The length of a marriage and the pre-existing financial positions of the husband and wife are both relevant factors when it comes to dividing up assets on divorce. However each case is decided on its own facts and in one case a wife was awarded £4.5 million at the end of a marriage that lasted less than two years.

The husband, in his 60s, was worth £37 million, almost all of which pre-dated his marriage to a woman almost 30 years his junior. During their brief union they enjoyed a luxurious lifestyle, but the marriage and its breakdown were so tempestuous that the wife had suffered serious psychological harm.

Given the brevity of the marriage and the extent of the husband’s pre-existing wealth, a family judge acknowledged that it was not a case for equal sharing of assets. However, he found that the wife's needs included a £2.3 million flat in Central London. The husband was, amongst other things, also required to pay off her £300,000 debts and to provide her with a £1.3 million lump sum as a source of income.

In rejecting the husband’s appeal against that ruling, the High Court noted that, although the wife made no criticisms of his behaviour, she had left the marriage in a condition of great damage and vulnerability. Although her award might be viewed as generous, the judge’s assessment of her capital and income needs fell well within the discretion vested in him by the section 25 of the Matrimonial Causes Act 1973.

For further information on this article or other family matters, please contact Jayne Gregg on 0121 700 1400, email j.gregg@sydneymitchell.co.uk or complete speak to a member of our family team for help or advice on family and divorce matters.

Senior employees know the intimate details of the companies they work for and their departure to a competitor can be a disaster. However, a recent High Court case showed that professionally drafted contractual restrictions on what they can and cannot do after they leave can be highly effective in softening the blow.

The case concerned an employee who had performed a lynchpin role in an international recruitment company. She was viewed as a valuable addition to the team when she joined the company and was paid commensurately. After 13 years with the company, she announced her resignation and notified her employer that she would be taking up a post with another business operating in the same specialist field.

The employee’s contract contained restrictive covenants that, amongst other things, forbade her from being directly or indirectly concerned or interested in any competing business for six months after her departure. Although willing to comply with other provisions of the covenant, employee argued that part of it was unenforceable and unreasonably prevented her from getting on with her career.

In rejecting her arguments, the Court noted that she was an experienced businesswoman who had entered into the contract with her eyes open. The covenant was reasonable and valid and there was no good reason for not enforcing it. She would thus have to wait until the expiry of the six-month period before taking up her new position. The company did not object to her performing a restricted training role for her new employer in the interim.

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 you take out an insurance policy, it might seem tempting to minimise the risk insured against with a view to reducing the premium. However, one High Court case concerning a catastrophic property fire showed why absolute frankness is required.

The case concerned a five-storey mixed commercial and residential property that was so severely damaged by a fire that it had to be demolished. Its owners claimed a seven-figure sum from their insurers, but the latter refused to pay on the basis that various features of the property had been misrepresented to them.

When applying for the insurance, the owners had described the property as in good repair. However, the Court noted evidence that, amongst other things, many of its windows were broken or falling out and that its roof leaked. The owners’ assertions that the property did not have a flat roof and had not been subject to malicious acts of vandalism were also substantially incorrect.

In refusing to order the insurers to indemnify the owners for their loss, the Court noted that the latter had made no real effort to fairly represent the risk. Had they done so, the insurers would probably have declined cover. In the circumstances, the insurers were entitled to avoid the policy and tender the return of the premium.

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

Estate planning really is essential, particularly if you own a company, and a failure to take professional advice can store up unforeseen trouble for your loved ones. The point could hardly have been more powerfully made than by one High Court case concerning a company that was plunged into crisis following its founder’s death.

The businessman owned all the shares in the company and was its sole director. His death had left the company entirely directionless, without directors or a company secretary to guide it. Its bank account had been frozen, leaving it unable to pay its staff or tax liabilities. In the circumstances, the executors of his estate launched emergency proceedings in order to save the business.

In upholding the executors’ application under Section 125 of the Companies Act 2006, the Court directed amendment of the register of companies so as to substitute the executors for the deceased as the holder of the latter’s shares. That in turn would enable them to pass a written resolution, appointing a director of the company who would be empowered to put it back on an even keel.

Such relief would normally have been granted only after the businessman’s will had been admitted to probate, but the Court recognised that the case was wholly exceptional. Given the company’s pending liabilities in respect of staff wages and a VAT demand, any delay could irreparably damage the business.

For further advice please contact Nicholas Bennett on 0121 746 3300, email n.bennett@sydneymitchell.co.uk or fill in our online enquiry form

 

If you suffer discrimination in the workplace you can be compensated for injury to your feelings as well as for your financial losses. A £12,000 award was made for injury to feelings in one striking case in which a woman was told that she was being made redundant on the same day that she put in a request for maternity leave.

The woman, who had a senior managerial role in a large company, was so upset and shocked on being told that she would lose her job that she had to go on sick leave, suffering from stress. In her absence, her bosses proactively looked for errors in her work and informed her that she faced disciplinary action. She ultimately resigned.

After she took legal advice and lodged a complaint, an Employment Tribunal (ET) found that she had been selected for redundancy because of her request for maternity leave and that the allegations of gross misconduct against her were unjustified and unsustainable. She had thus been constructively dismissed and had suffered unlawful discrimination based on her sex.

Following a further hearing, the ET noted that the circumstances of her departure from the company had resulted in a loss of confidence and mental health problems from which she took some time to recover. In the circumstances, the company was ordered to pay her a total of more than £42,000 in compensation, including the substantial award for injury to her feelings.

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 shareholders have a disagreement, it can be particularly divisive where they do not have a controlling interest in the company concerned. However, as one Court of Appeal decision has recently shown, the outcome will usually depend on the interpretation of the company’s articles of association.

