Fri07282017

Last updateTue, 24 Feb 2015 5pm

Clare Arthurs and Nicole Finlayson present a few recent legal highlights

Whisper it, but – for the first time ever – we have sympathy with our politicians. How to choose which issues to highlight? What some of you find central to your practice, others may dismiss as a sideshow. Focusing on the bigger (often already much discussed) issues may lead to eye-rolling or disengagement… and there are so many issues to cover! Here are our (s)elected few for this edition.

John Doherty and Nicole Finlayson provide a timely update on bribery and corruption

Bribery and corruption are firmly in the spotlight for 2017, with an ever-increasing commitment from regulators in the UK and abroad to work together and take a harder line against companies which fall foul of anti-corruption laws. The results can be seen in the wave of high-profile investigations and record-breaking prosecutions and fines that have hit the headlines over the past few years.

Hannah Gearey outlines the points considered when there is a conflict between the authority of the deputy and trustees in the case of a personal injury trust

The question that arose in the case of Watt v ABC [2017] highlights the conflict that can arise between the authority of a deputy appointed by the Court of Protection, and the trustees of a personal injury trust.

Clare Arthurs and Nicole Finlayson review recent decisions

Life as a commercial litigator is (large disclosure exercises aside) usually varied and stimulating. No two cases are ever the same, and you never know what is going to cross your desk next. With that in mind, this column offers a smorgasbord of recent cases for your delectation.

Clare Arthurs and Richard Marshall take a view on the direction of reform

This time last year, we were reeling from Jackson LJ’s proposal to extend fixed recoverable costs across all types of cases under £250,000; this proposal, he said in his speech to the Insolvency Practitioners Association in January 2016, could be implemented by the end of 2016, if the political will was there. Perhaps unsurprisingly, given last year’s events, the political will appeared to be (at least temporarily) elsewhere. But what might the future hold for litigation?

Iain Managhan analyses new OPG guidance on giving gifts on behalf of someone else

Last year the Office of the Public Guardian (OPG) produced a guide aimed directly at attorneys and deputies entitled ‘Giving Gifts for Someone Else’. The aim of the guide is to provide clear advice, based on the legislation, as to what gifts an individual acting under an enduring or lasting power of attorney or deputyship order can make on behalf of someone else.

Clare Arthurs and Phillip D’Costa highlight recent case law on frustration

Frustration: the feeling of being upset or annoyed as a result of being unable to change or achieve something. An apposite word for many in this most capricious of years. Legally speaking, a contract is frustrated when something happens which makes it impossible or illegal to perform the contract, or which changes the parties’ contractual rights and obligations so fundamentally that it would be unjust to make the parties perform them.

Alex Fox and Rebecca Andrews-Walker weigh up the recent decision in Horton v Henry

When this topic was last considered two years ago, there was a real danger of pension rights (previously thought of as sacrosanct) being within the reach of trustees in bankruptcy by way of an income payments order (IPO). There were also two conflicting first instance decisions in play. The issue? Whether a pension entitlement capable of drawdown by election, but not yet in payment, can fall within the definition of income in s310(7) Insolvency Act 1986 (IA 1986), and so be the potential subject of an IPO.

Rustam Dubash and Clare Arthurs consider the conclusions of the Briggs Review

Briggs LJ described the purpose of his recent Civil Courts Structure Review as (1.3):

Alex Fox and James Harrison ponder the practicalities of privilege post Panama Papers

We are all familiar with the concept of privilege, but the Mossack Fonseca leak has put privilege and confidentiality firmly in the spotlight, for all the wrong reasons. Can privilege withstand the modern threats of computer hacking and widespread, near instantaneous leaking of confidential information? Recent case law suggests that judges worldwide are re-examining the principles of confidentiality and privilege and exercising their discretion to ensure that justice is done.

Chris Syder looks at the potential impact of the Modern Slavery Act

The UK’s Modern Slavery Act 2015 (the Act) not only sets out stronger criminal sanctions against those who profit from this form of gross human exploitation, but has provided society with the opportunity to scrutinise and hold businesses more accountable for what they are doing to counter modern slavery. The Act requires both UK and foreign companies and other commercial organisations (including partnerships and LLPs) that carry out any business involving goods and/or services in the UK, and have a global annual turnover of £36m or more, to prepare and publish a slavery and human trafficking statement (a statement) for each financial year ‘as soon as reasonably practicable after the end of each financial year’. Businesses with a year end of 31 March 2016 were the first required to publish a statement under the Transparency in Supply Chains clause.

