Month: July 2021

Returning to work – key considerations for employers

  • 30 July 2021
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Employers and employees alike will be well aware that on 19 July 2021 the government lifted its instruction that people should work from home.

If you are an employer, you might now be considering how best to formulate your return to work strategy or even putting it into action. However far along in this process you are, it is inevitable that you will be questioning the safest strategy for your business, employees and customers.

Two of the most frequently asked questions raised by both employees and employers are:

  • Can an employee refuse to return to the workplace?
  • Can an employer enforce a testing/vaccination policy?

This article will address how employers can best interpret the current government guidance (in conjunction with their statutory duties) and the takeaway points from recent Employment Tribunal decisions in this area.

An employer’s duties

Under the Health and Safety at Work etc Act 1974 employers have a statutory duty to provide a safe place of work and are obliged to take all “reasonably practicable” steps to ensure the safety of their workforce. Employers will also owe a duty of care to third parties, such as those visiting their premises.

In order to fulfil these duties in the context of the pandemic, employers should carry out thorough risk assessments to identify and address any risks and generally take steps to keep the workplace safe (such as the continued use of hand sanitisers, distancing measures and regular cleaning). They should also continue to follow any government guidance (as updated from time to time).

By communicating to employees that appropriate measures have been taken to create a COVID-secure workplace (and engaging with them), cautious employees are more likely to feel comfortable about their return.

An employee who refuses to return

An employee’s implied duties include “being ready and willing to work” and accepting “reasonable instructions”. If an employer has created a COVID-secure workplace, they can reasonably expect their employees to return; indeed, employers who have conducted a thorough risk assessment and put appropriate safeguards in place will be better placed to insist that staff return.

We would suggest in any event that employers review and update their attendance and absence policies so that employees know what is expected of them and the consequences of non-compliance.

Dealing with employees who refuse to return is a tricky problem to grapple with. Refusals should be dealt with on a case-by-case basis and in particular, employers should communicate with any employee who is refusing to return to understand the reasons for their refusal. If, for example, it is due to an underlying illness or a medical condition of a close relative, insisting they return (or disciplining them if they do not) could give rise to a claim.

Where an employer believes it is appropriate for them to insist that an employee returns to work and the employee continues to resist, it would be prudent for the employer to consider all options (such as unpaid leave or flexible working arrangements) in the first instance. If alternative options are not acceptable to the employee or are not possible for the employer and in the absence of any mitigating circumstances, a refusal to co-operate with the return to work strategy could be dealt with under the company’s disciplinary procedures.

However, the decision to enter into a disciplinary procedure should not be taken lightly and an employer should always be aware of any additional legal protection which may be afforded to the employee, such as those associated with a whistleblowing disclosure.

Where an employee is viewed as disabled in the context of the Equality Act 2010 an employer is further obligated to make reasonable adjustments to enable the employee to fulfil their duties despite their disability. Failure to do so could result in a discrimination and/or a constructive unfair dismissal claim against the employer.

Testing and vaccinations

Employers may ask their staff to be tested for COVID-19 on the basis they are considering the health and safety of other employees, customers and so on. If an employee unreasonably refuses to take a test, their employer could take disciplinary action.

Vaccinations are however, a different matter and it will not generally be possible to insist that staff receive a COVID-19 vaccination, especially if there are health or religious reasons behind their refusal. There are some exceptions to this but typically these will apply in the health care sector only.

If an employer collects health data (such as test results and whether somebody has been vaccinated) they should remember that such data is afforded enhanced protection under data protection laws. Employers should ensure that their data privacy notice confirms that such data is collected and explains how it will be used.

Employment Tribunal outcomes so far

Recent decisions delivered by the Employment Tribunal have made it clear that every case is fact-sensitive and instances of an employee’s refusal to return to the workplace cannot necessarily all be handled in the same way.

Pivotal facts considered by the Employment Tribunal in finding for the employer in Rodgers v Leeds Laser Cutting included the employee’s conduct and the efforts taken by him to self-isolate and protect himself against the transmission and threat of COVID-19 (in addition to the measures put in place by the employer to create a safe workplace) when determining whether he had a genuine belief that returning to work posed health and safety concerns. However, if he had shown a genuine belief, query whether the outcome would have been different. In Accattatis v Fortuna Group (London) Ltd the Employment Tribunal’s decision (again finding for the employer) was guided by the employee’s unwillingness to accept his employer’s offer of unpaid leave in order to avoid the workplace.

A common theme in both cases (identified by the Employment Tribunal) was the lengths taken by the parties to mitigate the health and safety risks posed by COVID-19.

Disclaimer

This note reflects our opinion and views as of 29 July 2021 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.

Much Ado About Service Charges

  • 30 July 2021
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A recent case (Criterion Buildings Ltd v McKinsey and Co Inc [2021] EWHC 216 (Ch)) has clarified the proper approach to the calculation of service charges in relation to commercial premises. In particular, the apportionment of the service charge between the tenants and the demands for sinking fund contributions was considered.

Apportionment

The issues

Under the terms of the lease, the tenant covenanted to pay a “due proportion” of the total costs of the services and expenses. “Due proportion” was defined as “a fair proportion to be determined by the landlord or the landlord’s surveyors, taking into account the use made of and the benefit received from the services and expenses”.

The tenant argued that the “due proportion” charged by the landlord was not “fair”. The apportionment was based upon the internal floor areas of each lettable unit save for a theatre, in respect of which an 80% discount was applied. This reflected the more limited use of the space demised because, although the theatre was laid out over four levels, most of this was the auditorium and stage area, which were only fully occupied at the bottom level.

Accordingly, the theatre discount increased the burden on the other tenants beyond the proportions that would be produced by using the actual floor areas demised.

The judgment

The judge determined that, whilst the landlord bears the legal burden, the evidential burden was on the tenant to prove that the service charge had been apportioned in an unreasonable manner.

The judge further found that the landlord was entitled to make a subjective (albeit rational) decision as to the division of the service charge. It was not for the court to determine. The landlord could be trusted to make such a decision in this case as it had “no axe to grind”. That is to say, it did not make a financial difference to the landlord as to how the service charge was divided.

Sinking Fund

The tenant failed on the other points it raised relating to set-off, costs relating to a goods lift and a dispute about the sinking fund.

The Issues

In relation to the sinking fund, the lease provided that the landlord shall be entitled to include in the service charge an amount which the landlord reasonably determined was appropriate to build up and maintain a sinking fund and a reserve fund.

The tenant claimed that the landlord had failed to identify the accumulating liabilities and what would be proper for the tenant to contribute, bearing in mind its interest under the lease. As a result, it argued that it did not have to pay.

Further to this, the tenant also claimed that the landlord could not make demands for the tenant to pay into the sinking or reserve fund in the same year as the expenditure took place.

The judgment

The judge stated that there was no requirement for the landlord to give details of how the contributions required for a sinking fund or a reserve fund have been calculated; it simply had to state the amount.

Similarly, the judge found nothing in the terms of the lease which prevented the landlord from making demands for the tenant to pay into the sinking/reserve fund in the same year as the expenditure took place.

Conclusion

This is a favourable judgement for landlords because, in cases where the apportionment of the service charge has no direct bearing on the landlord, they are entitled to apportion the service charge subjectively. However, it is a salutary reminder to tenants to always make enquiries as to the apportionment of the service charge prior to entering into a new lease or taking an assignment of an existing lease.

The Chancery Lane Project – Lawyers taking direct action over climate change

  • 29 July 2021
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Forsters are supporting The Chancery Lane Project – a pro bono collective effort by lawyers to develop new drafting for contracts and laws to help fight climate change.

The Chancery Lane Project is an organisation which is driving direct action in respect of climate change by coming up with standard form green clauses in legal contracts. The rationale being that contracts underpin economic relationships and the inclusion of green clauses will have a more immediate effect than related climate change legislation, which can take a long time to enact.

In commercial transactions the starting point for any negotiation is influenced by custom. If greener clauses become more familiar and we talk about those with our clients, then together we can help create new market norms. Many of our clients have internal climate conscious or carbon reduction policies and environmental risk is increasingly influencing investment decisions, so it makes sense on many levels to tackle this issue.

Real estate – greener drafting?

