Author Archives: Christopher Kelly

1. Wills Act: Video Witnessing Amendment

   22nd December 2020 5:41 pm Comments Off on Wills Act: Video Witnessing Amendment

   Formalities of making a Will

   The requirements for ensuring that a Will is validly executed (signed) are contained in Section 9 of the Wills Act 1837. It states that a Will must be in writing and signed by the testator in the presence of two witnesses. The two witnesses must then also sign the Will in the presence of the testator.

   Due to the Coronavirus pandemic the signing of Wills adhering to the formalities were proving difficult, especially for those self-isolating or shielding. These difficulties were recognised and changes to the Wills Act 1837 were introduced.

   Changes to the Wills Act 1987

   The Act now provides for the ‘presence’ of those making and witnessing Wills to include a virtual presence, via video-link, as an alternative to physical presence. The amendment still requires that the Testator and witnesses have an unobstructed line of sight, and witnessing must be done in real time. Therefore witnesses cannot sign the Will having seen a pre-recorded video of the Testator signing it.

   Changes to the Wills Act 1837 will apply to Wills made from 31 January 2020 and will run until 31 January 2022 (unless extended) except in limited circumstances.

   Our views

   The amendment did not arise until September 2020 (albeit backdated to 31 January 2020) and by this time Leonard Gray’s Private Client team had already come up with other ways Wills could be signed in the height of the pandemic.

   Witnessing took place through windows, an open door of a house or in adjacent rooms, ensuring that a clear line of sight was maintained whilst keeping socially distanced. Staff attended clients wearing face masks and gloves, using hand sanitiser and taking their own pens.

   Despite the amendment we continue to advise clients that witnessing via video link should only be carried out if witnessing in the conventional method is impossible. For those that have had their Wills witnessed via video link we recommend that these be re-signed and witnessed once it is safe to do so in the conventional methods, to help minimise any validity claims in the future.

   At Leonard Gray LLP we are now seeing clients at the office by appointment only, where absolutely necessary, and have implemented the following guidelines to ensure our office remains Covid secure:

   • We have a gazebo in our Courtyard so that meetings can take place outside
   • Installed partition screens in all meeting rooms and reception areas
   • Social distancing is being observed throughout the office
   • Clients are required to wear face coverings
   • Hand sanitiser provided throughout the building
   • Limiting numbers in the office, this includes both staff and clients
   • Asking that clients do not touch objects or surfaces unless necessary
   • Regular cleaning of the office, including chairs, tables and door handles after each meeting and at regular intervals.

   Should you be concerned about the validity of your Will, how it should be signed or wish to discuss any changes to it please contact a member of our team on 01245 504904.

2. Making a Will – is the feeling Mutual?

   12th March 2020 4:24 pm Comments Off on Making a Will – is the feeling Mutual?

   What are Mutual Wills?

   Mutual Wills are a type of Will in which people decide to make Wills in similar terms and agree that in the future they will not revoke or amend that Will without the consent of the other party. This means that once one of the parties dies, the other person cannot change their Will.

   “Mutual Wills” should not be confused with the more common “Mirror Wills” in which people make Wills in similar terms but are not “tied in” to the terms of the Will and can change them at any time.

    

   How is a Mutual Will recognised as such?

   Usually a Mutual Will contains wording to say that the parties have agreed with one another that the Wills shall not be revoked or altered during their joint lives or changed by the survivor.  However, even if this wording is not included, a claim can be made at a later date that the Wills are intended to be Mutual Wills if a claimant can provide evidence to the effect that the Testators had intended that the survivor would not change the Will. Of course, proving the joint intention is much more difficult without the wording included.

   In 2017 The Law Commission considered abolishing the concept of Mutual Wills but decided against it.

    

   Why do people make Mutual Wills?

   The main reason that people enter into Mutual Wills is that they wish to ensure specific beneficiaries inherit when both parties have passed away. This may be suitable in second marriage situations where there is a concern that the survivor could potentially disinherit the original agreed beneficiaries from one side of the family, choosing instead to distribute the “joint” estate to beneficiaries from the other side of the family.

   There are other methods of dealing with an estate which can preserve assets for named beneficiaries whilst still allowing the survivor the freedom to distribute their own assets however they please. For example, a Life Interest Trust can be set up within a Will where there is a jointly held property which, on first death, would give the survivor the freedom to live in a property but secure the interests of named beneficiaries on the survivor’s death. In that situation, one half of the property would be held in trust and the other half still owned outright by the survivor. This also has the added benefit of protecting one half of the property value against potential care costs.

    

   Adapting to changing circumstances

   The usual principle when making a Will is that a person who has the necessary testamentary capacity is free to change their Will at any time. By entering into a Mutual Will both parties give up their right to change their Will if they outlive the other party regardless of the situation at that time. Similarly, they are also unable to change their Will during their joint lifetime without the other person’s consent.

