Business Law Updates

On the 6 July a team of four intrepid climbers from Sydney Mitchell Solicitors will take on the Yorkshire 3 Peaks Challenge. 12 hours, 3 Peaks, 64 pairs of socks and an abundance of plasters, is in between them and victory.

They are taking on this gruelling challenge to raise funds for two worthy causes, Age UK Solihull and The Buddy Bag Foundation.

Age UK Solihull is a charity with a mission to improve the lives of older people within the Solihull Borough. Age UK Solihull provides many services including social clubs and befriending programmes to tackle feelings of isolation and loneliness many within the older generation are going through.

Please click on the following link to learn more: https://www.ageuk.org.uk/solihull/about-us/

The Buddy Bag Foundation provides comfort to children who enter emergency care after fleeing violent situations at home. Buddy bags help to restore a sense of safety and security into a child’s life during a traumatic time.

To learn more about The Buddy Bag Foundation click on the following link: https://buddybagfoundation.co.uk/our-mission/

To sponsor our “Peaky climbers” in their aim to raise money for these two charites please click on the link below and donate, all donations are welcome.

https://uk.virginmoneygiving.com/Team/PeakyClimbers-Sydneymitchell

Watch out for more information. Hour by hour coverage will be posted on the 6 July on our Facebook page @SydneyMitchellSolicitors

Our lawyers are recommended in The Legal 500 United Kingdom 2018 editorial (listed below)

WEST MIDLANDS
Dispute resolution - Commercial litigation - Birmingham
- Dean Parnell
- Kamal Majevadia

Dispute resolution - Debt recovery
- Kamal Majevadia
- Hayley-Jo Lockley
- Gemma Parker

Finance - Insolvency and corporate recovery
- Leanne Schneider-Rose

Human resources - Employment
- Dean Parnell
- Samantha Glynn

Insurance - Clinical negligence - claimant
- Mike Sutton
- David Lydon
- Adam Hodson
-Stephen Jesson

Insurance - Personal injury - claimant
- Mike Sutton
- David Lydon
- Adam Hodson

Insurance - Professional negligence
- Sundeep Bilkhu

Private client - Contentious trusts and probate
- Kamal Majevadia (leading individual)
- Tracy Creed

Private client - Family - Birmingham
- Karen Moores
- Mauro Vinti

Private client - Personal tax, trusts and probate
-Tracy Creed ~
- Nicholas Bennett
- Ravinder Sandhu

Public sector - Health
- Dean Parnell
- Fahmida Ismail
- Tony Harris (Deceased)

Real estate - Commercial property - Birmingham
- Georgina Walsh
- Div Singh
- Fahmida Ismail

Real estate - Property litigation
- Sundeep Bilkhu
- Kamal Majevadia

When businesses or individuals fall victim to fraud, perpetrators often go to ground and do all in their power to keep hold of their ill-gotten gains. However, a case in which an accountant was accused of embezzling over £300,000 from a corporate client showed that judges are far from powerless in dealing with such behaviour.

The company’s lawyers issued proceedings against the accountant with a view to recovering the money. An emergency asset-freezing order had been obtained against him, but he flouted it by taking steps to hide or dissipate his assets, the extent of which he had refused to disclose.

A difficulty arose in the case in that the accountant had apparently, by his inactivity, caused the company to be struck off the register and dissolved. Having thus ceased to exist as a legal entity, it had lost the ability to litigate. The Court, however, solved that problem by joining a director and shareholder in the company as a party to the case, pending an application to restore the company to the register.

In confirming the asset-freezing order, the Court noted that the accountant’s current whereabouts were unknown. However, given that there was some evidence that he was in the UK, the Court ordered him to deliver up any and all passports which he owned, so as to prevent his departure from the jurisdiction. He was also ordered to pay £44,000 in legal costs.

For help or advice on this or other Banking, Finance or Dispute Resolution matter, please speak to Preena Lal on 0808 166 8827.

The trend towards full disclosure and openness continues unabated in business, and new regulations are being mooted which will increase the amount of disclosure required of UK-registered companies regarding their principals.

Currently, even the smallest company must disclose who its officers and the beneficial owners of its shares are, and company officers' records show all the companies they are currently involved with or have been in the past, including those that have ceased to exist.

However, it is considered that the existing level of disclosure is insufficient to deter the abuse of the corporate structure by unscrupulous people and that the information held is often unreliable.

Accordingly, the Government has come up with new proposals to allow Companies House to undertake identity checks on those who set up new companies, or are involved in the running of companies, and to cross-reference that information with other sources in order to prevent false claims of audit assurance from well-known accounting firms, the appointment of 'ghost' directors (often well-known individuals) and the use of fake addresses. It is intended that transgressions will meet with penalties for those involved.

A consultation exercise is ongoing that will close at 11:45pm on 5 August. Legislation is to be expected in 2020. https://www.gov.uk/government/consultations/corporate-transparency-and-register-reform.

For help or advice on this or other company or commercial law matter, please speak to Julian Milan on 0808 166 8827.