John Doherty and Richard Reeve-Young explore the vexed question of legal professional privilege in the context of increasing regulation

In a breakfast meeting in support of Youth At Risk on 9 March 2016, ‘The Scope and Role of the Legal Professional Privilege and its proper place in the context of corporate internal investigation’, Lord Neuberger commented on the increasingly contentious issue of the application of legal professional privilege (LPP) to communications/documents generated by lawyers in the context of corporate internal investigations. This area of the law is in sharp focus at present and developing swiftly, driven by greater regulatory enforcement, especially in the areas of bribery and corruption, which carry significant fines and prison sentences. Perhaps somewhat counter-intuitively, we turn first to Lord Neuberger’s concluding remarks, in which he empathises with the role of a professional adviser in an increasingly complex and fast-moving world (para 25):

David Niven and Elisabeth Mason explore a recent judgment on aggregation

The Court of Appeal has ruled on the proper construction of the aggregation clause in the Solicitors’ Regulation Authority’s (SRA’s) ‘Minimum Terms and Conditions of Professional Indemnity Insurance’ (the MTC).

Matthew Howson examines the lessons from Winkler v Shamoon [2016]

Sami Shamoon (Mr Shamoon) had a remarkable life. Born in the 1930s to an Iraqi Jewish family, he spent his life as a refugee: first to Iran, and then, following the revolution, to London. Despite this he built a £1bn empire in pharmaceuticals, iron ore, oil pipelines and the largest citrus fruit growers in Israel. He ended his life in 2009 as one of Israel’s richest men, living in the orphanage he founded.

Richard Marshall and Clare Arthurs share some concerns over the proposed extension of the fixed-costs regime

He’s tenacious, Jackson LJ, you have to give him that. In 2009 he suggested fixed recoverable costs across the fast track, to impose proportionality and to avoid satellite litigation. He has returned to this theme several times since, until January’s now infamous proposal that fixed costs apply to all claims up to £250,000.

Noel McMichael and Nicole Finlayson consider a recent Supreme Court ruling

In December 2015, the Supreme Court handed down a significant judgment on the nature and effect of the ‘proper purpose’ rule in company law and when the presence of an improper purpose will invalidate a decision of directors ((1) Eclairs Group Ltd (2) Glengary Overseas Ltd v JKX Oil & Gas plc [2015]). In doing so, it overturned the previous decision of the Court of Appeal and restored the decision at first instance. The judgment is interesting for its analysis of how the ‘proper purpose’ provisions interact with other provisions of the Companies Act 2006 (the Act) which are intended to protect companies from external, rather than internal, interference/manipulation.

Clarke v Brothwood [2007] indicates the circumstances in which ‘clerical error’ allows rectification. Siân Hodgson reports

Until 1983 there was no power to rectify a will. If a will was wrongly drafted and did not reflect a testator’s instructions, the furthest that a court could go was to omit spurious words.

Mark Lewis and Elisabeth Mason assess a recent case of difficult drafting

In BT Cornwall Ltd v Cornwall Council [2015], the High Court has ruled that Cornwall Council and others were entitled to terminate an outsourcing contract with BT Cornwall Ltd (BTC) due to BTC’s failure to meet certain key performance indicators (KPIs). The judgment provides some interesting practical pointers for those negotiating and drafting these complex documents and those considering terminating contracts.

Dr Sam De Silva highlights the merits of a key commercial principles document

Given the complexity of strategic outsourcing contracts, once the parties have reached agreement on principle deal points, they may wish to shape a deal and qualify it at various stages by executing a non-binding key commercial principles document (also known as a heads of agreement or memorandum of understanding). The key commercial principles document is a short non-legal document that captures the essence of the deal under discussion. As such, it should provide sufficient information about the shape and scope of the deal to enable the parties’ legal advisors to produce an initial draft of the outsourcing contract.

Mark Lewis and Clare Arthurs report on the proposed changes to costs management

The Civil Procedure Rules Committee (CPRC) has been busy. Among other things, it has proposed amending the costs management provisions in Civil Procedure Rules (CPR) 3.12 and 13, Precedent H, and substantially adding to the Precedent H guidance notes in Practice Direction (PD) 3E. Let’s get the caveats out of the way first: there is no set date for these proposed amendments to come into force, although it is possible that they will form part of the 83rd Update to the CPR in April 2016.

