Legal News

Original news R Trust [2015] JRC267A What were the background facts of the case? The matter arose from directions issued by the English Family Court against Jersey-based trustees of a Jersey discretionary trust, even though the trustees had not accepted the authority of that court. Following divorce proceedings in England between Mr B and his former spouse, Mrs B, the court ordered a distribution of the matrimonial estate. Included within that division was a trust established by Mr B, whose only beneficiaries were the parties’ children, both of whom were minors. The trust deed nevertheless allowed, among other powers, the addition of further beneficiaries. The English court determined that Mr B’s transfer of assets into the trust should be unwound, and instructed the trustee to recognise that position and return the trust fund to Mr B so that he could make payment on to Mrs B. The...

Practical implications Mr Justice Knowles CBE reviewed how releases in a settlement agreement should be read, with a particular focus on provisions addressing fraud-based claims. He applied the approach articulated in BCCI and in Satyam. Allegations of ‘sharp practice’ levelled at those relying on the settlement to shut out future claims were rejected. Here, the releases were expressly identified and did not amount to a general release, the type of clause where any ‘sharp practice’ might call for relief. How did this construction issue arise? Kaupthing Bank had advanced a loan in exchange for security that was already, directly or indirectly, encumbered in favour of senior lenders. Mr Johannsson was appointed first to Kaupthing’s Resolution Committee and subsequently to its Winding Up Committee. Following Kaupthing’s collapse, the Serious Fraud Office opened investigations concerning Mr Tchenguiz and others, which included Mr...

Original news Banwaitt v Dewji and another [2015] EWHC 3441 ( Ch) What issues did this case raise? This decision will interest practitioners advising judgment creditors with a charging order against a debtor’s share in jointly owned property, and anyone dealing with security over beneficial interests in land more generally. The central issue was whether a married couple, as co-owners, could have a charging order removed from the title by the wife buying the husband’s stake. The claimant had secured a substantial judgment which the debtor failed to satisfy. A charging order was then obtained over the debtor’s beneficial interest in the family home. Thereafter, the debtor and his wife transferred the property into her sole name for a modest sum. She argued the order no longer bound the title—maintaining it had been ‘overreached’ under sections 2 and 27 of the Law of...

Government sets out plans to reform public financial guidance for consumers In March 2016, the government published a consultation paper outlining a proposal to replace MAS, TPAS and Pension Wise with a fresh delivery model. It is inviting views on how the services should be established and assessed, and on creating effective links between the two new guidance bodies and the broader sector, so that consumers can move seamlessly between guidance and advice providers. Views are requested on service design, assessment, and building links with the wider sector. The consultation closes on 8 June 2016. What is the background to this? The government states that it wants consumers to have access to high-quality, impartial, levy-funded, free-to-client financial guidance (public financial guidance). In October 2015 it launched two reviews—the Financial Advice Market Review ( FAMR—a joint review with the Financial Conduct Authority) and the Public...

Practical implications This ruling is notable for its observations on the need for dishonesty under LA 1980, s 21(1). It is settled that dishonesty is required for LA 1980, s 21(1)(a)—no limitation where a trustee commits a fraudulent breach of trust. Yet, although the court appeared to imply that dishonesty is also demanded for LA 1980, s 21(1)(b)—no limitation on recovering trust property from a trustee who holds it or has converted it to his own use— Smith J nevertheless concluded that LA 1980, s 21(1)(b) was satisfied, notwithstanding the absence of dishonesty on the evidence. The decision likewise indicates that, where there is a single active director who has committed undisclosed breaches of fiduciary duty, they owe a continuing obligation to disclose those breaches while they remain a director; and whilst the non-disclosure persists, those breaches are likely to be regarded as...

Original news Broadhurst v Tan; Taylor v Smith [2016] EWCA Civ 94, [2016] All ER ( D) 219 ( Feb) The Court of Appeal, Civil Division, determined an issue of construction arising from an apparent clash between the rules that fix costs in most lower value personal injury matters, located in s IIIA of CPR Part 45, and the provisions in CPR Part 36 that specifically govern such claims. It decided that conflict between CPR 45.29B and CPR 36.14A must be settled in favour of CPR 36.14A. What problems did the litigation highlight, and why does it matter? The dispute concerned s IIIA of Part 45, which fixes the solicitors’ costs recoverable in all personal injury cases commenced through the RTA or EL/ PL portal. Part 45 states that the only solicitors’ costs to be recovered are those set out in that Part. By...

