Tag Archive: Blacks Solicitors

BLACKS SOLICITORS: It Is Not Necessarily Where you Live

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In a surprising decision to some, the High Court has ruled that a Russian businessman living and working in Russia is domiciled in England and therefore subject to the jurisdiction of the English courts.

In the case of Bestolov v Povarenkin, Mr Bestolov brought proceedings against Mr Povarenkin in England seeking repayment of a debt which arose under a joint venture between them in relation to various mining projects in Russia.  Mr Povarenkin argued that the English courts did not have jurisdiction and that the dispute should be determined in Russia.  This was on the basis that both parties were Russian citizens who lived in Russia; their business interests were in Russia with neither having any business interests in England; the contract (the subject of the dispute) was concluded in Russia with performance to be affected in Russia; the witnesses were in Russia and all documents would be in Russian.  Further, Mr Povarenkin submitted that the parties had not agreed that the English court would have jurisdiction to determine the dispute or that English law would be applied to the contract.

That argument might seem persuasive but the court found that Mr Povarenkin was in fact domiciled in England for the following reasons:-

  • His wife and children had, since 2013, resided in London for the majority of the year.
  • His children were educated in England and spent the whole of the school year in England.
  • The London property was effectively the family home.
  • Mr Povarenkin was in England for substantial periods of time to be with his wife and children.
  • Mrs Povarenkin had spent a substantial amount of money to satisfy UK visa requirements resulting in her being granted temporary residence with the potential to apply for permanent residence.

Taking all of the above into account it decided that, because of his family connections, Mr Povarenkin was resident in England and as such the English court had jurisdiction to deal with the claim.

It is questionable whether the Russian courts will enforce any judgment that Mr Bestolov may obtain against Mr Povarenkin.  Despite that, even if there are difficulties in enforcing a judgment overseas, being able to sue in England is attractive to many because of the powers that the English courts have to freeze assets.  

This decision demonstrates that individuals cannot avoid being treated as domiciled in England, and therefore subject to its jurisdiction, by limiting the amount of assets which they own and the time that they spend here.  The courts will look at their connection to England when determining residency and jurisdiction.  If a party wishes to avoid this then it should ensure that an appropriate jurisdiction clause is included in the contract.  

If you are involved in any dispute or require contractual documentation to ensure that the appropriate jurisdiction deals with any dispute arising from a commercial arrangement then Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: Oops… You Were Not Meant To See That!

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An important part of the litigation process is the disclosure by the parties to one another of documents relating to their respective cases.  The Civil Procedure Rules (CPR, the rules which govern civil claims) require disclosure of all documents which are relevant to their case even if those documents adversely affect it or support another party’s case. Some documents attract “privilege”, such as certain communications between a solicitor and his client, and do not need to be disclosed.

Sometimes privileged documents are disclosed by mistake.  The question then arises as to how those documents should be treated.  The CPR says that where a party inadvertently allows a privileged document to be inspected, the inspecting party may only use it or its contents with the permission of the court.  

This rule was recently considered in the case of Atlantisrealm Limited v Intelligent Land Investments (Renewable Energy) Limited.  During the proceedings ILI’s lawyers disclosed 4,891 documents including approximately 150 emails to or from lawyers advising on a transaction on which the dispute was based.  The intention had been to disclose documents that ILI’s lawyers concluded were not privileged i.e. documents which the other side already had and which did not contain any element of advice.  However, they inadvertently disclosed an email of advice from ILI’s previous lawyers to it.  That email, whilst not fatal to ILI’s case, provided “useful ammunition” for Atlantisrealm in its dispute with ILI.

Atlantisrealm’s lawyers drew the email to the attention of ILI’s lawyers.  They immediately claimed that it was privileged and had been disclosed inadvertently and asked Atlantisrealm’s solicitors to delete all copies.  This request was refused, on the basis that privilege had been waived by ILI.  ILI therefore applied for an injunction to prevent the use of the email.   

The court refused to grant the injunction on the basis that the email had not been disclosed in error but instead it had been deliberately disclosed because it was one of a number of emails between ILI and its solicitors which had been disclosed.  ILI therefore appealed.  

The Court of Appeal agreed and granted the injunction.  It found that, although the solicitor who first reviewed the document for Atlantisrealm had thought the email had been disclosed deliberately, a second and more senior solicitor acting for Atlantisrealm had realised and appreciated that the email had been disclosed in error and that ILI had not waived privilege.  It commented that in the electronic age, even with the help of sophisticated software, disclosure of documents can be a massive and expensive operation where mistakes will occur from time to time.  The disclosure procedure depends upon the parties and their lawyers acting honestly, even when that is against a party’s interests; this duty of honesty rests upon all of the parties not just the disclosing party.  

We at Blacks Solicitors can advise and assist you in respect of all litigation and court procedural matters.  If you require assistance, please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com.

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BLACKS SOLICITORS: Retention of Title

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If you provide goods to a customer you should include a provision in your terms and conditions of sale that entitle you to retain ownership of those goods, irrespective of whether you still hold possession or not, until payment is received in full.

This is called a “retention of title” clause and needs to be quite specific to have any meaningful effect. If drafted properly it could be enforced against a debtor company, even if insolvent, to recover your goods.

If a customer becomes insolvent and you have a retention of title clause in your terms and conditions then you must act promptly to distinguish the goods as yours so that they are not sold and the proceeds distributed without your approval.

In some circumstances if the goods are for an end user it may be possible for you to negotiate with them directly to discharge some or all of the sums due to you. Retention of title is a good way to maintain leverage over the debtor to encourage payment of your invoices while allowing you another opportunity to re-sell those goods.

By omitting this clause from your terms and conditions you are leaving your business exposed and providing grounds for argument in litigation. It’s important to make sure that your terms and conditions and the appropriate retention of title clause in particular are sound to increase your chances of retaining ownership of the goods provided until payment is received.

There are limitations to retention of title clauses; for example, when the goods supplied are used in a manufacturing process so as to make them unidentifiable (such as leather supplied to make handbags).  It is important therefore that the wording of the clause is drafted carefully to protect the supplier’s position in the event that payment is not made or the company becomes insolvent.  

Similarly, regular and careful reviews of your terms and conditions of trading are important to ensure that they are relevant and enforceable. If you are forced to litigate, a well prepared and comprehensive set of terms and conditions will vastly improve your chances of succeeding at a trial or achieving a settlement.

If you have a retention of title clause in your terms and conditions and a debtor is depriving you of your right to recover these items then you may wish to make an application to court seeking an injunction to prevent them selling these items and for an order to deliver up these goods to you.

If you require advice regarding the enforceability or the drafting of retention of title clauses or terms and conditions of sale then please contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Court Rules Settlement Is Final

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Many disputes settle without the need for litigation and even when proceedings have been issued the majority of cases settle before they reach trial.  However, the recent case of Mionis -v- Democratic Press SA & Others highlights the need for care when agreeing a settlement so that it does not go beyond what you intend to settle for.  

In November 2013 Mr Mionis settled a libel claim against Democratic Press, a claim which he brought following the publication of a series of articles in a Greek language newspaper concerning Greek citizens holding bank accounts in Geneva for tax evasion purposes.  The parties had resolved the proceedings by entering into a settlement agreement.  One of the terms of that agreement prevented Democratic Press from making any reference to Mr Mionis and his immediate family, either in print or online, in any jurisdiction.

However, Democratic Press subsequently published two newspaper articles which, according to Mr Mionis, provided clues to his identity and that of his brother.  Mr Mionis considered this to be in breach of the settlement agreement so he applied to the High Court for an injunction to enforce the terms of the settlement. The court rejected Mr Mionis’ application on the basis that the relevant clause in the settlement agreement was too vague and uncertain to be enforceable.  Mr Mionis appealed.

At the appeal Democratic Press said that the court should uphold the earlier decision because the terms of the relevant clause were too wide (rather than too vague) and that the effect of Section 12 of the Human Rights Act 1998 (enshrining the right to freedom of expression) meant that it would be disproportionate and contrary to public policy to allow Mr Mionis to enforce the terms of the settlement agreement.

The Court of Appeal disagreed.  In weighing up the right to freedom of expression against the contractual rights of the parties, it decided that there was nothing disproportionate on the facts in holding Democratic Press to their bargain and it granted the injunction sought by Mr Mionis.  

The court’s view was that, although the parties had agreed contractual terms that were beyond the ambit of the dispute and even though the undertaking given by Democratic Press was very broad, this did not mean that those terms should not be enforced, particularly given that Democratic Press had entered into the settlement freely.  Further, the court confirmed that for public policy reasons there should be finality in settlements.

This case demonstrates that the courts will be reluctant to overturn an agreement which has been freely entered into by the parties even in circumstances where it affects the right to freedom of expression of one of the parties.  

Blacks Solicitors LLP can assist with libel claims and all aspects of contractual matters including any disputes arising from contract.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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Blacks Solicitors: GOVERNMENT TO CRACKDOWN ON LEASEHOLD ABUSE

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Under English law property can be held in one of two ways, either under a freehold or a leasehold. When you buy a freehold property you own not only the property but also the land on which it is built. The freehold estate will be the property of the owner permanently until it is disposed of.  When you buy a leasehold property, you do own the property but you only have the right to occupy the property for a set period of time and the land that the property is built on is not owned by you.  Leasehold properties tend to be flats and apartments where the freehold of the block is owned by someone else.

Leases can vary in length and are usually between 99 to 125 years although they can last as long as 999 years.  Properties with longer leases will typically attract a higher price whereas it can be difficult to sell properties that have less than 80 years left on their lease because mortgage lenders are reluctant to provide finance for a property near the end of the term of its lease.  Also, leaseholders will often have to pay ground rent to the building’s owner.  Clauses in the lease can cause dramatic increases in the ground rent on top of management charges for the upkeep of communal areas.  Further, should leaseholders wish to make significant alterations to the property, the freeholder’s consent will usually be required such consent normally being granted following the payment of a fee to the freeholder.  It is therefore better to buy a property which is freehold than leasehold.

There has been a recent trend for developers of new build houses (as opposed to flats)  to sell the properties on a leasehold rather than on a freehold basis to create an additional income stream for them from the ground rent charged under the leases and from charging the home owners substantial sums to purchase the freehold.

According to figures from the Department for Communities and Local Government, approximately 21% of private housing in England is owned by leaseholders with 30% of those properties being houses rather than flats.  The Communities Secretary, Sajid Javid, has said that there are currently 1.2m cases of houses which are leaseholds, a number of which have seen ground rents rise drastically since the property was purchased leading to some owners being unable to sell their homes.

To tackle this problem the Department for Communities and Local Government is seeking views on proposed new rules for leasehold properties which include:

  • Prohibiting the sale of new build leasehold houses where the developer is not obliged to sell a house on a leasehold basis.
  • Restricting ground rents on new leases to a “peppercorn” level i.e. a nominal amount so that it has no real financial value.
  • Excluding leaseholders from possession orders over ground rent arrears.

It is unclear what new rules the government will introduce but having acknowledged that there is a problem with the misuse of leaseholds by developers it appears that the government is keen to tackle it.

If you require assistance in either selling or buying a property or if you wish to apply to extend the lease on a property then Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com.

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BLACKS SOLICITORS: A Brief History of Lateness – missed deadlines and the courts

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Court cases have a reputation for dragging on, with each step taking weeks or months. The courts themselves are only too aware of this and streamlining procedure was one aim of reforms introduced in 2013 which revised the courts’ approach to what lawyers refer to as “relief from sanctions”.

Sanctions in this context refer to the consequences of a party failing to take a particular step by a given deadline. Typical sanctions are that the party cannot rely on evidence which is late or that a claim or defence is struck out completely. A party can apply for relief from sanctions to avoid a penalty and, prior to the reforms, this would generally be granted where the failure did not seriously prejudice the other party.  

However, post-reforms, granting relief from sanctions is considered much more in light of the need to enforce compliance with rules.  This led to a much harsher regime.

This was reflected in 2013’s Mitchell v News Group Newspapers case, a defamation claim where the claimant failed to file a costs budget until the day before the hearing due to consider it. The judge ruled that the budget had arrived too late and deprived the claimant of the chance to recover his, very substantial, costs if he won. Relief from sanctions was applied for but refused. Mitchell looked to have brought in a zero-tolerance era.

The next year saw a raft of challenges to decisions that took the same approach as Mitchell, most prominently Denton v TH White where severe penalties had been imposed for lateness and other breaches. These challenges saw the courts deciding that the Mitchell principles had been applied over-strictly. They also noted that Mitchell had led to an overly antagonistic atmosphere between parties, which had an incentive to make the most of even minor errors by the other side. Since the Denton decisions, the courts have tried to walk a line between being too strict and too lenient, an uncertain environment in which to conduct litigation.

The best approach, of course, is to hit the deadline in the first place, meaning that parties should be thinking about costs, experts, witnesses and other key steps well in advance, rather than rushing to hit a deadline at the eleventh hour. This was underlined in the recent decision in Lakhani v Mahmud.  The defendant’s budget was served one day late and the courts refused to accept it, severely limiting the defendant’s ability to recover costs. The defendant sought relief, as the parties had agreed costs, the delay was slight and prejudice to the other side minimal, but relief was refused, in part because the application itself was made late.  Even a small default, exacerbated by further lateness, proved to have a catastrophic impact on the defaulting party’s prospects.  The lessons to be learned are clear.   

Blacks Solicitors offers expertise on all forms of disputes and can assist in relation to any litigation in the civil courts.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Beware Of Using Work Computers For Personal Matters

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The perils of using your work computer for personal matters was recently highlighted in the High Court case of Simpkin v The Berkeley Group Holdings PLC.  

In that case the Mr Simpkin was the Finance Director of The Berkeley Group.  Berkeley terminated his employment, removed him as a director and decided that he would not be treated as a “good leaver”.  As a result Mr Simpkin would not receive the substantial financial benefits of a long term incentive plan and bonus scheme of which he was a part.  He therefore issued proceedings against Berkeley.  

During Mr Simpkin’s employment with Berkeley he had sent an email from his work email account to his personal email account with an attachment containing an analysis of his expectations under Berkeley’s long-term incentive plan.  He had then forwarded the email from his personal account to his solicitor who was dealing with his divorce.

