Lyn Brisley looks at the new Supreme Court ruling on pre nuptial agreements

Pre-nuptial agreements allow people to ringfence part of their wealth at the outset of a marriage. They are enforceable in many countries but they have never been binding in England and Wales

However, the Supreme Court has ruled that a pre-nuptial agreement is binding in the case of a German paper company heiress.

Katrin Radmacher's ex-husband Nicolas Granatino went to the Supreme Court after appeal judges slashed his divorce settlement from more than £5m to £1m.

The Supreme Court said it agreed that in the right case pre nuptial agreements can have decisive or compelling weight.

The case was seen by lawyers as a test of whether “pre-nup” agreements were applicable in law in England and Wales.

The judges deciding the case said "it will be natural to infer that parties entering into agreements will intend that effect be given to them".

In effect, therefore, these agreements are now binding unless they are unfair. So if the parties enter into a "pre-nup" freely, are fully informed of all the relevant financial and other information, and the implications of the agreement, then the courts will generally uphold the terms of that agreement.

The president of the Supreme Court made it clear, though, that courts would still have the discretion to waive or vary any pre nuptial (or post nuptial) agreement especially in cases where the terms of such agreement would have an adverse effect on any children of the family.

The ruling has been hailed as a judgement for a modern society, but there are some who believe it will significantly damage the financially weaker party in divorce. If that party, normally the wife, is held to the terms of a pre-nup she may be deprived of a considerable chunk of the couple's wealth.

The Law Commission is due to report in 2012 on whether a change in the law should be made to ensure pre-nuptial agreements are fully enforceable.

If you, or anyone you know, needs advice on any pre nuptial agreement then please give Lyn a call on 01733 888841.

"Squatters" beware!

Anyone who continues to believe that  cheekily taking over a piece of their neighbour's land and simply sitting on it and waiting for it to become theirs should take heed of a new ruling by the High Court which has awarded damages of £428,812.29 plus interest, including exemplary (i.e. "we're going to make an example of you") damages of £60,000, against a someone who took part of his neighbour's property into his own with what the court called "reckless disregard of the interests of the true owner".

The award of exemplary damages was made to deter the "squatter" from repeating the same behaviour, as the court felt that the regular award was not a sufficient deterrent.

It's a slightly different scenario from someone taking over an area of land where there appears to be no owner (the "no man's land" scenario) but even so it's something of a wake up call to those people (and they do exist!) who treat land ownership as something of a movable feast.

Saying "No" to mediation - a mistake?

Mediation is an alternative method of resolving disputes, where the parties involved agree to appoint a third party, whose role is to assist them in coming to a settlement.

 

While mediation is not compulsory, the Court have encouraged the use of the same, particularly if the costs involved are considerably less than taking a matter all the way through the Court system. In order to encourage the parties to mediate, they have made it quite clear that if a party refuses to mediate, and they do not have a good reason to do so, then even if they succeed in the case, at trial, then they will not be entitled to recover the costs either in part or in full. In a recent case, where one party refused to mediate for “commercial reasons”, although those reasons were never stated. The Court, when refusing to make a costs order in that case, gave some guidance as to what factors would influence their decision either way namely:

 

• The party refusing mediation must have strong grounds.

 

• Strong grounds do not include that the matter cannot be easily mediated.

• That it can be a good ground to refuse to mediate if you believe you have a strong case. However, if you feel that your case is strong enough, then you would normally be expected to apply to the Court for an early determination of the matter by way of Summary Judgment Application. If you don’t then the Court will probably take the view that you obviously didn’t believe the case was as strong as you say.

 

• It is reasonable to refuse to mediate if sensible and realistic offers have already been made and have been rejected.

 

• It is not good grounds to allege that the parties are so far apart that mediation will not be effective. The whole point of mediation is to bring parties closer together.

 

• Refusing to mediate because of the additional costs that will be incurred is also not good grounds, as the costs of mediation are often less than allowing a matter to go to a fully contested trial.

 

• The burden of showing that the refusal was reasonable lies on the party refusing to mediate.