   The future cannot be predicted at the time of drafting the Wills and the actual situation may turn out to be totally different to the anticipated scenario. For instance, following the first death, the survivor may review the situation and decide that their children are financially secure and may wish to change the residuary beneficiaries under their Will in order to help grandchildren get onto the property ladder instead. With a Mutual Will, the survivor could not do this.

    

   Is there anything that can be changed under a Mutual Will?

   It is possible for the survivor to change the Executors of the Will, but not the beneficiaries.

    

   What happens if the survivor remarries or makes a new Will?

   It is also worth noting that after the first death a Mutual Will is not revoked on remarriage as is usually the case for “normal” Wills and the terms of the Mutual Will remains binding on the surviving testator’s estate.

   If the survivor is unaware of the restriction and does make a new Will contrary to the agreement, on their death, the personal representatives will hold the assets relating to the Mutual Wills on a Constructive Trust for the beneficiaries of the earlier Will. Obviously establishing the extent of those assets (for example the value of a property and amount in bank accounts) can be problematic, especially if the first death occurred many years previously and accurate records have not been kept. This can lead to dispute and costly litigation.

    

   Conclusion

   Mutual Wills do serve a purpose in the context of Will preparation but they can be inflexible and restrictive. There may be alternative options which can be discussed should you wish to ensure that joint assets are preserved for certain beneficiaries after a second death scenario.

3. Parent Alienation – What is it?

   28th January 2020 9:00 am Comments Off on Parent Alienation – What is it?

   Whilst the act of parent alienation is recognised in Family Courts, by social workers and those working closely with children, there is no single definition to explain “parent alienation”.

   However, it is now identified by Cafcass (who are the Courts appointed social workers) as “when a child’s resistance or hostility towards one parent is not justified and is the result of psychological manipulation by the other parent”.  In simple terms this is when a parent is manipulating a child and a result of that manipulation, the child no longer wishes to see the other parent. This often arises following a separation between the parents and can have negative long-term effect on the child’s emotional development and future relationships.

   It is a child’s right to have a loving relationship with both parents. To be denied this right by one parent, without a good reason, is psychological abuse.

   There can of course be many reasons for why your child is refusing to have contact with you and therefore, it does not automatically mean that you are being “alienated”. It can simply be that your child needs some space to adjust to your recent separation. That said, each case must be assessed on its facts. If you are concerned that you are being “alienated”, the following indicators may be helpful to identify the same:

   • Your relationship with your child has suddenly deteriorated.
   • Your child no longer wishes to see you or speak to you.
   • You are aware that your ex is repeatedly belittling or denigrating you in front of your child.
   • You are aware that your ex is preventing your child from having contact with you.
   • You are aware that your ex is telling your child that you do not love them.
   • You find out that your child is no longer allowed to speak about you in front of your ex.

   The above is not a complete list. The Courts recognise that “parent alienation” exists and widely encourage parents to take action as soon as possible so it can be addressed before any significant harm comes to the child. If you are unsure if you are being “alienated” or would like to discuss any of the above issues in more detail then please feel free to contact us on 01245 504904 to book an appointment.

4. Divorce Myths Debunked

   15th January 2020 9:44 am Comments Off on Divorce Myths Debunked

   Throughout my years in dealing with divorces and separations, I have come across a number of common misbeliefs held by clients which need to be debunked.

   In this article, I have set out the top ten, in no particular order.

    

   “I can petition on a “no-fault” basis”

   Whilst the government has announced that new legislation will be brought for the long-awaited “no fault” petition, unfortunately, it is still in the process of being implemented. This means that until the “no fault” petition is in use, the current process (of relying on one of the five factors) will apply. These are adultery, behaviour, desertion, two years’ separation with consent and five years separation (without consent). Whilst an unhelpful start to the divorce process, this does not mean that you have to be at war with your ex-partner.

    

   “I want a quick divorce”

   There is no such thing as a “quick divorce”. Even if the matrimonial property and assets have not been dealt with, it can still take up to 6 months to finalise a divorce. This is because our Courts are very busy and there are compulsory waiting periods (such as 6 weeks and a day between Decree Nisi and Decree Absolute). All divorcing couples are of course advised to deal with the financial matters at the same time, so as to prevent any claims against them in the future.

    

   “Adultery means I will get a better settlement”

   Whilst adultery is a factor on which a divorce petition can be issued, the grieved party does not automatically get financial compensation for adulterous behaviour. Instead the Court will look to find a fair solution that meets the family’s needs.

