intends to announce the outcome of its recent consultation by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012. Its aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation.

UPDATE 25/1/12

The Court of Appeal has ruled against the government's proposed reference date of 12 December for FIT cuts - For more on this see my later post Solar Saga - On it Goes as Government Loses FITs Appeal.

Tuesday, 17 January 2012

Lease Break Clauses: Skating on Thin Ice


Break clauses can leave you skating on thin ice.

Two recent cases from mid-winter once again show the importance of scrutinising the detail of a break clause and scrupulously keeping up to date with payments of rent and interest, if that is what the clause requires.

The first case, from 23 November 2011, is Quirkco Investments Ltd –v- Aspray Transport Ltd [2011] EWHC 3060 (Ch).

The break clause was conditional on there being no arrears of rent and no other outstanding breaches of covenant on the break date, which was 18 December 2010. 

In November 2010 the landlord sent an invoice for the insurance premium for the next year. 

The tenant was required to pay such sums as the landlord may “from time to time expend in insuring”. 

The tenant refused to pay the insurance premium because it covered the period after it was due to vacate under the break clause. 

As it happened, the landlord’s cheque to the insurance broker went missing so the landlord’s broker paid the premium on behalf of the landlord, but before the break date.

The court decided that the landlord could not demand payment for the insurance when it had not yet “expended” the amount itself (the broker had). 

There may be other reasons why the break clause had not been validly exercised (as it required the tenant not to be in material outstanding breach of covenant), but this was not one of them.

The second case, from 19 December 2011, is Avocet Industrial Estates LLP –v- Merol Ltd [2011] EWHC 3422 (Ch).

This time the tenant was not so lucky.

The tenant had a right to break on a certain date. 

The break was conditional on all payments due under the lease being paid. 

During the lease term the tenant had paid its rent by cheque and had often been a bit late with its payments. 

The day before the break date, the tenant gave a cheque to the landlord for six months’ rent and said it had paid all outstanding charges and was not aware of any breach. 

The landlord argued that payment had not been made because it had not received cleared funds. 

The landlord also said there were other payments still outstanding because the tenant had not paid interest that was due under the lease for payments of rent that had been paid late in the past, even though the landlord had not issued any demands for payment of that interest. 

In this case the court decided that because the landlord had consistently agreed to accept cheques as payment for the rent, there was therefore an implied agreement that the landlord would accept payment by cheque of sums due under the lease; so the landlord could not object to receiving a cheque immediately before the break date.

However, it was the matter of the missed interest payments that saw the tenant plunge through the metaphorical thin ice.

The court said the tenant had owed interest because of the late payments of rent. The lease did not qualify the landlord’s entitlement to interest by requiring the landlord to serve a prior demand for it and the tenant would have been able to calculate the interest due without any difficulty. 

The judge acknowledged that this was something of a “trap” for the tenant.

Because the tenant had not paid the interest that was due, even though it had not been demanded, a payment due under the lease had not been paid and so the break clause condition had not been satisfied.

The tenant, as a result, was not able to end its lease and remained in the hook.

The fact that the amount of interest outstanding was only £130 made no difference – which led the judge to conclude:

“However, it was not suggested that the size of the amount allowed one to ignore non-compliance... I consider that the result in this case is a harsh one but, applying legal principle, it is one which I am obliged to reach.”

For more about break clauses generally, here is a link to my other posts last year.

As well as highlighting the point made in previous posts about the need to exercise extreme care when exercising break rights, the Avocet case also demonstrates the need to scrutinise carefully your records of payment to see if any interest payments are due to the landlord.

Friday, 13 January 2012

Tick Tock Goes the Doomsday Clock

According to the Bulletin of the Atomic Scientists the Doomsday Clock has just moved 1 minute closer to zero hour and now stands at 5 minutes to midnight.

The Bulletin of Atomic Scientists dates back to 1945, when it was founded by scientists of the University of Chicago who had helped develop the world’s first atomic weapons.

Having helped create the seeds of our own destruction, they came up the Doomsday Clock in 1947, with midnight representing the apocalypse.

The Doomsday Clock has become a universally recognised indicator of the world's vulnerability to catastrophe from nuclear weapons, climate change, and emerging technologies in the life sciences.

The decision to move the minute hand of the Doomsday Clock is made by the Bulletin's Board of Directors in consultation with its Board of Sponsors, which includes 18 Nobel Laureates.

The latest move follows an international symposium held on 9 January 2012 at, of all places, a law firm – the Washington, D.C. office of Jones Day (which no doubt made a refreshing change from discussing profits per equity partner, perhaps).

What’s depressing is that whereas two years ago it appeared that world leaders might address the truly global threats that we face, in many cases that trend has not continued or has been reversed. For that reason, they’ve moved the clock hand one minute closer to midnight, back to its time in 2007.

The main reasons for this step backwards are:

·         Nuclear disarmament – the Board believes that the path toward a world free of nuclear weapons is not at all clear, and leadership is failing. 

·         Nuclear energy - the Fukushima disaster has raised significant questions that the Board believe must be addressed. 

·         Climate change - the global community may be near a point of no return in efforts to prevent catastrophe from changes in Earth's atmosphere. 

There’s more on all this on the Bulletin’s website.

Other news, the Guardian reported yesterday that the skyscraper boom in China and India may herald economic collapse (probably time for that drink now).

According to a study by Barclays Capital, the mania for skyscrapers over the last 140 years is a sure indicator of an imminent crash.

Apparently, the construction boom that led to the construction of New York's Chrysler and Empire State buildings preceded the New York crash of 1929 and the Great Depression.

More recently, Dubai built a forest of skyscraping offices, hotels and apartment buildings, including the world's tallest, the Burj Khalifa, before it got into terrible financial difficulties. In 2010 Dubai had to be bailed out by its neighbour, Abu Dhabi, to avoid going bankrupt.

Still, the Shard’s coming along nicely.

Happy Friday the 13th!

Photo by Junnn via Flickr