• If mediation is attempted but fails then no criticism can be raised by the parties because the whole process is confidential.

 

In the circumstances, it would only be in exceptional cases that mediation would not be appropriate. The consequences of refusing to do so can result in you succeeding in your claim but being unable to recover your costs either in part or in full.

New court decision on remedies for right to light infringement

Rights to light and air are not something that the planning process generally takes into account - at least not in the way that those rights are protected in title deeds to property.  It's perfectly possible for a planning authority to grant planning permission only for the property owner not to be able to carry out those works because he finds out that his proposed building works would interfere with the existing light and air to the neighbouring property.

Until now, though, it has always been assumed (especially in relation to commercial property - the courts having always taken a slightly different tack with residential property) that if the neighbour didn't complain about the infringement of his rights before the building work was carried out, his only remedy was to damages for loss of amenity - the view of the courts being that it was unfair to make someone take down a building that was already completed.

However, a recent High Court decision seems to have turned that on its head!

The court awarded an injunction against a developer whose development interfered with the rights of light to a neighbouring commercial property, despite the development having been completed.

In the past, developers may have assumed that they could simply buy rights of light out from the neighbouring land owners after completion of the development if necessary.  It would seem that they must now start to think slightly differently!

Tenants Rights - Changes to the rules

The Civil Procedure Rules are being amended and some of those amendments have consequences for mortgage lenders who have mortgages over tenanted (rather than owner-occupied) property.

In particular the rule changes will allow tenants about whom the lender has no knowledge (that is to say tenants who the property owner has not told the lender about!) who are living in a mortgaged property to apply to the court for postponement of any repossession order granted in favour of the lender.

That obviously has repercussions for lenders being able to sell the property to recover their loan.

The new rules also require lenders to notify tenants and occupiers of a property before taking steps to enforce a possession order.

In those circumstances any tenant who the lender has had no previous knowledge of can apply to the lender for a delay repossession to allow the tenant time to find another home.

If the lender does not agree to an extension of time the tenant may apply to the court for a decision.

At the moment we can only speculate about what effect these changes may have on the willingness of lenders to make mortgage advances to landlords in relation to "buy to let" properties.

Changes to the Building Regulations

The Government has published two new sets of legislation relating to the building control regime in England and Wales.

Many of the changes in the new regulations deal with "tidying up" the current regulations in order to make them easier to understand (we hope!)

In addition, though, there are also some more meaty changes - including the widening of the provisions for self-certification to cover a greater range of activities which deal with the improvement of the energy efficiency of a building.

A proper understanding of the new provisions is vital for anyone who regularly deals with building control issues- especially those businesses whose bread and butter is dealing with construction and property.

The new rules come into force on 1 October 2010, but it may be some while after that before detailed guidance is published.  Until that guidance is forthcoming, anyone seeking clarification on the new regulations will need to look at the government's documentation showing the differences between the 2000 and 2010 regulations.

Buckles seminar and workshop programme

Tomorrow evening (16th September) we are putting on a seminar which will be of interest to landlords regardless of the profile of their property portfolio since it deals with something  which is currently of conern to all landlords - the insolvency of a tenant.

If you would like to attend, or would like further information, please contact Sara Coggins on 01733 888735 or by email at sara.coggins@buckles-law.co.uk

On Thursday 23rd and 30th September the firm's social housing team is running a seminar dealing with issues affecting social landlords.

On 6th October the firm's employment team is running a seminar dealing with the issue of restrictive covenants in employment contracts - an area of law which is a caselaw minefield!

Finally in October, the firm's commecial property team is hosting a much more laid back event - we're going to be indulging in some wine tasting!

If you'd like to attend any of the above seminars or events, or would like to be placed on the firm's mailing lists for future events please contact Sara Coggins (as above!)

Rave Reviews for Buckles!

The independent client's guide to law firms, the Legal 500, published its 2010 edition online yesterday - some really great reviews for the teams here and individuals within those teams!  Check out what the Legal 500 has to say about the firm here - http://tinyurl.com/2wd7hzl

Another Accident at Work story..........

