February 2011 News Articles
Contracts must consider all eventualities
It’s important to consider all reasonable eventualities when drawing up a contract.
Failure to do so can prove costly as a building firm discovered in a recent case before the Court of Appeal.
The firm had joined forces with another contractor to set up a residential development company which bought land on their behalf. The builder and the contractor owned equal shares in the development company and so it sold land to them in equal measures.
However, there would be times when one firm received more land than another, usually depending on how busy they were. If they received less in one allocation, it would usually be compensated for in the next allocation.
The problem arose when there were only two areas remaining on a site they had been developing. The builder had received less land than the contractor up to that point. It was therefore agreed that the builder should receive a greater share of the remaining land to redress the balance.
However, it then turned out that planning permission was refused for the remaining land, making it virtually worthless. Neither party had anticipated this. The builder claimed that he should receive a greater share of the next plot to compensate but the contractor refused.
The Court of Appeal has now ruled in favour of the contractor. It held that the builder could have waited to see if planning permission would be granted. Alternatively, he could have reserved his position in the event that it was refused.
He did neither of these things and the contract had no mechanism for readjusting the allocation of the land. This may have been harsh on the builder but it was the effect of the contract as it was drawn up.
Please contact us if you would like more information about contract law.
New official guidance on producing debt collection letters
A new document has been drawn up to provide official guidance on the production of debt collection letters.
The document has been produced jointly by the Office of Fair Trading (OFT), the Credit Services Association (CSA) and the Debt Buyers and Sellers Group (DBSG).
The purpose of the document is to provide guidance on issues of concern to the OFT including the use of misleading terms, tracing and the use of ‘soft letters’, legal action, and statements.
The aim is to provide “greater standardisation in consumer correspondence across the debt collection industry”. The document doesn’t provide a letter template but it does highlight a number of areas that firms need to consider to ensure compliance and to minimise consumer complaints.
It’s the first time the two industry organisations have worked jointly on guidance issues with the OFT.
Sara de Tute, CSA Vice President, said: “Collaboration with the OFT on the document is further strengthening ties between the Association and the regulator, while also providing clear guidance on how members should be contacting debtors.
“The Guidance, which has been adopted and agreed by both parties, provides a clear outline for compliant communication which also keeps in-line with Industry best practice.”
Please contact us if you would like more information about credit control and debt collection.
Company closed down because of misleading claims
A company has been closed down because it made false and misleading claims about the levels of expertise that it had to offer.
The winding up petition was granted even though there had been no complaints from the public and even though an investigation by the Serious Fraud Office had not led to any proceedings.
The company was set up on December 9th 2009 and began trading in February 2010. Its business was to find buyers for hard to sell shares in return for substantial fees.
Even though it had only just started trading, its website and brochures claimed that it was a unique company with years of research experience and with staff devoted to helping people with overseas shares. In fact, there were no staff except the owner himself.
It also stated that it did not need to be regulated under the Financial Services and Markets Act 2000 because it did not give advice, or buy or sell regulated investments.
The police were concerned about the company’s claims and filed a complaint to the Insolvency Service which then began proceedings to stop the company trading.
The court granted the petition. It held that the company’s website created a picture of an established company with years of experience and a wide range of contacts. This was designed to convince clients that they were in good hands.
However, the claims were a gross distortion of reality. It rejected the owner’s defence in which he said that, although the claims were inaccurate, he did intend to reach the stage where he had experienced staff and he had not meant to deceive.
The court held that the false claims were enough to wind up the company, but it was also the case that it had been carrying out regulated activities when it was not authorised to do so.
Please contact us for more information about the issues raised in this article.
Broker wins appeal over payment of commission
What happens when a company refuses to pay a sub-contractor because it hasn’t been paid itself for work carried out?
A recent case before the Court of Appeal provides some helpful guidance.
It involved a corporate finance adviser who was engaged to raise funds for a venture capital company. The adviser then hired a sub-broker to raise the money, which it subsequently did.
However, the venture capital company then refused to pay the adviser for the work carried out and later went out of business. The adviser then refused to pay the broker on the basis that it had not been paid itself.
At trial, the judge accepted that there was a general market practice or understanding that a sub-broker would not be paid until the main broker or agent had been paid. This did not, however, amount to a trade usage or custom.
Nevertheless, the judge ruled against the broker on the basis that it was implicit in the agreement that there would be no payment until the main adviser was paid.
That decision has now been overturned by the Court of Appeal. It held that although the judge had been entitled to take market practice into account, there were no known cases in which this kind of issue had arisen. It therefore followed there was no relevant market practice.
The broker was entitled to be paid commission even though the main adviser had not been paid.
Please contact us if you would like more information about the issues raised in this article.
Homeowners to get more protection on their mortgages
The Government is introducing new measures to provide better mortgage protection for homeowners – particularly those with second charge mortgages.
It plans to transfer the regulation of new and second charge residential mortgages from the Office of Fair Trading to the Financial Services Authority. Ministers believe this will ensure consistent standards of consumer protection and simplify the regulatory environment for lenders and borrowers.