A lease or development agreement that is completed today may be in place for years to come. Both the embodied carbon and the operational carbon emissions associated with that property can be significantly influenced by the original contracts.

Members of the Forsters Commercial Real Estate team have worked as part of the Chancery Lane Project on various collaborative cross-firm efforts.

This includes:

  • The drafting of model clauses concerned with encouraging sustainable and circular economy principles in carrying out repairs and alterations under leases. These clauses are designed to encourage landlords and tenants alike to reuse existing materials or to use recycled, reclaimed or sustainable materials in carrying out alterations or repair works. The model clauses will also help landlords and tenants to consider the lifespan of a product, design or construction, reducing the amount of waste going to landfill and reliance on natural resources.
  • The drafting of model service charge clauses. It is usually difficult for landlords to recoup the cost of making environmental improvements to a building through the service charge (as service charge costs do not usually extend to improvements unless an item requires renewal as it is beyond economic repair) and this prevents landlords from making their buildings more energy efficient. The model clauses are intended to enable landlords to include improvement of the environmental performance of a building in the service charge costs (where such works are not necessarily required) in a move towards net zero emissions.
  • The provisions also encourage landlords to use sustainable procurement in providing services, promote the use of reused, recycled and reclaimed materials, and enable landlords to install renewable energy solutions and metering to track energy consumption. The clauses will also help landlords to implement a strategy to reduce reliance on natural resources and the amount of waste going to landfill, and encourage co-operation between landlords and tenants to maximise energy efficiency of buildings.
  • Attending the Chancery Lane Project’s “Real Estate: Built Environment” event series to collaborate on developing clauses that support the built environment’s transition to net zero emissions. The clauses discussed fell under the following principle themes: investment (commercial and residential), development and lending.

Action achieved so far

In the first year of the project a total of 5,000 pro bono hours have been donated (worth about one and a half million pounds in fees) and 115 organisations have been involved across 60 countries.

Download a PDF version of this article

Our Sustainability Hub

Our sustainability hub brings together the team’s insights and legal expertise on a broad range of environmental matters that affect our clients’ business and personal affairs. This is a rapidly evolving and wide-ranging area of law and we will continue to share our insights about related legal developments on this hub.

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What is divorce mediation? Jo Edwards explains all in Spear’s Magazine

  • 27 July 2021
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Head of Family, Jo Edwards, answers the most common questions about divorce mediation in an interview with Spear’s. Jo explains the process of divorce mediation and how it can help families avoid contention.

The article, entitled ‘What is divorce mediation‘, was first published in Spear’s on 23 July 2021 and can be read in full below.

Innovative dispute resolution is an integral part of Jo’s practice and many HNW clients instruct Jo as a mediator in an attempt to find a tailored solution away from the glare of media attention that court proceedings can bring.

Jo is recognised as an industry leader in Family Mediation as demonstrated by her inclusion in the ‘Spotlight Table’ of the Family/Matrimonial: Mediators list of the latest Chambers HNW Guide.

Family law can involve sensitive issues such as relationship breakdown and children, so the courts are not necessarily the best place to resolve them. Divorce mediation, therefore, is designed to help families come to an amicable agreement outside of the justice system. Forsters’ Jo Edwards explains why the process helps families avoid contention.

What is divorce mediation?

Mediation involves a divorcing couple appointing a third party (a mediator) to intervene in a dispute in order to try and resolve it outside of court. They are seeking to avoid litigation – the process of taking legal action. The issues discussed could be anything that arises from a relationship breakdown, including shared finances and children.

Divorce mediation is a voluntary process – it cannot be ordered by the court (although the court can suggest that a couple explore mediation). It is also, crucially, a confidential and privileged process, says Forsters solicitor Jo Edwards.

‘The couple is effectively coming into a safe space,’ she says. ‘Even if court proceedings are going on in the background and the couple are wary of sharing their hand, thinking [their spouse’s] solicitor is going to rely on this… I can say to them, no, this isn’t up for discussion in solicitor correspondence or in court.’

The ‘safe space’ allows couples to brainstorm solutions to their disputes without fear that anything they say will be held against them in legal proceedings, which in turn allows them to come to agreements that they might not have otherwise been able to.

For example, Edwards is currently conducting mediation with a couple who are having difficulties over children arrangements. There’s litigation ongoing, but through mediation they are exploring the possibility of international relocation.

‘Had they just carried on in litigation, I don’t think that would ever have been explored. In mediation they can be a bit more creative and look at different avenues, knowing that if those avenues come to nothing, they’re not going to be hit with that in the court process.’

The first benefit of mediation is that it provides couples with the freedom and autonomy to be creative in finding solutions, and therefore often yields better outcomes than the court process.

With divorce mediation, you can also ‘road test’ arrangements. For example, if a couple is thinking about having alternative weekends with their child after divorce, or trying to figure out what interim maintenance payments are appropriate, they can try it out before committing to anything.

‘Court is quite a blunt tool,’ says Edwards. ‘A judgment is imposed and that’s it. Through mediation I can say to couples, why don’t you go away for a month and see how this goes on the ground, and then come back to me? And if we need to tweak it, we can tweak it.’

Some people worry that they are legally unsupported through the mediation process, but this is not the case. Lawyer-inclusive mediation is becoming a lot more prevalent, and even if solicitors aren’t physically present, Edwards will always stop her clients and let them know whether they should seek legal advice on a particular point. Plus, crucially, any agreement reached in mediation isn’t binding until the couple wants to be.

Finally, avoiding entering the chronically overstretched court system saves a huge amount of time (and money). ‘The family justice system is absolutely creaking at the seams, and it’s gotten worse with the pandemic,’ says Edwards. ‘I’m seeing my clients having to wait months and months for their first hearing.’

Who should use divorce mediation?

Edwards heartily recommends mediation in almost all cases and wants to remind people that it’s never too late to mediate’ – even if court proceedings are already underway. ‘There was one couple about three weeks away from a contested final hearing, and they came to me for mediation and made significant progress in narrowing issues.’

There are, however, instances where mediation might not be appropriate. For example, mediation would not work in cases where there has been domestic abuse. This is firstly due to concerns about the safety of bringing the couple together, although this is ameliorated slightly in the digital age where mediation is being conducted over video call. But there may still be issues over the imbalance of bargaining power.

Edwards also ‘wouldn’t do mediation where there are issues of children’s welfare and safeguarding’, due to the need for other bodies and agencies to weigh in.

‘On the money side of it,’ Edwards continues, ‘if I had any concerns that [one of the couple] hadn’t been honest in their financial disclosure, I’d consider whether mediation is the right process. Complete transparency and openness are key.’

Within mediation, she explains, there is no power to compel somebody to produce financial disclosure, so if a spouse is unwilling to do this voluntarily, she will not take on that mediation. ‘It’s not an opportunity to try to avoid your duty of full and frank financial disclosure.’

How much does mediation cost?

The cost of divorce mediation depends on how long the process takes. On average, issues will take three to five sessions of 90 minutes to 2 hours hours to resolve. If couples have multiple issues to discuss, like children and finances, then it may take longer.

The length of a mediation will also depend on what stage in proceedings the couple are at when they start. Some may embark upon mediation as their first port of call, whilst others will have spoken to solicitors, done financial disclosure, and ‘really want to get down to the nuts and bolts of negotiations when they come to see me’, says Edwards.

Most mediators charge an hourly rate which, for London law firms serving HNW clients, can range between £350-£550 per hour.

‘But there is a lot of work I do in mediation that I don’t charge clients for, like screening intake calls at the start, routine emails back and forth. I charge for the mediation sessions themselves and any summaries,’ says Edwards.

‘What I can say, hand on heart, is that [mediation] is considerably cheaper than contested litigation, which can run on for over 18 months with all the associated costs, both financial and emotional,’ she continues.

What happens if mediation fails?

Other measures to stay out of court include private FDRs (financial dispute resolution) – these are non-binding indications of what the financial outcome of a case will be should it go to litigation, and can go a long way in informing a couple as to whether it’s worth it.

‘If [mediation] is really not going to work, I will always signpost on to arbitration,’ says Edwards. Arbitration also keeps disputes out of the courts, but is a different process. Both parties put their case to an independent person called an arbitrator, who will then come down on one side or the other.

