Secret commissions – otherwise known as bribes – leave the taint of illegality on any transaction of which they form part and can have consequences far into the future. The High Court powerfully made that point in castigating mortgage brokers who violated the duty of loyalty they owed to a farmer client.
After taking advice from the brokers, the farmer took out an £81,000 mortgage on his property to raise capital and to consolidate his existing borrowings. He testified that the brokers told him they would organise everything on his behalf and that all he had to do was to sign on the dotted line. He knew that the brokers would charge him a commission for their services, but they took no steps to inform him that they would also receive a commission from the lender.
More than a decade after those events, a company which had taken an assignment of the mortgage obtained a possession order against the property on the basis that the farmer was in default of his repayment obligations. The farmer’s plea that the mortgage should be rescinded due to the secret commission received by the brokers was rejected by a judge.
In upholding his appeal against that outcome, the Court found that the brokers owed him a fiduciary duty loyally to serve his interests as their client. Their performance of that undivided and single-minded duty was fundamentally undermined by their receipt of the secret commission. The fact that the farmer may have been happy with the mortgage was irrelevant in that the brokers’ obligation was to find him the best possible deal they could.
The original lender had taken the hazardous course of relying on the brokers to tell the farmer that they would be receiving commission on both sides of the deal. On the basis that a debtor should not be prejudiced by the assignment of his obligations, the company was in the same position as the original lender. Subject to the farmer coming up with satisfactory alternative proposals to discharge his debt, the Court directed that the mortgage be rescinded and set aside.
Family disputes frequently focus on inheritance and can inflict immense anxiety and pain on all concerned. A case concerning a young man who died tragically when he stepped in front of a train, however, showed that the best way to avoid such conflict is to make a professionally drafted will.
The deceased, who had learning disabilities and mental health issues, was aged just 35 when he died but was a wealthy man due to an inheritance from his grandfather. An inquest resulted in a verdict of accidental death. Following the accident, his mother was granted letters of administration on the basis that he had died intestate – without making a valid will.
However, his uncle by marriage, with whom he had had a close relationship while he was growing up, subsequently launched a probate claim on the basis that he had in fact made two duplicate wills prior to his death. The wills, under which the uncle stood to inherit cash and property, were in identical terms and were apparently executed on the same day.
The deceased’s mother claimed that the wills were forgeries which had been created several years after his death. She pointed to the fact that they had been signed on his behalf by a man who was later convicted of an unrelated fraud and jailed. The man, who signed the wills in exercise of an enduring power of attorney granted to him by the deceased, was not a solicitor but was on occasions willing to let others think he was. He had since died.
In ruling on the matter, the High Court acknowledged that the involvement of a fraudster in the wills’ execution created a potential for forgery. However, in finding that they were genuine, the Court could detect nothing in their contents to arouse suspicion. The fraudster would have gained nothing from the wills and, under their terms, the deceased’s mother and brother remained his principal beneficiaries.
After hearing evidence from handwriting experts, the two witnesses to the wills and others, the Court found that they were duly executed. They had been signed in the presence of the witnesses and the deceased, at the latter’s direction. The Court was also satisfied that the deceased understood and approved their contents.
The grant of letters of administration to the deceased’s mother was revoked and the Court pronounced in favour of the duplicate wills. Given the long history of dispute between members of the family, the Court also ruled it appropriate and necessary to appoint, in the mother’s place, an independent professional as executor of the deceased's estate.
Remote hearings via Zoom, Skype and other communications software have made it possible for the family justice system to continue functioning during the COVID-19 pandemic. However, as a Court of Appeal case showed, such hearings carry the ever-present risk of private comments being overheard.
The subject matter of the case could not have been more serious in that a mother was accused of either causing the death of her toddler or failing to protect him from the man with whom she lived. A family judge was engaged in a fact-finding hearing which was designed to uncover the truth about the child’s death and, if possible, to identify a perpetrator or perpetrators.
Due to the pandemic, the judge conducted a hybrid hearing, during which some of the parties, their witnesses and legal representatives appeared physically in court whereas others attended via Zoom. The mother was in the witness box when she said she had developed a cough. The judge, completely appropriately, sent her home and agreed that she could give the rest of her testimony via Zoom.