    

   “I can use my adultery to start a divorce”

   Adultery can only be relied on if it has been committed by the other party. This means that only your spouse can petition on your adultery; not you. If you are in this situation, this does not mean that you cannot issue divorce proceedings. The fact of “behaviour” is likely to apply in this scenario. As it stands, adultery can only occur between members of the opposite sex. If your former partner has had an adulterous relationship with someone of the same sex, you must cite their behaviour for the divorce.

    

   “Decree Nisi finalises my divorce”

   It is a common belief that the divorce is finalised once Decree Nisi has been pronounced. However, your divorce is only finalised once Decree Absolute has been granted. Until such time as Decree Absolute is granted, you remain married (and cannot therefore re-marry!).

    

   “The Judge will automatically Order a Decree Absolute”

   If you wish to finalise your divorce, an application will need to be made to the Court. Decree Absolute will not automatically be made by the Court. If you do not finalise the divorce by applying for Decree Absolute, you will remain married.

    

   “The matrimonial finances can be finalised without Court intervention”

   This is one of the most harmful myths that I come across again and again. It is not uncommon for separated couples to believe that their finances are in full and final settlement of all claims if they divide their assets without the Court’s involvement.  However, this is incorrect and often leads to uncertainty in the long term.

   The only way to finalise the matrimonial property and finances is by way of a Court Order. This does not mean you need to enter into disputed proceedings. An agreement can be submitted to the Court for the Judge’s review and approval. If the Judge is satisfied that the agreement is fair, he/she will make a Court Order. However, until an Order is made, your spouse’s claims against your assets remain open and are often a ticking time bomb. There are cases where one party has come back and made a claim on the other 20 years on!

    

   “There must be a 50/50 split”

   Whilst the general starting position is equality, the Judge can depart from an equal split of the matrimonial assets if he/she determines it is fair in all the circumstances of the case to do so. Therefore, a fair Order (depending on the circumstances) may be an unequal division.  This area of law is not straight forward and therefore requires advice from a family law specialist.

    

   “I am protected by common law marriage”

   It is understandable that after many years of living together under the same roof as a family (no different to a married couple) that you would consider yourself protected by the law under “common law marriage”. Unfortunately, that is not the case. “Common law marriage” is a myth and unless you are legally married, in the eyes of the law, you are considered as cohabitees. The law applicable to two people living together (without marriage) is very different to two people living together as a married couple. The law related to cohabitees is less favourable and you do not automatically have an entitlement to your partner’s assets. This is a complex area that requires advice from a family law specialist.

    

   “I had a religious ceremony so I have legal rights”

   All religious marriage ceremonies do not result in a legal marriage. In the eyes of the law, if the correct procedure is not followed, the marriage will not be valid and it means you are living with your partner as a cohabitee with limited financial protection (if any).  Religious marriages from faiths such as Islam, Sikhism and Hinduism are only valid if all the civil requirements have been met. By way of example, if a Muslim “nikkah” (the religious marriage ceremony) does not take place in line with the requirements of a legal marriage, the couple will also need to undertake a civil ceremony. In the absence of a legal ceremony, their marriage remains legally invalid.

    

   If you would like to discuss any of the above issues in more detail then please feel free to contact us on 01245 504904 to book an appointment.

5. Valuing an Estate for Probate and Inheritance Tax

   29th November 2019 1:51 pm Comments Off on Valuing an Estate for Probate and Inheritance Tax

   A question that many clients often ask is how do you value an estate where someone has died for probate and Inheritance Tax and what assets much actually be recorded.

   Other queries that come up are whether the value of personal items need to be included, what happens about jointly held property and what to do about any assets held abroad. In this article I shall try and explain how an estate should be valued.

    

   What assets should be included?

   Simply put, all assets that have any value at all should be reported on either form IHT205 (the simpler return usually completed when there is no tax to pay) or on form IHT400 (the Inheritance Tax account that is completed when there is tax to pay or other criteria are met).

   There is no minimum value that can be omitted when valuing an estate and therefore any assets with value should be included.

    

   Bank accounts

   Any solely held bank accounts should be valued by taking the capital balance as at the date of death and adding any interest accrued but not credited. The simplest way of doing this is to ask the bank for this value in writing as at the date of death and they should, as a matter of course, add the interest accrued but not credited in their calculations.

    

   Gifts in the last 7 years

   If someone has made gifts in the last 7 years of their life, the value of these will need to be ascertained at the date they were given as they may well have an impact on the value of the available nil rate band as at the date of death. Likewise any gifts with reservation (the subject of which goes beyond the scope of this article) would need to be ascertained.

    

   Land and buildings

   It is usual in taxable estates for a Chartered Surveyor to provide a valuation on land and buildings as the Revenue can penalise personal representatives who submit inaccurate valuations when completing form IHT400. Where an estate is not taxable it may not be strictly necessary for a valuation to be carried out by a Chartered Surveyor but it is best to take advice in each case to ascertain what should be done.

