Private Client Titles – Spring 2007

Ancient Law Costs Landowners

 

A couple who fell foul of an old law applying to their property are faced with a bill for building repairs plus legal costs amounting to an estimated total of £400,000, following a reverse in the House of Lords.

 

Andrew and Gail Wallbank, of Carno in Powys, are the owners of Glebe Farm in Warwickshire. The farmland includes a field which is classified under ecclesiastical law as ‘rectorial property’ and makes the couple ‘lay rectors’ of the parish. Unfortunately for the Wallbanks, under the Chancel Repairs Act 1932 (which itself is based on ancient law) their ownership of the rectorial property renders them responsible for the cost of repairs to their village church, St John the Baptist Church of Aston Cantlow.

 

The Wallbanks took their case all the way to the House of Lords, arguing that their liability was limited to keeping the chancel of the church wind-tight and watertight, not providing the ‘Rolls-Royce job’ sought by the church authorities. A previous appeal to the Lords, based on the argument that the demand was an infringement of their Human Rights, had already been turned down. Regrettably for them, the House of Lords again rejected their arguments. They had been victorious in the Court of Appeal, which held that their liability was a form of taxation which was unfair and arbitrary. That decision was appealed by the church authorities.

 

The cost of the repairs to the church for which they are responsible amounts to approximately £200,000 and the Wallbanks are responsible for both their and the church authorities’ costs, which could double the total bill.

 

“This case shows how important it is to make all the necessary searches when buying property and to obtain a clear understanding of liabilities which may attach to ownership of particular pieces of land,” says <<CONTACT DETAILS>>.

 

 

Partner Note

Reported in the Times, 6 February 2007

Prior H o L Appeal, 26 June 2003, see

http://www.parliament.the-stationery-office.co.uk/pa/ld200203/ldjudgmt/jd030626/aston-1.htm.

 

Animal Welfare – Government Raises the Bar

 

Although not widely publicised, new legislation is coming into effect which will make it an offence for a person responsible for animals not to take reasonable steps to make sure that their needs are met. It may be surprising that this is new law, but the position in England prior to 6 April 2007 (the end of March in Wales) is that the law only comes into play in most cases when an animal has been subjected to cruelty.

 

This represents a big step forward as under the old law a prosecution could only proceed when cruelty had been inflicted. Under the Animal Welfare Act 2006, however, a prosecution can be commenced when the standard of care is inadequate.

 

The law affects anyone who is responsible for the welfare of an animal, which includes a person with temporary control over the animal, such as someone looking after a cat for a holidaying neighbour. It requires that the animal is provided with a suitable environment and diet, is protected as far as is practicable from disease, pain and suffering and is able to exhibit its natural behaviour patterns. It does not increase the requirements where there are current legal standards (for example regarding the conditions for keeping battery hens), so the standard of care which is required will be dependent, to an extent, on the purpose for which the animal is being kept.

 

The Government has given itself the power to issue further regulations under the Act at a later date and to provide codes of practice where appropriate.

 

One practical aspect of the Act for businesses engaged in animal care is that staff should be trained in the new requirements and procedures should be put in place to ensure that they are complied with: the penalties for non-compliance are severe. For example, anyone causing unnecessary suffering to an animal can face imprisonment for up to 51 weeks, a fine of up to £20,000, or both.

 

 

Partner Note

Further information can be found on the DEFRA website at http://www.defra.gov.uk/animalh/welfare/bill/.

 

Can We Share the Children?

 

When a couple divorces, decisions regarding the custody arrangements (known as ‘residence orders’ to lawyers) of children are made with the central aim of providing the best outcome for the children of the divorcing couple. Normally, one parent looks after the children and the other is given rights of access to them.

 

However, on occasions a shared residence order might be made, under which the children live with both of their parents at different times. The factors which will be considered by the court when deciding whether a shared residence order is appropriate are:

 

·        the distance between the two homes. Where they are far apart the likelihood of shared residence is much reduced;

·        the children’s perception that they have two homes, not just one;

·        the proximity of the homes to the children’s school;

·        the demonstration of clear bonds of affection between the children and each of the parents;

·        the history of the degree of contact with each parent. Where this is substantial with both parents a shared residence order is more likely; and

·        the views of the children themselves.

 

It is essential that the reality of the shared residence order is that it will benefit the welfare of the children. However, the existence of a co-operative attitude between the parents is not a prerequisite, so a frosty or even hostile relationship may not prevent a shared residence order being granted.

 

For advice on all family law issues, contact us.

 

 

 

Partner Note

For a recent case which sets out the factors of importance, see Re C (A Child) (Shared Residence Order) [2006] EWCA Civ 235.

http://www.familylawweek.co.uk/library.asp?i=1826.

