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Recent cases – Wild v Wild, family farming partnership

Wild v Wild [2018] EWHC 2197 (Ch), [2018] All ER (D) 04 (Sep)

David successfully appeared for the Defendants at this recent Chancery trial. It concerned a family farming partnership. The Claimant argued that the farm itself was an asset of the partnership (as opposed to just the farming business). The Court held that the farm was not an asset of the partnership and so not to be brought into account on dissolution of the partnership.

Partnership issue

The claimant and the first defendant were brothers and partners in a family farming partnership. Previously the parties’ father had been a partner until his death, as had their mother (the second defendant) until her retirement. The partnership was in dissolution by agreement. The issue which arose was whether the farm property itself was a partnership asset. The farm property had been registered in the father’s name and was then transferred to the mother on the father’s death. It consisted of the farm itself and farmhouse, which remained the mother’s home, and a bungalow which was the home of the first defendant and his wife, the third defendant. The claimant maintained that the farm was a partnership asset. His case was that it was mentioned in the accounts each year, and that this was evidence of an intention or agreement for it to have been brought into the partnership. His case was also that these were settled accounts, having been agreed over many years. There was other evidence on which the claimant relied, but the accounts were the main evidence to support his case. There was no direct evidence of an agreement between the original partners, the father and the first defendant, to bring the farm into the partnership and the first defendant’s evidence was that there was no such agreement. The defendants’ case was that the farm was not mentioned in the accounts, but even if it was, such mention did not by itself raise an inference of an agreement to bring the farm into the partnership and that the evidence showed rather that there was no such agreement.

The court decided that there had been no agreement that the farm was a partnership asset.
The court also held that a unilateral intention by the father was not enough to bring the farm into the partnership. There had to be an agreement between the partners, ie the father and the first defendant. Further, although an agreement could be inferred, this should not be done unless the evidence required, following Miles v Clarke [1953] 1 All ER 779 and Ham v Bell [2016] EWHC 1791 (Ch), [2016] All ER (D) 222 (Apr). Such an inference follows the general rules for implying a term into a contract. The court accepted previous authority, as summarised in Ham v Bell, that it was not normally necessary for business efficacy to imply a term that the farm land was a partnership asset. There was no evidence of such an agreement and the evidence of the father’s later view suggested rather that he did not consider that the farm was part of the partnership. The court did hold that the farm appeared consistently in the accounts, but that this by itself was not evidence from which it could properly be inferred that there was an agreement to bring the farm into the partnership. An asset appearing in the accounts was not conclusive, nor was it a course of dealing.

On the facts, the court held that the farm was not partnership property. The fact that it appeared in the accounts did not mean that the accounts were settled such that it bound the parties on dissolution. In particular, various items of correspondence relating to possible testamentary dispositions showed that the father had treated the farm as remaining his to dispose of. There was other evidence which the court accepted showed that this was the father’s understanding of the position. The court found that the father did not cede control of the farm, nor did he intend or represent that he was doing so.

The key principle which the court applied was that bringing assets into a partnership does require an agreement between the parties. This can be inferred, but care must be taken in this exercise. The courts should not infer such an agreement unless it is absolutely necessary to do so. The partnership accounts are only one piece of evidence in this regard, they are not conclusive, and if they do not reflect what was actually agreed between the partners, they should be disregarded.

The case is a useful reminder of the importance of having a written partnership agreement. Had there been a written agreement, that would have avoided most of the arguments. The case also underlines the importance of clarity about which assets are partnership assets and which not, and again this should ideally be evidenced in writing.

Estoppel issue

There was also an issue about proprietary estoppel. Part of the property was a bungalow in which two of the Defendants lived. They argued that there was a proprietary estoppel or constructive trust because the father and mother had promised that the bungalow would be the first and third defendants’ and, in reliance on that promise, they had done substantial works on it.  The court held that there was a proprietary estoppel. The defendants acted to their detriment in incurring substantial expenditure in respect of the refurbishment, renovation, and extension of the bungalow and did so in reliance on representations and assurances from the father and mother that the bungalow was to be theirs and was being regarded as their property such that it would now be unconscionable for the mother to rely on their absence of legal title to it.

