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Contents
PUBLISHERBenham Publishing Limited4th Floor,Orleans House,Edmund St,Liverpool,L3 9NGTel: 0151 236 4141Fax: 0151 236 0440email: [email protected]: www.benhampublishing.com
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MEDIA No.1161
PUBLISHEDFebruary 2009© Benham Publishing Ltd
LEGAL NOTICE© Benham Publishing Limited.None of the editorial or photographs may bereproduced without prior written permission fromthe publishers. Benham Publishing Limited wouldlike to point out that all editorial comment andarticles are the responsibility of the originatorsand may or may not reflect the opinions ofBenham Publishing Limited. No responsibility canbe accepted for any inaccuracies that may occur,correct at time of going to press.
DisclaimerThe South London Law Society welcomes allpersons eligible for membership regardless ofSex, Race, Religion, Age or Sexual Orientation.
All views expressed in this publication are theviews of the individual writers and not the societyunless specifically stated to be otherwise. Allstatements as to the law are for discussionbetween member and should not be relied uponas an accurate statement of the law, are of ageneral nature and do not constitute advice in anyparticular case or circumstance.
Members of the public should not seek to rely onanything published in this magazine in court butseek qualified Legal Advice.
Introduction
4 List of officers 20094 Application for Membership4 Membership Renewal5 President’s Review
News
6 Council Report7 The Welfare Reform Bill8 Respected by clients, rewarded by peers9 South London Law Society & London South Bank University
Practice
10 Corporate documentation... a time for review12 Chasing the Dragon14 Electronic Document Storage15 Contract Locum16 Success fees: Risk? What risk?
Education
17 The University of Huddersfield School of Law18 School Admissions
Criminal
20 Anti-money laundering compliance – keeping it proportionate22 Countering Fraud in the Recession30 Recent Developments in Confiscation
Probate
26 Problematic Probate28 Increasing Statutory Legacy
Book Review
29 Craies on Legislation
Family Law
30 Collaborative Law
Property
30 Keep a close eye on your tenants
Contents
SO
UT
H
LO
NDON LAW
SO
CIE
TY
The Clapham Omnibus 5
IntroductionIntroduction
4 The Clapham Omnibus
Hello, welcome to the second edition ofthe Clapham Omnibus – the free Journalof the South London Law Society.
These are difficult times for all of us, withfirms suffering from the effects of therecession and many also suffering fromthe recent Legal Aid reforms. We will beoffering our members two free CPDevents in our current CPD programme(see page 9). The first of these will beheld at 6.30pm on Tuesday the 24th ofFebruary at London South BankUniversity (where I am Head of the LawDepartment) and the topic will be LegalAid: Surviving Carter. We have gatheredtogether leading Legal Aid solicitors todiscuss the reforms and how their firmsare coping with them. Speakers willinclude Sir Geoffrey Bindman of Bindman& Partners, Laura Janes of the YoungLegal Aid Lawyers and Stephen Hewitt ofFisher Meredith. The evening offers anopportunity for our members to discussthe reforms and exchange ideas in acollegiate atmosphere, preceded by food& drinks offered by the Law Department.
Recent events have included our AGMand our Annual Dinner. The AGM washeld on October 21st 2008 at LSBU andaccompanied by a reception and a freeCPD Lecture on Client Care. The entirecommittee stood for re-election and wereelected unopposed. Our Annual Dinnerwas held on November 28th, 2008 at theHouse of Commons, courtesy of the
Solicitor General, Vera Baird MP QC. The Guest of Honour was Linda Lee, the DeputyVice President of the Law Society who pledged the Law Society’s continuing supportfor Legal Aid clients and Legal Aid firms. The Dinner was considered to be a greatsuccess and we hope to see you at one of our social or professional events soon. Forfurther news from the Law Society, please see the Report of our Honourary Secretaryand local Council Member, David Taylor on page 6.
With regard to our twinning link with the Law Association of Zambia and ourcollaborative Access to Justice Project, we are awaiting official confirmation but wehave heard unofficially that our application to the Law Society Charity for further fundinghas been successful. This is good news, and with our support LAZ are planning thenext two Access to Justice events, to be held in Lusaka in March 2009. One will be forCivil Society Organisations and Advice Workers and one will be for the Judiciary andthe Legal Profession. We are also hoping to invite LAZ to hold their AGM in London inApril 2010. Please contact us if you would be interested in helping with the twinning linkor any of our other activities. We are particularly keen to get some help in organisingmore social events, so if you have a good idea, please get in touch.
At LSBU, local practitioners continue to support our students and our courses andhave recently helped us as to develop new, vocationally oriented Masters courses,including the LLM Crime & Litigation, the LLM Human Rights & Development and anew course aimed at European Civil Law students and practitioners, the LLM CommonLaw. We are also currently looking to expand placement and volunteering opportunitiesfor our students, so please contact us if you can help. Thanks very much.
We aim to publish three editions of the Journal a year, Autumn, Spring and Summer,and welcome contributions from our readers. If you have a suitable article, pleasesubmit it to the editor, Robert Oliver, at [email protected]
Andy UngerPresident of the South London Law [email protected]
President’s ReviewPresidentAndy UngerTel: 020 7815 6344e-mail: [email protected]
TreasurerJohn WeaverTel: 020 8394 6547e-mail: [email protected]
OfficersVice-PresidentRobert HushTel: 020 7663 8615e-mail: [email protected]
Magazine EditorRobert Olivere-mail: [email protected]
Hon. Secretary and Council MemberDavid TaylorTel: 020 7228 0017e-mail: [email protected]
Web Address
www.southlondonlawsociety.co.uk
SOUTH LONDON LAW SOCIETYAPPLICATION FOR MEMBERSHIP
SIGNATURE: . . . . . . . . . . . . . . . . . . . . DATE: . . . . . . . . . . . .
SUBSCRIPTION RATESFOR SUBSCRIPTION PERIOD: 1 January 2008 to 31 December 2008
Full Membership: . . . . . . . . . . . . . . . . £25 per annum . . .�Up to 3 years post qualification: . . . . . £15 per annum . . .�Trainee Solicitors only: . . . . . . . . . . . . . Free Membership .�
Firm Membership:Up to & including 5 partners/solicitors £60.00 per annum .�6 to 15 partners/solicitors . . . . . . . . . . £110.00 per annum�16+ partners/solicitors . . . . . . . . . . . . £160.00 per annum�
Please copy this form and return it, completed, to:John WeaverTreasurer - South London Law SocietyRussell-Cooke Solicitors, DX: 59456 PutneyTel: 0208 394 6573 Fax: 020 8785 4286Please make cheques payable to the South London Law Society
SURNAME: . . . . . . . . . . . . . . . . . . . . . . . . . . Mr/Mrs/Miss/Ms
FORENAMES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FIRM: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDRESS/DX: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMAIL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATUS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DATE OF ADMISSION AS A SOLICITOR: . . . . . . . . . . . . . . . .
I wish to apply for: FULL/ASSOCIATE/TRAINEE Membershipof the Society.
The South London Law Society may/may not contactme/my firm by email.
SOUTH LONDON LAW SOCIETYMEMBERSHIP RENEWAL
The Annual Subscription for the present financial year is asfollows:SUBSCRIPTION FROM 1 January 2008 TO 31 December 2008
Category 1: Ordinary Member . . . . . . . . . . . . . . . . . £25.00
Category 2: A member during the first . . . . . . . . . . £15.003 years only following the date of admission; a member employedfull time as assistant to anothersolicitor; or a consultant
Category 3: Firm Membership:(i) Up to & including 5 partners/solicitors . £60.00(ii) 6 to 15 partners/solicitors . . . . . . . . . . £110.00(iii) 16+ partners/solicitors . . . . . . . . . . . . £160.00
Annual Subscription: . . . . . . . . . . . . . . . . . . . . . . . . . . . £ . . . .Add previous arrears/deduct previous overpayments . £ . . . .Amount Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £ . . . .
SURNAME: . . . . . . . . . . . . . . . . . . . . . . . . . . Mr/Mrs/Miss/Ms
FORENAMES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FIRM: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I confirm that I am happy to be contacted at the followingemail address: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please copy this form and return it, completed, to:John WeaverTreasurer - South London Law SocietyRussell-Cooke Solicitors, DX: 59456 PutneyTel: 0208 394 6573 Fax: 020 8785 4286Please make cheques payable to the South London Law Society
Andy Unger
The Clapham Omnibus 7
NewsNews
6 The Clapham Omnibus
The last year has been afairly catastrophic one for theHigh Street in particular,conveyancing. The LawSociety is doing everythingin their power to mitigate theeffects of this recession onour practices. The Officersand the Chief Executive havemet with the BritishAssociation of Bankers andwe have been lobbyinggovernment.
The Society has also set up a review ofProfessional Indemnity Insurance we areaware of a significant number ofpractices that were let down at the lastminute by their brokers and some ofthese have even have had to go into theAssigned Risk Pool. Council isinvestigating as to whether having theone date each year on which every firm’sinsurance has to be renewed is anadvantage to the profession or not.
In addition, the Society has been sendingregular messages to the professionthrough Professional Update which weshould all should be receiving via e-mail.The Society’s webpage has many links toinformation on how best to survive therecession. The website gives you adviceon how to handle redundancies and onsuch things as negotiating with HMRC inregard to the rescheduling of payment oftax and VAT. I thoroughly recommendthese sites to you and hope that theyprove useful to your particularcircumstances.
I will also draw your attention to the various toolkits that are available for free anddownloadable from the website including one for small businesses and another forlegal aid. Finally there are links to pastoral care sites such as Lawcare and theSolicitors Assistance Scheme. These organisations provide support and free help andadvice to practitioners suffering from either financial or personal problems.
I would also draw your attention to the review of regulation which has been set up bythe Law Society under the auspices of the Rt Hon Lord Hunt of Wirral MBE. Lord Huntis now calling for evidence and if you have any thing to say about how regulation hasbeen conducted in recent times then you should contact the review which you can doby visiting the website at www.legalregulationreview.com. Lord Hunt as some of youmay know is a solicitor and was a great ally in the passage of the recent Legal ServicesAct. We had a recent report by Lord Ousley on the disproportionate effect of SRAintervention and discipline on BME members of the profession. In addition, there is ageneral feeling that the SRA choose to exercise their most stringent powers uponsmaller practices. You may be aware that the SRA are now embarking upon entity baseregulation that is regulating practices rather than individuals. It is these issues andmany more that will occupy this review. If you do make any submissions to the review Ishould be very grateful for a copy.
I am a member of the Membership Board of Council and it is our responsibility to try toensure that we put in place an adequate system whereby we as Council Members cancommunicate with our constituents and vice versa. Unfortunately as it seems with alllarge-scale IT projects this particular one has been beset by problems. However, wewould hope to have such a system in place by the end of this year. This system willallow the Society to communicate with interest groups within the profession for instanceon the basis of categories of work, demographic groups, geographical etc.
The Membership Board and Council are also engaged in somewhat of a struggle withthe SRA in regard to the ownership of accreditation schemes. When the regulation andrepresentative arms were split the accreditation schemes by default were put under theauspices of the SRA. Council’s position is that apart from the statutory schemes forHigh Rights of Audience and insolvency and the rest of the schemes such as personalinjury, family law etc should revert back to the representative arm. This as I have saidabove is meeting with resistance from the SRA and I hope to report the outcome of thisin my next bulletin.
I hope that you will see from a selection of council activities that I have listed above thatthe representative Law Society is now engaging in activities to advance the bestinterests of the profession. If you have any suggestions, comments or criticisms aboutthe work of the Society then please contact me on my e-mail at [email protected]
Council Report
David Taylor Hon Secretary and Council member.