 

 

Check Your Home Insurance Policy

 

Increasing numbers of people are spending substantial periods of time away from their homes on account of working away, having a second home or for any of a number of other reasons. Houses can also frequently be empty for substantial periods after the death of the owner or prior to sale. If you are the owner of, or are responsible for, a property that is likely to be unoccupied for a considerable period it is worth checking your house insurance policy. Many policies contain clauses which invalidate the cover if the property is unoccupied for more than a minimum period – often 30 days, a period which would be exceeded by some holiday cruises.

 

Normally, the insurer will agree to extend cover when requested, although this might involve the payment of an additional premium or compliance with specific requests, such as turning the water off at the main. An alternative might be for the insurer to reduce the level of cover or increase the excess payable for certain types of claim during the period of absence. Also, substantial additional premiums are often required for household contents policies where there will be an extended void period. In some cases, it might be cheaper to put all or some of the household contents into secure storage.

 

There are insurers who specialise in providing cover for unoccupied homes and second homes.

 

“The most important point is to make sure that if your policy has such a clause, you know about it and make a considered decision. Many a policy holder has had a claim denied because they failed to adhere to a policy condition,” says <<CONTACT DETAILS>>.

 

Children Deserve to Know

 

An unusual family case in the Court of Appeal recently considered the possible effect on children of finding out information about their father in an unstructured, rather than a planned, way.

 

The father had been married to the children’s mother for seven years prior to the break-up of the marriage. The children lived with their mother after the couple’s divorce. The father wished to live as a woman and underwent gender reassignment surgery. The mother’s reaction to this was such that it was considered advisable that she should seek professional help to enable her to deal with the situation.

 

The question arose as to how the children should be made aware of their father’s change of gender. The family doctor favoured the children being told promptly, with professional help being given to assist them in coping with the altered circumstances. The mother opposed this, arguing that the children should not be told. In the lower court, the judge imposed a moratorium on their being told for 20 months, during which time the father’s contact was limited to sending them Christmas, birthday and Easter cards. At the end of the 20 month period, the mother was to produce a statement outlining how the children were to be made aware of their father’s situation.

 

The father appealed against the decision, fearing that the children might suffer psychological damage if they were to find out about his new circumstances in an unstructured way – for example from other children at school. The Court of Appeal agreed that the children had the right to be told promptly and that professional help should be obtained to enable this to be done in a supportive way. In the Court’s view, the judge in the lower court had been wrong to reject the recommendations of the family doctor. The decision left the children unprotected from the potential adverse effects of a ‘shock’ disclosure.

 

Issues surrounding family break-up can often be difficult. Contact <<CONTACT DETAILS>> for advice.

 

 

Partner Note

Re C (Children) [2006] EWCA Civ 1765.

http://www.familylawweek.co.uk/library.asp?i=2690.

 

 

Customs’ Right to Seize Goods

 

Most travellers know that large quantities of cigarettes and tobacco can be brought back to the UK from another EU country, provided duty and tax have been paid on them in that country and they are for personal consumption only. In this context, personal consumption includes gifts to family and friends.

 

HM Revenue and Customs (HMRC) have issued guidelines that state that 3,200 cigarettes (160 packets) will be accepted as being for personal use in normal circumstances. With duty and tax paid prices for some ‘name brand’ cigarettes being more than £4 per packet cheaper in some EU countries than they are in the UK, substantial savings can be made.

 

It is currently estimated that up to 9 per cent of the UK tobacco market is supplied by the illegal resale of tobacco goods bought duty paid in other EU countries. Unsurprisingly, HMRC are intent on reducing ‘white van’ smuggling of duty paid tobacco products.

 

It should be remembered that the guidelines are not absolute. Where HMRC officers believe that the goods have been imported for commercial purposes, they may seize them and, if applicable, the vehicle in which they are being carried, even if the quantities involved do not exceed the ‘allowable limits’.

 

Recently, HMRC were successful in defending the seizure of a quantity of tobacco and alcohol where the person involved had made a number of previous trips importing amounts of both which were large, but within the guidelines. In this case, the vehicle used was seized also. In the view of the court, the limits on importation imposed are not an absolute determinant of whether the goods are imported for commercial or private purposes but are merely guidelines. To determine the status of any particular importation of dutiable goods, all relevant facts need to be considered.

 

Although most of the illegal importation of tobacco and alcohol is carried out on a large scale by organised criminals, HMRC are also keen to stamp out repeated importations of quantities of dutiable goods which appear to have a commercial purpose.

 

 

Partner Note

Sources:

http://www.ash.org.uk/html/factsheets/html/fact17.html.

Harrison v Revenue and Customs ChD, 8 Jan 2007. Reported in the Times.

 

Damages Awarded for Dog Attacks

 

Two victims of dog attacks have recently received compensation for their injuries.

 

In the first incident, a ten-year-old girl was bitten on the arm by a dog when her father stopped to talk to its owner. The injury required surgery at the time and a further skin graft may be needed in the future. The dog’s owner, an off-duty policeman, was ordered to pay £2,000 in compensation. The dog was not, however, destroyed as a vet discovered that it was suffering from an irritating wound and also had a tumour in its ear. Magistrates did, however, order that the dog should be kept on a lead and muzzled when in public.