    

   Jointly held property

   Often spouses will own joint property together such as bank accounts and maybe their own home. Jointly held assets need to be reported separately on forms IHT205 and IHT400 and a distinction is made as to whether the property passes by survivorship (usual for bank accounts and houses held as joint tenants) or whether in fact it passes under the terms of the deceased’s Will (usual when property is held jointly as tenants in common). Valuing this sort of property depends on a number of factors and sometimes if the property is jointly held, is land or a house and is owned with someone other than a spouse, there will be a joint ownership discount on the value. Ordinarily though, it would be a case of ascertaining what the deceased’s share of the property is and then taking this as a proportion of the overall value.

    

   Foreign property

   If the deceased had assets abroad then the value of any foreign property will need to be included. Valuations should be obtained in the usual way from the country that the deceased held assets in. If an estate is taxable by HM Revenue and Customs then it may well be the case that a discount can be obtained on the tax payable here equal to the tax payable abroad (if any).

    

   Stocks and Shares

   Shares in smaller companies should be valued by an accountant.

   In publicly quoted companies there is a special formula for valuing shares on the date of death whereby the quarter up price is taken on the difference between the high and low values on the date of death. If someone died when the relevant stock exchange was closed, (ie, bank holiday or at the weekend) then the lower of the two days either side may be used.

   Some shares attract reliefs depending on the exchange they are quoted on.

    

   Trusts

   If the deceased did benefit from some form of trust during their lifetime then it is highly likely the details will need to be reported on form IHT400. Again, professional advice is likely to be needed to decide whether this will be necessary and how an interest in a trust should be valued.

    

   Life insurance policies

   If these are payable to the estate, the insurance company will usually be able to supply a letter confirming the value as at the date of death.

    

   Pensions

   If a lump sum or ongoing benefits are paid to an estate after someone has died, the pension scheme will normally supply a letter giving these details so they can be reported.

    

   Business interests

   Shares in private companies should be valued by an accountant as should other business interests. It is often the case that reliefs can be secured against such assets to reduce Inheritance Tax.

    

   What liabilities can be deducted?

   After all of the assets have been added together this will give you a gross figure for the estate. From this liabilities may be deducted. However, only liabilities of the deceased such as the funeral account, memorial expenses, monies owed at the date of death and any liability to personal tax may be deducted. Costs of the administration such as death certificates, executors’ expenses, Inheritance Tax, etc cannot be deducted.

   After the deduction of liabilities, a net figure for the estate will then be produced.

    

   Conclusion

   This is not intended to be an exhaustive explanation of how an estate should be valued for Probate and Inheritance Tax after someone dies. I have, however, tried to outline the broad elements that should be taken into account when trying to create the snapshot of the deceased’s finances and their estate as at the date of death.

   There is no substitute for professional advice when dealing with an estate and should you wish to explore the above matters or anything else in further detail, please do not hesitate to make contact.

6. Who looks after your pet when you die?

   2nd October 2019 3:40 pm Comments Off on Who looks after your pet when you die?

   According to a recent survey around 50%* of us own a pet in the United Kingdom. So it is not surprising that many of us are concerned about what happens to our beloved pets upon our deaths.

   In the eyes of the law (at least) a pet is not a person. In legal terms, a domestic animal is a ‘chattel’ or possession and consequently, it is not possible to leave assets to it. Having said that, it is perfectly possible to make provision for the future care and welfare of a pet in your Will. Fortunately, making provisions for your pets in your Will is easy to do.

    

   Make a Will

   If you make a Will, when you die your Executors have immediate responsibility for your assets and that includes pets. Even if your Executors are not the people who ultimately give your animal a home, they will have the authority to start making arrangements for your pet’s immediate welfare.

   Points to consider should you decide to plan for your pet’s future using your Will:-

    

   Mentioning your pet in the Will

   Ensure your pet is adequately identified in your Will. This is not necessarily an issue if you only have one pet or if all of your pets are going to the same person/charity etc. However should you have a number of similar animals that you are leaving to different people then more specific information to help your Executors understand which animal you are gifting to whom should be included.

   If you name a particular pet but you no longer own it when you die, the gift will fail, even if you acquire another similar pet before you die. One way to get around this would be to include a substitute clause such as “any other dog I own at my death”.

    

   Decide who will care for your pet

   You could make a gift of your pet in your Will to a relative or friend who you know is willing to care for the animal. We would recommend speaking to the person you are considering as your pets carer in the first instance to ensure they would be happy to look after your pet.

   You should also consider the life expectancy of your pet and that of the proposed carer and whether your pet will adapt to the carers lifestyle etc.

   Even if the person agrees to care for your pet now, they may not be willing or able at the time of your death. You may therefore want to include substitute beneficiaries.

