Legal News

Original news In NRAM v Evans [2015] EWHC 1543 ( Ch), the court directed the rectification of an inadvertent discharge of a mortgage. The proceedings centred on whether a 2005 loan, advanced by NRAM’s predecessor to Mr and Mrs Evans, was secured over their property. The key issue was whether a 2004 charge, which had secured an earlier loan to the borrowers, who were subsequently made bankrupt, was effective to cover the 2005 advance. The High Court held that, on its terms, the 2004 charge did secure the 2005 loan against the property. The mortgage conditions attaching to the 2004 charge were sufficiently broad and unambiguous to include the 2005 borrowing. Upon the borrowers’ bankruptcy, their estate vested in the Official Receiver as trustee, but remained subject to the bank’s charge. It was also found that the bank had made a distinct mistake by...

Original news JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd [2017] EWCA Civ 267, [2017] All ER ( D) 62 ( Apr) The Court of Appeal ( Civil Division) upheld the property owner’s challenge to a High Court ruling that had declined to take off the court record a copy of a notice of intention ( No I) to appoint an administrator. The court examined the effect of paragraphs 44(4) and 28(2) of Schedule B1 to the Insolvency Act 1986. What, then, should practitioners draw from this? The ruling makes clear that lodging an No I where there is nobody to serve, or where there is no firm decision to proceed to an appointment, purely to obtain the moratorium, can no longer be relied upon. Merely contemplating an administration if other avenues fall away does not suffice....

Original news Eason and another v Wong [2017] EWHC 209 ( Ch), [2017] All ER ( D) 196 ( Mar) The Chancery Division determined that investors who had contracted to acquire long leases of student flats and paid deposits held an enforceable equitable lien over the land comprising the subject of each individual bargain once the seller failed to progress the development. The court further ruled that enforcement of an equitable lien does not depend on the pre‑existence of the legal estate in the property; it is sufficient that the vendor agreed to create a legal estate out of an existing legal estate and that the estate to be created is identifiable. What was the background to the case? A company incorporated as a special purpose vehicle to purchase and develop a site for student accommodation entered into off‑plan contracts with a number of...

Original news J Toomey Motors Ltd and Another v Chevrolet UK Ltd [2017] EWHC 276 ( Comm) What should commercial lawyers take note of? Commercial practitioners should note the following: The court confirmed (in line with established authority) that a recital expressing intention, without operative effect, cannot override the contract’s operative terms. When applying the ‘commercial or practical coherence’ test for implying terms after the Supreme Court’s decision in Marks and Spencer v BNP Paribas, the court emphasised that coherence must be determined objectively from the viewpoint of the ‘officious bystander’, not merely one party’s standpoint. The court dismissed reliance on a course of dealing as an independent ground for implied terms, noting that although prior dealings may inform whether a term is to be implied, they do not create a separate category of implied terms solely by reason of such...

Original news Senior HBOS banker and associates found guilty of corruption, LNB News 31/01/2017 141 A former HBOS manager, a financial adviser and their network were found guilty of corruption, fraudulent trading and laundering funds after operating a racket that eventually left the bank facing losses of about £250m in total. Ex-banker David Mills and cohorts plotted to line their own pockets, forcing companies into collapse along the way. Their conduct deliberately prioritised personal gain, with severe consequences for the companies involved and for the businesses affected. What is the background to the investigation in this case? On 30 January 2017, Judge Beddoe at Southwark Crown Court passed sentence on five banking staff and private business advisers for offences tied to a £245m fraud on HBOS customers between 2003 and 2007. This stemmed from a complex, six-year Thames Valley Police inquiry, codenamed Operation Hornet. It became the...

Original news C‑156/15: Private Equity Insurance Group SIA v Swedbank AS What was the background to the case? The dispute stemmed from the insolvency of the Latvian company Izdevniecība Stilus SIA, whose rights are now held by Private Equity Insurance Group SIA (the company). Before going under, the company maintained a current account with Swedbank AS (the bank). The account agreement contained a clause under which every sum standing to the account’s credit was pledged to the bank as financial collateral securing all liabilities owed by the company to it. Once insolvency commenced, the bank relied on that term and debited the account, using the funds to satisfy the company’s debts to the bank. Acting through its administrator, the company sought repayment of those amounts by reference to Latvian insolvency provisions requiring pari passu treatment of creditors. The bank maintained that its steps were...

The UK remains the global frontrunner in offshore wind, with 5GW already operating and a goal of 10GW of installed capacity by 2020. The scale of schemes is growing steadily, helping to capture significant economies of scale. For example, in February 2016 DONG Energy announced plans to proceed with construction of the 1.2GW Hornsea Project One offshore wind farm, set to become the world’s largest offshore wind farm (and expected to use Siemens 7MW turbines). The UK’s referendum decision to leave the EU has sent shockwaves through political and investment communities. Regarding offshore wind, ministers rapidly signalled after the vote their intention to maintain investment in clean energy, including offshore wind. For instance, on 29 June 2016 Amber Rudd, then Secretary of State for Energy and Climate Change, stressed the ongoing intention to bring forward more offshore wind, subject to further cost...

