And similarly, the previously announced changes to dividend rates will come into effect from April, 2022 with each rate increasing by 1.25% from that date. So 1.25%. So that basically means the ordinary rate on dividends is going to go up from 7.5% to 8.75%. And the higher rate's going to go up from 32.5% to 33.75%. So those dividend changes come in, in April, 2022.
Other things that the Chancellor mentioned. So some changes to R&D tax relief with qualifying expenditure being expanded to include cloud computing and data costs. And then also from April, 2023, R&D tax reliefs are going to be limited so that they only apply to domestic activities. If R&D relief is of interest to you, then hop onto our website and check out some of the insights from our sister company, Gateley Capitus, who specialize in helping businesses claim that relief.
And then finally, just another thing to mention that there was no announcement about. So there was no decision about introducing an online sales tax, which again is something that the government's been talking a lot about. But the Chancellor has said that there'll be a consultation on that further on in the next year.
So that's it for the budget. Next up, I thought I'd just give you a heads up that the maximum sentences for various criminal market abuse offenses have increased from 7 years to 10 years. So market abuse is things like insider dealing. So that's buying or selling shares in a listed company when you are in possession of sensitive information about that company, which could affect its share price. And then also things like misleading statements. So things like statements about a company, maybe in a prospectus or an information memorandum, which are made with a view to inducing someone, to buy shares in a company, making misleading statements in those kind of documents, again, that can amount to market abuse.
So historically, the maximum sentence for these offenses was 7 years, but that was less than the maximum sentence for fraud, which was 10 years and fraud was kind of considered to be a comparable economic crime. So as a result of that, there were sort of concerns that insider dealing and market manipulation could be perceived as lesser offenses. And then that would increase perhaps the likelihood of market abuse. So as I say, the maximum sentences for those market abuse offenses has now been increased to 10 years to put them on an equal footing with fraud.
So next I wanted to mention a case which highlights the significant financial costs, £77 million in this case, for a company which fails to take adequate procedures to prevent bribery. So the Bribery Act 2010 introduced various different offenses, including both giving and receiving a bribe as well as a specific offense of bribing a public official. And in addition, an organization will be guilty of an offense where an associated person bribes another person with view to obtaining or retaining business for that organization. And an associated person for this purpose is anyone who performs services for or on behalf of the organization. So that could include obviously employees, officers, agents or associated companies.
And that corporate offense is a strict liability offense. So what that means is that the organization will be liable regardless of whether or not it knew about the bribery. And the only defense for an organization is if it can show that it had in place adequate procedures to prevent bribery from taking place. Now there's guidance from the Ministry of Justice, which sets out six principles that organizations should think about when they're designing their own anti-bribery procedures. And they include things like ensuring procedures are proportionate to the bribery risks faced by the particular organization, carrying out appropriate due diligence on all potential associated people, and ensuring anti-bribery policies and procedures are properly embedded throughout the organization. So it's all well and good to have anti-bribery procedures and policies, but you actually have to make sure they are enforced and adhered to throughout the organization. And that it's not just a tick box of, yes, we've got a policy.
So the latest case involved to company called Petrofac Limited, and that was a company which provided oil field services in various locations in the Middle East. And over the course of a four year investigation, the Serious Fraud Office found that between 2011 and 2017, senior executives at Petrofac engaged in what were called elaborate schemes to corrupt the awarding of contracts, using agents to bribe officials to win lucrative contracts out there in the Middle East. And in particular Petrofac's global Head of Sales, a chap called David Lufkin had already pleaded guilty to a total of 14 counts of bribery. So Petrofac cooperated with the SFO's investigation and admitted that it had failed to prevent its senior executives from paying £32 million in bribes, which helped the organization to win over £2.6 billion worth of in the oil and gas industry in the Middle East. So Petrofac pleaded guilty to seven separate counts of failing to prevent bribery in connection with the offenses committed by Mr. Lufkin, their Head of Sales.
So an organization that is found guilty of this corporate offense of failing to prevent bribery faces an unlimited fine. And the fine sort of is made up of both the confiscation of gains made by the organization as a result of its offending. So as a result of the bribes, but also there's a penalty element to the fines, to discourage similar behavior in the future. Interestingly, in Petrofac's case, actually not all of the contracts turned out to be profitable and some actually resulted in a loss. But nonetheless, the judge imposed a confiscation order of almost £23 million.
Then in relation to the penalty fine, the SFO appeared keen really to encourage other entities to cooperate with its future investigations. And so it was at pains to impose a penalty, which was significant, but which wouldn't tip Petrofac into insolvency. Petrofac had indicated that with refinancing, it could afford a total penalty of around £81 million. Taking into account its cooperation with the investigation and crucially its early guilty plea, Petrofac was ordered to pay a fine of £47 million. And when you added that to the confiscation order and also a cost order of £7 million, it meant that the total penalty for those acts of bribery was £77 million.