The case concerned two minority shareholders who between them owned 22 per cent of each of two cosmetics companies within the same very successful group. None of the shareholders owned 50 per cent or more of either of the companies. Following the deterioration of relations between certain shareholders, the minority shareholders gave notice to the others that they wished to dispose of their holdings.

The two companies’ articles of association were identical, and contained pre-emption clauses which specified the mechanism for the other main shareholders to acquire the 22 per cent block and also the method of valuation of any shares.  The clauses provided, amongst other things, that the shares could be acquired at a “prescribed price” that would be determined by two independent accountants, if not agreed.

No such agreement was reached, and an issue arose as to how the “prescribed price” would be valued by the accountants.  In particular, the minority shareholders argued that the shares should be valued on the basis of a pro rata proportion of the value of the whole equity of each company.  The other shareholders preferred to value the minority shareholders’ shares, by taking into account the minority status of the shares. 

In the High Court, the judge had found that the shares should be valued in accordance with the minority shareholders’ argument.  This method of valuation produced a much higher value for the shares, and the other shareholders appealed the decision.  In dismissing the appeal, the Court of Appeal could find no flaw in the High Court judge’s careful and thorough interpretation of the pre-emption clauses.

The lesson to be learned from this case, is that founders of companies and majority shareholders, should have a Shareholders’ Agreement, and regularly consider the pre-emption rights in the company’s Articles of Association - especially before granting any minority shareholdings to valued employees.  

For further information, please contact Suzanna Patalong on 0121 698 2200 or s.patalong@sydneymitchell.co.uk or complete our online enquiry form.

Family partnerships can be highly effective vehicles for running businesses, but that depends on good relations being maintained. In one High Court case in which ties of blood were sadly not enough to prevent discord, a father and son engaged in a bitter dispute over ownership of a hotel and campsite.

The father ran the business in partnership with his son and daughter-in-law. After a breakdown in relations, they agreed that the partnership had been dissolved, that its affairs should be wound up by a receiver and that its assets and liabilities should be divided between them.

The father and son were, on paper, equal joint tenants of the property which formed the main asset of the partnership. However, the father argued that this did not reflect the true position and that he was the beneficial owner of 80 per cent of the property. He launched proceedings seeking a declaration to that effect.

Ruling against him, however, the Court compared his thoroughly unreliable evidence with the convincing testimony of his son. Even if the father had contributed more to the property’s purchase price, it had been agreed between them at the outset that they would hold it in equal shares. The son had entered into the transaction on the faith of that agreement.

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

A decree absolute, ending a marriage, does not necessarily signal the end of judicial involvement in divorce. As one High Court case showed, financial arrangements can be revisited in the light of changed circumstances, including children growing up, the formation of new relationships and increases and decreases in income.

The case concerned a middle-aged NHS dentist and his care worker ex-wife who had two children during their 11-year marriage. After their relationship broke down, a decree absolute had been granted in 2011 and the wife had been awarded 53 per cent of the couple’s capital assets. The husband had also been required to pay her £2,250 in monthly maintenance.

The husband had since remarried and his new wife was expecting a baby. Whilst his financial responsibilities had increased, his income was said to have substantially dropped due to changes in NHS funding of dentistry. In those circumstances, a family judge agreed to reduce his maintenance payments to £2,000 per month. Provision was also made for their further reduction in stages as he approached retirement. However, the judge directed that the husband’s NHS pension, worth more than £190,000, should be shared equally with the wife.

The husband remained dissatisfied and, in challenging the judge’s order before the High Court, he presented fresh evidence as to his declining income and increased outgoings. In seeking a clean financial break, he claimed to be facing a deficit between his income and expenditure of £3,360 per month.

In rejecting his appeal, however, the Court could find no sufficient evidential basis on which to interfere with the judge’s clear and comprehensive conclusions. His decision to gradually decrease the wife’s maintenance payments until such time as they would be replaced by the pension sharing order was carefully crafted.

For advice please contact Emma Gray on 0121 746 3300, email emma.gray@sydneymitchell.co.uk or fill in our online enquiry form.

Covenants restricting the use of land commonly appear on title deeds, but they often date back many years and take no account of changing circumstances. A tribunal’s ruling, however, has shown that they are not written in stone and can be amended to ensure that scarce land supplies, particularly for housing, are put to good use.

The owners of a detached house, set in about three-quarters of an acre of grounds, had obtained planning permission to demolish a large indoor swimming pool and replace it with a new home. The property was part of an estate that was subject to a restrictive covenant dated 1963. The covenant forbade construction of more than one house on each of the original building plots that made up the estate.

Several of the owners’ neighbours objected to their plans. However, in amending the covenant so as to enable the development to go ahead, the Upper Tribunal found that the proposals represented a reasonable use of the site. Although the new house might just be visible from some neighbouring homes, it would have no substantial impact on their value. Impeding the development would bring no practical benefits of substantial value and advantage to the objectors.

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

Before accepting an employee’s resignation, it is crucially important to be certain that resignation is their true intention. In one case, an Employment Tribunal (ET) found that a letter in which an employee asked her manager to ‘please accept one month’s notice’ was ambiguous and did not amount to a resignation.

The employee, who was employed by an NHS Trust, was not happy in the department in which she worked and had received a conditional offer of a transfer to another department.  Following an upsetting incident she handed the brief letter to her manager. The transfer offer was subsequently withdrawn in view of her record of sickness absence and her employment with the Trust was terminated after the manager purported to accept her resignation.

In upholding her unfair dismissal claim, the ET found that, taken in context, the letter was not a clear and unambiguous expression of a wish to resign her employment with the Trust. The probability was that the manager had not understood it as such and that the employee had only intended to give notice of her wish to leave the department. The amount of her compensation remains to be assessed.

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

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