Berkeley wanted to use the email and attachment in the context of its employment dispute with Mr Simpkin but he argued that they should be prevented from doing so as the documents were protected by legal privilege – broadly speaking communications between a client and their solicitor are protected from use in proceedings by privilege.  However, Berkeley contended that Mr Simpkin was not entitled to claim privilege in relation to those documents because when a privileged document came into the hands of an opposing party in litigation there was nothing to prevent that party from using that document.  They also argued that the document was not confidential as far as it related to Berkeley - it was accepted by both parties that confidentiality was a pre-condition to privilege.  

The court decided that the documents were not confidential because:

  • Mr Simpkin had signed Berkeley’s IT policy which provided that emails sent and received on Berkeley’s IT system were the property of Berkeley.
  • Berkeley’s IT department had full access to all emails sent and received by Mr Simpkin.
  • The document was created by Mr Simpkin during the course of his employment with Berkeley and by using its IT system.

It was therefore impossible for Mr Simpkin to have any reasonable expectation of privacy as regard the preparation of those documents as he should have been aware that they would be stored on Berkeley’s servers.  The judge found that the documents in question were never confidential in relation to Berkeley or, if they were, they lost their confidentiality when they were processed on Berkeley’s IT system.

This case highlights one of a number of risks for employees who use work IT systems for private communications.  It is also a reminder to employers to ensure that their IT policies are as watertight as possible to avoid complications such as this arising both during the employment relationship and after it has ended.   

Blacks Solicitors offer expertise on all forms of disputes and can advise on any issues relating to employment policies.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Can Pay But Won’t Pay

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If a creditor is owed money by a debtor and the debt is not disputed then, usually, the quickest way to extract payment would be to serve the debtor with a statutory demand (a formal demand for payment) and, if the demand is not met, issue a bankruptcy petition (if the debtor is an individual) or a winding-up petition (in the case of a company).  However, if the debt is disputed -  i.e. the debtor “won’t pay” rather than “can’t pay” - then the insolvency process should not be used.  Instead, a claim should be issued at court.  Insolvency proceedings should not be used as a means of enforcing the payment of debts.

The recent High Court case of Breyer Group plc v RBK Engineering Limited highlights this principle.  In that case Breyer was a contractor on a building contract; it appointed RBK as a subcontractor.  The works to be carried out by RBK were covered under a written contract.  However, further works were done by RBK without an agreement as to contractual terms.  Due to the lack of a written contract, a dispute arose as to the quality of the work provided by RBK.  RBK issued a winding-up petition for £258,729.16 against Breyer for unpaid invoices.  Breyer refused to pay RBK arguing that RBK should remedy the defective works at its own cost.

The court struck out the petition.  It found that Breyer was not insolvent but that it had not paid the sums claimed by RBK as it had various defences and cross claims relating to the terms on which the work has been undertaken and the quality of that work.  It was inappropriate for such defences and cross claims to be dealt with in insolvency proceedings and the proper place for the dispute was in ordinary court proceedings.  

The use of insolvency proceedings to enforce the payment of the debt was considered to be “oppressive” and “an abuse of process”.  The court said that “while the court must be astute to avoid having the wool pulled over its eyes by a debtor trying to escape its obligations, it must be equally astute to avoid an injustice being caused by a potential creditor using insolvency proceedings to make it less likely that a justified defence or counterclaim will be pursued because the alleged debtor will be pressurized into paying the claim in full before that can be done”.

This case reinforces the principle that an insolvency procedure such as winding-up proceedings should not be used to pressurize a debtor into paying a debt which is the subject of a genuine dispute.  Any creditor who issues a petition for a disputed debt risks that petition being challenged and a costs order being made against them.

Blacks Solicitors offer expertise on all forms of disputes and can advise on any issues relating to insolvency.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Can The Court Intervene In Party Wall Disputes?

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The Party Wall etc Act 1996 (“the Act”) provides a framework for preventing or resolving disputes in relation to party walls, boundary walls and excavations near neighbouring buildings.

A building owner wishing to start works covered by the Act must give the adjoining owner notice in a set way.  Adjoining owners can agree or disagree with what is proposed.  Where they disagree, the Act provides a mechanism for resolving disputes involving the appointment of party wall surveyors.

It was previously believed that the assessment of the compensation payable in any dispute covered by the Act could only be determined by the procedure set out in it.  However, the recent case of Lea Valley Developments Limited v Derbyshire has altered this view.  In that case, it was ruled that the court could determine the appropriate method of assessing compensation following a dispute notwithstanding that the Act provided a complete code by which such disputes could be determined by a surveyor without recourse to the courts.

The claimant had entered into a contract to build 12 houses adjacent to the property owned by the defendant which comprised six residential flats.  Those building works required a notice of excavation work to be given.  Severe damage was subsequently caused to the defendant’s property and its tenants had to vacate.  It was accepted by both parties that the property was so badly damaged that it would have to be demolished and rebuilt but the parties could not agree the method of assessing the compensation payable. The defendant’s party wall surveyor argued that compensation should be assessed by reference to the cost of the demolition and rebuilding (which he estimated to be between £1m to £2m) whereas the claimant’s surveyor believed that the correct measure was by reference to the reduction in value of the properties (which he assessed as being between £500,000 to £1m).

The defendant argued that the court could not determine the question of damages because the Act contained a complete code for the resolution of disputes by surveyors and to intervene would be to interfere with the surveyors’ jurisdiction.  However, the court disagreed.  The judge held that the court could grant relief and if the Act had intended the position to be different it would need to include express words to that effect; there was no such wording in the Act.

This decision does not mean that whenever a dispute arises under the Act a party can ask the court to resolve it before following the set procedure.  Instead it demonstrates that the dispute resolution procedure set out is not unchallengeable and that the court can intervene in appropriate circumstances.  

If you are involved in any boundary or building dispute then Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Foot Dragging On Mediation Will Not Be Tolerated

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The Court of Appeal recently reminded litigants that they must give mediation proper consideration and that anything less will result in cost penalties being imposed.  

In the recent case of Thakkar v Patel, the claimant owned a building that was leased to the defendant.  The property was vandalised and as a consequence suffered flooding.  The claimant delayed carrying out repairs for several months during which time the building could not be used. The lease subsequently came to an end and the claimant made a £210,000 claim for dilapidations.   The defendant counterclaimed for £41,875 in respect of rent which it had paid when the premises could not be used.  

The claimant proposed mediation and, following an initial agreement to mediate, was proactive in making arrangements and identifying possible mediators.  The defendant, by contrast, was slow to respond and raised hurdles that ultimately frustrated the claimant’s efforts.  The claimant eventually lost patience and told the defendant that they no longer had any confidence that mediation could be arranged.  

At trial, both parties were successful with their respective claims.  The claimant was awarded £44,933.52 and the defendant was awarded £16,750 on their counterclaim.  

In deciding the issue of costs, the court examined the parties’ conduct in relation to mediation.  It found that neither had refused to engage in mediation or ignored the request to consider it.  However, the claimant had been more proactive and, by contrast, the defendant was unenthusiastic and had shown no flexibility when it came to agreeing the mediation arrangements.  The court considered that there had been real prospects of a settlement being achieved had the parties engaged in mediation.   For those reasons, it held that the defendant should pay 75% of the claimant’s costs and the claimant should pay the costs of the defendant’s counterclaim.  The defendant appealed.

The Court of Appeal held that the vast majority of the costs of the proceedings would have been saved had there been a settlement and, while the decision to penalise the defendant in costs was tough, it was not so tough as to warrant interference by it.  The appeal was therefore dismissed.  

In a clear warning to all litigants, Lord Justice Jackson stated: “…in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction.” 

This case acts as a reminder to all parties that they are required to give proper consideration to mediation.  Avoiding mediation is not an option.  The parties cannot ignore a request to mediate; they cannot blankly refuse to mediate; they should engage in the process rather than simply pay lip service to it.  Failure to do so will result in costs penalties being awarded against them.

If you are involved in any dispute and require assistance then please contact Luke Patel on 0113 227 9316 or by email at “<a href="mailto:LPatel@LawBlacks.com">LPatel@LawBlacks.com</a>

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BLACKS SOLICITORS: Dance of the Corporate Veils

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The “corporate veil” is the principle by which the liabilities of a limited company cannot be pursued against directors or shareholders, who are not personally liable for actions conducted within the normal course of their roles.

UK legal history includes numerous attempts to “pierce the corporate veil”, often when the company in question is insolvent, leaving creditors unable to recover their debts but allowing directors and shareholders to walk away unscathed despite their possible responsibility for the company’s collapse.

In a recent case, Housemaker Services Ltd v Cole, the court considered the extent of the veil. The claimant company was a building firm that had been dissolved following a failure to file accounts and reinstated 20 months later to pursue a claim against a client who was in dispute regarding the quality of building works. The company had a single director and early work was conducted between Cole and the director as a sole trader, before the company was incorporated and raised the later unpaid invoices.

The initial matter before the court was an application to allow a claim to be made outside the usual limitation period. The court refused the application and ordered the company to pay the defendant’s costs in relation to it, which of course was worth little given the company’s financial position.

Cole then applied to the court to join the director as a second claimant and apply the costs order to him directly on the basis that the company was purely a legal construct for his business, there was no real distinction between the man and the company, and the director had funded the litigation and would be the chief beneficiary had it succeeded.

On the face of it, this seems a relatively extreme case where a dissolved company is brought “back from the dead” so that (on Cole’s case) a sole director could use it as a vehicle to pursue an unsuccessful claim for long-disputed fees. However, the judge followed the courts’ general reluctance to breach the veil and refused to expose the director to any personal liability – it held that an additional component of bad faith, such as improper conduct or the claim not being truly for the benefit of the company (even if it was a very thin shell around the director) was required.

When threatened with a claim brought by a company that will never be able to satisfy a costs order, is there any other remedy? At an early stage, it may be worth the defendant applying for an order for security for costs. This order would require the claimant to pay funds into court to be used to satisfy any subsequent costs order, or else abandon the claim. Courts can be reluctant to make such orders, however, and unfortunately one reason for refusal can be that the inability of the claimant to make such a payment should not be a bar to its right to seek justice.

If you are involved in any litigation or court proceedings, Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: Tales from the Riverbank: Adverse Possession by Boat

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Adverse possession, the principle that simply by occupying land for a certain period of time you might acquire legal ownership of that land, is an attractive legal idea to the layman. In practice, and following changes to the law by the Land Registration Act 2002, obtaining adverse possession of land where a legal owner has been registered is now very difficult, but the old principles still apply over unregistered land.

These principles require that a party which claims adverse possession demonstrates that, for at least 12 years beforehand, they had both actual possession of the land, and intended to possess the land to the exclusion of all others. The second point is often where applications fail. It is not enough to simply make use of the land – the applicants must show that they acted as exclusive owners of the land, for example by fencing it off to prevent access by others.

A recent case involved an unusual claim for adverse possession. In Port of London Authority v Mendoza, Mr Mendoza was seeking possession of a stretch of Thames riverbed and foreshore on the basis that his boat had been moored there for over 12 years by the time the Authority sought to register its title to the land.

Whilst this may seem something of a desperate gambit by Mr Mendoza, he was successful at the first tribunal hearing, forcing the Authority to appeal. Mr Mendoza’s factual possession of the land, though disputed, was accepted by the Upper Tribunal, notwithstanding the tides and currents which made his occupation of it somewhat mobile. The point he failed at, as with so many adverse possession applications, was in demonstrating his intention throughout the relevant period of claiming a permanent and exclusive ownership. The mooring of a boat, the Tribunal decided, does not constitute in and of itself an unequivocal intention to possess the mooring site in the same way as, for example, fencing off a plot of land. Mr Mendoza’s residency was insufficient to demonstrate such an intention, and the Upper Tribunal found for the Authority.

Could a case with slightly different facts succeed?  If the boat owner took steps beyond simply residing on the boat for the relevant time period, entirely possibly. A dispute known to Blacks resulted in a victory for the boat owner on the basis that he paid Council Tax and had utilities connected to the boat, which the local authority conceded constituted a sufficiently permanent occupation without referring the matter to a tribunal. In similar cases, it may be the steps the mariners have taken on land that determine their right to ownership on the water.
If you are involved in any litigation or court proceedings, Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: The Price Of Free Services

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The recent judgment by the Court of Appeal in the case of Lejonvarn v Burgess & Another should act as a salutary reminder to professionals of the risk of providing free informal advice and services.

Mrs Lejonvarn had been friends with her neighbours, Mr & Mrs Burgess, for a number of years.  The Burgesses were planning to carry out a high value landscaping project on their garden at their London home.  However, they had received a very expensive quote.  Mrs Lejonvarn, who was an architect and who had previously carried out work for Mr Burgess’ company, agreed to help out her friends by providing various services for free.   These included procuring contractors to carry out the earth works and project managing those works.  It was envisaged that Mrs Lejonvarn would be paid a fee for the design works at a later stage.

Unfortunately, the project turned sour and Mr & Mrs Burgess had to incur additional costs of £235,000 to put matters right.  Mr & Mrs Burgess therefore pursued a claim against Mrs Lejonvarn to recover those additional costs.

The High Court decided that although there was no contract between the parties, Mrs Lejonvarn did owe Mr and Mrs Burgess a duty of care in tort.  Although the services were provided free of charge the Judge found that Mrs Lejonvarn had assumed a duty of care to Mr & Mrs Burgess in providing professional services on a professional basis.  The Judge held that, firstly, Mrs Lejonvarn had assumed a duty of care and, secondly, Mr & Mrs Burgess had relied upon Mrs Lejonvarn to provide those services with reasonable skill and care.  The Judge decided that a duty of care can arise even when the services are provided free of charge.  Mrs Lejonvarn appealed.

The Court of Appeal upheld the original decision.  The Court found that the duty owed by Mrs Lejonvarn was not to provide any services but to exercise reasonable skill and care in relation to any services that she did carry out.  There was no obligation on Mrs Lejonvarn to carry out the services but if she did, she had to carry out those services with reasonable skill and care.

This case provides a clear warning to professionals who are asked to provide free advice and services to friends or relatives as the professional may inadvertently assume a duty of care and end up liable in damages in the event that things go wrong.