Partner in H.C.L.Hanne & Co, Clapham Junction. Graduated from the University of Kent atCanterbury in 1976 with a degree in Social Policy & Administration. He then joined the CitizensAdvice Bureaux service, working in Sheffield & London, specialising in welfare benefits andemployment. He was the manager of Battersea CAB for 10 years.
He joined Hanne & Co in 1988 and was admitted as a solicitor in 1994. His practice is inemployment law. He is a member of the Employment Lawyers Association, Association ofRegulatory and Disciplinary Lawyers and the Industrial Law Society. He is an accredited mediatorthrough the Centre for Effective Dispute Resolution. He was president of South London Law Societyfrom 2003 to 2006.
On 3 December 2008 theQueen’s Speech set out thenew legislative agenda forthe coming year, includingThe Welfare Reform Bill,which received its SecondReading in the Commons on27 January 2009. There are2 items of particular interestfor family lawyers.
Birth Registration
The first is the proposed newrequirements for the birth registration ofchildren. The new legislation wouldrequire that both the mother and father ofa newborn would be obliged to beentered on the birth certificate unless theregistrar deemed it impossible,impractical or unreasonable.
On average, about 45,000 children areregistered each year with only oneparent’s name on the birth certificate. Afather who is not named on a birthcertificate and is not married to themother does not have ParentalResponsibility. He does not have theright to be involved in decisions about achild’s upbringing, including schooling,medical treatment and religion, but maylater acquire Parental Responsibility byformal agreement with the mother or byorder of the court.
The government’s proposals aredesigned to promote the involvement ofboth parents from birth, strengthen theinvolvement of both parents in family lifeand promote shared parenting.
In the present form of the Bill, exceptions to the new proposed rule are:
(a) that by virtue of section 41 of the Human Fertilisation and Embryology Act 2008 thechild has no father,
(b) that the father has died,
(c) that the mother does not know the father’s identity,
(d) that the mother does not know the father’s whereabouts,
(e) that the father lacks capacity (within the meaning of the Mental Capacity Act 2005),
(f) that the mother has reason to fear for her safety or that of the child if the father iscontacted in relation to the registration of the birth, and
(g) any other conditions prescribed by regulations made by the Minister.
It remains to be seen how in practice the new legislation will sit with the governmentsexisting commitment to combating domestic violence and to what extent suchconsiderations might deem joint registration unreasonable.
Enforcement of Child Maintenance
The second is the proposed new powers for the Child Maintenance Commission, thebody responsible for collecting statutory child maintenance. Such powers wouldenable the state to seize travel authorisations and driving licences from parents whodefaulted on child maintenance payments.
In the Bill “travel authorisation” means:
(a) a United Kingdom passport (within the meaning of the Immigration Act 1971);
(b) an ID card issued under the Identity Cards Act 2006 that records that the person towhom it has been issued is a British citizen.”
The government hopes to reduce the number of parents who do not receive themaintenance that has been assessed for the benefit of their children. Before making a “disqualification order” against a person, the Commission would haveto consider whether a person needs the relevant document in order to earn a living, butnonetheless, the Bill has far reaching implications for the relationship balance betweenthe individual and the state and will not be without its critics.
Robert HushHoward Kennedywww.howardkennedy.com
The Welfare Reform Bill
Vice President - Robert Hush is a partner at Howard Kennedy solicitors in London and a family lawspecialist. He is a member of the Law Society’s Family Law Committee and the Resolution TrainingCommittee and is a member of the association’s panel of Approved Trainers. Languages: Frenchwww.howardkennedy.com
News
8 The Clapham Omnibus The Clapham Omnibus 9
News
Copy DeadlinesSummer Issue 1st May 2009Autumn Issue 1st September 2009
Members wishing to submit editorial please contact Robert Oliver before copy deadline.
Email: [email protected]
Anyone else wishing to advertise or submit editorial for publication in the Clapham Omnibus pleasecontact Phil Lightfoot, before copy deadline.
Email: [email protected]: 0151 236 4141
In just seven years since itwas founded, a niche law firmhas established itself at theforefront of its field, winningnot only the respect of itsclients but its peers too.
TPP Law – until recently known as TheProjects Partnership – specialises inworking with public authorities and not-for-profit organisations in areas whichinclude education, housing, health andsocial care. It has recently won a LawSociety Excellence award for its practicemanagement standards.
Staff at TPP Law have proved that havingthe right systems in place can reassurepublic sector clients that objectivemonitoring systems have been appliedand reached. For TPP Law these includea carefully thought out managementframework and accreditations in Investorsin People and Lexcel.
Lexcel is awarded by the Law Society tosolicitors that meet the highest
management and customer care standards, while Investors in People provides aframework for improving performance and competitiveness through training anddevelopment. TPP Law became only the tenth firm nationally to achieve the exactingnew standards of Lexcel version 4.
Lexcel accredited practices undergo rigorous independent assessment every year toensure they meet required standards of excellence in areas such as client care, casemanagement and risk management.
TPP Law is audited annually by Quality South East, which provides assessment andpost recognition support for all organisations working with the Lexcel Standard andInvestors in People.
Benefits of Lexcel and Investors in People for TPP LawMark Johnson, Managing Director, who jointly founded the firm with Director GrahamBurns in 2001, said: “Achieving Lexcel and Investors in People has helped us attractand maintain motivated, talented professional and support staff, and to instil a clear setof values and expected behaviours to maintain reputation and high standards ofservice.
“As to winning the Law Society award, this has cemented the sense of pride andachievement which our managers and staff have in Lexcel accreditation.”
Lexcel accreditation has brought many benefits to the firm, including:• Increased profitability by avoiding costly mistakes and managing risks, costs have
been reduced and fee income increased• Improved financial management through applying Lexcel’s discipline improved cash
Respected by clients, rewarded by peers
flow and credit control• Winning more
contracts, especiallyfrom public sectorclients who expect lawfirms to demonstratevalue for money andevidence of qualityduring tenders
• Increased selfconfidence. Lexcel andIIP have been badgesof honour, instilling asense of pride andachievement inmanagers and staff
The updated LexcelStandard not only requirespolicies and plans to beput in place, but also thatthey are reviewed andupdated at least annually,and in certain areas, suchas the business continuityplan, tested. The newstandard places moreemphasis on thetechnology that is neededin a modern law firm.
TPP Law’s own disasterrecovery plan was testedwhen the offices suffereda major power failure, butsystems had been put inplace to ensure data wassaved – thanks to thepursuit of Lexcelaccreditation.
Programme of Continuing Professional Development Events 2009
Seminars start at 6.30 pm (unless otherwise indicated). Refreshments are available from 6.00pm.
Seminars are held in the London South Bank University Keyworth Centre. Seehttp://www.lsbu.ac.uk/about/maps.shtml for a map and directions to the Keyworth Centre, LSBU.For further information on events please contact: [email protected]
Date Topic Lecturer2009
Tuesday 24th February Legal Aid - Surviving Carter Chair: Andy Unger6.30pm
Panel inc:Note: Lucy Scott Moncrieff,This is a Free Lecture Laura Janes,
Stephen Hewitt, &* Note Revised Date Sir Geoffrey Bindman
Tuesday 10th March Restraint, Confiscation and Deepak Singh,6.30pm Money Laundering & the Crown Prosecution Service
Proceeds of Crime Act 2002
Tuesday 24th March Human Rights Law Update Sir Geoffrey Bindman,6.30 pm Solicitor, Bindman & Partners,
Visiting Professor at LSBUJoel Bennathan, Barrister at Tooks CourtImran Khan, Solicitor, Imran Khan & PartnersVisiting Fellows in Law at LSBU
Tuesday 5th May Family & Children Robert Hush, Solicitor,6.30 pm Law Update Howard Kennedy
Maria Healy, Solicitor,Fisher Meredith
* Note Revised Date
11th June 2009 Criminal Trials:Science, Technology
Day Conference & Psychology
South London Law Society & London South Bank University
PracticePractice
The Act seeks to simplify company lawUnfortunately it has created a situationwhich will require most charities to reviewtheir memorandum and articles andsupporting governance policies to:
• Take account of new rules on conflicts;
• Reflect, provisions that overrule yourmemorandum and articles;
• Take advantage of new deregulations;and
• Clarify directors’ duties.
There are changes brought in by the Act,which, if charitable companies do notrespond to them, could cause themsubstantial difficulties. The best exampleof this is the new provisions that arebeing introduced on conflicts of interest.
Conflicts of interestThe difficulty arises in particular insituations where the conflict is not a resultof a transaction between thetrustee/director and the charity (forexample, where he provides services tothe charity) but where the conflict arisesfrom other circumstances. A typicalexample of this would be where a trusteeof your charity was also a trustee ofcharity B and, as a result of being atrustee of your charity, he became awareof an opportunity which would also beimportant for charity B. He then faces aconflict as to whether to use theknowledge to assist charity B. The Actsays this situation is to be resolved by thedirector declaring the conflict and the
other directors authorising it. Very unfortunately for charitable companies, the Actrequires that the directors may only authorise the conflict if there is a provision in theirarticles allowing them to do so. In my experience, one virtually never finds such aprovision in the articles.
The memorandum of association will frequently contain provisions dealing with asituation where a conflict arises out of a direct transaction between the charity and thetrustee. For example, the trustee is a solicitor and the charity wants to use his firm for atransaction. These provisions will not cover the sort of conflict of interest mentionedabove.
It is clearly vital that organisations update their memorandum and articles to give thedirectors/trustees such a power. Otherwise this type of conflict would simply beunmanageable. You will also need to review the code of conduct and register ofinterest arrangements.
Are your articles overruled by the Act?In a number of situations charities will have provisions in their memorandum andarticles which contradict and are overruled by the provisions of the 2006 Act. Twoexamples are set out below:
• Proxy voting for all. Prior to the Act, charitable companies, like all companies limitedby guarantee, only had proxy voting if the articles provided that they should have.Many charities have been uncomfortable about it and have specifically provided thatvoting shall only be in person. Since October 2007 all charitable companies limitedby guarantee have to allow proxy voting at meetings and it is a punishable offencenot to notify members in the notice of a meeting of their rights to vote by proxy.Clearly having a situation where your articles say you do not have proxy voting andthe law says otherwise is not sustainable.
• Written resolutions. The Act makes it easier for company members to pass aresolution without holding a general meeting. Members can now pass mostresolutions by obtaining the written approval of at least 75 per cent of the members(in the case of a special resolution) or more than 50 per cent of the members (in thecase of an ordinary resolution). Before the law changed, 100 per cent approval wasrequired. This change in the law will apply irrespective of what your articles say, so itis important to amend them to avoid mistakes being made.
When you can’t take advantage of the deregulationA whole range of other simplifications will not be available to charitable companies iftheir articles say otherwise. Examples of these include
• Notice periods for general meetings: The required notice period for all generalmeetings is now 14 days, but you will not be able to take advantage of this relaxationin the law where the company’s articles require a longer notice period.
• Holding general meetings on short notice: It is now easier to call a general meetingon short notice. To do this will require the written approval of at least 90 per cent ofthe members. Under the old law the percentage approval required is 100 per cent (inthe case of AGMs) or 95 per cent (in the case of EGMs). Again, if your articlesspecify that 95 per cent/100 per cent approval is required, they will need to beamended before you can take advantage of this change.
• Annual general meetings: Companies are no longer obliged to hold annual generalmeetings. However, if the company’s articles require the company to hold them, itmust continue to do so. If you do give up holding AGMs, you will need to think aboutthe implications for trustee election.
