Forsters team supports Ministry of Defence in settlement of landmark litigation, bringing Armed Forces housing back into public ownership
17 December 2024
News
The Ministry of Defence (MOD) and Annington Homes have today announced that they have reached a major deal to bring the Armed Forces housing estate back into public ownership. MOD will re-acquire c36,000 houses from Annington Homes for a total purchase price of £5.9945bn, as well as unwinding the complex and costly set of contractual arrangements between the parties which has governed their relationship since 1996.
The transaction marks the culmination of landmark litigation between the parties concerning the scope of MOD’s enfranchisement rights. Forsters has advised MOD in relation to the enfranchisement and subsequent litigation since 2020 and the firm was also selected to handle the transactional elements of the deal, which is one of the largest property transactions in UK history. The entire Forsters team has worked immensely hard on behalf of MOD, alongside Slaughter and May who advised on the public law aspects of the litigation, to help bring matters to a successful conclusion.
The Forsters team comprised Senior Partner Natasha Rees, Real Estate Disputes Partner Julia Tobbell and Commercial Real Estate Partner Ben Brayford. They were supported by Senior Associate James Carpenter (Real Estate Disputes), Counsel Andrew McEwan, Senior Associates Alexandra Burnaby and Alex Harrison and Paralegal Kelly Pryor (Commercial Real Estate).
Ben Barrison shares his thoughts on potential reforms to the Landlord and Tenant Act 1954
21 November 2024
News
Partner and Head of Real Estate Disputes, Ben Barrison, shared his thoughts with CoStar, Property Week, and BE News, on The Law Commission launching a consultation on potential reforms to the Landlord and Tenant Act 1954.
The overall consultation focuses on Part 2 of the Act, dealing with ‘security of tenure’ for business tenancies. Discussion points focus on the security of tenure model, alternatives to this, and how this reflects the rise of online retail and sustainability needs. This follows 70 years on from the introduction of the Act, and 20 years since the last review.
‘Of the four options they are considering, a modernised contracting-out regime, to reflect the 20 years of tech advancement since it was last updated, would be an important first step and this would retain the balance the Act brings to commercial landlord and tenant relationships. Apart from security of tenure, there is a great deal of additional work for the Law Commission to do in terms of the other mechanics of the 1954 Act to deliver a modern regime for determining the lease terms and opposing renewal/termination cases. The 1954 Act is currently too slow and cumbersome for the digital age, but the overarching intent remains good.’
Forsters boosts Dispute Resolution with appointment of Steven Richards
11 June 2024
News
Disputes Partner Steven Richards joins Forsters from Foot Anstey to add specialist fraud and contentious insolvency expertise to the firm’s full-service Dispute Resolution practice.
Forsters, the leading London law firm, announces today that Steven Richards is to join the firm on 11 June 2024. Steven has over two decades of experience advising on a wide range of commercial litigation and contentious insolvency matters. He joins Forsters from Foot Anstey where he led the dispute resolution practice for several years before heading up the firm’s fraud team. Prior to that Steven trained and practised at Jones Day (formerly Gouldens).
Steven’s appointment marks a period of continued growth for Forsters following the recent arrival of highly ranked and market recognised Employment Partner Jo Keddie and her team from Winckworth Sherwood. The firm, which celebrated its 25th anniversary in 2024, moved to new premises in Baker Street in January this year.
Steven has extensive commercial litigation experience and has a strong track record of acting on big ticket, complex disputes and achieving successful outcomes for a range of both domestic and international clients. He advises high net worth individuals, private companies, insolvency practitioners and financial services organisations on a wide range of disputes and has a particular expertise in civil claims involving allegations of dishonesty and fraudulent conduct. He also has significant experience in dealing with corporate disputes, banking and finance litigation, professional negligence, contentious insolvency, insurance claims, business critical issues and injunctive relief.
The addition of Steven Richards to Forsters’ Disputes Resolution practice will boost its already thriving general commercial litigation capability, while adding specialist contentious and insolvency expertise.
Benedict Walton, Head of Commercial Dispute Resolution at Forsters, said: “Clients turn to our disputes practice for the most complex commercial claims. Steven’s addition to the team adds significant bench strength in the important areas of fraud and contentious insolvency. I’ve known Steve for many years and he brings a fantastic track record of high profile litigation experience, successful practice building and a progressive and collaborative working approach, all of which will be highly beneficial as the team continues to strengthen and grow.”
Steven Richards said: “I am really excited to join Forsters at a time when the firm is growing and going from strength to strength. Forsters’ diverse client base and culture feels like a natural fit for me and my practice. The firm is the right place from which to serve my clients who will have access to market leading contentious expertise from the wider practice which, in turn, will help them navigate their most complex business challenges.”
Natasha Rees, Senior Partner of Forsters, commented: “Forsters is enjoying a period of strong momentum as a business and so we are really pleased to welcome Steven Richards to the partnership. He will be an excellent addition to the Disputes practice and of instant benefit and value to clients across the firm.”
Clarity and simplicity for the law on limitation in “concealment” cases
30 November 2023
News
Limitation periods reflect the uncontroversial principle that a defendant should not be exposed to a claim which the claimant has unreasonably delayed in pursuing.
However, what should happen to the limitation period where the defendant is responsible for the claimant’s delay, having concealed the facts underlying the cause of action? This is the issue which is addressed by ss. 32(1)(b) and (2) of the Limitation Act 1980, and which was considered by the Supreme Court in its recent judgment in Canada Square Operations Limited v Potter.
The decision emphasises the need to give the words of s. 32 their ordinary meaning, resulting in an expansion of the scope of s. 32(1)(b) and a narrowing of the scope of s. 32(2). Despite the changes in the interpretation of the provisions, it appears likely that the effects of the decision in practice will likely be relatively limited, with most cases still being likely to be decided as they would have been under the previous caselaw. The Supreme Court’s judgment nevertheless provides welcome clarification on the tests to be applied, and will simplify an area of law which has historically been subject to an array of inconsistent and complex decisions.
Factual and legal background
In 2006, Mrs Potter took out a loan with Canada Square. This was accompanied by a PPI insurance policy. Canada Square did not inform Mrs Potter that over 95% of the cost of the policy was commission payable to them.
In 2014, the Supreme Court handed down judgment in Plevin v Paragon Finance, holding that a party’s failure to disclose commission in this way rendered the parties’ relationship “unfair” under the Consumer Credit Act 1974, such that the other party was entitled to recover the amounts paid.
In 2018, Mrs Potter issued a claim against Canada Square in reliance on the Supreme Court’s decision in Plevin. Canada Square defended the claim on the basis that it was time barred, the relevant relationship having ended over six years before the claim was issued. In reply, Mrs Potter sought to rely on s. 32(1)(b) and 32(2) of the Limitation Act. As to these:
S. 32(1)(b) postpones the commencement of the limitation period where “any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant” until “the plaintiff has discovered the […] concealment […] or could with reasonable diligence have discovered it”.
S. 32(2) provides that for these purposes “deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty”.
The Supreme Court’s judgment
The Supreme Court was required to consider the meaning of the phrases “deliberately concealed” in s. 32(1)(b) and “deliberate commission of a breach of duty” in s. 32(2).
