Legal News

Avery- Gee and others v Sibley and others [2021] EWHC 798 ( Ch), [2021] All ER ( D) 24 ( Apr) What are the practical implications of this case? Although the principles governing contractual construction are now considered settled (see Teesside Gas Transportation Ltd v Cats North Sea Ltd and others [2020] EWCA Civ 503, para [55] per Lord Justice Males), disagreements about what contracts mean will not disappear. So long as drafting is ambiguous, the courts—and, as here, administrators appointed over distressed companies—must work out, long after the event, what particular words were intended to signify. Administrators should likewise beware of preferring a company charge-holder’s interpretation over that advanced by an unsecured creditor where their financial interests pull in different directions. The decision provides salient guidance for contract drafters and for those presenting these disputes in court. First, it underscores the need for lucid...

Morley (trading as Morley Estates) v Royal Bank of Scotland plc [2021] EWCA Civ 338 What are the practical implications of this case? This decision clarifies the boundaries of a bank’s obligations to its client and demonstrates how those responsibilities shift over the course of their dealings. Where a borrower has taken out a secured lending facility, the bank’s duty to deliver banking services with reasonable skill and care ceases when the contractual loan period ends. After that point, the bank is only bound by the express provisions of the mortgage and the equitable duties inherent in that security relationship (for example, the recognised obligation to exercise reasonable care to realise a proper price for the collateral). It is not correct to read into the mortgage an implied contractual duty of reasonable skill and care. In addition, the Court of Appeal endorsed RBS’s...

Rockliffe Hall Ltd v Travelers Insurance Company Ltd [2021] EWHC 412 ( Comm) What are the practical implications of this case? The widely reported Supreme Court “test case” on business interruption insurance examined whether policies responded to the COVID‑19 pandemic under various disease clauses, where indemnity was triggered by the incidence or presence of a notifiable disease within a specified radius of the insured’s premises. The Supreme Court concluded that cover would attach where governmental action—such as a nationwide lockdown—was taken in reaction to cases of COVID‑19 that included at least one instance within the policy’s defined area. Consequently, even a solitary local case of COVID‑19 could be treated as the proximate cause of a policyholder’s pandemic losses. Importantly, though, the wordings analysed in the “test case” were tied to “notifiable” disease, thereby bringing COVID‑19 within scope from 5 March 2020, when it was...

Introduction On 31 December 2020, the Withdrawal Agreement’s transition phase (discussed here) concluded. From 1 January 2021, relations between the UK and EU are currently regulated partly by the remaining Withdrawal Agreement (as further discussed in this Twitter thread) and partly by the Trade and Cooperation Agreement ( TCA) formally agreed between the EU and the UK themselves. ( There are also two other agreed treaties, on security information and nuclear cooperation, as well). Basic legal issues The EU and UK have agreed to apply the TCA provisionally and temporarily (a common practice in international law). This arrangement runs until 28 February 2021, though the parties may change that date via the Partnership Council (composed of representatives of both contracting parties). This is intended to give the European Parliament sufficient time to examine the treaty in detail before deciding whether to give its consent. By...

Burns v Burns and others [2021] EWHC 75 ( Ch) What are the practical implications of this case? This judgment illustrates how the approaches in Ivey v Genting Casinos ( UK) Ltd [2017] UKSC 67 and Group Seven Ltd (a co incorporated under the laws of Malta) and another company v Notable Services LLP and another and other cases [2019] EWCA Civ 614 can be applied in practice at first instance, where a claimant seeks to secure a dishonest assistance finding within the constraints of the summary judgment process. It also emphasises that, in a suitable case, exposing trust assets to risk by a non‑trustee—for example, an operator of an unregulated investment scheme which, on a proper reading of the relevant documentation, involved unauthorised use—may amount to dishonest behaviour. That assessment turns on the defendant’s actual knowledge of the underlying facts and the court’s...

This is a retrospective on some of the most notable corporate crime cases to reach the courts in 2020. Serious Fraud Office’s Barclays case collapses In February 2020, the Serious Fraud Office ( SFO) endured a bruising loss when a jury cleared three ex- Barclays plc directors of fraud linked to the bank’s financial-crisis fundraising, prompting doubts about the wisdom of pressing on through two trials and repeated courtroom reverses. The Old Bailey prosecution had been weakened by a series of heavy blows starting in 2018, when charges against the bank itself were thrown out. In 2019, midway through the trial of the individual defendants, the presiding judge directed the acquittal of former Chief Executive John Varley. According to Neil Williams, legal director at Rahman Ravelli, warning signs should have sounded once the Court of Appeal backed the ruling that the bank should not be...