Chris Syder outlines the requirements of slavery and human trafficking statements

The Modern Slavery Act 2015 (the Act) requires both UK and foreign companies and other commercial organisations (including partnerships and LLPs) that carry out any business in the UK and have a global annual turnover of £36m or more to prepare and publish a slavery and human trafficking statement (statement) for each financial year. Around 12,000 large UK companies will be caught by this financial threshold. Businesses with a year-end of 31 March 2016 will be the first required to publish a statement under this new transparency provision. Consequently these businesses should start seriously considering the requirements for a statement.

Noel McMichael and Clare Arthurs analyse the impact of Makdessi

The Supreme Court has re-examined the rule against penalties in contracts. Its judgment in the joined cases of Cavendish Square Holding BV v El Makdessi; ParkingEye Ltd v Beavis [2015] has been widely welcomed as introducing greater clarity and flexibility to this somewhat opaque principle. Just how much certainty will be gained in practice remains to be seen. What is clear is the Supreme Court’s continued determination to protect the sanctity of contracts and minimise judicial interference in freely negotiated agreements after the event (see also Arnold v Britton [2015]).

Iain Managhan offers an update on recent revocation of power of attorney cases

There have been a number of cases heard in the Court of Protection this year that deal specifically with the issue of revocation of a power of attorney. When one considers these as a whole, it is clear that there are a number of recurring themes which ultimately lie at the heart of the majority of cases.

Clare Arthurs and Richard Marshall assess the value of early neutral evaluations

Litigation, the Pre-Action Practice Direction tells us, should be ‘a last resort’. That same PD states sternly that parties should consider the possibility of reaching a settlement at all times, including after proceedings have been started. It then lists several forms of alternative dispute resolution (ADR) which parties might consider. Among them (para 10(c)) is ‘early neutral evaluation, a third party giving an informed opinion on the dispute’.

David Niven and Elisabeth Mason look at aggregation clauses and the AIG Europe case

The High Court has ruled for the first time on the proper construction of the aggregation clause in the Solicitors Regulation Authority’s Minimum Terms and Conditions of Professional Indemnity Insurance (the MTC).

Matthew Howson outlines the lessons from Australian case Hancock v Rinehart [2015], which considered fraud on a power and replacement of a trustee

Gina Rinehart (Mrs Rinehart) is the only child of mining magnate Langley Hancock. She is valued at approximately $14bn and is still, despite falling iron ore prices, the richest person in Australia. She claims to be more businesslike than her father and has not only maintained but also expanded his empire. She is also familiar with trust disputes. The Hope Margaret Hancock Trust (the ‘trust’), the object of these proceedings, was settled in 1988 as a compromise during her litigation with her father over his new maid-turned-wife. The trust’s sole asset is a 24% holding, valued at $5bn, in Hancock Prospecting Pty Ltd (HPPL), the family mining concern. Mrs Rinehart owns the remaining 76%.

Nicola Hibbert examines how changes to the presumption of death legislation have brought in a single framework for dealing with the affairs of a missing person

According to the charity Missing People, approximately 250,000 people go missing in the UK every year. Thankfully, the majority of these are resolved relatively quickly but 1% of disappearances remain unsolved after a year. The families of these people are left with a range of emotional, practical, financial and legal difficulties.

Stuart Adams discusses the first round in what appears to be a solid case for the rectification of a deed of variation

The case of Vaughan-Jones v Vaughan-Jones [2015] was heard on 5 March 2015 by His Honour Judge Hodge QC, who handed down his judgment on 22 April 2015.

Rustam Dubash and Clare Arthurs evaluate the new bill of costs and time recording codes

Opinion appears divided about the proposed new form bill of costs and the standard time recording codes which underpin it (the J-Codes). On the one hand, there is concern that they are more complicated and time-consuming for practitioners; on the other, recognition that they should prove much better for clients and the courts. Debate in our team has been lively, but there is no escaping the fact that the time recording and billing landscape is set to change in the near to medium future.