“Concealed”
The Court began by considering the meaning of the word “concealed” in s. 32(1)(b). In a series of previous decisions, the Court of Appeal had held that insofar as the concealment relied on was a withholding of information (as opposed to taking active steps to conceal), the claimant would need to show that the defendant was subject to a duty to disclose the relevant information. This duty did not need to be a legal duty, but rather could be one “arising from a combination of utility and morality”.
The Supreme Court held that this was the wrong approach, noting that it had no basis in the statutory language; a party could perfectly well be said to conceal something which it had no duty to disclose (the Court used the example of an elderly lady hiding her pearls from a burglar). Further, applying this gloss to the statutory language would lead to unwelcome uncertainty and complexity insofar as it would require the Courts to decide in what circumstances a duty in “utility and morality” arose.
The Court also rejected previous Court of Appeal dicta suggesting that concealment required the defendant to know that the facts withheld were relevant to the claimant’s right of action; instead it was sufficient simply that they had withheld the information.
“Deliberately” concealed
The Supreme Court next considered the meaning of “deliberately” concealed in s. 32(1)(b). In this context, having decided (as noted above) that withholding of information would only amount to concealment where there was a duty to disclose, the Court of Appeal had held (on the basis of pre and post-Limitation Act case law, and statutory materials preceding the Limitation Act) that deliberate concealment could exist not only where the defendant had not disclosed a fact which they knew they had a duty to disclose, but also where they had been reckless as to whether they had such a duty.
Given that the Supreme Court had decided that concealment did not require any duty to disclose, it likewise rejected the Court of Appeal’s conclusions regarding recklessness, which were premised on such a duty being required. Looking at the matter afresh, and having also considered the meaning of the word in the context of s. 32(2) (to which most of the previous caselaw was directed – see below), the Court concluded that “deliberately” should bear its ordinary meaning; deliberate concealment therefore required a defendant to intend to withhold the relevant facts from the claimant.
“Deliberate” commission of a breach of duty
Following the Court of Appeal’s decision, it was undisputed that the existence of an unfair relationship under the Consumer Credit Act would give rise to a breach of duty for the purposes of s. 32(2), notwithstanding that the Act was couched in terms of an unfair relationship rather than any breach of duty.
The issue was therefore what mental state the word “deliberate” required on the part of the defendant when committing the relevant breach of duty (on the facts, when performing the act which rendered the relationship unfair i.e., failing to disclose the commission). In this regard, the Court of Appeal had relied on a combination of pre and post-Limitation Act caselaw as well as the parliamentary materials which preceded the Act (as noted above) to decide that the test was met if a defendant was reckless as to whether his actions were in breach of duty; actual knowledge of the breach was not required. For these purposes, the Court of Appeal gave recklessness the meaning given to it in the seminal criminal case of R v G; in order to be reckless, a defendant would need to be subjectively aware they were at risk of breaching the duty, in circumstances where it was objectively unreasonable to take that risk.
The Supreme Court was not persuaded by this analysis, noting that in its view the previous case law did not establish that recklessness was sufficient. The Court also indicated that, in circumstances where the relevant words of the Limitation Act were ordinary words of English with a clear meaning, it was impermissible to rely on the statutory materials which had preceded the act as an aid to interpretation. In what it stated was a return to the ordinary meaning of the statutory words, the Court concluded that deliberate commission of a breach of duty required the defendant to know they were committing a breach of duty.
Decision on the facts
In light of its conclusions, the Cout concluded that Canada Square had deliberately concealed facts underlying Mrs Potter’s right of action from her for the purposes of s. 32(1)(b), having intentionally withheld the amount of the commission. However, Canada Square had not deliberately committed a breach of duty for the purposes of s. 32(2), having been unaware that its failure to disclose the commission would render its relationship with Mrs Potter unfair.
Conclusion
The Supreme Court’s decision brings greater clarity and simplicity to the law, by holding that:
“Concealment” for the purposes of s. 32(1)(b) does not require a defendant who withholds facts relevant to a right of action to be under any duty to disclose them or to be aware that they are relevant to the right of action – it is enough simply that they are withheld; and
“Deliberate” in the context of s. 32(1)(b) and s. 32(2) requires actual intention to withhold the relevant facts or knowledge of the relevant breach of duty (as applicable), recklessness in either case being insufficient.
Following the Supreme Court’s judgment, s. 31(1)(b) is broader in scope, while s. 32(2) is narrower. Whether the new law is favourable to claimants or defendants will vary on a case by case basis, although as a general rule it seems likely that in most cases the result will be the same as previously. Specifically, it appears likely a defendant who withholds information relevant to a right of action for the purposes of s. 32(1)(b) (such that they satisfy the new test) will usually also be acting immorally and with an awareness that the facts are relevant to the right of action (as required under the old test); similarly, for the purposes of s. 32(2), a defendant who is aware that they are at risk of breaching a duty of care in circumstances where it is objectively unreasonable to take that risk (as required by the old test) appears likely to know that they are acting in breach of duty (such that they satisfy the new test).
In any event, limitation issues appear likely to be simpler for parties to plead and for the Courts to determine in light of the Supreme Court’s judgment. As was the position under previous caselaw, claimants will frequently be well advised to rely on both limbs of s. 32 in the alternative, with success under either limb being enough to deprive the defendant of its limitation defence.
Damages: an appropriate remedy? – Natasha Rees writes for EG
13 November 2023
Views
The Estates Gazette have featured an article by Natasha Rees on the conclusion of the nuisance case against the Tate Gallery.
The article considers the Court’s approach to the question of remedy in nuisance claims where decisions now appear to be reached on a case-by-case basis, and factors such as planning permission and public interest are relevant.
Rees writes that: “Earlier this year the Supreme Court found in favour of five Neo Bankside residents, holding that the viewing gallery at the Tate Modern’s Blavatnik Building had created a nuisance by interfering with the residents’ use and enjoyment of their flats (Fearn and others v Board of Trustees of Tate Gallery [2023] UKSC 4; [2023] EGLR 14). As recommended by Lord Leggatt in his majority judgment, the proceedings were then remitted to the original trial judge in the High Court, Sir Anthony Mann, to determine the appropriate remedy.”
Following a hearing before the original trial Judge the Tate elected not to argue for damages and subsequently entered into an agreement with the defendants preventing use of the property in the way that had caused nuisance.
As such, Rees writes, this has “[put] an end to the nuisance and [disposed] of the proceedings.”
Questions
This ruling has raised questions regarding the circumstances in which courts will grant an injunction or will decide that damages should be awarded instead. The courts power to grant damages instead of an injunction derives from statute – “originally the Chancery Amendment Act 1858 (colloquially known as Lord Cairns’ Act) and currently the Senior Courts Act 1981.”
The article considers the Court’s approach which was until fairly recently based on the leading case of Shelfer v City of London Electric Lighting Co (1895), and which assumed an injunction would be granted save for in exception circumstances. This changed following the Supreme Court’s ruling in Lawrence and another v Coventry and others (2014)].
She writes that: “Lord Neuberger, who gave the leading judgment, stated that the mechanical application of the four tests leading to damages being awarded only in ‘exceptional circumstances’ was simply wrong in principle and that although prima facie the remedy for nuisance is an injunction, there may be circumstances where damages are more appropriate and there should be no inclination either way.”
Going forward
As Rees states “The onus is on the defendant to show why an injunction should not be granted.”
“The court now has a wider discretion and the choice between an injunction or damages depends on the relevant facts, circumstances, and arguments in the case. While this allows the courts greater flexibility, it also introduces much greater uncertainty.”