After the court rose, however, a court official followed the judge into her chambers bearing a laptop which, although closed, remained linked to Zoom. Those in the courtroom, including the mother, overheard the judge having a private phone conversation with her clerk in which she expressed her frustration that the hearing, which had already overrun its allotted time, would be further delayed.
The judge was overheard to make a number of pejorative comments about the mother, including that she was pretending to have a cough and that she was trying every trick in the book to avoid answering difficult questions. The mother’s lawyers later asked the judge to recuse herself – effectively bow out – from continuing to preside over the hearing. She refused to do so, but the matter was adjourned pending an emergency application to the Court of Appeal.
Ruling on the matter, the Court noted that what happened was a consequence of the tremendous pressure under which family judges found themselves during the pandemic. All over the country, judges were battling against powerful odds to keep the show on the road for the sake of children.
Expressing considerable sympathy for the judge, the Court noted that she had made her regrets plain and accepted that her comments were very critical. At no time prior to making her overheard comments was there any suggestion that she had shown bias or approached the case with anything other than scrupulous fairness.
In allowing the mother’s appeal, however, the Court found that the judge’s comments were such that a fair-minded and informed observer might conclude that there was a real possibility of bias on her part. She should thus have recused herself. The Court directed that the fact-finding hearing should proceed before a different judge.
It is a fundamental feature of any free society that justice must be done in public, but how does that principle sit with the right of individuals not to have sensitive details of their private lives exposed to the public glare? The Employment Appeal Tribunal (EAT) had the difficult task of balancing those factors in a guideline case.
The case concerned a transgender claimant who was in part successful in proceedings against his former employer. He did not attend the Employment Tribunal (ET) hearing himself on mental health grounds and was represented by his father. He was named in the ET’s published decision, which made reference to his transgender status and sensitive issues relating to his mental health.
Ten days after the publication, the claimant asked the ET to delete those references and to anonymise the decision so that those who read it would not be able to identify him. The ET refused his application but he appealed on the basis that the decision’s publication in unredacted and un-anonymised form violated his right to respect for his private and family life, enshrined in Article 8 of the European Convention on Human Rights.
Ruling on the matter, the EAT found that it would be disproportionate to delete from the decision those passages that dealt with the sensitive issues. Anonymisation of the decision was, however, a less drastic means of protecting the claimant’s Article 8 rights.
No application for an anonymity order had made been made during the hearing but, given the highly personal and sensitive nature of the references, the ET was plainly wrong not to make such an order of its own volition. Had the claimant’s retrospective application been properly considered, the only possible outcome would have been an order for anonymisation. The EAT directed that his name be replaced by random initials in the published decision.
Breaching a planning enforcement notice is a serious offence and landlords should take careful note of a case in which a property owner was stripped of over £500,000 in rent paid on a house which had been converted into 12 flats without planning consent.
After buying the house for £340,000, the landlord obtained permission to convert it into three flats. However, he flouted the terms of the consent by converting it into four times that number. It was some years before the council discovered what had happened but, when it did, it issued an enforcement notice against him, requiring that the property cease to be used as self-contained flats.
The landlord ignored letters from the council and took no steps to comply with the notice. After the council prosecuted him, he pleaded guilty to breaching the notice and was fined £20,000. He also received a £527,887 confiscation order, that sum representing every penny of rent that had been paid by tenants of the property over a period of more than four years.
Challenging that order, the landlord argued that the true source of the rent paid was not his breach of the notice but the lawful tenancy agreements made with individual tenants. He also submitted that the fact that he had planning consent for three flats should have been taken into account. The order was said to be disproportionate in that it was based not on his profits from the property but on gross rental receipts.
Ruling on the matter, however, the Court of Appeal found a direct link between his criminal conduct and the receipt of rent. The criminal benefit he received was properly adjudged to be the total value of the rents obtained. Although he could lawfully have converted the house into three flats, the fact that he might have done things differently had he chosen to do so was not the point.
The landlord’s appeal against the confiscation order was dismissed. However, the Court reduced the amount of his fine from £20,000 to £13,333 on the basis that he should have been given a one-third discount in recognition of his guilty plea.
There is a powerful public interest in parties to contracts having the freedom to agree how any disputes between them should be resolved. That principle underpinned the Court of Appeal’s ruling that a dispute arising from a property company’s brief removal from the Register of Companies must be submitted to arbitration.
