£2.5 Million Settlement in Hotel Illness Case
A group of British holidaymakers has won more than £2.5 million in compensation for illness they suffered while staying at a hotel in Spain.
Many holidaymakers contracted the ‘norovirus’ infection while staying at the Beach Club Hotel in Torremolinos between 2000 and 2002. Norovirus is the name given to a group of viruses, the symptoms of which are nausea, vomiting, diarrhoea and stomach cramps. The virus is often contracted from eating or drinking contaminated substances.
The effects of the virus normally last for a few days, but some of the claimants are still suffering from its after-effects years later.
The holidaymakers brought the group action against tour operators Thomson and Thomas Cook, who for a long time denied liability for the claim, even though over a prolonged period a number of people had become ill while staying at the hotel. However, medical evidence was produced as well as documents showing that the hotel management, along with others, had made serious mistakes with regard to hygiene.
Shortly before the case was due to be heard in the High Court, the claim was settled. The tour operators and the hotel agreed to pay more than £2.5 million in compensation, thought to be the largest settlement of its type. The money will be divided between nearly 1,000 claimants on the basis of a number of factors including the severity of their illnesses.
If you are struck down with illness on a package holiday, you may have a right to claim against the tour operator. It is important to remember that such illnesses are common and to obtain compensation you need to prove that the tour operator was at fault and the resort failed to exercise reasonable care to prevent infection. In order for a claim to be successful, there are a number of steps you should take:
Get evidence. Obtaining pictures or video footage and supporting evidence from other holidaymakers is important. Make notes of the standard of cleanliness, food hygiene and so on. Ask to see and copy (or make notes on) the complaints file at the resort;
Share names and addresses with anyone else at the same resort who is also ill;
Make a diary of where you went and where you ate. If you have eaten food not provided by the tour operator, be prepared to show that other people eating at the same place did not become ill;
Inform the holiday representative of your illness as soon as possible and make notes of your conversations with them and anyone else working for the holiday company;
Be prepared to prove that you were ill. Obtain documentary evidence of your illness from the doctor or hospital. See your doctor as soon as possible once you get home if symptoms persist; and
Record your symptoms in detail for as long as they persist and their effect on your everyday life.
It may be difficult to obtain a great deal of evidence – especially when you are ill – but in order to be successful, you will need to demonstrate that the tour operator (i.e. the resort they have contracted themselves to) is the source of the sickness and that they are responsible for it because of a failure to exercise reasonable care to prevent the infection or contamination.
If you have had your holiday ruined by illness, contact <<CONTACT DETAILS>> for advice on how to proceed.
Partner Note
Widely reported. See http://www.telegraph.co.uk/travel/748432/Compensation-for-British-holidaymakers.html.
Debt Still Valid After Bankruptcy
When a person is unable to pursue a claim against someone who has been made bankrupt on account of the bankruptcy having been discharged, it may still be possible to pursue the claim against the bankrupt’s insurers, following a recent ruling.
The case involved 12 claims for breach of trust against nine solicitors and a Mr Dixit Shah. It was brought by the Law Society and 19 of the various clients of the solicitors.
Mr Shah had acquired several solicitors’ firms. Allegations had been made that a total of £12.5 million had been misappropriated by Mr Shah from the client accounts of these firms. Three of the solicitors were subsequently made bankrupt and then discharged.
The Law Society’s compensation fund made various payments to the aggrieved clients, totalling £12.5 million. Since the bankrupts no longer had professional indemnity insurance, cover was effectively provided by the Law Society.
However, because the three bankrupts had been discharged, the Law Society was unable to pursue a claim against them. For this reason, the Law Society attempted to make a claim against their insurers under the Third Parties (Rights Against Insurers) Act 1930, in order to recover monies paid out from the compensation fund in respect of the bankrupt solicitors’ clients.
To do this, it was necessary to prove that the claim against the insured was no longer disputable. Although the effect of the discharge of bankruptcy was to refute the Law Society’s incomplete claims, it was possible to elevate those claims to the status of ‘established’ simply by the admission of the claim in bankruptcy.
It follows that although a right to pursue an action against a debtor was lost once the debtor had been discharged from bankruptcy, this did not mean that the underlying cause of action was destroyed.
The ruling allowed the Law Society the means of demonstrating that the discharged bankrupts were liable to the various clients, by simple proof of debt. Once this had been done, the Law Society would then be able to pursue the insurer directly.
“This decision has far-reaching implications in such cases,” says <<CONTACT DETAILS>>. “The circumstances of this case are very unusual, but for clients of solicitors it provides the reassurance that in the very unusual event of the bankruptcy of a solicitor who is the subject of a claim, the claim can still be pursued. Not all people offering professional advice are insured. Solicitors must have appropriate insurance arrangements in place in order to protect their clients.”