   You could look to prepare a letter of wishes giving the person who will be caring for your pet all the information they need to know to be your pet’s carer. The letter can cover any dietary need and medical issues alongside age and breed of your pet. The letter can also express your wishes as to how you would like your pet to be cared for.

   If you can’t decide who should take care of your pet now, an alternative is to gift your pet to your Executors along with a cash sum and write a letter of wishes indicating what the money is for and how you’d like them to choose a carer. Careful consideration should be given as to how much the cash sum should be. Your Executors will have no power to increase or even decrease the sum being given.

    

   Financial gift to accompany the gift of your pet

   If you don’t want to place a financial burden on that person who will look after your pet, you could leave them a sum of money to pay for your pets upkeep.

   Of course, there’s always the risk that they might keep the money and get rid of your pet and there would be nothing in law to prevent them from doing that. So if you choose that option it’s wise to make sure the new owner is going to be totally committed to taking over the care of your animal for the rest of its natural life.

    

   Set up a pet trust

   Although you can’t make a pet the beneficiary of a Will or a trust, you can set up a trust either during your lifetime or in your Will which permits the trustees to use the trust money or other assets to pay for the care of your pet.

   You will need to name beneficiaries who ultimately benefit from the trust assets after your pet has died.

    

   Ask a charity

   If you cannot think of someone you would like to look after your pet upon your death, or if you want to put an alternative plan in you may wish to consider asking a charity.

   There are lots of charities such as The Cats’ Protection League, The Dogs Trust and The Cinnamon Trust, which all have schemes in place to care for or re-home your pet in the event of your death.

   It is, however, recommended that you include your wish for a charity to take responsibility for your pet in your Will so that matters are clear.

   Alternatively, even if you do not have a pet at the time of your passing, you may wish to include a cash gift an animal charity that has a commitment to caring for pets.

    

   If you want to write a Will, or re-write a Will to include a family pet, then please contact a member of our team on 01245 504904, for assistance.   

   *PDSA Animal Wellbeing (PAW) Report) – https://www.pdsa.org.uk/get-involved/our-campaigns/pdsa-animal-wellbeing-report/uk-pet-populations-of-dogs-cats-and-rabbits

7. New hope for out of time Inheritance Act claims

   26th September 2019 12:36 pm Comments Off on New hope for out of time Inheritance Act claims

   On 30 July 2019, the Court of Appeal handed down its Judgment in the case of Cowan v Foreman which concerned a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (‘the Act’), overturning the High Court’s earlier decision.

   The Judgment means that, in this particular case, Mrs Cowan can make a claim for reasonable financial provision from her late husband’s estate despite bringing that claim after the deadline imposed by the Act.

   

   Background

   Mr & Mrs Cowan met in 1991 and married in 2016, shortly prior to Mr Cowan’s death that year.

   Following his death, a Grant of Probate was obtained on 16 December 2016. In his Will Mr Cowan did not make any outright provision for his wife, Mrs Cowan, but did make her a beneficiary of two discretionary trusts.

   Dissatisfied with the lack of provision made for her in Mr Cowan’s Will, Mrs Cowan issued a claim under section 2 of the Act for reasonable financial provision from her deceased husband’s estate and also applied for permission under section 4 of the Act to bring that claim out of time.

   The normal rule, under section 4, is that the time limit for bringing a claim under the Act is 6 months from the date the Grant of Probate is obtained – unless you obtain the Court’s permission to bring a claim after that date.

   In Mrs Cowan’s case she did not issue her claim for nearly 2 years after the Grant of Probate was obtained. However during that time she had been obtaining legal advice and entering into negotiations with the executors of Mr Cowan’s Will. Whilst these negotiations were ongoing the parties had agreed between themselves a ‘Standstill Agreement’, effectively extending the deadline by which Mrs Cowan could bring a claim. Since the negotiations were unsuccessful, Mrs Cowan went onto issue her claim on 8 November 2018.

    

   High Court

   In the first instance, the High Court refused to allow Mrs Cowan to bring her claim out of time stating that “It is not for the parties to give away time that belongs to the Court”, essentially refusing to recognise the Standstill Agreement that had been agreed between the parties. Mr Justice Mostyn found that there was no good reason for the delay and that Mrs Cowan had no real prospect of success in her claim.

    

   Court of Appeal

   However, the Court of Appeal overturned the decision of the High Court and granted permission to Mrs Cowan to bring her claim out of time. They found that Mr Justice Mostyn had errored in his approach to the case. Of particular note, the Court of Appeal concluded that whilst a Standstill Agreement is not binding on the Court, where both parties are legally represented the Court are more than likely to “endorse the approach” taken by the parties, particularly since they can be useful in allowing the parties to explore the possibility of settlement before incurring the time and cost of Court proceedings.