The factors that might be taken into account include whether planning permission authorises the activity, or if any potential injunction would affect the viability of the defendant’s business or indeed the public’s ability to enjoy the activities carried out by that business.
What this meant in the Tate case was that the Tate’s activities or its use of the Viewing Platform was probably relevant to the remedy.
She writes that: “In his leading judgment, Lord Leggatt indicated that matters which needed to be addressed were whether there was a public interest in maintaining the viewing platform with a 360-degree view which was capable of overriding the prima facie remedy of an injunction.”
Rees concludes that:
“Where a person’s right to the enjoyment of their home is disturbed by an invasion of privacy, it is hard to envisage when damages might be an appropriate remedy. Such a right can rarely be compensated for in monetary terms. This was the majority view in Lawrence.
“In such cases, it is hard to see what public interest considerations might outweigh this. Matters of national defence or the provision of public services such as healthcare may, but it seems unlikely that recreational facilities or the public’s enjoyment of those facilities would tip the balance.”
This article was originally published in EG on 31 October 2023 and can be read here in full (behind their paywall).
Fearn and Others v The Board of Trustees of the Tate Gallery
18 October 2023
News
The Supreme Court found in favour of five Neo Bankside residents earlier this year, holding that the viewing gallery at the Blavatnik Building at Tate Modern had created a nuisance by interfering with living conditions at their flats at Neo Bankside. The proceedings were remitted to the original trial judge in the High Court, Sir Anthony Mann, to determine the appropriate remedy.
Last month, having been asked to elect by the Court, the Tate chose not to argue that the Court should award damages instead of an injunction. The Tate has now agreed to a final order disposing of the proceedings which puts an end to the nuisance.
Tate Modern has undertaken not to operate Level 10 of the Blavatnik Building in such way that would enable visitors to engage in intrusive viewing or photography of neighbouring flats in the manner that was held by the Supreme Court in February to be a nuisance.
Currently, the Tate prevents that happening by preventing public access to the parts of the viewing gallery nearest to the flats of the five residents.
Natasha Rees, Senior Partner of law firm Forsters, which represented the five Neo Bankside residents, comments, “An award of damages was never our clients’ aim and they are grateful for the Tate’s recent willingness, instead, to agree that the viewing platform will not be operated in a way which causes nuisance. They are pleased that this long-running dispute has been concluded.”
Bryan Shacklady quoted in Law 360 article – Forex Ruling Signals ‘Permissive’ Approach to Class Actions
27 July 2023
Views
Dispute Resolution Counsel, Bryan Shacklady was quoted in Law 360’s recent article on the Court of Appeal’s recent decision to allow a £2.7 billion forex rigging claim to proceed as an opt-out collective action.
Appellate judges on Tuesday reversed a ruling by the Competition Appeal Tribunal, finding the specialist tribunal was too quick to block opt-out claims that would automatically enroll thousands of companies into mass litigation against a group of banks.
Bryan stated that “The Court of Appeal decided the CAT was wrong to take a view on the strength of that case because by definition, any view it took could only ever be provisional because the class representatives haven’t pleaded their final case.”
The full article can be read here, behind a paywall.
No “real risk of prosecution” under Article 271 of the Swiss Criminal Code: Application to be excused from disclosure obligations fails
20 July 2023
News
It is well established that the English Court has discretion to excuse a party from performance of its procedural obligations in litigation where it considers that performing those obligations would give rise to an actual risk of prosecution in a foreign state: Bank Mellat v HM Treasury [2019] EWCA Civ 449.
In Public Institution for Social Security v Al Wazzan & Ors [2023] EWHC 1065, the defendants sought to be excused from their obligation to give disclosure on the basis that doing so would lead to a real risk of prosecution in Switzerland under Article 271 of the Swiss Criminal Code1. The Court was not persuaded by the defendants’ arguments and refused to grant the order sought.
The decision provides welcome guidance in a previously uncertain area, as well as a salutary warning to parties seeking to rely on Article 271 to excuse themselves from their disclosure obligations in English Court proceedings.
Article 271
Article 271 prohibits the performance on Swiss soil of “official” acts i.e. those which are properly the preserve of the state. The article was originally introduced during WWII in response to a German gestapo officer’s kidnapping of a Swiss Jewish citizen.
It is well established under Swiss law that Article 271 is engaged by examination of witnesses or the service of proceedings for the purposes of foreign litigation. It is less certain, however, whether Article 271 applies to the collection and/or review of documents for the purpose of satisfying a foreign Court’s disclosure order. This was the issue considered by the Court in Al Wazzan.
The decision in Al Wazzan
The applicants were the defendants to a claim brought by the Kuwaiti government regarding an alleged fraud committed against Kuwait’s social security system and state pension scheme. They sought to avoid giving disclosure of documents obtained from the Swiss criminal authorities and other documents originally obtained from Switzerland on the basis that doing so would give rise to a real risk of prosecution in Switzerland.
However, the Court was not persuaded that Article 271 was engaged by the giving of disclosure, having essentially accepted the respondents’/claimants’ Swiss law expert’s evidence on the point:
First, the Court was not persuaded that Article 271 was capable in principle of applying to compliance with a disclosure order; in Swiss litigation the submission of documents (unlike, for example, the examination of witnesses) is not restricted to the Court and it is not therefore clear that it is an “official” act.
Secondly, even if Article 271 could in theory apply to a disclosure order, it was accepted by the parties’ respective experts that (subject to the third party information point discussed below) it would not apply if the sanction for non-compliance with the order was procedural rather than criminal. In English litigation, the sanction for non-compliance with a disclosure order is generally procedural (eg, striking out relevant sections of the party’s pleading). Although contempt of court would in theory be available, crucially it would not be applied absent a penal notice on the face of the relevant order. There was no such notice on the face of the order at issue.
Thirdly, while the applicants had sought to rely on a recent Swiss case which had indicated that the disclosure of documents containing information belonging to third parties protected by Swiss public policy would fall within Article 271 (even where the sanction for breaching the order was only procedural), the third party information in that case had been subject to Swiss banking and fiduciary secrecy laws. There was no suggestion that any third party information in the present case raised any such issues.
Fourthly, Article 271 was not engaged by virtue of the fact that Kuwait had sought copies of the documents in the context of the Swiss criminal proceedings and this had been refused. Kuwait was not seeking to subvert this result and thereby perform an “official” function simply by exercising its rights as a party to civil litigation.
Fifthly, and in any event, the relevant documents were already in the possession of the defendants’ English lawyers. Giving disclosure would not therefore require any act to take place on Swiss soil and Article 271, which was clearly restricted to such acts, was not therefore engaged.
Accordingly, the Court was not persuaded that the applicants would be at a real risk of prosecution if they were to give disclosure. It therefore declined to excuse them from complying with their disclosure obligations.
Comment
The Court’s findings on the application of Article 271 (and the attendant risk of prosecution) were findings of fact based on its assessment of the expert evidence on Swiss law. They would not therefore technically bind another Court. That said, it seems likely that any party seeking to rely on Article 271 to justify failing to comply with its disclosure obligations will (absent materially different facts eg, as to the relevant third party information) face an uphill struggle.