Partner Note
Times Law Report. Published December 20, 2007.
Law Society of England and Wales and Others v Shah and Others,
before Mr Justice Floyd, Chancery Division – Judgment November 30, 2007.
E-Conveyancing on the Way
Plans to update the conveyancing process in England and Wales have been ongoing since 1998, when preliminary proposals were set out in a report, compiled by the Law Commission and the Land Registry, entitled Land Registration for the Twenty-First Century. Consultation on how best to go about re-engineering the system has been extensive. The aim is to develop an electronic system of conveyancing that makes buying and selling easier for all those involved in the process.
The Land Registry’s e-conveyancing project, developed by IBM, is expected to go live some time this summer following the introduction of a public key infrastructure (PKI) system that uses cryptography to guarantee the authenticity of property transaction documents. The system is designed to allow authorised users to exchange information quickly, securely and reliably with each other and with the Land Registry. Documents will be encrypted and signed with a digital certificate. Documents will only be able to be produced or read by those in possession of a cryptographic token, username and password. Once up and running, the system should allow property and mortgage registrations to be completed instantly, funds to be transferred immediately, securely and reliably and it will enable accurate and up-to-date information on the progress of all linked conveyancing transactions to be accessed online.
For further information on the e-conveyancing system, see http://www.landregistry.gov.uk/e-conveyancing/.
Partner Note
Widely reported. See http://www.computerweekly.com/Articles/2008/01/17/228972/land-registry-e-conveyancing-system-to-include-pki.htm.
Evasiveness Shows True Intentions
There have been several cases before the courts in recent years which arose because a house or property was purchased in the name of one of an unmarried couple and then when the couple split up, the ‘non-owner’ claimed that they were entitled to an equitable share in the property concerned.
In general, where it can be demonstrated that a couple’s intention was to hold the property jointly, the courts will accept such claims. However, a recent case shows that not having the right sort of evidence of the intention can lead to what seems, on the face of it, to be a very unfair result.
Sharon James lived with Peter Thomas, who was an agricultural contractor. She worked in his business, but received no payment. All the income from the business went into an account in Mr Thomas’s name and all the couple’s expenses were paid from this account, including the mortgage on the cottage they shared. The property had been purchased by Mr Thomas before he and Ms James started living together. Ms James had carried out improvements to the cottage which had enhanced its value. A piece of adjoining land was also acquired in Mr Thomas’s sole name, payment for this being made in kind by work done by the couple.
The business was reconstituted as a partnership in 1999 and the bank account was made a joint account in 2002.
In 2004, after 15 years together, the couple separated and shortly after that the partnership was dissolved. Ms James claimed that she had a beneficial interest in the cottage, arguing that Mr Thomas had said she would be ‘well provided for’. Interestingly, the court heard evidence that when the subject of formal joint ownership of the property was raised, Mr Thomas had been evasive. This was taken to mean that he had no intention of parting with an equitable share in the property. The court also considered that Mr Thomas’s comment that Ms James would be well provided for was a general statement of a beneficial outcome, rather than a commitment to share ownership.
The court ruled that her claim failed, leaving her with only a share in the partnership assets on the dissolution of the business.
Cohabiting couples are often unaware that they do not have the same legal rights as married couples or civil partners and this case is proof of the wisdom of unmarried couples setting out in clear terms what their financial arrangements are to be. This is easily done by creating a ‘living together agreement’. Contact us if you need advice on protecting your financial position in the event of a break-up of your relationship.
Partner Note
James v Thomas [2007] EWCA Civ 1212 .
See New Law Journal, 1 February 2008, pp 174-5 for a discussion of the issues.
Government Abandons Plans to Protect Cohabitees
The Government has announced that it does not, for the time being at any rate, intend to proceed with reforms to the law that would have given cohabiting partners similar rights to married couples or civil partners on the breakdown of their relationship.
This unexpected announcement was made by Justice Minister Bridget Prentice and is all the more surprising given the inconsistency of rulings made by the courts in this problematic area.
The Law Commission had spent two years working on proposals to give protection to couples who live together. If introduced, these would have set out the respective rights of cohabitees as regards the financial arrangements on the termination of a relationship.
The number of people who are living together in a relationship but who are neither married nor civil partners continues to rise. Many of these people are probably completely unaware that they have few rights in the event of a break-up of their relationship and that such rights as they do have centre around any children of the relationship.
“The problem stems from the fact that, contrary to popular belief, in law there is no such thing as a ‘common law spouse’,” says <<CONTACT DETAILS>>. “Couples who live together do not acquire legal rights and there are no set rules for how their assets should be divided if they split up. With over 2.5 million people currently living together informally, the courts are seeing a flood of disputes about who owns what when such relationships end.”