If you have any queries in relation to any claims relating to contract or tort or any other litigation related enquiries then please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Once more into the Hedge

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The saga of the mis-selling by the banks of Interest Rate Hedging Products (“IRHP”), commonly known as Interest Rate Swaps, rumbles on.

It was reported in the Sunday Times over the weekend that The Coin Group Limited, an operator of care homes in Buckinghamshire, had settled its High Court claim against Lloyds Bank Plc over the mis-selling of three complex financial products to it by Lloyds.

When settling cases banks typically insist that the Claimant agrees to a Confidentiality Clause in the Settlement Agreement preventing the Claimant from disclosing any details of the settlement.  However, in this instance The Coin Group refused to enter into such a clause because it wanted to demonstrate to the public the flaws in the IRHP Review Scheme which has been set up by the Financial Conduct Authority (“FCA”) for dealing with IRHP mis-selling claims and because Lloyds refused to completely compensate The Coin Group for all of the losses that it had suffered as a result of the mis-sold IRHP.  

Under the settlement, Lloyds agreed to pay The Coin Group £890,923.98 for the IRHP payments which it had paid; to bear the “exit” costs of the remaining IRHP which was estimated to be in the region of £3.5m; and to pay a contribution towards The Coin Group’s legal costs.  The settlement will therefore cost Lloyds in the region of £4.5m albeit the Bank has denied any liability.

What is of particular interest in this case is the fact that The Coin Group initially took part in the IRHP Review Scheme to compensate customers who were mis-sold IRHP.  Under the terms of the Scheme, the banks would decide whether a borrower was entitled to any compensation with the help of an independent reviewer.  The Coin Group was told by Lloyds that it could not claim under the Scheme because it was a “sophisticated customer” and they were specifically excluded from the Scheme.  The Coin Group was judged to be a “sophisticated customer” because, due to the size of its assets, it was deemed to be able to judge the risk of the Swap Products.  The Coin Group is only one of thousands of borrowers who have been refused compensation under the Scheme on that basis.  

The IRHP Scheme has been criticised by many as being similar to having a trial where the Defendant is also the Judge (since the Scheme is self administered by the banks) and it has been alleged that the “sophistication test” is not actually a test of sophistication but a set of criteria designed to save the banks from having to pay compensation owed to customers.  It has also been reported on the BBC that the Treasury pressurised the FCA to water down the Scheme to save billions of pounds of redress from the major Banks, two of whom (Lloyds and Royal Bank of Scotland) are publically owned.  This allegation is denied by the Treasury.  A Judicial Review of the Scheme has now been ordered.  

It was revealed in The Coin Group case that Lloyds delayed notifying The Coin Group by several months of its decision that it considered The Coin Group to be a “sophisticated customer” and would therefore not qualify under the Scheme.  It appears there were no good reasons for this delay other than for Lloyds to frustrate The Coin Group from pursuing a legal claim against the Bank as the decision letter from Lloyds arrived a few weeks after the statutory time limit for The Coin Group to bring a claim had expired.  Fortunately for The Coin Group, it had sought legal advice before that deadline and its lawyers had issued a protective Claim Form before the expiry of the time limit.  

If you have a claim and even if you are currently pursuing your claim through the IRHP Review Scheme, you should not delay in seeking legal advice.  There are strict time limits for bringing legal claims and, even if your claim has been rejected, it does not necessarily mean that you do not have a claim; particularly given that the Scheme is now going to be scrutinised by the courts.   

If you believe you have been mis-sold a product from your bank or if you are concerned about the way your claim is being dealt with under the IRHP Review Scheme then contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Marathon Receives Buttons

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The case of Jeremy Hosking v Marathon Asset Management LLP was reported in an article headed “Breach of Trust” in this publication last October.  In that case Marathon sued Mr Hosking, a founding member of Marathon, for breaching his contractual and fiduciary duties to the company by holding discussions with a number of its employees regarding setting up a competing business.

In the case of Marathon Asset Management LLP v Seddon & Bridgeman, Marathon returned to court shortly after its victory against Mr Hosking with a claim against two of its former fund managers, Mr Seddon and Mr Bridgeman, who had joined Mr Hosking’s newly established and competing firm.  

Marathon claimed that Mr Seddon and Mr Bridgeman had copied highly confidential material onto a USB stick for use with their new employer.  It said that the information which had been taken was extremely sensitive and potentially very valuable as it included a list of all clients who had redeemed their investments with Marathon and as such provided any competing business with a readymade target list of clients. Marathon valued the information which had been copied at £15m and sought an award of damages for that sum.

Marathon’s claim was not that the files had been used by Mr Seddon and Mr Bridgeman or that it had suffered any financial loss as a result of the removal of those files but that Mr Seddon & Mr Bridgeman should pay damages equivalent to the value of the data that they had taken.  This was because only a handful of the files which had been taken had actually been used and their use did not cause Marathon any financial loss or result in any financial gain to Mr Seddon, Mr Bridgeman or their new employer. Marathon argued that damages should be assessed on the price which would have been payable by Mr Seddon and Mr Bridgeman in return for an unrestricted licence to use the material that they had taken.

However, the High Court disagreed. It decided that it was not correct to assume that the information taken by the defendants had been used and award damages as if it had; instead it awarded damages to reflect the very limited use which had in fact taken place. As Marathon had suffered no financial loss on the date it had decided to use for its damages calculation the court held that it was only entitled to nominal damages.  It therefore awarded damages of £1 against each defendant.  The Judge said that Marathon had gone for “jackpot damages” but that it had “missed the jackpot”.

This case shows that an employer will only be able to recover substantial damages from a former employee for taking confidential material if it can demonstrate that there has been significant misuse of that material which has resulted in substantial loss to the employer or profit to the former employee.  

If you require advice regarding the enforceability of any form of employment contract then please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Shareholder’s Undertaking Not Good Enough

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In civil proceedings, where a claim is brought by a corporate entity the defendant can, if it has evidence that the claimant is unlikely to be able to pay its legal costs in the event the claimant loses, apply to the court for an order for security for costs.  If granted, the claimant would be required to pay money into court to cover the defendant’s costs before the claim can proceed.  Security for costs applications are therefore a useful weapon in a defendant’s armoury if they are faced with a potentially impecunious claimant company.

Nowadays claimants can obtain after the event (ATE) insurance to cover their legal costs if they are unsuccessful with their claim. However, ATE policies can be expensive and may not always be a viable option.  Claimants who have cover are better able to defeat applications for security for costs on the basis that the defendant’s costs are covered by the policy.

In the case of Dunn Motor Traction Limited v National Express Limited, the claimant was pursuing a £20m claim in respect of profits which it claimed it had lost due to the defendant wrongfully terminating a contract between the parties.  The defendant applied for security for costs as the claimant had conceded that due to the effect of the termination of the contract its financial position had dramatically deteriorated to the extent that it might not be able to meet the defendant’s costs if it lost the case.  

The claimant did not have an ATE insurance policy but its sole shareholder, Mr Dunn, provided an irrevocable undertaking to indemnify the claimant in respect of its costs liability to the defendant.  The claimant argued that this was comparable to cases that have held that the existence of an ATE insurance policy provided satisfactory security.  

However, the High Court disagreed.  The judge found that the approach taken by the courts towards ATE policies did not apply to an indemnity provided by a shareholder.  The reasons for this were because the counterparty to an ATE policy is a “responsible and reputable insurer” whereas the shareholder of a claimant company is, effectively, the adversary of the party seeking security for costs.  Further, whereas ATE policies were a central feature of the ability of parties to gain access to justice, an indemnity provided to a company by its owner in respect of the company’s liability to bear legal costs was not.  Security for costs was therefore granted in favour of the defendant.

This case demonstrates that indemnities from third parties such as shareholders are not adequate security in the same way as ATE insurance policies and that claimants, particularly corporate entities, need to consider obtaining ATE insurance cover if there is likely to be any doubt regarding their ability to meet adverse cost liabilities.  

If you are involved in any proceedings then Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: Conduct Is All Important

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In litigation, compliance with court directions and court rules is paramount.  

Equally important is a party’s behaviour and conduct. This was highlighted in the recent High Court case of Buchanan -v- Metamorphosis Management Limited and Others.

In that case, the claimant pursued a claim for damages against Metamorphosis Management Limited (‘MML’) and a number of other defendants. However, MML had been struck off the Companies Register and therefore the claimant had to apply to restore it for the purposes of issuing proceedings against it.

There were no directions given by the court in relation to the filing or the service of the defence by MML once it had been restored. The solicitors acting for MML tried to agree directions with the claimant’s solicitors but they received no response.

Subsequently, MML’s solicitors were late in serving its defence and the claimant applied for default judgment against it. However, MML challenged the validity of the default judgment application and in the alternative it applied for relief from sanctions (i.e. that it should not suffer the potentially serious consequences of filing late) and asked that it be allowed an extension of time for the service of its defence.

The court refused to grant the claimant default judgment but instead allowed MML relief from sanctions by granting it an extension of time for the service of its defence. The judge was highly critical of the claimant’s approach to the litigation and the entrenched position that it had adopted which had resulted in the various applications being made to the court.  

The judge stated that this was a case which “cried out for a co-operative approach in agreeing a sensible timetable for a heavy piece of litigation” rather than the tactical approach which had been adopted by the claimant.  

He also decided that the claimant was wholly responsible for the parties having to appear before him on the various applications. For those reasons he dismissed the claimant’s application for default judgment and allowed MML relief from sanctions.  In the judge’s view this “was not a case that required the issuing of applications for default, but for sensible discussion”. 

The Civil Procedure Rules (the procedural rules that govern civil cases) require litigants to engage with each other and to co-operate to move matters forward in any court case.  Where a party fails to do this, as in the above case, they run the real risk of being punished by the court.

If you are involved in litigation and require assistance then the Commercial Dispute Resolution Team at Blacks Solicitors is able to assist.

Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: # Come fly with me … fly with me…

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In litigation a party’s conduct can sometimes have a significant bearing on the outcome of the case.  So it proved in FlyMeNow Limited v Quick Air Jet Charter GmbH, which was heard by the High Court at the end of last year.

The case concerned a dispute between an aircraft charter company (FlyMeNow) and an aviation company which provided air ambulance flights (Quick Air).  Quick Air flew a number of flights for FlyMeNow and issued invoices to it as a result.  However, FlyMeNow failed to pay.  As a consequence Quick Air circulated an email which was headed “WARNING. Company you should not deal with! Pecuniary difficulties!” which stated that FlyMeNow was not able to pay the outstanding amount due to Quick Air.  The email, which was circulated to 26 companies in the aviation industry, suggested that FlyMeNow was insolvent.   

FlyMeNow pursued a claim for damages for libel against Quick Air.

Quick Air admitted that it had published the email and that it had referred to FlyMeNow and that it was defamatory but it relied on the defence of “justification” on the basis that the natural and ordinary meanings of the words complained of were substantially true.  However, notwithstanding Quick Air was able to prove that FlyMeNow was “perilously close” to being insolvent, that it “was operating on a knife edge” (and it was therefore true that it would be financially unsafe for others to deal with them) and it was also true that FlyMeNow was a defaulter who had failed to settle outstanding invoices, its defence ultimately failed as it was unable to prove that the meaning of the email, that FlyMeNow was actually insolvent, was true at the time the email was sent.  

However, although the judge decided that FlyMeNow had been defamed by Quick Air (as FlyMeNow was not technically insolvent as claimed) he held that it was not entitled to substantial damages.  The judge found that the email was “very largely true” and that FlyMeNow had “lied repeatedly” to Quick Air about the reasons for non-payment of its invoices and that it had “behaved disgracefully at the time” and it had “behaved disreputably and disgracefully since”. Further, the judge found that FlyMeNow’s own conduct had played a significant role in causing Quick Air to publish the untrue allegation of insolvency.  For those reasons the Judge awarded FlyMeNow £10 for the damage to its reputation.

This case should act as a warning to all litigants that when going before the court their conduct will be closely scrutinised and any disreputable behaviour will be taken into account.

If you require advice regarding any issues concerning defamation or insolvency then please contact Luke Patel on 0113 227 9316 or at LPatel@LawBlacks.com

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BLACKS SOLICITORS: Do you have capacity?

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In the case of Fehily v Atkinson which was heard by the High Court at the end of last year, the Court had to consider the issue of whether a person had sufficient mental capacity to enter into a transaction.  

In that case, Mrs Fehily was seeking to annul a bankruptcy order which had been made against her following her failure to comply with the terms of an individual voluntary arrangement (IVA) which she had entered into to avoid being made bankrupt by HMRC after her failure to pay a substantial tax liability.  Mrs Fehily argued that she had lacked the necessary mental capacity to enter into the IVA.

The District Judge dismissed Mrs Fehily’s application, rejecting her argument.  The Judge also decided that even if the IVA was ineffective, there would have been little point in annulling the bankruptcy as Mrs Fehily would inevitably have been made bankrupt by HMRC.  Mrs Fehily appealed.

The High Court dismissed Mrs Fehily’s appeal and provided useful guidance on the test to be applied when assessing a person’s mental capacity to enter into a transaction.  The following principles are relevant:

  • The person needs the mental capacity to recognise the issues which must be considered, to obtain, receive, understand and retain relevant information and to weigh the information in the balance in reaching a decision.
  • The person may have capacity for one type of decision but not another.
  • Capacity may vary over time and should be assessed at the specific time when the decision was made.
  • The question to be addressed is whether the person had the ability to understand the transaction and not whether he actually understood it.
  • Although help may be needed to understand the transaction, it did not prevent the person from having the capacity to understand it.  

Ultimately, a person requires the insight and understanding to realise that advice is needed, the ability to find and instruct an appropriate adviser and a capacity to understand and make decisions based on that advice.  

This case has helped clarify the test for mental capacity, a subject which has been raised from time to time by litigants in order to try to extract themselves from a transaction or contract which they have entered into.  

At Blacks Solicitors we can assist in any type of civil or commercial dispute you may be involved in or on any issue concerning insolvency.  Please contact Luke Patel on 0113 227 9316 or at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: Court refuses to save an incomplete contract

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The recent case of Wells v Devani has highlighted the perils of failing to agree the terms of a contract fully before performing that contract.