The Court’s decision creates potential difficulties for parties insofar as it is not certain that the Swiss Courts would reach the same view of the application of Article 271. It therefore remains possible that giving disclosure might give rise to criminal liability in Switzerland. It is worth bearing in mind in this regard that the defendants’ expert was of the view that Article 271 was probably engaged (and this firm has also previously received Swiss law advice to similar effect).
In all cases where Article 271 is potentially engaged, Swiss law advice should be sought at an early stage. In addition, any party which ultimately concludes that there is a risk that Article 271 is engaged might consider applying to the Swiss Federal Office of Justice (“FOJ”) for a clarificatory opinion. Although this would not permit the party to give disclosure in contravention of Article 271 (as would the lengthier judicial assistance procedure under the Hague Convention), it would provide an authoritative opinion from the Swiss authorities relatively swiftly as to whether Article 271 was engaged. This should give the applicant either comfort that they are able to perform their disclosure obligations without fear of prosecution or (alternatively) persuasive material with which to justify to the English Court a request to be excused from those obligations.
1The defendants also sought the same order on various other bases which are beyond the scope of this article.
Caroline Harbord, Jeremy Robertson and Maryam Oghanna to present to STEP Jersey
13 June 2023
News
Dispute Resolution Partner, Caroline Harbord, Private Client Partner, Jeremy Robertson, and Contentious Trusts and Estates Senior Associate, Maryam Oghanna, are presenting a lunchtime session to STEP Jersey and the Société Jersiaise, on the topic of trustees and investments.
The session will focus on the key protections and pitfalls that trustees should be aware of when holding financial investments.
The team will consider the key provisions that can be included in the trust instrument, and in particular reservation of trust investment powers, including when they may be suitable/appropriate, pitfalls and areas of concern and UK tax considerations.
They will also consider the potential claims and liabilities that trustees may face when investments go south, together with the claims that trustees might consider pursuing against third parties as an attempted shield to beneficiary claims. The team will talk about how the risks of pursuing third party claims can potentially be mitigated by litigation funding and ATE insurance, and also the strategic considerations a trustee may wish to consider if it finds itself on the receiving end of a funded and insured claim.
Renters’ Reform Bill may introduce new risks for tenants – Anna Mullins comments
22 May 2023
Views
Property Litigation Partner, Anna Mullins, has been quoted in Property Week and Property Reporter on the long-awaited Renters’ Reform Bill entering Parliament, and the new risks it may pose for both landlords and tenants.
Experts have warned that the Bill, published on 17 May 2023, could make it more difficult for low-income renters to secure tenancies since private landlords could be newly motivated to sell their properties.
Mullins commented: “The removal of section 21 no-fault evictions will provide greater security for tenants in the private rented sector. However, it may also drive landlords out of the market and exacerbate the housing crisis, ultimately driving rents up and making it harder for tenants to find affordable rental properties.
“Even if new grounds for possession are introduced or the current grounds are strengthened as proposed, there is bound to be litigation around the circumstances in which problematic tenants can be evicted.
“For example, the proposed wording for the expanded antisocial behaviour ground will extend to “any behaviour ‘capable’ of causing nuisance or annoyance.”
This is clearly open to interpretation and such uncertainty could be detrimental for both landlords and tenants. Similarly, what will constitute an “unreasonable” refusal for a tenant to keep a pet?“These will be issues left for the courts to decide. For landlords, the procedure for obtaining possession is already time-consuming and costly, with many County Courts understaffed and ill-equipped to deal with the volume of straightforward possession claims.”
These comments were originally published on 17 May and can be read here (behind the Property Week paywall) and here in full in Property Reporter.
She provides insight into her career so far, as well as offers thoughts on Forsters’ recent success in acting for the MoD in defence of claims made my Annington Homes.
What are your thoughts on the case?
“This case was about whether the Government could be entitled to benefit from legislation which gives long leasehold owners the right to purchase the freehold of their homes (known as enfranchisement).
The MoD had sold off a large portfolio of military family homes to Annington Homes, a private equity funded vehicle, in 1996, and simultaneously taken a 200-year leaseback. At the time of the deal, enfranchisement rights did not apply to MoD but there had been subsequent changes in the legislation expanding the definition of a ‘qualifying tenant’.
The MoD was keen to explore whether enfranchisement might bring better value for money for the taxpayer than the current lease arrangement, and so brought a handful of test claims to gain some clarity on the legal position. However, as the legislation was not written with government tenants in mind, there were numerous factual and legal complexities in issue, many of which had never been decided before.
Much turned on whether the MoD had a business tenancy, which would have disqualified it from enfranchisement, or whether the legislation could apply to a Crown interest. Annington also sought to attack the claims on judicial review grounds, arguing that the MoD had acted with an improper purpose. We were delighted to win on all grounds.”
How has it been dealing with the media?
“As we were part of a much wider legal team (including Slaughter and May, MoD Legal Advisers and Government Legal Department, plus a large Counsel team), we took a coordinated approach to everything in the litigation. MoD’s very capable communications team has taken the lead in handling media enquiries.”
Why did you become a lawyer?
“My family used to joke that I was so argumentative I ought to become a lawyer. This was around the same time that Ally McBeal so I think the combination of the two probably sowed the seed.”
What has been your career high?
“Getting a job on qualification in the property litigation team at Herbert Smith Freehills; initially they had not posted a vacancy, so I chose transactional real estate instead, but then a space opened up at the last minute. I am a litigator at heart, so I was very lucky to get on the right path.”
What has been your career low?
“In my final seat, whilst working on an exhausting deal that had involved multiple 5am finishes, I had an operation to remove an infected wisdom tooth. When I came round from the general anaesthetic, I realised I had only been under for an hour. I was apparently inconsolable not to have caught up on more sleep!”
This article was originally published in the Law Society Gazette on 19 May 2023 and can also be read here (Page 11).
Forsters advises Ministry of Defence in successful defence of claims by Annington Homes
15 May 2023
News
Forsters is delighted to have acted for the Ministry of Defence in successfully defending the claims brought by Annington Homes regarding military service family accommodation.
The High Court has found that the Ministry of Defence does benefit from a right to enfranchise; the Ministry of Defence will now consider whether enfranchisement might achieve better value for money for the taxpayer. The case involved complex aspects of the law of enfranchisement, some of which had never been decided before.
The team at Forsters was led by Senior Partner, Natasha Rees, and Partner, Julia Tobbell. Natasha Rees is a property litigator with expertise in the field of enfranchisement, whilst Julia has significant experience in managing high-profile, high-value property litigation. They received superb support from Associates James Carpenter and Harvey Small.
The Forsters team worked closely with Slaughter and May, as well as Ministry of Defence Legal Advisers, who advised the Ministry of Defence in respect of public law issues.
This case was heard, in respect of two Jersey Law Trusts, in the Privy Council on appeal from both the Jersey & Guernsey Courts of Appeal.
The retiring trustee (RT) sought to rely on the indemnity in the Deed of Retirement and Appointment (DORA) in respect of its claim from the trust fund in relation to its significant liability. The question at stake was whether RT’s claim should rank in priority to other creditors and subsequent trustees. If all the liabilities were justified, then the trust would be “insolvent”. RT argued that as their indemnity was the first in time, they should recover the whole of the trust fund (which was in any case insufficient to cover its liability). If they had no such priority, then RT would recover significantly less than the full value of the trust fund, and be more substantially out of pocket in view of other trustees and creditors’ claims.
This issue had not been decided before anywhere in the world.