An aerospace company had entered into a contract by which it agreed to procure the sale of two parcels of land to the property company for £93 million. The contract contained an arbitration clause to the effect that any disputes arising would be submitted to an independent arbitrator for resolution. The contract provided that, if the buyer suffered an event of default, the seller would be entitled to terminate the agreement forthwith. Such an event would include the buyer being struck off the Register or dissolved.
Due to an unfortunate oversight, the buyer was late in filing its annual return and accounts at the end of a financial year. A reminder from the Registrar of Companies went astray and the buyer was struck off the Register and dissolved. Once it realised what had happened, the buyer successfully applied for administrative restoration to the Register. It was only in a state of dissolution for about two months but, in the interim, the seller gave notice terminating the contract.
An arbitrator later ruled that the termination was valid and the buyer’s appeal against that decision was rejected. The buyer then resorted to launching proceedings under Section 1028(3) of the Companies Act 2006, seeking a declaration that the seller’s termination of the contract was of no effect. Alternatively, it sought an order requiring the seller to enter into a new agreement on the same terms as before.
Section 1028(3) empowers judges to take such steps as they consider just to place, as nearly as may be, restored companies in the same position as if they had not been dissolved or struck off the Register. In staying the buyer’s application, however, a judge ruled that the matter concerned a dispute arising under the contract and that the buyer was thus required to first submit its claim to arbitration.
In dismissing the buyer’s appeal against that outcome, the Court noted that Section 9 of the Arbitration Act 1996 requires judges to give effect to arbitration clauses unless satisfied that they are null and void, inoperative or incapable of being performed. The buyer’s arguments that the arbitration clause did not extend to its claim for relief under Section 1028(3) and that the matter was in any event not susceptible to arbitration both fell on fallow ground.
Repairing an asset is one thing, replacing it another, and distinguishing between the two is of critical importance when it comes to calculating Corporation Tax (CT) liabilities. The First-tier Tribunal (FTT) gave guidance on where the line should be drawn in a case concerning extensive works carried out on a heavy goods vehicle yard.
The yard had over the years fallen into considerable disrepair. Weeds were growing through its surface, parts of its had broken up and filling in potholes with gravel was only an imperfect solution. The company that ran the yard had health and safety concerns and spent about £74,000 on having it resurfaced.
The company set off that cost against its CT liability for the year on the basis that it was a revenue expense arising from the yard’s repair. However, HM Revenue and Customs (HMRC) took a different view and later demanded £13,428 in additional tax on the basis that the works had resulted in the replacement or improvement of the yard. The cost of the works was said to represent a capital expense which was non-deductible for CT purposes.
Upholding the company’s challenge to that decision, the FTT noted that it could not be said that the whole of the yard had been reinstated or renewed in that its sub-surface was not replaced. There was no increase in the yard’s usable area or in its load-bearing capacity.
There was no improvement in the yard compared to its condition before wear and tear took their toll and the works were repairs in that they merely returned it to its previous standard. They did not bring something new into existence and, although the resurfaced yard would need fewer running repairs in the future, that did not render the expense capital in nature.
Employment bonuses are often paid on an open-handed ad hoc basis without regard to formality. As an employment case strikingly showed, however, such arrangements tend to create high expectations which cannot easily be met during downturns in business.
The case concerned a senior employee of a company that provided VAT-related services to corporate clients. His contract contained a bonus clause which stated that he was entitled to a maximum annual bonus of 20 per cent of his salary which would be tied to his personal performance and that of his marketing region.
Whilst the company’s business thrived, he was not set specific performance targets and was paid bonuses on an ad hoc basis which far exceeded the contractual ceiling of 20 per cent of salary. After the business hit financial difficulties so serious as to threaten it with insolvency, however, he was informed that he and other managers would receive no bonus in that financial year.
Despite the company’s financial crisis, the part of the business for which the man bore responsibility had continued to do well. He took the view that he was entitled to receive a bonus of at least £55,000, in line with previous years. When the company stuck to its guns, he resigned on the basis that the failure to pay him a bonus amounted to a repudiatory breach of his employment contract.
After he launched proceedings, however, an Employment Tribunal (ET) rejected his complaints of breach of contract and constructive unfair dismissal. It found that, on a true reading of the bonus clause, payment of his bonus was discretionary. His own performance was not the sole relevant factor and the company was entitled to take account of the parlous financial position of its business as a whole. The refusal of a bonus was nether irrational nor perverse.
