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This Practice Note outlines the law concerning criminal recklessness. The subjective test for recklessness Certain statutory and common law offences allow the prosecution to prove mens rea through ‘recklessness’. Put simply, recklessness is where the accused takes an unjustified risk that results in unlawful harm or damage. The House of Lords in R v G reaffirmed the subjective approach to recklessness. Before R v G, two distinct tests were used, depending on the offence charged: Subjective recklessness from R v Cunningham: the prosecution had to establish that the accused personally foresaw the risk. Objective recklessness from R v Caldwell: the prosecution only needed to show that the risk would have been obvious to a reasonable person, without proving the accused themselves foresaw it. In R v G, the House of Lords concluded that the objective test could operate unfairly where a defendant did not foresee the
This Practice Note examines the remedy of rescission, explaining when and in what manner a contract can be unwound (at common law, in equity and under statute) and thereby terminated and brought to an end. It covers the consequences and effects of rescission, the principal grounds for setting aside an agreement (misrepresentation, mistake, undue influence, duress, non‑disclosure, fiduciary misdealing and bribery) and the main obstacles to claiming rescission—affirmation, the intervention of third‑party rights and the impossibility of restitution. For further guidance on rescission in the context of misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy. There are many ways in which a contract may reach its end; see: Terminating contracts—how and when a contract ends—overview for a brief and accessible summary, with links to the related further practical guidance, including Practice Note: Termination and expiry of contracts. For a table
What is a res judicata? A res judicata is a determination by a court or tribunal with jurisdiction over the cause of action and the parties, which finally disposes of the issues decided so they cannot be litigated again by those bound, save on appeal. Final judgments entered by default or by consent fall within this concept, whereas rulings on purely procedural points and any decision lacking finality do not. The doctrine’s aim is to bring litigation to an end and shield parties from being harassed by the same dispute twice. in personam—binds the parties and their privies in rem—binds all persons, privy or otherwise (ie a judgment binding the whole world) A party may rely on res judicata: as an estoppel to defeat an opponent’s claim or defence; and/or as the basis of their own claim or
The offence of causing grievous bodily harm with intent Wounding or causing grievous bodily harm (GBH) with intent can be tried solely in the Crown Court on indictment. Elements of the offence Under the Offences against the Person Act 1861 (OATPA 1861), the prosecution must establish that the defendant unlawfully and maliciously: wounded with the intention of causing GBH, or caused GBH with that intention, or wounded intending to resist or prevent the lawful arrest or detention of any person, or caused GBH intending to resist or prevent the lawful arrest or detention of any person ‘Unlawfully’ and ‘maliciously’ Unlawfully The wounding or causing of GBH must be unlawful. Such conduct may be lawful if used: in self-defence in defence of another in defence of property for the prevention of crime where the victim gave express or implied consent For further information on these defences, see below:
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What are the issues for a tenant if an intermediate landlord becomes insolvent? This Practice Note considers to whom the rent might be payable, and addresses disclaimer, forfeiture and surrender of the superior lease. Rent payment An insolvent landlord might default on rent owed to its superior landlord. Under the Commercial Rent Arrears Recovery ( CRAR) regime, a superior landlord may issue a notice requiring an undertenant to pay rent straight to the superior landlord where the immediate tenant is in arrears, continuing until those arrears are cleared. If the undertenant then does not pay, the superior landlord may exercise CRAR against the undertenant. To promote fairness, where the tenant pays any sum under a notice served by a superior landlord, the undertenant may deduct that sum from the rent due to its immediate landlord, even if the amount has already been paid in full or in part by...
Background The intercreditor agreement is designed to manage the inevitable clashes that arise between different classes of secured lenders during a restructuring. It deals with a range of matters (see Practice Note: Intercreditor agreements for R& I lawyers). A key feature is the security trustee’s authority to grant releases, allowing assets to be sold ‘free and clear’ of junior liabilities when instructed by the requisite majority of senior lenders—typically 66⅔%—in connection with enforcement of the security. Many restructurings involve enforcing share pledge collateral, where shares in the holding company ( Holdco) are transferred either to a new company ( Newco) controlled by senior creditors who are ‘in the money’, or to a third party buyer (see Practice Notes: Where the value breaks and negotiating strength and Transfer to Newco). To achieve this, Holdco and the wider group must be released from all...