    

   Summary

   This decision is good news for potential claimants who fear that it may be too late to bring to a claim under the Act.

   It is nonetheless important to act quickly in seeking legal advice if you are dissatisfied with the provision made for you in a deceased’s Will, so that your position may be protected.

   For more advice in relation to disputed Wills please contact Erin Duffy who will be pleased to assist you.

8. Employment Law Update – August 2019

   21st August 2019 1:54 pm Comments Off on Employment Law Update – August 2019

   Recent Changes in Employment Law

   Payslip Changes

   On 6 April 2019 important changes to the rules on payslips were introduced. Namely:

   • The right to a payslip now extends to all workers, not just employees.
   • Payslips must include additional information for individuals whose pay varies depending on the number of hours they have worked.

   For more information on these changes please click here to read Erin Duffy’s article on the subject.

    

   Minimum Wage Increase

   On 1 April 2019 increases to the National Minimum Wage were introduced as follows:

   • For workers aged under 18 (who are no longer of compulsory school age) the hourly rate increases to £4.20.
   • For workers aged 18 – 20 the hourly rate increases to £6.15.
   • For workers aged 21 – 24 the hourly rate increases to £7.70.
   • For workers ages 25 and over the hourly rate increases to £8.21.
   • It is important that you check that your business is paying its workers the correct amount. Adequate records should also be kept to show that you have complied with legislation and are paying the right amount.

    

   Statutory Redundancy Pay

   On 6 April 2019 new limits on statutory redundancy pay came into force.

   • An employer that dismisses an employee on redundancy grounds must pay that employee statutory redundancy pay if they have worked for the employer for at least 2 years.
   • Statutory redundancy pay is calculated according to the employee’s weekly pay, length of service and age. The weekly pay is subject to a ‘cap’ which, as from 6 April 2019, is set at £525.
   • If you are making redundancies in your business it is important to follow the correct processes and ensure that redundancy pay is calculated properly.

   If you should need any advice on calculating redundancy pay, or any other redundancy issue, please contact Erin Duffy.

    

   Case Law

    

   Restrictive Covenants

   Employment contracts often include ‘restrictive covenants’ seeking to restrict who an employee may work for immediately following the termination of their employment (i.e. to stop them working for a competitor and taking the employer’s clients with them).  There has been doubt in recent years over the enforceability of these covenants particularly when they are overly onerous or restrictive.

   However the Supreme Court recently held that a clause containing a restriction which prevented an employee from being “directly or indirectly engaged, concerned or interested in” a competing business for six months after termination of employment could be enforced (see Egon Zehnder Ltd v Tillman [2019] UKSC 32).Whilst the Supreme Court held that the words “interested in” made the clause too widely drafted, if these words were removed the rest of the clause was reasonable and enforceable.

   It is important to keep the restrictive covenants in your contracts under review to ensure they remain appropriate and enforceable.

    

   Knowledge of Disability

   In a recent case, the Employment Appeal Tribunal (‘the EAT’) held that a small employer did not have actual or constructive knowledge of an employee’s mental impairment and could not therefore reasonably have been expected to know that she was disabled, for the purposes of section 15 of the Equality Act 2010.

   In the particular circumstances of this case (A Ltd v Z [UKEAT/0273/18]) Ms Z had worked for her employer for just over a year and, in that time, had 85 days of unscheduled absence, 52 of which were recorded as sick leave. When questioned about her absence she routinely referred to physical ailments and did not disclose that, in fact, she had a long history of stress, depression, low mood and schizophrenia, which was the real cause of her absence. The employer decided to dismiss her, as she was unreliable, but the employee bought an Employment Tribunal claim against the employer for disability discrimination.

   It was accepted that Ms Z’s mental health issues did amount to a disability since those issues had a long term and adverse effect on her ability to carry out normal day to day activities.

   However, the EAT held that since the employee had suppressed information about her mental health problems the employer could not reasonably have been expected to know that she was disabled by virtue of these problems.

   This case is an extreme example of concealment by an employee of a mental impairment and illustrates the fact that many employees still worry there is a stigma attached to mental health issues.

   Employers should take care to consider whether an employee may be disabled even if a disability has not been disclosed by the employee themselves. An employer must do all they can reasonably be expected to do to find out if a worker has a disability, whilst still respecting the privacy of the individual and keeping their information confidential.

    

   Employer Not Liable for Employee’s Facebook Post

   The EAT has held that an employer was not vicariously liable for harassment, pursuant to the Equality Act 2010, when an employee posted a racially offensive image on Facebook and shared it with a colleague (Forbes v LHR Airport Ltd UKEAT/0174/18).