Ruling on the man’s challenge to that outcome, the Employment Appeal Tribunal (EAT) agreed with the ET’s interpretation of the bonus clause. It noted, however, that the ET had made a factual error in calculating the percentage by which the man had fallen short of his budgetary target in the relevant financial year. The ET found that the shortfall was approaching 50 per cent, whereas it was in fact less than 6 per cent. That error was material and might have affected the ET’s conclusions on whether refusing the man a bonus was rational.
The ET was also not justified in finding that, unless he were paid a bonus of close to £55,000, the man would have resigned anyway. The case was remitted to a freshly constituted ET for reconsideration of issues arising from the EAT’s ruling. The EAT found that resolution of those issues would not require a complete rehearing of all the evidence in the case.
How, if at all, is the duty of local authorities to allow children in their care reasonable contact with their parents affected by social distancing rules arising from the COVID-19 pandemic? The Court of Appeal confronted that issue in a guideline case.
The case concerned three young children who were taken into interim care after one of them suffered a broken leg, an injury which was considered likely to have been inflicted. The mother was in the pool of potential perpetrators and the children were therefore taken from her care and sent to live with their maternal grandmother.
Until lockdown was announced in March 2020, the children had face-to-face contact with their mother three times a week. As the pandemic took hold, however, the council’s contact centres were shut down and the mother’s only contact with her children became indirect, via telephone and video calls.
The council took the view that direct contact could not be managed in a safe manner in that the children were too young to be expected to socially distance themselves from their mother. It persisted in refusing direct contact after lockdown rules were changed so as to permit ‘social bubbles’ in which two households could meet with each other exclusively as if they were one household.
The mother applied for a contact order on the basis that professionally supervised face-to-face meetings could take place between her and the children in a local park. Her application was rejected by a judge, who noted that, in such unprecedented times, it was difficult to assess what level of contact would be ‘reasonable’ within the meaning of Section 34(1) of the Children Act 1989.
The judge expressed enormous sympathy for parents whose contact with their children was restricted during the pandemic. Their situation was similar to that of patients dying in hospital being denied visits from friends and family, grandparents being unable to hug their grandchildren and mourners being prevented from attending loved ones’ funerals.
Amidst the unprecedented crisis, however, he found that the council was entitled to have regard to its depleted human and other resources. There was nothing so unusual about the mother’s case to justify an exception being made to the council’s policy, whilst lockdown continued, to permit only indirect contact between parents and children in care.
Ruling on the mother’s appeal against that outcome, the Court noted that the local authority had recently agreed to a resumption of face-to-face contact once a week. That rendered the case academic in practical terms, but the Court nevertheless heard the appeal on the basis that it raised issues of wider importance.
Upholding the mother’s appeal, the Court observed that, by the time the judge came to make his decision, social distancing was no longer an absolute obstacle to face-to-face contact between her and her children. The evidence did not support his conclusion that no direct contact at all was possible.
Giving guidance for the future, the Court emphasised that contact arrangements must be considered on a case-by-case basis with the welfare of children always treated as the paramount consideration. There was no doubt that face-to-face contact would be in the children’s best interests if it could be achieved. Rather than deferring to the council’s policy on the basis that it was reasonable, the judge was required to form his own view as to what level of contact was appropriate.
The Court concluded that the ordinary principles governing applications for contact with children in care continue to apply during the pandemic, even though outcomes may well be affected by the practical difficulties that are being faced.
Identity theft is a blight on society and very far from being a victimless crime. As a High Court case showed, perpetrators can expect to be pursued by the National Crime Agency (NCA) and comprehensively stripped of their ill-gotten gains.
The case concerned an overseas national who had a number of previous convictions for fraud and dishonesty-related offences. Despite having no reported legitimate income, he had built up substantial assets, including a bank balance in excess of £300,000 and three luxury Swiss watches valued at almost £200,000.
With a view to seizing those assets, the NCA sought a civil recovery order (CRO) against him under the Proceeds of Crime Act 2002. A similar order was also sought against his long-term partner. who held bank accounts with balances of close to £490,000 and a personalised number plate worth £15,000.
In attempting to explain the source of his wealth, the man claimed that it derived from property dealing, gambling and other activities. The Court, however, found on the evidence that his relevant assets, and those of his partner, were the product of various identity fraud and money laundering offences.