Original news Re Codere Finance ( UK) Ltd [2015] EWHC 3778, [2016] All ER ( D) 27 ( Jan) Codere Finance ( UK) Ltd sought an order approving a scheme of arrangement under Part 26 of the Companies Act 2006. The company, incorporated in England, was a subsidiary of Codere SA, a Spanish entity that sat at the top of the corporate group. Efforts to negotiate a restructuring had been underway for over two years before these proceedings. It was concluded that the most effective route was to rely on the scheme jurisdiction available in England and Wales, and Codere Finance ( UK) Ltd was acquired for that very purpose. The court was asked to decide whether to sanction the scheme, with particular focus on the fact that the group had only recently bought Codere Finance ( UK) Ltd...

Practical implications It is widely accepted that the prime authority on prohibitory injunctions is the House of Lords ruling in American Cyanamid, which lays down broad criteria the court should ordinarily address when deciding whether to grant such relief. In exercising its discretion, the court will ask: Is there a serious issue to be tried? Would compensation be an adequate remedy? Where does the balance of convenience fall? Is this an exceptional case? The present decision examines the particular situation in which an employer seeks to uphold a restrictive covenant through an injunction, though the analysis could arguably extend to most cases where a respondent proposes to do exactly what he has freely promised not to do. By way of illustration, similar reasoning could arguably be applied to non-compete terms in a commercial agreement. In those circumstances: the default position is that a prohibitory injunction ought to be...

Original news Chief Constable of Greater Manchester Police v Wright [2015] EWHC 3824 ( Ch), [2015] All ER ( D) 270 ( Nov) The Manchester County Court refused the claimant chief constable’s application, said to be made under POCA 2002, s 311, for permission to continue forfeiture proceedings against a bankrupt, concluding that, on a proper interpretation, no permission was needed under that section. Accordingly, any purported condition of leave—requiring the seized cash to be paid to the defendant trustee in bankruptcy—could not be attached and, in any event, would contravene POCA 2002, s 298(4). What was the background to the application? Three separate sums were taken by the police from Mohammed Tahir pursuant to POCA 2002, s 294 in August 2010 and May 2013. On 7 July 2014 Mr Tahir was declared bankrupt, and a trustee in bankruptcy ( Miss Wright, the...

How is social media affecting the personal injury landscape? In essence, defendants are increasingly turning to social media to probe a claimant’s credibility. If a claimant declares 'my life is ruined' or ' I can't walk', yet their Facebook profile shows photographs from parties or other energetic pursuits, that mismatch is unlikely to go down well with most judges at trial. Defendants routinely rely on this kind of content to challenge what is being alleged. Have there been any recent cases that offer guidance on how the social media accounts of those involved in the case can play a crucial role? Social networks, particularly Facebook, have featured in cases for four or five years, and their use is becoming more common. Recent matters highlight Twitter and Facebook as significant in challenging the credibility of witnesses. Notably, in Saunderson & Others v Sonae Industria ( UK) Ltd [2015] EWHC 2264 (...

Practical implications This judgment: offers a clear and carefully set out account (with hypothetical examples) of the difference between how damages are assessed in contract and in tort underlines the importance of ensuring that suitable and necessary valuation evidence is put before the court for determination. Although the absence of such evidence did not prevent the court from arriving at a damages figure payable for breach of warranty, the task would have been more straightforward had that material been placed before the court, and it is ordinarily sensible to make sure it is hints at the potential value, in claims of this type, of pleading both damages for breach of warranty and, where the facts allow, an alternative tort claim for misrepresentation (especially if fraudulent). In this matter, however, it was the contractual warranty claim that enabled Mr Karim to recover What was the breach of warranty...

Original news Avon Ground Rents v 51 Earls Court Square RTM Company [2016] UKUT 0022 ( LC) What was the issue involved? The dispute centred solely on whether 51 Earls Court Square RTM Company Limited (the company) qualified as an RTM company within the meaning of the Commonhold and Leasehold Reform Act 2002 ( CLRA 2002) for these purposes. If so, all parties accepted that it could obtain the right to manage the building at 51 Earls Court Square (the building), the property that gives the company its name. If not, the notice seeking the right to manage, served by the company on 8 January 2015, would be ineffective and of no legal consequence. The question hinged exclusively on construing the company’s articles of association, namely what the incorporators precisely intended and understood by defining 'the premises' as ' Flat 1–13, 51 Earls Court...