Forward-Thinking Approaches to Divorce and Separation

Coming to a decision to separate or divorce is difficult and often distressing. For many, the process that lies ahead is a mystery and it is assumed that it will be confrontational and drawn-out. However, there is in fact a wide range of forward-thinking, constructive approaches to resolving the issues flowing from your divorce or separation.

Anna Mullins writes for the Property Law Journal on the Telecommunications Infrastructure consultation

  • 26 July 2021
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Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Property Litigation Senior Associate, Anna Mullins, writes for the Property Law Journal examining the governments recent consultation on the Telecommunications Infrastructure (Leasehold Property) Act.

Anna considers the proposals in the article entitled Telecommunications infrastructure: Further consultation’.

This article was first published in Property Law Journal and is also available at lawjournals.co.uk.

Elizabeth Small writes for Tax Journal on NRSDLT

  • 26 July 2021
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Tax Partner, Elizabeth Small, has authored an article for Tax Journal entitled ‘FA 2021: SDLT – increased rates for non-residents‘.

The article was first published on Tax Journal on 15 July 2021 and can be read in full below.

FA 2021: SDLT – increased rates for non-residents

After the NRCGT comes the NRSDLT

Once we had NRCGT it seemed inevitable that NRSDLT (the 2% surcharge regime) for non-UK tax residents buying residential property would be introduced. Of course (as we know), NRCGT started off as only being applicable to residential property, but the scope was changed in 2019 to include commercial property, so perhaps it is not totally idle speculation to assume the same might happen with NRSDLT.

Because NRSDLT is a surcharge like the higher rates for additional dwellings (HRAD), it is easy to assume that the rules are similar in their application but there are differences. HRAD does not apply to rent, but NRSDLT does, which means even a modest ground rent on a long lease will attract the 2% surcharge (perhaps not significant in terms of client cashflow, but important for accurate filing of returns).

HRAD may not apply on a mixed purchase of a block of flats with commercial property on the ground floor, but NRSDLT would. HRAD has exceptions including replacement of main home and also on divorce/separation; NRSDLT does not.

NRSDLT requires the taxpayer to consider where they are tax resident for these rules and that places a great burden on conveyancers or the risk of making assumptions that may prove to be inaccurate (especially for company purchasers). The non-resident individual, if they then move to the UK and spend the requisite 183 days in the year after the effective date, can reclaim their SDLT. Timing will be crucial. Many people will have substantially performed their purchase rather than waiting for formal completion to beat the 30 June deadline, so their clock will start ticking early. The clock also starts ticking early where an option fee is paid and the option is exercised more than a year later while the buyer is still non-resident, as in those circumstances whilst NRSDLT may become reclaimable on the exercise price the grant fee will be trapped in the NRSDLT regime. Unlikely to be of significant cashflow importance but irritating and resulting in unnecessarily complicated calculations.

One important concept that NRSDLT shares with HRAD (and other SDLT regime changes) is that of grandfathering of old contracts and the importance of being aware of the transitional rules – so proceed with extreme caution when dealing with old contracts.

Elizabeth is a Partner in our Tax team.

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Transport Decarbonisation Plan – Key Take-Aways for Logistics

  • 23 July 2021
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The Government has published its most recent plan to decarbonise the transport system in the UK. “Decarbonising Transport: A Better, Greener Britain” (the TDP) is intended to be a “greenprint” for the UK’s road to a net zero transport industry by 2050. The publication of the plan is particularly timely given that the UK will be hosting the UN Climate Change Conference (COP26) in Glasgow later this year.

The key points in the TDP from a logistics perspective are:

Phase out of polluting vehicles

The intention is for the sale of new petrol and diesel HGVs to end by 2040 (or 2035 for HGVs under 26 tonnes). This timeline is, however, subject to public consultation, which opened at the same time as the publication of the TDP.

Incentives to decarbonise

The Government has committed to providing a package of financial and non-financial incentives to accelerate the move towards a greener logistics industry, including in relation to the use of zero emission trucks. Whilst no new schemes are announced, the TDP refers to the grants that are already available for specific truck models that cover 20% of the purchase price (up to a maximum of £16,000). It is unclear, however, how long these existing grants will be available for and what other incentives might be announced in the future.

Shift to alternative delivery methods

One of the clear themes in the TDP is the intention to move away from road and aviation haulage towards more environmentally-friendly options, including rail and inland waterways. According to 2019 Department for Transport statistics, 18% of road transport emissions are attributable to HGVs and therefore this modal shift is intended to address the corresponding environmental impact.

The TDP has been broadly welcomed by many in the industry. This includes the Director of Policy at Logistics UK, who has welcomed the “confidence and clarity” that the plan will provide to logistics businesses on the next steps they will need to take on the road to net zero.

Nevertheless, the TDP still presents a number of potential challenges for developers and operators of logistics warehouses, including:

Level of technology

Whilst the TDP mentions that zero emission trucks are already entering into the market, these vehicles are still in the infancy of their development. The TDP specifically refers to the DAF LF Electric truck as a case study, which has a 175-mile range on a single charge. Clearly, the range of these vehicles will need to significantly increase before they are adopted wholesale across the industry for long-distance deliveries.

Cost

One of the main concerns regarding the TDP is who will pay for the decarbonisation agenda, especially once current financial incentives are tightened. The higher cost of green technologies compared to their fossil fuel counterparts has, of course, been a significant constraint for the adoption of green technologies across society and clearly the cost of greener delivery vehicles will still be a barrier for many businesses for some time to come. The adoption of electric- or even hydrogen-powered HGVs will also mean that existing fleets will depreciate in value, which presents an additional cost to businesses.

Infrastructure

The use of greener HGVs will require logistics warehouses to have in-built electric charging points. This will have an impact on the cost and complexity of warehouses, which will need to be factored into the development of new sites and the retrofitting of existing buildings. The installation of electric charging points will also put pressure on the national grid infrastructure, particularly in concentrated locations where a number of logistics warehouses are based.

Location

The adoption of alternative methods of freight will also affect developers’ decisions over where they acquire land for development going forward. Warehouses will need to be built closer to existing rail networks and waterways in order for the TDP’s modal shift away from road haulage to be successful. Tesco’s recent £5 million investment into their rail delivery network may be a sign of things to come in this area.

For additional insight and commentary on sustainability and the wider topic of ESG, please visit our dedicated, cross-industry Sustainability and ESG hub.

Dan is an Associate in our Construction team.

Our sustainability hub

Our sustainability hub brings together the team’s insights and legal expertise on a broad range of environmental matters that affect our clients’ business and personal affairs. This is a rapidly evolving and wide-ranging area of law and we will continue to share our insights about related legal developments on this hub.

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Forsters retains top band Private Wealth status with a record number of lawyers recognised in Chambers 2021 HNW Guide

  • 23 July 2021
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Forsters continues to be recognised as one of London’s leading Private Wealth law firms as it retains its band one ranking in the 2021 Guide. This year’s guide acknowledges the team’s unparalleled next generation talent with new listings for young partners and up and coming senior associates.

Following extensive independent research and analysis, the 2021 Chambers Guide to the Leading High Net Worth lawyers was published on 22 July 2021. The industry’s recognised guide, describes Forsters as “an excellent team, [who] are responsive, proactive and easy to deal with” whilst one market insider comments that: “We often go to Forsters on high-value and complex cross-border matters. They’re a really technical group and clients often enjoy working with them.”

The guide also recognises Forsters’ breadth of specialisms within Private Wealth with continued strong rankings for Private Wealth Disputes, Family and High Value Residential.

This year we saw a record number of our lawyers recognised in the guide, with 20 Partners ranked and two Associates listed as ones to watch. Our ‘foreign experts’ in Singapore and United Arab Emirates continue to be acknowledged, alongside our Family team’s mediation practice with Jo Edwards‘ inclusion in the ‘Spotlight Table’ of the Family/Matrimonial: Mediators list.

A particular highlight this year, is the inclusion of many of our next generation lawyers, including “Up and Coming” Partner, Emma White, recognised for her expertise in US-related matters Senior Associate Charlotte Evens-Tipping and Family Senior Associate, Dickon Ceadel.

The Life Cycle of Family Wealth

From growing a business to starting a family or handing over control of that business to the next generation, every individual has their own goals to aspire to. Our Private Wealth lawyers advise our clients throughout this family life cycle, providing the legal advice required for specific transactions such as purchasing a home or selling a business, whilst also advising on the long-term opportunities for succession and estate planning.