The partner, the Court ruled, must have had actual notice that funds which she received were the proceeds of crime. If she was not actively involved in money laundering, she at least dishonestly chose to turn a blind eye to the illegitimacy of those funds and thus could not be said to have received them in good faith.
The Court found that one of the watches, together with funds in one of the bank accounts, were the property of a bank which was the victim of certain specified frauds. In issuing a CRO in respect of all the other assets concerned, the Court ruled that they represented recoverable property within the meaning of the Act.
Technical data and know-how are the crown jewels of many businesses but there is an ever present risk of them being leaked to competitors by disloyal employees. As a High Court case showed, however, victims of such deceit are, with the right legal advice, very far from powerless in bringing perpetrators to book.
The case concerned the former product development manager of a company which designs, makes and supplies equipment used in the oil and gas industry. He worked for the company for 17 years prior to his departure. He took with him very substantial amounts of confidential and proprietary information belonging to the company and took up employment with an overseas competitor.
Rightly suspecting what had happened, the company swiftly obtained a court order which forbade the man from using, accessing or distributing the confidential information. He was, amongst other things, required to abide by restrictive covenants in his employment contract, to disclose and preserve the information and to facilitate imaging of devices and online accounts on which it was stored.
After he breached the order in numerous respects, the company applied to have him committed to prison for contempt of court. He admitted all the alleged breaches and apologised. In ruling on the matter, however, the Court found that he had been intent on making his fortune by misuse of the information and that his apology did not amount to a true expression of remorse.
His conduct was deliberate and flagrant, involving deception of a high order. He had lied in sworn statements to the Court and had neither preserved nor disclosed the material he had taken. He had persistently failed to recognise the gravity of his behaviour, which harmed the company’s business and struck at the heart of the rule of law. The Court sentenced him to 14 months’ immediate imprisonment.
The old adage that an asset is only worth what someone is willing to pay for it cannot easily be applied to private companies for which there is no ready market. The High Court confronted exactly that valuation issue in a big-money divorce case.
The case concerned a couple aged in their 40s who had two children during their 17-year marriage. By far the largest marital asset to be divided between them following their divorce was a company of which the husband, a successful entrepreneur and financier, was a founder member and the single largest shareholder.
The wife said that the husband had told her that the company might be worth more than £200 million. He, however, contended that much of the business’s expansion post-dated the end of his marriage. The company had recently encountered liquidity difficulties and a sharp fall in its profits had been reflected in his income.
Ruling on the case, the Court noted that valuing private companies is a matter of no little difficulty. Even when using the same valuation methods, professional valuers of such companies frequently produce widely differing results. Their profitability can be volatile and valuing them on a snapshot basis can give rise to misleading outcomes. The absence of an obvious market for shares in many private companies means that exposing them to the acid test of the free market is simply not possible.
After taking into account the value of the company’s net assets, and its roller-coaster fortunes since the marriage ended, the Court valued the husband’s shares as at the date of the couple’s separation at £35.5 million net of Capital Gains Tax. All of that value had been built up during the marriage and there was no dispute that their assets should be divided in accordance with the equal sharing principle.
Adding in the value of the couple’s real property and other assets, the total pot came to £39.662 million, of which each was entitled to £19.831 million. Achieving parity required the husband to pay the wife a lump sum of £16,787,595. In order to give him time to raise funds, and to minimise disruption to his business, the husband was permitted to pay that sum by instalments over a period of more than three years.
British immigration rules are amongst the toughest in the world, but every case must be considered on its own facts and human rights legislation leaves room for mercy. A striking case on point concerned an elderly Indian couple who suffered a dramatic decline in their health after coming to Britain to visit their family.
The couple, in their 60s, flew to Britain on valid entry visas to stay with their son, who has indefinite leave to remain in Britain, and daughter-in-law. They did so in order to celebrate the fifth birthday of their grandson, a British citizen. Although the woman suffered from mild dementia, they were otherwise healthy.
After their arrival in this country, however, the man suffered a severe heart attack. Although he was operated on successfully, he required regular medication and suffered from high blood pressure and diabetes. His illness also triggered a rapid deterioration in his wife’s dementia. She was receiving treatment for diabetes, hypertension and bronchial asthma together with psychiatric care.