So as I mentioned, the only defense for Petrofac, would've been to show that it had adequate procedures in place to prevent bribery from taking place. But actually Petrofac accepted that its procedures were inadequate and easily bypassed. And so it didn't raise any defense based on those procedures in the court case. It's interesting this case, because a lot of bribery act cases are actually resolved via what's called a DPA, a deferred prosecution agreement. So that's a sort of agreement under which an organization avoids prosecution in return for agreeing a course of conduct. So payment of the fine and perhaps a review of procedures, that kind of thing. So prosecutions deferred because the company takes the required steps. This Petrofac case is actually only the second one to result in a criminal conviction for the corporate offense of failing to prevent bribery. And it's not clear whether actually any DPA negotiations were initiated or indeed why this case was resolved by a prosecution, not a DPA. But as with many of these bribery cases, it's a salutary lesson for those involved. And as you can see, the financial implications can be really significant.
The next case that I thought I'd mention this month relates to a financial cap on the seller's liability in a share sale agreement. So when a company or business is sold, the sale agreement will include a raft of warranties from the seller. They're basically statements about the business being sold. If they turn out not to be true, then the buyer will be able to bring a claim against the seller for breach of those warranties. But it's market practice for the sale agreement to include various limitations on the seller's liability under those warranties. And one of those is a cap on the seller's maximum liability.
So there was a recent case called Equitix EEEF Biomass versus Fox. And in that case, the High Court had to consider whether the cap applied to damages only, or whether it also captured other ancillary liabilities, such as it interests and costs arising from a warranty claim. And obviously those sort of ancillary liabilities could be significant. So if they're not included in that contractual cap, then they could significantly extend the seller's potential liability.
So in the agreement, the cap was expressed as applying to liability in respect of any claim under the agreement for breach of warranty. So the seller argued that that imposed a total financial limit, which included not just damages, but also interest on damages, costs and interests on the costs. It, as in the seller, argued that having agreed a cap on its liability, the parties couldn't have intended all of those ancillary obligations, all of those additional potential liabilities to be uncapped. They didn't think that made sense. But the buyer argued that the language in the agreement didn't support that interpretation by the seller. The buyer said, well, in the agreement, a claim is defined as any claim under the agreement for breach of the warranties. And an order to pay interest or costs wouldn't create a liability in respect of the claim itself, but in respect of the litigation process to determine the claim. So the buyer said it's not a liability in respect of a claim under the agreement. And therefore it's not covered by that cap.
And the court in this case, agreed with the buyer. It held that the limitation applied in respect of a claim under the agreement and this didn't include claims for interests or costs, which would be made pursuant to the court's jurisdiction to make ancillary orders rather than being made under the agreement itself. So although the phrase in respect of was very wide, the court said it would've expected interest and cost to be mentioned expressly in the liability cap if the parties had intended those items to be covered. So the message here for sellers is that they should try to ensure that any cap on liability refers not just to liability for the claim itself, I.E. any damages awarded, but also to interests and costs. Otherwise, their actual liability could end up being significantly more than the figure expressed as a cap in the agreement. And obviously if you're on the other side, if you are a buyer, buying a business, then you'd rather those matters were not covered by the cap. And this case does suggest that unless they're expressly referred to as being included, then they're going to be excluded.
Okay. Then finally here's a slightly odd case or at least one that at first sight appears slightly odd, where the Court of Appeal held that a buyer was unable to recover the consideration allocated to certain assets under a sale agreement, despite those assets not actually being transferred by the seller. So this case is called Dargamo Holdings versus Avonwick Holdings and it arose out of a pretty bitter long going dispute between three wealthy Ukrainian businessmen over the division of their business interests.
So the relevant facts for our purposes are that there was a sale and purchase agreement and a seller agreed to sell certain shares to two buyers. The consideration for those shares in the agreement was $950 million, but it was a common ground between the parties. So they agreed that that $950 million not only represented the consideration for the target shares, but it also included an advanced payment of $200 million for certain other assets held by the seller, principally shares in two other companies. The share pitch agreement was completed. So the shares in the target company were transferred to the buyers and the consideration was paid in full. But the additional assets were never transferred to one of the buyers. So that buyer brought a number of claims against the seller, including one for unjust enrichment. So that kind of a claim can be made against a defendant who is unjustly enriched at the claimant's expense with the purpose of that claim being to correct the defective transfer of value by restoring the parties to their pre-transfer positions.
So in this case, the buyer argued that the seller had been unjustly enriched because it had received value for something, the additional assets, that it had not transferred and it still retained. So the High Court dismissed the buyer's claim, but the buyer then appealed to the Court of Appeal. But the Court of Appeal agreed with the High Court and dismissed the buyer's appeal. So the key thing here was that the court noted the parties had deliberately omitted the additional assets from the share purchase agreement. For whatever reason, the agreement that they'd chosen to document was one that provided that the only thing the seller was obliged to transfer in return for the payment of $950 million was the shares in the target company. And as the judge said, well, the parties had struck to their contractual obligations. The buyers had paid the consideration and the seller had transferred the target shares. There was no obligation on the seller to transfer any other assets and no such transfer ever took place.
And what the court said was the buyer couldn't overthrow the express terms of the agreement by a claim for unjust enrichment. So at first sight, as to say, it seems to bit of an odd decision, maybe a bit unfair. The buyer paid for something it thought it was getting, but which it never actually received. But the flaw in the buyer's argument was the express contractual terms that it had negotiated and agreed. And those terms did not refer to the additional assets at all. And the courts were not prepared to step in and rewrite the clear express terms that had been freely negotiated between well advised commercial parties. So I think the lesson there is to make sure that your agreement covers and does indeed refer to everything that you are intending it to capture.
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