August 2009 News Articles
High Court rules that Foxtons’ terms are unfair to landlords
The High Court has ruled that some of the terms and conditions used by Foxtons Ltd in its letting agreements with landlords are unfair.
In giving his judgment, Mr Justice Mann said some of the clauses represented a time bomb for landlords. For example, the terms required a landlord to pay substantial commission when a tenant remained in a property after the initial period of tenancy had expired – even if Foxtons played no part in persuading the tenant to stay and did nothing to collect the rent or manage the property.
Other unfair terms included requiring a landlord to pay commission even after the property had been sold and allowing Foxtons to receive a full estate agent’s commission for sale of the property to a tenant.
Mr Justice Mann held that important conditions such as these needed to be clearly highlighted, not just in the contract itself but also in sales literature and other relevant material. He said a typical consumer would be unlikely to read standard terms very carefully and would not expect important conditions to be slipped into the small print.
The case was brought by the Office of Fair Trading (OFT) under the Unfair Terms in Consumer Contracts Regulations 1999 which protect consumers against unfair standard terms in contracts with traders. The OFT says it expects letting agents to comply with the ruling.
The Chief Executive of the OFT, John Fingleton, said: “This ruling sends out a clear and unambiguous message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print. Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people's attention.
Foxtons were not the only letting agents to have terms of this kind and so the ruling could provide a welcome boost for private landlords.
Buy to let landlords who have unwittingly entered into unfair agreements of this kind may now have a good chance of recovering some of the money they have paid in commissions.
Please contact us if you would like more information about landlord and tenant issues or matters relating to terms and conditions in contracts.
No time to waste when rescinding leasehold sale contracts
The right to rescind a contract for the sale of leasehold property must be exercised promptly within reasonable time limits or else it would be forfeited.
That was the ruling of Mr Justice Sales in the case of Alchemy Estates v Astor and Another.
The court heard that Alchemy exchanged contracts to buy a leasehold property from Astor on 15th January 2008. The contract was due to be completed on 13th March but this was delayed because the landlord’s consent had not been obtained in time.
Both parties continued to act as if the contract was still going to continue to completion. However, on 19th May 2008, Alchemy served notice that it was going to rescind the contract because the seller had failed to obtain the licence to assign by the agreed completion date.
The Astors disputed that Alchemy had a right to rescind and further submitted that if there was such a right, it had been lost because of the delay in exercising it.
The terms of the contract relating to the point under dispute were based on condition 8.3 of the Standard Conditions of Sale (4th Edition). The contract required the seller to take all reasonable measures at his own expense to obtain the landlord’s consent, and obliged the buyer to comply with reasonable requests for information and references.
It also stated that if consent had not been obtained three working days before completion, then in line with condition 8.3, the contract could be rescinded by either party as long as they weren’t in breach of their obligations.
In giving judgment, Mr Justice Sales said the objective of standard condition 8.3 was to allow each side to assess their positions in the event of the landlord’s consent not being obtained in those few days before completion. It gave them the opportunity to reconsider and possibly rescind if it became apparent that there might difficulty in obtaining consent.
However, Alchemy could not use condition 8.3 to rescind the contract because it had not served notice to exercise its right in the three days up to the contract completion date. Nor had it served notice within a reasonable time afterwards, such as one or two days. In fact, it had not served notice until more than two months later.
Steep rise in tribunal claims poses a threat to employers
The recession has sparked a huge rise in tribunal claims which have created costly and time-consuming problems for employers.
Many of the claims relate to issues such as working time and equal pay but, not surprisingly perhaps, there has also been a rise in the number of cases involving redundancy.
The latest full year figures from the Tribunal Service show that the overall number of claims rose by 43% in 2007/08 to a record high of 189,303. The provisional figures for 2008/09 show that this trend looks set to continue. Between April 2008 and February 2009, the number of claims relating to redundancy payments rose from 7,313 to 9,220. There were also substantial rises in claims over unfair dismissal, breach of contract and failure to inform and consult over redundancies.
There are several reasons for the increases. The recession has put pressure on many firms who have felt the need to lay people off, reduce hours or scale down benefits. All of these procedures can become a minefield when it comes to employment law. The problem has been made worse in some cases because the recession took hold so quickly.
Some firms have been taken by surprise and have rushed into changing working practices or making staff redundant without following the correct procedures. This haste has left them open to claims from disgruntled staff.
