Legal News

Palmali Shipping SA v Litasco SA [2020] EWHC 2581 ( Comm) What are the practical implications of this case? This judgment carries two key consequences. First, Foxton J determined that the court can grant summary judgment, on the pleaded approach, for the quantification of damages in a breach of contract, even where the defendant is unable to show that no damages are recoverable at all. A dispute over the proper methodology for assessing loss amounts to a ‘particular issue’ within CPR 24.2. Second, the court considered the so‑called ‘net loss approach’ to damages. Where a claimant bears a legal obligation to third‑party companies for costs incurred in performing the contract, those expenditures must be credited when arriving at the net loss claimed against the defendant, even if those third‑party companies have the same beneficial owner as the claimant and even if, in practice, such...

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......

Falk J held that the interim notes—together with any associated discounts and backstop fees—and the advisers’ fees did not bear on class composition. Although the judge regarded the work fee as relevant to class formulation, and even if the interim notes were also pertinent, the scheme creditors could still be consulted in a single class because their rights were not materially distinct, especially given that the most likely alternative to the scheme was the Codere group’s liquidation. Re Codere Finance 2 ( UK) Ltd [2020] EWHC 2441 ( Ch) What are the practical implications of this case? The decision offers clear guidance for practitioners assisting companies proposing schemes of arrangement on the correct approach to defining creditor classes for voting. Matters practitioners should keep in mind when advising an applicant scheme company include: the creditors’ existing rights and the effect the scheme terms would have on those...

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...

What are the legal implications of audiovisual manipulation and deepfakes and what challenges do they pose to intellectual property rights, rights in personal information and image rights? ‘ Deepfake’ describes a face-swapping method in which AI-driven tools process images of a person to create a digital double, then overlay that likeness onto other bodies in video or stills. Creations built from a lone source image are usually easy to dismiss, but those trained on thousands of photos or clips can appear highly convincing. In contrast, audiovisual edits that do not employ AI are often labelled ‘shallow fakes’ or ‘cheap fakes’. Deepfakes present broad socio-political threats: they can skew public debate, disrupt elections and national security, and undermine confidence in journalism and public institutions. The risks to individuals and organisations are just as significant, ranging from fake endorsements and forged documentary evidence to loss of creative control over...

Introduction The UK’s disapplication of so‑called ipso facto clauses—contract terms allowing a party to end the agreement when insolvency proceedings begin against the other—was made a permanent feature by the Corporate Insolvency and Governance Act 2020 ( CIGA 2020). For deeper commentary on CIGA 2020’s reforms, see News Analysis: Corporate Insolvency and Governance Act 2020—the rise of the moratorium and restructuring plan and the fall of the Scheme? Halting such terminations marks a significant shift in UK insolvency practice. Ipso facto defaults are standard in most formal agreements, save for the briefest or most transitory. Further, English authority has treated a counterparty’s insolvency as repudiatory where it deprives the insolvent of the ability to perform. Statutes invalidating these provisions exist in many jurisdictions. The UK legislation mirrors the conventional model: first declaring...

AXA SA v Genworth Financial International Holdings, LLC and Genworth Financial, Inc (and named third parties) [2020] EWHC 2024 ( Comm) What are the practical implications of this case? In AXA v Genworth, the High Court examined a routine SPA clause requiring a gross-up for any tax arising in the recipient’s hands on a payment (here, a seller’s indemnity for 90% of liabilities tied to PPI mis-selling by the acquired entities). The court ruled that the expression ‘subject to taxation in the hands of the receiving party’ means ‘actually taxed in the hands of the receiving party’. It also decided that any extra sum to gross up for tax in hand is only payable once the recipient is under an enforceable duty to pay an actual sum of tax (at para [222]). That conclusion followed from construing the gross-up wording and the SPA in line with the...

Hillingdon Borough Council v Persons Unknown and others [2020] EWHC 2153 ( QB) What are the practical implications of this case? There is a persistent conflict between the workings of the courts and the wish of individuals to advance political and/or environmental causes. That friction lies at the core of the judge’s ruling in this matter. It was plain that the court had to neutrally weigh the fundamental liberties protected by human rights law against the council’s duty and right to safeguard the public from unlawful occupation and from unreasonable nuisance and annoyance on its land. In the end, the judge decided that because protesters could still continue their demonstrations on the land, they did not need to erect a camp or remain overnight, and they should not engage in conduct that creates unreasonable nuisance and annoyance in any manner...

Pengelly v Business Mortgage Finance 4 plc [2020] EWHC 2002 ( Ch) What are the practical implications of this case? Practitioners will recognise that the agreements reviewed in this matter are largely boilerplate—typical and widely used across the market. Its consequences are likely to be extensive. The broker’s terms given to the borrower provided that it might obtain payments from lenders to whom it introduced mortgages, and that, before arranging a loan, it would set out the fee in writing; where the fee was below £250 it would confirm receipt of up to that figure, and where the fee was £250 or more it would specify the exact amount. The brokers probably took two streams of commission—one from the borrower and another from the lender. The lender accepted that it routinely paid a 2–4% commission, but expected the broker to handle...

The pensions watchdog ( TPR) has issued a Determination Notice under Section 99(4) of the...