A worker who slipped in flooded toilets has won an undisclosed sum in compensation.


The man worked at a community centre and went to investigate a problem in the toilets. Someone had put the plugs in the washbasins and left the taps running and water had overflowed onto the floor. As he went to turn off the taps, the man slipped and fell, fracturing his elbow.



It emerged that this was not the first time someone had deliberately caused a flood at the premises. There had been a similar incident in another set of toilets at the community centre. However, no action had been taken on the part of the man’s employer to prevent the potential problem, such as removing the plugs or fitting each tap with a flow-limiting device.

The man brought a personal injury claim, but his employer denied liability for the accident. In court, the judge found that the employer had failed to put in place adequate health and safety measures. As well as steps to prevent a recurrence of flooding, there should have been a system in place for making regular checks on the toilets as the community centre was used by members of the public. Also, training should have been provided on how to deal safely with a flooding incident.

Council Tax on Houses in Multiple Occupation

The High Court has just decided (in the case of R (Goremsandu) v London Borough of Harrow)  that the landlord of a house in multiple occupation (HMO) was not liable to pay council tax to the local authority and that the liability remained with the tenants.

 

Given that many local authorities have been actively pursuing landlords for the payment of council tax where tenants have failed to pay, there will be many investors this morning heaving a sigh of relief!

James Maxey says Never Say Never

This week has seen the launch of the mediation website www.mediated-solutions.co.uk and as always when mediation is discussed, inevitably it leads to me being asked by clients and lawyers alike if mediation really works. It is 14 years since I first experienced mediation and the biggest thing that has changed in that time is the increasingly enlightened attitude of clients and lawyers who are finally recognising that, without any sign of weakness, the willingness to sit down with a neutral third party and explore creative solutions to a dispute can actually bring savings of time and money.

“But why do we need a mediator” is the next chirpy comment that emerges. “If we can’t settle it ourselves sitting round the table then a mediator could never settle it”. But this misses the invaluable dynamic a mediator can bring to a settlement meeting.

A mediator is neutral and can talk to the parties without being for or against their case. A mediator is objective and can test the realities. A mediator should be the trusted honest broker. Most importantly, a mediator is confidential and can get into the unique position of fully understanding both of the parties private positions and therefore seeing if there is any overlap.

And the reasons mediations fail?

In my own experience around 90% of mediations result in settlement, and of disputes where I have been appointed as mediator, so far 2010 has a 100% success rate. But the major impediment I usually see is a lack of preparation. It is essential that the clients and their lawyers have spent some serious time thinking about what is actually achievable if they take their case to court and the realistic risks and costs they face. Providing those issues are addressed then a competent mediator stands a very good chance of bringing favourable settlement terms to most disputes. Don’t knock it until you have tried it. And never say never.

Air Rage - it's not just the passengers!

Poor Steven Slater - it all got too much for this experienced member of the Jet Blue cabin crew after a passenger allegedly verbally absued him and opened a storage locker on his head.  Steven gave the lady concerned a rather poor review over the aircraft tannoy and promptly exited the plane via the emergency slide.  You can only wonder just how many other cabin crew the world over have felt like taking the same sort of actions at one time or another!

But air rage is on the increase generally - and it's worth considering that certain behaviour on board an aircraft does carry some hefty crimial penalties.  Even mere "unruly bahaviour" can result in a fine of up to £2,500.00 (making it a pricey old break to the sun!).  The more serious offences - usually involving physical violence - carry a maximum fine of £5,000.00 and up to 2 years residing at Her Majesty's pleasure.  Try getting that absence past HR!

Airlines now have a zero tolerance policy to all these types of behaviour and anyone falling foul will certainly find the local police waiting for them on the tarmac.  There's apparently slightly more tolerance to the joining of the mile high club - though recent passengers on a Dutch flight weren't shown that tolerance given the fact that their club application was made whilst still in their seats!