Mr Wells was property developer who had a number of unsold flats in London.  Following an exchange of emails and a telephone conversation, Mr Devani (an estate agent) agreed to sell the flats for a commission of 2% plus VAT per transaction.  

Crucially, however, Mr Devani did not specify the circumstances in which his commission would become payable.  Mr Devani subsequently introduced a buyer who agreed to buy all of the flats.  It was only at this point that he sent out his terms of business to Mr Wells.  

Following the sale of the flats Mr Devani sought commission of £42,000 plus VAT for introducing the buyer.  Mr Wells refused to pay with the result that Mr Devani issued proceedings.

At trial, Mr Devani was successful.  The trial judge found that, although the contract was incomplete in that it did not specify the circumstances in which Mr Devani’s commission would become payable, a term should be implied into the contract whereby payment would become due upon the sale of the flats.  Mr Wells appealed.

The Court of Appeal overturned the decision and dismissed Mr Devani’s claim.  It found that although there were a number of possibilities as to when the commission could have fallen due (for example, upon the exchange of contracts or when the transaction was completed) the failure to specify such a fundamental term in the contract meant that no agreement existed between the parties.  

The Court of Appeal took the view that the courts cannot imply terms into an agreement where to do so would transform an incomplete bargain into a legally binding contract.

Although this case relates to the commission payable to estate agents, the ruling by the Court of Appeal will apply to all contracts.  The lesson from it is that parties need to specify all of the contractual terms upon which they intend to rely at the outset as the failure to do so could result in there being no contract at all.

Blacks Solicitors can assist with all aspects of contractual matters from drawing up a contract to dealing with any contractual disputes.  Please contact Luke Patel on 0113 227 9316 or at “LPatel@LawBlacks.com

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BLACKS SOLICITORS: Failure to complete

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On a typical conveyancing transaction the buyer is required to pay to the seller a deposit equivalent to 10% of the purchase price upon exchange of contracts.  The deposit provides the buyer with an incentive to complete and the seller with a guarantee of the performance of the contract.  If the buyer fails to complete after exchange then the deposit is forfeited.

The usual position is that the buyer is not entitled to the return of the deposit but, in certain circumstances, the buyer can apply to the court seeking an order for its return. However, such an order will only be made in exceptional circumstances; the recent case of Solid Rock Investments UK Limited v Reddy shows how difficult it can be for the buyer to succeed.  

In that case the buyer agreed to purchase a property for £430,000 and paid a 10% deposit.  However, it encountered difficulties in obtaining funds from abroad and failed to complete the purchase on the completion date.  The seller rescinded the contract and kept the deposit.  On the following day, the buyer told the seller that it was ready to complete and offered to pay interest and costs in addition to the purchase price but the seller was insistent that the contract had been rescinded.  The seller subsequently sold the property to another party at an increased price.  

The buyer applied to the court for the return of the deposit. However, its application was rejected and it therefore appealed on the basis that the original judge had failed to take into account the fact that the seller had received a financial windfall upon rescission and that the buyer had offered to pay both the seller’s costs and interest so that the seller would not actually suffer any loss following the failure to complete.

The appeal was rejected.  The court outlined the factors which would need to be taken into account in dealing with such an application.  These were:

  • The fact that the seller had not suffered any loss as a result of the buyer’s failure to complete could not, of itself, amount to a ground for order for the return of the deposit but the economic impact on the seller would be a factor that the court could take into account.  
  • It would be relevant to consider how close the buyer came to completing and whether any alternatives were proposed by the buyer and, if so, whether they were more advantageous to the seller than the original terms of the contract.
  • Whether the seller had caused or contributed to the failure to complete.
  • A lack of funding due to matters which were beyond the buyer’s immediate control would not normally entitle the buyer to the return of the deposit.

This case illustrates that, although it is possible, it is extremely difficult for a buyer to recover a deposit which has been paid if there has been a failure to complete on his part.  

If you are involved in a dispute, contractual or otherwise, then the Commercial Dispute Resolution Department at Blacks Solicitors can assist, please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: No duty on banks to advise on onerous loan terms

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As readers of this publication will be aware, in the last few years there have been various articles covering the mis-selling of interest rate hedging products by the high street banks.  Those claims have primarily claimed negligent advice by the banks to their customers.  However, in the recent case of Finch & Another v Lloyds TSB Bank Plc the allegation was different: that the bank had failed to provide advice in the first instance, namely to provide a warning as to the existence of onerous terms within the loan agreement and the effect of those terms.  

The Claimants took out a 10 year fixed rate loan for £11.6m in January 2008.  The loan agreement contained a (typical) clause which required the borrower to pay break costs in the event of early repayment.  The Claimants alleged that it was only when they tried to re-finance in 2009 that they discovered they would have to pay over £1m in respect of those break costs.  

The Court had to decide whether the bank owed either a contractual or tortious duty to advise the claimants and, if it did, whether the bank had breached either duty by failing to advise the claimants of the effect of the early repayment clause.  

The claimants argued that the duty on the bank arose out of the close working relationship between the parties or, alternatively, was implied under Section 13 of the Supply of Goods and Services Act 1982 (which states that services will be provided with reasonable skill or care).

The Court ruled that there was nothing in the contractual documentation to suggest that the bank had agreed to provide advice in connection with the loan agreement and it rejected the argument that a contract to advise on the scope or the effect of the agreement arose out of the closeness of the relationship between the parties.  The Judge held that each party had acted in its own self-interest which was demonstrated by the fact that all the terms of the loan were negotiated between the bank and the claimants’ professional advisers.

The Judge also rejected the argument that the bank had assumed a tortious duty.  He ruled that it had no general duty to advise customers and that there would have to be “exceptional circumstances” before it could safely be concluded that the bank was under a duty to give advice in relation to a product which it was offering.  This was especially the case when the customer had its own professional advisers and the provision of advice by the bank might have been contrary to its own commercial interests.  

Accordingly, the claimants’ claim was dismissed in its entirety.  

This case highlights that the courts are reluctant to imply terms into a contract.  It shows that the relationship banks have with their customers will not automatically turn into an adviser/client relationship unless specific circumstances exist which show that the customer has sought advice which has then been provided by the bank.

If you are currently in dispute with your bank concerning a financial product sold to you then contact Luke Patel on 0113 2279 316 or by email at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Keeping time

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There has been plenty of case law on the subject of when a claim is “brought” for the purposes of stopping a limitation period running – it is when the Claim Form is delivered to the court office, accompanied by a request to issue and the appropriate fee.  A recent case, Dixon v Radley House, has explored further what is meant by “the appropriate fee”.  

The Claimants brought claims for misrepresentation, breach of contract and negligence against the Defendants, who were architects and engineering consultants, in respect of works carried out to their home. Proceedings were issued claiming damages for misrepresentation in the sum of £35,894.78 and damages for breach of contract and/or negligence to be assessed. The correct fee for a claim of that amount was paid and the proceedings were issued. However, when the Claim Form and Particulars of Claim were served, they referred to a much higher claim for damages, alleging that the Claimants had been obliged to carry out remedial works amounting to over £500,000.  

When issuing proceedings, the size of the court fee depends on the amount that is being claimed.  In light of this, the Defendants said that as the value of the actual claim was higher than originally stated a much higher court fee should have been paid and that, because it was not, the claim had not been “brought” for the purposes of limitation and the action was statute barred.  

Amongst other things, the Defendants relied on an earlier case, Lewis v Ward Hadaway, which regular readers will remember.  In that case the court decided that an underpayment of the court fee before a limitation period expired was not payment of “the appropriate fee” and therefore that the claims in question were not “brought” in time.  

The Judge did not accept the Defendants’ argument.  The crucial distinction, it was decided, was that the Claimants in this case had not deliberately underpaid the court fee to avoid initial payment of the correct amount.  He said “assuming that the Claimant's behaviour is not abusive, the fact that the Claimant hopes or intends to bring a claim which cannot be either articulated or quantified at the time of the issuing of proceedings should not require payment of the fee that would have been payable if it had been articulated or quantified…If and when the further claims or quantification can be pleaded, further fees may become properly payable.”

The Claimants had therefore paid the correct fee for the claim which had been set out in the Particulars of Claim, even if they intended to claim further amounts later, and so the claim had been properly "brought" for limitation purposes and was allowed to continue.  

Once again, this case highlights the dangers to claimants posed by limitation periods – not least the fact that they can find themselves at the mercy of the Court as to whether or not their claim can proceed.  

If you would like to discuss any issue arising from this case please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Landlord’s Consent – a step too far could be prejudicial

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The relationship between commercial landlords and their tenants is complex. In many cases their interests are diametrically opposed and never more so than when the tenant wishes to leave before the end of the lease.

The majority of commercial leases will be for a fixed term and sometimes the tenant wants to leave while there are still several years left to go. In practice, what this means is that the tenant must find a replacement and assign the lease to them. Needless to say, the landlord will be keenly interested in the nature and creditworthiness of the new tenant.

This process can be entirely painless. The new tenant may be as good as the old, and the old tenant may only be moving because their success requires expansion to larger premises.

Most leases will include a clause restricting the assignment of the lease. In rare cases this may be absolute. More commonly, the consent of the landlord is required. This is usually specified as “not to be unreasonably withheld” but even if the wording is not used, the landlord’s consent must be exercised reasonably or the tenant may be given a free hand.

In the recent case of No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd, the lease permitted assignment with consent and the landlord applied conditions to that consent being granted, firstly that the incoming tenant provide bank references, secondly that the landlord was able to inspect the premises, and finally, that the tenant pay the landlord’s costs, set at £1,600 plus VAT. The tenant objected and the matter ended up in court.

The court considered it was entirely reasonable for the landlord to investigate the financial position of the incoming tenant. Likewise it was reasonable for the landlord to inspect the property to ascertain that the outgoing tenant had complied with its duties and not, for example, let the property fall into disrepair or made unauthorised alterations – matters that it is far harder to take up with a new tenant not actually responsible for them.

However, the court ruled that the final condition was unreasonable because the sum sought was disproportionate in the circumstances, and on that basis found for the tenant.

The impact of this went beyond simply forcing the landlord to give up its costs. The court’s decision meant that the landlord’s other objections – that would be considered reasonable – were also swept away, leaving the tenant free to assign to its chosen subtenant with neither references nor inspection. The landlord’s consent was therefore no longer a factor at all. If the landlord had limited its requirements to the first two points, or even simply sought a lower sum for its costs, then it would have retained some measure of influence on the assignment process.  

The Property Litigation Team at Blacks can provide advice and assistance on any property related matter.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Breach of trust

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It is an established principle in law that if a fiduciary, a person who holds a position of trust, breaches that trust, for example by making a secret profit, then he has not only to account for any gains he has received as a result of that breach but also forfeit the remuneration he was entitled to for the services rendered.  This rule usually applies to agents who are acting on behalf of principals.  

However, in the recent case of Jeremy Hosking v Marathon Asset Management LLP the High Court found that a profit share payable to a member of a limited liability partnership (an ‘LLP’) was capable of being subject to forfeiture where the member was found to have breached his fiduciary duty to the LLP.  

Mr Hosking was one of three founding members of Marathon which was an investment management business.  As such Mr Hosking was entitled to a share in the profits of the business.  Mr Hosking retired from Marathon in December 2012.  However, following his retirement Marathon discovered that Mr Hosking had breached his contractual and fiduciary duties by having discussions with four of Marathon’s employees in July 2012 about the possibility of setting up a competing business.  Marathon therefore commenced arbitration proceedings against Mr Hosking.

The Arbitrator awarded Marathon compensation of £1.38m for the losses suffered as a result of Mr Hosking’s breaches and held that Mr Hosking should forfeit 50% of the profit share payments that he had received in respect of the period from July to December 2012 (i.e. the period when he was in breach of his fiduciary duties) which amounted to a figure of £10,389,957.50.  

Mr Hosking appealed on the grounds that the share of profits in a partnership was not subject to the rule of forfeiture for breach of fiduciary duty.  His primary argument was that the rule related to remuneration for services rather than to a share of profits.

The High Court disagreed.  In what has been hailed by some as a landmark decision, the Court found that a profit share payable to a partner or LLP member (as in this case) could potentially be subject to forfeiture and whilst the principle had mainly been applied to agency cases its rationale extended more widely and could be applicable to other fiduciaries as well.  The Judge found that the absence of a provision for forfeiture in the relevant contractual documentation did not mean that the principle of forfeiture could not apply.  

This decision is of particular importance to partners and members of limited liability partnerships particularly where there are partnership disputes.  If you are involved in any commercial dispute then the Commercial Dispute Resolution Department at Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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Priced out of the Market – the effect of court fee increases

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The government’s major increase in civil court issue fees went live back in April 2015. Prior to that date fees were relatively modest, scaling with the amount of money claimed and reaching a maximum of around £2,000.

After it, the fee structure changed entirely for those cases over £10,000 (meaning cases too large to be dealt with in the ‘Small Claims track’.  The new regime calculated the court fee at 5% of the sum claimed, meaning a small increase for cases around the £10,000 mark, but a very dramatic increase for higher value cases – initially capped at £10,000 but with plans to increase this to £20,000. Small Claims fees remain unchanged – although in many cases these already stand at over 5% of the claimed sum, and so would have to be reduced to be brought in line with the fees for higher value cases.

These changes have since been followed in March and April 2016 by wider-ranging increases, including Court of Appeal costs, possession claim costs and a sharp increase to the cost of making applications to court. More recent changes have added 10% to the cost of all enforcement actions.

The Registry of County Court judgments has recently published a report that makes for sobering reading. The number of County Court judgments made in the first half of 2016 is 19% down on the same period of the previous year. The number of High Court judgments, claims of higher value, is down by a huge 50%.

Possession claims are also down by 9%, and County Court bailiff possessions are down by 14% - although in the latter case the slack may be taken up by High Court Enforcement Officers who offer an eviction service that is more expensive but usually swifter than the court’s own bailiffs.

On the face of it, a reduction in litigation might seem like good news for everyone except the lawyers. However, this change is unlikely to reflect a drop in the number of actual disputes, unpaid invoices and recalcitrant tenants. The Bar Council, which opposed the rises along with a number of other legal organisations, has stated that smaller businesses are the sector worst hit by the increases, and that “by increasing court fees the government has cut off those small businesses’ only real and last hope of getting that money”.

