September 2011 News Articles
Director breached his duty when using borrowed equipment
The Court of Appeal has upheld a ruling that a director breached his fiduciary duty when he made personal use of some equipment that had been loaned to his company.
Fiduciary commitments simply mean that a director must act in the company’s best interest and avoid any conflict between his personal interests and his duty to the company.
In this case, a waste management company was loaned some equipment by one of its customers. The equipment was old and dilapidated but the director was able to use it when renovating a property he owned.
The equipment was not made available by the director for the company to use for its business purposes.
When the matter came to light several years later, the company issued proceedings against the director for breach of duty.
The judge held that the director should account to the company for the six-month period that he had the equipment.
That decision has now been upheld by the Court of Appeal. It held that fiduciary duties included an obligation not to make a secret profit.
In this case, the no conflict duty extended to preventing the director from depriving the company of the opportunity to use the loaned equipment for its own purposes.
Please contact us if you would like more information about the issues raised in this article or any aspect of company law.
When TUPE does not apply
When a business is transferred from one owner to another, the rights of employees are protected by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
This means the employees of the previous owner become employees of the new owner on the same terms and conditions.
But what happens when the services provided by the new owners are different to those supplied by the original owners?
The issue arose in a case involving Nottinghamshire Healthcare NHS Trust. It closed one of its care homes and the residents were then moved to homes of their own. Responsibility for their care was then transferred to two independent providers.
Some of the care workers were offered jobs with the new providers. The Trust and the staff involved believed that TUPE applied, but the new providers disagreed.
The case reached the Employment Appeal Tribunal which held that TUPE does not apply if the services are not essentially the same under the new provider as they were under the former provider.
In this case, the services were clearly different because the former residents of the care home were now living in their own homes and were being helped to live more independent lives.
TUPE was also not applicable for a second reason. The care home was no longer operational and so there was no longer a single, economic entity being transferred to which TUPE could apply.
Please contact us if you would like more information about TUPE and the issues raised in this article.
When shareholders fall out and refuse to meet …
Relationships between shareholders in small companies are often tense, but what happens if they refuse allow meetings to take place that could determine the future of the business?
The issue arose in a case involving a taxi firm that had two shareholders who were also both directors.
The minority shareholder played no active part in the business but her husband worked as the accounts manager.
The majority shareholder discovered that the accounts manager was withdrawing money on a monthly basis without authorisation. He challenged him about this and as a result, their relationship quickly deteriorated.
The majority shareholder then decided to call an extraordinary general meeting with a view to ratifying the dismissal of the accounts manager, and to remove the minority shareholder as a director.
However, the minority shareholder did not respond to enquiries about whether she would attend the meeting. If she did not attend, the meeting would be inquorate and so ineffective.
Faced with this stalemate, the majority shareholder applied for an order under the Companies Act 2006 allowing the meeting to be held and considered valid despite being inquorate.
The High Court granted the application on the basis that the two shareholders were at deadlock. Trust had broken down and the current state of affairs was unsustainable.
The meeting needed to take place for the sake of the viable governance of the company.
If this resulted in decisions that infringed the rights of the minority shareholder, she could take further legal action to protect her interests.
Please contact us if you would like more information about the issues raised in this article or any aspect of company law.
Landlords still being hit by unfair terms from letting agents
The Office of Fair Trading (OFT) has warned that consumer landlords are still being presented with potentially unfair terms in contracts with some letting agents.
The warning follows the enforcement case last year against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).
Foxtons agreed to amend some of its terms concerning sales and commissions after the High Court ruled that they were unfair.
The OFT estimates that its enforcement order has provided an annual benefit of at least £4.4m for landlords that use Foxtons.
However, although there is no longer a problem with Foxtons, the OFT is concerned that other letting agents seem to be unaware of the High Court ruling and are still offering terms that may be unfair.
Amelia Fletcher, OFT Chief Economist, said: “There is evidence of continuing poor practice by some letting agents, which need to go further to make their contracts transparent and fair.”
The OFT is now warning letting agents to check their terms and conditions to make sure that they are in line with the High Court ruling.
Landlords may also want to seek legal advice to ensure that they are not being treated unfairly in their agreements with letting agents.
Please contact us if you would like more information about the issues raised in this article.
Father ‘can be jailed repeatedly’ in child contact dispute
A father has been told that he can be jailed repeatedly if he continues to disobey court orders relating to the whereabouts of his four-year-old daughter.