In the past, many employees who lost their jobs would find new work quite quickly and so would not feel the need to pursue a tribunal claim. The recession has made it much harder to find work so people have fewer options. They may choose to take legal action to make up for their lack of income.
The other difficulty for businesses is that employees are more aware of their rights these days and are prepared to pursue all sorts of claims relating to pay and conditions.
Looking to the future, employers will have to get to grips with the new Equality Bill which introduces stronger measures to tackle various forms of discrimination and could lead to a further rise in claims relating to age, disability and equal pay.
Many of the claims will be genuine but there is also a danger of a victim culture emerging in which someone who doesn’t get their way in the workplace feels entitled to make a claim.
Many employers may need to tread carefully because such claims can prove expensive, especially if the employee’s complaint is not handled correctly.
Building firm successful in defending one of its patents
A building firm has won its appeal against a court ruling that one of its patents had not been infringed by a rival company.
The firm had patented a bolting mechanism with features which were different to those found in other systems used in construction. Its channels inclined inwards which meant it performed better than previous versions which were rectangular.
It was described in the patent as having a “generally elliptical cone shape”.
A rival firm produced an assembly which had virtually the same features except that there was no ellipse at the top. At the hearing, the judge held that the phrase “generally elliptical cone shape” was used in the patent to describe all shapes which had the essential feature of an ellipse.
As the rival assembly did not have an ellipse at the top, there was no infringement of the patent. However, the Court of Appeal has overturned that decision saying that taking such a strictly geometrical view would unduly restrict the scope of protection.
It held that the important question to ask was, what would a skilled person understand the patent to mean when it referred to the elliptical shape. Such a skilled person would understand that it referred to the parts of the mechanism that make it function, not the top part which was immaterial to its performance.
The rival mechanism may not have had the exact same shape as the patented version but it did contain the same essential elements and so therefore that patent had been infringed.
More firms taking legal action to recover debts
UK companies are stepping up their approach to dealing with bad debts, according to a new survey by the business information provider, Creditsafe.
Its research shows that one in four businesses intend to take legal action over the coming year to enforce the recovery of outstanding debts. The tougher approach comes as six out of 10 businesses believe they will have to contend with an increase in defaulted payments for the rest of this year.
The survey also revealed that one in five businesses intend to introduce more stringent penalties for late payment. In some cases, this will involve charging interest at 100%. The Creditsafe research discovered that a television production agency has modified its terms and conditions to allow it to charge 100% interest on invoices not paid within its 30 day settlement period.
A Creditsafe spokesman said: "While enforcement of contractual penalties used to be a last resort, increasingly companies are embracing legal action as soon as payments slip beyond the timeframe set out in their terms and conditions.
“We could see the courts increasingly overburdened with claims and increasing numbers of involuntary insolvencies as firms demand immediate payment of outstanding invoices."
The survey confirms that more and more businesses are prepared to take action to protect their liquidity position and, of course, it is the firms who are the most proactive who are the ones most likely to recover money owed to them. Firms who sit back and wait are the ones most likely to lose out.
In most cases, the matter can be resolved without having to go to court. A solicitor’s letter outlining the action that may be taken if the overdue amount is not paid is often enough to ensure that the debt is settled promptly.
Please contact us if you would like more information about recovering debts.
Buyers of farm lose appeal over breach of contract
It’s sometimes said that ‘if you don’t ask you don’t get’ and that seems to have been borne out by an unusual case before the Court of Appeal recently.
It involved a dispute over the sale of a farm which qualified for EU subsidies being paid over seven years beginning in 2005. The regulations allowed for the possibility of the farm being sold during this period and for the subsidies to be passed on to new owners.
When the farm came to be sold, the sale contract stipulated that the sellers would agree to take all reasonable action requested by the buyers to ensure that the subsidy payments from 2005 onwards were passed on to them as the new owners.
It then transpired that the historic element of the subsidies dating from 2005 did not pass on to the new owners as they had anticipated. They began legal proceedings on the basis that the sellers had breached the terms of the contract.
The case went all the way to the Court of Appeal which has now ruled in favour of the sellers. It held that the sellers’ obligation under the clause would only arise when the buyers requested them to take action to ensure that payments were passed on.
In order to prove there had been a breach of contract, therefore, the buyers would need to allege and prove that they had made such a request and the sellers had failed to comply. However, the buyers had not made such an allegation when outlining their claim.