Background The purpose of an intercreditor agreement—also called a deed of priority—is to manage and resolve the conflicts that will inevitably emerge between different classes of secured lender during a restructuring. Waterfall of payments Such an agreement commonly details a distribution waterfall instructing the security trustee on how to deploy any funds it receives (including sale proceeds, litigation recoveries, or amounts originally paid in error by a debtor to a junior creditor and then transferred under turnover provisions). The waterfall may apply either: (i) universally in all situations; or (ii) by distinguishing between ordinary operations (pre-enforcement) and post-enforcement, namely via a ‘flip’ clause. Ordinarily, the waterfall requires the security trustee’s fees to be settled first, after which monies are distributed to creditors in line with their ranking (with secured lenders typically at the top of the order), and any remaining balance is ultimately returned to the...
Intercreditor agreements for R& I lawyers Rationale As companies and groups of companies make greater and frequent use of multiple layers of debt, the significance of intercreditor agreements has increased markedly. The purpose of an intercreditor agreement is to manage the likely clashes that will inevitably arise between different classes of secured lenders when a restructuring takes place. These agreements carry particular weight in Europe, where there is a wide range of potential restructuring procedures, in contrast to the US, where the chapter 11 regime automatically delivers creditor releases and is relatively well settled and predictable for creditors (see US chapter 11—overview). As a result, an increasing reliance is being placed on the contractual position and its terms......
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Insolvency practitioners ( IPs) will recognise the established routes to finance claims, such as conditional fee agreements ( CFAs), damages-based agreements ( DBAs), third party funding, creditor-backed funding, assigning a cause of action, and after-the-event ( ATE) insurance. See: Funding of insolvency litigation and investigations—overview. Yet, for many, the burgeoning practice of using insurance to mitigate not only adverse costs and security for costs but also their own spend is less well known. ATE providers have broadened their offerings to cover own disbursements, counsel’s fees, solicitor’s fees, and the work in progress of restructuring specialists. From 2013, the insolvency litigation funding landscape has had to respond to sweeping changes under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, including the non-recoverability of CFA success uplifts and ATE premiums from the losing side (implementation for insolvency cases was postponed until April 2016). As with...
This Practice Note offers direction on taking enforcement action within the care home sector. It explores approaches to shape the sale of an insolvent care home business with regulatory hurdles in mind and signposts risks. It also outlines considerations when preparing a sale agreement for an insolvent care home. The enforcement and sale journey for distressed care homes can be lengthy and strewn with pitfalls. Although this Practice Note points to core matters needing attention, each situation will present its own distinct challenges. Insolvency and the care home industry—overview Care homes provide housing and personal support for those unable to live independently. Some also deliver care from qualified nurses or specialise in serving particular groups, such as younger adults with learning disabilities. The industry as a whole has suffered significantly in recent years. Challenges persist in parts of the market, especially at the smaller end,...
Introduction to SPVs What is an SPV? ' SPV' means 'special purpose vehicle'. An SPV is a corporate entity, commonly with limited liability status, incorporated specifically to undertake a structured finance transaction in a selected legal jurisdiction and with an appropriate ownership set-up which, for tax, regulatory and/or accounting reasons, produces overall favourable treatment for the transaction it has been created to execute. SPE (special purpose entity) and SPC (special purpose company) describe essentially the very same idea. ( SPV, SPE and SPC can also denote 'single purpose vehicle', 'single purpose entity' and 'single purpose company' respectively). Under Regulation ( EU) 2017/2402 (the EU Securitisation Regulation) and UK securitisation rules, SPVs are termed securitisation special purpose entities ( SSPEs) under those regimes. SPVs are most frequently employed, in practice, as financing vehicles (typically, issuers of securities) in structured finance deals (such as...
General Set-off grants one party, Party A, who is owed money by another, Party B, the means to secure payment by setting off the sum owed through a reduction of Party A’s separate liability to Party B. Consequently, where a creditor and debtor have had mutual dealings, the creditor is entitled to set-off against the debt they are owed any amount that they owe to the debtor. The rules for administration set-off and liquidation set-off are contained in the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, rr 14.24 and 14.25, respectively. The rules governing bankruptcy set-off are found in section 323 of the Insolvency Act 1986 ( IA 1986). Under insolvency set-off, an account is taken of what is due from each party to the other in respect of their mutual dealings, and the sums owed by one party to the...