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Michael Armstrong and John FitzGerald receive the STEP Excellence Award

  • 22 July 2021
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We are delighted to announce that Private Client Senior Associates, John FitzGerald and Michael Armstrong, have received STEP Excellence Awards.

  • John FitzGerald has received the STEP Excellence Award for his Advanced Certificate in UK Tax for International Clients. This acknowledgement is particularly special given that it was John’s final exam and he has now officially been admitted to STEP.
  • Michael Armstrong has received the STEP Excellence Award for his Advanced Certificate in Advising Vulnerable Clients. Despite having already completed his diploma and being admitted to STEP, Michael commendably decided to take this additional exam to further develop his expertise in advising on mental capacity issues.

The STEP Excellence Award is given to the top scoring student at distinction level in each of the STEP exams worldwide each year.

The Life Cycle of Family Wealth

From growing a business to starting a family or handing over control of that business to the next generation, every individual has their own goals to aspire to. Our Private Wealth lawyers advise our clients throughout this family life cycle, providing the legal advice required for specific transactions such as purchasing a home or selling a business, whilst also advising on the long-term opportunities for succession and estate planning.

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A resilient outlook for the UK property market in some sectors

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Your guide to US-UK cross-border planning

Understand the issues, avoid the traps, and discover ways to plan ahead in our Navigating the Atlantic guide for US-connected individuals and families.

How we can help

Property experts from across the industry agree that while many areas of the UK residential property market are slowing in light of recently increased costs of finance and wider political concerns in general, trophy assets continue to be a popular with international buyers, both as a place to call home and for investment purposes.  For US buyers, demand for UK residential property, and London in particular, has proved notably resilient. While recent changes to the UK’s non‑dom regime have prompted some international purchasers to reassess their position, US buyers have generally been less impacted. In Prime Central London, US buyers continue to be drawn to high‑quality apartments, period houses and landmark developments that combine heritage value with modern living, with schemes such as The Whiteley and 1 Mayfair attracting American buyers seeking a London home to live in when spending time in the UK, whether or not they ultimately relocate here. Given the new FIG regime, there has also been a marked increase in interest in renting super prime properties, particularly given the Stamp Duty Land Tax and Inheritance Tax implications of owning a property.

Potential political changes

Despite tax changes, it is hoped that Prime Central London property will remain attractive to foreign purchasers given values today in some cases are 25% down on pre-Brexit prices in real value terms making for a good long-term investment, this is in spite of changes over the years to SDLT, which have included:

  • The introduction of a surcharge of 2% for non-UK resident purchasers completing on purchases from 1 April 2021.
  • A surcharge of 3% introduced in April 2016 for purchasers who already owned a residential property anywhere in the world (and were not replacing their main residence) at the time of completion.
  • An increase in the above 3% rate to 5% introduced on 31 October 2024.
  • A “high value council tax surcharge” to be implemented in April 2028, which will lead to a charge of between £2,500-£7,500 p.a. for properties over £2m.

This means that SDLT rates for individual purchasers can now be as high as 19%.

Particular interest from the US

In terms of the international marketplace, Knight Frank continue to see steady interest from US-based buyers, with demand coming from established wealth centres across both the East and West Coast. While some buyers have repositioned domestically in recent years, prime city markets are showing renewed resilience, particularly where supply remains limited and pricing has adjusted.

Jason Mansfield of Knight Frank, Head of US Residential comments: 

“Although we support clients with their property needs across the United States, New York remains the primary destination for many of our international buyers. Despite broader economic uncertainty, pricing has held steady, rental values continue to rise, and constrained inventory is underpinning overall resilience. Demand remains diverse, and the city continues to provide the long‑term stability and depth that many of our clients seek.

Los Angeles is also demonstrating notable resilience at the top end of the market. While the past year brought meaningful challenges – including tax changes, higher insurance costs and the impact of last year’s fires – activity has remained robust. Sales above $30 million have been strong, and although some buyers initially explored moves to lower‑tax states during Covid, many are now returning. Pricing is becoming more realistic, new wealth segments are active, and several key neighbourhoods appear well positioned as we move through this year.”

Comparatively, the UK still remains attractive due to its lower holding costs, the current low exchange rate, a great education system and other niche factors. We are, for example, seeing instructions from US clients with an interest in British history, acquiring diverse properties from listed country estates to apartments in very high end Central London conversions where the historical importance of the property is a unique draw. These attractions are however increasingly set against concerns over high borrowing costs both for owner occupiers and those with investment properties, particularly as these rising costs cannot be offset against income tax.

Paddy Dring of Knight Frank, Global Head of Prime Sales and Private Office comments on Americans in London:

“In recent years, the profile of international buyers in Prime Central London has shifted subtly, reflecting a market attuned to wider global dynamics. Americans have strengthened their position as the leading overseas purchaser group, rising from 9.4% in 2023 to 13.1% in 2025. Demand from China has eased slightly – from 10.9% to 8.6% – while interest from France and Italy has fluctuated but remained consistently engaged, underpinning an ongoing appetite for lifestyle-driven acquisitions.

Taken together, these movements point to a market that is recalibrating around buyers who prioritise stability, quality, and long term fundamentals. Despite geopolitical uncertainty and evolving tax environments worldwide, London continues to stand out for its transparency, liquidity and reliability – attributes that international purchasers consistently value. These qualities reinforce its status as a steady anchor within the global luxury landscape.”

UK-US cross border issues

Against this backdrop it is important to draw attention to the specific US-UK cross border issues that may arise from US connected persons owning UK property. It is essential to incorporate these UK assets into an individual or family’s wider tax, estate and wealth plans.

We explain some of the key crossborder issues at play and reveal the planning options available to protect against these risks.

Disclaimer

This article reflects the law as of 20 July 2026. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.

Asset protection considerations

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Your guide to US-UK cross-border planning

Understand the issues, avoid the traps, and discover ways to plan ahead in our Navigating the Atlantic guide for US-connected individuals and families.

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Use of trusts

While the use of trusts to hold UK residential property can potentially offer some degree of asset protection when compared to outright personal ownership, this protection may not be as robust as clients would like. In the event of a divorce, for instance, trust assets can be considered a financial resource available to the spouse who is a beneficiary (although this will depend on the terms of trust, distribution patterns, etc.) and the trust may even be treated as a “nuptial settlement” if it is settled by one or both of the couple, or by a third party for their benefit. If a court finds the trust is a nuptial settlement (which is comparatively rare but not unheard of) it will have extensive powers to change the terms of the trust, remove/replace trustees, order distributions, etc. This is in stark contrast to the position in the US, where trusts are generally robust and immune from variation.

The use of trusts might also be unattractive from a tax perspective. For instance, the value of the property would suffer an IHT charge of up to 6% every ten years while it was held in trust. The property would also continue to form part of the estate of the settlor (so be subject to IHT on his or her death) unless he or she was irrevocably excluded from benefit. Excluding the settlor from benefit is unlikely to be practical if he or she wishes to occupy the property. Furthermore, holding the property in trust would give rise to reporting obligations for the trustees, who would need to report the existence of the trust and details of its beneficiaries to HMRC through the Trust Registration Service.

As a result, there will only be very limited scenarios in which trust ownership will be appealing. Generally speaking, direct personal ownership will be the preferred route for the family home.

Protecting assets from separation or divorce – Dickon Ceadal, Family Partner:

Nuptial agreements

A pre-nuptial or post-nuptial agreement offers the best degree of protection for UK property on divorce. Parties are able to define marital property (which is to be shared) and separate property (to be ringfenced) on divorce and can also seek to prescribe levels of maintenance payable on separation. Whilst pre-nups are not automatically enforceable in England and Wales, provided the agreement meets the parties’ respective needs, and those of any children, its terms should generally be upheld.

There are many reasons why people have a nuptial agreement, including;

(i) if there is an actual or expected disparity between the wealth of the spouses;
(ii) there are assets which have been in one of the couple’s families for generations that they would like to protect on divorce, in order that future generations can benefit and
(iii) if it is not a first marriage and a party wants to preserve assets for children of a previous marriage.