Impact of the forthcoming VAT increase on SDLT

As everyone is no doubt aware, the standard rate of VAT will increase to 20% with effect from the 4 January 2011.  It has until now been slightly unclear what effect this might have on leases already in existence where VAT is payable on the rent.  Since SDLT is calculated on the VAT inclusive amount of the rent (thanks HMRC - nothing like being taxed on tax eh!!) any change in the VAT rate is theoretically notifable to the Revenue.

The Birmingham Stamp Office has advised that the requirement to review the SDLT calculation for leases with variable or uncertain rent (by virtue of being subject to VAT and there being possible fluctuations in the VAT rate) at the earlier of the end of the fifth year of the term or when the rent for the first five years of the terms becomes ascertained, is modified so that the review date will always fall at the end of the fifth year of the term.

Essentially, what this means that where the rent review date occurs before 4 January 2011, the 4 January 2011 VAT rate increase can be ignored. Only leases granted after 3 January 2006, for which this review date falls on or after 4 January 2011 will need to take the VAT increase into account.

There is a 30 day deadline from that review date to pay any additional SDLT due and file a further return.

Will Aid Success

Every year we take part in Will Aid.
For the month of November, clients are able instead of receiving a bill from us for preparing their Will, to make a donation to Will Aid instead.

Funds raised through Will Aid are used in projects all over the world - from the NSPCC's Childline project to helping the victims of the Haitian earthquake.

We're proud that this year, Buckles clients contributed £1,920.00 towards Will Aid and as a national total the campaign raised an amazing £1.25m!

So just a big "thank you" to everyone who participated - both our clients for their generous donations, and our lawyers who give of their time to run the project in the firm every year!

We've just received a nice certificate from Will Aid so I thought I'd share that with you too!

Obligatory Budget Summary

Not anything you won't have seen elsewhere this, but thought we might as well summarise yesterday's budget, given that it is the first in a generation to make such drastic changes to both taxation and benefits regimes

Corporation Tax will be cut next year by 1% to 27%. Annual reductions will then be imposed until the rate reaches 24%.

The Small Companies tax rate will reduce to 20%.

On 4th January next year, the main rate of VAT will rise from 17.5 to 20% - bad news for shoppers and bad news too for those of us in service sectors who are obliged to charge VAT on our services.

More bad news for higher rate tax payers with capital assets - the rate of Capital Gains Tax rises by 10% to 28% as from midnight last night. Those with investment properties on the market at present will be amongst the first to suffer that hike.

To add to that particular misery, the annual exemption for CGT remains at £10,100.00 but will apparently continue to rise with inflation.

The personal income tax allowance will increase by £1,000.00 in April, taking the amount that you can earn before paying income tax up yo £7,475.00

However, higher rate taxpayers will not benefit from that change, and the higher rate income tax threshold will remain frozen to 2013-14.

James Maxey, head of Dispute Resolution says....

The Sunday Times this week seemed to hit the right note with an article on page 9 of the Business Section headed "Try not to see your customers in court".

For the relatively small claims which make up most of the county court claims issued, the main difficulty lawyers have is delivering a cost effective solution. Factor in the wasted management time and the risk, whatever it may be, of losing, and you quickly see how suing on a modest dispute is often bad news even if you win.

A face to face meeting to try to resolve the dispute consensually is usually the best way forward, says the Times. Quite right. And if that does not work, whether or not litigation follows, consider mediation as a serious option. Yes, it may mean sharing the baby, but if you factor in the savings in risk, costs and time it usually offers a viable outcome.

And if you are a defendant reading this blog, does it mean things have gone soft and you can exploit opportunities to avoid paying? Not really. With the jittery economy we have today, more and more emphasis is being placed credit scoring and so forcing your opponent into suing and ending up with a judgment against you is seriously bad for your financial health. So even if your antics meant you got away without paying your debts on this occasion, was it really worth ruining your personal and business reputations for years to come?

Think about that next time you need to talk to your bank. So either everyone loses, or everyone wins.

I know which I would prefer.

Leaving More Than Your Money

Like millions of other Britons (although not nearly enough!) I regularly donate blood. I'm also on the bone marrow register (bit scary!) and the organ donation register so that in the event of my death my family aren't faced with making a decision about whether I'd want my useable bits and pieces given to someone in need.