Clare Arthurs and Sebastian Kokelaar examine the role of commercial common sense in the interpretation of contracts after Arnold v Britton

In the case of Arnold v Britton [2015] the Supreme Court has again had occasion to consider the principles governing the interpretation of contracts. This is the fourth time in a decade that this subject has been considered at the highest level. The decision is important because it revisits the question of how far the courts should allow themselves to be guided by commercial common sense in construing the language used by the parties in their agreement.

Dr Sam De Silva considers the reasons for renegotiating outsourcing contracts

There are many reasons why a customer may seek to renegotiate an outsourcing contract, such as:

Clare Arthurs and Julie Bond provide a timely reminder of the rules relating to litigants in person

Swingeing cuts to legal aid; vastly increased court fees; an increased small claims limit; the ‘unbundling’ of legal services… No wonder most courts and tribunals are dealing with increasing numbers of parties who are unrepresented for some or all of the court process. Litigants in person (LiPs) create challenges for the judiciary and the legal professions alike. To quote the Master of the Rolls, the main challenge for our justice system is ‘to make sure that everyone is treated equally, fairly and impartially and according to the law’.

John Doherty and Nicole Finlayson review the battle against corruption

Bribery and corruption are a scourge on society, threatening democracy and fairness, damaging institutions and hampering economic development and growth. Given the cross-border reach of many offences, the fight against bribery and corruption is a global one and relies on cooperation between countries and strong bribery and corruption laws across the world.

Dr Sam De Silva analyses managing legal risks within the supply chain

In a typical outsourcing arrangement, a customer will engage a service provider and will expect that service provider to provide the services itself. However, there are many instances where the selected service provider may need to subcontract its obligations to a third-party subcontractor. The subcontractor may then in turn need to further subcontract to another third party and this could be the beginning of a complex supply chain. How can the customer manage the risks related to a third party in the supply chain failing?

Hannah Herbert provides an update on AML4

On 16 December 2014 the Presidency of the Council of the European Union and the European Parliament finalised a compromise draft text of the 4th Anti Money Laundering Directive (AML4).

In the first of a regular comment column, Clare Arthurs and Richard Marshall consider recent developments

We have a new pre-action practice direction! The catchily titled ‘Practice Direction Pre-Action Conduct and Protocols’ (the PD) came into force on 6 April 2015. It replaces the ‘Practice Direction – Pre-Action Conduct’ (the PDPAC), although it currently goes by the old name on the Ministry of Justice website. The question is – what, if anything, has changed?

Rebecca Andrews-Walker and Alex Fox investigate the strained relationship between insolvency and pension assets

In a challenging economy, bankruptcy increasingly stands accused of constituting a mechanism for debtors to escape their responsibilities at their creditors’ expense. It understandably remains a live debate as to whether a bankrupt should be afforded the means of a protected pot of money for their future use while their creditors are left unrecompensed for their loss. The debate is not new, but the balance has perhaps shifted in a climate where creditor losses are felt particularly keenly. Should a bankrupt be permitted to retain their pension pot for whatever use they see fit, or should it be utilised to soften the blow within the bankruptcy estate?

Sarah Lee sums up the main provisions of the Care Act 2014 for private client practitioners

On 1 April 2015, most of part 1 of the Care Act 2014 (the Act) came into force. This follows years of consultation and review going back to the government’s ‘Vision for Adult Social Care’ launched in November 2010 and the Law Commission’s report on adult social care published on 11 May 2011.

In the conclusion to a two-part consideration, Dr Sam De Silva looks at the different types of service levels and the consequences of failing to meet them

Part one of this article discussed ways to measure service levels and specify performance standards. This concluding part will explore types of service levels, including those for business process outsourcing, and what happens when a party fails to meet business critical levels.

Edward Floyd looks at the court’s jurisdiction where permission to appeal has already been refused and the meaning of a real prospect of success

In McHugh v McHugh [2014] the Court of Appeal provided an overview of the circumstances in which it has jurisdiction to hear an appeal against a financial remedies order and, conversely, situations where legislation and public policy dictate that finality should be brought to bear on family litigation.

Alex Fox, Chris Hoyer Millar and Clare Arthurs discuss the evolution of offers to settle, Part 44 and changes to Part 36

Litigation, we are told, should be the last resort for parties in dispute. The courts and practitioners are exhorted to encourage parties to settle their disputes early and at both reasonable and proportionate cost. Case law increasingly shows the courts frowning upon parties (and their advisers) for failing to settle before trial or to control the associated costs. Easier said than done, sometimes: not least where there are different rules and costs consequences governing an offer depending on how it is made.