Decisions
The Jersey Royal Court said that RT had no priority and that all claims were to be on a pari passu (ie rateable) basis. The Jersey Court of Appeal reversed this saying that a former trustee’s right of indemnity and lien ranks in priority to later claims. The Privy Council took the case on the priority issue and the status of a lien under Jersey law. It reversed the Jersey Court of Appeal’s decision and decided that:
The lien conferred by the right of indemnity is not a form of security (so no priority);
The trustee has a proprietary interest in the trust assets;
The lien gives a trustee priority over the interests of beneficiaries;
Trustees’ claims were to be dealt with on a pari passu basis – not first in time;
The trustees’ indemnity covers costs of proving a claim.
Consequences
This decision has some potentially dramatic consequences for retired trustees, existing trustees and future trustees. Even though most trusts will not be “insolvent”, it will affect the taking on of liabilities by trustees, and their approach on taking on a trusteeship and retirement of a trustee. Some of the consequences are:
DORAs will be much more complex to negotiate, as retiring trustees will want to try to secure priority in respect of their indemnity. But why would a successor trustee agree to that?
Retiring trustees may now want to take a charge and/or possession/retention/ringfenced amount over trust assets on retirement. Some trust laws allow that; some do not; it may have to be specifically provided in the trust deed.
Incoming trustees will be much more vigilant over inspecting trust accounts and understanding potential liabilities.
New trustees will have one eye on their ultimate retirement or removal and will not want to give any priority to the then retiring trustees.
A trustee potentially the subject of future removal may need to secure their position when taking on the trusteeship.
Chains of indemnities may become more common once again.
Trustees will be reluctant to take on any third party liabilities, as creditors will want absolute security ahead of any past or present trustee’s indemnity.
Trust liquidity will be an increasingly focussed issue.
Incoming trustees will want third party commercial or lending liabilities paid off or terminated before taking on the trusteeship (but taking into account existing trustee indemnities).
Third party contracts should be novated to the incoming trustee.
Incoming trustees may find that outgoing trustees seek to prevent them incurring liabilities to preserve the outgoing trustee’s indemnity & lien.
Trustees still have to be mindful of their obligations to beneficiaries!
Thus all trustees will need to take these issues into account in the future. It is likely that, as this is a Privy Council decision, it will have relevance to all trust jurisdictions around the world.
On 1 February 2023 the Supreme Court handed down its judgment in the ongoing nuisance claim between the residents of Neo Bankside and the Tate Gallery relating to the public viewing gallery situated in the Blavatnik Building at the Tate Modern.
Lord Leggatt, who gave the leading Judgment (with which Lord Reed and Lord Lloyd-Jones agreed) decided that the Tate’s use of the viewing gallery does give rise to liability to the residents under common law nuisance and that the case should be remitted to the High Court to determine the appropriate remedy. The Judgment, which runs to 168 pages re-asserts the principles of the law of nuisance and considers its application to the facts and the decisions of the Courts below.
Background
The viewing gallery is situated on the 10th floor of the Blavatnik Building and affords a 360-degree panoramic view of London to visitors of the Tate Gallery at no cost. Around 5 and ½ million people visit the Tate Gallery each year and of those, it was estimated that around 500,000-600,000 visit the viewing gallery with a limit of around 300 on the gallery at any time. The Claimants all own flats that are situated in a development opposite known as Neo Bankside. The interior of the flats can be viewed easily from the south side and south western corner of the viewing gallery.
The Courts below
The Judge at first instance found on the facts that a significant number of visitors displayed an interest in the interior of the flats either by peering, photographing, waving or using binoculars to view. He considered this to be a material intrusion into the privacy of their living accommodation using “privacy” in its every day sense. Despite stating that such intrusive viewing could, in principle, give rise to a claim in nuisance he concluded that the intrusion experienced in this case did not amount to a nuisance for two reasons. Firstly, the claimants had properties with glass walls and secondly, because they had failed to take remedial measures to protect their privacy.
The Court of Appeal found that this reasoning involved material errors of law and that, had the principles of nuisance been applied correctly, the residents’ claim should succeed. Nevertheless, they then went on to dismiss the appeal. Their reason was that overlooking, no matter how oppressive, cannot in law count as a nuisance.
Supreme Court Decision
Lord Leggatt considered that whilst the Court of Appeal was right to hold that the first instance Judge incorrectly applied the law, it was wrong to decide that the law of nuisance does not cover a case of this kind, which he considered to be a straight forward case of nuisance. The notion that visual intrusion cannot constitute a nuisance is not supported by precedent and indeed the relevant authorities positively support the opposite conclusion. He concluded that in applying the well settled legal tests, the claim ought to succeed. He suspected that what lay behind the rejection of the claim by the Courts below was “a reluctance to decide that the property rights of a few wealthy property owners should prevent the general public from enjoying an unrestricted view of London and a major national museum from providing public access to such a view.”
This decision is a robust re-assertion of the protection afforded by the common law to privacy in the home. As a result, there was no need to extend the common law to accommodate the right to privacy guaranteed by Article 8 of the ECHR.
Natasha Rees, Senior Partner and lead lawyer advising the Claimants, said “Our clients are both pleased and relieved that nearly six years after they began their claim the Supreme Court has now found in their favour. Lord Leggatt, giving the majority judgment, recognised how oppressive it can be to live “under constant observation from the Tate’s viewing gallery for much of the day, every day of the week…much like being on display in a zoo.” Our clients now look forward to working with the Tate as valued neighbours to find a practical solution which protects all of their interests.”
On 3 November 2022, The Court of Appeal published its decision in O G Thomas Amaethyddiath v Turner & Ors [2022] EWCA Civ 1446 which concerned a narrowing of the scope of the Mannai Principle, a rule that can be relied upon in certain circumstances to save a defective notice.
The decision highlights the potential pitfalls in relation to the service of notices and emphasises the importance of taking proper legal advice when serving notices to ensure compliance with service requirements.
Mannai Principle
Parties serving notices must adhere to any contractual and/or statutory requirements that govern the service of the notice. However, if a party has failed to comply with these requirements, there are circumstances in which they may be able to rely upon the Mannai principle established in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19.
The Mannai principle may be relied upon to save a defective notice if the reasonable recipient “would not have been perplexed in any way by the minor error”.
This doctrine was tested in Trafford Metropolitan Borough Council v Total Fitness UK Ltd [2002] EWCA Civ 1513 and a two-stage test for the applicability of the Mannai Principle was established as follows:
Consider what the notice says on its true construction.
Compare the notice to the relevant requirements for that notice to establish whether the notice meets the requirements.
O G Thomas Amaethyddiath v Turner & Ors [2022] EWCA Civ 1446
The facts of the case were that:
Mr Thomas had a tenancy of an agricultural holding which he had assigned to a company without his landlord knowing.
He was the sole director and shareholder of the company and its registered address was the same as his home address.
Following the assignment, the landlord of the holding served a notice to quit at Mr Thomas’ home address and which was addressed to Mr Thomas rather than the assignee company.
The Court of Appeal held that this was not an instance in which the Mannai principle could save the defective notice. The notice was addressed to a previous tenant of an agricultural holding and so was not given to the current tenant. This is despite the fact that the landlord could not have known about the assignment and the current tenant was a company of which the previous tenant was the sole director and shareholder and both the company and the tenant were registered at the same address.