But have you ever thought about what happens if you decide you want to donate your whole body to research and not just the organs for transplant purposes? Many people believe that they can simply express that wish in their Will and that their executors will sort it all out.

However, under the Human Tissue Act 2004, which came into force in 2006, anyone who wants to donate their body to medical science must give his or her written consent. Consent cannot be given by anyone else after death - so you cannot give an instruction in your Will (well you can but it may well not be accepted by any medical school or research facility).

A consent form can be obtained from your local medical school and a copy should be kept with your will. You should also tell family, close friends and your GP that you wish to donate your body so that the necessary steps can be taken as soon as possible following your death.

More cheery subjects next time!

Exciting News of the Day

Last night saw the annual Buckles Charity Quiz Night.

7 teams from the various departments in the firm competed for glory but there could be only one winner!

Those winners were the Property Department followed in joint second by Private Client and Dispute Resolution.

The evening's nominated charity was the Children of Chenobyl - so thanaks to everyone from the firm who attended and helped to raise money for an extremely worthwhile cause!

HIP Update

So the new regulations have now been published giving the details of the suspension of the need for a Home Information Pack.

As stated in a previous post, there will still be a requirement to produce an EPC (Energy Performance Certificate - just like the thing you see on the front of fridges and washing machines telling you how efficient they are) but rather than having to have that in place before the property can be marketed, the only requirement will now be that the EPC needs to have been commissioned before the property can be marketed.

Additionally, and in bonus good news for sellers, the EPC will be valid for 10 years rather than the current 3.

More Protection for Vulnerable Homeowners

Sale and rent back (SRB) involves individuals—often those facing financial difficulties—selling their home at a discount in return for the right to remain as a tenant for a set period. Following an investigation by the Office of Fair Trading, which confirmed that many SRB consumers were not being treated fairly, the government asked the Financial Services Authority (FSA) to regulate the market.

Regulation has been in place since last year but the full regulation system will come into force on 1st July 2010.

The key provisions of the new regime are as follows:

SRB customers must be given security of tenure for a minimum of five years, through the use of a fixed-term, assured shorthold tenancy agreement.

Firms offering SRB products must meet capital resources requirements and have professional indemnity insurance.

There will be a 14-day cooling-off period to give consumers more time to make decisions and seek advice on sale and rent back.

A valuation must be carried out by a competent valuer who is independent of the SRB provider.

The valuer will be liable to the customer as well as to the SRB firm.

The firm must carry out an "affordability and appropriateness" check for all SRB sales to make sure that the SRB deal is right for the consumer.

Cold calling and dropping promotional leaflets through letter boxes will be banned.

The use of terms like "fast sale", "rescue" and "cash quickly" are prohibited in promotional literature.

A risk warning must be used in SRB adverts.

This is good news for consumers who are thinking of using these products and may be desperate to stay in their homes at any cost - the system should ensure that the deal isn't entirely in the SRB company's favour.

Anyone considering one of these products should seek legal advice before signing any documentation.

Cause to celebrate!

Common sense has stuck its head above the parapet!

The government has with immediate effect suspended the need for the preparation of a Home Information Pack when selling your house.

So not only will you be able to get your house onto the market sooner (because you won't have to wait for the HIP to be prepared) but the cost of the HIP (averaging around £300.00) will no longer be a consideration for sellers.

The need for an Energy Performance Certificate (EPC) remains.

It's a shame for all the estate agents touting for HIP business, but good news for the rest of us!

Stephen Duffy says

I received a newsletter the other day from the Probate Registry which said that the longest Will they have on record is over 95,000 words long, and the shortest is just 3 words long – it reads simply “all to wife”.

I recommend a happy medium of somewhere in between those two extremes!

Product warnings

In this age of litigation, many manufacturers include warnings on their products either to avoid being sued or sometimes to avoid being sued again for the thing they're warning against.

See if you can guess why these warnings appeared........

"Do not use for personal hygiene" - on a toilet brush

"This product moves when used" - on a scooter

"Once used rectally, the thermometer should not be used orally" - on a digital thermometer (seriously - ewww!)