In the first of a two-part analysis, Dr Sam De Silva outlines the role of service levels

In most outsourcing contracts, customers are naturally concerned with their ability to motivate a services provider to deliver services that meet the customer’s needs and expectations. While there is no such thing as ‘perfect’ service for the myriad of tasks involved in an outsourcing transaction, customers will expect the service provider to provide these services at a particular service level (ie a specific minimum level of efficiency, accessibility, quality or timeliness).

Mark Lewis examines recent case law on the interpretation of outsourcing agreements

Outsourcing agreements need to cover a lot of ground and yet retain a great deal of flexibility in order for the parties’ contractual relationship to cope with both planned and unplanned change. Contracts often seek to set qualifying thresholds such as ‘material change’ or ‘material breach’. The required flexibility can be obtained, at the cost of certainty, and difficulties can arise over what ‘material’ actually means in practice. Burton J’s judgment in Decura IM Investments LLP v UBS AG [2015] shows the court’s recent approach to this question.

As mobile working grows in popularity, it is not always easy to say where an employee is based, which can cause difficulties on dismissal, explains Julian Yew

Under s139 of the Employment Rights Act 1996 (ERA), there are four types of redundancies, of which two concern the place of work. A redundancy may arise where, for example, the employer has ceased, or intends to cease, to carry on its business in the place where the employee was employed (s139(1)(a)(ii) ERA). While this provision may seem relatively straightforward, there has not been any established legal authority on the issue of mobile employees.

Martin Codd assesses the outcome of two recent decisions highlighting the complexities of leasebacks on collective enfranchisement claims

Two recent cases heard in the Upper Tribunal (Lands Chamber) have highlighted the need for landlords and tenants to consider more carefully the terms of any leaseback when dealing with a collective claim brought under Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act).

Mark Lewis provides a timely reminder to make sure your audit clause is fit for purpose

Audit clauses are an important tool in IP agreements, intended to allow a licensor to check that the licensee is complying with the terms of the licence agreement and, in particular, paying the correct royalties. The case of 118 Data Resource Ltd v IDS Data Services Ltd [2014] involved an audit clause in a database licence agreement. The judgment reinforces the message that parties should be clear about the specific rights being granted, as the court will not go further than necessary to imply terms which are not set out expressly in the agreement. Similar considerations will apply to the audit clause in any IP licence agreement.

Julian Yew and Georgina Hedges outline a recent case of an outgoing supplier being fined for failure to provide accurate employee liability information

An incoming supplier is entitled to ‘employee liability information’ (ELI) from the outgoing supplier under Reg 11(1), TUPE 2006 (Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended)). For service provision changes taking place on or after 1 May 2014, the ELI must be provided not less than 28 days before the transfer. A salutary warning of the consequences for failure was highlighted in a recent case where the outgoing supplier was fined a substantial amount for failure to comply with their statutory obligations. This article will explore the case and share some practical tips on managing the due diligence process.

Rebecca Andrews-Walker and Clare Arthurs assess the impact of Coventry v Lawrence

Just as the dust was beginning to settle from the changes to funding and recoverability of costs ushered in by the Jackson Reforms, the Supreme Court has agreed to hear a challenge to the costs regime which they superseded. In essence, the argument in Coventry v Lawrence [2014] is that the requirement that the losing party pay any success fee or ATE premium incurred by the successful party is an infringement of their rights under the European Convention of Human Rights (the Convention). The ramifications of such a finding are potentially huge and, for the government, expensive.

Sam De Silva reviews the options for intellectual property ownership in outsourcing contracts

In those outsourcing contracts where deliverables are created as a result of the services, the ownership/licensing of intellectual property (IP) should be considered. There are a number of options to consider. It should be noted that there are no right or wrong answers and the approach adopted will depend on a multitude of factors, including the commercial bargaining power each party holds.

Siân Hodgson examines the dangers of informal farming arrangements between family members in Creasey v Sole

Creasey v Sole [2013] was a dispute between six brothers and sisters about farmland in the Isle of Wight which was owned by their parents. The case raised a number of issues, including the effect of a conditional gift in a will and whether one of the sons could remain in occupation of the land, but this article focuses on the claim raised under the Agricultural Holdings Act 1986 and the proprietory estoppel claim.

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