This case demonstrates how difficult it can be to serve notices correctly, given the strict requirements that apply. Not many cases will involve a concealed assignment but it remains important to ensure proper legal advice is always sought in relation to the service of notices and all available investigations are undertaken to ensure the correct party receives the notice at the correct place.
Cladding disputes: liability – Dan Cudlipp, Emma Forsyth & Phoebe Jackson write for the Property Law Journal
7 November 2022
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Construction Senior Associate, Dan Cudlipp, and trainees Emma Forsyth and Phoebe Jackson, have written for the Property Law Journal, on construction contracts and the implication of the judgment in Martlet Homes v Mulalley.
This article was first published in Property Law Journal 402 (November 2022) and is also available on lawjournals.co.uk.
The case of Martlet Homes v Mulalley [2022] concerns the use of defective cladding in high-rise tower blocks and is of particular significance as it is the first High Court judgement on a cladding system dispute following the Grenfell Tower tragedy.
Cudlipp, Forsyth and Jackson write of the background to the case, the claim judgement, and wider significance and highlight how: “In a construction contract, the question of whether there has been a design or specification breach requires a consideration of professional negligence.”
They summarise that “a holistic approach when considering regulatory framework is essential. Moreover, design and build contractors cannot shy away from their responsibilities as qualified designers by seeking to rely on what others in the industry may be doing.”
Google suffers blow in battle against €4bn EU fine: Caroline Harbord comments in The Times
20 September 2022
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Dispute Resolution Partner, Caroline Harbord, has been published in The Times commenting on the recent European Court ruling which saw the owners of Google lose their appeal against a record fine for abusing its dominance of the Android phone system.
Caroline commented that “Not only is the hefty fine bad news for Google in an of itself” but that the ruling “will very likely be used as a foundation for huge follow-on damages claims — potentially running into the billions —from those who have suffered loss as a result of Google’s conduct”.
In a further article for The Times, Caroline followed up by saying that the UK’s competition appeal tribunal’s opt-out group was “becoming increasingly tried and tested and funders and insurers are willing to back them — as demonstrated by the action filed against Google in respect of advertising malpractice”.
Expanding on last year’s success, this two day conference will be covering major areas of group litigation in the UK, international developments and practical considerations for bringing and defending against class actions.
Caroline will be speaking on the panel: ‘Group Litigation in the high court’.
The conference will take place from 19 to 20 October 2022. You can view the full agenda, and register to attend, here.
Loan agreement default interest rates: How much is too much?
31 August 2022
News
It would be a strange loan agreement indeed if there was no provision for the payment of interest by the borrower on the amount outstanding, and this rate of interest will generally increase if the borrower defaults on a payment.
But, can a lender impose any default interest rate they wish? The short answer is no. Although a higher interest rate is acceptable where there has been a default; justified by the increased credit risk taken on by the lender, an unusually high default interest rate could be deemed a penalty and actually be unenforceable by the lender as this recent case shows.
The facts
In brief, the borrower (Ahuja) had bought a property from the lender (Victorygame), which was partly funded by a loan from Victorygame. Ahujua subsequently defaulted on a payment under this loan, alleging misrepresentation.
The loan agreement specified that in the event of default (such as non-payment), the interest rate would be compounded on a monthly basis at a rate of 12% per month, a rate which represented a 400% increase on the pre-default rate.
The law and decision
Case law surrounding default interest rates has established that to avoid the risk of the interest rate being classified as an unenforceable ‘penalty’, the default interest rate should not be too high and should only run while the default continues. But, what is deemed as “too high”?
In the Ahuja case, the High Court undertook the analysis in two stages:
First, it considered whether the clause in question imposed a ‘primary obligation’, which is essentially a requirement for the contracting parties to carry out their contractual promises, as opposed to a ‘secondary obligation’, which is a requirement that arises by operation of law on the breach of a primary obligation. If classed as a primary obligation, the interest rate could not be a penalty. The court found however, that the manner in which the loan agreement was drafted clearly showed that the clause was meant to impose a secondary, rather than a primary, obligation in the event of breach.
The court then considered the ‘legitimate interest’ test, i.e. whether the obligation imposed was out of all proportion to any legitimate interest. The judge accepted that a defaulting borrower comprises an increased credit risk for the lender and as such, a higher default interest rate is more acceptable; in such a situation, the lender has a “legitimate commercial interest in applying a higher rate”. However, even though Ahuja did not provide evidence of market interest rates and Victorygame did not provide evidence to show that the rate imposed reflected a “genuine assessment of Ahuja’s creditworthiness in the event of default”, the High Court found the default interest rate was “so obviously extravagant, exorbitant and oppressive”, that it categorised it as a penalty and was therefore irrecoverable by Victorygame.
The court suggested that had the default interest rate been lower (for example at a rate of 200% or less), then the court might have been prepared to accept, without further evidence, the provision as ‘non-penal’ to reflect the greater credit risk presented by a defaulting borrower. However, any greater increase would require evidential justification.
Tips
As a borrower, ensure that you fully understand the interest rate provisions agreed and the maximum amount of interest that could be payable on any outstanding sum, particularly if an event of default arises.
Lenders should be aware that although higher interest rates are likely to be enforceable in respect of a defaulting borrower, there are limits as to how high such rates should go, particularly if there is no evidence to justify the higher rate. If Victorygame had provided a genuine assessment of Ahuja’s creditworthiness and evidenced particular factors affecting the credit risk posed or market interest rates at the time of entering into the loan agreement, they may just have got away with it.
If you would like further information about anything covered in this article, please contact our Banking team.
Disclaimer
This note reflects the law as at 31 August 2022. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
An English appeals court put multinational corporations on notice that they can be held accountable for worldwide operations by reviving a massive class action over dam failures in Brazil, signaling that the country’s courts should not shy away from handling mass claims regardless of where the underlying events took place.
Harbord said this summary “will no doubt cast fear into the hearts of multinationals who use complex group structuring over multiple jurisdictions.”
The article was first published on Law360 UK on 13 July 2022, and is available to read in full here, behind the paywall.
Renters’ Reform Bill: A ‘New Deal’ for Residential Tenants
6 July 2022
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Property Litigation Partner, Natasha Rees, and Associate, Elizabeth Oxendale, consider the Government’s long awaited White Paper published on 16 June, which sets out the 12 point action plan to reform the private rented sector.
While there is currently no indication of when the Bill will become law, it is set to introduce changes which will fundamentally overhaul the existing basis of the Private Rented Sector.
Supreme Court ruling paves way for 5G coverage expansion in the UK – Anna Mullins speaks to City AM
28 June 2022
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Property Litigation Partner, Anna Mullins, spoke to City AM following the Supreme Court’s ruling that makes it easier for telecommunications firms to deploy 5G infrastructure in the UK.
The judgment, which comes as the government pushes ahead with plans to transform the UK into a “global leader in 5G”, stipulates that telecoms firms have the right to upgrade their existing phone masts, even in the cases where landowners do not grant them permission.
Mullins described the ruling as a “triumph for technology.”
An antitrust tribunal has given the go-head for a £2billion claim over a price-fixing cartel, granting the U.K.’s first ever opt-in class action.
Harbord said “while standalone opt-in applications may be made in specific circumstances, such as a trade body with a significant and unusually motivated membership that has signed up for the claim, these circumstances are quite unusual.”