• Accounts: It will no longer be obligatory to lay the company’s accounts and reportsbefore the members at a general meeting. This change only applies to accounts andreports for financial years ending on or after 1 October 2007. There are also newrules relating to the circulating of accounts to the members. Where the accountsrelate to a financial year ending on or after 1 October 2007, the Act no longerrequires you to circulate them to members 21 days before the AGM. Instead, theymust be sent to members (and anyone else entitled to receive notice of generalmeetings) on or before the date on which they are filed with Companies House(which, at present, must be done 10 months after the end of the financial year, butthis was reduced to nine months in 2008). Again, however, if your articles require youto circulate accounts 21 days before your AGM, you will still have to comply with theold law as well as the new.
Directors’ dutiesFor the first time the duties of directors are spelt out and these are:
• To act within the company’s powers;
• To exercise independent judgment;
• To exercise reasonable care, skill and diligence. This is a subjective test, takingaccount of the skills and experience the director actually has as well as an objectivetest where the director must achieve a reasonable standard regardless of personalskills or capabilities;
• In the case of a charitable company, the duty to act in the way in which a directorconsiders in good faith would be most likely to achieve the company’s purposes(such as the charitable objects set out in the memorandum).
When exercising this duty, directors must note:• The likely long-term consequences of any decision;
• The interests of the company’s employees;
• The need to foster the company’s business relations with suppliers, customers andothers;
• The impact of the company’s operations on the community and the environment;
• The desirability of the company maintaining a reputation for high standards ofbusiness conduct; and
• The need to act fairly as between members of the company.
The government has emphasised thatthis list of factors should not lead to a‘box-ticking’ exercise at board meetings,or a need to make more detailed minutesof board meetings. However, it isimportant for the directors of charitablecompanies to be aware of these statutoryduties and that these are not the onlyduties that apply to company directors.You will need to review and updatepolicies including trustee job descriptionsand record keeping policies. Membersare given new, albeit somewhat limited,statutory rights to sue if they thinkdirectors are breaching duties.
Three further statutory duties came intoforce on 1 October 2008. These are to:
• Avoid conflicts of interest;
• Not to accept benefits from thirdparties resulting from being a directoror doing or not doing anything as adirector;
• Where a director is in any way directlyor indirectly interested in any proposedor existing transaction or arrangement,the company must declare the natureand extent of that interest to otherparties.
Directors can make the declaration:
• At a meeting of the directors;
• By a notice in writing sent to the otherdirectors;
• By a general notice given to the otherdirectors declaring an interest in aspecified company or firm or declaringhis connection with a specified thirdparty.
One way of doing this would be througha register of interests which was laidbefore directors (provided it is wordedappropriately).
These duties apply in respect of directorsand, in the case of conflicts, they alsocover a situation in which the director has(or can have) a direct or indirect interestthat conflicts. The Act does not definehow an indirect interest is to beevaluated. However, elsewhere in the Act,
Corporate documentation... a time for review
James Sinclair-Taylor is a partner at Russell-Cooke and heads up the Charities Team. He acts for abroad range of charities and also advises other not for profit organisation including local authoritiesand educational establishments. He is a member of the Charity Law Association and co-author ofVoluntary Sector Legal Handbook.
What changes can charitable companies expect from theCompanies Act 2006?James Sinclair-Taylor examines the implications
The Clapham Omnibus 1110 The Clapham Omnibus
Practice
12 The Clapham Omnibus
there is a detailed definition of who is going to be treated asconnected to a director in respect of the approval processnecessary for certain transactions, for example, if the charitywas considering selling property to the director. It seems likelyin looking at whether a director has an indirect conflict ofinterest, that notice will be taken of the fairly extensive list ofpeople who the Act now says a director is deemed to beconnected with. These include:
• A partner with whom the director lives in an enduring familyrelationship;
• Children of such a person as well as stepchildren.
It is an unfortunate additional complexity that this list ofconnected persons is not the same as the list of connectedpersons in the Charities Act.
Governance policiesThe implications of these changes in directors’ duties and anumber of other changes within the Act are that not only thememorandum and articles but the governance policiesdeveloped from that will need to be reviewed and updated.For example, organisations should have a job description fortrustees who are directors. This should now include explicitreferences to the statutory duties. Charities will have codes ofconduct and associated registers of interest. These will nowneed to be formal procedures to put the register of interestbefore board meetings at least once a year to ensure thatconflicts and potential conflicts are flagged and handledappropriately.
Broader implicationsThe duties of company directors have always sat alongsidecharity law duties. The Charities Act 2006 will allow paymentsto trustees for services provided. If a charity moves to takeadvantage of this provision, it is going to need to be awarethat even though it observes the requirements in the CharitiesAct in doing so, it will also need to observe the somewhatdifferent requirements in the Companies Act which, forexample, require copies of all directors’ service contracts to beavailable for inspection at the company’s office or some otherspecified place, and to allow members to attend and takecopies of such contracts.
In conclusionWe are recommending that charitable companies limited byguarantee review their memorandum and articles to make surethat there are no contradictions between those articles and thenew rights and duties under the Companies Act and also toensure that they can take advantage of the variousliberalisations available.
The Clapham Omnibus 13
Practice
Those of you familiar with China in generaland Shanghai in particular will be ascaptivated as I am by Pudong. What amonument to Chinese development andstyle and awareness. Manhattan with space!
My initial visit to Pudong was in 2000 when I first becameexcited at the prospect of providing business software to theChinese legal market. Silly me.
Grierson’s had developed software for lawyers in 1998 inconjunction with a local North East University. Having decidednot to follow the traditional route of developing “CaseManagement” software attached to an accounts package, wetook the view that developing “business control” softwarebased on the concept of The Law Society “Lexcel” PracticeManagement Standards and Legal Service Commission“Quality Standards” would produce software with anInternational perspective.
“Case management” software is totally reliant on Nationallegislation and is therefore only relevant to the Country oforigin. Software based on a “Standards”, if those “Standards”are good enough, could well be relevant around the globe.
Having dabbled in the UK market and found the processtotally frustrating we decided to spread our net as far awayfrom that market as we could. China is about as far away asyou can get. However China was nearby. Our local Universitieshad an abundance of Chinese nationals undergoingeducation. It was not difficult to make contact and begin afriendship with Chinese graduates and it was through thatfriendship that our software was translated into both Mandarinand Cantonese.
Once the software had been fully translated and tested to thenth degree we were off!
We discovered that Pudong was the residence of a decentnumber of International Law Firms, mainly American with asmattering of Chinese partners. Our software was clearly notfor them. The software developed at Grierson’s was for thesmaller high street lawyer but did such an animal exist in
Chasing the Dragon
China. What kind of lawyer resided in down town Shanghai onthe other side of The Bund? It has taken a further eight years todiscover the reality of legal life in China.
Were you aware that until the 1990’s there was no such thing asa legally trained lawyer in China? Prior thereto those whoadjudicated on legal disputes were retired forces officers who,despite their lack of legal training, had the authority to arbitrateand decide in favour of one party or another in a legal dispute.
When China joined the World Trade Organisation it wasimmediately obvious that existing legal authority could notcontinue and fully legally trained lawyers were required. As withmost other issues, China set about the task with gusto and LawSchools sprang up around the country. Within a couple of yearslawyers were being produced in their thousands and China nowhas a thriving legal community inhabited by locally trainedlawyers rather than western imports.
However probably the only semblance of similarity betweenChinese trained and Western trained lawyers is that they bothattended law school.
Individual lawyers in China do not congregate into partnershipsor practices as we do in the West. In China there is no “joint andseveral” responsibility where all work is pooled and shared bypartners with the revenue generated being that of the practiceand shared between partners.
In China the lawyer owns the work he does. He is in total controlof that work and under no circumstances will he allow that workto be infiltrated by others. Whilst individual lawyers share officespace and administrative staff, that is as far as the “relationship”will go. Each lawyer will contribute an agreed percentage of hisannual earnings to the partnership but all other moniesgenerated by the individual is his or hers alone.
Having demonstrated our software to a variety of lawyers, bothin Shanghai and Beijing, it was clear that either our software hadto be radically altered to meet local demand or the Chineselawyer had to begin to adopt western practice of a truepartnership with the sharing or work and responsibility as well asrevenue.
Having developed a partnership ourselves, with a Chinesesoftware company in Shanghai, we have been closelymonitoring developments within the Chinese legal community.As yet they have shown little interest in adopting computerisedrecording as standard. However, eight years is not a great deal
John Dobie was employed for 33 years within the Legal Aid system.Since 1994 he has been working in a commercial environment andnow has interests in business software, e-commerce, broadbandcommunications and the treatment of contaminated land and water.
of time as far as business development is concerned. PerhapsChinese lawyers will eventually realise the benefit of having acomputerised recording process to ensure accuracy ofrecording or maybe national Government will force the issue onthe ground of transparency of earnings for taxation purposes.Whatever does transpire the journey will be an interesting oneand, no doubt, many more new Chinese friends will be madealong the way.
Are the Chinese lawyers likely to change their ways and adoptwestern practices. Having revisited the country some eight timessince my initial foray, I am not prepared to put money on it!
Practice
thecabinetoffice London, a specialistelectronic document storage company begantrading from premises in Merton in July 2008and Lynda Reynolds from Merton Chamberof Commerce spoke to the owner/directorDavid Brown about this new venture.
LR: So what exactly does thecabinetoffice do?DB: Put simply, we electronically store any and all documentsthat a business needs to keep in long term storage, typically fora minimum of six years.
LR: What are the benefits of this to your customers?DB: Primarily a business can expect to enjoy large savings inspace and storage costs. With the high cost of office space inLondon, storing boxes of paper on-site becomes very expensiveand to store off site is highly inconvenient; it’s also notconducive to a good working environment and there are also ahealth and safety issues. Secondly it’s a lot easier and quickerto retrieve a file or single document electronically.
LR: Tell me how it works.DB: We offer a complete service. First we collect files from theclient premises and take them to our bureau; there they are
sorted for scanning by security vetted staff. We scan using highspeed scanners and a Law Society approved software calledScanFile.
Once scanned and audited we return the disk to the client andwhen they are satisfied with the quality of the work we thenrequest an order for secure destruction.
LR: What is secure destruction?DB: It’s shredding by one of the security approved recyclingcompanies. Once the shredding is carried out we receive acertificate of completion and a list of the files destroyed, we thencertify the client. The whole process is very well controlled,particularly as we are dealing with highly sensitive andconfidential documents.
LR: You mentioned earlier that it is easier to retrieve a file or asingle document, why is that?DB: When we scan a file we index each one to the clientspecification, if it’s a solicitor they may want to search by clientname or matter number or fee earner, in fact there are ten userdefined search fields. To then find the exact document yourequire takes a matter of minutes electronically, whereas if it is ina box somewhere off-site it can literally take days and there isno cost.
LR: Can you give me a guide as to how much space is actuallysaved?DB: We can scan 100,000 B&W images on to just one DVD,that’s typically 500 files or 40 file boxes, imagine how muchspace that saves, as well as the rental.
LR: You are currently scanning to DVD, how are these thenstored?DB: We deliver the images on DVD which includes the softwareto search, view and print images. The majority of our customerswill then transfer the data to their own server, which means ofcourse that the information can be attached to a client file.
LR: Who are your customers?DB: We work mainly with solicitors, but also with private banks,property companies and housing associations. Law firms are anobvious target market for us as they produce files daily so theyneed a service like ours as we are set up to meet the stringentlegal requirements with regard to confidentiality and weunderstand the demand to ensure that the files are indexedclearly and correctly.
LR: Finally, is there anything else we should know?DB: All of the software that we deliver to our customers is free ofcharge and importantly we are happy to work with prospectivecustomers to ensure that by electronically storing they can makegenuine cost savings over physical storage.