The court followed Thorner v Major [2009] UKHL 18, [2009] 3 All ER 945 and Gillett v Holt [1998] All ER (D) 278 for the general principles which applied. The court’s approach was that the case was to be decided in the round, depending on all the facts. In particular, there does not have to be a strict chronological sequence of clear assurance then reliance—if there is a common understanding which is acted on, which is then confirmed by what is said, even if that is after the action in reliance, that can suffice because reliance is to be determined in the round.

The minimum equity necessary was to find that the beneficial interest in the bungalow should be transferred to the first and third defendants. The court did not consider in detail whether there was a constructive trust as well but did indicate that the particular circumstances should more naturally be regarded as giving rise to a proprietary estoppel than to a common intention constructive trust.

Book review – Journal of Professional Negligence

David has been published in the new issue of the Journal of Professional Negligence with a book review of Professor Jane Wright’s “Tort Law and Human Rights” (2nd edition). The book is highly recommended, in particular for its discussion of horizontal effect. The journal is published by Bloomsbury Professional and the reference is  JPN (2018) vol 34 p. 52.

Fellow of the Chartered Institute of Arbitrators

David is delighted to announce that he has been appointed a Fellow of the Chartered Institute of Arbitrators. This means that he is now qualified to act as an arbitrator, to decide disputes between two parties. He looks forward to helping you resolve your disputes!

David listed in Legal 500

David is listed in this year’s Legal 500, which is a leading ranking of the  bar. He appears in the category of leading juniors for the North of England under commercial, banking and insolvency. The Legal 500 describes him as follows: “He has a strong paperwork practice, and is known for his preparation and drafting skills.’” You can see the full listing here.

Devolved Legislation and Human Rights

The Supreme Court has had to consider the interaction between the Human Rights Act and the powers of the devolved legislative bodies in a number of cases. One area that has recurred is compensation for industrial  injury or disease claims caused by exposure to asbestos. This has an interest because there is evidence to suggest that some of the asbestos industry knew more about the risks of exposure to asbestos than it revealed before it became so heavily regulate to ensure safety, and because a small exposure a long time ago can still cause disease.

This was before the Supreme Court case of AXA Insurance v Lord Advocate[1] concerning legislation by the Scottish Parliament about asbestos claims, which held that the Scottish legislation interfered with the rights of insurers about certain asbestos claims but was proportionate and so not in breach of the Act.

A proposed bill relating to asbestos claims has been considered further by the Supreme Court but this time in the case of Wales in the case of Recovery of Medical Costs for Asbestos Diseases (Wales) Bill.[2] Here the National Assembly of Wales passed a law which was intended to impose liability for the medical costs of treating victims of asbestos-related disease where that disease was the subject of compensation, usually because the victim was an employee of a company which handled asbestos in some way. The medical costs were those incurred by the NHS and the compensation was paid both by employers and insurers of employers (or others), and whether or not liability was admitted. The liability under the bill was also retrospective: it applied even to asbestos exposure in the past.

The Supreme Court held (by a majority) that the bill was outside the legislative competence of the Welsh Assembly. The Welsh Assembly’s role in the organisation of the NHS in Wales which allowed it to set charges to cover NHS costs did not extent to raising money from any source just because it was being used for the NHS. It also was not empowered to deal with insurers. The Court went on to hold that even if the Assembly were acting within its proper scope, the bill would infringe Article 1 of Protocol 1. Particular justification was needed for retrospective legislation and that had not been provided here.

[1] [2011] UKSC 46, [2011] 3 WLR 871

[2]  [2015] UKSC 3

The Law of Negligence and the Human Rights Act: Michael v Chief Constable

The Supreme Court has considered the interaction between the law of negligence and the Human Rights Act in the case of Michael v Chief Constable of South Wales [2015] UKSC 2 in which judgment has just been given.