Nosnehpetsj Ltd (in liquidation) v Watersheds Capital Partners Ltd and another [2020] EWHC 1938 ( Ch), [2020] All ER ( D) 144 ( Jul) What are the practical implications of this case? The key takeaway is that directors will generally be held to the content of confirmation statements, accounts and, for the period before 2016, annual returns. Many private companies operate with a degree of informality, and directors sometimes shift assets within a small group merely by reflecting the transfers in those filings. A director who acts in that way is unlikely to be allowed to step back from those actions by asserting that corporate formalities were not observed, particularly where third parties have relied on the records or one group company has gone into insolvency. The old saying that equity will not assist a volunteer carries limited weight in corporate contexts. The modern stance is that...

Contractual interpretation and worked examples— The terms to which the parties have turned their minds ( Altera Voyageur Production Ltd v Premier Oil E& P UK Ltd) The court held that illustrative calculations may serve as a significant tool for construing terms when the drafting has misfired; in a boilerplate, they may encapsulate the very provisions the parties actually considered. Notably, this judgment is only the second reported decision to address the interpretative effect of worked examples. In this dispute, the examples incorporated an extra step in the calculation and so seemed in tension with the contract’s governing clauses; nevertheless, they steered the court towards the real meaning of the parties’ bargain. Written by Lauren Godfrey, barrister, Hardwicke Chambers. Altera Voyageur Production Ltd v Premier Oil E& P UK Ltd [2020] EWHC 1891 ( Comm) What are the practical implications of this case? This decision is of broad...

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...

Re C (a child) [2020] EWCA Civ 987, [2020] All ER ( D) 136 ( Jul) What are the practical implications of this case? The case arose when, during a remote hearing that had far exceeded its time estimate, a hard-pressed judge expressed irritation about the mother in what she believed was a private exchange with her associate. As the hearing link had not been closed, the parties unintentionally overheard the remarks. The Court of Appeal had to determine whether those adverse comments signalled a real possibility of bias; while sympathetic to the pressures the judge faced, it concluded that they did. Considerable understanding was extended to the judge, whose off-the-record words were accidentally audible during a break. The backdrop of the worldwide coronavirus ( COVID-19) pandemic is significant. The Court of Appeal recognised that family judges are grappling with...

A local authority v A [2020] EWCOP 38 What are the practical implications of this case? Hayden J confirmed that when a deputy wishes to cease acting, they must make an application to the court. Importantly, the court will not rubber-stamp such applications: the deputy, whether an individual or a body, must convince the court that stepping down accords with the person’s best interests. What was the background? As at May 2020, local authority deputies for property and affairs in England and Wales were acting for 22,775 people, making up around 39% of all deputyships. Over the previous two years, both the headcount of local authority deputies and the number of deputyships managed by local authorities had been steadily rising. The applicant council formulated criteria that led it to pinpoint seven matters in which it no longer wished to continue as deputy. It therefore supported a court...

What are the practical implications of this case? It marks the definitive end for using separate relativity graphs for property beyond PCL. For years, valuers have contended that existing leases outside PCL command a higher proportion of the freehold than those within PCL, rendering PCL graphs irrelevant. That stance can no longer stand. If they wish to argue that existing leases exceed the levels implied by PCL graphs, they must now substantiate it with market evidence. In the near term, this translates into higher premiums for flat tenants outside PCL seeking lease extensions where the unexpired term is below 80 years. Their most realistic prospect of relief lies in government adopting a Law Commission recommendation to reduce or abolish marriage value. What was the background? A tenant holding a long lease of a flat is entitled to a 90-year extension under section 56 of the...

Dowse and another v City of Bradford Metropolitan District Council [2020] UKUT 202 ( LC) What are the practical implications of this case? The doctrine of adverse possession has long sat awkwardly with the regime of registered land and its mirror principle—the expectation that the register alone should reveal all key details about a parcel, including who owns it. That is why the LRA 2002 dramatically curtailed a squatter’s capacity to acquire title to registered land: the primacy of the title register should, in general, prevail. This decision is important because it gives unequivocal effect to that position. Unless a squatter can demonstrate 12 years’ adverse possession of registered land completed before the LRA 2002 took effect, the registered proprietor holds the upper hand. So long as the statutory process is properly followed, there are only three tightly confined situations in which a...

Re Juraid Anwer [2020] EWHC 1745 ( Ch), [2020] All ER ( D) 94 ( Jul) What are the practical implications of this case? The key takeaway from this decision is that Mr Anwer filed a second application to set aside the statutory demand while the first had been adjourned pending the outcome of linked county court proceedings. As the second application relied on the same grounds, the court found it to be a duplicative proceeding, disproportionate and a misuse of resources. It was accordingly deemed totally without merit and this was taken into account when granting an ECRO. Those seeking to set aside statutory demands—and their legal advisers—should exercise particular caution before issuing a further application where an earlier one is still extant. The court will be alert to attempts to use a second application to sidestep an adjournment of the first; it will...

Collier and others v Bennett [2020] EWHC 1884 ( QB) What was the background? This ruling concerns applications for Norwich Pharmacal relief, or in the alternative pre‑action disclosure, to identify the person behind an anonymous Twitter account and to secure copies of tweets said to be libellous and harassing of the claimants. The claimants, each of whom is Jewish and publicly known for taking an active stance against anti‑semitism, are: Mr Collier – a blogger, researcher and campaigner against anti‑semitism; Ms Riley – a television presenter; Ms Oberman – an actress. They have issued proceedings in respect of a Twitter profile (the account) using the pseudonym “ Harry Tuttle”, which, they contend, has for some time been deployed as a vehicle to target a number of Jewish individuals through harassment and defamation. The defendant, Mr Bennett, is a Jewish barrister who has been described as “a pro‑ Corbyn...