Contact David Brown at thecabinetofficet: 0845 146 0004m: 07800 831076e: [email protected]
Electronic Document Storage
14 The Clapham Omnibus
The concept of the contract lawyer hasgrown rapidly in recent years as firms andorganisations have come to rely onexperienced lawyers to cover a variety ofsituations such as recruitment gaps,maternity leave, holidays, sickness etc.
We have a core of experienced lawyers, including many ex-partners, on our register who locum on a professional basis.Until the recent property slump it has been perfectly feasiblefor those lawyers specialising in areas of law such asResidential Conveyancing, Commercial Property, FamilyLaw, Civil Litigation and Private Client (ie. Probate) to workfor at least 9 – 10 months per year. Even in the currentclimate most of our contract lawyers would be able tosecure a minimum of 6 months’ work per year.
Contract work certainly suits someone who is seeking a freshchallenge and would enjoy the freedom and variety of work thatit affords. For an informed opinion on the pros and cons oflocuming I asked one of our most popular ConveyancingSolicitors, for his views after completing his first 12 months as alocum. Based in North London, he was an ex-partner with twoSouth London practices for nearly 20 years, concentrating onResidential and Commercial Conveyancing in recent years,having been a General Practitioner earlier in his career. Aftertaking a year’s sabbatical he has locumed regularly since then,assisting half a dozen firms on a repeat basis, covering shortterm assignments deputising for partners and other senior feeearners.
He said: “Basically I felt that I needed a change after so manyyears in partnership, and was even contemplating doingsomething unconnected with the law. However I realised afterspending many months renovating my house that I actuallymissed the mental stimulation of being in practice, and havinghad my first proper break from working in the legal professionfor many years I returned to the fray feeling refreshed and veryenthusiastic about the new challenges ahead.
“As far as I’m concerned the benefits of locuming far outweighthe disadvantages. You are actually welcomed and valued byclient firms, and frequently get asked back for repeatassignments; you have plenty of client contact; another hugeplus is that you can concentrate on just doing the work without,as a partner, having to worry about management, staff and LawSociety issues; you don’t build up piles of cases which you can’tface dealing with... every file is the same, so you don’t have anysleepless nights about particular cases. Locuming gives you anexcellent insight into how different law firms operate, and I havebeen fortunate enough to handle some high quality CommercialProperty work at two very well run practices that I have beenassigned to.
“The disadvantages are minimal really... obviously on short termassignments you do have to assimilate urgent matters veryquickly, but this is a skill that you soon acquire. You don’t seemany of the files through to completion, although on repeatassignments you do often find yourself handling files that you’vedealt with previously. I was worried at the onset about theuncertainty of what lay ahead, but I’ve found myself working themajority of weeks that I was available and have established anexcellent relationship with the firms that I have been introducedto so far.”
Contract Locum
Career Legal is a specialist legal consultancy, acting predominantly for law firms within London and the Home Counties.
The Clapham Omnibus 15
Practice
Practice
The recent case of C v W [(2008) EWCA Civ1459] is of interest because it gives someinsight into the Courts attitude towardssuccess fees when liability has beenadmitted pre CFA.
The Claimant was a passenger in an RTA. Liability was admittedby the driver by the time the CFA was entered into. The CFA, inLaw Society terms, provided that no costs would be payable inthe event that a successful Part 36 offer had been rejected onthe solicitor’s advice.
The CFA claimed a single success fee of 98% inclusive of 15%in respect of the funding element. On the original assessmentthe District Judge had allowed 70% which was reduced by theCircuit Judge to 50%. On appeal the Defendant contended that20% was appropriate.
The Court of Appeal looked closely at the way in which theClaimant’s solicitors had calculated the success fee. The maincategories of risk identified by the solicitors were: the chancesof success, the existence of additional or complicating factors,the opportunity to reduce the risk and the costs of funding theclaim.
In considering the specific factors taken into account by thesolicitors the Court found that: the chances of not achieving a“win” as defined by the CFA were no more than 5%, to increasethe risk by reason of the size of the claim was wrong as, thoughhigh value claims could be more complex that did not, by itself,increase the risk and that the addition of a further 10% to thesuccess fee for “unidentified Defendants and insurance issues”was not justified.
The Court further noted that the real difficulty in this case lay inassessing the risk that the solicitors might lose the right torecover part of their fees in the event of the Claimant’s failure tobeat a Part 36 offer on their advice. However, on the basis thatexperienced solicitors were unlikely to differ widely in theirevaluation of a claim and that, depending on the stage at whichan offer was made, a significant part of the solicitors’ fees werenot at risk, the Court found that the 20% addition to the successfee attributed to this element was excessive. In allowing anoverall success fee of 20% no more than 17% was attributed tothis element.
In the light of this judgment, as long as you ensure that adetailed risk assessment is prepared that specifies the variousheads of risk taken into account it should now possible to defeatthe standard paying party argument that liability was admittedpre CFA or that liability was never in doubt and so the successfee recoverable should be around the 5% level.
Success fees: Risk? What risk?
16 The Clapham Omnibus
Legal Costs Management. The School of Law is aprogressive one that iscommitted to offeringcourses that are not onlyinnovative in terms ofstructure but also in terms ofdelivery. The School wasestablished in 1978 and wasone of the first providers tobe validated to run the LegalPractice Course (LPC) from1993.
In 2008 commenced a radical new fouryear degree course combining thetraditional law degree with the final stagefor qualifying as a solicitor, normallycompleted through the LPC. At the end ofthe four years students achieve their LLB(Hons) plus a Master of Law andPractice. We were the second Universityin the country to be authorised to offerthis course by the Solicitors RegulationAuthority, the first time the SRA hasapproved such radical reform since 1992.Apart from the added value of obtaining a
Master’s degree, students benefitenormously as all fees are deferred untilthey are in employment, there are noexpensive “upfront” fees as for the LPC.
Our emphasis is giving students a soundeducational experience supported by an“open door” policy for academic andpastoral care throughout the student’speriod with us.
Our commitment to ongoing coursedevelopment to meet the needs oftomorrow’s professionals isdemonstrated in new course areas suchas a Foundation Degree in Para-LegalStudies which will be available from 2009.We also offer both full and part-timecourses leading to the CommonProfessional Examination. Again thiscourse is unique in that it is offered on aflexible and distance learning basis overthe internet. This means that any student,anywhere in the world can complete thiscourse and then move on to studying theLPC or the Bar Vocational Course.
In an era of economic uncertainty whensignificant re-structuring is taking place,not least in the legal professions, we arealso able to provide appropriatelyqualified applicants a range ofpostgraduate courses to enhance theirknowledge. For those who areprofessionally qualified or who havesimply completed their LPC or BVCcourses and are awaiting a trainingcontract or pupillage we offer an LLM byopen and distance learning. This requiresthe presentation of a 25,000 worddissertation, coupled with a presentation.The research is usually carried out overan academic year, though this period canbe extended. In addition we offer taughtLLM degrees in Commercial andInternational Law on a full-time or part-time basis with either a September orJanuary start.
P H Richards LLB, PhD, PGCE, FHEAHead, School of Law
The University of Huddersfield School of Law
Education
The Clapham Omnibus 17
The Clapham Omnibus 19
EducationEducation
This area of law is governedby a labyrinth of primary andsecondary legislation,government guidance andcase law. The website of theDepartment for Children,Schools and Families is auseful source for materials,including 2 substantial Codesof Practice and references tothe relevant legislation(www.dfes.gov.uk/sacode).
The predominant primary legislationgoverning admissions to maintainedschools can be found in the Education Act1996, School Standards and FrameworkAct 1998 SSFA), Education Act 2002 andthe Education and Inspections Act 2006.
This issue is highly topical as applicationsto most admission authorities (AA’s) forSeptember 2009 and January 2010Reception intake are imminent. Decisionsupon the said applications will bepublished a few months later, in somecases, April.
Applications for September 2009secondary applications were submitted inOctober 2008. Decisions should be postedon national offer day, 2nd March 2009, oravailable on line from 3 March for thosewho submitted on-line applications.
Primary and secondary admissions aregoverned by co-ordinated arrangements.Parents are required to complete aCommon Application Form (CAF) providedby their home local authority in which theystate, in ranked order, a number of schoolto which they wish to apply. 6 preferencescan be stated for secondary applications,and in the region of 4 for primaryapplications, depending on the admissionarrangements of individual local authorities.
The local authority is responsible forsubmitting the application for eachindividual school to the relevant (AA) whichwill consider the application and determinewhether or not a place is offered to theparent. The decision is communicated tothe local authority. The identity of the AAdepends on the type of school. AA’s forcommunity schools are the local authoritywhereas AA’s for foundation schools andvoluntary aided schools are in fact thegoverning bodies of those schools. AA’s forAcademies are the Board of Governors.Appeals are organised by the AA of theschool in question.
The underlying purpose of the co-ordinated arrangements is to ensure that the home localauthority makes one offer of a place to the parent, in line with their ranked preference. If noschool named on the CAF offers a place, the local authority should take steps to identify anavailable place at another school.
Admissions procedure can be confusing and stressful for parents who are experiencing theprocess for the first time. A common misapprehension of parents is a belief that there is anentitlement for their child to attend the parent’s school of first choice. What the legislationactually provides, however, is an entitlement to state a preference, which is wholly differentto entitlement to a place at a particular school.
Section 86 of the SSFA requires local authorities to make arrangements for enablingparents to express a preference, and give reasons for that preference. Furthermore, AA’sare required to comply with expressed parental preference unless:i. Compliance would prejudice provision of efficient education orii. prejudice the efficient use of resources.
Inevitably, popular schools receive more applications than places which are available. AA’sadmit to their published admission number. If over-subscribed, they allocate placesaccording to their published over-subscription criteria. These vary depending on the type ofschool and whether or not it is a community school, faith school or selective school.Statutory priority is given to looked after children. Other criteria include sibling link, social ormedical reasons and distance. Faith school generally require evidence of religious worship.
Academies receive funding from the Secretary of State on condition that their admissionsprocedures must comply with the legislative framework for maintained schools. CityTechnology Colleges operate under their own procedures.
AA’s are under a statutory duty to have regard to the Secretary of State’s School AdmissionCode of Practice (February 2007) and the School Admission Appeals Code of Practice(January 2008).
Appeal procedureSection 94 of the SSFA gives parents a right of appeal to an independent appeal panelagainst a decision refusing admission to a maintained school. This entitles parents toappeal in respect of all schools detailed on the CAF which have not offered a place.
Parents must ensure that if they wish to appeal any admission decision, they do so by thedeadline date stated by the AA in order to avoid delay in the hearing of their appeal. It isadvisable to submit full grounds of appeal with supporting documentary evidence such asmedical or other professional reports or relevant school records. The appeal should beacknowledged by the clerk to the appeal panel and the parent should be informed thatthey have a further opportunity to submit additional evidence before the hearing, and thedate by which they should do so.
The Code of Practice specifies that primary appeals must be heard within 30 school daysof the closing date for lodging the appeal, and secondary appeals must be heard by 6July. The clerk to the appeal panel is required to provide at least 10 days notice of thehearing date and to circulate a statement from the AA at least 7 days before the hearing. Ifsubstantial information is provided by the parent less than 3 working days before thehearing, the panel may consider adjourning the hearing.
When hearing appeals, panels are required to satisfy themselves that the AA correctlyapplied it admission arrangements and over- subscription criteria in all cases. If the criteriawere incorrectly applied, this is a primary ground of appeal, Accordingly, if the appeal panelconcludes that a child would have been allocated a place had the criteria been appliedcorrectly, it should direct admission of that child.
Infant appeals Distinct regulations apply to infant appeals (Reception, Year 1 and Year 2), in contrast tosecondary appeals. Section1 (3) if the SSFA imposes a limit to infant class sizes of 30
pupils to one qualified teacher. Further details are set out in The Education (infant ClassSizes) (England) Regulations 1998. This impacts on the basis upon which appeals can bepursued in respect of infant classes, and parents’ prospects of success.