One common problem is where partners have lived together for a long time but the property they share continues to be held in the name of only one of the couple. If the couple then split up, this may give rise to a claim that the property should belong to both parties. The issues involved are often complex and such disputes can be very expensive to resolve in court. In some cases, people who have made a very substantial contribution to the financing and improvement of a shared home have been left with little or nothing for their efforts.
The review of the law in this area was intended to create more certainty in such cases, but the Government has chosen instead to wait to see what are the effects of planned reforms to the law in Scotland before any changes are made to the law in England and Wales.
“Meanwhile, the position of cohabitees is best protected by having a formal written agreement, which should be made with the benefit of independent legal advice on both sides,” says <<CONTACT DETAILS>>. “This is particularly important where the assets involved are substantial, so that in the event that the relationship founders, a drawn out and acrimonious dispute can be avoided.”
Partner Note
The Law Commission’s Consultation Paper can be found at
The Justice Minister’s announcement can be found at http://www.justice.gov.uk/news/announcement060308a.htm.
In Brief
Bereavement Damages Increase
The level of damages for bereavement in England and Wales has been increased from £10,000 to £11,800 and the new level applies for causes of action which commenced after 31 December 2007.
It is intended that in future, adjustments will be made at three-yearly intervals.
Partner Note
The Damages for Bereavement (Variation of Sum) (England and Wales) Order 2007 (SI 2007/3489).
In Brief
Modernising the Courts Means More Wigs
The Government always seems to be introducing some sort of ‘modernising’ initiative or other and in recent years the legal profession has had to deal with a great number of changes aimed at modernising the law.
One very curious form of ‘modernisation’ was introduced recently when solicitor advocates were given the right (previously reserved for barristers) to wear wigs in court when members of the Bar would ordinarily be allowed to wear them. This ruling will mean that solicitor advocates will be able to ‘wig up’ when appropriate in the Magistrates’, Crown and County Courts.
The ruling is aimed at removing what was described as ‘an unjustified advantage’ for the Bar.
Partner Note
Change introduced under a practice direction applicable from 2 January 2008.
Intention Not Enough Rules Court
When promises are made but not kept, the law often provides no redress for the disappointed person, as a recent case involving a couple who looked after a friend demonstrates.
The couple looked after their friend when he became unable to care for himself, and they helped him deal with his affairs. He offered them the use of two properties he owned, which they accepted. Over the ensuing years, they decorated and maintained the properties and even carried out improvements to one of them. The man told the couple that he intended to leave the properties to them when he died and also made other people aware that this was his intention. He signed a document to that effect, but it was not a valid will and he died legally intestate. At the point at which the man died, the properties were worth £280,000.
The couple applied for the title to the properties to be transferred to them. When their request was refused, they went to court claiming that the man’s promise had created a ‘constructive trust’ for them and that they were entitled to the properties because they had acted to their own detriment on account of the man’s promise. Where a person acts to their own detriment on the basis of a promise made by another person, it may be possible to mount a successful claim.
However, the court rejected the couple’s claim. There was, in the mind of the judge, an insufficient link between the promise and the couple’s detriment to mean they should benefit, except by way of compensation for their expenditure and a small amount for their disappointment. Accordingly, an award of £20,000 was made. The couple appealed, claiming that there was in effect a bargain between them and the man which the court should uphold.
The Court of Appeal concluded that the man’s offer of property for use was not accompanied by a requirement that the couple carry out the acts for which they claimed compensation, so there was no ‘bargain’. Nor was there any ground for the assumption that receipt of properties worth £280,000 was in proportion to the detriment (approximately £20,000) that the couple had suffered. The claim was therefore rejected.
Says <<CONTACT DETAILS>>, “The couple were no doubt disappointed, but relying on stated intention in such cases is a very risky strategy. The sensible thing to do is to make sure that the correct paperwork is put in place to give effect to the owner’s intention. Creating the documentation needed to transfer property or writing a will is both quick and inexpensive.”
Partner Note
Powell and Powell v Benney [2007] EWCA Civ 1283.
Lack of Clarity Causes Title Disputes
When a couple’s intention is that a property should be owned in a way which is not the same as the legal form of ownership (i.e. where the intention is that they both have an equitable interest in their home, the title to which is in one of their names only), it is always sensible to make sure that the appropriate documentation is put in place to reflect this position – if only to avoid the potential problem of unnecessary legal costs if the ownership is subsequently disputed.
Two recent cases illustrate the potential pitfalls. In the first of these, a divorced couple who had had a stormy relationship for years got back together and bought a house in the name of the ex-husband, although both contributed towards its purchase. When their reconciliation failed, the ex-husband left the property. His ex-wife sought a declaration by the court that the property was hers alone whilst he sought a declaration that the property was jointly owned. The case went to the Court of Appeal, which rejected the ex-wife’s claim. However, the Court considered that she would not have contributed to the purchase and moved in to the house without an assurance that she could continue to live there if their relationship collapsed again. Accordingly, it ruled that the property could not be sold without the consent of the ex-wife and that on sale she would be entitled to half the proceeds.