The result of the increase in court fees means it is likely that, for individuals and small-to-medium companies, justice through the courts is increasingly out of reach. Similarly, where a claim is made, a struggling debtor now faces a vastly increased court fee to be added to the pre-existing debt. Given these trends (and a further increase to fees has not been ruled out), smaller businesses will likely be far more wary about offering credit to customers, which in itself will make them less competitive against larger rivals, and is unlikely to help speed up economic recovery and growth.

If you are involved in any dispute and require assistance please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.   

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Delay proves fatal

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The recent High Court case of Goldcrest Distribution Limited v (1) Charles McCole (2) Mary McCole and Another is a salutary reminder for those involved in litigation that delay in dealing with their case can prove fatal.  

Goldcrest had provided credit to a company that was owned by Mr McCole, secured by a charge over a residential property jointly owned by him and his wife.  The loan was not repaid so Goldcrest sought possession of the property.

Mrs McCole filed a Defence and Counterclaim to Goldcrest’s claim.  The Defence argued that:

  • The charge was a regulated mortgage contract and was unenforceable because Goldcrest was not licensed by the Financial Conduct Authority.  
  • The charge was void under the Insolvency Act because it was arranged after a bankruptcy petition had been presented against Mr McCole.
  • The property was subject to a trust for the benefit of Mr & Mrs McColes’ daughter.  
  • Mrs McCole had been subject to undue influence at the hands of Mr McCole and Goldcrest had had notice of this.  

In her Counterclaim Mrs McCole sought a declaration that the charge was unenforceable and should be set aside.  

Despite Mrs McCole’s solicitors informing Goldcrest’s solicitors that the time for serving its Defence had long expired, Goldcrest  did not file a Defence to the Counterclaim after six months.  Mrs McCole therefore applied for and obtained a default judgment in respect of her Counterclaim.  

Goldcrest subsequently instructed new solicitors and applied for the judgment to be set aside and for permission to file its Defence.  However, it took Goldcrest a further month to make that application.  

Although the Court agreed that Goldcrest had real prospects of success of defending the Counterclaim, the Judge refused to set the judgment aside on the grounds that he felt that Goldcrest’s delay in making the application was a serious failure for which Goldcrest had provided no reasonable explanation.  The Court therefore decided not to exercise its discretion to grant Goldcrest relief and the default judgment therefore stood.

Although Goldcrest had reasonable prospects of success with its claim, this case once more demonstrates that a party can be severely punished by the Court for poor conduct, in this instance for failing to deal with its claim in a timely manner.  

If you are involved in any litigation or court proceedings, Blacks Solicitors can assist.  Please contact Luke Patel on 0113 2279316 or email him at “LPatel@LawBlacks.com”.

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Breaking up is hard to do

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The area of property law regularly throws up examples of traps for the unwary.  That has proved to be the case once again.  

The recent decision in question this time is Vanquish Properties (UK) Limited Partnership v Brook Street (UK) Limited.  It involves the often problematic issue of break clauses and adds to the mix the involvement of a limited partnership (a common investment vehicle in the UK).  

A lease was granted to “Vanquish Properties (UK) Limited Partnership acting by its general partner Vanquish Properties GP Limited”.  The Defendant was an undertenant under an earlier lease.  The problem arose when a break notice was served on behalf of “Vanquish Properties (UK) Limited Partnership” (“the Partnership”).  It was an important notice too: the Partnership needed to bring the underlease to an end to undertake major redevelopment works.  

The Defendant did not accept the validity of the notice so the Claimant issued proceedings to obtain a declaration that it was valid.  

The most relevant parts of law in this case are that a limited partnership has no legal identity, and that where land is conveyed to more than one person as joint tenants in undivided shares (as can be the case when land is conveyed to a partnership) the maximum number of grantees there can be is four.  

The Defendant argued that the notice could not be valid because it was given by the Partnership which could not be the owner of the lease as it was not a legal entity.  The Claimant accepted that but said that if the Partnership was not the owner then four of its five partners were and the notice was served by them.   It said that it was possible to identify who those four partners were.  It also said that as the same solicitors acted for the general partner company it would have been obvious to the Defendant that a mistake had been made and that a different entity should have been named in the notice.  

The Court did not agree on either count.  It decided that there were no documents which showed any intention of the partners as to which of them would hold the legal estate and that in the absence of that information, the legal owner was the general partner, Vanquish Properties GP Limited (“VPGP”).  VPGP had not served the notice, therefore it was invalid.  It also held that there was no reason for the Defendant to believe that the solicitors involved were also instructed by the general partner company.  

The Claimant now faces the possibility of major redevelopment plans being delayed by a considerable period of time.  The decision provides a further warning, if one were indeed needed, that the content and service of break notices, whatever the circumstances, needs to be very carefully considered.  

If you are involved in any disputes concerning a lease then Blacks Solicitors can assist. Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.  

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Cards on the table please

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Litigation should always be a last resort.  This is the reason why the courts encourage, and indeed expect, parties to try to resolve their disputes before pursuing court proceedings.  To this end “Pre-Action Protocols” were introduced by the Civil Procedure Rules (the rules that govern how civil cases are run).

There are different protocols for different types of cases. For example, there are Pre-Action Protocols for personal injury claims, clinical negligence disputes, professional negligence claims, defamation, housing disrepair cases, judicial review and construction and engineering disputes.  There is also a general protocol known as the “Pre-Action Conduct and Protocols” in respect of claims not covered by any specific protocol.

Under the Pre-Action Protocols the parties have a duty to set out their case and, in particular, they are under an obligation to provide all documents in their possession which are material to the issues between them and which they would likely be ordered to disclose by the Court.  This is in line with the “cards on the table” ethos which is incorporated into the Civil Procedure Rules to try to deal with issues at an early stage and avoid litigation wherever possible.  Gone are the days of “litigation by ambush” where a party discloses a “killer” document at trial which completely undermines the other party’s case.

The recent decision of Chapman v Tameside Hospital NHS Foundation Trust illustrates the risk of failing to comply with the Pre-Action Protocol.

Ms Chapman pursued a personal injury claim against Tameside Hospital which was subsequently discontinued.  Normally, on the discontinuance of a claim the Claimant is required to pay the Defendant’s costs.  However, in this case the Court reversed the usual costs position.  The reason for this was because the hospital had failed to comply with the Pre-Action Protocol for personal injury claims and, had it done so, Ms Chapman would not have proceeded with her claim.

At the start of the case, the hospital’s lawyers, the NHS Litigation Authority, responded to Ms Chapman’s letter of claim by denying liability and stating that the hospital had no documents to disclose in relation to the matter.  However, once proceedings had been issued, the hospital relied on a number of documents which were a complete defence to the claim. Following the disclosure of those documents, Ms Chapman discontinued her claim.

The Court found that the documents which the hospital had disclosed were documents that should have been disclosed before proceedings were commenced and that the claim would not have gone any further had those documents been produced at an earlier stage.  It therefore took a very dim view of the hospital’s behaviour and the way it had conducted the litigation, describing it as “entirely unacceptable”.  In light of that conduct, the Court ordered the hospital to pay Ms Chapman’s costs of the proceedings even though she had withdrawn her claim.

If you are involved in any dispute and require assistance please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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To surrender or not surrender

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When is a commercial lease surrendered?  The question may appear straightforward but as the tenant found out in the recent case of Padwick Properties Limited v Punj Lloyd Limited the answer is not always as simple as it seems.

The landlord granted a 21 year lease of an office block to the tenant company.  The lease was guaranteed by the tenant’s parent company.  Subsequently, the tenant ceased trading and went into administration.  The administrators wrote to the landlord’s solicitors to inform them that the tenant had vacated the property stating that “the security and safety of the Property will therefore revert to your client”.  Notwithstanding this the landlord reminded the administrators that the tenant and the guarantor remained liable under the lease and that they should make arrangements to secure the property.  The landlord eventually had to secure the property itself after the tenant failed to do so and upon the insistence of its insurers.

A few months later the administrators returned the keys of the property to the landlord and confirmed their intention to surrender the lease. The landlord only accepted the keys because it was told by the administrators that the keys would otherwise be thrown away. However, the landlord made it clear that it was not accepting a surrender and demanded that the guarantor comply with its obligations.

The tenant subsequently entered into liquidation and the liquidators disclaimed the lease.  The landlord asserted that the lease had not been surrendered, called upon the parent company to honour its guarantee and required it to pay the rent arrears and to enter into a new lease.  The parent company refused to enter into a new lease on the basis that it had already been surrendered.  

The Court ruled in favour of the landlord and held that the lease had not been surrendered because:

  • The acceptance of the keys to the property by the landlord was not, in itself, inconsistent with the continuation of the lease and in any event the landlord had made it expressly clear that it had only accepted the keys for the purposes of maintaining security to the property.
  • The attempt to re-let the premises did not give rise to the surrender although the position would have been different if the property had been successfully re-let.

This case highlights the need for unequivocal conduct by both parties for the surrender of a lease to be effective.  A tenant cannot terminate a lease by simply walking away.  The decision also emphasises the importance of stating your position clearly.  In this case the landlord expressly stated that the return of the keys was only accepted to protect its interest and not because it had agreed that there had been a surrender of the lease.  

If you are involved in any disputes concerning a lease then Blacks Solicitors can assist. Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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Better late than never

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In the recent case of Pineport Limited v Grangeglen Limited the High Court was asked to consider whether a commercial tenant whose lease had been forfeited (i.e. brought to an end) by peaceful re-entry by its landlord on the grounds of non-payment of rent was entitled to relief from forfeiture despite applying for it some 14 months later.  

In commercial leases, there is usually a provision which allows the landlord to forfeit it and regain possession if there are any arrears.  Where a lease has been forfeited like this, a tenant can apply for relief.  If the application is successful the tenant will be placed back into the property and the lease will be reinstated as if the forfeiture had never occurred.  However, a tenant who seeks relief must do so with “reasonable promptitude”.  The general rule is applications must be made within six months.  However, this is not a strict time limit but simply a guide which is followed by the courts.

In this case the tenant had a 125 year lease.  It had paid a £90,000 initial premium and had covenanted to pay the ground rent of £100 per annum, the service charge and the cost of insuring the premises.  

The landlord forfeited the lease by peaceable re-entry for non-payment of the service charge totalling £2,155.  The tenant applied for relief.

Although there had been a significant delay by the tenant in applying, the court decided to grant relief for the following reasons:

  • The tenant had paid a large premium and the ground rent was only £100 per year - the landlord would have received a substantial windfall if relief was not granted as the property was valued between £275,000 to £300,000.
  • As the landlord had not taken any steps to re-let the property after the forfeiture,   there was no prejudice to the landlord or to any third parties.
  • The tenant was able to pay the arrears, interest and costs in full.
  • There was a reasonable explanation by the tenant for the delay - the director of the tenant company had been serving a prison sentence and he was also suffering from depression.

Whilst this case was decided on its own facts, it does highlight the wide discretion which the court has when considering applications for relief from forfeiture.  Although it is usually the case that such an application will fail if the tenant has not made it within six months, this case illustrates that the court will take into account all circumstances when exercising its discretion and that a long delay in applying may not necessarily mean failure.  Having said that, tenants who are seeking relief would be wise to apply without delay and, if at all possible, within six months from when the lease was forfeited.  

If you have any issues relating to leases then the Property Litigation Team at Blacks Solicitors are happy to help.  Please contact Luke Patel on 0113 227 9316 or email him at LPatel@LawBlacks.com.

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BLACKS SOLICITORS: The art of noise

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Leases will almost always contain a clause allowing the tenant “quiet enjoyment” of the premises.  Usually, they will also include a term permitting the landlord to carry out building works.  The recent decision of Timothy Taylor Limited v Mayfair House Corporation & Another explored the conflict between these two competing clauses.  

The tenant, Timothy Taylor Limited, operated a high end art gallery from the basement and ground floor of a premises in Mayfair, London.  The lease was for 20 years commencing in 2007 at an annual rent of £530,000.  From 2013 onwards, the landlord started substantial building works which involved completely rebuilding the interior from the first floor upwards.  Those works resulted in ongoing building noise and at the same time the entire building was surrounded with scaffolding.  

Understandably, the tenant complained.  It subsequently pursued court proceedings against the landlord arguing that its use and enjoyment of the premises was being substantially interfered with due to the high level of noise from the building works and the way the scaffolding and sheeting had been wrapped around the building, giving the appearance that the gallery was closed.  

The lease reserved the right of the landlord to erect scaffolding and to improve the building.  However, the Court found that the landlord had acted unreasonably in the exercise of that right and was in breach of the covenant to allow the tenant quiet enjoyment of the premises for the following reasons:

  • The landlord had failed to accommodate the tenant’s need to keep the gallery open, particularly as it was let at a substantial rent.
  • The landlord had refused to offer any form of discount for the disturbance being caused.
  • The design of the scaffolding ignored the tenant’s interest and unreasonably obstructed access to the gallery.
  • There was no prior consultation with the tenant about the building works, the noise levels, or how the landlord would mitigate the impact of that noise on the gallery.

The tenant claimed damages based on loss of profits for the period of the building works.  However, the Court instead chose to compensate it by allowing a 20% discount on its rent in respect of past breaches.  The Court did not believe it was practical to grant an injunction to have the scaffolding removed but instead decided that the tenant should continue to receive the discounted rent until the works were completed.  

This case highlights that even where a landlord expressly reserves a right in the lease to carry out substantial building works, it does not mean that it can disregard the tenant’s rights.  Any landlord contemplating building works should, firstly, check the lease carefully to see that it is permitted to carry out those works and, secondly, take steps to ensure that it is not breaching its obligations to its tenant.

If you are involved in any dispute concerning a lease then the Property Litigation Team at Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at LPatel@LawBlacks.com.

 

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Addressee gone away

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Commercial leases usually contain a “break clause” which allows the tenant to terminate early.  To activate such a clause the tenant is required to provide the landlord with notice during a specified period in the lease and by a specific method.  Whether a “break notice” has been validly served is often the matter of dispute between the landlord and the tenant as there can be significant consequences for either by getting it wrong particularly where there is only a one-off right to break.