The aim of nuptial agreements is to provide certainty and security if the marriage did breakdown, and more power to a couple to make arrangements for the future, rather than leaving everything to be determined by the court. Above all else, a pre-nuptial or post-nuptial agreement can save acrimony and potentially significant costs if there were a divorce in the future.

Pre-nups and post-nups will be familiar territory to many US-connected clients, but there are some additional considerations and differences that they will need to be aware of on moving from the US to the UK. English nuptial agreements are not automatically enforceable like pre-nups in the US, but are instead afforded differing weight depending on a number of factors. Case law states that the starting point is that nuptial agreements should be upheld so long as they must meet certain conditions including;

(i) the agreement been entered into freely;
(ii) each party has taken independent legal advice;
(iii) there has been full financial disclosure by both parties; and
(iv) agreement is fair. This element of fairness is the second main differentiator between UK and US pre-nups; if a US pre-nup is in place, it must satisfy the principles of fairness to be upheld in England.

It would be wise for any clients that are moving from the US to the UK to have their arrangements reviewed by a specialist English family lawyer and revised or supplemented, if necessary, to provide more robust protection against claims on divorce. Alternatively, if a nuptial agreement is not in place, a move to the UK or an investment in UK property may provide the impetus to negotiate a post-nup.

Cohabitation

There can also be a risk of claims against property on the separation of unmarried cohabitees. While cohabiting couples currently have no automatic legal status on separation, (there is no such thing as common law marriage in England), there are a number of means through which one party can make a claim against the other with respect to property. Moreover, in their 2024 Manifesto the Labour Government pledged to strengthen the rights and protections of those in unmarried relationships and a consultation is underway. It is therefore notable that the law is liable to change in this area.

However, as things stand in England and Wales, cohabitation is a patchwork quilt of potential claims that can call on various different areas of law, including property, family, trust and children law, to make a claim.

For example;

a) Claims for the benefit of children – The court could make a settlement or transfer of property order, to provide a home for the child for their minority (NB: Any capital awarded to purchase a property is likely to be held in trust until the child’s majority or the end of full-time education, when it will revert to the payer).
b) Trusts of land – One party may be able to rely on actions during the course of a relationship (e.g. conversations, oral agreements, regular payments towards outgoings in relation to the property etc.) to establish a beneficial interest pursuant to an implied, resulting or constructive trust. The latter is most relevant in the domestic context. Alternatively, a party can rely on proprietary estoppel to claim a beneficial interest.

They must show:

(i) an assurance on the part of the other party (e.g. leading them to believe they will have some right in relation to the property)
(ii) that they relied on the assurance to their detriment; and
(iii) that it would be unconscionable for the other party to deny them the right they expected to have.

Cohabitation agreements can protect against these risks. They allow parties to regulate the terms of their cohabitation, providing clarity both during the course of the relationship and in the event that it should break down.

The agreement would incorporate or be accompanied by a declaration of trust in relation to any real property, confirming the parties’ respective beneficial interests. The agreement can also deal with a wider range of issues, including how household expenses are to be split; what happens if one party wishes to sell the property and the other does not; financial support during and after cohabitation; and living arrangements and financial provision for children.

Security and clarity of such a kind is extremely beneficial to a couple if the relationship breaks down in the future.

Conclusion – How we can help

The UK and London in particular remains a leading destination of choice for wealthy international families.

While there will often be additional challenges for US-connected clients, these can be navigated with the right team on board. Our private client team have UK-US cross border specialists experienced at guiding US connected clients through their planning. Along with our strong network of expert contacts, we are on hand to provide comprehensive support.

Want to know more?

Speak to our team of expert lawyers

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Nuptial agreements

The Forsters Family team share their insights and guidance on pre-nups and post-nups.

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Tax and estate planning considerations

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Your guide to US-UK cross-border planning

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Exposure to UK inheritance tax

The acquisition of UK real estate by a person who is not a ‘long term resident’ of the UK (LTR) will always come with an increased exposure to UK inheritance tax (IHT). The value of UK property in a person’s estate will be subject to IHT at a flat rate of 40% on death if and to the extent that it exceeds the deceased’s available ‘nil rate band’ amount of up to £325,000. This may come as a shock to clients from the US, where the amount that can pass free of Federal estate tax is $15m in 2026!

In the past, individuals who were only exposed to IHT on UK assets would have been advised to acquire UK real estate through a non-UK registered holding company, which would serve as a “situs blocker” and protected the value of the property from IHT. However, following the introduction of anti-avoidance legislation in April 2017, shares in a non-UK registered company will now be treated as UK assets for IHT purposes (so will be exposed to IHT, regardless of the deceased owner’s LTR status) if and to the extent that their value reflects the value of underlying UK residential property interests.

Taking out a mortgage

The options for mitigating this IHT exposure are now very limited. In most cases, the only option will be to purchase the property with the benefit of a commercial mortgage, which should be deductible against the value of the property for IHT purposes. Of course, this comes at the cost of paying interest to the lender, and whether this is worthwhile will vary from case to case.

Where US persons are taking out mortgages to fund purchases, there are some extra considerations to be taken into account.

Borrowing from individuals (e.g. friends or family) or non-UK resident trusts offers less IHT protection when viewed holistically because, although the debt should be deductible from the borrower’s estate for IHT purposes (subject to various legislative conditions being met), the benefit of the debt will be subject to IHT in the lender’s hands. This was another of the changes introduced in April 2017.

As explained by James Rose, a Private Banker at Coutts & Co:

“For US people, getting a UK mortgage can present a number of issues. Many banks will struggle to lend to people whose income isn’t denominated in GBP and will want to see the income being received into a UK bank account. These issues are further amplified for HNW individuals, who are often not salaried individuals but instead have complex income streams. In these circumstances, it may be better to find a lender who can adopt a more pragmatic approach and potentially consider the client’s wider asset base to support the application. Furthermore, while many US clients may want to consider taking an Interest-Only mortgage for tax planning purposes, a number of changes to mortgage regulations over the last decade mean that few banks are willing to offer these any more. Nonetheless, US clients should be careful about taking a “flexible” mortgage product (such as those which you repay and redraw) and should seek specific tax advice as these products can have unintended US tax consequences as well. Overall, it is worth looking for a Private Bank or specialist mortgage lender who can take into account more complex client circumstances as well as engaging with a tax adviser who understands both countries “tax regimes.”

Life insurance

Given the limited scope for IHT planning and increasing cost of mortgages driven by higher interest rates, many clients will choose to accept the IHT burden and, instead, take out life insurance to cover the liability that will arise on their death. If they do this, they should be advised to take out the policy through a life insurance trust (or assign the benefit of the policy to a trust) to prevent the proceeds themselves being subject to IHT.

Christiaan van den Hout of Vie International explains that:

“US clients may already be familiar with holding life insurance as a financial planning tool.

If a US person has relocated to the UK, life insurance policies will now need to deliver a solution that is effective from a tax, legal and payout perspective considering both UK and US jurisdictions.

We find that clients who already hold life insurance policies benefit from a policy review to ensure the design and structuring is still in their best interest.

Several highly rated US domestic insurers will accept overseas residents, including both US citizens and also non-US citizens with US ties.

Policy design, funding and structuring options are flexible so the clients’ needs are well served, particularly for the buyers of London’s most sought after and valuable homes.

A US sourced policy, designed and structured in a dual UK/US compliant trust can deliver robust protection and value for US-connected clients, while providing financial clarity that there is a plan to settle their UK inheritance tax liability in a timely and tax efficient manner.”

But US citizens and residents will also need to ensure that the trusts they create will take the form of US irrevocable life insurance trusts (“ILITs”).

Dina Kapur Sanna of Day Pitney LLP comments that:

“Assuming the ILIT is properly drafted and administered, at the death of the donor-insured, the insurance proceeds will not be includable in the insured’s taxable estate and will also be exempt from income taxes.

If an insurance policy is transferred to the trust or purchased by the trust and is completely owned by the trust, cash gifts can be made to the trust each year to pay the premiums without the ownership of the insurance being attributed to the insured. This can keep the full death benefit of the policy out of the estate of both the insured and the surviving spouse; provided, however, if the policy is transferred to the trust, there is a 3-year survival requirement for the proceeds to escape estate tax on the death of the donor.