 

In the second incident, an American bulldog jumped up and bit a woman on the breast. The injury required emergency surgery. The dog’s owner was ordered to pay the victim £500 in compensation. The court heard evidence that the dog’s behaviour on this occasion was out of character and the judge decided that it was likely to have been an accident so did not order that the animal be destroyed.

 

It is an offence for a dangerously out of control dog to be in a public place. If you have been injured as a result of a dog owner’s failure to control their animal, you could be entitled to compensation. Contact <<CONTACT DETAILS>> for advice.

 

 

 

Death by Dangerous Driving – Sentencing

 

A recent Court of Appeal decision dealing with appeals against sentences by six drivers found guilty of causing death by dangerous driving has provided assistance in ascertaining the length of sentence that is likely to be imposed in such cases.

 

In general, where there are no ‘aggravating circumstances’, a sentence of 12 months to 2 years’ imprisonment will be appropriate. Where there is ‘intermediate culpability’ the sentence will be between 2 and 4 ½ years’ imprisonment. Where there is ‘higher culpability’ the sentence will be between 4 ½ and 7 years’ imprisonment. In cases where there is ‘serious culpability’, the sentence will be between 7 and 14 years’ imprisonment.

 

Aggravating circumstances include a number of factors, such as prolonged bad driving, excessive speed, the consumption of alcohol or drugs (this includes prescription drugs known to cause drowsiness) and the use of a mobile phone whilst driving. There are also mitigating factors, such as a good past driving record. Two specific mitigating factors are where the defendant has behaved responsibly after the accident (i.e. by staying to render help) and has shown remorse after the accident. The aggravating and mitigating factors are considered in total to ascertain the applicable level of culpability.

 

With regard to drink-driving, the degree of culpability will normally be assessed as follows:

 

·        lowest level – being barely over the legal limit (and the driving is otherwise careless rather than dangerous);

·        intermediate level – where the person is found to have consumed twice the drink-driving limit; and

·        higher levels – where the person is found to be more than two times over the drink-driving limit.

 

One factor which should stand out is that the still common practice of using a mobile phone when driving is an aggravating factor in such cases.

 

 

Partner Note

R v Richardson and others [2006] EWCA Crim. 3186

http://www.bailii.org/ew/cases/EWCA/Crim/2006/3186.html.

 

Family Split Determines Outcome

 

When families break up it is not uncommon for the children to ‘take sides’, although this is not normally as extreme in its effect as in a recent case.

 

The case involved a couple named Garland who had two daughters, Beverley and Yvette. After the couple split up, Yvette became estranged from her father. He eventually remarried and from that time on she never spoke with him again.

 

Yvette inherited the whole of her mother’s estate. When Mr Garland died, he left his entire estate to Beverley, with whom he had maintained good relations. Two and a half years after the usual limitation period for such a claim had expired, Yvette (who lived in much reduced circumstances compared with Beverley) made a claim for financial provision, from the estate, under the Inheritance (Provision for Family and Dependants) Act 1975. Such claims can be made in appropriate circumstances by family members and other dependants if a will fails to make reasonable financial provision for them.

 

The judge rejected her claim. Yvette had not maintained any links with her father, whereas Beverley had been close to him throughout his lifetime. Furthermore, Yvette had inherited the whole of her mother’s estate, financing the purchase of a house. She could not reasonably be expected to be provided for out of her father’s estate.

 

“Claims for financial support from an estate must normally be brought within six months of probate being granted,” says <<CONTACT DETAILS>>, “and will be met when the court considers them fair. The threat to cut someone out of a will may not always be sustainable. To ensure your will is drafted to fulfil your precise wishes, contact us.”

 

 

Partners Note

Garland v Morris [2007] EWHC 2, 11 January 2007.

 

HIPs to Go Live on 1 June

 

The Government has confirmed that Home Information Packs (HIPs) are to go live on 1 June 2007, following their trial in several regions throughout the country. After that date, anyone who puts a house or flat on the market will have to supply prospective purchasers with a HIP.

 

Although the HIP is now much reduced in scope compared with the earlier proposals, having the necessary searches completed in advance of the sale should at least speed up the normal conveyancing process.

 

Following the testing of HIPs in trial areas, the Government has proposed changes in order to reduce the time it takes to complete local searches. Both the quality of the service provided and the amount charged for doing this vary from one area to another. A further proposal is that estate agents must include an Energy Performance Certificate (EPC) with their property particulars for the first time.