The case concerned an argument that there should be a common law duty of care in negligence where the police knew or should have known that a specific member of the public was at risk as to her life or physical safety. There had been an emergency call and the victim had been killed while waiting for police to arrive. Due to miscommunication, the call was not given as prompt attention as it should have been and this was criticised by the police inquiry.  However, following the leading cases of Hill v Chief Constable of West Yorkshire [1989] AC 53 and Smith v Chief Constable of Sussex Police [2008] UKHL 50, [2009] 1 AC 225, the Court had held that the police had no liability in negligence.

The Supreme Court agreed. The police in general terms do not owe a duty of care to members of the public. They may in some individual cases have accepted a responsibility to specific persons, but they had not done so in this case.

The Supreme Court was in particular invited to develop the law of negligence to give effect to the duties under the European Convention to protect life (Article 2) and prevent serious harm (Article 3). The Court declined to do so, although there were dissents from Lord Kerr and Lady Hale on this point.

In the majority judgment, given by Lord Toulson, he confirmed that whilst there have been areas where English private law has developed to give effect to Convention rights, most notably the law relating to privacy, this was where it was necessary for the law to comply with the Convention as it would otherwise be deficient [124]. There is no need to develop the law of negligence to give effect to Article 2 and 3 since there is an adequate remedy for these in an action under the Act, with different time limits and approaches to damages. This does not need to be duplicated by the common law. If the remedy under the HR Act is considered to be inadequate, it should be remedied by Parliament, and not by the courts, since the police already have a duty to comply with Article 2 and 3 [129-130].

However, the Court did consider unanimously that the victim’s family’s claim under the Human Rights Act could continue. Thus, a party can claim for a breach of Article 2 or Article 3 under the Act, but not through the law of negligence.

The Supreme Court has confirmed a particular approach to the place of the Act in our private law – namely, that it does not necessarily require the common law to be developed to match it (for further discussion, see the relevant chapters in the book ‘The Impact of the Human Rights Act on Private Law’ (Cambridge, 2011))

The Continuing Dialogue Between the Supreme Court and the European Court: Haney

The issue of whether or not the Supreme Court can or should refuse to follow a European Court decision had to be considered recently in the case of Haney. [1] The topic was review of imprisonment following conviction for an offence, which is permitted under Article 5 of the European Convention as long as the detention is lawful and not arbitrary.

The issue here was considering prison sentences which are indeterminate for the protection of the public. An indeterminate sentence includes a minimum term fixed by the judge and then there is the opportunity for release.

In the case of James,[2] the House of Lords had held that there was no breach of Article 5(1), unless there should be a lengthy period without effective review by the Parole Board. The prisoners who brought that case had complained about the lack of availability of courses to allow them to meet the conditions that would demonstrate they were sufficiently rehabilitated for the Parole Board to allow them to leave prison on licence. The House of Lords rejected this as amounting to arbitrary detention.

The European Court disagreed. [3]   It held that the lack of availability of the courses meant that, once the prisoners had served the minimum term, their indefinite detention was arbitrary.

The Supreme Court has now had to consider the European Court decision in James and decide whether or not to follow it: and it decided not to do so. In Haney, there were four prisoners whose minimum term had expired; and they were complaining that their progress towards release had been hindered by lack of relevant services.

The Supreme Court held that the decision of the European Court in James was unworkable in practice, because the lawfulness of detention would depend on the steps being taken to rehabilitate the offender at any one time and the resources available to a particular prison. These are far too uncertain and could lead to detention being unlawful and then being lawful again following their release.

However, the Supreme Court did hold that in the light of the European Court decision, the House of Lords in James was wrong to hold that the aim of a life or indefinite sentence did not include rehabilitation and so does include a duty to rehabilitate. But the Supreme Court held this was not part of whether or not the detention is arbitrary, under Article 5(1), but only a part of the duty to review detention. Thus it can be supervised through judicial review of the Parole Board but does not create an express duty to provide specific courses or facilities. The detention remains lawful and within Article 5 since it results from the conviction; and it prevents release before the Parole Board have concluded that release is safe. The prisoner can seek review of their detention and damages if there has been a failure to provide steps towards rehabilitation, and damages were awarded to two of the prisoners in the appeal in Haney itself.

