Archive for August, 2011

Arbitrators Not Employees for the Purposes of Equality Legislation

The Supreme Court has overturned the controversial decision of the Court of Appeal in Jivraj v Hashwani and ruled that arbitrators are not employees for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 (now superseded by the Equality Act 2010).Hotel pool
 
The case concerned a joint venture agreement (JVA) entered into by two Pakistani businessmen. This contained a clause to the effect that, in the event of a dispute between them on which they were unable to reach agreement, the dispute should be resolved by arbitration before three arbitrators, each of whom should be a respected member of the Ismaili community. When the venture failed and the two men were involved in a dispute, Mr Hashwani wished to appoint an arbitrator who was not a member of the Ismaili community. He claimed that the requirement laid down in the JVA was in breach of the Regulations. Mr Jivraj argued that the appointment was a breach of the arbitration agreement.
 
The High Court ruled that arbitrators fall outside the scope of the Regulations as they are not employees for the purposes of anti-discrimination legislation. This decision was reversed by the Court of Appeal, however, which held that the arbitration clause was void. This judgment caused alarm as its effect could have been to nullify many existing arbitration agreements that contain restrictions as to nationality that are aimed at preserving neutrality in the arbitration process.
 
The Supreme Court has now overturned the Court of Appeal’s decision. In the Court’s view, arbitrators are not employees and so are not subject to the Regulations. Rather, they are ‘independent providers of services who are not in a relationship of subordination with the person who receives the services’.

Posted August 15th, 2011 in Uncategorized |

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ACAS Advice on Disruption Caused by Riots

The damage resulting from the recent riots in London and other major cities will continue to impact on the lives of those homeowners and businesses caught up in the events for many weeks to come, as well as causing disruption to travel arrangements.

 
The Advisory, Conciliation and Arbitration Service has issued an advice sheet for employers and employees on how to cope with the disruption. This states that, in general, it is important to:
 
  • keep in touch with each other – if you can't get to work, try to get in touch with your employer to let them know. If your business has been damaged, contact your employees to discuss work arrangements;
 
  • be flexible about working hours and location, perhaps using smartphones and laptops to help you keep working where possible; and
 
  • be fair – as an employer, try to take into account the circumstances surrounding absence or timekeeping issues before deciding on the action you might take in terms of leave and pay.
 
The guidance, which is available here makes key points on how employees’ entitlement to pay and holiday leave arrangements should be dealt with in such circumstances.
 
If your business has been affected by the recent events and you would like advice on your individual circumstances, contact us without delay.

Posted August 12th, 2011 in Uncategorized |

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Sophistication of Consumers Stymies Claim

When one business uses the trade marks of another, an action can be brought for trade mark infringement and possibly also for ‘passing off’ – the term given to the situation in which a business attempts to profit by presenting itself in such a way that the buyer may confuse it with another business.

 
The outcome in such cases depends mainly on the court’s view of what the effect of the infringement or passing off would be in the market concerned. One of the main factors will be the knowledge and sophistication of the consumer.
 
Recently, Group Lotus Plc and Lotus Cars Ltd (the manufacturers of Lotus cars) brought various claims against a number of defendants all associated with the Team Lotus Formula 1 car racing team. The claims all had at their core the use of the word ‘Louts’ in a motor-racing context.
 
The High Court was unmoved. In its view the businesses were sufficiently different and the sophistication of the consumers was such that there was no likelihood of confusion.

Posted August 10th, 2011 in Uncategorized |

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Non-Dom Will Challenged by Family Kept Unaware of Death

An English lawyer working in France, but domiciled in Belgium, took the unusual step of leaving instructions that his family in England should not be made aware of his death, allowing his executors (a friend and the man’s Belgian fiancée) to wind up his estate.

 
His will, made in England, left his entire estate to his uncle – the only relative who was informed of his death.
 
Several months later, his family discovered that he had died – which put in context a text sent from his mobile phone which read, ‘Not this year. There’s a problem’, in response to an invitation to spend the Christmas after he had died in England with his family.
 
The family of the dead man claim he was not domiciled in the UK, hence his will was not valid. They believe his estate should be administered according to Belgian law. Under the succession laws prevailing there, they stand to inherit his estate.
 
Many European countries have strict succession laws, which means will planning for those who live overseas or who have overseas properties must be approached with particular care.

Posted August 10th, 2011 in Uncategorized |

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Equitable Compensation to be Tax Free

People who suffered losses as a result of the collapse of mutual insurer Equitable Life in 2000 will be pleased to know that the compensation payments they receive as a result of the passing of the Equitable Life (Payments) Act 2010 will be tax free.
 
The compensation on offer amounts to only 22 per cent of the amount lost and where the policyholder’s loss is deemed to be less than £10, no compensation is payable. The payments commenced in June, 2011.
 
Equitable Life collapsed after the House of Lords ruled that a promise made by the insurer to pay the holders of pension policies which had a ‘guaranteed minimum pension’ must be met.
 
If you have been mis-sold an investment product, contact us for advice.