Another case resulted from the death of a man who emigrated from Bromley to Australia 60 years ago, leaving his house in the UK to be occupied by his relatives here. The house purchase had been financed by a bank loan and loans from members of his family. His will left the residue of his estate to a woman in Australia who had cared for him in his old age. The man’s relatives claimed that he had held the house in Bromley on trust for his family. Again, the case went all the way to the Court of Appeal, which ruled that the man’s family had failed to discharge the burden of proof that their loans were contributions to the purchase price of the property, entitling them to a share in it, rather than just advances of money.
“To avoid problems, it is a simple matter to execute the appropriate legal documents giving someone a legal interest in a property. Failure to make one’s intentions clear can prove expensive and cause delays in the event of a dispute over ownership later on,” says <<CONTACT DETAILS>>.
Partner Note
Holman v Howes [2007] EWCA Civ 877.
Tackaberry v Hollis, Cobbett and Beacham [2007] EWCA 2633 (Ch).
McCartney Split – Implications for Divorcing Couples
The much-publicised divorce of Paul McCartney and Heather Mills has led to a settlement in favour of Ms Mills of £24.3 million. Press speculation was rife that she might be awarded anything up to £60 million from Sir Paul’s fortune, which is estimated to be £400 million – the figure presented by his side in the proceedings and accepted by the court. Ms Mills, who represented herself, claims that he is worth £800 million.
What is significant about the judgment is that the award is based only on the needs of Ms Mills and the couple’s daughter. The implication of this is that the judge clearly considered that Ms Mills had added nothing of significance to the wealth of the McCartney household during their four years of marriage.
The decision contrasts with the July 2007 divorce of insurance magnate John Charman and his wife Beverley, who received £48 million from Mr Charman’s £130 million-plus fortune.
“The difference between the cases in legal terms is that Mrs Charman was considered to have made a much greater ‘special contribution’ to the couple’s 28-year marriage and to the acquisition of marital assets during that time than Ms Mills had made during her four-year marriage to the former Beatle,” says <<CONTACT DETAILS>>.
The McCartney settlement follows a recent case in which a thrice-divorced woman, who on marrying for the fourth time had signed a pre-nuptial agreement to the effect that in the event of divorce neither she nor her husband would make any financial claim against the other, withdrew her claim for a share of her ex-husband’s fortune when the couple divorced, after the judge issued a preliminary ruling that the pre-nuptial agreement would be of material importance to the case.
It appears the courts are looking much more closely not only at the stated intentions of people going into a marriage but also at their relative contributions to the wealth created during the marriage. This does not mean that ‘stay at home’ spouses will necessarily receive a small settlement. If they can demonstrate that they provided the environment and support which enabled or assisted the ‘go getter’ to amass wealth, then there is every chance of them being awarded a significant proportion of the marital assets, particularly if the marriage has lasted several years.
The other factor the court will consider is the wealth brought into the marriage by each party. By and large, the ‘non-marital assets’ are divided in the proportion in which each spouse or civil partner introduced them.
Partner Note
Widely reported. See http://news.bbc.co.uk/1/hi/entertainment/7300931.stm and
The judgment can be found at http://www1.sky.com/news/Approved%20Judgment%201%20-%20Full%20Version.pdf.
Price-Fixing – Refund for Football Shirts
The result of the first ‘class action’ brought in the UK regarding price-fixing has been settled, with one of the culprits – who colluded in keeping the price of replica football kit artificially high – agreeing to compensate customers who can prove that they purchased one of the football shirts that was in point.
Following an action brought by the consumer watchdog ‘Which?’, retailer JJB Sports has agreed to pay compensation to the hundreds of customers who sued them. These customers will receive £20 each from the retailer.
The retailer has also agreed to refund £10 to any customer who can produce a receipt for the purchase of one of the shirts, which are England, Manchester United, Nottingham Forest, Celtic and Chelsea shirts bought between 2000 and 2001.
The court case follows the levying of fines totalling £17 million by the Competition Commission, in 2003, against JJB, Manchester United, Allsports, Umbro and the Football Association, for fixing the prices of football shirts.
If you have one of these shirts and can find the original receipt, you should be able to obtain the £10 merely by taking it to your local branch of JJB Sports.
More recently it has been announced that people who inform on those operating cartels may be eligible for rewards of up to £100,000.
Partner Note
Widely reported. See The Solicitors Journal, 15 January 2008.
Private Copying – Copyright Relaxation on the Way?
It might well be a surprise to many, but when your child comes home from school with a bag brimming with photocopies, it might also be a bag full of copyright violations.