Due to the statutory class size limit, the nature of these appeals are restricted and it isessential that parents should bear this in mind so they can manage their expectationsaccordingly.
The appeal panel has to establish whether the school has admitted the maximumpermitted number of pupils to the year group. The primary role of the AA in these appealsis to satisfy the appeal panel that there would be “prejudice” to the provision of education ifany more children were admitted (see reference to section 86 SSFA above).
A school may have admitted to its published admission number, however, it may have tojustify to the panel that this would also breach the infant class size limit. Amongst itsconsideration, the panel has to consider whether admission of another child could causeinfant class size prejudice in the future, for example if a school re- organises forms in years1 and 2.
If the panel is satisfied that the maximum number of pupils permissible have been admittedand any additional admissions would result in more than 30 pupils being taught by onequalified teacher without any “qualifying measures” being implemented (such asappointment of an additional qualified teacher), there are limited additional circumstanceswhich can be taken into account by the panel, and thus restricted grounds upon which anappeal can be allowed.
The panel is only permitted to allow any appeals if a failure to admit any pupil would beperverse or irrational. Detailed guidance on this is set out in the School Admission AppealsCode of Practice.
There is no scope for the appeal panel to take into account compassionate or personalcircumstances if, on the face of the original decision, the admission authority complied withits admissions arrangements and has admitted the maximum statutory numberpermissible.
Secondary appeals In contrast, panels for secondary transfer appeals have a much broader remit.
Firstly, the panel has to satisfy itself as to whether the admission arrangements werecorrectly applied when places were allocated to the school.
The panel then has the task of establishing whether or not the AA has admitted to thepublished admission number. If the AA satisfies the panel that it has admitted to thatnumber, it still has the task of satisfying the panel that there would be prejudice to pupils’educational provision if more children were admitted. The appeal panel should not simplyconclude that there will be prejudice purely because the published admission number hasbeen reached.
When preparing for an appeal, the parent should consider whether there are anychallenges to the AA’s prejudice arguments, such as arguing that the published admissionnumber was set some time in the past and does not reflect any subsequent increase in theactual physical capacity of the school.
Other arguments which can be considered include establishing whether in previous yearsthe total admitted number exceeded the admission number. If so, there is an arguablepresumption that the school can accommodate an increased number of pupils.
In contrast to infant appeals, if the panel is satisfied that prejudice is established by the AA,it then goes onto a final stage of balancing the AA’s arguments on prejudice againstarguments presented by the parent as to why admission should still be allowed (R v SouthGlamorgan Appeals Committee ex parte Evans (1984) 10 May Lexis CO/197/84). Whereschools are particularly oversubscribed, parents do need to be aware that this is a highly
competitive process; the appeal panel isrequired to consider each parent’scompassionate and compelling nature and,in many circumstances, make difficultdecisions.
For this reason it is essential that anydocumentary evidence or professionaladvice to support compelling, social ormedical submissions should be submittedby the parent either when the appeal islodged or at the later stage when furtherevidence can be provided in advance ofthe hearing. Evidence of this nature iscrucial for assisting the panel indistinguishing appeals and making itsdecisions.
Legal representationMany parents feel it is beneficial to obtainlegal advice and assistance with thepreparation of their appeals andsubmissions to appeals panels. Legal helpis available to parents, subject to financialeligibility.
Generally, it is only advisable to have legalrepresentation at the actual appeal hearingin exceptional circumstances such aswhere specific legal arguments are beingpresented on the parent’s behalf with aview to potential judicial reviewproceedings. Representation is not coveredunder the Legal Help Scheme.
Further remediesComplaints of maladministration can bemade to the Local GovernmentOmbudsman in respect of the localauthority or its appeal panel.
Judicial review can be considered if thedecision of the AA is arguably unlawfulwithin the context of public law principles.Time is of the essence when consideringadmissions judicial review proceedings asthe court is generally reluctant to intervenein admission arrangements once AA’s havetaken steps to plan for specific intakes.Applications have been treated as out oftime even when issued within 3 months ofthe decision in question.
Public funding is only available to parentsand not to children, following the decisionin JC v Richmond [2001] ELR 21 where thecourt made strong comments that publicfunding in the name of the child isincompatible with the wording of thelegislation which specifically vests appealrights in the parent rather than the child.
School AdmissionsAngela Jackman is a solicitor at Fisher Meredith LLP. Email: [email protected]
18 The Clapham Omnibus
The Clapham Omnibus 21
Criminal
Emma Oettinger is the Law Society’s anti-money laundering policy officer.
In difficult economic times, it is tempting to cut back oncompliance checks to save costs and to turn a blind eye toanomalies in transactions in order to keep work. It is just thisvulnerability which criminals will seek to exploit to ensurethey can keep laundering the proceeds of their crime. Atransaction that may look like a godsend today, will not seemsuch a good idea if it leads to criminal investigation in twomonths or two years time.
Criminal
The Regulations apply to solicitors undertaking certain types of ‘regulated sector’ worksuch as:
• property transactions
• assisting in setting up trusts or company structures and
• managing client money or assets.
Before setting up your procedures and controls, the practice note encourages you tofirst asses your client demographic and the services they provide. A little time andeffort spent in this initial risk assessment may reduce overall compliance costs in thelong run, either as a result of reducing over-compliance or avoiding a compliancefailure due to unappreciated risks.
Some points to consider in conducting the firm risk assessment include:
• Is there a high turnover of clients?
• Do you meet clients face to face?
• Does the practice undertake complex financial or property transactions?
• Does the practice receive cash payments?
• Are cross-border transactions a standard part of the firm’s work?
Once you have established your firm’s risk profile, you should consider the risk profileof each individual client. The Law Society’s view is that the overall information gatheredby the firm while acting for the client can be drawn upon in making that riskassessment initially and when it is reviewed as the retainer progresses. The more youknow your client and understands their instructions, the better placed you will be toassess risks and spot suspicious activities.
Knowing your clientFor the majority of firms, customer due diligence tends to command the greatestattention. As the front line of defence, many firms will want to have a robust system toensure that all necessary identity checks have been undertaken before workcommences on a retainer. However, to get the best value for your firm out of this clientdue diligence, it is important to take time to really know your client, rather than just tickthe box of obtaining a passport. Look at the identity information provided and ask, is itconsistent with the:
• presentation of the client?
• nature of the transaction?
• other information within the transaction?
If you are satisfied as to the identity of the client, but think that the transaction itselfposes a higher risk, it is not a case of getting more evidence of identity. Rather you canundertake standard identification of the client and put more resources into the ongoingmonitoring of the transaction.
Beneficial ownersWhen conducting customer due diligence on clients, you must now identify anybeneficial owners. This is a typical example of an obligation where it is possible toapply a risk-based approach and so enhance the proportionality of the complianceburden.
The practice note advises that in normal situations, where there are no high risk factorspresent, you will not need to verify a beneficial owner to the same degree as a primaryclient. This means that in some cases a certificate from the client confirming the identityof the beneficial owner or shareholder details from an online registry may be sufficient.They key is to understand the ownership and control structure of the client. The level ofunderstanding required is in direct proportion to the complexity of the structure and therisks associated with the transaction.
Some of the questions to consider when assessing the risk of beneficial ownersinclude:
• Why is the client acting on behalf of someone else?
• Where is the business structure based?
• Why is a particular business structure being used in a transaction?
Training staff on the warning signsFee earners who deal with clients on a regular basis and undertake many similarretainers are your best defence in protecting your firm from potential launders, as longas they know the warning signs for which they should be looking. Expensive external oronline training programmes are not always the most effective way to ensure fee earnerskeep money laundering warning signs in the front of their mind during their day to daywork.
Sharing real life situations considered within other parts of the firm at team meetinghelps to bring home to fee earners the types of risks that your actual firm is facing andre-enforces the firm’s procedures for responding to concerns or suspicions. Circulatingnewsletters, e-alerts or journals with new methodologies is a useful way to keep staffup to date more regularly than formal training may allow. Some firms have eveninstituted anti-money laundering pub quizzes, helping to liven up what can be quite adull topic for many, and improving the retention of information because it was deliveredin an entertaining and competitive context.
Chapter 11 of the practice note containsa number of warning signs acrossdifferent areas of practice. Some keywarning signs include:
• Use of cash
• Secretive clients
• Funds from unknown or unusualsources
• Clients approaching you to undertakework in areas your firm does notusually practice or of a size or valuewhich is significantly greater than usualfor your firm
• New clients approaching you who livesome distance from your firm andwould have been able to obtaincomparable services closer to wherethey live.
However, it is important to remember thatwarning signs are just that – warningsigns - not definitive evidence ofcriminality. Fee earners and moneylaundering reporting officers should askquestions of the clients where warningsigns are identified to better understandthe transaction and carefully consider thelegitimacy of the responses they aregiven.
Other assistance from the Law SocietyThe Law Society is committed tosupporting our members in complyingwith anti-money laundering obligations. Inaddition to the practice note, we providea telephone helpline through the PracticeAdvice Service, regular e-alerts, freeregional networking events for moneylaundering reporting officers and regulartraining programmes around Englandand Wales. For information about all ofthe anti-money laundering servicesprovided by the Law Society, visit ourdedicated webpage:www.antimoneylaundering.lawsociety.org.uk
Anti-money laundering compliance – keeping it proportionate
20 The Clapham Omnibus
Vigilance never ceases to beimportant, whatever the economicclimate. Protecting your firm frommoney launders is good businesssense, not just another compliancebox to be ticked. The challenge inthese times is to ensure that thepractical activity of compliance worksto the firm’s greatest advantage,rather than being merely compliancefor compliance sake.
The risk-based approach The Law Society’s anti-moneylaundering practice note providesadvice on how to adapt the high levelobligations set out in the MoneyLaundering Regulations 2007 (theRegulations), into practical policiesand procedures. The practice notefocuses specifically on solicitors, andhow their firms actually operate. Thevalue in this approach is an emphasison proportionality, allowing you toadapt the systems and controls in theRegulations in a manner whicheffectively reflects your practice sizeand risk-profile.
The Clapham Omnibus 23
CriminalCriminal
Richard KusnierzThe founder and owner of Investigative Data Mining Limited (“IDM”), a specialist consultancy dealing with all aspects of data mining and automatedfraud detection. Since 1995 he has pioneered the use of internal and external databases to detect fraud and in developing static and dynamic fraudand risk profiling strategies. He is an internationally recognised expert in developing innovative data mining solutions and is regularly called upon tolecture on automated fraud detection both in the UK and world-wide. Prior to forming IDM, he was a Director of one of Europe’s leading fraudinvestigation consultancies. He has over thirteen years’ experience working in the computer industry and a further eighteen in corporate security andfraud investigations.
I believe that it is fair to say that “the man on the Clapham Omnibus” may view thelegal profession as an unavoidable necessity, only to be used as a last resort when allelse has failed. The current recession requires that we all think “outside the box” andlegal advisors should not be shy to suggest innovative, practical and proactive ways ofreducing risks and improving a Client’s prospects of survival, and therefore their owncontinued existence. I have been successfully advising both public and privateorganisations for over 18 years in the use of data mining and interrogation techniquesto prevent, detect and investigate all manner of corporate fraud, including criminal andcivil actions. The one central point of resistance to implementing controls to detectinternal fraud, collusion and corruption is always “the Data Protection Act 1998” and anobvious lack of understanding.