In brief what did Lord Dyson say about judicial review and in its place in a democratic society? In his speech, Lord Dyson maintains that judicial review is a cornerstone of a democratic society. He regards it as self-evidently a vital safeguard, offering an effective way to ensure executive public authorities meet their statutory duties and do not act unlawfully. As those duties arise from the democratic process, he argues, their enforcement is an essential handmaiden to democracy itself. Accordingly, judicial review is, in his view, the very antithesis of anything that weakens or poses a threat to democracy... How does Lord Dyson address the increase in the number of judicial reviews in England and Wales? Lord Dyson identifies three chief reasons for the growth in judicial reviews in England and Wales: He suggests the standard of review has been relaxed, in part because judges are no...

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 decision explored how far a purchaser of a company can rely on an indemnity in a share sale agreement to recover from the seller for losses stemming from an employee’s negligent acts occurring both before and after the business transferred. The indemnity clause stated the seller would hold the buyer harmless for loss ‘directly or indirectly’ arising from services the company (or its agents) supplied before the transfer date, as specified in the agreement. Such wording is a common feature of share sale indemnities. On a straightforward reading, it implies that any loss linked to conduct after completion falls to the buyer, with no route to reimbursement from the seller. The core dispute was how liability should be apportioned for losses spanning pre- and post-transfer where pre-transfer negligence was left uncorrected following completion. This required analysis of two principal...

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 This judgment delivers a concise overview of the relevant legal principles for a CA 2006, s 994 unfair prejudice petition and/or an alternative claim for a just and equitable winding up under IA 1986, s 122(1)(g), together with the specific criteria needed to establish such claims. For additional guidance on pursuing these claims, see Practice Notes: Unfair prejudice claim—what it is and when to use it Unfair prejudice claim—the procedure Just and equitable winding-up—what it is and when to use it Just and equitable winding-up—the procedure The key requirements for establishing a successful s 994 unfair prejudice petition Hildyard J addressed this at paras [35]–[48]. Despite a tendency to treat s 994 as covering any conduct connected with or affecting the company, and the court’s flexible, expansive approach, three cumulative requirements must be satisfied. These include: that the matters...

Original news R (on the application of Ali) v Secretary of State for the Home Department; R (on the application of Bibi) v Secretary of State for the Home Department ( Liberty Intervening) [2015] UKSC 68, [2015] All ER ( D) 150 ( Nov) The Supreme Court concluded, among other points, that obliging the overseas spouse or partner of a UK citizen, or a person settled in the UK, to pass an English language competence test before joining them was not an unjustified infringement of rights under ECHR, art 8. What key issues do these cases raise? Mrs Bibi and Mrs Ali are British nationals married to non- EEA citizens. Following amendments to the Immigration Rules on 29 November 2010, their husbands had to demonstrate English language ability by passing a competence test before being admitted to the UK for settlement. The rule does not apply in every...

Does a criminal prosecution prevent civil contempt proceedings? ( First Capital East Limited v Ilmi Plana & Anor) Practical implications There is a steadily growing momentum across the wider insurance sector, especially in the personal injury sphere, to seek the toughest sanctions realistically available against those who attempt to advance fabricated or inflated claims. Although, to some, such measures may, at first blush, seem heavy-handed — and the PR dimension is ever-present — where the dishonesty is both clear and brazen, often shown by the deployment of covert surveillance, the urge to make examples of fraudsters is entirely understandable. The critical point in this matter appears to have been that the individual had been acquitted and there was no fresh evidence. In general, contempt applications ought to be brought as soon as possible after the civil proceedings and before any criminal...

Original news Chesterton Commercial ( Oxon) Limited v Oxfordshire County Council [2015] EWHC 2020 ( Ch) What was the background to the case? Chesterton, a property developer, bought three sites that included parking bays. A local authority search indicated the bays were not within the public highway. Yet the council omitted to disclose it had long been examining whether the land was in truth highway. It later concluded the land was highway and updated its records to reflect that. By then, relying on the search outcome, Chesterton had already exchanged contracts to acquire the property. Once completion had taken place, it transpired the search was wrong. The council contended the claim must fail as the search was accurate when issued. Chesterton went on to develop and sell the......