So it proved in the recently reported case of Levett-Dunn and Others v NHS Property Services Limited.  In this case there were four joint landlords and the tenant served break notices by recorded delivery on each of them at the address stated for the landlords in the lease.  The lease itself actually said that where the landlord comprised of more than one individual, service on any one of them would be deemed as service on all of them.  At the date the notices were served, one of the four landlords had ceased to be a landlord and the three remaining landlords were no longer at the address stated in the lease.  The question which the High Court had to decide was whether the break notices had been validly served.  

Under the Law of Property Act 1925, notices served on either party are validly served if they are left at “the last-known place of abode or business” of the receiving party.  The court found in favour of the tenant because the landlords’ “last-known place of abode or business” could reasonably be understood as being the address stated in the lease.  

The court held that it was the landlords’ responsibility to notify the tenant that the address had changed and if they failed to do so then they took the risk that notices and other correspondence would not reach them.  A tenant was under no obligation to check that a landlord’s address was still valid and a landlord has to provide clear notification to a tenant of a new address; correspondence from the landlord from a different address would not by itself constitute notification that it should be the address for future notices.  Landlords, it was held, should not be allowed to benefit from their own failings.  

This case serves as a warning to landlords to notify their tenants clearly of any change of address.  Failure to do so runs the risk of a break notice being validly served on them even though they may not actually have received it.  It is clear that the onus is on the landlord to update the tenant and not for the tenant to check whether his landlord’s address is current.

If you require advice in relation to a break clause in a lease or if you wish to apply for the renewal of a commercial lease then the Property Litigation Team at Blacks Solicitors can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com

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Pound Land

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Under the Landlord & Tenant Act 1954, tenants of premises which are occupied for business purposes (as opposed to residential) are provided with a degree of security of tenure so that when the lease comes to an end they have a right to apply to the court for the grant of a new lease.  The landlord can only object to this request in certain specified circumstances, such as if he wishes to occupy the property for himself or if he requires the property back for development purposes.  

Usually lease renewals are concluded by agreement between the landlord and the tenant but some cases do end up in court.  That was the position in the case of Flanders Community Centre Limited v Newham London Borough Council, a case which was recently heard by the High Court.  

In that case the council did not oppose the tenant’s request for a new lease but the parties could not agree on the amount of the rent.  The original lease provided for a yearly rent of £1, conditional upon the tenant carrying out various repair works to the property.  On renewal the tenant argued that the rent should remain at £1 whereas the council wanted to increase it to £16,000 per annum.  Both sides submitted expert evidence to support their case.  

However, the trial judge found that the expert evidence put forward by both sides was inadequate and she felt unable to rely upon it; in particular, no evidence was given in relation to the terms of the comparable leases relied upon by the council’s expert so it was not known whether they contained any onerous requirements.  In the absence of reliable evidence of market rent, the trial judge relied on the current rent which both sides accepted was a relevant factor and she decided that the new rent should be £1 per annum.  The council appealed.  

The High Court refused to disturb the decision and said that the judge was entitled to have regard to the current rent and it was a matter for her to determine how much weight should be given to it.  Whilst the High Court said that the judge could have carried out her own analysis, she was not obliged to do so in the absence of any assistance from the parties.  The only tangible evidence before the judge was the current rent and in the absence of reliable expert evidence it was a matter for her to determine how relevant that should be.   

This case illustrates the importance of presenting clear, thorough and reliable expert evidence in lease renewal applications as judges do not have an expert knowledge of valuations.  If a party fails to do this then they risk their evidence being disregarded in its entirety, the consequence of which could be very expensive, as Newham Council discovered to its cost.  

At Blacks our specialist Property Litigation Team can assist with lease renewals.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@lawblacks.com”.

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BLACKS SOLICITORS: The riot act now read

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Many will still remember the riots that erupted in London in August 2011 which resulted in extensive damage to property.  The question as to who pays for that damage has been finally determined by the Supreme Court in a judgment which was handed down last month.  

In the case of The Mayor’s Office for Policing and Crime v Mitsui Sumitomo Insurance Co (Europe) Ltd and Others, a number of insurers which had compensated property owners that had suffered losses during the riots had brought claims for compensation against the Police Authority under the Riot (Damages) Act 1886.  Under that Act, where a property has been damaged or destroyed as a result of rioting, the victim can claim compensation from the Local Police Authorities.  It also enables insurers to recoup from the Police Authority any payments which have been paid out as a consequence of rioting.

The issue before the Supreme Court was whether, in addition to compensation where there had been physical damage to a building, the claimants were also entitled to receive compensation for consequential losses, such as loss of rent and loss of profits arising from business interruption.  

The case itself involved the destruction of the Sony distribution centre in Enfield.  On 8th August 2011 it was attacked, looted and firebombed. The subsequent fire completely destroyed the warehouse and all of the stock and equipment contained inside.  The insurers for Sony, for its landlord and for Sony’s customers whose stock had been stored in the warehouse all made claims against the Mayor’s Office.  

Initially, the High Court awarded compensation for the damage to the building and its content but it refused compensation for business interruption including loss of profit and loss of rent on the ground that those items were outside the scope of the 1886 Act.  However, that decision was overturned by the Court of Appeal which ruled that compensation could be claimed for any losses flowing from the damage to the building and not just for physical damage.  The Mayor’s Office appealed.

In a unanimous decision the Supreme Court overruled the Court of Appeal.  It held that it had not been Parliament’s intention that the statutory compensation scheme should mirror the rioters’ liability in tort and that it had set out a self-contained statutory compensation scheme which was confined to physical damage to property; consequential losses could not therefore be recovered.  

This decision will save the taxpayer tens of millions of pounds.  Although it has clarified the law, it may prove somewhat academic as the Riot Compensation Act 2016 is due to repeal the 1886 Act and replace it with a new regime regulating compensation from riot damage.  The new act contains a £1million cap on recovery and specifically excludes consequential losses.  

If you are involved with any dispute with your insurers then Blacks can assist.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.

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BLACKS Solicitors: A gentleman’s agreement can be binding

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In English law informal oral agreements can be binding between parties if there is an “intention to create legal relations”.  This was the position in the case of Corporate Oil and Gas Limited -v- Marshall Aviation Services Limited which was decided by the High Court towards the end of last year.

The Claimant was the owner of a jet aircraft and it had engaged the Defendant to carry out maintenance and repair services in relation to it. The dispute arose as to whether the Defendant had adequately performed its obligations and whether the Claimant owed the Defendant any money for the work which had been carried out.

The Defendant claimed that a “gentleman’s agreement” had been reached at a meeting between the parties whereby a discount and a settlement amount for the work that had already been carried out by the Defendant was agreed by the parties.  The Claimant disputed this and argued that the agreement was subject to confirmation by its Chief Executive Officer (CEO) who was not present at the meeting.

The Court held that the “gentleman’s agreement” made between the parties was binding and the entire amount outstanding was payable by the Claimant; the Judge found that the agreement had not required confirmation from the Claimant’s CEO nor was it relevant that it was not confirmed in writing.

In deciding whether an oral contract is binding the Court will look at how, amongst other things, the parties have conducted themselves after any alleged agreement has been reached. In this particular case, after the meeting the Defendant had sent an email to the Claimant confirming the discount agreed and the Claimant had not rejected this, nor was there any request by it for clarification or continuation of negotiations in the weeks and months that followed. Had the Claimant told the Defendant that the agreement was “subject to CEO approval” then the Court would probably have concluded that there was no binding agreement in place.

This case highlights the willingness of the Courts to uphold informal agreements between parties which have not been recorded in writing, particularly in a commercial context where there is a greater likelihood of there being an intention to create legal relations.  If a party does not wish to be bound by any terms discussed during negotiations then it should make it clear that the negotiations are “subject to contract” or subject to any other condition.

At Blacks Solicitors, we can assist you with all aspects of contractual matters from drawing up a contract to dealing with any disputes arising from it.  If you require any advice in relation to such matters then please contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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Beware of varying a contract

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A contract can be varied either orally or in writing.  However, most contracts will contain what’s called a variation clause which will specify that any variation will only be valid if it is in writing and signed by the parties.

In the case of C&S Associates UK Limited v Enterprise Insurance Company Plc which was heard by the High Court at the end of 2015 the Court had to decide, amongst other things,  whether an agreement had been effectively varied by email correspondence.

C&S Associates was a motor insurance claims handler who brought a claim for wrongful termination against the insurance company, Enterprise.

Initially C&S Associates and Enterprise were on good terms and there was an exchange of emails between them where C&S Associates sought to agree an increase in its fees and to vary the duration of the agreement.

However, the agreement between C&S Associates and Enterprise contained a clause which stated that:  “Any variation of this Agreement shall not be effective unless made in writing and signed by or on behalf of each of the Parties to this Agreement.”

Had the Agreement been varied by the email correspondence?

The Court found that the variation clause was intended to ensure that a party would not be bound by oral communications or informal written documents that were not signed.

However, it also decided that the clause did not require manuscript signatures, paper documents or both parties’ signatures to be on the same document and that an electronic signature such as an email auto-signature would be adequate.

Provided the emails could satisfy the other requirements of contract variation, such as an intention to be bound, then there would be a valid variation.

In this case, the Court found that objectively the parties clearly did intend to be bound by the exchange of emails, despite the fact that they also clearly contemplated that their agreement would subsequently be recorded in a formal contract.  Accordingly, the contract had been validly varied.

Given the extent to which business is carried out by email nowadays, even if there is a formal contract with a variation clause, an exchange of emails using email signatures can vary that contract.

If the parties wish to prevent this from occurring then the contract will need to stipulate specifically that any variation to the contract will only be effective if it is in writing and signed by the parties and that “in writing” does not include emails.

At Blacks, we can assist you with all aspects of contractual matters from drawing up the contract to enforcing it if there has been a breach.

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BLACKS SOLICITORS: A little help from my friends

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Legal disputes between neighbours frequently arise out of long-standing rivalries, moved boundaries, overhanging trees or loud music at antisocial hours, and are notorious for being fought with a bitter passion over matters that seem to be profoundly trivial to the impartial observer. Sometimes, though, such disputes can come out of a neighbour being too neighbourly. Going that extra mile for a friend can be a problem if it’s a mile in the wrong direction and a lack of a formal agreement between the parties doesn’t mean there is no legal responsibility. This is the strong message in the recent case of Burgess & Burgess v Lejonvarn decided earlier this year.

In this case, the parties were neighbours and Lejonvarn had provided architectural design services for the Burgess’s business on a professional basis on several previous occasions. Based on this, they accepted her offer to provide similar services informally and voluntarily for work on their own property when they decided to landscape their garden. Unfortunately, things went wrong and the Burgesses brought claims under both contract and tort.

Liability in UK law is divided into contractual and tortious claims. A contractual claim is based on a prior agreement under which both sides receive some manner of ‘consideration’ or benefit. A claim in tort, on the other hand, is based on the principle that everyone has a duty not to take action that would have a foreseeable negative consequence to others, whether or not they have an existing relationship with them.

Had the Burgesses engaged Lejonvarn with her professional hat on - to undertake the landscaping services in return for remuneration - her contractual liability would have been clear, and alleging the existence of such a contract was their first tactic when they brought the claim to court. However, the judge was unable to find sufficient evidence that any formal agreement had been entered into, or that Lejonvarn was intended to receive anything for her time, and rejected that part of the claim. (That Lejonvarn might have been paid for a later stage of the project was not enough to imply a contract.) Argument then turned to whether the provision of free advice and supervision left Lejonvarn open to tortious liability. Despite a number of arguments run by the defence, the judge found that the relationship between Lejonvarn and the Burgesses was sufficiently close to that of a professional and her clients to allow the Burgesses to succeed in their claim for losses arising from the work. Lejonvarn had “assumed responsibility” for the project, and was liable when it went wrong.

In the field of non-contractual relationships, Burgess v Lejonvarn is actually an extreme case – the project was planned out meticulously and there was considerable written evidence to suggest Lejonvarn was approaching it with a professional mindset. Where matters are muddier – such as where the party providing advice and services is not a professional in that line of work, but just an enthusiastic amateur, then the courts will likely have a difficult time deciding where to draw the line.

If you are involved in any dispute and require assistance then please contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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BLACKS SOLICITORS: Restrictive Covenants Revisited

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Restrictive covenants are commonly used in employment contracts to control the activities of an employee during the course of his employment and post-employment.  For example, to prevent an employee from setting up in competition with the employer or going to work for a competitor.  However, they are also used in commercial agency agreements - agreements used when a business appoints an agent as an intermediary to negotiate and conclude contracts with customers on its behalf.   Typically the agent is paid a commission on any sales which are generated, usually on a percentage basis.

In the case of One Money Mail Limited v (1) Ria Financial Services (2) Sebastian Wasilewski which was heard by the Court of Appeal towards the end of last year, the Court explored the enforceability of restrictions applying during and after an agency period.  One Money Mail (“OMM”) and Ria Financial Services (“Ria”) were rivals in the money transfer services business.  OMM specialised in the Polish market whilst Ria operated worldwide.  Mr Wasilewski was OMM’s agent in Hereford.  He was unhappy working for OMM so approached Ria to become its agent.  However, Mr Wasilewski was subject to restrictive covenants prohibiting him from acting as an agent for any of OMM’s competitors within five miles of its place of business for a period of six months following termination.

The County Court found that the restrictions were too widely drawn to be enforceable, mainly because they were not accompanied by corresponding restraints upon OMM – it retained the right to appoint other agents within the area that Mr Wasilewski was operating and had in fact already done so.

However, the Court of Appeal disagreed and decided that the restrictions were reasonable and therefore enforceable because OMM had invested in Mr Wasilewski by training him and providing him with a certain level of technical support whilst acting as their agent.

Of particular interest in this case is that, although it was Mr Wasilewski who approached Ria about becoming their agent, OMM was successful with its claim against Ria because Ria had procured the breach of contract: it had been told by OMM of the restrictions within Mr Wasilewski’s contract but nevertheless still entered into a contract with him.  Had OMM not notified Ria of those restrictions then it is unlikely that its claim against Ria would have succeeded.

For OMM though, the result was not all good: although it succeeded in enforcing the restrictive covenants, it failed to recover any damages from Mr  Wasilewski or from Ria for the breach of contract because they were unable to quantify what financial loss they had suffered.