They did make such allegations in their submission to the court but they had not provided any evidence. It was therefore impossible for the court to conclude that the sellers had refused any request which would mean they had breached the contract.
Bank of England says mortgage approvals at 14-month high
The number of mortgage approvals has reached its highest level for more than a year, according to figures released by the Bank of England (BoE).
The Bank’s latest Trends in Lending report showed that approvals for home loans rose from 44,169 in May to a total of 47,584 in June. It was the fifth successive monthly rise. The report says the figures suggest that mortgage lending for house purchase may continue to strengthen in coming months.
The findings are backed up by separate research by the Council of Mortgage Lenders which showed that gross mortgage lending reached £12.3bn in June – the highest for six months and a 17% increase on the June figure of £10.5bn.
This partly reflected seasonal factors but the BoE report points to a growing sense of optimism. “The Royal Institution of Chartered Surveyors’ new buyer enquiries balance has continued to rise in recent months, indicating that demand for mortgages for house purchase may rise further. And the major UK lenders have reported rising applications for house purchase mortgages.”
The Land Registry reported that house prices rose by 0.1% in June - the first monthly rise since January 2008.
It is still early days, of course, but the various findings from different sources are encouraging and suggest that the worst may be over and we can now look forward to some stability in the housing market.
It’s thought that these early signs of recovery will tempt many sellers back into the market. If so, they should be aware that the procedures have changed considerably over the last two years.
Sellers must provide a Home Information Pack (HIP) for potential buyers as soon as a property is put on the market. The HIP must have an index and include various documents such as an Energy Performance Certificate - which grades the property’s energy efficiency - the terms of sale, proof of title and boundaries from the Land Registry, and the results of local searches.
Sellers must also include a Property Information Questionnaire covering areas such as the property’s service charges, flood risk information, structural damage, gas and electricity safety and parking arrangements.
Please contact us if you would like more information about HIPs or any aspect of buying and selling a property.
Children win the right to inherit estate from their ‘delusional’ mother
Four children who were cut out of their mother’s will because she suffered from delusions which poisoned her mind against them have won the right to inherit her estate.
The woman owned a farm which the children expected to be passed on to them when she died. However, she made a will leaving most of her estate to a charity.
The children challenged the will on the basis that their mother had lacked testamentary capacity – that is, the necessary mental capacity and understanding required to make a will valid.
They said their mother suffered from a mental disorder which caused delusions and led her to falsely believe that they had done nothing to help her and that she had not assured them they would inherit the farm. They submitted that, far from behaving improperly towards her, they had supported her and she had been quite dependant on them.
They were able to provide an expert who attested that the mother had been suffering from a paranoid personality disorder.
The court held that the mother had been suffering from an abnormal paranoid disability. She had probably believed that the allegations she had made about her children were true. However, this was because her natural maternal instincts and affections had been perverted by her mental illness. The disorder caused delusions which made her cut them out of her will.
It followed that she lacked testamentary capacity and there was a strong moral obligation to leave the estate to the children. The grant of probate – the court order that confirms that a will is valid – was revoked and the children will now be able to inherit.
Please contact us if you would like more information about wills and probate.
Gay postman awarded £2,400 in discrimination case
A gay postman who was called effeminate, girly and bitchy by his manager at the Royal Mail has been awarded £2,400 in compensation.
Liam Black, who is 22, was so upset by the remarks that he signed off work suffering from stress and then later resigned. He brought a claim that he had been discriminated against because of his sexuality.
The Employment Tribunal at Ashford in Kent heard that the comments were made by the line manager at a meeting called to discuss a dispute between Mr Black and a colleague. Mr Black did not attend the meeting but later obtained a transcript of what had been said in his absence.
That’s when he discovered the remarks which he said he found shocking and offensive.
The tribunal said the manager had used “stereotypical language” which was derogatory and which had discriminated against Mr Black on grounds of his sexual orientation. In its ruling, the panel said: "Each of the terms 'effeminate', 'girly' and bitchy' are, when used in respect of a man, a direct reference to that man having female characteristics.
"In the context of this case where they are used concerning a man who is known to be homosexual, they are quite clearly derogatory in nature."
The panel said it was satisfied that the manager was not homophobic but his comments were still “influenced, quite unconsciously, by his knowledge that Mr Black was homosexual”. It added: "We do not think it likely that he would use those three words together in the description of a heterosexual man.”