The European Directive 95/46/EC on the processing of personal data was enacted inthe UK in 1998 to protect individual rights and to provide a framework within which thedata subjects’ personal information may be used. Therefore provided that;
• the data owner ensures that all the purposes for which personal data is used areregistered with the Information Commissioner’s Office;
• the data owner informs the data subjects of these purposes and allows them toupdate or delete incorrect information; and
• the use of a data subjects’ personal information is proportionate to the purpose(using employees’ information to uncover fraud risk and exposure), as documentedby a DPA Adverse Impact Assessment;
then the data owner may use employees’ personal data for “the prevention of crimeand the prosecution of offenders” (a standard purpose). To counter any civillibertarians quoting the Human Rights Act 1998, it is worth, for the avoidance of doubt,confirming what type of data would be used and how. One of the most commoninternal frauds is the payment of fraudulent supplier invoices to an employee’s personalbank account, therefore a data matching exercise between the organisation’s HRsystem and the Supplier file in the Finance systems is a quick and painless use ofpersonal data. Such data matching also extends to data elements such as the homeaddress and telephone number. Sensitive personal data, such as medical histories,trade union and religious affiliation or previous criminal histories are not part of the dataanalyst’s armoury. There is no infringement of an employee’s rights, merely anemployer’s right to protect his business, and all the stakeholders’, includingemployees’, interests.
We are now all part of the global village and events on the other side of the world can,and do, have a direct and catastrophic effect in the UK. The oft repeated, but seldomadhered to, mantra of “Know Your Customer (KYC)” is even more important when theUS Foreign and Corrupt Practices Act is brought to bear on a UK company such as theAibel Group Limited. On Friday 21st November 2008, the US Department of Justiceissued the following press release:
“Aibel Group Limited pleads guilty toforeign bribery and agrees to pay $4.2 million in criminal fines”
A quick data mining analysis of opendata sources identified 36 additionalcompanies registered at the sameaddress as Aibel; and a series of relatedsubsidiaries, see figure 1. Are any ofthese companies related by commondirectorships? Are your Clients dealingwith them? Do any of these directors holdother positions of responsibility with yourClients directly or with their suppliers?Unravelling the spider’s web ofrelationships and how it might affect oneof your Clients is a proactive example ofhow data mining can counter fraud andcorruption and demonstrate an effectiveKYC culture.
The current recession demands thatbusinesses re-assess their operatingpractices, throwing out traditional andoutdated perceptions, such as thereactive nature of the legal profession,and actively embrace a forward thinkingand innovative approach to mutualbusiness survival. The legal professionshould be promoting the use of personaldata and data mining to prevent anddetect fraud, explaining how this may bedone within existing legal constraints,instead of waiting to pick up the pieces.
There is no longer any time forcomplacency, action is required!
Countering Fraud in the Recession
22 The Clapham Omnibus
Figure 1. Link Analysis of Aibel Group LtdAdditional 36 companies registered at 90 Long Acre, London, WC2E 9RA
Absolute Multimedia UK LimitedAutomotive Technik (Holdings) LimitedBorghese (UK) LimitedCamus International LimitedCheviot Asset Management LimitedCheviot Capital (Nominees) LimitedCheviot Partners LLPDow Jones International LimitedEurohypo Asset Management LimitedEurohypo Investment Banking LimitedEurohypo UK Pension Trustee Company LTDEuropean Stockbrokers LimitedFulbright and Jaworski International LLPInsurancewide.com Services LimitedJJ Hotels & Resorts LimitedMarks & Clerk Marks & Clerk (Asia) LLPMarks & Clerk (Canada) LLP
Marks & Clerk (France) LLPMarks & Clerk Properties LimitedMBI & Partners U.K. LimitedMBI Network Television LimitedMedtrust Innovations LimitedMillsec LimitedOld Oak Holdings LimitedSki Leasing UK No.1 LimitedSki Leasing UK No.2 LimitedStewart & Stevenson TVS UK LTDThe Health FoundationToscafund Asset management LLPToscafund LimitedTrelie LimitedVetco Aibel Holding LimitedVetco Aibel LimitedVetco International LimitedVetco Limited
At a recent fraud conferencearranged by the UK FraudAdvisory Panel, RosalindWhite the Chairman and exdirector of the Serious FraudOffice (1997 to 2003) warneddelegates that in a recessionthe number of cases of fraudwas likely to dramaticallyrise. This was partly due tothe perception that ascompany profits dwindledthere was a greater andmore aggressive focus oncosts and expense controlsand hence an increase in thedetection of anomalies, i.e.fraud. There was also theobvious concern that anyemployees/managers whosesalaries were performancerelated, would be tempted to“massage the figures” or “dowhatever is necessary tomeet the targets”. Finally,personal tragedies wouldalso contribute to theincrease in fraud ashistorically this activity hasbeen seen as a victimlesscrime. As I am sure that thereader will appreciate, untilthe Fraud Act 2006 came intoeffect there was no legaldefinition of fraud and henceit was difficult to prosecute.
The Clapham Omnibus 25
CriminalCriminal
David Winch is a forensic accountant specialising in crime and proceedsof crime and a director of NIFA member Accounting Evidence Ltd.www.AccountingEvidence.com
Confiscation proceedings are nowcommonplace where a defendant has beenconvicted of one or more offences fromwhich he has obtained – or is deemed tohave obtained – a benefit. But one themewhich has recurred in confiscation casesover the past 12 months is, as the House ofLords put it, “in very many cases the factualfindings made will be decisive”.
The flood of confiscation appeals have thrown up a variety ofpoints of interest relating to the way in which ‘the facts’ canimpact upon the computation of ‘benefit’ and the amount inwhich a confiscation order should be made. Several decisionsin the Court of Appeal and the House of Lords over the pastyear have modified our understanding of the law of confiscation.
May, Jennings and GreenOf key importance were the House of Lords’ decisions, handeddown together, in the cases of R v May [2008] UKHL 28, CPS vJennings [2008] UKHL 29 and R v Green [2008] UKHL 30. Priorto these definitive decisions there had been much controversyabout the ‘benefit’ derived by joint defendants or conspirators incriminal conduct. How should Courts approach theapportionment between the various defendants of the totalbenefit derived from the crime?
The short answer is that where benefit is obtained jointly itshould not be apportioned at all. Every co-defendant obtainsthe whole of the benefit which is jointly obtained.
However this naturally leads to the next question – how doesone determine the benefit which has been obtained jointly?Here the House of Lords, particularly in its judgment in Jenningstook a rather different view from the Court of Appeal. The Lordsheld that, in relation to each defendant individually, “obtained”meant “obtained by him” and that “a person’s acts maycontribute significantly to property (as defined in the Act) beingobtained without his obtaining it”.
Benefit in a conspiracyFollowing on from those decisions, the Court of Appeal hasrecently made it plain that the benefit obtained by an individualmember of a conspiracy is an issue of fact and that whilstconspirators may, in certain circumstances, obtain benefit jointlythere may also be circumstances in which some conspiratorsbenefit more than others.
In the case of R v Sivaraman [2008] EWCA Crim 1736 thedefendant was an employee of a company which operated aservice station on the A508 near Northampton. The companyillegally sold agricultural ‘red’ diesel as road fuel and therebyevaded the excise duty chargeable on diesel engine roadvehicle fuel (DERV). The defendant had supervised the deliveryto the service station of the red diesel upon which duty hadbeen evaded, for which task he had been paid £15,000, andwas convicted of conspiracy in the evasion. However, the Courtof Appeal noted that the excise duty evaded had not been aliability of the defendant himself (but that of the company ofwhich he was merely an employee) and held that thisdefendant’s benefit from the conspiracy was limited to the£15,000 he had himself received.
On the other hand, the owner of the company which hadevaded the duty had properly been held to have obtained thebenefit of the entire amount of duty evaded (without anydeduction for the £15,000 paid to Mr Sivaraman).
Benefit obtained by a money laundererVery recently the Court of Appeal has considered the benefitobtained by a money launderer. It had been believed that aperson convicted of a money laundering offence wouldinevitably be deemed to have obtained a ‘benefit’ in the sumlaundered by him. In Allpress & Others v R [2009] EWCA Crim 8the Court of Appeal reconsidered the position and concludedthat a mere courier or custodian of proceeds of crime does not‘obtain’ those proceeds for the purposes of confiscation and sodoes not ‘benefit’ by the amount of those proceeds, eventhough he commits a money laundering offence.
In contrast, a money launderer who converts or transfersproceeds of crime will be regarded as having ‘obtained’ thoseproceeds (of which he has temporarily had legal ownership andpractical control) and will accordingly have a ‘benefit’ of thoseproceeds in confiscation proceedings.
Seized drugsThe Court of Appeal has taken the opportunity to set out in veryclear terms that seized drugs have, of themselves, no value“whether for the purpose of assessing a defendant’s benefitfrom obtaining drugs or for the purpose of assessing theamount available to him at the time of the confiscation order” inR v Islam [2008] EWCA Crim 1740. However it is open to thecourt to include the expenditure incurred by the defendant inobtaining those drugs as an element in computing his ‘benefit’under the criminal lifestyle assumptions.
Oppressive confiscation proceedingsIn the remarkable case of Shabir v R [2008] EWCA Crim 1809the defendant was a dispensing pharmacist who had falselyinflated claims which he submitted to the NHS for payment. MrShabir had inflated six particular monthly claims by includingfalse items totalling £464 overall. However each of those claimshad also included a multitude of legitimate items, far in excessof the false ones. The total value of the six claims was£179,731. Mr Shabir was accordingly convicted of obtaining bydeception six money transfers totalling £179,731.
Since he had been convicted of six offences and the ‘benefit’ of£179,731 exceeded the £5,000 threshold of section 75(4)Proceeds of Crime Act 2002, the Crown proceeded toconfiscation on the basis that Mr Shabir had a ‘criminal lifestyle’.
The Court of Appeal held that confiscation in this case wasoppressive given that in any ordinary language the true extent ofthe offending was only £464. The confiscation order wasquashed and instead a compensation order was made in thesum of £464.
Using a forensic accountantThe undoubtedly draconian impact which confiscation can haveon a convicted defendant and the way in which, in ‘criminallifestyle’ cases, the scope of the prosecution investigationextends well beyond the offending which gave rise to theconviction, presents a challenge to the defendant’s legal team.Typically the defendant himself will regard the situation which hefaces as manifestly unfair and will object to being described ashaving obtained a large ‘benefit’ or labelled as having a ‘criminallifestyle’.
However the case law underlines the importance of establishingthe relevant facts and points to areas in which the prosecutionmay be successfully challenged resulting in a reduction in the‘benefit’ figure.
A forensic accountant with appropriate skills and experience,whose fees may be covered by a prior authority from the LSC,can be invaluable to the defence in these cases.
Recent Developments in Confiscation
24 The Clapham Omnibus
The Clapham Omnibus 27
ProbateProbate
The purpose of this series ofarticles is to give a litigator’spoint of view on the validity ofwills and other testamentarydocuments. The intention isnot to be prescriptive on howto draft the perfect will, butrather to give an insight intowhat issues are being raisedand litigated and whatdecisions the Courts aremaking. What a will draftsmancan do to prevent a problemclearly depends on thecircumstances. It is hoped thatthis short overview will at leastraise awareness of the issues.
Profession Negligence – White v JonesPrior to the decision in White v Jones[1995] 1 All ER 691 a disappointedbeneficiary had no recourse against a willdraftsman on the basis that that firstly thebeneficiary was not a party to the contractbetween the testator and the draftsman,and secondly there was no claim in tortfor pure economic loss for the loss of anexpectation.
Everything changed with White v Joneswhen the House of Lords extended theduty of care owed by the draftsmanbeyond the Testator, to the intended (anddisappointed) beneficiaries. The House ofLords’ view was that where a specialrelationship arose as a result of thedefendant draftsman giving advice whichhe knew the Testator would rely on, thenthe draftsman was required to exercisesuch care as the circumstances required.In the case of a will, the negligence wouldnot actually be revealed until after thedeath of the Testator, by which time it wastoo late. For this reason the House ofLords agreed it was right to extend it to adisappointed beneficiary.
