In a ground-breaking decision, the High Court has upheld the legitimacy of the growing number of companies that specialise in taking over legal claims by disgruntled consumers and pursuing them, en bloc, against alleged wrongdoers.

The case concerned one such company that had taken assignment from a number of members of the public of their claims against an online data storage provider that was alleged to have charged them unfair cancellation fees. Those who assigned their causes of action to the company had the option of receiving a fixed sum or 60 per cent of sums recovered in the event that the claim against the provider succeeded.

In attempting to strike out the company’s claim, the provider – which denied that its charges were unfair – argued that the company’s mode of business amounted to illegitimate support of litigation in which it had no concern whatsoever. The company’s methods were alleged to constitute ‘maintenance’ and ‘champerty’, activities which have been banned since medieval times when intermeddling with litigation was rife.

In rejecting those arguments, however, the Court found that there was a strong public interest in upholding the validity of the assignments and in permitting the company to pursue its claim. Individual claims by the provider’s customers would be too small to be cost- or time-effective and the company had a legitimate and genuine commercial interest in being able to pursue the claims assigned to it.

The company’s methods were an innovative and responsible means of enhancing access to justice in small money cases and there was no risk of the litigation process being abused, inflated damages being awarded or frivolous litigation being pursued. Arguments that the assignments were an attempt to circumvent the regulatory provisions concerning the provision of legal services contained within Section 13 of the Legal Services Act 2007 were also rejected.

For any further advice, please contact Kamal Majevadia 0121 746 3300 email, k.majevadia@sydneymitchell.co.uk or fill in our online enquiry form.

Some contracts are better drafted than others, but the courts are always keen to give effect to the intentions of the parties and are equally reluctant to find that provisions are void for uncertainty, especially where the contract has been performed.  Those points were clearly made recently, in a case concerning a subcontract to install a new airport baggage handling facility.

The main contractor was carrying out major works at the airport and had engaged a specialist subcontractor to design and construct the baggage handling facility.  The work was divided into sections, each of which was to be completed by a date specified in the contract – the contract also provided for payment of liquidated damages in the event of delay.

When delays did in fact arise, although the deadlines were extended by agreement, a dispute ensued as to the operation of the sectional completion dates and the delay damages.  The matter was referred to an adjudicator, who found that the delay damages provisions were so uncertain in their meaning, as to be inoperable and unenforceable.  As a result, the main contractor issued court proceedings, asking for declaratory relief as to the proper construction of the contract.

In ruling on the matter, the court noted that what mattered was the intention of the parties, by reference to what a reasonable person, with all relevant background knowledge, would have understood from the wording of the contract.  It was made clear that the subjective evidence of each party’s intentions, was to be disregarded - the delay damages provisions had to be interpreted in the context of the whole contract, with a view to achieving a harmonious reading of each clause.

Applying these principles, the court found that it was possible to sufficiently identify those works that fell within each of the sectional periods, and as a result the liquidated damages provisions were sufficiently certain and therefore enforceable.  The court made declarations in respect of the “true meaning” of the applicable contract terms.

A clear lesson to be learned from this case, is that a contract must be clearly drafted – important provisions, like liquidated damages clauses and anything related to them, must be carefully constructed and objectively interpreted.  It will not be possible to interview the parties after things have gone wrong, in order to decide how courts will judge the meaning of a particular clause in a contract – a solicitor with a good grasp of the English language, is now judged to be essential!

If you would like some advice about your Commercial Contract, please contact Suzanna Patalong on 0121 698 2200 or s.patalong@sydneymitchell.co.uk or complete our online enquiry form.

Following a consultation, the Presidents of the Employment Tribunal have issued revised guidance on the amount of compensation payable for injury to feelings in discrimination cases (the 'Vento' bands).

In future, the guidance will be subject to revision on an annual basis, without the need for further consultation, with the first review taking place in March 2018.

The Presidents consider that, for the time being, the Retail Prices Index (RPI) is the appropriate measure of the rate of inflation to be applied.

Applying the formula adopted by the Presidents, the new bands for awards for injury to feelings are as follows:

  • Lower band – between £800 and £8,400. Awards in this range are appropriate where the act of discrimination is an isolated or one-off occurrence;
  • Middle band – between £8,400 and £25,200. Awards in this range are made in serious cases but where an award in the top band is not merited; and
  • Top band – between £25,200 and £42,000. Awards in this range are made in the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment. Only in exceptional circumstances will a compensation award for injury to feelings exceed the upper limit.

The Guidance will apply to claims presented to the ET on or after 11 September 2017.

The response to the consultation can be found on the Courts and Tribunals Judiciary's website. 

For further advice please contact Jade Linton on 0121 746 3300, email j.linton@sydneymitchell.co.uk or fill in our online enquiry form

When a compensation award is made to the victim of an accident, the actual amount of the settlement is adjusted to take into account the interest the claimant can expect to earn by investing it. This is achieved by applying a 'discount rate', or 'Ogden rate' to the sum awarded. Traditionally, the percentage rate applied has been linked to returns on lowest-risk investments – typically index-linked gilts. The lower the rate, the higher the compensation award.