The issue arose following the break down of his relationship with the girl’s mother.
He was allowed contact with his daughter but that wasn’t enough. In 2009 he abducted her and took her to Pakistan. The girl was then made a ward of court so the father took her to Iran, which has no arrangements with the UK in relation to international child abduction.
The father was arrested but refused to give details about his daughter’s whereabouts, despite a court order being made. He was then held to be in contempt of court and jailed for two years.
When he was due to be released, the matter came before another judge who made a fresh order. The father again refused to comply and so was sentenced to another year in prison.
He appealed on the grounds that it was wrong to punish him again for the same offence. The mother submitted that the judge was right to impose a second sentence. Otherwise, it would send out a message that it was possible to disobey court orders, with only two years in jail as punishment.
The Court of Appeal ruled against the father. It held that any court would have to look at the impact on the girl of growing up without a relationship with her mother.
Each time the father refused to comply with a court order was a new and fresh occasion, and so further prison sentences were justified.
Whether that would continue to be the case in future would depend on the facts at that time but for now, the father needed to realise that the court was resolved to getting the girl back to her mother and was not going to give up.
Please contact us if you would like more information about family law matters.
Sisters fail to overturn man’s will leaving estate to his cleaner
Two sisters have failed to overturn a man’s will in which he overlooked them and left all his estate to his cleaner.
The man had first made a will in 1997 and left his estate to the sisters.
In 2006, he started to employ a cleaner at his home. They formed a friendship and the cleaner gave evidence that at one point he spoke of marriage, although he eventually drew back from such a commitment.
In 2009, he made a second will in which he left everything to the cleaner.
Following his death, the sisters challenged the will saying the cleaner had exerted undue influence on the man when he made the second will.
They alleged that she was prepared to do anything to inherit his wealth and they disputed her claims that he had spoken of marriage.
They also contested her claim that she had known him since 2006. They alleged that he had only known her for a short time.
He was unlikely to leave his estate to her and so she must have exerted undue influence on him at a time when he lacked testamentary capacity – that is, when he lacked the mental capacity to fully understand what he was doing.
The court, however, rejected the sisters’ claims. It found that there was no evidence of victimisation or coercion, or of any mental frailty.
The judge said there were other explanations for the 2009 will. The sisters visited the man less frequently in the last two years of his life and he may not have felt obliged to provide for them.
Please contact us if you would like more information about the issues raised in this article or any aspect of wills and probate.
Government sees self-build as a way to provide affordable homes
The Government is trying to stimulate the housing market by promoting what it calls a “self-build revolution”.
It’s calling on banks and building societies to provide the funding by making more mortgages available to people who want to build their own homes.
Housing Minister Grant Shapps said: "I want to create a self-build revolution where building your own home is not just the preserve of the privileged few. As the mortgage market continues its recovery, lenders have an ideal opportunity to diversify lending into areas such as this.
"I think there are real business opportunities for lenders here - as the market grows - and I call on them to help make this important housing sector more mainstream."
Mr Shapps says lenders should not be misled by the term by “self-build development” because most self-build projects are not "DIY builds" but involve professional builders, architects and project managers.
He added that people who want to build or oversee the building of their own home are usually very reliable and unlikely to default on mortgage payments.
Meanwhile, the Government says it intends to stimulate the housing market further by making more public land available for new homes and by reducing the burden of regulation on house builders.
Please contact us if you would like more information about the issues raised in this article or any aspect of buying and selling a home.
Engineer awarded £17,500 after falling from ladder
A 53-year-old engineer has been awarded £17,500 compensation after sustaining an ankle injury at work.
Doctors said that he would always experience aching and swelling in his ankle and he would not be able to go running or play football as frequently as he had before.
The accident happened when his manager asked him to remove foliage from the outside wall of the company’s factory. He was given no equipment, instructions or assistance to carry out the task.
While he was on the ladder, some foliage gave way beneath him and he fell to the ground of the neighbouring property. A piece of drainpipe, which had been attached to the foliage, fell after him and hit him where he had landed.
He took action against his employers saying they had been negligent in failing to carry out a risk assessment or provide a safe system of working.
His employers said he should take 50% of the blame as he had not erected the ladder correctly. The engineer disputed this and the company eventually accepted full liability.
They settled out of court. The engineer received £17,500 compensation for pain, suffering and loss of amenity.
Please contact us if you would like more information about pursuing a personal injury claim.