The article was first published on Law360 UK on 17 June 2022, and is available to read in full here, behind the paywall.
In their article, they explore the facts of Philipp v Barclays, the Court of Appeal’s approach to Quincecare, and the many questions that are currently left unanswered.
“Retail banks will most likely need to revisit their policies and procedures for detecting and preventing APP fraud and/or reversing monies that have been misappropriated by virtue of it.”
The article was first published in the New Law Journal on 10 June 2022. You can read the full article here.
High Court judgment highlights the complexities of refusing consent: Anna Mullins writes for Property Week
8 June 2022
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Property Litigation Partner, Anna Mullins, has written for Property Week on the recent High Court judgment handed down in Davies-Gilbert v Goacher and Chester [2022] EWHC 969 (Ch).
Part of the claimant’s land benefited from a restrictive covenant, which prevented the defendants from constructing any building without the claimant’s consent. The claimant refused consent but the defendants proceeded to commence building anyway, in the belief that the refusal was unreasonable.
The claimant issued proceedings and, although the refusal was eventually held to be reasonable, the judgment emphasises, not only the importance of the decision-making process when refusing consent, but also the many complexities that practitioners and landowners (and by wider implication landlords and tenants) must consider when refusing consent.
Mullins says: “it is important to remember that the burden of proof for proving that the covenantee’s refusal of consent is unreasonable lies upon the covenantor. It is not up to the covenantee to justify their decision as reasonable”.
The article was first published in Property Week on 7 June 2022 and is available to read in full here, behind the paywall.
Economic Crime Act – compliance tips for accountants: Bryan Shacklady and Joe May write for Accountancy Daily
25 May 2022
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Bryan Shacklady, Counsel, and Joe May, trainee solicitor, at Forsters LLP examine what accountants need to consider if their clients are affected by the Economic Crime Act and how the new legislation will work.
In response to the current situation in Ukraine, parliament hastily passed the Economic Crime (Transparency and Enforcement) Act 2022 introducing the register of overseas entities. Broadly speaking, the Act requires the identification of ultimate beneficial owners of UK land, similarly to the persons of significant control regime introduced in relation to UK companies in 2016. The Act also strengthens the unexplained wealth orders regime introduced in 2018 and streamlines the existing arrangements in relation to sanctions.
With this, the government delivers the message that the UK is not a soft touch for economic crime. At the same time, the Act is only part I of the proposed reforms to target the financial assets of wrongdoers.
The government states: ‘These measures form part of a wider package of legislative proposals to tackle illicit finance which will be introduced in parliament in the coming months, including reforming Companies House and introducing new powers to seize crypto assets more easily.’
UK government agencies have already begun to adapt to new classes of assets such as non-fungible tokens (NFTs) and cryptocurrency, the most well-known of which is Bitcoin. For example, HMRC recently seized three NFTs in relation to a suspected £1.4m VAT fraud and about £5,000 worth of cryptocurrency assets.
It is not yet clear what wider powers the government intends to take in relation to crypto assets. However, practitioners would be wise to flag the coming focus on such assets to their clients and to bear in mind three key points.
Implications for holders of cryptocurrency
First, while cryptocurrencies have a reputation for being untraceable and anonymous, this is overplayed. Transactions involving Bitcoin are recorded publicly, albeit in an anonymous form, which can assist tracing when the operations are accompanied by other information.
Many people will hold their cryptocurrency through digital exchanges or mobile wallets,which are regulated in the UK if based here. There will be records showing how the crypto assets were acquired and who is entitled to them. It will not be difficult to craft legislation requiring cryptocurrency infrastructure providers to divulge that information to law enforcement authorities.
Second, even if assets are held in jurisdictions where regulation is lighter, a UK person is likely to leave a trace when moving the funds to acquire those assets. For example, a bank transfer from a UK bank account to a wallet provider will be recorded by the UK bank.
With this information court orders may be obtained abroad or made in the UK against UK-based persons to divulge further information in relation to those assets. This might lead to successful asset tracing and seizure.
Third, practitioners will need to be aware that crypto assets can be held ‘off-grid’ or in’cold storage’. Here, the wallet containing the cryptocurrency is secured by a key held by the person who owns the cryptocurrency. That key could be written down or put on a USB stick and kept in a safe. It would be prudent for practitioners to regard crypto assets stored in this way as cash or precious metal. Even so, the process of acquiring such assets may leave traces, and the authorities could be empowered to seize the key if it is recorded on a physical object.
Furthermore, the new legislation may not only focus on the cryptocurrency infrastructure providers, but also on professional advisers. Responding to orders to divulge information that advisers hold on clients may be costly and time consuming.
Professionals will want to ensure that they are indemnified or insured against such risks when the legislation is published in its intended form. They will also need to inform clients of the duties imposed on advisers that clash with the duties owed to clients, such as confidentiality.
It is also important to consider potential consequences of a deliberate or inadvertent failure to comply with either legislation or a court order.
Finally, it is necessary to be aware of how existing legislation may be used to target crypto assets. As one example, we touched briefly above on transactions in bank accounts that show transfers being made to crypto exchanges or wallet providers. Where such assets do not appear in a client’s assets as known to you, is it time to make a suspicious activity report to the National Crime Agency?
All these considerations mean it is more important than ever to be on top of the changing nature of assets in the digital world.
This article originally appeared in Accountancy Daily on 23rd May 2022, and is available here behind their paywall.
Renters’ Reform Bill – the end of no fault evictions?
18 May 2022
News
The government has announced in the Queen’s Speech that it will shortly publish a White Paper setting out details of the much anticipated Renters’ Reform Bill.
The Bill was first proposed by Theresa May’s government in April 2019 to offer tenants renting privately greater security. Having lost momentum whilst the COVID pandemic became the government’s priority, it now forms part of the government’s “levelling up” policy.
The main elements of the Bill are as follows:
The abolishment of “no fault” evictions. These currently fall under section 21 of the Housing Act 1988 and allow landlords to serve a notice on tenants to terminate the tenancy without reason;
Reforming possession grounds for landlords, introducing new and stronger grounds for repeated incidences of rent arrears, and reducing notice periods for anti-social behaviour;
The application of a legally binding “Decent Homes Standard” in the Private Rented Sector, intended to stop private landlords renting out homes that are of such a low quality that they endanger the health of their tenants;
The introduction of a new Private Renters’ Ombudsman, intended to resolve landlord and tenant disputes without the need to go to court; and
The implementation of a new property portal to “help landlords understand their obligations, give tenants performance information to hold their landlord to account, and help councils crack down on poor practice”. It is not entirely clear what this will entail.
In an accompanying press statement, Michael Gove described the use of section 21 as an “injustice that sees renters unable to put down roots in their communities”. Whilst its arbitrary nature can lead to tenants being subjected to unfair treatment, many landlords use section 21 to legitimately end tenancy agreements – for example if they wish to sell the property. If the government is to maintain a fair balance between landlords’ abilities to deal with their assets and tenants’ abilities to live securely in their homes, it will need to introduce additional grounds for possession as well as strengthening the current regime.
It is clear that change is firmly on the government’s agenda but for now the law remains unchanged and the proposed reforms are unlikely to come into force for some time given they are at a preliminary stage. Any landlords or potential landlords should bear in mind that the introduction of these reforms could, in due course, severely restrict the ability to obtain vacant possession of properties within their portfolio.