The rate also applies to compensation awards by way of damages made by an Employment Tribunal for personal injury where a claimant is found to have suffered ill health – physical or psychological – as a result of unlawful discrimination or detriment. Such an award is often in the form of a compensation payment for long-term loss of earnings.

The discount rate had remained unchanged at 2.5 per cent since 2001. However, in light of the low interest rates available to investors, a new discount rate of minus 0.75 per cent was introduced with effect from 20 March 2017 in an attempt to ensure fairness to those receiving compensation. The move was heavily criticised by the insurance industry, however, and a sharp increase in motor insurance premiums followed. The Government also had to make available additional sums to cope with the knock-on effect of the change on public services with large personal injury liabilities – particularly the NHS.

Following a consultation on this issue, the Lord Chancellor and Justice Secretary, David Lidington, has announced the Government's intention to revise the way the discount rate is calculated. The proposal is that the rate should be based on 'low risk' rather than 'very low risk' investments. In addition, advice will be taken from a panel of experts and the rate will be reviewed at least every three years, with changes made when necessary.

If the proposals are approved by Parliament, the revised discount rate is likely to be somewhere between 0 per cent and 1 per cent.

For further information on this article, please contact Mike Sutton on 0121 698 2200, email m.sutton@sydneymitchell.co.uk or fill in our online enquiry form.

It is common for couples to make so-called ‘mirror’ wills, leaving everything to each other and, eventually, to their children. Such documents may appear simple but, as one High Court case showed, they can be effectively unchangeable, depending on what promises are made at the time.

A husband and wife signed mirror wills in 2000 which provided that each would inherit the other’s estate and that, when both of them had died, the combined estate would then pass to their daughters. Following the husband’s death, the wife made more than a dozen further wills, each replacing the other, before her own death 16 years later. The last of those wills bequeathed £40,000 in legacies to the daughters, but the remainder of the wife’s £213,000 estate was left to other beneficiaries’

There was no dispute that the wife had the mental capacity required to make a valid will. However, her daughters argued that, by changing her will, she had broken a binding commitment that she had made to her husband before his death. They had been present when the mirror wills were signed and had been assured by both their parents that their terms were ‘set in stone’ and would not be changed.

In upholding the daughters’ arguments, the High Court accepted their evidence as to the mutual promise that their parents had made. There was no doubt that both of them intended at the time that their wills would not be changed. On her husband’s death, therefore, the wife lost the unilateral right to dispose of her estate as she pleased. In the circumstances, the Court ruled that her personal representatives held her estate on trust to give effect to the mirror wills.

For help and guidance on this or other private client matters contact Ravi Sandhu 0121 698 2200 or email, r.sandhu@sydneymitchell.co.uk.

If you take appointments as a Receiver or make such appointments then this seminar will be of interest to you!

Speakers

Our Senior Partner Div Singh will be opening the Event introducing our speakers:

  • Leanne Schneider-Rose, Partner, Restructuring & Recoveries department
  • Sundeep Bilkhu, Solicitor, Property Litigation

Key Objectives

The objectives of this seminar include –

  • How to appoint a Receiver and how to ensure that you have been properly appointed
  • Steps to be taken following an appointment
  • Powers of a Receiver
  • Duties of a Receiver
  • Dealing with moveable assets and animals on or at the property
  • Issues with tenants

You are invited to join us after the seminar for a light buffet and refreshments and the opportunity to speak to the team and ask any questions.

This is a FREE event. Please book now to avoid disappointment as places fill up quickly.

We very much look forward to seeing you there.

Eventbrite booking link – to book on line

Believe it or not Performance Management is not a 30 minute appraisal once each year reports Jade Linton Associate Solicitor at Sydney Mitchell LLP. 

When used correctly Performance Management is an effective HR tool helping employees to do a job well and achieve the goal they were employed to do, help you run a thriving a profitable business.

A common mistake made by businesses is to ignore underlying issues which, if left unresolved, can turn in to huge litigious problems making matters difficult for the employee, difficult for staff and difficult for business. 

Jade Linton Employment Law Associate Sydney Mitchell LLP 0121 746 3300A forward thinking business will ensure its line managers are equipped and empowered to manage staff effectively and fairly.  People are often promoted to management because they have the technical skill required for business but technical prowess alone does not make a person capable of managing people.  

Capability is aimed at improvement not punishment and businesses should not use performance management as a tool to engineer problematic staff out of the business under the guise of poor performance.  Various cases reveal dismissing an employee for poor performance when performance was not the real reason for dismissal is likely to render the dismissal unfair. 

An effective performance management culture (and not just a policy on page 259 of the Handbook) should ensure the right people occupy the right roles and employees facing genuine difficulties are supported.  After all, a happy workforce is the driving force behind any profitable business and employers should be more concerned about ‘presenteeism’ than they are 'absenteeism'.

Jade added:

Get it right at the outset and save yourself the cost, distress and embarrassment of an expensive Tribunal claim.  Plan, discuss and work together with your key employees to make a day in the office a positive and profitable experience.

My HR Forums have helped many businesses share their views in a confidential and friendly arena aimed at identifying how practices can be improved to the benefit of all concerned. Find help before you need help!