Due to their health difficulties, which had not been anticipated prior to their arrival in the UK, the couple were unable to return to India as planned. Their application for further leave to remain in Britain was, however, refused by the Home Office and their challenge to that decision was later rejected by the First-tier Tribunal.
In upholding their appeal against that outcome, the Upper Tribunal (UT) found that their health problems represented an insurmountable obstacle standing in the way of their return to India. Requiring them to leave the UK would be unduly harsh and would amount to a violation of their human right to respect for their family life, enshrined in Article 8 of the European Convention on Human Rights.
It was not a case of foreign nationals with pre-existing medical conditions coming to Britain in search of treatment. The couple had no ulterior motive for making a claim to remain in this country, rather than applying from abroad. They would not be a financial burden on the state in that their son had undertaken to support them. At great personal sacrifice, he had shouldered the burden of paying an NHS bill in excess of £26,000 in respect of his father’s treatment.
The UT acknowledged the importance of upholding effective immigration control, but found that a ruling in the couple’s favour could not be viewed as a precedent that might encourage others to circumvent the rules. The adverse consequences to society of permitting them to remain in Britain would be slight, whereas requiring them to leave would severely disrupt their family life. Overall, the UT ruled that the latter course would be disproportionate.
Home renovations are a notoriously frequent source of dispute and, if you feel that you have been let down by a builder, you should consult a solicitor straight away. In a case on point, a householder won a £200,000 asset freezing order against a builder who he claimed left his home in a dangerous condition.
On a friend’s recommendation, the householder engaged the builder to carry out extensive works on his home at a cost of almost £240,000. The project was blighted by delay and the builder was alleged to have left the property’s electrical installations in a life-threatening condition. He was said to have mis-installed various items, to have failed to follow architects’ plans and, with a view to saving money, to have undertaken electrical and other works for which he was not qualified.
The householder terminated the building contract on the basis of what he considered to be the builder’s repudiatory breaches. For his part, the builder claimed that the householder had prematurely shut him out of the property, thus preventing him from satisfactorily completing the works. He also argued that the householder had contracted not with him but with the limited company through which he traded.
The householder, who asserted that he had to spend more than £150,000 remedying faults in the builder’s work, launched proceedings against the builder and, following a preliminary hearing, obtained an order freezing his assets up to a value of £200,000.
In dismissing the builder’s application to discharge that order, the High Court noted that he had been personally named as the contractor and that a substantial part of the contract price had been paid to him in cash. There was a good arguable case that he, rather than his company, was the contracting party. There was also a real risk that, unless restrained, the builder might dissipate his assets, thus putting them beyond the householder's reach.
Personally guaranteeing repayment of a company’s debts should not be undertaken lightly or without professional advice as it effectively removes you from the shelter of the corporate veil. In a case on point, a prominent businessman who entered into such a guarantee ended up bankrupt under the weight of a debt totalling almost £140 million.
The businessman guaranteed the debts of a company against which an international arbitration award was subsequently made. A money judgment was entered against him after the successful party in the arbitration launched proceedings to enforce his guarantee. The creditor later served the businessman with a statutory demand requiring payment of £139,786,656 plus interest, which was continuing to accrue. After the demand remained unsatisfied, the creditor petitioned for his bankruptcy.
The businessman argued that the petition was so littered with errors that it should, at the very least, be amended, re-verified and re-served. He submitted that the creditor was precluded from enforcing the debt by the terms of a settlement agreement and that the proceedings should in any event be stayed pending the creditor’s payment of a much smaller sum that it owed to him. The High Court, however, rejected all those grounds of opposition.
The Court noted that, even where a petition debt has been clearly established and any grounds of opposition have been dismissed, it retains a discretion not to make a bankruptcy order. In declining to take that course, however, the Court found that the businessman had failed to establish that he had a reasonable prospect of paying the debt in full within a reasonable time. A bankruptcy order was made against him on the handing down of the Court’s judgment.
Even the most carefully considered will cannot guarantee that concord will prevail amongst your loved ones after you are gone – but professional drafting can make all the difference. That was certainly so in the case of a woman whose attempt to achieve harmony was stymied by antagonism between her farmer sons.
In the knowledge of her sons’ poor relationship, the woman wished to bequeath the family farm in such a manner as to enable each of them to continue farming those parts of it that they had historically worked. By her will, she left the farm to them equally, but provided for each to have the option to buy out the other’s interest in their respective portions of the farm at a substantially discounted rate.