Original news Hosking and another v Apax Partners LLP [2016] EWHC 1986 ( Ch), [2016] All ER ( D) 193 ( Jul) The Companies Court refused an application by the joint liquidators to pause the English proceedings they had commenced, pending the outcome of earlier litigation in the United States. The court decided that a stay was not justified and set out several reasons for that conclusion: It was not appropriate to censure the defendants for blameworthily bringing about parallel proceedings. Any judgment in the US case would not bind the defendants. The fraud allegations ought to be addressed at the earliest sensible opportunity. Nonetheless, a short stay until 3 October 2016 was ordered for case management purposes, given the imminent US ruling on forum non conveniens, which could encourage additional defendants to consent to being joined to the English...

Original news Re Ralls Builders Ltd (in liquidation); Grant and another v Ralls and others [2016] EWHC 1812 ( Ch), [2016] All ER ( D) 113 ( Jul). The Chancery Division determined that, as the joint liquidators’ application under section 214 of the Insolvency Act 1986 for a contribution from the company’s directors on a wrongful trading basis had failed, it was not appropriate to order the directors to add to the company’s assets in respect of the liquidators’ fees and expenses incurred in examining and advancing that unsuccessful claim. What was the background to this judgment? This was a wrongful trading claim brought under IA 1986, s 214. The liquidators, Steven Grant of Wilkins Kennedy and James Tickell of Portland, sought a £1.5m contribution to the company’s assets from three former directors of a South East building company that entered...

Original news Marlbray Ltd v Laditi and another [2016] EWCA Civ 476, [2016] All ER ( D) 202 ( May). The Court of Appeal ( Civil Division) partly upheld a property developer’s appeal against a Chancery Division ruling. The Chancery Division had found that the developer’s contract for the sale of a lease to a husband and wife, signed by the husband for himself and, purportedly, on his wife’s behalf, was invalid. What was the factual background to the appeal? The developer had sold units off-plan in an “apart-hotel” being developed. The husband executed what appeared to be an agreement conferring on him and his wife a 999-year lease of one unit. The document identified the husband and wife as joint purchasers. He paid a 25% deposit and the parties exchanged contracts. When the couple failed to secure a mortgage, the developer served notice...

Background e IDAS Regulation: Regulation ( EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/ EC What are the principal changes ushered in by the e IDAS Regulation? In what respects will the current regime be altered? Although signatures are commonly used on commercial paperwork, under English law a document generally need not be signed to have legal force, save for particular classes including: guarantees consumer credit agreements sales of real property, or wills When electronic formats such as fax and email emerged in the 1980s and 1990s, the courts in England adopted a notably liberal stance, treating even a telex answerback, generated without human action, as a valid signature. As a result, Directive 1999/93/ EC (the 1999 e Signature Directive), which came before the e IDAS...

Practical implications This judgment reinforces the established approach in the authorities for identifying when a duty of care can arise in cases of negligent misstatement. It emphasises the need to show a special relationship between the author of the statement and the person relying upon it, captured by the assumption of responsibility test. If such a relationship is absent, the analysis must then address whether loss was foreseeable, the closeness of the parties’ relationship, and, ultimately, whether imposing a duty would be fair, just and reasonable in the circumstances. The authorities in Hedley Byrne, Caparo and Customs and Excise Commissioner were each approved. For further guidance on negligent misstatement, see Practice Notes: Negligent misstatement—founding a claim Negligent misstatement—defences and remedies How did the negligent misstatement issues arise in this case? The club engaged Burlington to obtain references for potential players at the club....

Practical implications This ruling offers a helpful and clear demonstration of the court’s method when carefully judging, in the circumstances of a case, whether a party’s conduct under an agreement truly constitutes a repudiatory breach—either taken in isolation or viewed collectively—so as to allow the other party to accept the repudiation and terminate the contract. It addresses, in particular, in such disputes: the so-called Heisler qualification, namely the general principle that a party who declines to perform a contract, yet states an incorrect, inadequate, or no reason, may later justify objectively that refusal if facts then existing and at the relevant time supplied a proper basis for it, does not operate where “the point taken is one which if taken could have been put right” ( Heisler). In the view of Males J, the Heisler qualification can only arise where the breach in...

Practical implications This judgment demonstrates how the principles governing equitable set-off via a cross-claim function in an assignment, in this instance where a factor has taken over debts owed by customers to a supplier. The Court of Appeal concluded that, since the factor neither agreed with the supplier that no rebate would be available nor asked the debtor to notify it of any rebate, the debtor had no obligation to reveal any prior contractual rebate arrangements affecting the debt. Here, the scale of the rebate cross-claim almost eliminated the whole of Bibby’s demand. The clear potential for serious prejudice to a factor in such circumstances is therefore apparent and calls for the inclusion of suitably drafted contractual protections (see paras [49]–[53]). How did the set off issues arise in this debt factoring case? Under a Factoring Agreement from 2000, Bibby, acting as factor, acquired all of the...

Practical implications Although no witnesses were cross-examined in this matter, the court was able to dispose of it summarily, given the procedural steps already taken and the case management directions both in place, under which the appellants had repeated opportunities to advance their position. Disclosure had also occurred, and the court could rely upon witness material filed in earlier, related proceedings that had failed. While the appellants invoked comparisons with decisions discussed in the Tomlinson Report concerning banks’ lending behaviour, it was not the court’s role to permit a trial merely to ventilate issues of public interest where the underlying claims lacked viability. Accordingly, a summary determination was appropriate notwithstanding the absence of oral testing of the evidence. The court’s task is to assess viability, not to convene a forum for broader debate where the pleaded causes cannot...