Similarly, copying a CD, which you have already bought, onto your MP3 player is a breach of the copyright of the artist.
Faced with law which is ignored on such a vast scale, the Government has accepted many of the recommendations of a 2006 report on the reform of copyright law and has started a consultative process with a view to allowing limited private copying for non-commercial use of copyrighted material.
It is too early in the process to outline what form such a relaxation might take, but one possibility is that the copying technology itself may incorporate a licence or it could be that persons wishing to make private copies must hold a licence.
There is no suggestion that multiple copying or file-sharing is likely to be made lawful. The consultation closes on 8 April 2008.
Contact <<CONTACT DETAILS>> for advice on protecting your intellectual property rights.
Partner Note
The Gower review of copyright was published in 2006.
Problem Trees and Preservation Orders
Cases involving damage to a property caused by trees located on a neighbour’s land, especially those dealing with subsidence or heave due to roots, are fairly common. One complication that arises is where the tree in question is subject to a preservation order.
In a recent case, a tree on a neighbour’s land was causing continuing damage to a house. As the tree was the subject of a preservation order, the homeowners applied to the council for planning permission to fell it. The homeowners considered that they should be entitled to a declaration that they could fell the tree because it was creating a nuisance and taking it down was necessary to prevent this continuing. The planning application was refused. The local authority considered that the nuisance could be prevented by other methods, such as creating a root barrier or by underpinning the affected house. The court, however, rejected the council’s argument, holding that the existence of alternative solutions to the problem was not relevant. The council therefore appealed to the Court of Appeal.
The Court of Appeal overturned the decision of the lower court. In its view, the purpose of the legislation that covers tree preservation orders is to preserve trees. Therefore, the existence of alternative means of abating the nuisance which would allow the preservation of the tree had to be considered. The legislation could not be considered to apply only to what might need to be done to the tree to solve the problem – it was reasonable to consider alternative action that might be taken which did not involve lopping or felling the tree.
It would appear, therefore, that in circumstances such as this the whole range of possible solutions will have to be considered before the court will support a decision to fell a tree which is the subject of a preservation order.
If you have problems with nuisance, caused by your neighbours or their plants, our experts can help you resolve them.
Partner Note
Perrin and Another v Northampton Borough Council [2007] EWCA Civ 1353.
Property Losses – Latest Developments
Two recent cases have dealt with different aspects of damage to property and have provided clarification of the approach the courts will take.
In the first case, a man whose home was destroyed by fire claimed under his insurance policy. The policy gave the insurer the right to reinstate the property rather than to pay a cash sum to the insured. The insurer opted to undertake reinstatement and required the insured to enter a standard form JCT Minor Building Works (1998) contract with a builder.
The builder’s performance was not satisfactory to the homeowner and he therefore withheld progress payments that were due to the builder under the contract. The builder then sought an adjudication (as provided for in the contract terms) to confirm his entitlement to the payments. The adjudicator ruled in favour of the builder and the homeowner appealed the decision. The Technology and Construction Court overturned the decision on the basis that the contract had been imposed on the man by the insurer and the wording of the withholding clause was unfair under consumer law.
In another case, the court had to deal with the common situation in which the cause of a fire was uncertain. In this case, a fire occurred after work had been undertaken by electricians. They had finished their work and left, but before the owner of the house had returned, it caught fire and burned.
The owner was able to demonstrate that the work done by the electricians had been negligent, but the expert evidence did not categorically demonstrate that their negligence had caused the fire. The court ruled that the probable cause of the fire was the negligence of the electricians and that they were therefore liable. This approach was backed by the Court of Appeal. The inability of the electricians to show with a reasonable degree of probability that something else, for which they were not responsible, could have caused the fire was fatal to their defence.
These cases show that the courts are willing to protect the end user. In the first instance, consumer law was applied to protect the insured and in the second instance, the application of a ‘balance of probabilities’ approach to (rather than a strict requirement to prove) the causation of the fire was applied.
Partner Note
Steve Domsalla (trading as Domsalla Building Services) v Kenneth Dyason [2007] EWHC 1174 (TCC).
Drake v Harbour [2008] EWCA Civ 25.
Remarriage Not Ground for Alteration of Divorce Settlement
When financial arrangements are being made on divorce, the issue of the payment of maintenance is often in point. One of the concerns from the point of view of the payer is that if the ex-spouse remarries, their circumstances may well change significantly, so that the payment of maintenance is no longer appropriate.
Another issue which often arises is what happens when the person paying maintenance retires, as this can also affect the appropriate amount of maintenance payable.
Recently, a case was heard which dealt with both these issues. A man had been paying maintenance to his ex-wife for 12 years. As he was coming up for retirement, he sought to pay her a lump sum instead of continuing to pay maintenance. He enquired on more than one occasion whether she was cohabiting or intended to remarry and was informed that neither circumstance applied. In 2005 he therefore agreed to a consent order, as a result of which he paid his ex-wife a lump sum of £125,000 in lieu of future maintenance payments.