 

In late March, the Government announced further amendments to the HIP rules, the most important of which are as follows:

 

·        for a transitional period, vendors will be able to market their homes with a HIP which includes only the index, EPC, sale statement, evidence of title and evidence that the other required documents have been commissioned. Any omitted documents must be included in the HIP within 28 days;

·        the EPC must be the first document in the pack, following the index;

·        properties bought ‘off plan’ will have a separate energy assessment included;

·        properties already on the market on 1 June 2007 will not need a HIP unless they are still on the market after 31 December 2007; and

·        time-sensitive parts of the HIP will not need to be refreshed where the property is withdrawn from the market and remarketed by the same vendor within one year of the original date on which it was put on the market.

The office of the Ombudsman for Estate Agents has announced that the Department of Trade and Industry has approved its application to run a HIP redress scheme. From 1 June all estate agents selling homes will have to belong to an approved independent scheme, permitting customers who are treated unfairly to obtain redress.

 

Fines for estate agents who fail to provide HIPs (including EPCs) will be reviewed in the light of experience from June 1 and could be raised from £200 to £500 if they fail to meet their commitments.

 

Home Information Packs – Launch Looms

 

The Government has confirmed that Home Information Packs (HIPs) are to go live on 1 June 2007, following their trial at several locations throughout the country. After that date, anyone who puts a house or flat on the market will have to supply prospective purchasers with a HIP. This includes sales made at auction.

 

Sellers will be required to assemble, prior to sale, much of the essential information currently obtained by the purchaser after an offer for a property has been accepted. The vendor will bear the cost of producing the HIP when a property is put on the market.

 

The Home Information Pack Regulations set out provisions on the ‘required’ and ‘authorised’ content of the Pack. Required documents must be included in the pack where appropriate whereas authorised documents may be included at the seller’s discretion.

The required documents are (but see below for transitional provisions):

 

 

The authorised documents include:

 

Originally, the Home Condition Report, based on a professional survey of the property, was intended to be a required document and the Government is still keen to promote its use, if practical problems can be ironed out, as it believes sellers offering a full Home Condition Report will be more likely to benefit from swifter sales and will suffer fewer transaction failures as a result of problems coming to light later on in the purchase process.

Whether or not everything is in place to allow a smooth introduction of HIPs nationwide remains to be seen. Following the testing in trial areas, the Government has proposed changes in order to reduce the time it takes to complete local searches. Both the quality of the service provided and the amount charged for doing this vary from one area to another. A further proposal is that estate agents must include EPCs with their property particulars for the first time.

 

In late March, the Government announced further amendments to the HIP rules, the most important of which are as follows:

 

·        for a transitional period, vendors will be able to market their homes with a HIP which includes only the index, EPC, sale statement, evidence of title and evidence that the other required documents have been commissioned. Any omitted documents must be included in the HIP within 28 days;

·        the EPC must be the first document in the pack, following the index;

·        properties bought ‘off plan’ will have a separate energy assessment included;

·        properties already on the market on 1 June 2007 will not need a HIP unless they are still on the market after 31 December 2007; and

·        time-sensitive parts of the HIP will not need to be refreshed where the property is withdrawn from the market and remarketed by the same vendor within one year of the original date on which it was put on the market.

Our residential conveyancing experts can help ensure your property sale or purchase proceeds as smoothly as possible.

 

 

Home Information Packs – Launch Looms

 

The Government has confirmed that Home Information Packs (HIPs) are to go live on 1 June 2007, following their trial at several locations throughout the country. After that date, all vendors of houses and flats in the UK will have to supply prospective purchasers with a HIP. This includes sales made at auction.

 

Sellers will be required to assemble, prior to sale, much of the essential information currently obtained by the purchaser, after an offer for a property has been accepted. The vendor will bear the cost of producing the HIP when a property is put on the market.

 

The Home Information Pack Regulations 2006 set out provisions on the ‘required’ and ‘authorised’ content of the Pack. Required documents must be included in the pack where appropriate whereas authorised documents may be included at the seller’s discretion.

The required documents are:

 

 

 

The authorised documents include:

 

Originally, the Home Condition Report, based on a professional survey of the property, was intended to be a required document and the Government is still keen to promote its use, if practical problems can be ironed out, as it believes sellers offering a full Home Condition Report will be more likely to benefit from swifter sales and will suffer fewer transaction failures as a result of problems coming to light later on in the purchase process.

A HIP will be valid while the home is continuously marketed for sale. The Regulations do allow for a period where the property might be taken off the market while, for example, it is under offer or to allow a seller to change estate agents. The main time-sensitive items in the HIP are the local searches, which are generally acknowledged to be valid for six months.

 

Whether or not everything is in place to allow a smooth introduction of HIPs nationwide remains to be seen. Following the testing of HIPs in trial areas, the Government has proposed changes in order to reduce the time it takes to complete local searches. Both the quality of the service provided and the amount charged for doing this vary from one area to another. A further proposal is that estate agents must include EPCs with their property particulars for the first time.

 

Our residential conveyancing experts can help ensure your property sale or purchase proceeds as smoothly as possible.

 

I Can’t Raise the Mortgage – Do I Lose My Deposit?