If you require advice regarding the enforceability or the drafting of an agency agreement or any other form of employment contract then please contact Luke Patel on 0113 227 9316 or by email at “LPatel@LawBlacks.com”.

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In Confidence

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Directors are trusted with a substantial amount of confidential information about their company. Information can be communicated and accessed in many different forms and it can therefore be difficult to control especially if a director leaves a company. So what does happen to confidential documentation when a director leaves a company?

In the case of Eurasian Natural Resources Corporation Ltd v Judge the High Court held that unless a contract stipulates what is to happen with confidential information when a director leaves, a director is under no duty to deliver up confidential documents on the termination of his appointment. As a result, no such term was implied by the Court into his contract with the company.

A term can be implied into a contract where no direct provision has been stipulated in a contract if;

  • the courts believe it is necessary to give effect to the obvious intentions of the contracting parties, or
  • an Act of Parliament so provides.

In this case, Sir Paul Judge had been a director of Eurasian Natural Resources Corporate Ltd (ENRC).When Sir Paul Judge terminated his contract with ENRC, several claims were brought against Sir Paul, including breach of duty to deliver up company confidential documents.

No statute exists in these circumstances to insert an implied term into a contract therefore whether a term could be implied into his contract depended on the parties’ intention. The terms of his contract provided that all information acquired during his appointment was confidential and should not be disclosed to third parties or used for any reason other than in the interests of the company, either during their appointment or following termination, without prior authority.

However there was no express term requiring him to return confidential documents on termination.

In deciding whether a term should be implied the High Court held:

  • Had it been the "obvious but unexpressed intention of the parties", you would have expected to see a term in the agreement.
  • It had been shown no legal authority, code of practice, guidance or evidence to suggest that such a requirement was the norm for directorships.
  • There would be difficulties in complying with such a duty, especially for individuals who took on multiple directorships.
  • There was also no wider obligation of confidence (embracing delivery-up) arising from the director's fiduciary duties.

The case highlights the difficulties in controlling information and the impracticalities for directors to retrieve and return documents. If companies are concerned about confidential information being left in the hands of ex-directors they need to expressly include the obligation to deliver up the documentation with an employment contract. Companies cannot rely on the Courts to fill in the blanks.

 

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Everything’s coming up roses

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In the case of Interflora Inc & Another –v- Marks and Spencer plc and Another, M&S paid Google AdWords for advertisements for its flower delivery service displayed on the search engine results page when internet users searched for “interflora” and similar terms. This is known as keyword advertising. Interflora brought proceedings against M&S for infringing its trade marks.

The High Court proceedings were lengthy and required a reference to the European Court of Justice as to whether the use of a trademarked term as a keyword amounted to trademark infringement.

The ECJ concluded that if the national court decided that the use of the Interflora trade mark as a keyword led internet users to believe the service offered by M&S was part of the Interflora network, then the trade mark’s function in indicating origin would be damaged.

The High Court, using the criteria set down by the ECJ, found that M&S had infringed Interflora’s trade marks by using them as keywords. This was because the adverts did not enable the reasonably well informed and reasonably observant internet users to work out (or only with difficulty) if the service referred to in the adverts originated from the trade mark owner; a business connected to it; or a third party.

The High Court found that M&S had infringed Interflora’s trade mark because a significant proportion of consumers who searched for “interflora” and were presented with M&S’ adverts were wrongly led to believe that the M&S flower delivery service was part of the Interflora network.

The Judge found that internet users today were more likely to appreciate the distinction between natural search results and paid advertisements on Google’s search engine results pages, as opposed to back in 2008 which was the relevant time period in this case. Nevertheless, even now, a significant proportion of individuals would not appreciate that distinction.

The Judge was not satisfied that the public would be aware that M&S were not part of the Interflora network and indeed were in competition with it; there was nothing in the M&S adverts to inform the reader that M&S were not part of the Interflora network; and given the nature of the Interflora network, it would make it particularly difficult for an individual to determine whether M&S were part of that network or not in the absence of any indication in the advertisement. It was noted that a feature of the Interflora network was that members traded under their own names and had commercial tie-ups with several large retailers, including Tesco. This made it even more plausible that a connection existed between the two.

The Court made it clear that whilst M&S had infringed on the facts of this case, keyword advertising is not inherently or inevitably objectionable from a trade mark perspective. Rather, ECJ case law has recognised that the use of keyword advertising encourages competition.

We at Blacks deal with all aspects of Intellectual Property law, to include claims for Passing Off and Trademark Infringement.

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Face the Music

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The world’s largest social media network, Facebook, is suing leading global law firm DLA Piper (along with other law firms) who represented Paul Ceglia in a previous claim where he alleged he was entitled to an 84% share of Facebook.

Facebook was launched in February 2004 out of a Harvard University dorm room and is now worth over 200 billion dollars, has more than 1.3 billion users and the CEO, Mark Zuckerberg, is one of the richest people in the World. It is therefore not surprising that Mr Zuckerberg has found himself party to many lawsuits over the social network’s founding.

Convicted felon and fraudster Paul Ceglia brought a claim in 2010 alleging he owned an 84% stake in the company based on a contract prepared in 2003. However in April 2014, Ceglia was arrested by the FBI as they discovered the original contract had been contrived to include reference to ‘theFacebook.com’ (the company’s previous name) for the purposes of bringing a fraudulent claim. The original contract merely related to some web development for Zuckerberg on a separate project.

Although Ceglia’s claim was consequently dismissed, and a federal grand jury indicted Ceglia, Facebook are not willing to let matters lie. They now want to hold Ceglia’s lawyers accountable too.

Facebook have filed a lawsuit in New York alleging that DLA Piper, amongst others, conspired to bring the fraudulent lawsuit which was based on an implausible story and fabricated evidence in order to obtain a lucrative settlement against Facebook.

DLA Piper, who were only involved in the 4 year litigation for only 78 days, are not taking these allegations lying down. DLA’s Spokesperson emphasised that,

“This is an entirely baseless lawsuit that has been filed as a tactic to intimidate lawyers from litigation against Facebook.”

The crux of the claim rests on whether Ceglia’s previous legal representatives, Kasowitz Benson, who allegedly discovered the fraud, informed the other lawyers acting for Ceglia (including DLA Piper) of the likely fraud, but continued to pursue the matter regardless. Kasowitz Benson however ceased to act.

DLA Piper, along with other law firms did later withdraw from the case but never disclosed why. Indeed, they may not have been able to disclose their reasons due to their duty of confidentiality owed to Ceglia and the rules relating to attorney-client privilege in the US. However as officers of the Court they are under a duty to disclose information to prevent a crime, or a fraud.

The claim questions the ethical standards of the lawyers involved and will indeed raise issues of legal privilege. Facebook may have taken the world of social media by storm but can a powerful corporate adversary threaten the practices of legal attorneys? One thing is for certain, it will make lawyers think twice about bringing dubious cases and given the reaction of DLA Piper it may be a long time until this matter is laid to rest.

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One Vision

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In a previous article, we looked at the case of Specsavers –v- Asda which concerned a marketing campaign by Asda to promote its in-store optician services. Asda used various marketing materials in their stores and on their website which included the taglines “Be a real spec saver at Asda” and “Spec saving at Asda”. Asda had also used a logo mark of two non-intersecting ovals similar to the overlapping ellipses used by Specsavers (“the wordless mark”).

Specsavers issued proceedings in the High Court for trade mark infringement and passing off. The Court of Appeal found that the use of both straplines amounted to an infringement and was unfair.

The Court of Appeal sought guidance from the Court of Justice of the European Union which found that the use of a composite mark (a word mark superimposed over a logo mark) is capable of amounting to genuine use of a trade mark, provided that the use of the composite mark does not alter the distinctive character of the logo as registered. The case was then returned to the Court of Appeal for an application of the guidance provided by the European Court to the specific facts in question.

Whilst the infringement proceedings were concluded on terms confidential to the parties, the Court allowed Specsavers’ appeal relating to its trade mark. Accordingly, the wordless mark was not to be revoked for non-use.

The Judge indicated initially that Specsavers’ argument did not appear very convincing on the basis that the addition of the word ‘Specsavers’ was a highly distinctive and prominent delineating element when compared to the wordless mark. However, the Judge was persuaded by the following factors:-

• Specsavers had made very extensive use of the logo for a long period of time. In 2009 alone they had spent £45million on advertising

• None of their competitors have a logo even vaguely similar

• There was evidence that ASDA had deliberately adopted a logo similar to that of Specsavers. Therefore, it was reasonable to assume that ASDA were well aware that consumers would identify the overlapping ovals as denoting Specsavers, even without the addition of the word.

The wordless mark had itself been seen as a trade mark and not just as background. This all amounted to unusually convincing evidence of genuine use.

The Court dismissed the concern expressed by the Trade Marks Registrar (who had been permitted to intervene in the appeal) that allowing the appeal would result in many applications to register relatively commonplace outline shapes of logo marks. The Court were of the view that each case would be decided on its own facts but did note that this was an unusual case and it was generally unlikely that the background of a mark would be perceived as an indication of origin.

We at Blacks have a specialist Intellectual Property team dealing with all aspects of trademarks and any disputes arising.

 

Please contact Luke Patel on 01132279316

or by email at LPatel@LawBlacks.com

 

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Pushing the boundaries

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The location of a boundary can be a contentious issue, with a disagreement over a few inches of land leading to the most bitter of disputes. Neighbour disputes are particularly challenging because of the proximity of the parties who continue to reside near to one another both during and after the dispute itself. This can have a profound impact on the relations between the parties and the enjoyment of their homes.

Although the deeds to a property may provide confirmation of the location of a boundary line, this is not always conclusive. In practice it can often be difficult to determine precisely where a boundary lies. Whilst the plans in a conveyance can provide assistance in locating the boundary line, these cannot always be relied upon when determining the correct boundary. It may be that the plans are inaccurate or have been drawn in such a way that the thick lines are not to scale and may well represent an area of several feet on the ground.

When determining a boundary dispute, the Courts will be guided by the following relevant principles:-

• Plans show only general boundaries unless the property is said to be "more particularly described in the plan"

• Ordnance Survey plans are no more than a general guide to a boundary feature

• The starting point is the language of the conveyance and any plan

• Extrinsic evidence such as topographical features on the land that existed when the land was divided may be relevant

• Evidence of subsequent conduct may be of value in showing what the original parties intended

• Evidence of later features may or may not be of relevance.

• It is important to bring certainty to the determination by proclaiming the boundary

• Evidence of adverse possession should be considered

• Informal boundary agreements need not be in writing

• A boundary agreement can be implied or inferred

• The Court should also bear in mind (1) what a reasonable layman would think he was buying; (2) every case turns on its own facts; and (3) the task of the court is to assess all available and admissible material in arriving at its answer, and then to achieve the correct answer.

In the case of Acco Properties Limited -v- Mr and Mrs Severn, the High Court dealt with a boundary dispute concerning a British Virgin Islands company which had purchased a plot and driveway adjoining the Defendant’s family home. The Defendants erected a fence in order to prevent the encroachment of trees and undergrowth and a dispute arose regarding the location of the boundary line. The width of the boundary in issue was, at its widest point, 19 inches (49cm). Following an analysis of the relevant principles, the Court determined that the fence had been erected at least 4 inches over the Claimant’s land.

The Court ordered that the fence should remain in situ and the Claimants should be awarded a modest financial sum (£1,000) to compensate them for the loss of what was a very narrow strip of land with no apparent commercial value. The Judge noted that the fence had been erected as a result of neglect on the part of successive owners of the Claimant’s land which had led to the hedgerow crossing over onto the Defendant’s land, which had caused some damage and was therefore a nuisance.

The Judge made clear that he did not “accept that the days are gone when a party can litigate over a tiny strip of land, although I would certainly agree that it is usually economic madness so to do, but a person remains entitled in law to protect and preserve that which is his or hers”.

Whilst the Courts will strive for a common sense approach, boundary disputes are often emotionally draining for those involved and can result in one of the parties eventually moving home as they find continuing to live in close proximity to their opponent untenable.

Blacks Solicitors can assist in the sale and purchase of residential and commercial property and any disputes which may subsequently arise.

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Big Brother is watching

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In the case of Uppal –v- Endemol UK Ltd and others, the Claimant, a former Miss India UK and housemate in the 2012 series of Big Brother, issued defamation proceedings following two broadcasts of Big Brother.

The Defendants in the case are the producer of Big Brother (Endemol), the broadcaster of Big Brother (Channel 5) and Mr Conor McIntyre, a fellow housemate of the Claimant on Big Brother. The Claimant sought damages for libel, for breach of duty of care owed by Endemol and Channel 5 to the Claimant, and for breach of contract against Endemol.

The claim arose in respect of two broadcasts of Big Brother. The first broadcast contained a rap by Mr McIntyre and the second broadcast contained comments by another housemate, for which they had been reprimanded by Big Brother. The Claimant alleged that the words voiced in both broadcasts were defamatory because they had the following meanings:

• The Claimant had below average intelligence

• Alternatively that the Claimant was in some way socially or intellectually inferior

• The Claimant was sexually promiscuous

• The Claimant was in some way socially or intellectually inferior to the other housemates because she was of Indian origin or descent

In response to the claim, the Defendants made an application for a ruling that those words complained of were incapable of bearing such meanings or of being defamatory of the Claimant. The Defendant’s Application for Summary Judgment was successful - it was found that Endemol and Channel 5 were entitled to such a ruling on the defamation claim against the Claimant, and the Claimant’s claim for defamation was dismissed.

The Defendants were successful as regards to the first broadcast because it was held that any reasonable viewer would have understood that the person whose reputation might have been adversely affected by the ‘rap’ was the person who made up the rap, and not the Claimant. It was found that instead of being defamatory of the Claimant, the use of the words were vile abuse.

As to the second broadcast, which contained offensive racial stereotyping - conduct which was reprimanded by Big Brother - that was held to have been a reflection on the offending housemate, but it had not been a reflection on the Claimant.

The case is a reminder of the threshold of seriousness that must be met before words are found to be capable of bearing a defamatory meaning. The case also highlights that the Courts draw an important distinction between words of discourtesy and those words that are capable of bearing defamatory meanings.

We at Blacks have experience in handling defamation claims and breach of contract claims.