In 2006 his ex-wife remarried. He went to court to make an application for the consent order to be set aside on the basis that her remarriage had made the assumptions on which it had been based invalid.
For such an action to succeed, it is necessary that:
since the order was made there has been a supervening event which has led to a change of circumstances which undermines or invalidates the basis of the order;
the events are such that if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed; and
the new events have occurred within a relatively short time of the order having been made.
The court ruled that the man’s ex-wife had not planned to remarry at the time the settlement was negotiated and therefore the settlement stood. The man appealed to the Court of Appeal. The Court considered that the payment of the lump sum was intended to provide for a ‘clean break’. That in turn depended on the intentions of the parties at the time. The purpose of the husband’s enquiries regarding his ex-wife’s domestic situation was to assure himself that she was not cohabiting, rather than to protect himself from the risk of her remarrying. At the time of the agreement, she had no intention of remarrying, but that carried no implications regarding her future intentions. There was no basis for making the assumption that she would not remarry in any particular period, nor had the agreement between them provided for any variation in the event that she did remarry within a particular time frame.
On a majority decision, the Court of Appeal rejected the man’s appeal.
“This case shows how difficult it can be to alter financial arrangements designed to achieve a clean break and proves again that in such matters you get what you negotiate, not necessarily what you deserve,” says <<CONTACT DETAILS>>.
Partner Note
Dixon v Marchant [2008] EWCA Civ 11.
Should We Incorporate Our Charity?
One of the main problems for charities is finding people to help run them who have the particular skills needed to do so – such as financial or legal skills. The reason behind this is usually that such people are highly aware of the fact that charity trustees can be made personally liable for the losses of a charity in certain circumstances.
Strictly, this is because charities formed as unincorporated associations or trusts have no legal identity that is distinct from their trustees. As well as causing problems in putting together the right management team, this can also cause unnecessary complexity when undertaking certain types of transactions. For example, if a property is owned by the unincorporated charity and a trustee wishes to retire, there may well be a considerable amount of paperwork required. There can also be other difficulties – such as persuading a bank holding a loan secured against the property owned by the charity to release a retiring trustee from his or her obligation to the bank.
One possible solution is to change the charity’s structure, turning it into a limited company. The main advantage of this is that a company is a legal entity in its own right and can contract in its own name, which means the potential liability of the directors (the erstwhile trustees) can be limited, provided they are neither negligent nor act in breach of their duties.
The Charities Act 2006 created a new sort of company, specifically for charities, called the Charitable Incorporated Organisation (CIO), which is shortly to be made available.
The Act also provides, for the first time, a mechanism (to be administered by the Charity Commission) which will make it easier for smaller charities wishing to cease operations to transfer their funds to other charities and wind themselves up.
Trustees of unincorporated charities who would like to know more about CIOs or how to wind up a small charity should contact <<CONTACT DETAILS>>.
Smells Earn Author £115,000
An author who claimed that the smells from a nearby shoe factory and shop prevented her from writing serious literature has received an out of court settlement of £115,000 including costs from its insurers. She claimed that the fumes from the premises caused her physical problems which prevented her from writing the sort of literature for which she was known and, as a result, she was reduced to writing thrillers. She produced medical evidence to show that she suffered from nerve damage consistent with exposure to chemicals.
Author Joan Brady was living in Totnes, Devon, when she found that she was suffering from numbness to her hands and legs, which she alleged was due to toxic substances emanating from the nearby premises. The local council’s environmental health department initially failed to detect the problem but eventually paid Ms Brady £4,000 in compensation after the Local Government Ombudsman ruled that it was guilty of maladministration.
Says <<CONTACT DETAILS>>, “The law protects people who are injured by gradual exposure to toxic substances as well as those injured in an accident. If your health has suffered because of the activities of someone else, you may be entitled to compensation.”
Partner Note
Reported in the Times, 24 January 2008.
Taking Children into Care – The Legal Process
We often hear of children being taken into care, but the process by which this occurs is not well known. The Children Act 1989 lays down the circumstances under which it is appropriate for a child to be taken into care or a supervision order made. The necessary criteria, somewhat rephrased, are:
that the child concerned is suffering, or is likely to suffer, significant harm; and
that the harm, or likelihood of harm, is attributable to the care given to the child (or which would be given if a care or supervision order were not made) and is not what could be reasonably expected of a parent, or that the child is beyond the control of the parents.