The gifts to the trust can be designed to qualify for the $19,000 annual gift tax exclusion through what are sometimes called “Crummey” withdrawal powers exercisable by the beneficiaries (usually the spouse and children, or in the case of a two-life policy, by children and more remote descendants).

It should be noted that, if life insurance is taken out with the express purpose of paying off a mortgage, the ILIT will not protect it from US estate tax. The ILIT must be independent of the residential purchase, and the death benefit must be paid to the beneficiaries (not the bank) after the death of the insured.”

Wills

Clients who acquire UK real estate should also be advised to consider putting in place a UK will. For married couples, the UK will should be structured in a way that allows access to the spouse exemption from IHT, so the tax liability can be deferred until the second death. While this can potentially be achieved in a foreign will, the added benefit of having a UK will in place is to facilitate the administration of the UK estate on death.

In particular, to obtain probate of a foreign (e.g. US) will in the UK, the Probate Registry will require an affidavit of foreign law (provided by US counsel) confirming the validity of the will as a matter of local law and who is entitled to administer the estate. This gives rise to an additional administrative hurdle (and associated costs) for the executors that would not arise if there was a local will in place. Having said that, if primary probate is granted in the US, the Probate Registry will generally accept a court-exemplified copy of the US will to probate in the UK without an affidavit. But this option has its own disadvantages, including the inevitable delay in administering the UK assets.

Capital gains tax on the family home

For UK capital gains tax (CGT) purposes, gains realised on the disposal of a person’s main home benefit from 100% relief, assuming the property has been that person’s main home throughout the period of ownership. This is not the case for US income tax purposes, where only the first $250,000 will be exempt and the balance will be subject to tax. This US tax overlay can cause the UK relief to be wasted.

Therefore, in the case of a couple with one US spouse and one non-US spouse, it will generally be most tax efficient for the main home to be owned solely by the non-US spouse. But where the US spouse is funding the acquisition of the property, it’s not that simple! Due to the absence of an unlimited spousal exemption from US gift tax on gifts to non-US citizen spouses, the gift itself could have adverse US transfer tax consequences. To address this, the US spouse might consider making annual gifts of fractional interests in the property to the non-US spouse. Under current rules, the US spouse can make gifts of up to $194,000 to the non-US spouse each year free of US Federal gift tax. These regular gifts scan add up over time to improve the CGT position.

Forsters advises Barwood Capital and Bridges Fund Management on the acquisition of a proposed £20m net zero carbon urban logistics scheme

  • 19 July 2021
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Forsters has advised Barwood Capital (“Barwood”) and Bridges Fund Management (“Bridges) on the purchase of the former John Nike Leisuresport Ice Rink in Bracknell for the development of a new £20m logistics scheme.

Barwood will act as Development Manager and are looking to deliver highly sustainable net zero carbon, BREEAM Excellent and EPCA+ specification warehouses at the 3.34 acre site.

Edward Henson, Director and Head of Transactions at Barwood Capital, comments: “Following the closure of the Ice Rink, we are delighted to be bringing this site back into use. Local businesses in Bracknell seeking warehousing space currently have limited options. Our plan is to deliver in the region of 70,000 sq. ft. of industrial space through the proposed new scheme which will go some way to meeting this demand.”

Henry Pepper, Investment Director at Bridges Fund Management, adds: “This well-located site can be positioned to meet strong local demand for industrial and logistics. Together with Barwood, we will draw on our extensive experience of developing best-in-class low-carbon logistics sites to create a scheme which is both energy-efficient and highly sustainable in its operation.”

Commercial Real Estate Partner, Victoria Towers, led on this transaction, assisted by Senior Associate, Jade Capper.

How Can Family Offices Facilitate A Family Governance Exercise? Nick Jacob writes for IFC Review

  • 7 July 2021
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Private Client Partner, Nick Jacob, has authored an article entitled ‘How Can Family Offices Facilitate A Family Governance Exercise?’.

The article was first published in IFC Review on 23 June 2021 and can be read in full below.

Facilitation is the key word. Family Offices (FOs) come in all shapes and sizes. Many are set up purely for investment purposes, but an increasing number of FOs are set up to carry out a much wider array of tasks for the family. A family that fails to plan puts at risk the business and wealth that often has been created with great diligence.

There is a good deal of confusion over what “Family Office Services” really are, compared with “Family Governance” (FG). Family Office Services relate to the services provided by FOs to the family for whom they work. Many do provide services to the business but that is not generally the function of an FO, save perhaps for seeking and co-ordinating external advice for the business. FG is the process whereby planned succession of the family business and wealth is transitioned from generation to generation in a structured and organised manner and in a manner that is likely to hold the family together rather than split it apart. The two are very different, yet strongly connected.

The fundamental problem that exists in the FG arena is the time and commitment needed by family members. One of the early questions I ask families is whether they have the appetite to give the time and commitment the process needs. If they don’t, they will find the process unsatisfactory as it is the process itself that is so important to the family. Most entrepreneurs are busy people with a great determination to succeed. However, when you question them as to what they are succeeding for, it is often clear that they wish to leave a legacy. However, they often don’t give that wish the time it needs to plan that legacy. That is where the FO can come in to facilitate that process.

That’s the theory, at least. Can it work in practice? Let’s ask a few questions:

  • Will the officers in the FO have the skills to manage a Family Governance (FG) exercise with external advisers?
  • Will they prevent the external adviser getting “under the skin” of the family members, which is crucial to do a meaningful exercise?
  • How aware of the psychological aspects of FG will the FO officers be?
  • How helpful can they be in supplying information to the external adviser?
  • Will they actually “get in the way” of the external adviser conveying important messages to the family members?
  • Can they facilitate the involvement of the younger generation?
  • Can they co-ordinate arrangements with family members scattered around the world?

What are the answers?

The aggregate effect of these questions is that, in my view, the FO officers can be an enormous help to the family and the external advisers, but the family should ideally not hide behind them as their own involvement is crucial. The ability of the FG external adviser to understand the psychology of the family is often not recognised adequately but that, too, is crucial.

I was once asked by an FO if I could provide my “template” for them to implement an FG arrangement. There was a fundamental misunderstanding as to what FG was, and it took them six more years to realise where they went wrong with that question and see the benefit of a proper tailor-made solution involving all adult members of the family.

Purpose Of The FO

The FO is rarely intended to be a governance vehicle itself. It is there to facilitate the FG by providing informational and organisational support, but not “passing on the messages”. Just like “Chinese whispers” it is inevitable that messages and nuances will be lost if the FO officer is acting as an intermediary or go-between. It cannot and should not be seen to be the mechanism for the decision making on FG issues. However well known or trusted by the family, they simply cannot convey the most important aspect of FG – the psychological interaction with the family.

What they may be able to do, however, is when the preliminary work is completed and there is an agreed structure to be set up – if, indeed, that is the case – they can be involved with the tax and regulatory advice required to set it up and the setting up itself. However, there will still be the need for interaction with the family for fine tuning structural aspects, not only to ensure that they understand it and are comfortable with it but also to ensure it is properly tailored to the requirements of that family. In my experience of doing this for over 25 years, no two arrangements for any family are the same or even similar.

Selection Of The External FG Adviser

Families often delegate the selection of the FG external adviser to the FO. That may work but at the end of the day, the family must be totally comfortable with the external adviser and see them as a totally “trusted adviser”. If they are not satisfied of that, or if they have not been part of that selection process, then they are far less likely to “buy in” to the FG process. By all means delegate the process of finding potential candidates, but it is imperative to bring the family into the final selection process.

In Whose Pocket Is The FO?

The FO needs to be clear as to whose instructions are paramount. If the senior generation is dictating the agenda, the FO can help to get buy-in from the other generations. Of course, they may be unable to do so but they can at least act as some sort of a sounding board for the first gen. If the influencing person is the second gen where the first gen is still alive and active, then the first gen may feel that the second gen is utilising the FO to take up their agenda for the planning and it may be resisted. This needs to be handled very delicately.

Once an FG arrangement is in place, it should be the FO’s role to oil the wheels of the arrangement by ensuring that all parties are doing their job and making sure that everything is properly co-ordinated. This may include family members themselves, trustees, external service providers and foundations. If a Private Trust Company (PTC) has been set up, it will be important that the FO oversees the trust company normally administering the PTC to ensure that it is acting as a proper trust company and not just a nominee.