Jade Linton can be contacted on 0121 746 3300 or email j.linton@sydneymitchell.co.uk

HR Forum - Sydney Mitchell LLP - Jade LintonJade runs a series of HR Forums aimed at HR Professionals and HR Managers - the next FREE event is on 28 September - with Guest sponsor is Stephen Gallacher – Gallacher Wealth Management

to be held at James's Place House, Blythe Valley Park, Solihull

You can book on this using this Eventbrite Link

 

Social housing is an intensely scarce resource and its desirability can sadly make it a target for fraud. Such behaviour does not go unpunished, however, and in one case a couple who told a farrago of lies in an attempt to cover up their dishonest subletting of their flat were evicted by the High Court and stripped of every penny of rent that they had illicitly pocketed.

The couple were lucky enough to be granted an assured tenancy of a two-bedroom flat in an area with one of the longest housing waiting lists in the country. Their lease forbade them from subletting the property and required them to live in it as their only or principal home.

Following a tip-off, their landlord, a social housing provider, discovered that they had moved out to live with a relative and had sublet the flat to others who were paying them £400 per month in rent. One of the flat’s bedrooms had been kept locked and filled with toys and a cot to give the impression that they were still living there with their two children.

The couple’s mendacious and absurd explanations for their absence from the flat were rejected by a judge, who issued a suspended possession order against them on the basis that they had not given up possession of the whole flat and had thus not sacrificed their security of tenure. Their landlord, however, appealed on the basis that only an outright possession order would suffice to mark their behaviour.

In upholding the landlord’s arguments, the Court found that the judge had been taken in by the couple before reaching a decision that was fatally and demonstrably flawed. On the evidence, the couple were profiteering fraudsters who had abused their position as social tenants of a flat that thousands of needy people on the waiting list would have been thankful for.

In the circumstances, the Court directed the couple to give up possession of the flat within 21 days and made an unlawful profit order under the Prevention of Social Housing Fraud Act 2013. That order required them to pay to their landlord £1,550, representing the rent that they had unlawfully received from their subtenants.

For advice please contact Sundeep Bilkhu on 0121 698 2200, email sundeep.bilkhu@sydneymitchell.co.uk or fill in our online enquiry form.

Firms and people who fail to pay their bills are a significant nuisance for any business, but when the debtor is abroad, there may be a temptation to give up. Although recovery of debts from those who live overseas requires determination, English judges are relentless and have a panoply of powers that reach across national borders. One case that proves the point involved a company's pursuit of a Swiss resident who was said to have fraudulently posed as a finance professional, which led to a worldwide freezing order over his assets and an application to have him imprisoned for contempt of court for failing to comply with court orders.

The company claimed to have paid the man large sums of money on the strength of his promise that he would obtain for it various corporate financial guarantee bonds and a credit facility. None of those had materialised and the company claimed that it had been duped by the man, who had held himself out as a qualified banker.

The claims were not contested, so the company obtained default judgments against the man in London for £1.6 million and €400,000. He was also ordered to pay legal costs of £276,000 and the company obtained domestic and worldwide freezing orders against him. A freezing order prevents access to the assets identified, which remain frozen until a judgment is met.

In refusing the man's application to set aside those orders, the High Court noted that he had taken steps clearly intended to cover his tracks in Switzerland and to conceal any assets he may have had there. He had closed his Swiss bank accounts and disappeared from his last known address without disclosing a new one.

Despite having no bank account and no declared income, he had managed to pay for improvements to one of his properties in England and had found sufficient funds to spend over £1 million on the litigation. It was at least arguable that he had breached the international freezing order and the Court refused to set aside the company's application to have him committed to prison for contempt.

If you are owed money by someone who will not pay, we can help you obtain and enforce a judgment by the court.

For advice please contact Hayley-Jo Lockley on 0121 698 2200, email h.lockley@sydneymitchell.co.uk.

Planning permission is usually all that you need to turn your development plans into reality – but not always. In one case, a restrictive covenant enshrined in title deeds before the Second World War was enough to defeat proposals for a new bungalow.

The covenant required that a plot of land lying between homes in a historic market town should not be built on, with the exception of a greenhouse, a garage or summer house to be used in connection with a private dwelling. However, after obtaining planning consent to build a detached bungalow on the plot, its owner applied to the Upper Tribunal (UT) to discharge or modify the covenant.

The UT accepted that the bungalow would be a reasonable use of the plot, but noted that the existence of the planning permission was not decisive. A neighbouring homeowner had objected to the development on the basis that it would obliterate the feeling of space and openness that he enjoyed in his garden and that money would not be adequate compensation for that loss of amenity.

In rejecting the would-be developer’s application, the UT found that the covenant was not obsolete and brought to his neighbour a practical benefit of substantial advantage – a peaceful back garden within a built-up area. The bungalow, if built, would stand nine yards from his boundary and would have a serious impact on the garden he cherished as a respite from the busy world outside.

Please contact Adam Oleskow on 0121 746 3300, email a.oleskow@sydneymitchell.co.uk or fill in our online enquiry form.

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