 

In the UK, property purchases proceed in two stages. The first is when there is an ‘exchange of contracts’, when a deposit (normally five per cent or ten per cent of the purchase price) is paid. On completion, the balance of the purchase price is paid.

 

Where the vendor is a developer, it is common for the contract to specify that a ten per cent deposit is to be paid, but the developer may well agree to a smaller sum being paid to reserve the property.

 

In between the exchange of contracts and completion, the prospective purchaser normally has to arrange finance for the completion, which usually involves obtaining a mortgage. Sometimes this proves impossible, or the buyer’s circumstances change so that they cannot complete the purchase. In the situation in which the purchaser has paid a deposit but cannot complete the purchase on the due date, the deposit normally ends up being forfeited by the purchaser and retained by the vendor, who will then re-market the property.

 

Where a deposit is paid which is less than that stipulated in the contract, the developer may serve a notice on the purchaser demanding that he or she completes the purchase. If this does not go ahead, the developer issues a demand for the balance of the deposit unpaid.

 

And that, as far as most people believe, is that. However, it is not necessarily so. It is not well known amongst the public that in such circumstances the court can order (s.49 of the Law of Property Act 1925) that a vendor must return to the purchaser any amount of deposit received in excess of the loss they have suffered. If no loss is suffered, then the deposit should be returned in full. If, for example, the property is quickly resold at the same or a higher price, there may be little or no loss to the developer. When the demand is for the balance of the deposit, such an argument is likely to be particularly compelling.

 

For purchasers facing a forfeiture of their deposit or being pressed for the balance of their deposit because they cannot complete, the message is clear: keep an eye on what has happened to the property subsequently. If it has been sold, there may be grounds for demanding a refund or for not paying the sum demanded.

 

For developers who accept ‘part-deposits’, make sure you do not seek payments in excess of the loss you have suffered. Few purchasers will demand repayment of a part-deposit, but claims for the balance of a deposit are more likely to be contested strongly.

 

 

 

Partner Note

Ref. s.49 of the Law of Property Act 1925.

 

Jail for Overzealous Divorcee

 

A company director was recently sent to jail after taking what can only be described as a wildly overzealous approach to making sure his ex-wife was not cheating him by failing to disclose all her assets.

 

Wishing to make sure that the financial settlement between them took account of all her assets, he arranged for a firm of private detectives to plant ‘key tracking’ software on her computer, which recorded all the keystrokes she made on it. For eleven months, the agency provided him with reports on her activity and details of transactions made when she used her online banking services.

 

The director compounded his bad behaviour by arranging for the detective agency to invoice his company for this work. The company paid £50,000 plus VAT and the amount was improperly recorded as a business expense, not as private expenditure. This also created an incorrect recovery of the input VAT on the bill.

 

Following an investigation of the activities of the detective agency, the director and two of his co-directors were arrested and charged with false accounting and other offences.

 

The director concerned was previously of good character and was over 60 years old but, despite such mitigating factors, was sentenced to four months’ imprisonment. The other directors involved received a suspended sentence and a community service order respectively.

 

An appeal against the sentence, claiming that the disparity in the sentences was unjust, was rejected by the Court of Appeal. The method by which information had been obtained was a gross intrusion into the ex-wife’s privacy and the judge had been correct in concluding that the ‘custody threshold’ had been breached.

 

 

 

Partner Note

R v W CA (Crim), 31 January 2007.

 

Letter From the Taxman Follows Building Work

 

If you have recently had an extension built or other work done to your property which involved obtaining planning permission, be prepared for a letter from HM Revenue and Customs (HMRC).

 

In an effort to clamp down on ‘cash in hand’ building work, HMRC are reviewing planning permissions granted and have started sending letters to the property owners. The letters include a form requesting details of the builder’s name, address and VAT registration number, the sum paid and how the payment was made (i.e. whether in cash or by cheque).

 

In order to make a reply as convenient as possible, the enquiry comes with a stamped addressed envelope.

 

 

Partner Note

Source – Institute of Chartered Accountants Alert, 24 January 2007.

 

 

Maintenance Agreement Overruled

 

A wealthy man recently saw the amount payable under a maintenance agreement, which provided for his child, increased by the court and subsequently scaled back by the Court of Appeal. The man had never married the mother of the child, nor had he lived with her. He had, however, agreed to provide for the child’s maintenance. The woman also had a second child who had a different father.

 

Following an application by the child’s mother, the father was ordered by the court to make substantially increased periodical payments for the child’s maintenance. He was also ordered to provide a housing trust fund for the child and to pay £100,000 as a lump sum to clear the mother’s debts, which she had incurred as a result of moving to a larger house in order to have more room for her family.

 

The father appealed against this order, arguing that there was no basis for replacing the earlier agreement, which was intended to be a final agreement and was negotiated with the benefit of specialist legal advice on both sides. He maintained that the practical effect of the order would be to benefit the second child, for whom he bore no responsibility. The order would therefore act to relieve that child’s father of his obligations.