This has led to numerous claims bydisappointed beneficiaries against theunfortunate draftsman. Not all of them aresuccessful but it is better to avoid theargument (and the costs consequences)in the first place by being aware of thesorts of issues which can arise withregards to validity of the will.
There are four main areas of validity disputes:
• Lack of Proper Formalities• Lack of Testamentary Capacity• Lack of Knowledge and Approval• Undue Influence
This article will deal with Formalities.
Lack of Proper FormalitiesThe obvious place to start is Section 9 of the Wills Act 1837 as amended by theAdministration of Justice Act 1982:
[9 Signing and attestation of wills][No will shall be valid unless—(a) it is in writing, and signed by the testator, or by some other person in his presence
and by his direction; and(b) it appears that the testator intended by his signature to give effect to the will; and(c) the signature is made or acknowledged by the testator in the presence of two or
more witnesses present at the same time; and(d) each witness either—
(i) attests and signs the will; or(ii) acknowledges his signature,
in the presence of the testator (but not necessarily in the presence of any other witness),but no form of attestation shall be necessary.]
Presumption of Due ExecutionVery helpfully (from the point of view of the draftsman and the Testator) there is apresumption of due execution. So where on the face of it a will appears to be properlyexecuted and attested then it will be assumed to be valid. Where circumstances aresuch that suspicions are raised, then the Court may exercise its discretion andpronounce against the will, but only if there is the “strongest evidence” that theformalities have not been complied with.
This was reinforced in Sherrington v Sherrington [2005] EWCA Civ 326:
Mr Sherrington was an experienced solicitor who instructed a non qualified person todraw up wills for himself and his second wife. His will effectively made the children of hisfirst marriage dependent on his second wife. There were numerous obvious errors in thewill (ie referring to the “testatrix” and containing a clause only relevant to minors) as wellas conflicting evidence as to how the will was executed and attested. The children of thefirst marriage successfully applied to set aside probate and the second wife appealed tothe Court of Appeal.
There were two issues in relation to due execution: whether the Deceased had signedthe will in the presence of the two attesting witnesses, and whether those witnessessigned intending to attest as witnesses that the Deceased signed in their presence. Oneof the witnesses had given evidence that she did not see the Testator sign and did notsee his signature on the piece of paper she was asked to sign. The other witness variedbetween saying he did not know if the Deceased had signed, didn’t remember seeinghim sign, and did not see him sign .It was held that due to the confusion of thewitnesses, this evidence could not possibly amount to the “strongest evidence”necessary to overcome the presumption of due execution.
The decision in Sherrington was confirmed in Channon v Perkins [2005] EWCA civ 1808:The Witnesses gave robust evidence that they did not sign Professor Channon’s will.Indeed they were adamant they had not, one saying that she would have rememberedbeing asked as she disliked the Testator, and the other saying she would haveremembered such a request as significant because he was “a figure of somedistinction” at the college where they worked. However, neither witness could explaintheir signatures on the will and there was no dispute that the signatures were genuine. Itwas held that on the face of it the will was valid, as their evidence did not amount to the“strongest evidence” necessary to rebut the presumption.
This is then some comfort for the draftsman. However the evidence is sometimes the“strongest evidence” necessary with the result that the presumption is occasionallyrebutted. This inevitably leads to allegations of professional negligence on the part ofthe will draftsman:
Professional Negligence cases - executionGray & Others v Richards Butler [1995]: There were two witnesses to the will, one was a neighbour of the Testator, the other anemployee at Coutts. The will was held to be invalid on the basis that executionformalities were not complied due to the fact that the two witnesses were never presentat the same time and couldn’t have witnessed the Testator’s signature together. Thedisappointed beneficiaries issued a claim in negligence against Richards Butler on thebasis that the will draftsman had not given the Testator specific enough instructions onattestation.
It was held that the will draftsman did owe a duty of care to explain attestationappropriately. In this case the nature of the Testator was considered. She was describedas a gregarious outgoing lady who who had no interest whatsoever in legal matters and,it was claimed, would have paid no attention to legal formalities or written instructions.
It was held that the Testator was intelligent enough to understand the written instructionsand that the instructions themselves were adequate in the circumstances.
(However a point to note is that the executor of the failed will was a partner at RichardsButler and had authorised payment of administration costs before the will was declaredinvalid. The Claimant claimed a refund of those costs. It was held that considerationneeded to be given to three legal principles:
1 Where personal representatives had paid funds from the estate to a third partysubsequently found not to be entitled, those truly entitled could recover the moneyfrom anyone other than a bonafide purchaser.
2 Remuneration paid to a solicitor executor under the terms of a charging clause wasproperly regarded as “bounty” in the same way as a legacy under a will.
3 A personal representative enjoyed all the powers of a personal representative unlessand until the grant was revoked or had determined.
It was held payments to the firm were not payments to a bona fide third party and weretherefore recoverable in the same way that legacies would be. The firm had to refundeverything it had been paid in the way of costs from the estate).
Contrast the case of Esterhuizen v Allied Dunbar [1998] 1 ITELR 211: Here a will failed through only having one witness. A representative of will writing serviceat Allied Dunbar had attended on the Testator who was virtually a recluse. Therepresentative was unable to find another witness (despite offering to drive the Testatorto the local petrol station, an offer which the Testator unsurprisingly refused). Therepresentative left the will with the Testator with written instructions on what to do andreturned on one more occasion to get it executed with no success. Eventually theTestator arranged execution himself but either did not read or understand theinstructions because his signature was witnessed by only one person.
It was held that a will writing service is subject to the same duties as a solicitors firm andthat it is well within the draftsman’s duty of care to assist his client with execution. Wherepossible the Testator should be invited to the draftsman’s office or the draftsman himselfshould attend the Testator’s home with another member of staff. In this case theTestator’s reclusive nature was considered and it was held further steps should havebeen taken.
Humblestone v Martin Tolhurst Partnership[2004] EWHC 151(Ch): This will was signed by two witnesses inanticipation of the Testator signing. Henever did. The will was returned to the firmby the principal beneficiary, checked bysecretary who pronounced it all in orderand placed it in the firm’s storage vaults.When the Testator died the obvious errorwas discovered, the will was held invalidand the estate passed on intestacy. Thedisappointed beneficiary sued the firm. Itwas held that the firm was under a duty tocheck execution of a will even if it was notspecifically asked to do so.
Professional negligence: Intention tobe final willCorbett v Newey [1996]: The Testator received negligent advicethat she could execute a will but leave itundated on the basis that it would only beeffective after certain lifetime gifts weremade. It is contrary to the Wills Act 1837for a will to be subject to “externalconditions”, ie conditions which have tobe proved by extrinsic evidence.Consequently the will was held to beinvalid as there was no intention by theTestator for it to have immediate effect.The draftsman had to compensate thedisappointed beneficiaries. Costs werepaid from the estate.
Corbett v Bond Pearce [2006]:Subsequently further action was taken bythe beneficiaries under the will that wasadmitted to probate. This was a claimagainst the solicitors for a sum equal tothe costs ordered out of the estate. Thesolicitors argued that this was doublerecovery and they were successful in firstinstance.
On appeal in 2001 the Court of Appealheld that the duty of care was owed to theTestator and the beneficiaries under thelater (invalid) will, and not to thebeneficiaries under the earlier will as theTestator had not intended that earlier willto have effect. It was also held that tocompensate the estate for the lossoccasioned by the costs would amount todouble recovery. However this order wasthen amended again to hold that if theestate had insufficient funds to settle thecosts, the legacies and creditors underthe earlier will, then the personalrepresentative may recover damages tomake up the shortfall. So in essence adouble recovery was allowed.
Problematic ProbateHow to avoid a will dispute (and a potential negligence claim)
26 The Clapham Omnibus
Alison Regan is a senior solicitor in the Commercial Litigation department at Russell-Cooke. She specialises in contentious trusts and probate and is anassociate member of ACTAPS (the Association of Contentious Trusts and Probate Solicitors).
Continued
Probate
Professional negligence-delayWhite v Jones [1995]: There was a two month delay between receivinginstructions and death. It was held that failure toprepare a will within an acceptable timescale willamount to negligence and the firm had to compensatethe disappointed beneficiaries.
X v Woollcombe & Yonge [2001]: In this matter the solicitor prepared a will for aterminally ill client within a week, but the Testator diedbefore execution. Despite her illness it was shown thather death was no expected so quickly was and it washeld that the solicitor had not been negligent. In thiscase Mr Justice Neuberger suggested that 7 dayswould be a sufficiently short period “in most cases”where the client was “elderly or likely to die”. He alsosaid “where there is a plain and substantial risk of theclient’s imminent death, anything other than a hand-written rough codicil prepared on the spot for signaturemay be negligent”.
Profession Negligence-Failure to remindAtkins v Dunn Baker [2004] EWCA Civ 263: The Testator had remarried and was well aware that hismarriage had revoked his previous will. In February1997 he gave instructions for a new will, a draft ofwhich was sent to him. The testator never replied andthe firm did not write to remind him. He died in August2000 intestate.
It was argued that the solicitor’s retainer can only bebrought to an end in limited circumstances which didnot apply here and that the solicitor was under a dutyto follow up. It was held that the retainer was to draftand submit a draft will and that on the facts theretainer ended there and could not be extended so asto say the solicitor was under a duty to send areminder. In addition it was shown that the Testatorwas well aware of the consequences of not having thewill in place and had given no instructions to have itcompleted by any particular day or event. Had he notbeen so aware, the matter may have been decideddifferently.
ConclusionIt appears that the overriding principle when givinginstructions on execution is “know your client”. Theless sophisticated client needs more explanation andwritten instructions may not be enough. If your client isill or elderly, bear in mind what Mr Justice Neubergersaid in X v Woollcombe & Yonge.
We live in a more litigious society and the scope forprofessional negligence claims (particularly involvingdeceased estates which due to enhanced propertyvalues are more and more valuable) is on the increase.It is always better to take a little bit more care in thebeginning than have to deal with the aftermath of amistake later.
28 The Clapham Omnibus
Spouses and Civil Partners to Receive More whenPartner Dies without Leaving a Will
Making a Will, and including tax advice, remains the only certain methodof ensuring that worldly goods pass to intended recipients on death.
Where someone dies without having made a valid Will, their estate isadministered using the statutory rules of intestacy. The statutory legacyis the amount payable to a surviving spouse or civil partner of someonewho has died without leaving a valid Will. It was previously set at£125,000 where there are also surviving children and £200,000 wherethere are no children. The government last increased the statutorylegacy in 1993. At that time 90% of estates were worth less than£125,000 and 98% of estates were valued at less than £200,000.
In 2005 the government issued a consultation paper on the issue whichacknowledged that the levels were out of date and needed to berevised. Research carried out that year by Standard Life suggested that57% of adults in the UK had not drawn up a Will, including 40% ofpeople with homes worth more than £150,000.
The government’s consultation paper initially published on 7 June 2005suggested that the rates be increased to £350,000 for a surviving partnerwhere there were children and £650,000 where there were no children.Since then the government has had to balance the interests ofdependent partners and the sometimes competing interests of children,particularly where those children were born during previous relationships.
On 28 August 2008 the Ministry of Justice announced an increase in thestatutory legacy to £250,000 where there were children and £450,000where there were not. The new level takes effect from 1 February 2009.Justice Minister Bridget Prentice explained that the increase wasdesigned to give “extra protection to married couples and civil partnerswhose spouse or civil partner dies without making a Will”, but she addedthat “married couples and civil partners should not assume that whentheir spouse or civil partner dies, they will automatically be entitled toeverything. It is up to individuals to make sure that their wishes arerespected by making a Will”.