Exercise of the options required each brother to serve notice on the trustees of the will – themselves and the family’s solicitor – within three months of their mother’s death. There was no dispute that the older brother had served such a notice. He, however, denied that the younger brother had done the same.
Within the three-month deadline, the younger brother sought to exercise his option by personally delivering a notice to the solicitor’s address. He did not, however, serve the notice on the older brother. That prompted the latter to argue that the younger brother had failed to give notice in compliance with the will and that his option had therefore lapsed.
The matter was of great financial significance in that, if the younger brother had validly exercised his option, he would have the right to buy out the older brother at a price of about £370,000. If the option had remained unexercised, he would be required to pay in the region of £1,150,000 for the same land.
Ruling on the matter, the Court found that the woman’s intentions were clear from her professionally drafted will. She wanted to provide for her sons as best she could in a way which would enable them to sustain their livelihoods and interests in the family farm. Her attempt to tie up all possible loose ends, however, had resulted in the last thing she wanted – further dispute between them.
Finding that the younger brother had validly exercised his option and was therefore entitled to buy out the older brother at the discounted rate, the Court noted that both of them knew the solicitor well and that it was his address alone that appeared in the will. The woman’s intention was that he, as a trusted and independent professional, should assume responsibility for receiving service of the option notices and carrying them into effect.
Given their preferential nature, each brother would have expected the other to exercise his option. As a matter of business common sense, the Court concluded that the younger brother’s delivery of the notice to the solicitor’s address was sufficient to achieve service on all three trustees. Any other reading of the will would have achieved the illogical result of requiring him to serve notice on himself.
A firm management style is all well and good, but where it descends into harassment the financial and reputational consequences can be severe. In an employment case on point, a professional firm was landed in legal hot water by its senior partner’s uncompromising attitude and sometimes volcanic temper.
The case concerned a middle-aged barrister who resigned from the firm after seven months in its employ and launched Employment Tribunal (ET) proceedings. She claimed to have been bullied on a daily basis by the senior partner, who was said to have verbally abused her in florid terms for any perceived failings in her work.
In ruling on her claim, the ET noted that the senior partner could be generous and kind and was willing to praise good work. However, he had a very short fuse and his behaviour in the office was unconsciously boorish. He tended to erupt into a torrent of abuse, liberally spiced with very bad language, if he considered that a mistake had been made by anyone under his management.
The ET found that, on two occasions, gender-related terms of abuse he had directed at the woman amounted to sexual harassment. She had also been subjected to four instances of age-related harassment by the senior partner’s secretary, who had made comments to the effect that she was too old for the job. Following a further remedies hearing, the woman was awarded compensation totalling £46,908, including accrued interest and £5,000 in aggravated damages.
In ruling on the firm’s challenge to that outcome, the Employment Appeal Tribunal rejected arguments, which were first raised at the remedies hearing, that all the woman’s claims should be struck out, having been brought outside the statutory time limit. She was not obliged to seek an extension of time and, even had she made such an application, it would have been just and equitable to grant it.
The ET was not wrong in principle to award compensation for injury to feelings and aggravated damages. However, when it came to quantifying those awards, the ET’s reasoning was either internally inconsistent or insufficient. The firm’s appeal was in that respect allowed and the case was remitted to the same ET for reassessment of the amount of the woman’s compensation.
Anyone who witnesses a shocking event may suffer psychiatric injuries as a result – but should they be compensated if that event arises from negligence? The High Court confronted that burning issue in a ground-breaking case.
The case concerned a father who suffered a fatal heart attack whilst on a shopping trip with his two children, aged 12 and nine. The children were said to have suffered psychiatric injuries as a result of witnessing his collapse and the harrowing events that followed. A claim for damages was launched on the children’s behalf against an NHS trust on the basis that their father’s shocking death would not have occurred had his heart condition been correctly diagnosed and treated during a hospital admission about 14 months earlier.
The trust accepted that it owed a duty of care to the father, the primary victim of the alleged clinical negligence. However, it denied that it owed any such duty to the children as secondary victims. Following a preliminary hearing, the children’s case was struck out on the basis that it was bound to fail.
Ruling on the children’s appeal against that outcome, the Court noted that the issue of liability to secondary victims has exercised legal brains for many years. No clear principles had, however, emerged from a string of so-called ‘nervous shock’ cases and it was an area of the law which remained unsatisfactory. A number of similar claims were waiting in the wings pending resolution of the children’s case.