In order to determine whether these criteria are met, a thorough fact-finding exercise must first be carried out. One common difficulty arises when the proceedings to take a child into care are based on an expectation that the child may be harmed in the future, rather than on the basis of harm having been done to the child in the past. In such cases, the local authority is required to prepare a clear written analysis of the facts on which the authority’s decision to apply to take the child into care is based. This analysis should be divided into three stages:
an establishment of the primary facts;
an assessment as to whether the criteria outlined above are met; and
an overall assessment of what action is likely to be in the child’s best interests.
All the other parties involved have the right to respond to any allegations made in the analysis.
We can assist you in your dealings with the local authority and other bodies. Contact <<CONTACT DETAILS>> for advice.
Uncertainty Prevents Revision of Divorce Arrangements
One factor that comes into play when decisions are being made about the financial arrangements following a divorce is the earning capacity of the couple.
A problem that can arise in such cases is what to do when the earning capacity of one of the ex-spouses is uncertain. In a recent case, which also involved a number of other issues, the wife of an airline pilot went to court over the level of the maintenance payments she received.
Her ex-husband had suffered a severe depressive illness and he had been suspended from flying duties by his airline. The financial arrangements made in the District Court took account of the uncertainty of his future employment prospects.
Some time later, his condition appeared to improve and he was able to return to ground duties, receiving a captain’s basic salary. An occupational physician’s report concluded that it was possible that he might be able to return to flying duties in due course.
The Court of Appeal, however, concluded that the uncertainty surrounding the man’s future employment had to be taken into account. His current earnings were no guide to his future level of earnings. The original decision regarding the division of assets therefore had to stand.
Says <<CONTACT DETAILS>>, “This decision will be of interest to anyone in similar circumstances and indicates that in the absence of hard and fast evidence of changed circumstances, an appeal is unlikely to change the considered decision of the judge in a lower court.”
Partner Note
Vaughan v Vaughan [2007] EWCA 1085.
Victim Wins Right to Proceed with Compensation Claim
A landmark decision of the House of Lords could pave the way for some victims of sexual abuse to claim compensation from their attackers many years after the attack took place.
Mrs A, a retired teacher, has won the right to sue for damages a man who attacked her in 1988. Her attacker, Iorworth Hoare, was jailed for six sex attacks committed during the 1970s and 1980s.
At the time of the attack, Mrs A was advised not to bring a claim against Mr Hoare because he did not have any money. Instead, she made a claim to the Criminal Injuries Compensation Board and received just £5,000 in compensation.
However, since then Mr Hoare has scooped a £7 million win on the lottery after he bought a ticket whilst on day release from Leyhill open prison in 1994. Mrs A then commenced a claim for compensation in the High Court. However, the Court ruled that her claim was outside the legal six-year time limit for bringing an action. The Court of Appeal rejected Mrs A’s appeal against this decision.
When the case came before the House of Lords, Mrs A asked for a change in the law that prevented compensation claims for sexual assault being made outside the strict time limits. Five Law Lords unanimously ruled that courts should have the discretion to extend the limitation period to permit ‘out of time’ claims. The case will now go back to the High Court to be reconsidered in the light of this decision.
Four other appeals by people seeking compensation for sexual abuse that took place more than six years ago were also heard and these can also now proceed.
Says <<CONTACT DETAILS>>, “Prior to this judgment, the law prevented victims of sexual assault from bringing a claim after the six-year time limit had expired. In cases of child abuse, claims were only permitted up to six years after the child had reached the age of 18. Such attacks can have long-term traumatic effects on the victim which may prevent them proceeding with a timely damages claim.”
Partner Note
Widely reported. See
Victory for Pre-Nuptial Agreements
Pre-nuptial agreements have been given a boost following a recent case involving a ‘serial divorcee’.
A pre-nuptial agreement is an agreement made by a couple before they marry specifying how their assets are to be divided in the event that they divorce. They are commonly made by wealthy people, especially where the assets of the couple prior to the marriage are very unequal.
However, UK law does not (in theory) recognise pre-nuptial agreements – the argument being that marriage is to be encouraged in the public benefit, so an agreement which presupposes divorce is contrary to the public good. However, ‘pre-nups.’ are having more influence as the courts increasingly accept that they are indications of a couple’s intentions at the outset of their relationship.
In the case in point, thrice-divorced Susan Crossley abandoned her claim to a share of the fortune of her property developer fourth husband Stuart after their 14-month marriage broke up. Mrs Crossley had received £18 million in divorce settlements from her previous husbands. Prior to her marriage to Mr Crossley, she had signed a pre-nuptial agreement stating that in the event of the failure of their marriage, she would receive nothing. Hours before a scheduled hearing at the High Court, Mrs Crossley abandoned her claim, accepting that she had little or no chance of persuading the Court that the pre-nuptial agreement was invalid.