 

The Court of Appeal ruled that the level of maintenance should be increased but agreed that the mother’s debts arose as a result of the move to a bigger home. As such, part of the debt was clearly due to the needs of the second child, not the man’s own child. Accordingly, the lump sum he was ordered to pay towards the mother’s debts was reduced to £50,000.

 

Says <<CONTACT DETAILS>>, “The courts are required to consider the needs of the child in such cases and the responsibility for maintenance rests with the parents of that child. In this case, the financial responsibility for the maintence of the second child lay elsewhere.”

 

 

Partner Note

Stephen Peter Morgan v Janet Anne Hill, [2006] EWCA Civ 1602.

 

Megabucks Divorce Settlement Goes to Appeal

 

Insurance magnate John Charman, whose fortune is estimated at over £130m, has launched an appeal against the £48m financial settlement awarded to his ex-wife Beverley.

 

The award, the largest ever made by a British court, followed her refusal to accept his offer of £20m, which the tax exile famously described as ‘enough for anybody’. He claimed that such a sum would be impossible to spend in a person’s lifetime. In his view, the original judgment was ‘poor and blatantly discriminatory’.

 

The settlement in this case followed the recent practice of the courts, which seek to divide the ‘matrimonial assets’ relatively equally. Mr Charman’s belief is that the family wealth was built up by his efforts (the couple both come from modest backgrounds) and that it is therefore fair for him to keep the lion’s share.

 

The decision in this case will be eagerly awaited, especially by lawyers dealing with the divorces of wealthy couples. However, other recent cases involving rich couples would seem to give Mr Charman few grounds for hope that the settlement will be radically altered.

 

 

Partner Note

The High Court’s ruling can be found at http://www.bailii.org/ew/cases/EWHC/Fam/2006/1879.html.

 

The Court of Appeal’s decision is expected shortly.

 

Mobile Phone Penalties Increased

 

From 27 February 2007, the penalty for using a mobile phone whilst driving has been increased to £60 and three penalty points will be added to the licence of the driver involved.

 

The new law makes it an offence to cause or permit a driver to use a hand-held phone while driving. This will catch employers as it will be an offence to permit staff to use a mobile phone when driving and to require them to be available to take calls while driving on company business. Employers who have not already done so should take immediate advice on how best to introduce a ‘no-mobiles’ policy for people driving when at work.

 

According to the Royal Society for the Prevention of Accidents, employers would be ‘unwise to respond (to the new law) by supplying their staff with hands-free kits. Even if the use of these while driving does not contravene the specific ban on hand-held phones, employers could fall foul of health and safety laws if an investigation determined the use of the phone contributed to an accident’.

 

More recently, a driver who was spotted eating a sandwich whilst driving was fined and received three penalty points.

 

Post-Separation Assets

 

Over the last few months there have been many articles in the press outlining how couples have split their assets on divorce. In all bar a few instances, these have been cases in which the marriages have broken up acrimoniously. In such cases, the period between the couple’s separation and the commencement of divorce proceedings is normally short. However, some people are in no hurry to end their relationship formally and divorces often take place years after separation. A divorce in the UK can be sought without the consent of the other party after a separation of fiveyears.

 

When the divorce follows years after the split, the financial arrangements may well not have been resolved and, because of the passage of time, further problems can arise, especially where the fortunes of the separated couples have differed.

 

Two recent cases illustrate the current views of the UK courts in such cases. The first case concerned an Italian man who separated from his wife in 1985 and divorced her in 1992. In 2005, he claimed a share in the partnership which they had operated together prior to their separation. The issue was in essence whether the new business his ex-wife had built after their separation had its financial foundation in the assets of the marriage accumulated prior to 1985. The judge concluded that the wife’s business assets were not ‘matrimonial assets’ and her ex-husband’s claim failed.

 

In the second case, a husband developed a company after his divorce from his wife and without any help, finance or other input from her. She claimed a share in the new company, alleging that its genesis lay in another company which they had operated together when married. The judge rejected the claim.

 

In deciding such cases, the court seeks to differentiate between ‘matrimonial’ and ‘non-matrimonial’ assets. The former are those built up during the marriage and the latter are those which are not. In general, only matrimonial assets will be regarded as warranting an approximately equal split. ‘Post-separation’ assets will be non-matrimonial assets to the extent that they are acquired after separation, come into existence by the industry or efforts of their owner alone and are not rooted in (i.e. the result of or financed by) matrimonial assets.

 

If you are worried about the financial implications of divorce or have concerns about a possible claim on assets you have built up after separation or divorce, contact us for advice. We have considerable experience in all aspects of divorce and financial settlements.

 

 

 

Partner Note

Rossi v Rossi [2006] EWHC 1482 (Fam).

S vS [2006] EWHC 2339 (Fam).