No individual may act as an insolvency practitioner ( IP) for another at any time unless both: security is maintained for the proper discharge of their functions, and that security satisfies the prescribed conditions for acting in relation to that person This framework exists to safeguard creditors and other interested parties against losses caused by the IP’s fraud or dishonesty, or the fraud or dishonesty of another committed with the IP’s connivance. The expense of putting this security in place is treated as a cost of the insolvency proceedings. Security requirements Terms of the bond The required security is a bond approved by the Secretary of State which must: be in writing or electronic form, include provision whereby a surety undertakes joint and several liability for losses relating to the insolvent debtor arising from the fraud or dishonesty of: ...
The duty of insolvency office-holders to preserve information and its relationship with the Civil Procedure Rules The entitlements and obligations of insolvency office-holders regarding records, and the information contained within them, derive from, and are constrained by, the Insolvency Act 1986 ( IA 1986), the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, the Insolvency Regulations 1994 ( IR 1994), SI 1994/2507, together with the Civil Procedure Rules 1998, SI 1998/3132. In the course of administering an insolvent estate, an office-holder may acquire, retain, or produce multiple types of documents. Such rights and responsibilities relate to both the papers themselves and the data they hold, and exist by virtue of those instruments and remain subject to their provisions. This includes procedural duties and constraints......
This Practice Note sets out the following facets and issues concerning an office-holder’s exposure to adverse costs in litigation: the overall position where an office-holder is a claimant or a defendant in proceedings the office-holder’s entitlement to reimbursement from the insolvent estate the possible costs implications of discontinuing a claim the potential ranking of any adverse costs order the personal exposure of office-holders for adverse costs security for costs The general position if an office-holder is a claimant or defendant in litigation If an office-holder issues proceedings in their own name, they proceed entirely at their own risk as to costs. Should a costs order be made against them, they are personally liable and cannot confine that liability to the extent of assets available in the insolvent estate ( Re Wilson Lovatt & Sons). However, unless the court directs otherwise, they will have a right to reimburse the amount of any...
Applicable law The common law prior to the Insolvency Act 1986 ( IA 1986) embraced a pragmatic rule: when dealing with the estates of an insolvent partnership and its partners, liabilities of the firm should be discharged from firm assets, whilst a partner’s personal liabilities should be satisfied from that partner’s own assets. This rule of convenience kept firm and personal funds separate at first instance, and guided the conduct of overall administration. Where either estate proved insufficient, any shortfall was to be met from any surplus available in the other estate or estates (see Re Rudd & Son). This Practice Note considers the regime relevant to matters within the ambit of the Insolvent Partnerships Order 1994 ( IPO 1994), SI 1994/2421. For guidance on what amounts to partnership property in a general partnership, see Practice Note: The nature of a general...
Funders regard insolvency disputes as compelling for the following reasons: claims typically display clear causation and are underpinned by strong documentary evidence and records insolvency practitioners ( IPs), acting as officers of the court, bring credibility and rigour to the process financial recoveries can be substantial, especially in cases involving director misconduct or asset tracing This Practice Note discusses seed funding and portfolio funding in detail. For further reading on third party litigation funding more generally, please consult the following Practice Notes set out below: Third party litigation funding—a guide for dispute resolution practitioners Third party litigation funding for insolvency practitioners Third party litigation funding process for insolvency practitioners Funding and litigating a claim vs selling or assigning a claim Litigation funding agreements—pricing Litigation funding...
This Practice Note briefly explains insolvency issues in PFI/ PF2 projects. It is designed to give restructuring and insolvency practitioners a concise, high-level overview of key contractual terms, restructuring routes, and steps that may safeguard a client’s position, presented in a practical format in routine professional practice. What are PFI/ PF2 projects? The Private Finance Initiative ( PFI) is a form of public–private partnership ( PPP) used to commission and deliver a range of public assets and services, such as schools, hospitals, prisons, rail links, roads and social housing across the public sector. PFI schemes are financed by private sector lenders, with private contractors assuming the burden and risk in relation to design, construction and/or day-to-day operations. A typical PFI arrangement is long term, enduring for around 25–30 years. Private Finance 2 ( PF2) was launched by the government in December 2012 with the intention of...