"Never remove food or other items from the blades while the product is operating"
- on a food processor

Apparently some people never learn!

Police to have increased powers of charging

The new Home Secretary has announced that police officers will take back some of the powers which had been taken over by the Crown Prosecution Service (CPS) to decide whether to charge someone with a criminal offence.

The new powers will apply to minor offences (so the police won't be able to decide whether to charge someone with, say murder - that will still be done by the CPS!) but with any luck it will mean a cut in bureaucracy and perhaps more importantly some of those cases which we all feel should never go to court will never see the inside of a courtroom!

New Recruit

Giles Betts joins Buckles Solicitors as
Head of Employment

Giles trained and qualified as a solicitor at Mills & Reeve’s Cambridge office from 1997 until 2007. He then worked at Hewitsons from 2007 until 2010 where he was a Partner and Team Leader for their Cambridge Employment Team. Giles joined Buckles in April 2010 as Head of Employment.

Giles advises businesses, the public sector and senior executives on the full spectrum of employment law issues, such as: implementing redundancies and business reorganisations, TUPE, managing employment terminations, conducting disciplinary and grievance procedures and issues to consider when dealing with disabled employees or managing long term sickness absence.

He has extensive experience of managing claims in the Employment Tribunals involving issues such as: unfair dismissal, disability discrimination, sex and race discrimination, unlawful deductions from wages and breach of contract claims. In addition Giles drafts contracts of employment, directors’ service agreements, company policies and procedures and compromise agreements. Giles also has experience in drafting post termination restrictions and advising clients on enforcing such covenants and protecting confidential information.

The Legal 500 describes Giles as “approachable and commercially minded”.

Accessing Your Own Land

Prior to the introduction of revised procedures (set out in regulations under section 68 of the Countryside and Rights of Way Act 2000, which came into effect in July 2002), people who had to cross common land in order to reach their homes were sometimes denied the right of access to their own property, due to an anomaly in the law. In order to gain access, it was necessary for them to obtain an "easement" from the owner of the common land. This could be very expensive for the person needing the right of access.

Under the revised rules, the right of easement is now statutory and, provided the relevant conditions are met and procedures complied with, the owners of the common land cannot object. In return they will be paid as follows:

0.25% of the value of the premises if these came into being before 1 January 1906;
0.5% of the value of the premises, if they came into being between 1 January 1906 and 1 December 1930; and
2% of the value of the premises if they came into being on or after 1 December 1930.
Once payment has been made, the right of access will continue in perpetuity.

Battle of the Forms - who wins?

A legally binding contract requires offer and acceptance. However, it is not unusual for commercial transactions to be negotiated by a series of documents (e.g. request for quotation, quotation, purchase order, acknowledgment of purchase order etc.) each with reference to that party’s T&Cs.

Where each subsequent document seeks to impose different terms, it will amount to a counter-offer which requires acceptance by the other party. The usual position is that the last party to send its document prior to performance will have its T&Cs govern the contract – providing the other party can be said to have accepted it by way of its conduct. But, can this rule be overridden? Certainly Tekdata thought so in Tekdata v Amphenol. The parties had a long standing trading relationship where Amphenol supplied cable connectors to Tekdata, who then supplied various cable assembly products up the contractual chain. Tekdata brought a claim against Amphenol for late delivery and goods not being fit for purpose.

The last pre-contract document was Amphenol’s Acknowledgement of Purchase Order which unsurprisingly referred to Amphenol’s T&Cs. However, Tekdata argued that due to the parties’ trading relationship and agreements with other parties in the contractual chain (where time was of the essence) it must have been the parties’ intention that Tekdata’s T&Cs (as per its Purchase Order) were incorporated. On appeal, the Court said it would require very strong evidence to displace the traditional rule of offer and acceptance where there is a battle of forms, and so Amphenol’s T&Cs were the ones applying to the contract.

COMMENT
A battle of the forms can have a number of consequences, some of which may be surprising to the parties. The message is that a legally binding contract still requires an offer to be unequivocally accepted – whether by words or conduct.