The first instance decision has been taken to the Supreme Court by the FCA, all but one of the insurer parties, and the Hiscox Action Group as interveners. The four-day appeal was heard in mid- November 2020. Should the judges be broadly aligned, a ruling may issue before Christmas; otherwise, early 2021 is anticipated. The Supreme Court’s judgment could finally determine how far the representative sample policies respond to coronavirus ( COVID-19) business interruption losses. For policyholders with business interruption cover on other wordings not included in the test case, however, the position may remain less certain. Traditional business interruption policies Policyholders with traditional business interruption insurance—covering loss from damage to insured property—were likely advised that the prospects of coronavirus cover were poor. While coronavirus undoubtedly caused business interruption, it did not do so by causing damage to property. The prevailing view that such...

Clydesdale Financial Services Clydesdale Financial Services, trading as Barclays Partner Finance, ought to return interest levied on loans arranged for timeshare operators Azure Resorts and Resort Properties, according to a court submission dated 19 November 2020, the claimants assert. They also seek to prohibit Barclays from imposing any future interest and to restrain it from taking steps to enforce the loan terms, the filing states. The claim explains that Barclays Partner Finance acted as the banking partner to the timeshare businesses and underwrote finance agreements marketed to holidaymakers. The claimants argue that affordability checks were not conducted amid lengthy, high-pressure sales presentations lasting hours. Each claimant agreed to purchase defined use of holiday resorts at specific periods during the year. The court papers do not reveal the names or locations of the resorts. Lawyers for the claimants described them as ‘generally...

Two foreign exchange agents banned for 24 years The Insolvency Service revealed that two currency brokers are prohibited for a combined 24 years after obtaining over £9m from customers, then using the money to reimburse earlier clients and previous customers too. Both Peter John Roebuck (65), of Berkhamsted, Buckinghamshire, and Preston-based Francis Edward Tarling (75) each received 12-year disqualifications, with their bans taking effect from 1 October 2020 respectively. The foreign exchange agents are now barred from serving as directors or from directly or indirectly taking part, without the permission of......

Re Legal and General Assurance Society Ltd and another company [2020] EWHC 2299 ( Ch), [2020] All ER ( D) 37 ( Sep) What are the practical implications of this case? This ruling is plainly positive for insurers and banks seeking to utilise the Part VII transfer mechanism under the Financial Services and Markets Act 2000 ( FSMA 2000). Notably, the court’s method of distinguishing this transfer from that in Re Prudential Assurance Company Ltd and others [2019] EWHC 2245 ( Ch) is especially helpful, enabling many schemes to progress without companies being overly anxious about contravening the Re Prudential decision. That stance should reassure stakeholders relying on established practice while still acknowledging the court’s vigilance arising from the earlier decision and debate. However, it would be incorrect to claim that the Re Prudential judgment—at least pending the outcome of the intended...

The impasse The standstill in settling coronavirus BI claims has sorely tried policyholders—many being small firms battling the financial shock of lockdown and the pandemic. In places, irritation hardened into anger as policyholders compared experiences and suspected insurers were seeking to argue it both ways. Some with BI extensions triggered by closure on a public authority’s order say they were told their losses were uninsured because they would have arisen anyway from the pandemic, with its fear, lockdown and social distancing. By contrast, others with BI wordings tied to an infectious disease say they were informed their losses were uninsured because they would have occurred anyway due to the government’s direction to shut businesses. One can readily see why policyholders felt aggrieved, not least given the Prime Minister and Chancellor’s statements on 17 March 2020 that insurers would pay companies compelled to close by the...

Re Lehman Brothers International ( Europe) (in administration) [2020] EWHC 1932 ( Ch) What are the practical implications of this case? This judgment clarifies the connection required between the statutory aims of administration under IA 1986, Sch B1, para 3 and any management act that administrators may approve under IA 1986, Sch B1, para 64. Earlier decisions had reached inconsistent conclusions on this question. The court has now confirmed that, while administrators must in general carry out their functions in accordance with the para 3 objectives, they are not obliged to prove that each discrete action they take has a direct causal link to that objective... What was the background? LBIE’s administration had proved successful. All admitted creditors had been paid in full, with sufficient reserves set aside for the small number of outstanding claims. A cash surplus had accumulated in the...

Should compliant, ordinary individuals enjoy confidentiality over what they own? And does pushing that confidentiality into full anonymity heighten the chance of misuse by organised criminals and terrorist groups? The question of asset privacy is hotly disputed. Its position is unambiguous and forceful. The EU’s Fifth Money Laundering Directive ( Directive ( EU) 2018/843, known as 5MLD) plants its flag by aiming to dismantle the anonymity embedded in ownership frameworks: notably within certain trusts and corporate bodies. Unsurprisingly, the Directive also focuses on the anonymity surrounding cryptoassets, though the EU favours the label ‘virtual currencies’. It proposes to achieve this through the novel application of rules to crypto exchanges and custodian wallet providers offering services relating to cryptoassets, as such providers operate today. Exchange providers— SI 2017/692, reg 14( A)(1) vs article 1(1)(c) of MLD5 Under the Money Laundering, Terrorist Financing and Transfer of Funds...