Mr Black was awarded £2,000 for hurt feelings and a further £400 because the employers failed to follow the correct procedures following his complaint.
Please contact us if you would like information about making a claim for discrimination in the workplace.
Why it pays to be reasonable when a relationship breaks down
The need for couples to communicate and behave reasonably when their relationship breaks down was highlighted in a recent case before the Court of Appeal.
It involved a cohabiting couple who had to settle various financial matters when their relationship ended. The man issued proceedings for the repayment of loans and possession of some of their property. The woman disputed the loans and made a counter claim that the property was owned equally.
She then tried to make the process easier by asking her former partner to take part in mediation and alternative dispute resolution procedures. These procedures are designed to help couples reach amicable settlements and so avoid the cost and stress of going to court.
However, her former partner refused several offers to take part. The woman then made an offer that the property should be split 55% - 45% in his favour but that too was refused.
The matter was then scheduled to go to court but on the day of the hearing, her former partner decided to abandon his claim. An order was made on the basis that the property was owned equally and his claim in relation to loans was dismissed.
It meant that he ended up accepting a worse settlement than the one he had been offered when his former partner was trying to get him to take part in mediation sessions. Now he is even more out of pocket because the Court of Appeal has ruled that he should pay his former partner’s costs.
The court ordered him to do so because he continued with the proceedings right up to the day of the hearing and then abandoned his claim at the last moment.
It is not uncommon for attitudes between couples to harden once their relationship breaks down. However, it is always better for both sides to get good legal advice and then try to behave reasonably to make the process as easy and as fair as possible. Good solicitors will be able to provide various methods to help arrive at an amicable settlement which in most cases will prevent the need to take matters all the way to court.
Please contact us if you would like more information.
Mother wins appeal over where her son should live
A mother has won her appeal against a court order that her son should continue living with his father instead of returning to live with her.
The couple had separated when their son was two years old. The boy then lived with his mother until he was nine. She was then diagnosed as suffering from exhaustion and she agreed that her son should live with his father until she recovered.
The father applied for a residence order so his son could live with him permanently. The mother opposed this and was supported by a welfare officer. The court hearing took place seven months after the boy had started living with his father.
The officer said the boy had indicated that he would prefer to live with his mother. He was aware that his mother was pregnant and he wanted to be back with her at the time of the birth.
The officer felt this was a sub-conscious desire to reassure himself of his position within the family.
The judge heard from both parents but not the welfare officer or the boy. He decided that the boy was settled with the father and granted the residence order.
The Court of Appeal has now overturned that decision. It held that the judge was wrong to reject the welfare officer’s recommendation without hearing evidence from her. He had also been wrong in not giving sufficient weight to the fact that the boy wanted to return to his mother.
Please contact us if you would like more information about family law.
Motorists still wasting money on unnecessary insurance
Millions of motorists are still wasting money on unnecessary legal expenses insurance despite a campaign launched three years ago to alert people to the problem.
The insurance usually costs between £15 and £20 and is tagged on to motor policies to cover such things as personal injury claims. The Motor Accident Relief Society, the charity which began the campaign to highlight the issue, estimates that the needless insurance costs drivers £270m a year.
The charge is seen by many as a way for large insurance companies to earn more money out of the unwitting motorist.
In fact, the driver is really being subjected to a double blow. The first point is that he doesn’t need any legal expenses insurance. If he does ever need to make a personal injury claim he’ll find that most solicitors will handle it on a no win, no fee basis which doesn’t cost him anything.
The second problem is that when the motorist comes to make a claim using his legal expenses insurance, he will find his case is farmed out to a solicitor chosen by the insurance company.
What he may not realise is that the solicitor assigned to him may have had to pay a fee of about £600 or £700 to the insurance company for the privilege of taking on the case.
It means that the solicitor is already badly out of pocket before he even starts working on the claim. In those circumstances, he may well be tempted to cut a few corners to reduce his costs and so not provide the best service.
The system works very well for insurance companies because they get paid when they sell the insurance and then get paid again when they sell the case.
The only real loser is the motorist who ends up paying excessive fees for a poor service that he didn’t even need in the first place. He would be better off keeping his money and then if ever he needs to make a claim, approaching a solicitor who will deal with the case on a no win, no fee basis.