When partnerships are dissolved, the usual rule is that their assets must be sold on the open market and the proceeds divided. In one case, however, the High Court took a different course in honouring a farmer’s wish that his land should remain within his family.

The farmer owned the arable farm equally with his sister and the pair had cultivated the land in successful partnership for many years. On his death, his share of the land passed to his widow, who was his sole beneficiary. The two women did not get on and the widow felt that she had been unfairly excluded from the business. The sister, who had been involved in farming the land for over 40 years, felt that the farm was none of the widow’s concern.

When the farmer died, his partnership with his sister was automatically dissolved and it was agreed that his land would have to be sold under the terms of the Trusts of Land and Appointment of Trustees Act 1996. The widow argued that it should be placed on the open market, as the only true and definitive test of its value. The sister, however, submitted that she should have the opportunity to buy the land at a price fixed by the Court.

The land had been cultivated by members of the family since at least the mid-19^th century and, in upholding the sister’s arguments, the Court accepted that the farmer would have wanted that state of affairs to continue. The land had been owned by him and his sister as individuals, but there was no doubt that it had been held in trust in order to allow it to be farmed by the partnership.

On the basis of expert evidence, the Court found that it was possible to place a value on the land with sufficient accuracy to reduce the risk of the widow not receiving full value for her interest. The Court took into account the possibility that the land might at some point be sold for development in valuing it at £3,245,000. The sister was given two months in which to complete a buyout of the widow’s interest for half that sum. Failing that, the land would be placed on the open market.

For help on this or other related Trusts of Land and Appointment of Trustees Act matters, call Hayley-Jo Lockley h.lockley@sydneymitchell.co.uk 08081668860

 

Well, I wonder if Danny Baker learnt anything from this?

Sydney Mitchell and a team of leading barristers and experts assisted a shareholder in recovering substantial damages following his removal as a director and dilution of his shareholding.

Due to an accounting error the company’s balance sheet and trading had been overstated with a result that a capital contribution from the shareholders was needed.

Kam Majevadia  commented:

The issue for the court was whether the capital contribution was in fact needed, and secondly whether the method of cash input was fair against the background where the course of action adopted had the effect of diluting the shareholder’s holding to a fraction of what it was.

The Defendants argued that the company was technically insolvent without a capital contribution of £150,000 and consequently issuing 150 shares at par was not unfair as without it the company was worthless.  

The Shareholder argued that the company had real value, pointing to various long term contracts, trading history and goodwill. 

Accordingly, the shareholder argued that the company’s shareholding should have been professionally valued and the number of shares actually needed to remedy the balance sheet, if in fact needed, issued. 

The shareholder’s position was that each issued share had a value of near £25,000 so that only 6 shares needed to have been issued with the effect that his shareholding would have been reduced by as little as 2% and not the resultant 32%.

Notwithstanding, extensive attempts to settle the matter at mediation and prior to court proceedings the matter proceeded to trial.  On day 5 of a 10 day trial the Defendants’ accountant admitted in evidence that the company was solvent, he had applied the wrong test, and that the company had significant value. The case settled shortly thereafter with a significant damages award for the shareholder.

Sydney Mitchell acted for the claimant shareholder on a ‘no win no fee’ agreement, along with the leading barrister.

If you have a shareholders’ or partnership dispute contact Kam Majevadia on 0808 166 8860 or email k.majevadia@sydneymitchell.co.uk.

Dean Parnell, Partner, at Sydney Mitchell asked a simple question on BBC QT that stumped Nigel Farage. 

Name me one country that operates solely under WTO rules and doesn’t  have a separate trade agreement with another country.

- Extract from Birmingham Live and BBCQT News... 

...Nigel Farage was schooled by a Birmingham lawyer in jaw-dropping scenes on Question Time last night.

The ex-Ukip leader couldn't bring himself to give a straight answer to the partner from a city law firm.

Mr Farage, now leading the Brexit Party, was left stumped over a question on World Trade Organisation (WTO) rules.

 

He was asked by Dean Parnell, a partner of Sydney Mitchell, to name anywhere operating on WTO rules that did not have a trade agreement with another country.

Mr Farage, who backs leaving the EU on WTO rules, failed to state a country.

Instead, he argued that there were plenty of governments keen to sign trade deals with the UK.

Mr Farage was asked: "Nigel, you say: 'WTO rules, that's not a problem, that's the solution'.

"Name me one country within the WTO rules that doesn't have a trade agreement with another country."

He replied: "Of course, because WTO rules are the basis from which you begin."

He added that other nations would 'come running' when the UK is able to sign trade deals, after Brexit.

However, the audience member was unsatisfied with the MEP's response, saying: "Nigel, sorry.

"Just answer the question."

 

Mr Farage then tried again to avoid the question by telling the audience that the UK would be able to negotiate lots of trade deals with other countries.

 

Mr Parnell’s frustration was clearly visible and Mr Farage then blamed Liam Fox (the International Trade Secretary) for his failure.