Dealing With Difficult Issues

Whilst I do not advocate the FO to deal directly on all aspects of the FG exercise with the external adviser, there is a definite role for them to play. In my view it is essential to extract from all family members any potentially contentious or difficult issues. If part of the rationale of the FG exercise is to plan for an effective and successful succession, that will be undermined by a failure to recognise difficult issues before they become impossible to deal with because views have become too entrenched and polarised. The FO has a real part to play here in that it will usually be able to help deal with these difficult issues as it is likely to understand them better then the external adviser. If it can facilitate the resolution, or at least understanding of those issues, it will have achieved a great deal towards making the FG process work effectively.

The FO may well be able to mediate to some degree when there is a family dispute and take on specific projects which may be difficult for outsiders to do so.

Technology

There is no doubt that the embracing of technology is an imperative in today’s world. In this area, the FO has a significant part to play. In my view, this is a key area where the younger generation can justifiably find a “way in” to the family environment and, indeed, provide added value. I have recently been involved in advising a family with a very large logistics business. The older generation really had no idea that if this business did not embrace technology, and fast, then it would be left behind. I suggested that the third gen, in their late teens and early twenties, worked together on a project to how the business needed to develop (after we gave them a few hours of education as to what the business really was all about). The FO organised the educational seminars and the outline of the project. Almost magically, they came up with an amazing set of ideas which were immediately embraced by the older gens and this was a way in for seven of the nine third gens. FOs can and should have a big part to play in businesses looking in to the future.

Immortality

There seems to be a particular type of businessman where great success gives rise to a feeling of immortality. Maybe the COVID pandemic has put paid to that. But here again, the FO can provide a significant contribution. Many family members find it difficult to raise the issue of succession with the Patriarch or Matriarch. FOs can – and probably should – help the successive generations on a pro-active basis. If that does not facilitate FG, then I am not sure what will.

A Pro-Active Family Office

Many FOs are too reactive to the requirements of the senior family members but a good and thoroughly trusted FO will be a bit detached from the family and be able to make suggestions regarding things that should be done. This includes Corporate Governance for the family’s operating companies, overseeing education and mentoring, and ensuring that agendas for Family Council and/or Assembly meetings are drawn up well in advance, with careful thought as to relevance and to ensure engagement by family members.

FO Governance

Even if the FO does not control the FG, in order to make sure there is continuing support of the family the FO’s own governance is important to ensure succession, accountability and relevance.

Conclusion

While it is imperative that the FO facilitates the FG, it must ensure that family members actually engage in the FG and not stand in their way or simply act as a conduit. That is a recipe for failure. Yet without a good FO, the FG exercise in the broader sense is unlikely to be effective. The co-ordination of implementation, working and ongoing reviews is a crucial function of the FO.

Record number of Forsters’ Family Team recognised in Spear’s Family Law Index 2021

  • 7 July 2021
  • News
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We are delighted to announce that all of our Family Partners and three Senior Associates have been recognised in Spear’s Family Law Index 2021:

Top Recommended Family Lawyer:

Top Recommended Family Law Barrister:

Recommended Family Lawyer:

Rising Star:

The Index recognises the most distinguished High Net Worth Family Lawyers in the industry. This year’s rankings are a testament to the growing strength and reputation of our market-leading practice, offering the highest levels of technical expertise, empathetic client care, innovation and discretion.

Forward-Thinking Approaches to Divorce and Separation

Coming to a decision to separate or divorce is difficult and often distressing. For many, the process that lies ahead is a mystery and it is assumed that it will be confrontational and drawn-out. However, there is in fact a wide range of forward-thinking, constructive approaches to resolving the issues flowing from your divorce or separation.

Forward Thinking Approaches to Divorce and Separation

STEP Private Client Awards 2021/22 Finalists: Hat trick for Forsters’ Private Wealth Team

  • 5 July 2021
  • News
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We are delighted to announce that Forsters have been shortlisted in three categories in the STEP Private Client Awards 2021/22:

  • International Legal Team of the Year (midsize firm)
  • Contentious Trusts and Estates Team of the Year (midsize firm)
  • Family Business Advisory Practice of the Year

The STEP Private Client Awards are widely acknowledged as the most prestigious Awards in the industry and are rigorously judged by a worldwide panel of experts. This year has seen a high number of nominations, with 297 submissions across 23 countries. We are one of three firms to have been recognised in three categories.

The nominations showcase the breadth of expertise within Forsters’ Private Wealth practice and our experience advising families from across the world in relation to the complete life cycle of their personal and business affairs.

The news follows last year’s STEP Private Client Awards where Forsters were named both the Private Client Legal Team of the Year (midsize firm) and International Legal Team of the Year (midsize firm), and named finalists for Contentious Trusts and Estates Team of the Year (midsize firm) and Family Business Advisory Practice of the Year.

This year’s winners will be announced at STEP’s Awards Ceremony on 23 September 2021.

Forsters is proud to have won Private Client Legal Team of the Year (midsize firm) for three consecutive years, thus precluding the team from entering this year.

Forsters’ double award win at the prestigious STEP Private Client Awards 2021/22

Forsters’ Private Wealth practice has been named International Legal Team of the Year (midsize firm) and Contentious Trusts and Estates Team of the Year (midsize firm) at this year’s STEP Private Client Awards.

Winners - International Legal Team of the Year (midsize firm)

Winners - Contentious Trusts and Estates Team of the Year (midsize firm)

Head of Commercial Real Estate interviewed by Estates Gazette

  • 5 July 2021
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Forsters’ Head of Commercial Real Estate, Andrew Crabbie, has been interviewed by Estates Gazette on his views of supporting clients through the pandemic, how clients needs have changed during it and what the team are focusing on in 2021.

1. When working with your clients in such challenging times, what would you say are the top three things that your team are focused on to support your clients?

“First, I would say that having the right IT software to support our clients has been crucial. Having robust software in place has ensured that there have been no dips in service and that transactions have closed on time. We already had HighQ, a cloud-based platform for document sharing, in place prior to the pandemic but it has really come into its own during the crisis and I think it will continue to do so, as we hopefully make our way out of it. We’ve obviously made use of both Microsoft Teams and Zoom and have found that being able to easily share screens has significantly reduced negotiation time. Being able to use digital signatures through DocuSign has also been massively helpful, although again, this was in place for us before the pandemic.

Secondly, I think showing empathy has been really important; the pandemic has been a humbling experience for us all.

Thirdly, and this has always been a focus of the team, putting ourselves in the shoes of our clients, understanding and anticipating issues for them to make their lives easier.”

2. What are the lessons/trends that Forsters have taken from this crisis and how has your business changed as a result in the past 12 months?

“I think we’ve gone full circle since the first lockdown was announced and we are now looking forward to getting back to many things that we used to take for granted, such as being in the office, however frequently, seeing our colleagues, clients and friends face-to-face. A lesson, which is one I think we all knew anyway, is that there are no short cuts to building strong business relationships and meeting and collaborating in the real world play a huge part. Many of our best client relationships have developed over decades and been built on by successive lawyers and client teams; video calls do not really compare to being able to celebrate the closing of a transaction or other milestone in person or even just having a chat in the same room. I’ve certainly felt the difference in not being able to do those things and I think this goes to the heart of what makes the property market such a compelling sector; it is really the people and relationships you build up across the industry which, for me, make it so interesting and enjoyable and gives it vibrancy.”

3. How have your clients’ needs changed and how has your team adapted?

“Our clients’ needs haven’t changed during the course of the pandemic but we have seen significant adjustments to the legalities that underpin the property sector, in particular in relation to landlord and tenant relationships. The team has had to stay ahead of these developments so that we can advise our clients of the changes which impact them and how such changes can be managed. Over the last 15 months or so, we’ve focussed on providing webinars, client briefings, digital content and podcasts to cover these new developments, as well, of course, as having regular chats with clients.”

4. Is there anything that Forsters is focussing on in 2021 that you can share with our readers?

“For us, together with many across the industry, we are focussing on sustainability both for us as a business and also to enable us to keep our occupier, landlord, investor and financial services’ clients up-to-speed. Sustainability is such a hot topic at the moment and looks like it will continue to be for the foreseeable future but it’s also a very fast-moving area with ever-changing standards and rules, so our clients tell us it is an area in which they welcome our knowledge and assistance.”