It is however vitally important to understand that the change only affectsthose who automatically inherit under the intestacy rules. It does notprovide provision for partners who live together but who have nevermarried or entered into a civil partnership. For surviving partners inthose circumstances, it will remain necessary to seek relief from theCourts by making an application under the Inheritance (Provision forFamily and Dependents) Act 1975. Unless such an application is made,the rules of intestacy will be applied so that the deceased’s next of kinwill inherit and this usually means the deceased’s children or, if there areno such children, the deceased’s parents or wider family. Applicationsunder the 1975 Act can only be made if the claimant lived with thedeceased for a period of 2 years prior to the date of death and only thencan basic financial relief be sought to meet their reasonable needs.
In all circumstances making a Will remains the only way to make surethat your loved ones are properly provided for in the event of your death.
Increasing Statutory LegacyRobert Hush, Partner and Laura Bradley, Trainee SolicitorHoward Kennedy
The Clapham Omnibus 29
Book Review
A practitioners’ guide to the nature, process,effect and interpretation of legislation
9th EDITIONEditor: Daniel GreenbergISBN: 978 1 847 03138 9THOMSON SWEET & MAXWELL (www.thomsonreuters.com)Price: £249
“CRAIES” JUSTIFIES THE STATUTES A CENTURY ON!A review by Phillip Taylor MBE, Barrister-at-Law, Richmond GreenChambers
The distinguished Edwardian, W.F. Craies, launched the firstedition of this work on statutes 100 years ago founded on‘Hardcastle on Statutory Law’ which Lord Browne-Wilkinsoncomments “have been with us from the beginning of English lawand, although the emphasis of judgments varies over the years,give or take a little, the basic principles remain much the same”.Then he contradicts himself! And rightly so!
This is a splendid piece of legal expertise guiding professionalsthrough the various kinds of primary and subordinate legislationwith a twenty-first century flair which made Lord Browne-Wilkinson recant immediately- the making and constructing oflegislation has fundamentally altered in the last 30 years and‘Craies on Legislation’ sets us on the best path for the future.
This is an essential work for all involved in the legal and politicalprocesses. It provides a practical guide – 32 chapters in fiveparts plus judgment extracts – to understanding and applyinglegislation of all kinds. Additionally, it gives practical informationabout the legislative process itself which will be extremely helpfulfor learners, trainees, tutors and highly experienced lawyersalike.
Mr Greenberg is by far the best choice to edit this work with hisdistinguished background as Parliamentary Draftsman at theOffice of the Parliamentary Counsel. He has also deployed theskills we find on show in the excellent “Stroud” with its brilliantdetail.
The ninth edition of ‘Craies on Legislation’ is a re-writing whichgives us the following contemporary guidance:
• it is designed to provide answers to questions that are likely tooccur to the users of legislation;
• it describes the legislative process, including importantinnovations such as legislative reform orders and Public BillCommittees;
• it includes a practical guide to drafting, for legislative andother legal purposes;
• it covers questions of the timing of legislation includingtechnical issues such as retrospectivity;
• it explores issues about the extent and application oflegislation, including areas such as the consequences of newlegislation on existing law and the effect of errors inlegislation;
• it covers Acts of Parliament, rules, regulations, orders, othersubordinate legislation, the devolved legislation of Scotland,Wales and Northern Ireland, and European legislation;
• it examines the different rules of statutory interpretation andthe consequences of the Human Rights Act 1998, sectionthree on statutory interpretation;
• it looks at the consequences of the controversial rule inPepper v Hart and the case law which has since developedfrom that decision;
• it describes recent trends in statutory interpretation, includingpurposive and contextual construction;
• it follows recent developments in particular areas oflegislation, such as burdens of proof in criminal legislation andconstitutional legislation;
• it includes coverage of European legislation, includingexamining the nature of European legislation, its effect andinterpretation; and it contains useful extracts from judgmentsand other documents in the excellent appendix at the back.
Greenberg’s formidable task in explaining where we are todaywith modern legislation has been executed with a masterlycommand of the subject-matter Browne-Wilkinson says it hasbeen written by a man with a profound and perspicaciousknowledge of his subject and that it will be indispensable- it is!
Craies on Legislation
Collaborative Law is aninnovative approach tosolving problems in a non-confrontational way and isused to resolve issues arisingfrom family breakdowns,including financial mattersand issues relating to thechildren of the relationship.
The collaborative process will not besuitable for every separating couple as itrequires a foundation of goodwill betweenthe clients and a commitment from both ofthem to resolve the issues in the best waypossible for the whole family. It is unlikelyto be suitable in situations where oneclient is intent on obtaining the bestpossible financial outcome, no matterwhat the consequences to the family are,or where one client may be intent uponconcealing or misrepresenting their assetsor income.
The process itself is conducted by way ofa series of four way meetings attended bythe clients and their respective solicitors.The lawyers work together to manage theprocess and will have special skills, havingtrained as collaborative lawyers withResolution. The solicitors work in practicegroups (called pods) with others who havetrained. For the process to be successfulcareful planning is required by bothsolicitors who will need to work closelytogether to keep it on track.
The meetings are arranged in a pleasantroom with refreshments, and usuallyalternate between the offices of therespective solicitors. At the beginning ofthe process the clients and their solicitors
will sign up to a Participation Agreementcommitting to the process and agreeingnot to commence court proceedings. If theprocess breaks down the solicitorsinvolved in the collaborative process maynot act for either client in subsequent courtproceedings.
A lot of clients express the view thatCollaborative Law appeals to them as anattractive alternative to the traditional courtbased process, or mediation for manyreasons, some of which are:
• The clients are in control of the process.They set the agenda and the pace andcraft individual and more flexiblesolutions for their family.
• The clients are able to raise importantconcerns, fears and goals in a non-confrontational environment, fullysupported by their solicitor throughout.
If the collaborative process is successful, itenables the clients to move forwardseparately with a better understanding,and most importantly, if there are children,better co-operation for the future.
Although the process requires a differentmindset for the solicitors who areaccustomed to the traditional role that theyplay in representing their client in courtbased litigation, it is usually successfuland the clients generally exit the processwith their dignity intact for which they arealways grateful.
The process allows the clients to feel moresupported than the mediation process,because each client has their own solicitorat their side looking out for them, and theinterests of the family as a whole.
Eileen Pembridge (senior partner) andLouise Barretto (a partner and deputyhead of the family department) ElizabethJones (partner) and David Hodgson(solicitor) are all trained collaborativelawyers at Fisher Meredith. You maycontact Eileen Pembridge on 0207 0912740 or by email [email protected]. Ifyou would like to find out more about thisprocess.
Louise BarrettoPartner, Family DepartmentFisher Meredith Solicitors
Collaborative Law
The Clapham Omnibus 31
Family Law
30 The Clapham Omnibus
Property
Seeking possession of aRent Act-protectedtenancy is not alwaysstraightforward andlandlords should bevigilant, says PaulGreatholder
This article focuses on practical tipsfor landlords, surveyors and lawyerswhen considering a claim forpossession.
There have been no new Rent Acttenancies since 1989. It isconceivable that a Rent Act tenancycould be continuing on terms that areexactly the same as those originallygranted, including rent. The tenancycould then be terminated only inaccordance with the terms of thattenancy (and the Rent Act 1977).
In practice, however, this is rare. Theinitial contractual tenancy is oftenlikely to have become a statutorytenancy following the expiry of theoriginal term, and sometimesfollowing the landlord securing a rentreview by rent registration under the1977 Act.
A landlord that is seeking to terminatethe occupation of a statutory tenant isnot technically obliged to serve anotice to quit before bringingpossession proceedings (subject tothe Rent Act requirements consideredbelow). However, unless there is acompelling reason not to do so, it isprobably best practice to serve sucha notice.
Grounds for possession There are discretionary andmandatory grounds (or cases) forpossession.
The mandatory grounds are mainlyconcerned with situations wherenotice was given at the outset of thetenancy that possession would berequired at a later date. They arerarely available today.
The main discretionary grounds relied upon are the usualsituations of tenant default (rent arrears (case 1), nuisance (case2), disrepair (case 3)) and where the landlord seeks possessionfor an employee (case 8) or for himself or a member of hisfamily (case 9).
In discretionary cases, the court must be satisfied that theground is established and that it is reasonable to make theorder. The courts can consider the needs of the landlord andtenant, the parties’ conduct, both before and during theproceedings, and the respective lengths of occupation orownership of the property in question.
Quite frequently, it is clear that the reasonableness requirementhas been established, but this should not be taken for granted.
Suitable alternative accommodationThe reasonableness requirement is required to establish anotherpossession ground, namely that suitable alternativeaccommodation is available.
Formerly, a landlord might have asked the local housingauthority for a certificate that it (the authority) would providealternative accommodation, such certificates constituting“conclusive evidence”. These are now rare.
The Act suggests that “suitability” should be considered byreference to whether the tenant would have “reasonablyequivalent” security under the new arrangement. The courtshould also take account of where the tenant and/or his familyworks, the rent and the extent and character of the property.
The alternative accommodation does not have to be offered bythe landlord. A frequent example of alternative accommodationis other property that is owned or occupied by tenantsthemselves. Rent Act-protected premises do not have to be theonly premises occupied by the tenant they merely have to be hisor her main residence. A second home is therefore permitted.
A tenant may occupy two properties for legitimate reasons: hemay need to do so because of work commitments or because itis temporarily necessary to look after an ill relative. However, notall arrangements are so innocent.
If a statutory tenant ceases to occupy rented property as hisonly or main residence, Rent Act protection is lost. Nevertheless,it is not uncommon for Rent Act tenants to take the risk ofsubletting their protected property, often at a higher rent thantheir own, while living in another property that they might own orrent.
Keep a close eye on your tenants
Paul Greatholder is a solicitor and partner in the contentious property department at Russell-Cooke LLP.
Establishing true residenceStatutory tenants who decide to move out of and/or sublet theirproperties often maintain an apparent connection with theproperty.
For example, a tenant might keep his name on the electoralregister for the property or will ensure that the utility bills for theproperty remain in his name. The landlord may often perceivethis to be a difficult evidential obstacle, but, in practice, thelandlord should not find it difficult to overcome.
First, an enquiry agent can make discreet investigations in theneighbourhood of the property; neighbours can be surprisinglyhelpful. Further enquiries will frequently reveal whether the tenantowns or lives in another property. An inspection of the propertywill also provide information on occupational arrangements.
The landlord must then confront the tenant. If the tenant has alegitimate reason for a temporary absence, or is in a “two-homes” position, the situation should be easily explained.However, if the tenant’s answer is less than satisfactory, a well-advised landlord should continue to press the tenant forevidence.
When asked, most people could provide copious information onwhere they live, either documentary or by way of statementsfrom friends, family and neighbours. “Where do you live?”should be one of the most straightforward questions anyone isrequired to answer. Any hint of evasion or inconsistency is likelyto justify a landlord’s suspicions.
The value to a landlord in recovering possession of a Rent Act-protected property means that a careful evidence-gatheringexercise is often a worthwhile investment.
Tips for landlords and their advisers• There is no substitute for regular and substantial contact with
the tenant to establish that all is normal at the property.• If the terms of the tenancy have been breached, a right to
possession is not automatic; among other things, the court isentitled to consider the behaviour of the parties.
• Any sign or suspicion that a tenant has moved out of theproperty should not be ignored. Enquiries will often providehelpful evidence.
• Evidence from the tenant should be considered critically. Thetenant should be asked to explain inconsistencies or gaps.
Editors NoteThis article was originally published in the Estates Gazette inDecember 2008.