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Please contact Luke Patel
on 0113 227 9316
or by email at LPatel@LawBlacks.com

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Let the record play

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In the High Court case of Ashworth and others v The Royal National Theatre the Claimants, a group of musicians, were unsuccessful in their application for an interim injunction to require the Defendant, The Royal National Theatre (“RNT”), to continue to engage them in the production of War Horse until the hearing of their claim for breach of contract.

The Claimants were engaged by the RNT in March 2009 to play their instruments in accompaniment with recorded music in the RNT’s production of War Horse. However productions of War Horse in other parts of the world have relied wholly on recorded music and as such it was decided by the Co-Director and the Composer of War Horse that it was better for accuracy and impact to rely on recorded music for the play.

Luke Patel.

Luke Patel.

Initially the involvement of the Claimants in the production was reduced to them playing their instruments during one short scene only with the remainder of the music in the play being recorded.

On 4 March 2014 the RNT sent the Claimants letters of termination stating their contracts would expire on 15 March 2014 on the grounds of redundancy (i.e. the music in the play would now be recorded as opposed to live).

In response the Claimants issued a claim against the RNT claiming breach of contract. At the same time the Claimants filed an application for an interim injunction (or specific performance) requesting that the RNT be required to employ them in the production again until the trial of their claim.

The court dismissed the Claimants’ application for an interim injunction. The court found that there had been a breakdown in ‘trust and confidence’ between the Claimants and the RNT and an injunction reinstating the Claimants into the production was likely to be unworkable.

The court also held that the case was not exceptional, and that damages would be an adequate remedy for the Claimants.

Further, the court was not persuaded that specific performance or a mandatory injunction would be granted at the trial of the Claimants’ claim for breach of contract.

The court also considered that the decision of the Co-Director and Composer to rely only on recorded music was a decision made in accordance with their ‘right of artistic freedom’.

This right derives from Section 12 of the Human Rights Act 1998, which provides that when considering whether to grant relief which may affect the right of freedom of expression as contained in Article 10 of the European Convention on Human Rights (“ECHR”), the court must have particular regard to the importance of that right.

The Judge held that the RNT’s right to freedom of expression as to how it produced the play would be interfered with should the Claimants be reintroduced into the play.

Even though the Claimants were unsuccessful in their application for an interim injunction the Judge did indicate that their prospects of success at the trial of the breach of contract claim were strong.

The case is an example of the stringent test Claimants must pass in interim relief applications. Furthermore, human rights legislation was held to be applicable in this case and this may set a precedent for future cases where ECHR provisions are used in a similar context.

The Musicians’ Union, which backed the five instrumentalists in the case, said the Claimants are considering whether to appeal.
We at Blacks have experience in handling applications for interim injunctions and breach of contract claims.

Please contact
Luke Patel on 0113 227 9316
or by email at
LPatel@LawBlacks.com

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A helping hand

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Prospective Muslim homebuyers will now be able to use a Shari’a compliant alternative to mortgages following an announcement made by the Treasury.

Paying interest to a lender under a traditional mortgage arrangement is prohibited by Shari’a law. Islamic banks instead offer Home Purchase Plans (“HPPs”), under which ownership of a home is split between the customer and the bank.  The homeowner buys a portion of the property outright with their initial deposit and then pays regular instalments to the bank covering rent for the portion they do not own and an ‘acquisition payment’.  It means they gradually buy the property from the bank and over time become the sole owner.

The government has now amended the rules governing the scheme to allow banks that sell HPPs to purchase a government guarantee for them.
The Islamic Bank of Britain has become the first lender to announce its intention to participate in the scheme. Treasury minister Sajid Javid stated:-

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“I am delighted Home Purchase Plans will now be available under the Help to Buy scheme, this gives even more choice to hardworking families across the UK trying to fulfil their home owning aspirations.”

The announcement from the Treasury comes in the wake of the UK planning to become the first non-Muslim county to offer Sukuk (Islamic Bonds) for trade. Sukuk are financial instruments that are similar to government-issued sovereign bonds. Shari’a finance prohibits riba (interest) and does not allow one party to make financial gains unjustly at the expense of another party. These Islamic bonds adhere to the principles of Islamic law as they pay investors a fixed return based on the profit generated by an underlying asset.

David Cameron at the World Islamic Economic Forum last year told delegates that the issue of Sukuk in 2014 would be worth in the region of £200 million with input from industry. This coupled with the opening of a new Islamic Index on the London Stock Exchange, could bring to the UK a share of the £1.3 trillion global Islamic investment.

The London Stock Exchange is an attractive draw for Islamic finance listing, with over 49 Sukuk listings valued at $34 billion over the last five years. The markets have seen global Islamic investments soar by 150% since 2006. Money from Islamic finance has already made a huge impact on iconic properties in London, financing the Olympic Village, the Shard building and the Emirates Stadium, home of Arsenal FC.

If you are thinking of moving home or adding to your property portfolio, we at Blacks can provide a complete legal service to guide you through the process.

 

Please contact Luke Patel
on 0113 227 9316
or by email at LPatel@LawBlacks.com

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Where there’s a will there’s a way

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In the important judgment of Marley -v- Rawlings the Supreme Court considered whether a deceased’s Will could be valid when a husband and wife had each executed the Will meant for the other as a result of an oversight on the part of their Solicitor when he handed them the Wills for signature.

In 1999 Mr and Mrs Rawlings instructed their Solicitor to prepare their Wills. Their instructions were identical namely that each spouse was to leave the entirety of their estate to the other but if one of them had already passed away or failed to survive them by less than a month, the entirety of the estate would pass to Mr Terry Marley. Mr Marley was not related to Mr & Mrs Rawlings but they treated him like a son.

Mr & Mrs Rawlings did have two sons but, for whatever reason, no provision was made for them in their Wills.

On 17 May 1999 when Mr & Mrs Rawlings signed their Wills their Solicitor, in error, gave each spouse the other spouse’s Will. This was not noticed by anyone at the time and the Wills were simply signed by Mr & Mrs Rawlings and their signatures witnessed.

Mrs Rawlings died in 2003 and the entirety of her estate passed to Mr Rawlings without anyone noticing the error in the Wills. Mr Rawlings passed away in 2006. At the date of his death the house he and Mr Marley lived in was held by Mr Rawlings and Mr Marley as joint tenants and therefore Mr Rawlings’ interest in the property passed automatically (via the rule of survivorship) to Mr Marley. The value of the other assets remaining in Mr Rawlings’ estate was £70,000.

Upon discovery of the error in the Wills Mr Marley, who was also the Executor under the Will, made an Application to the Court to rectify the Will. It was Mr Marley’s position that Mr Rawlings’ Will should be rectified by the Court so as to record what was originally intended by Mr Rawlings. In other words the Will should contain what was in the Will signed by Mrs Rawlings and probate should be granted on those terms.

That Application was challenged by Terry Rawlings and Michael Rawlings (Mr & Mrs Rawlings’ sons). If the Court found the Will to be invalid (due to the error in signing the Will) Mr Rawlings would be deemed to have died intestate (i.e. without a Will) and under the rules of intestacy his sons would inherit his estate of £70,000. Whereas if the Court ruled the Will was valid then Mr Marley would inherit Mr Rawlings’ £70,000 estate and his sons would not receive anything.

Mr Marley’s Application for rectification of the Will was unsuccessful. It was held by the Court at first instance that Mr Rawlings’ Will did not satisfy section 9 of the Wills Act 1837. This was because the formal execution requirements had not been carried out as a result of which the Will was not signed with Mr Rawlings’ knowledge or approval.

The Court at first instance also held that it was not able to rectify the Will in accordance with its legislative powers as it determined that the error regarding signature was not a ‘clerical error’.

Mr Marley appealed to the Court of Appeal but the Court of Appeal upheld the judgment of the lower court.
However Mr Marley, relying on the intentions of Mr Rawlings, appealed to the Supreme Court.

The Supreme Court unanimously allowed Mr Marley’s appeal. They held that Mr Rawlings’ Will should be rectified so it would contain the typed parts of Mrs Rawlings’ Will in place of the typed parts of Mr Rawlings’ Will. Therefore in accordance with the intentions of Mr Rawlings, Mr Marley will now inherit the entirety of Mr Rawlings estate.

We at Blacks deal with all aspects of contentious probate proceedings, preparation of Wills, estate planning and the administration of estates.

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Blacks Solicitors

 

Please contact Luke Patel
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or by email at LPatel@LawBlacks.com

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Hitting the Back of the Net

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The “quenelle” gesture used by Nicolas Anelka has sparked controversy in the media and raised serious question marks for sponsors with lucrative agreements in place.

The ‘quenelle’ has been declared as an anti-Semitic gesture by many and was the trigger for Zoopla (co-owned by Jewish businessman Alex Chesterman) to publicly announce on the 20th January their intention to bring to an end their shirt sponsorship agreement with West Bromich Albion at the conclusion of the 2013-14 season.

Anelka defended the sign as being “anti-system” and “just a special dedication to my comedian friend Dieudonne”.
What rather dents Anelka’s defence is that the said Dieudonne has previously been found guilty of making anti-Semitic speeches in France.

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The FA investigation included the appointment of an expert to interpret the ‘quenelle’ gesture. His findings alongside the requisite FA disciplinary procedure returned a charge of misconduct which carried with it a 5 game suspension penalty.

The two high profile incidents involving John Terry and Anton Ferdinand and Luis Suarez and Patrick Evra where allegations of racist remarks made by Terry and Suarez prompted the FA to add specific regulations to the 2013-14 regulatory provisions.  The Anelka episode has been the first instance that the FA has utilised the redrafted regulations. Anelka was charged with Misconduct under Section E of the FA Rules of Association. Paragraph E3(1) under terms of General Behaviour stipulates a player must not:-

“act in a manner which is improper or brings the game into disrepute or use any one, or a combination of, violent conduct, serious foul play, threatening, abusive, indecent or insulting words or behaviour.”

An aggravated breach of regulation E3(1) compels the FA Regulatory Commission on finding a player guilty to impose a minimum suspension of five matches.
Anelka is not the first athlete to land themselves in hot water with sponsors; Tiger Woods and Lance Armstrong lost many of their headline sponsors following the former’s infidelity and the latter’s doping indiscretions.

Most sponsors attempt to proactively protect themselves from foreseeable breaches of ‘morality’ by having their legal advisors draft specific clauses into their sponsorship agreements with an athlete. ‘Disrepute’ or ‘Morality’ clauses are brought into play by a triggering event which brings the individual, club and/or sponsor into disrepute, or if an athlete’s behaviour falls below expected levels of morality.

Coca-Cola had the foresight to construct such a clause under which Lance Armstrong provided contractual warranties assuring Coca-Cola that he was free from performance-enhancing drugs. When the US Anti-Doping Agency announced that Armstrong had led “the most sophisticated, professional and successful doping programme sport has ever seen”, Coca-Cola were able to terminate their deal with the 7-times Tour de France winner without recourse to Litigation. In contrast the insurance company SCA Promotions are locked in a legal dispute with Armstrong’s legal team in an effort to recoup $12m in bonuses which the firm paid out for his wins between 2002-2004.

We at Blacks have a specialist Sports Law team dealing with all legal sporting matters.

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In a fix

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The recent arrest of six men by the National Crime Agency over match fixing allegations has taken the football headlines from the back of the newspapers to the front pages.

Ex-Premier League player Delroy Facey is the most notable of those alleged and his picture is being widely used in many press articles.

So what are the legal implications for Delroy Facey? In Criminal proceedings Facey could be charged under the Bribery Act along with any of the following; money-laundering, fraud or conspiracy offences. The Bribery Act has a 10 year maximum custodial sentence and large fines at the discretion of the court.

Blacks Solicitors

Blacks Solicitors

In Civil proceedings individuals would be subject to disciplinary procedures from their club and penalties could be sanctioned by the Football Association. If clubs were discovered to have played any part in an event of match-fixing they could be liable for all or a combination of the following; points-deductions, large fines, possible relegation and possible insolvency. If the match-fixing became a national scandal commercial partners and sponsors such as those who supported Lance Armstrong through his Tour de France seven victory reign would be queuing up to file their own law suits.

So if we look at some recent examples of how players who have been caught match fixing have been dealt with. The Football Association suspended and fined four players for betting on the outcome of the match between Accrington Stanley and Bury in May 2008. James Harris of Accrington Stanley received the longest suspension, one year and fined £5k after the FA's Regulatory Commission delivered a guilty verdict that Harris had bet on his team’s match against Bury (Bury coming out 2-0 winners).

So perhaps the deterrent does not outweigh the costs. The average salary for a conference player is £500 a week, with this being their only income as 21 of the 24 clubs are now full-time professional the Telegraph’s Singaporean fixer has quoted players throwing a game for as little as £70k.

So if we took the fine and suspension Harris suffered, his loss of earnings at the conference average would amount to £24k for the year put on top his fine of £5k his total loss would only be £29k. 29k is still less than 50% of the total haul he would have potentially received if the Telegraph’s whistleblower is to be believed. This is before you factor in the £2K he staked on his side to lose. Arguably the costs don’t outweigh the benefits.

But it hasn’t always been like this has it? A former England centre-half by the name of Peter Swan had won 19 caps in a row and many including Jimmy Greaves say Swan would have been preferred in defence to England’s Jack Charlton in the 1966 World Cup winning side. Swan would be remembered as the most high profile name in what the People newspaper described as “The Biggest Sports Scandal of the Century”.

Swan bet against his own team Sheffield Wednesday to lose away to Ipswich Town. He placed a £50 bet at odds of 2-1 that they would lose on the fateful day, 1st December 1962. The Bookmakers lost £35k on that match, Swan lost his career. Swan was given a four-month jail sentence for conspiracy to defraud and a life ban from football (The ban was eventually lifted in 1972 following lobbying from the MP Joe Ashton and Sir Matt Busby). The financial penalty was two weeks’ wages and Swan was ordered to pay £100 towards his legal costs ironically the same amount which he profited from the bet itself.

Perhaps the threat of a life ban needs to be reinstated as the financial penalties alone are not deterring players from betting against their own team to lose?

Please contact Luke Patel on 0113 227 9316 or by email at LPatel@LawBlacks.com

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