Finance minister Mark Hoban said: “This will ensure that existing second charge mortgage borrowers who fall into arrears or face repossession on both first and second charge mortgages benefit from being regulated by a single organisation, maximising consumer protection and ensuring a more coordinated approach between lenders.”
The new measures will also ensure that consumer protection is maintained when a mortgage lender sells on a mortgage to an unregulated firm. The Government will also extend the current regulation of the sale and rent back market to all providers to maintain consistent protection for consumers.
It’s expected that the new measures will be in place before the end of the year.
Please contact us if you would like more information about the issues raised in this article, or any aspect of mortgages and the buying and selling of residential property.
Television presenter wins ageism case against BBC
NB this article was also sent to you on 13th January.
Miriam O’Reilly, one of the former hosts of the TV show Countryfile, has won her claim of age discrimination against the BBC.
Ms O’Reilly lost her job in 2008 when Countryfile was moved to a primetime slot. The BBC replaced her with younger presenters.
Ms O’Reilly took the case to an employment tribunal. She won her claim of age discrimination and victimisation, but the judge rejected her claim that she was also the victim of sex discrimination.
In her witness statement, Ms O’Reilly said: “I felt as if my life had been cancelled because of something I had no control over – getting older.”
The Tribunal said the discrimination against Ms O’Reilly was not justified. “The wish to appeal to a primetime audience, including younger viewers, is a legitimate aim.
“However, we do not accept that choosing younger presenters is required to appeal to such an audience. It is not a means of achieving that aim.”
The BBC issued a statement accepting the Tribunal’s findings. It also apologised to Ms O’Reilly and said it would welcome the opportunity to discuss working with her again in the future.
The Tribunal will now hold a separate hearing to decide what “remedy” Ms O’Reilly should receive for her loss of earnings and the injury to her feelings.
Please contact us if you would like more information about discrimination claims or any aspect of employment law.
Woman fails to get a share of former husband’s business windfall
A woman has failed to get a share of her husband’s business earnings which increased dramatically just after their divorce settlement was completed.
The reason was because of the long delay between the couple’s separation and their final divorce settlement, and because the woman had not contributed to the success of the business.
The couple had been married for 20 years before they separated in 1996. A decree nisi and absolute were granted in 2003 on the basis of five years separation. The wife then began ancillary relief proceedings.
During the couple’s separation but before their divorce, the husband had become a substantial shareholder in a company.
At the time of the finally hearing in April 2006, the wife’s experts valued those shares at £30m. However, the husband’s experts submitted that they had no appreciable value.
The judge handed down his judgment in September 2006. He held that as far as the husband’s company was concerned, the relevant point was that it had been created after the separation and so the wife had not contributed to it in any way.
He ordered that the matrimonial home should be transferred to her and that she should receive a lump sum of £1.1m.
It later emerged that during the period between the final hearing and the handing down of the judgment, the husband’s company achieved a refinancing deal that substantially increased its value.
The wife then applied for the court order to be set aside so the settlement could be increased to reflect the increased value of the husband’s company.
The judge refused her application. He agreed that the husband had been wrong not to disclose the increased value but said it would have made no difference to the judgment if he had.
This was because the fact remained that the wife had made no contribution to the setting up or success of the company, which took place after the couple had separated.
That decision has now been upheld by the Court of Appeal.
Please contact us if you would like more information about the issues raised in this article.
How disputes can arise when there is no written will
The kind of complex family dispute that can arise when people fail to draw up a will was illustrated in a recent case before the Court of Appeal.
The case involved a couple who each had sons through previous relationships.
The couple had made an oral agreement for mutual wills. The agreement was that on the first death, the estate would pass to the surviving partner.
The surviving partner would then be bound by an irrevocable trust to leave the estate when they died to the two sons in equal shares.
When the surviving partner died 15 years later, her son disputed that there had ever been an oral will that would entitle the other son to half the estate.
This resulted in legal proceedings that went all the way to the Court of Appeal, which upheld that there had been an oral will.
A resolution may have been achieved in the end but not without considerable stress and expense for the two sons – all of which could have been avoided if the couple had consulted their solicitor to draw up a written will.
Please contact us if you would like more information about wills and probate.
Cyclist hit by car awarded nearly £14m compensation
A cyclist who sustained devastating injuries when he was hit by a car has been awarded nearly £14m compensation.
The man was 28 when the accident happened. He is now 39. He suffered brain damage, injuries to his facial skeleton, facial nerve palsy and he lost the use of his right arm.
As a result of his injuries he suffered some loss of cognitive function, significant loss of short term memory and the loss of some vision in both eyes. He also suffered psychological damage. His life expectancy has been reduced by five years.
The victim required specially adapted accommodation because of his injuries and will need 24-care for the rest of his life.
He took legal action against the driver of the car alleging that he was negligent in trying to overtake when it was unsafe to do so. Liability was admitted.
He was awarded £13,863,138 by the Court of Appeal in Guernsey. The award includes compensation for his pain, suffering, loss of amenity and loss of future earnings. It also covers the cost of his future care.
Anyone who is injured as a result of someone else’s negligence is entitled to claim compensation. Please contact us if you would like more information about making a personal injury claim.