Posted August 10th, 2011 in Uncategorized |

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Damages Received Are Assets of Marriage

When a married couple with children are getting divorced and the financial arrangements are being considered, the primary concern of the court will always be the welfare of the children.

 
In a recent case, the extent to which this principle applies was evident and led to an interesting variation to the general rule that pre-marital assets are primarily to be regarded as the assets of the person who brought them into the marriage.
 
The case involved a couple who had divorced after 8 years of marriage. They had two children. Five years before meeting his then wife, the husband was injured in a car crash and received £500,000 in compensation. He claimed that retention of the award would be fair as it was awarded to compensate him for his injuries.
 
However, his wife claimed that the sum needed to be taken into account in order to provide a sufficient sum for her to provide for their children, of whom she has custody.
 
The Court of Appeal agreed and ordered that £285,000 was the minimum sum necessary to provide for the man’s ex-wife and children, but also ordered that £95,000 be repaid to him when the children turn 18 or, if in further education, finish their first degree, or in the event that his ex-wife marries a partner who can support her.

Posted August 9th, 2011 in Uncategorized |

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Conscious Decision is Not Force Majeure

Force majeure is the term used when something unexpected and not preventable occurs which radically changes a situation. A force majeure clause is often included in contracts to guard against the position in which a contract cannot be fulfilled because an event occurs which prevents it (wars and natural disasters are the most usual).
 
It also exists as a concept in some tax legislation and was recently argued to apply by a supplier of pick-up trucks who had earlier attempted to obtain a refund when VAT was charged at the wrong rate on its imports. It had fought the issue through the VAT Tribunal and lost. It then decided not to appeal that decision.
 
However, some years later, a ruling by the European Court of Justice confirmed that the supplier’s view regarding the appropriate rate to apply was correct. It applied for a VAT refund, but this was rejected as being out of time (there is a three-year limit on such claims).
 
The supplier argued that force majeure applied and that this had prevented it from making the application for repayment in time. This argument was rejected, however. The conscious decision of the supplier to not take a given course of action because it believed its claims would fail could not be described as force majeure.

Posted August 8th, 2011 in Uncategorized |

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A Click Isn’t Enough

An attempt by online retailer Amazon to patent its ‘one-click’ purchase system has predictably failed in the patent court.
 
The reason for the failure was that the creation of a system which is based on another, but with certain steps omitted, was ‘obvious’ and therefore not capable of being protected. The patent was sought, alleging that the use of a ‘cookie’ to look up customer details was an innovative step.
 
The claim was referred to the Technical Board of Appeal of the European Patent Office, which confirmed the 2007 decision of the European Patent Office.

Posted August 5th, 2011 in Uncategorized |

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Law Reform Bill Passes Second Reading

The Bill to make the ‘success fees’ under conditional fee arrangements (CFAs) charged in no-win, no-fee arrangements irrecoverable from the losing party in civil litigation has passed its second reading in Parliament and reached the report stage.

 
The Bill is based on the perception that such arrangements have led to a ‘litigation culture’. It also includes:
Law Court
·        Measures to pr ohibit the recovery of ‘after the event’ (ATE) legal insurance premiums from the loser;
 
·        A proposal to limit C FAs, under which an ‘uplift’ is charged based on the risk involved in the litigation, and replace these with ‘damages-based arr angements’ (DBAs). A DBA is a contingency fee in which the firm ch arges a percentage of the settlement received; and
 
·        Proposals designed to improve the system by which offers are made to settle disputes before reaching court, the practical effect of which would be that losing defendants would face increased potential liabilities in cases in which the claimant ‘beats the offer’ in court.

Posted August 4th, 2011 in Uncategorized |

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When Estate Asset Values Fall

When an estate includes assets whose values can fluctuate, such as shares or property, a situation can arise where the value of an estate for Inheritance Tax (IHT) purposes is greater than the market value later on. This is currently one of the biggest problems facing executors, since as the recession progresses, most assets other than cash are falling in value.
 


Where assets are disposed of at a loss within twelve months of the death of the testator (the legal term for the person who left the will), IHT relief is available. This works as below, but note that the relevant date is twelve months after the death, not after probate is granted: a powerful incentive to make sure that the administration of the estate is progressed with reasonable speed.
 


If the assets which have lost value are quoted shares, a claim can be made on their sale, but not on a transfer. If the assets consist of land, the time period for a claim is four years from the date of death. The loss claim can only be made by the ‘appropriate person’ (in most cases the executor) and therefore any asset transferred which is then sold at a loss will not qualify for relief. A claim cannot be made unless the loss is at least 5 per cent of the value at the date of death or £1,000, whichever is greater.
 


There is clearly room for tax planning here, not only regarding the timing of transfers but also whether assets should be sold or transferred and then sold. Which approach is best will depend on the tax situation of the beneficiaries as well as the estate.
 


Lastly, there is a similar relief which is available for lifetime gifts. Where an asset which has been gifted prior to death has fallen in value and is subject to IHT, a claim can be made for the reduced value to be substituted in the valuation of the estate at the date of death. This relief is only available if the transferred asset is still owned by the person to whom it was gifted or their spouse or civil partner.

Posted August 3rd, 2011 in Uncategorized |

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