As well as being important on the substantive matter of Article 5, this is also a very important case about the obligation in s.2 of the Act on the courts to ‘take into account’ the jurisprudence of the European Court. In analysing whether or not to follow the European Court in James, the Supreme Court considered very carefully the obligation on it to take this case into account. The Court recognised that it is not always possible simply to reflect European Court jurisprudence; it may have to decide a point which has not been decided by the European Court; or it may decide that a European Court case cannot be supported and decline to follow it, following dicta in Pinnock[4] and Chester,[5] but noting that the domestic court would have to be very satisfied that the European Court’s approach was flawed in some way.

In declining to follow the European Court in James, the Supreme Court considered that the reasoning in James was out of line with other European Court decisions as well as being not practicable (as discussed above). Thus, it held that it should not follow the European Court decision. This sets a clear signal both that our courts will decline to follow a European Court case if they consider that they should do so, but also of the high threshold for doing so. It is also relevant that the Supreme Court did not ignore the European Court case – they did regard the House of Lords decision in James as incorrect in light of it – but they did depart from the analysis of the European Court on Article 5.

The Supreme Court in Haney also had to consider another case which had been decided by the European Court, the case of Clift. The House of Lords[6] had held that early release provisions which differentiated between those who were of foreign nationality and those of UK nationality were in breach of Article 5, taken with Article 14, and made a declaration of incompatibility, but held that whether or not the minimum period of the sentence, that determined by the Judge, had expired was not a relevant factor. The European Court[7] had confirmed that there was a violation and held that whether or not the minimum period had expired was also a factor which could result in discrimination in breach of Article 14 and that there had been an unjustifiable distinction drawn between different types of offenders. In Haney, the Supreme Court noted that this may well mean that whether offenders’ minimum period has expired might be a relevant difference in status for Article 14, ie that this aspect of Clift in the House of Lords should be reviewed. However, in the case being considered (in fact the appeal of Mr Kaiyam), the Supreme Court held that any difference in treatment was entirely justified and so there was no discrimination in breach of Article 14.

[1] R (Haney) v Secretary of State for Justice [2014] UKSC 66, [2015] 2 WLR 76

[2] Secretary of State for Justice v James [2009] UKHL 22, [2010] 1 AC 553

[3] James v United Kingdom (2012) (apps 25119/09, 57715/09 and 57877/09)

[4] Manchester City Corporation v Pinnock [2010] UKSC 45, [2011] 2 AC 104

[5] R (Chester) v Secretary of State for Justice [2013] UKSC 63, [2014] AC 271

[6] Clift v Home Secretary [2006] UKHL 54, (2007) 1 AC 484

[7] Clift v United Kingdom [2013] (app 7205/07)

Criminal records and spent convictions: T

One recurring issue is how to balance respect for privacy in information held by the state, and the protection of the public, which manifests itself in the requirements for criminal record checks. What about where a conviction is an old one and it may not be a good indicator that a person is dangerous or a risk?

In the case of T[2], the Supreme Court had to consider the requirement that criminal record certificates should include spent convictions, which is to say convictions that are ignored for most purposes because of the time that has passed since the offence was committed.  In this case, police cautions or warnings were disclosed even though happened some years ago. The Court of Appeal had held that the scheme was unlawful.

The Supreme Court agreed that this case engaged Article 8, that the legislation requiring disclosure of the convictions interfered with Article 8 and held that there was a breach of Article 8 because there was no mechanism for reviewing the decision in an individual case. The disclosure of the spent convictions was not necessary for the protection of children, which was the point of the legislation. Thus, it was incompatible with Article 8. This did mean however that the regulations made under the Act remained in force – they could not be declared unlawful since they were made to give effect to primary legislation and the primary legislation remained in force until amended even though it was incompatible with the Convention.