Axa is suing Santander for £624m, a loss that Axa says it has suffered as a result of successful Financial Ombudsman Service claims concerning Axa payment protection insurance policies allegedly mis-sold by Santander.
“This is why it is important to have robust contractual arrangements in place. These arrangements should make it clear where and with whom liability sits when things go wrong.”
With Axa suing Santander for £624m over its payment protection insurance policies, Caroline Harbord,partner, and Charlie Paddock, trainee solicitor at law firm Forsters, discuss the importance of robust agency arrangements in insurance sales and supply chains.
Axa is suing Santander for £624m, the quantum of loss that Axa says it has suffered asa result of the tsunami of successful Financial Ombudsman Service claims concerning Axa payment protection insurance policies allegedly mis-sold by Santander.
This case provides a salutary lesson for insurance companies regarding the importance of having robust contractual arrangements in place.
For background, Santander was engaged to sell Axa PPI policies to consumers pursuant to the terms of an agency agreement between Axa and Santander. Axa now alleges that Santander mis-sold the PPI in breach of the express terms of the agency agreement and the Association of British Insurers’ code of practice of general insurance. Axa is seeking to recover its significant losses via: the indemnity in the agency agreement, general contractual damages, and the terms of an unexecuted settlement agreement. The status of the settlement agreement is in dispute between the parties and has formed the basis of Santander’s recent strike out application.
What is particularly interesting about the facts of the case is that when the PPI liabilities first started to arise, neither party appears to have been clear about who was responsible for the liabilities. Initially, Santander paid out on all the FOS judgments. Then Axa started to pay out for certain liabilities but was compensated by Santander. That lasted until Santander decided it was no longer happy with that arrangement and asserted that Axa should bear certain liabilities in their entirety.
This is why it is important to have robust contractual arrangements in place. These arrangements should make it clear where and with whom liability sits when things go wrong. This is particularly crucial when it comes to selling insurance and financial products, given the associated regulatory requirements which must be complied with at the point of sale. Agency agreements should, therefore, also contain robust compliance, supervisory and audit provisions, so that the insurer can satisfy itself as to its agent’s continued compliance with regulatory obligations.
Achieving contractual nirvana is, of course, often easier said than done. It is impossible to predict all the ways in which liability might arise and this can be particularly complicated when supply chains are multi-jurisdictional. In cases where unexpected liabilities do arise in a sales and supply chain, the parties would do well to get the lawyers in early to establish and record who is responsible for the losses. Had Axa done this back in 2014, it may have found its bottom line to be better off by the tune of £624m.
Axa is, however, in some ways fortunate that the agent in question is an institution of significant financial standing.This is important because it makes suing Santander worthwhile. If Axa succeeds in the claim, it has a good chance of being able to successfully enforce the judgment and receive the cash back in to its pocket.
The contractual considerations raised in the preceding paragraphs are rendered entirely academic in cases where the party in the supply chain that is contractually liable for losses has no financial substance to meet them. In these cases, the party in the supply chain with the deepest pockets may find itself forced to bear all third-party liabilities irrespective of what any agency or supply chain agreements provide about who should technically bear these liabilities as a matter of contract.
The article was first published on Insurance Post on 15 April 2022. You can read the full article here, behind the paywall.
Roberta Harvey to speak at ThoughtLeaders4 Contentious Circle of Trusts event
28 April 2022
News
Head of Contentious Trusts and Estates, Roberta Harvey, has been invited to facilitate a session on ‘Diminishing capacity of power holders’ hosted by ThoughtLeaders4 with Jordan Holland of 5 Stone Buildings.
In the session, Roberta and Jordan will discuss disputes in relation to incapacitated persons’ assets from a multi-jurisdictional perspective.
The event will take place from the 28 -29 April at Down Hall Hotel, Bishop’s Stortford.
Roberta is delighted to be attending the event with Consultant, Alison Meek who will join Forsters’ Contentious Trust and Estates team (link to press release) on 3 May 2022.
Death in the Modern Age conference: Hannah Mantle to speak on Conflict of Laws and multi-jurisdictional claims
25 April 2022
News
Contentious Trusts and Estates Senior Associate, Hannah Mantle, will be speaking at the ThoughtLeaders4 Private Client conference, Death in the Modern Age: UK & Cross-border probate, wills, and trusts on 26 April 2022.
Hannah will be joined by Prof Jonathan Harris QC (Hon.) (Serle Court) and Aurélie Conrad Hari (Bär & Karrer) to speak on ‘Conflict of Laws and multi-jurisdictional claims’.
The event will explore the latest challenges and issues in Wills and Probate in the modern digital age and will include informative panel discussions, interactive workshops and seminars hosted by industry experts.
To find out more and to book a place at the conference, taking place at the Ironmongers’ Hall, London please click here.
The impact of Croydon LBC v Kalonga on fixed-term tenancies: Sarah Heatley speaks to Property Week
21 April 2022
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Property Litigation Senior Associate, Sarah Heatley, has written for Property Week on the recent judgement handed down by the Supreme Court in Croydon LBC v Kalonga [2022] UKSC and the impact this will have on fixed-term secure tenancies.
Until the Localism Act 2011 came into force, it was relatively straightforward for landlords to obtain possession of their properties (subject to serving the correct notice period and agreement by the courts). The Act and the advent of flexible tenancies changed this, making it unclear how possession could be obtained during the fixed term (usually of at least two years).
In the case of Kalonga, the Supreme Court held that there are two ways of doing so – via a break clause or a forfeiture clause in the tenancy contract – without which, the tenancy would continue until the end of the fixed term.
Heatley says: “The clarity by the Supreme Court on this matter will surely be welcomed by landlords and tenants alike.”
The article was first published on Property Week on 13 April 2022 and is available to read here, behind the paywall.
After two years of postponements, the conference will bring together leading solicitors, barristers, offshore lawyers and trust practitioners.
Emily and Roberta will be hosting alongside Andreas Zavos (Boodle Hatfield), Maxine Mossman (Clifford Chance), Jenny McKoewn (Stephenson Hardwood), Helena Berman (Stephenson Harwood) and Emma Jordan (Taylor Wessing).
The Commercial Rent Bill: A Last Resort for Pandemic-Related Losses – Julia Tobbell writes for CoStar
13 April 2022
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Property Litigation Partner, Julia Tobbell, has written for CoStar News on The Commercial Rent (Coronavirus) Bill and the end of the moratorium on tenant evictions.
Whilst the Act creates a mechanism to address the issue of rent arrears accrued during the pandemic, the length and expense of the arbitration process suggests that the Government intends parties to use it only as a last resort.
Tobbell says, “Ordinarily arbitration is a private process, which is attractive to many commercial parties. However, the Act allows either party to request an oral hearing in public, and awards must be published except for limited confidential information. This could be a powerful disincentive to proceeding down this route, as tenants will have their finances laid bare in a public forum.”
The article was first published in CoStar on April 6 2022 and can be read in full behind the paywall here.
Thursday saw an antitrust tribunal refuse to allow a £1 billion forex rigging claim to proceed as an opt-out collective action, marking a toughening approach that attorneys say will rein in cases brought under the U.K.’s class action regime.
Harbord said “the court for the first time had to consider whether it could act on its own initiative and gave very strong guidance that it doesn’t like the claim. That is significant.”
The article was first published on Law360 UK on 1 April 2022, and is available to read in full here, behind the paywall.