Original news Mr T( PO-28491)/ Mr T( PO-28218)—14 November 2019 Summary The Pensions Ombudsman rejected a grievance alleging a Self- Invested Personal Pension ( SIPP) improperly levied an £800 yearly charge on pension assets valued at £1. The SIPP had pursued a speculative property investment that became distressed, though it did not go insolvent. As the investment remained active, the provider was entitled to refuse closure of the plan, since winding it up could potentially jeopardise any FSCS recovery. Under the plan rules, the provider was also permitted to raise its fees on giving notice. This matter highlights the potentially far-reaching consequences of choosing speculative investments. What were the facts? These two determinations stem from essentially the same circumstances. Mr T was a member of a SIPP. The SIPP provider was entitled to an annual management charge, which could be increased on notice to...

Promontoria ( Henrico) Ltd v Jeavons and another [2019] Lexis Citation 396 What are the practical implications of this case? There is an expectation that courts will avoid an expansive reading of CCA 1974, s 140A. The statute affords judges considerable latitude when evaluating the character of relationships; it does not set out specific factors for them to consider. In this matter, the judge declined to find unfairness. He determined that the loan facility offer’s terms and conditions made it plain that the defendants were required to satisfy themselves that the facilities were appropriate for their purposes and that they......

For much of the UK’s membership of the EU, the interaction between European law and the domestic system has sparked debate. To many observers, it operates as a limitation—practically, if not as a strict matter of doctrine—on the constitutional tenet that Parliament, acting with the Crown, is sovereign. In that context, the European Union ( Withdrawal Agreement) Bill ( WAB) sets out a number of measures with significant consequences for how sovereignty is to be understood in the United Kingdom. Current status of EU law At present, section 2(1) of the European Communities Act 1972 ( ECA 1972) stipulates that all rights, powers, liabilities, obligations and restrictions created by or under the Treaties, together with all remedies and procedures they provide, are to take legal effect in the United Kingdom without further legislation. Those rights must be recognised, available and enforced in UK law, and...

High Court judge Simon Picken concluded that Marme Inversiones 2007 SL’s claim against RBS could not succeed, as the Spanish investment vehicle failed to establish that the bank knowingly made false statements when selling it a number of Euribor-linked swaps in 2008. He further held that Marme would not, in any event, have relied on any such statements to enter the trades, since it was unaware of them at the time. In a 230-page judgment favouring the bank, now operating as Nat West Markets PLC, Judge Picken found that RBS neither engaged in, nor intended or attempted to engage in, manipulation of Euribor. Marme, the Spanish vehicle used by property magnate Glenn Maud to undertake a €1.575bn loan with a syndicate of European lenders led by RBS, had contended at trial that the swaps ought to be unwound due to the bank’s...

Innsworth Litigation Funding and a law firm, Keystone Law, are assembling institutional shareholders who bought or held shares in Petrofac starting from October 2010 Innsworth said in a statement that its assessment of potential claims is already well progressed. Claims against Petrofac, registered in the offshore UK dependency of Jersey, are understood to potentially surpass £400m ($516m). Lawyers intend to issue proceedings in April or May, once their investigations have been completed. It is claimed shareholders sustained substantial losses linked to Petrofac’s alleged involvement in bribery, corruption and money laundering, with Petrofac [allegedly] making false and misleading statements......

DIFC Courts and Smart Dubai The Dubai International Financial Centre Courts ( DIFC Courts) are partnering with the government‑backed Smart Dubai initiative to examine how blockchain can be used to authenticate court judgments for the purpose of cross‑border enforcement. According to the DIFC Courts and Smart Dubai, the purpose of their joint task force is to deliver a ‘blockchain‑powered future for the judiciary’ that will streamline the judicial process by making legal tasks more efficient. Amna Al Owais, chief executive and registrar of the DIFC Courts, said in the statement: ‘ This task force is in line with our’......

ICO working with FCA and National Cyber Security Centre after breach The Information Commissioner’s Office ( ICO), the national data regulator, confirmed it is working with the FCA and the National Cyber Security Centre — part of GCHQ, the national intelligence and surveillance agency — in the wake of a major data breach. An ICO spokesperson noted the probe is at an early stage and will assess both when the incident took place and when it was detected as part of its inquiries. Dixons Carphone, the high street group, said in a statement that attackers seem to have focused on credit and debit cards through a payments system used by two of its businesses, Currys PC World and Dixons Travel stores. Some 5.8......