(In fact, by the time of the Supreme Court appeal, the government had amended the legislation to remove the incompatibility, but the appeal had to be heard on the basis of the law prior to the amendments).

 

[1] R (L) v Metropolitan Police Commissioner [2009] UKSC 3, [2010] 1 AC 410

[2] R (T) v Secretary Of State For The Home Department [2014] UKSC 35, [2014] 3 WLR 96

Balancing Rights – a recent example

An interesting example of the need for the Courts to balance different Convention Rights was the case of TW.[1] Here the Court of Appeal had to consider a case where two rights of a patient came into conflict in the decision of a social worker whether to commit a patient to hospital under the Mental Health Act. The social worker had a duty to consult the patient’s nearest relative, unless it was not reasonably practicable to do so. This therefore ensured that the patient’s interests were considered before she was detained, which is relevant to ensuring there is no arbitrary detention contrary to Article 5. On the other hand, consulting a relative might involve disclosing private information about the patient’s medical history, and this bears on the patient’s rights under Article 8, respect for privacy. The Court considered the issues of reasonableness and proportionality and considered that both Articles were relevant to the proper interpretation of the statutory test of what is ‘reasonably practicable’. Since they had not properly been taken into account, there was an arguable case, so permission to bring a claim for wrongful detention was granted.

[1] TW v Enfield London Borough Council [2014] EWCA Civ 362

The Human Rights Act: taking into account the decisions of the European Court

One of the ways in which the Human Rights Act 1998 operates is to oblige our courts to take into account the decisions of the European Court of Human Rights in Strasbourg. Note that the words are ‘take into account’ – this raises a question whether in any particular case the European Court case is binding or not, and to what extent this is affected by the doctrine of precedent. Previous case law has established that courts below the Supreme Court do still have to abide by clear and binding law which contradicts European Court case law. What about where it is not clear?

The Court of Appeal has recently reviewed this in the case of Hicks.[1] This was a decision about various detentions made on the day of the royal wedding in 2011. The detentions were to prevent a breach of the peace. The question was whether these were compliant with Article 5 because they were to prevent the commission of a crime.

The European Court in the case of Ostendorf v Germany[2] had expressed the view that Article 5(1)(c) only covered pre-trial detention where an offence had been committed. The Court of Appeal considered that this is not what Article 5(1)(c) says on a straightforward reading: it allows for the possibility of detention to prevent the commission of a crime and applies to it the safeguard that the purpose of the detention is to bring the detainee before the relevant legal authority promptly. The suggestion to the contrary in Ostendorf appears to contradict this wording and also to contradict other European Court case law. Thus, the Court of Appeal had to consider whether it was obliged to follow Ostendorf.

The Court held that the s. 2 to take into account decisions did not mean that every decision had to be followed. The UK would be bound to follow a decision given by a Grand Chamber as authoritative or a clear line of European Court authority unless it was clear that it had misunderstood or overlooked some significant feature of English law or practice which, properly explained, would lead to that decision being reviewed in due course when properly explained. Where, as here, there were mixed decisions, the UK courts would need to make a judicial choice about the scope of the relevant Convention Right. In the present case, the Court would not follow Ostendorf, which was not part of a line of clear and consistent European Court authorities and did not appear to be consistent with the wording of the Article itself, so it was able to hold that the detentions were compliant with Article 5.

The analysis here bears close attention for anyone looking at this area. The Court of Appeal ultimately did not follow the European Court; but it did quite definitely take it into account, and indeed treated it as persuasive precedent. This continues the trend of ensuring that the use of European Court case law is not automatic, but also is part of a robust dialogue between our courts and the Strasbourg court.

 



[1] R(Hicks) v Metropolitan Police Commissioner [2014] EWCA Civ 3

[2] Ostendorf v Germany 34 BHRC 738