Mrs Crossley had claimed that the agreement was invalid because her husband, whose wealth is estimated at £45 million, had not disclosed to her ‘tens of millions’ of pounds held in offshore accounts. In an earlier hearing, however, the Court of Appeal ruled that the pre-nuptial agreement should be considered by the Court before looking at any other claim Mrs Crossley might have.
Says <<CONTACT DETAILS>>, “The courts are having to cope with increasing numbers of divorces involving wealthy clients, which can take up large amounts of court time, so they are becoming more willing to give weight to pre-nuptial agreements. If you are considering marriage and have, or are likely to have, wealth to protect, a pre-nuptial agreement is worth consideration. Contact us for advice on all family and wealth preservation matters.”
Partner Note
Crossley v Crossley – reported in the Times, 13 February 2008.
Welcome News for People Injured Abroad
Being injured in a road traffic accident whilst on holiday is a very unpleasant occurrence. Until recently, this has been made worse in many cases by the difficulties which can arise in seeking legal redress against the insurer of the responsible person.
Recently, the European Court of Justice has issued a ruling that will come as a relief to people who find themselves in this situation. The Court decided that a person who is injured abroad can bring a claim against the responsible person’s insurer in their home country – subject to certain conditions. The main condition is that the claimant and insurer must be domiciled in the European Economic Area. The right does not extend to claims against individuals, but would also apply to an injury sustained in the UK where the person who caused the injury is insured abroad.
The right to make a claim in the UK courts in such circumstances will make the whole process quicker and less expensive, which is to be welcomed.
If you are injured through the fault of someone else whilst on holiday abroad, contact us for advice.
Partner Note
FTBO Schadeverzekeringen NV v Odenbreit – reported in New Law Journal, 11 January 2008.
What is Collaborative Law?
Divorce can be highly confrontational and can involve a great deal of negotiation conducted by correspondence on the part of solicitors and their clients. This necessarily takes a great deal of time and can make what is already a stressful process even more so in many cases. Also, the client can seem detached from the whole exercise, especially in cases where there is a great deal of correspondence arguing points between the respective law firms involved.
In a bid to provide a quicker and less confrontational process, a new approach to divorce, termed collaborative law, has been created. The idea behind collaborative law is to allow the parties to resolve their differences as far as possible in a quicker and more flexible way, with the hoped-for results being the better preservation of family assets and maintenance of better relations between the divorcing couple. It is offered by lawyers who are specially trained to work in this way, with the aim of achieving a solution which works for the whole family.
Using collaborative law will not be appropriate in all cases, especially where the degree of conflict is great. If it is used and is not successful, a client may still opt for formal mediation or to use the courts.
The collaborative law process involves the client signing a participation agreement, which is in effect an agreement that they will not go to court. The client can withdraw from this at any time but, if they do so, the lawyers who advised them in collaboration cannot represent them in court. A series of four-way meetings follows, involving the clients and their legal representatives, which focus on finding solutions that work for everyone involved. In some situations, a ‘neutral’ third party may be used to suggest solutions to particular problems.
Collaborative law can have significant benefits in appropriate circumstances. Contact <<CONTACT DETAILS>> for more information on using this approach.
Partner Note
There is a good summary in The Legal Executive, February 2008, pp 10 and 11.
Who Doesn’t Need a HIP?
Home Information Packs (HIPs) are now required for most residential properties put on the market, but the list of exceptions to the rule – properties that can be marketed without a HIP – is significant.
The most important exception to the rule that all residential properties need a HIP is that no HIP is required where a property has remained on the market since before the date on which HIPs were introduced for that type of property. These dates are as follows:
1 August 2007 – sales of homes with four or more bedrooms;
10 September 2007 – sales of homes with three or more bedrooms; and
14 December 2007 – sales of homes with one or two bedrooms.
The other main exceptions to the requirement for a HIP are as follows:
residential properties not available for sale with vacant possession (in some circumstances);
seasonal and holiday accommodation (where there is a planning restriction prohibiting continuous occupancy);
where the residential property being marketed is ancillary to (i.e. is intended to be occupied and enjoyed with) one or more other buildings or areas of land used for non-residential purposes. This example would include farm houses on working farms or shops with residential accommodation where the premises are sold as a single unit; or
where the property is unsafe or intended for demolition.
There are other exemptions which apply also. We can help you ensure your property sale or purchase runs as smoothly as possible. Contact <<CONTACT DETAILS>>.
Partner Note
From Progress – Issue 28, 16 January 2008. See
For further information on HIPs, see
Whose Fault is it Anyway?
One of the main problems with working out who is to blame when an accident occurs on a public road is that the legislation which governs roads requires the relevant authority to ‘maintain’ the highway, but not to take steps to make it safe to use as a road. For example, if there is a reverse camber or blind spot and the authority does nothing, then very probably it will not be regarded as having any legal responsibility for an accident resulting from the defect in the road, even if it fails to erect a warning sign.