   In the particular facts of the case, an employee of London Heathrow Airport, ‘Ms S’, had posted an image of a golliwog on her own private, non-work related, Facebook page with the caption “Let’s see how far he can travel before Facebook takes him off”. She shared the image and caption with her friends on Facebook, which included a work colleague. The work colleague in question then, at work, showed the image and caption to another work colleague, Mr Forbes (the Claimant), who was offended by it and, eventually, bought a claim for harassment against London Heathrow Airport.

   Whilst the EAT accepted that the image was offensive and caused offence to Mr Forbes it did not accept that image was shared by Ms S in the course of her employment, which is an essential element of employer liability under section 109 of the Equality Act 2010. As such Mr Forbes’ claim was dismissed.

   This case highlights the difficulties and risks that social media poses for employers and the importance of having an appropriate social media policy in place, most commonly featured in the employer’s Employee Handbook.

    

   Should you require advice or assistance in preparing any workplace policies please contact Erin Duffy who would be pleased to assist.

9. Proposed Changes to Section 21 Notices

   8:52 am Comments Off on Proposed Changes to Section 21 Notices

   The process of obtaining possession of a rented property from tenants can be a fairly time-consuming and stressful experience for any landlord.

   Currently, landlords can serve a “no fault” eviction notice (called a “Section 21 Notice”) on their tenants and this requires the tenant to vacate the property by no later than two months after the Notice is served. However, the Government are now seeking to abolish Section 21 Notices and move the law concerning possession claims further into the tenants’ favour.

   Therefore, as well as complying with their duties that were introduced by the Deregulation Act 2015, landlords are now likely to encounter further significant obstacles when trying to recover possession of their property from tenants.

   It is worth noting that currently, the Government’s proposals have not been turned into law and are going through a consultation process, so this article is purely speculative as to what the changes to the law are likely to be. Nonetheless, landlords should be aware of the possible changes and what the consequences are likely to be when trying to take possession of their properties.

    

   Abolition of Section 21 Notices

   Section 21 Notices would be abolished completely and landlords would be unable to use this procedure. This would also involve abolishing the most commonly used form of tenancy agreement, the Assured Shorthold Tenancy Agreement, and replace it with a different type of tenancy, the assured tenancy. Assured tenancies would be for either a fixed term or on a rolling monthly basis.

   Tenants would still be able to end the tenancy agreement at the end of the fixed term or, if it is a rolling monthly tenancy, by giving a month’s notice. Although the landlord’s power to end the tenancy agreement would be restricted, as I will explain below.

    

   Improvement of the Section 8 Grounds

   Instead of serving a “no fault” Section 21 Notice, the Government now propose that the grounds under the fault-based system, the Section 8 procedure, are widened and landlords will need to prove one of the following to obtain possession of their properties:

   The landlord wishes to sell the property.

   The landlord, their spouse or partner, or family wish to move back into the property.

   The landlord can show that their tenant is in at least two months of rent arrears at the time of serving the notice and the landlord has placed the tenant on notice on this. As well, at the time of the possession hearing, the landlord will need to show the tenant is in at least one month of rent arrears to obtain possession. Furthermore, if there are three instances of a tenant clearing rent and then running up arrears again, then this ground will be mandatory (i.e. the Court will not have discretion to make any other Order). This is a modification to the current Section 8 mandatory ground 8 (at least two months’ rent arrears).

   The landlord can show there has been anti-social behaviour at the property. This is a reinforcement of the current Section 8 ground but the Government have not yet elaborated on this.The landlord can show there has been domestic violence at the property. This is a ground provided for social housing tenants but this would now become available for private landlords.

   The landlord can show their tenants have routinely refused access to the property for repairs and safety checks.

   The above grounds would be in addition to the current fault-based grounds under Section 8.

   As well changing the grounds to obtain possession, the Government has proposed to introduce an accelerated Court process for the mandatory grounds, so this would remove the need to hold Court hearings for possession claims, unless tenants wish to challenge them.

   If the legislation is passed, then it is likely to be implemented in late 2020 or early 2021, with an initial six-month transition period.

   The proposed abolition of Section 21 Notices would present difficulties to landlords in obtaining possession of their properties. In practice, unless the landlord is able to prove one of the specific grounds, then they will be left with no choice other than to wait until their tenants voluntarily vacate their properties. This is likely to dissuade proposed landlords from purchasing properties and entering into the investment market.

   In some cases it has been beneficial for landlords to serve both Section 21 and 8 Notices (usually in cases where there have been rent arrears and the landlord also wishes to leave open the option of pursuing possession under Section 21) but this will now not be an option for them. In cases of rent arrears, landlords could also be faced with the prospect of a tenant “playing the system” and clearing their rent arrears on two occasions, thus frustrating the landlord’s attempt to obtain possession.