 

Post-Nuptial Agreements

 

A wife was recently able to obtain a divorce settlement worth £10m when the post-nuptial agreement she had entered into was ruled invalid in the High Court, because she had signed it under excessive pressure.

 

The wife was put under pressure to sign the agreement when her husband discovered that she had had an affair with his best friend. Under the agreement, in the event of the couple divorcing, she agreed a divorce settlement of a house worth £3m and annual maintenance of £250,000. There was no lump sum payable however. Some time later, the wife resumed the affair and her husband instituted divorce proceedings.

 

The Court held that the agreement was made under undue and unacceptable pressure, preventing the wife from making a ‘clear, calm and rational’ decision. It was therefore unenforceable.

 

The Court ruled that the wife should receive a house worth £4m and a lump sum of £6m.

 

Says <<CONTACT DETAILS>>, “In general, the courts are unwilling to enforce marital agreements. However, it has been announced that an appeal is likely in this case, so it could yet set an interesting precedent.”

 

 

Partner Note

A v A. See New Law Journal, 26, January 2007, page 118.

 

Proceeds of Crime – The Burden of Proof

 

The civil (as opposed to criminal) burden of proof is that of the ‘balance of probabilities’ – whether something is more probable than not.

 

It is the civil burden of proof that is required under the Proceeds of Crime Act 2002, which allows the confiscation of assets which are obtained through conduct which is unlawful under the criminal law of England and Wales. Applications for confiscation are made by the Assets Recovery Agency (ARA).

 

It is not necessary that the unlawful gains are applied directly to the asset(s) concerned and provisions exist for a recovery of a proportion of the value of an asset which has partly been funded by the proceeds of crime and partly from other sources. For example, a house bought with a 50 per cent mortgage, the balance of the purchase money being from the proceeds of crime, could be subject to a 50 per cent confiscation order.

 

A recent case clarifies the test the court will apply in cases in which a confiscation application is opposed. It was judged that the ARA does not have to prove that a specific criminal offence has been committed. It merely has to prove the kind of conduct which would have resulted in the assets being obtained. However, merely showing that the lifestyle of the alleged criminal is not consistent with their disclosed lawful income is not enough to warrant confiscation.

 

In the case in question, several properties owned by the defendant were confiscated, except for one for which he was able to produce plausible documentation showing that the purchase money came from a bank in Nigeria.

 

 

Partner Note

Director of the Assets Recovery Agency v Oluptian & anor. [2007] EWHC 162 (QB).

 

‘Proper Accidents’

 

The Court of Appeal has dismissed a £150,000 damages claim brought against the Royal British Legion by a woman who broke her leg when she fell into a hole in a patch of village green where a maypole used to be placed.

 

In April 2001, Yvonne Cole, from Eastbourne, tripped over the hole as she walked across the green in the nearby village of East Dean. Until 1999, the British Legion had organised an annual fete, featuring maypole dancing, in the village. The hole left by the pole was filled in at that time and one of the residents, who was also a member of the Legion, had checked to make sure the job had been done properly. The hole only became exposed again shortly before Mrs Cole’s accident.

 

Originally, the lower court found the British Legion liable for Mrs Cole’s leg injury and set compensation at £150,000. The Legion appealed against the decision.

 

In the Court of Appeal’s view, the British Legion could not be said to have been negligent. Although the hole was filled in by a member of the organisation, he was in reality ‘a member of the community making his own contribution to the village and its safety’. There was no evidence as to how the hole reappeared. Whilst the Court expressed sympathy for Mrs Cole, it judged that if the claim were allowed it would threaten village traditions that go back centuries.

 

Lord Justice Scott Baker said: “Accidents happen and sometimes they are what can only be described as ‘proper accidents’, in the sense that the victim cannot recover damages because fault cannot be established.” The British Legion clearly took reasonable steps to make the green safe. If the courts were to require a higher standard of care than what is reasonable, the consequence could well be a flood of claims for compensation for accidents which a reasonable person would regard as being no one’s fault.

 

The decision in this case has been hailed as a victory for common sense by those campaigning against what they perceive as being an increase in the ‘compensation culture’.

 

 

Partner Note

Widely reported. See the Daily Mail at http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=439538&in_page_id=1770.

 

Revocation of Wills

 

It is important to make sure that your will both reflects your current wishes as regards the disposal of your property and is correctly drafted.

 

If a will no longer fulfils its intended purpose, the testator can revoke it: it is not necessary to make a new will. However, if a new will is not made or an invalid will is drawn up, the effect will be that the testator dies intestate and his or her property will be distributed according to the intestacy laws.

 

Recently, the court had to consider what to do with the estate of a nun. She had made a will and later revoked it. She left a new will which revoked her earlier one and stated that if she were to die before making a further will, she wished to pass her entire estate to the Diocese of Westminster to ‘hold on trust for the black community’ of four London boroughs. The bequest as stated did not specify exactly what it was that she intended be done with the gift and it was considered that the terms of the document might not be specific enough to be valid. If this were the case, the will would fail.