As a business, Forsters has had carbon neutral status since 2007. If you are interested and want to see our latest updates, as well as our own track record in sustainability, you can find these on our Sustainability Hub.

Read Andrew’s full EG interview

Directors’ duties to avoid conflicts of interest continue in respect of acts carried out post-termination

  • 1 July 2021
  • News
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

A director of a company owes various statutory and equitable duties to that company by virtue of their position. The statutory duties, known as directors’ general duties, are set out in sections 170 to 177 of the Companies Act 2006 (CA 2006) and comprise the following duties:

  • To act within powers
  • To promote the success of the company
  • To exercise independent judgement
  • To exercise reasonable care, skill and diligence
  • To avoid conflicts of interest
  • Not to accept benefits from third parties
  • To declare an interest in proposed transactions or arrangements.

Equitable duties include, for example, a duty of confidentiality to the company for so long as the relevant information remains confidential.

When do your duties as director cease?

Generally, directors’ duties to a company will commence on them becoming a director and terminate on them ceasing to hold the office of director with the company. However, the CA 2006 (section 170(2)) specifically provides that certain of the statutory duties will continue after a director’s termination, namely:

  • duty to avoid conflicts of interest – as regards the exploitation of any property, information or opportunity of which a director became aware at a time when they were a director; and
  • duty not to accept benefits from third parties – as regards things done or omitted by the director before they ceased to be a director.

The recent case of Burnell v Trans-Tag Limited [2021] EWHC 1457 (Ch) considered the post-termination duty to avoid conflicts of interest finding that a former director was in breach of such duty on the basis solely of his acts post-termination.

Burnell v Trans-Tag Limited

Facts

The case concerned circumstances surrounding the collapse of Trans-Tag Limited (TTL). Mr Burnell (Mr B), the claimant and CEO of TTL, sought repayment of a £250,000 loan made by him to TTL. TTL counterclaimed that Mr B, by seeking to gain control of TTL’s business for his own benefit, was in breach of his duties as a director to avoid a conflict of interest and/or in breach of his equitable duty of confidence to TTL.

TTL’s business involved the design, manufacture and sale of devices known as Tags which allowed for remote tracking and monitoring of goods, equipment and people. The company was also involved in the development of the Restore product which allowed for vehicles to be controlled remotely. All the intellectual property (IP) in the Tags and Restore devices and products was owned by a separate company, TTS. Under a licence agreement (Licence Agreement), TTS granted an exclusive licence to TTL to manufacture, use and sell the licensed products worldwide and an option to TTL to purchase the IP relating to the products on certain terms.

After Mr B ceased to be a director of TTL, the opportunity arose to acquire shares in TTS from existing shareholders. Mr B availed himself of the opportunity to acquire the shares and following the acquisition, he took immediate steps for TTS to: (a) defend proceedings by TTL against it relating to the termination of the Licence Agreement with TTL; and (b) terminate the Licence Agreement.

Findings

The High Court found in favour of Mr B in relation to the repayment of the loan but also allowed the counterclaim by TTL finding that Mr B had breached his statutory duty to avoid a conflict of interest post-termination.

This case marks a departure from existing common law whereby a claim for director’s breach of duty had to be based on the director’s actions before or at the time of their resignation. The Court confirmed the general principle that a director ceases to be subject to fiduciary duties associated with their position as director when the relationship ceases. However, section 170(2)(a) extends the application of the duty to avoid conflicts in certain circumstances (i.e. those involving the exploitation of any property, information or opportunity of which the director was aware when they were a director). As the extended statutory duty is a continuing duty the Court found that it must be possible for a breach of such duty to be based on acts which take place after a director’s resignation.

The Court held that the termination of the Licence Agreement by TTS after Mr B acquired shares in TTS must have involved the use of information regarding the terms of the Licence Agreement and concerns around the enforceability of the Licence Agreement of which Mr B became aware when he was a director of TTL. The purpose of the acquisition of shares and the termination of the Licence Agreement was to secure to TTS the right to exploit the IP of the licensed products and deprive TTL of its rights under the Licence Agreement. The Court held that Mr B had knowingly put himself in a position of conflict with TTL by acquiring the shares in TTS with the aim of acquiring the rights to the licensed products. Furthermore, the Court found that Mr B had breached his duty of confidence to TTL in relation to the information relating to the Licence Agreement.

Conclusion

It should be noted that the extended statutory duty of a director to avoid a conflict of interest post-termination in section 170(2)(a) is limited to the “exploitation of any property, information or opportunity of which he became aware when he was a director”. It is not sufficient to point to any information/opportunity as the basis of a claim against a director. It “must have some quality that permits it to be treated in law in a manner akin to property of the company” which the courts have previously characterised as “a maturing business opportunity”. In the case of Burnell v Trans-Tag, the Licence Agreement was such property/information whereas the opportunity to acquire the shares in TTS was not, as that opportunity arose after Mr B ceased to be a director of TTL.

Nothing prevents a former director from using the general skill and knowledge they acquired as a director but given this recent case, former directors will need to be mindful of their continuing duties and their post-termination actions. A breach of these duties can give rise to significant personal liability, including a damages claim and also liability to account for any profits made by such former director.

Please do get in touch with your regular Forsters’ contact if you would like to discuss further.

Disclaimer

This note reflects our opinion and views as of 1 July 2021 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.

The Fire Safety Act 2021 – overview and note for Build to Rent Landlords

  • 1 July 2021
  • News
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Intended to address concerns raised in the wake of the Grenfell Tower tragedy, the Bill had a bumpy ride through Parliament. Attempts to introduce a clause prohibiting remediation costs being passed to leaseholders failed. Much of the Act remains controversial, with concerns over the burden of costs on leaseholders enduring.

What the Act does – Reforming the Regulatory Reform (Fire Safety) Order 2005

A significant purpose of the new Act is to update who is accountable for reducing the risk of fires in buildings with two or more domestic dwellings (the ‘Responsible Person’). In most let buildings this will generally be the building owner. The Act also sets out the scope of the risks they must manage. These specifically include:

  • The building’s structure
  • External walls, including doors, windows and balconies
  • Any common parts of the building
  • All doors in between private dwelling and the common parts of the building

They must be included in the annual fire risk assessment, which must be shared with the Fire and Rescue Services.

The Act will also allow further legislation, based on the Grenfell Inquiry recommendations, without having to travel through Parliament.

The burden of costs

A focus of the debate surrounding the Act was on ensuring leaseholders were not burdened with the costs of remediating properties in need of recladding. In the end the legislation was pushed through without this, to avoid delays in the new ‘Responsible Person’ rules.

Funding options for building owners

On 21 February 2021 the Government announced an additional £3.5 billion, further to the £1 billion announced in May 2020 for the Building Safety Fund to remediate residential high-rise buildings over 18 meters tall with non-ACM cladding which does not conform to fire safety standards.

For buildings between 11 and 18 metres, the Government is offering a loan to building owners. How is this to be repaid? At the moment nobody knows. The talk is that legislation will cap leaseholder contribution at £50 per month.

The Building Safety Fund contains a range of criteria which the applicant must meet alongside exclusions and limits to obtaining funding. The fund excludes:

  • non-residential buildings
  • the cost of any interim safety measures such as waking watches put in place
  • necessary fire safety work, which may be exposed at the time of remediation, not directly related to unsafe cladding
  • Any work which started before 11 March 2020

Building owners should engage with the application process to establish if their building qualifies for funding.

Government statistics show that it is vital for building owners to take care with applications. Many are rejected.

Impact on BTR landlords

With long leases the landlord can generally pass on costs through the service charge but with BTR the rent in this scenario is often “all inclusive”. So due diligence when buying a stabilised asset is key, alongside establishing availability of warranties and identifying relevant construction parties.

What now?

There is talk of a contribution for tall buildings as part of the planning process, and a more general tax on residential developers, to raise cash.

We will have to wait for the Autumn budget.

Podcast: Insights into Build To Rent

On our latest More Than Law podcast, host Miri Stickland is joined by three members of our Build To Rent group who provide their insights into the sector.

A mobile phone and earphones, ready to listen to our podcast.

Molly Haynes
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Molly Haynes

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