   Further developments from the Government are awaited with interest and whether this will be final legislation that is enacted by Parliament.

   If you require any advice in relation to residential possession claims, or in relation to any other areas of Civil Litigation and Dispute Resolution, please contact Joe Sandercock who will be pleased to advise you.

10. How Can I Fund My Litigation?

    17th July 2019 10:05 am Comments Off on How Can I Fund My Litigation?

    The prospect of litigation can be daunting, whether you are an individual or a company. Furthermore, considering how the litigation will be funded is likely to cause additional concern.

    Solicitor’s and barrister’s fees can quickly increase as a case develops particularly once Court proceedings are commenced. From a fairly modest case to a larger, more complex, one, the issue of costs and funding is something that litigants need to be aware of from the start.

    The usual rule in Court litigation is that the losing party will be ordered to pay the winning party’s legal costs. However, even if successful and an order for costs is made in the winning party’s favour, the winning party will usually have their total costs reduced by the Court by around 30%. Furthermore, it is important to consider, if you were to lose your claim, how you would fund the winner’s costs and your own legal fees.

    It is, therefore, very important to get advice on likely costs and funding options before starting litigation.

    In this article I will be discussing the various litigation funding options that are available.

     

    Privately-Paying Retainers

    This is the most common form of arrangement between a solicitor and client. The solicitor will provide a costs estimate to the client at the start and will raise invoices as the case progresses. The solicitor will also usually obtain payments on account (i.e. payments upfront) from the client for additional expenses known as “disbursements”, which include Court and barrister’s fees.

     

    Legal Expenses Insurance (also known as “Before the Event” Insurance)

    Most home insurance companies will provide legal expenses cover to their policyholders. The areas usually covered are property litigation, personal injury, employment law and contract law. The policy is activated by the client making a claim to their insurer, who then refers the case to their claims department or nominated solicitors to conduct a risk assessment. Each insurer has different conditions attached to making a claim but, in the majority of cases, the insurer will only provide cover if the prospects of successfully bringing or defending the case are 51% or above. The insurer will also stipulate a limit of how much cost can be incurred by the solicitor in the case.

    Some insurance companies may be hesitant to instruct solicitors that are unknown to them and may insist on the policyholder using their nominated (known as “panel”) solicitors instead. Insurance companies also sometimes refuse to provide cover for straightforward cases and will only offer cover if the case is sufficiently complex or if Court proceedings have already been commenced.

    Before the Event insurance should not be confused with After the Event insurance, which is taken out by a solicitor on a client’s behalf to cover the possibility of the client being liable for the other party’s costs if a costs order is made against them.

     

    Conditional Fee Agreements (also known as “no win, no fee” agreements)

    These are commonly used in Clinical Negligence and Personal Injury cases. With Conditional Fee Agreements, the solicitor will take on the risk of not being paid if the client loses the case. Put simply, if the client wins their case, then the solicitor will be paid their costs and disbursements. If the client loses, then the solicitor will not be paid; however, the solicitor can require the client to pay their disbursements.

    Conditional Fee Agreements are fairly complicated and it is important to understand the consequences of entering into them at the start of the case. Also, because the solicitor takes on the risk of bringing or defending the claim, the Conditional Fee Agreement will impose various responsibilities on the client. These include the duty to co-operate with the solicitor, not to conduct the case unreasonably and to give prompt instructions.

     

    Public Funding (also known as “Legal Aid”)

    This is a funding option provided by the Legal Aid Agency, which is part of the Ministry of Justice. The state, essentially, pays the solicitor’s costs and disbursements. Unfortunately, since 1 April 2013 the scope of legal aid in civil cases and has been hugely reduced to a very small number of cases and it has now reached the point where there is nearly no legal aid available for civil cases.

    In Clinical Negligence cases, legal aid is only available for cases where children have suffered a severe disability due to a neurological injury sustained during their mother’s pregnancy, their birth or the first eight weeks of their life. In housing cases, legal aid is available for some residential possession cases, homelessness cases and unlawful evictions. Therefore, it is unlikely that an individual will be entitled to legal aid unless they fall into one of these very specific categories.

     

    Damages-Based Agreements

    These are similar to Conditional Fee Agreements, except the client will agree to pay the solicitor if they obtain “a specified financial benefit”, which would usually be a payment of compensation by the losing party. The agreement will state that a percentage of the compensation received will be paid to the solicitor upon settlement or conclusion of the case. If, however, the client is unsuccessful in their case, then the solicitor will not be paid.

    As with Conditional Fee Agreements, it is important to carefully consider the terms of the Agreement before entering into it.

    If you require any advice in relation to litigation funding, or in relation to any other areas of Civil Litigation and Dispute Resolution, please contact Joe Sandercock who will be pleased to advise you.