ARCHIVED: This archived Practice Note outlines the Insolvency Express Trials pilot, which operated from 1 April 2016 until 6 April 2020. This Practice Note is archived. It describes the scheme in outline. With effect from 1 April 2016, Civil Procedure Rules Practice Direction 51P ( CPR PD 51P) took effect, setting out the detail of the new pilot labelled Insolvency Express Trials ( IET). The CPR Committee approved the IET pilot on 4 December 2015. Any paragraph references in this Practice Note are to the paragraphs of the PD. For an interview with the then Chief Registrar, Stephen Baister, about IET, see News Analysis: Insolvency Express Trials pilot scheme. Please note that, since the IET pilot began, two relevant changes have arisen: first, the introduction of the Business and Property Courts of England and Wales ( B& PCs). Insolvency and Companies Act...
Liquidation and bankruptcy The overarching rule for both liquidation and bankruptcy is that, once expenses and preferential debts are settled, the company’s or bankrupt’s property is applied to meet their debts. Those debts are to be paid in full; if the estate is insufficient, they abate proportionately between themselves. For further detail on the order of payments, see Practice Notes: Waterfall of payments—a comparative guide Waterfall of payments in liquidation Waterfall of payments in bankruptcy Whenever the liquidator or trustee in bankruptcy (the trustee) holds sufficient funds in the insolvent estate, and subject to retaining sums needed for the expenses of the liquidation or bankruptcy, they must declare and distribute dividends to creditors for the debts they have proved. This reflects that, if the liquidator or trustee waited until all assets of the company or bankrupt were realised and all...
Unless the application proceeds without notice, once an application within insolvency proceedings has been issued, an early obligation is to serve the application and its supporting documents on the respondent. Challenges may arise where service cannot be completed because, for instance, the respondent cannot be located or is deliberately evading service. This Practice Note explores the options open to an applicant who cannot effect service of an application and accompanying documents in insolvency proceedings on a respondent. It does not consider alternative service methods for bankruptcy petitions, winding‑up petitions, or administration applications by which insolvency proceedings are commenced. For guidance on serving documents that commence insolvency proceedings, see Practice Notes: Practice Notes: How do you effect service of a creditor’s bankruptcy petition on the debtor and what if service cannot be effected? Compulsory winding‑up of a company—the process and...
FORTHCOMING CHANGE: The Charities Act 2022 ( CA 2022) obtained Royal Assent on 24 February 2022 and will be introduced largely in stages from October 2022 through to early 2024. CA 2022 gives effect to the bulk of the recommendations in the Law Commission’s 2017 report, ‘ Technical Issues in Charity Law’. For a synopsis of the accepted recommendations, see News Analysis: Government response to Law Commission report ‘ Technical Issues in Charity Law’. For additional guidance on the roll-out of CA 2022, see News Analyses: Charities Act 2022—what do we know so far?, Charity land disposals—new law is coming into force, and government guidance: Charities Act 2022: implementation plan. Of particular importance to this Practice Note are the amendments relating to the following: disposals of land by liquidators, provisional liquidators, administrators, receivers and mortgagees, which are to be excluded from Part 7 of the...
Applicable legislation Insolvency legislation typically includes bespoke measures for insurers, reflecting the sector’s regulated nature and the significance of insurance to the wider economy. The Financial Services and Markets Act 2023 ( FSMA 2023) revises the UK framework for insurer insolvency, clarifying certain aspects and broadening safeguards for insurers and their policyholders undergoing insolvency or write-down processes—the government consulted on these reforms in 2021 and issued its response in April 2022 (refer to News Analysis: Financial Services Markets Bill sets out post- Brexit framework for UK financial services, HM Treasury publishes response to consultation on insolvency arrangements for insurers— LNB News 07/04/2022 78 and Practice Note: The Financial Services and Markets Act 2023—essentials). The Prudential Regulation Authority ( PRA) released consultation paper CP3/23, Dealing with insurers in financial difficulties, outlining proposed rules and policy in light of the FSMA 2023 changes (see: LNB News...
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When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...
This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...
Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...
I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...
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