Upholding the children’s appeal and directing that their case should proceed to a full trial, the Court noted that the primary question was whether the trust could be said to have reasonably foreseen their psychiatric injuries. That in turn depended on, amongst other things, their proximity to the shocking event.
They had a close relationship of affection with their father and his rapid death would have been horrifying to ones so young. They were personally present at the scene and had endured a sudden and unexpected shock to their nervous systems. Their father’s collapse was said to be the first manifestation of the alleged clinical negligence and the 14-month lapse of time was not fatal to their claim.
The Court acknowledged that the father’s death could not be viewed as an ‘accident’ in the ordinary sense. Claims in respect of psychiatric injuries sustained months or years after a negligent act or omission might also be considered undesirable. However, it rejected arguments that enabling the children to pursue their case would open the floodgates to an unacceptable number of similar claims.
Many workers are employed by one company to provide services on the premises of another and that can give rise to debate about their legal status. In a guideline case on point, an Employment Tribunal (ET) found that a woman who managed a concession counter at a department store was a contract worker.
Space was provided within the store for branded counters and concessions and the woman was employed by a cosmetics company to manage one of them. After she launched proceedings against the employer and the store, asserting that she had been sexually harassed and victimised, the nature of her relationship with the store was considered as a preliminary issue.
The ET noted that, although it was not necessary for her to show that the store had a degree of influence or control over how she went about her work in order to establish her status as a contract worker within the meaning of Section 41(7) of the Equality Act 2010, it was clearly a relevant consideration.
The store had a significant degree of influence and control over the manner of her recruitment and she had to comply with the store’s dress and conduct codes. The store did not exert full managerial control over her but she was, amongst other things, required to display its promotional materials on her counter and it had a degree of control and influence over her day-to-day work.
In finding that she carried out work for the store, the ET noted that the stock she sold was the property of the store, as were the proceeds of its sale. She undertook refunds and exchanges for the store and participated in promotional events which were arranged by the store without reference to the employer.
Her services were provided by the employer to the store in furtherance of a contract. In the circumstances, the ET concluded that her relationship with the store was that of a contract worker. She was thus entitled to exert her rights against the store, which was her principal for the purposes of Section 41(5) of the Act.
Addressing a further preliminary issue, the ET noted that the alleged perpetrator of many of the incidents of which she complained was a security guard who worked at the store but who was employed by an external security company. She had failed to provide the very cogent evidence required to establish that he was an agent of the store for the purposes of Section 109(2) of the Act. The store was thus not liable for his actions under that provision.
When long-term relationships between unmarried couples break down, disentangling their property and financial affairs can be challenging, particularly where children are involved. As one case showed, however, a clean break is often the best option for all concerned.
The case involved a middle-aged couple who had continued to live uncomfortably under the same roof for more than three years after their relationship ended. Their oldest child had grown up and gone to university but their 14-year-old son still lived in the house with them amidst an increasingly fraught atmosphere. The woman largely inhabited an upstairs bedroom. She said that she felt unwelcome elsewhere in the house and was finding her situation increasingly intolerable.
The four-bedroom house, which they bought together, was worth about £440,000. Although he for a long time disputed the point, the man eventually agreed that they each beneficially owned 50 per cent of the property. The woman, who earned a good living as an accountant, was in a stronger financial position than the man, who had been out of work for five years due to health difficulties.
The woman launched proceedings, seeking an order that the property be sold and the proceeds equally divided so that they could move on with their lives. The man, however, argued that their son’s welfare demanded that a sale be put off until he turned 21 or finished his education, whichever was the later.
Ruling on the matter, a judge noted that the boy’s school had expressed concern that his very difficult home environment was not conducive to his welfare. He needed stability and security and to be protected from exposure to his parents’ disputes. Delaying a sale of the property would also require the woman to continue living for some years in a house where she felt uncomfortable, excluded and unwanted.
Directing that the house be put on the open market as soon as possible, the judge noted that this was not a divorce case in which she had to strive to achieve financial or lifestyle parity between the higher-earning woman and the lower-earning man. His parents had given him generous financial support and had paid the boy’s school fees. The boy did not require to live in a four-bedroom house and the couple each had equity in the house of up to £170,000 which should enable them to purchase more modest properties in the area.