 

The questions before the court were:

 

 

In the court’s view, there was no intestacy. The estate passed to the Diocese. The courts will always attempt to uphold a testamentary gift to the extent permitted by law and the law permits a gift to a community, even if no precise purpose is specified. In such cases, the gift is construed to be held specifically for charitable purposes. Accordingly, the Diocese received the funds on this basis.

 

“Had the new will’s bequest failed,” says <<CONTACT DETAILS>>,“the estate would have been distributed according to the intestacy rules, as if there had been no will at all. Had that been the case, what is certain is that the charitable aims which the testator wished to pursue would have been frustrated altogether.”

 

 

Partner Note

Gibbs v Harding [2007] EWHC3 (CH), 28 January 2007.

 

Unaffordable Mortgage Leads to Intentional Homelessness

 

A council tenant who decided to buy a house but could not then keep up the repayments on the mortgage, leading in turn to the house being repossessed, was found to have made herself intentionally homeless.

 

Mrs Watchman had a history of rent arrears when she and her husband purchased the property. The mortgage payments were significantly higher than the amount they had paid in rent. Some time later, Mr Watchman lost his job and mortgage arrears began to accumulate. The mortgage lender was granted a possession order and Mrs Watchman applied to Ipswich Borough Council for council accommodation.

 

The Council refused her request on the grounds that she had made herself intentionally homeless. The Council concluded that her husband’s loss of employment was not part of the chain of causation because it was inevitable that they would have got into severe financial difficulties. Mrs Watchman appealed against this decision, arguing that at the date she left the council accommodation, her future homelessness was not inevitable and that it was her husband’s loss of employment that led to her plight.

 

The Court of Appeal ruled that the Council’s decision was well-founded. The reviewing officer had been correct to take the couple’s past history into account and to consider what would have happened had Mr Watchman remained in employment. His loss of job accelerated their homelessness, but it was reasonable to consider that it was inevitable in any event.

 

“This case follows the logic applied in another recent case in which a tenant who moved out of her council accommodation into more expensive private rented accommodation that was beyond her means was also considered to have made herself intentionally homeless,” says <<CONTACT DETAILS>>. “It follows that tenants considering such a move should do their budgets very carefully indeed and be able to show that their decision was financially viable at the time it was made should the worst come to the worst.”

 

 

 

Partner Note

Watchman v Ipswich Borough Council CA (Civ), 8 February 2007.

See The Law Society Gazette, 22 February 2007 p 37.

 

Unaffordable Mortgage Leads to Intentional Homelessness

 

A council tenant who decided to buy a house but could not then keep up the repayments on the mortgage, leading in turn to the house being repossessed, was found to have made herself intentionally homeless.

 

Mrs Watchman had a history of rent arrears when she and her husband purchased the property. The mortgage payments were significantly higher than the amount they had paid in rent. Some time later, Mr Watchman lost his job and mortgage arrears began to accumulate. The mortgage lender was granted a possession order and Mrs Watchman applied to Ipswich Borough Council for council accommodation.

 

The Council refused her request on the grounds that she had made herself intentionally homeless. The Council concluded that her husband’s loss of employment was not part of the chain of causation because it was inevitable that they would have got into severe financial difficulties. Mrs Watchman appealed against this decision, arguing that at the date she left the council accommodation, her future homelessness was not inevitable and that it was her husband’s loss of employment that led to her plight.

 

The Court of Appeal ruled that the Council’s decision was well-founded. The reviewing officer had been correct to take the couple’s past history into account and to consider what would have happened had Mr Watchman remained in employment. His loss of job accelerated their homelessness, but it was reasonable to consider that it was inevitable in any event.

 

“This case follows the logic applied in another recent case in which a tenant who moved out of her council accommodation into more expensive private rented accommodation that was beyond her means was also considered to have made herself intentionally homeless,” says <<CONTACT DETAILS>>. “It follows that tenants considering such a move should do their budgets very carefully indeed and be able to show that their decision was financially viable at the time it was made should the worst come to the worst.”

 

 

 

Partner Note

Watchman v Ipswich Borough Council CA (Civ), 8 February 2007.

See The Law Society Gazette, 22 February 2007 p 37.

 

University Not Liable for Asbestos Exposure

 

Reading University has been found not to be liable for the death of a worker from mesothelioma. It was alleged that the man was exposed to asbestos when assisting in works to the University’s library in the 1980s.

 

The claim failed because the University could not be shown to have been in negligent breach of its duty of care to the deceased. The work had been undertaken by contractors, who had gone out of business and whose insurers could not be traced. A case against them would almost certainly have succeeded. The problem was that since the firm and its insurers could not be found, the claim was made against the University, which had contracted out the work to the firm by which the man was employed.

 

Regrettably for the claimant’s family, the relevant section of the Comp