 

But Mr Parnell had still not had Mr Farage’s answer to his original question and Question Time host Fiona Bruce eventually interjected.

 

She asked Mr Farage if he knew how many countries operated solely under WTO rules and astonishingly Mr Farage admitted he didn’t know the answer. 

 

Mr Parnell commented: “I find it so frustrating that Mr Farage and other politicians are able to say these things without being properly challenged. 

 

Source:

https://www.google.co.uk/amp/s/www.birminghammail.co.uk/news/showbiz-tv/astonishing-moment-nigel-farage-stumped-16255373.amp

 

More coverage on this ...

https://www.theneweuropean.co.uk/top-stories/nigel-farage-on-bbc-question-time-may-2019-1-6042658

https://www.mirror.co.uk/news/politics/question-time-nigel-farage-cant-15023826

https://inews.co.uk/news/politics/question-time-can-you-name-a-country-nigel-farage-silenced-by-furious-member-in-trade-deal-example-blunder/

https://theworldnews.net/gb-news/question-time-nigel-farage-can-t-give-audience-answer-to-simple-brexit-question

Video link to BBCQT -

 

view from https://www.youtube.com/watch?v=Pi40irjkFzE 29:47 onwards.

Most residential leases contain a standard covenant which requires tenants to give their landlords access to their homes for reasonable purposes, including repair and maintenance. As a matter of good manners, tenants are often asked to confirm that the date and time of such visits are convenient for them but, as a recent case showed, such politeness can have unforeseen legal consequences.

Pursuant to one such covenant, the landlord of a residential property twice wrote to the tenant, requiring access to the property on a particular date at a particular time. The tenant was invited to confirm that such access would be given at the appointed hour. The landlord took the view that his failure to respond to either letter amounted to a breach of the covenant and sought a declaration from the First-tier Tribunal (FTT) to that effect.

In ruling on the matter, the FTT noted that, for practical reasons and in order to foster good relations, landlords frequently communicate with tenants in order to ascertain whether the proposed date and time of a visit is convenient. However, such an approach was not a pre-condition for enforcement of the covenant, which required the tenant to allow the landlord access, for proper purposes, on 48 hours’ notice. There was no requirement that his permission be obtained.

In rejecting the landlord’s arguments, the FTT noted the tenants’ evidence that he had never refused to afford reasonable access to the landlord. The landlord had made no actual attempt to enter the property pursuant to either letter. The tenant’s lack of response to the letters did not amount to a refusal to afford access and he had thus not breached the covenant. The Upper Tribunal dismissed the landlord’s appeal against that decision, having detected no legal flaw in the FTT’s reasoning.

For advice on any aspect of landlord and tenant law and assistance in making sure that any lease you sign means what you think it means, contact Sundeep Bilkhu on 0121 698 2200, email s.bilkhu@sydneymitchell.co.uk or fill in our online enquiry form.

When people are declared bankrupt, all of their “property” passes, in most cases, automatically to a trustee in bankruptcy so that it can be sold to pay off creditors. In a recent case that will be of great importance to insolvency practitioners, the Court of Appeal has ruled that that word “property” includes fees that were due and payable to a barrister on the date of his bankruptcy.

Barristers are unique amongst professionals in that they were for centuries forbidden to enter into contracts for their services and thus could not sue for their fees. That ban was lifted by the Courts and Legal Services Act 1990, but only since 2013 has it become the norm for barristers to decline to accept work unless their clients enter into standard contracts, the terms of which are set by the Bar Council.

The case concerned a barrister who was made bankrupt in 2012. His trustee in bankruptcy argued that fees that were then due to him from his clients in respect of past work were his “property” within the meaning of Section 436 of the Insolvency Act 1986. On that basis, it was argued that the outstanding fees vested in the trustee in bankruptcy and therefore formed part of the Barrister’s bankruptcy estate.

That argument was, however, rejected by a judge on grounds that the fees were not due under a contract, but purely on an honorarium basis. Although solicitors who used the barrister’s services were honour-bound to pay his fees, they were not contractually obliged to do so and he could not sue them if they did not.

Upholding the trustee’schallenge to that ruling, the Court of Appeal noted that the barrister had more than a merely moral claim to his outstanding fees and more than just a hope of eventually receiving them. The reality was that solicitors almost always paid barristers’ fees, although sometimes belatedly, and there was evidence that the incidence of bad debt at the Bar was no higher than in other professions.

A solicitor’s failure to pay a barrister’s fees could potentially amount to professional misconduct, and the Bar Council had a scheme in place for the withdrawal of credit from non-paying solicitors. The barrister had an expectation that he would in time receive the outstanding fees and, regardless of whether they were contractually due, they were capable of realisation. In the circumstances, they fell into his bankrupt estate and vested in the trustee in bankruptcy.

For further information on this article, please contact Leanne Schneider-Rose on 0121 698 2200, email l.schneider-rose@sydney mitchell.co.uk or Gemma Parker g.parker@sydneymitchell.co.uk or complete our online enquiry form.