In this issue

Is your land at risk from squatters?
Employment update
Lifetime Gifts and Undue Influence
Electronic company formations
Meade King NEWS
Insolvency practitioners at risk
Adjudication: insurers not liable

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Is your land at risk from squatters?

On 13 October 2003 the Land Registration Act 2002 comes into force which will make it harder for a squatter on registered land to gain a legal title to land.

Under the new law a squatter will be able to apply for registration as legal owner in place of the registered proprietor after 10 years occupation - known as adverse possession. If the application is unopposed then the squatter will be registered in place of the original registered proprietor. However, if the registered proprietor opposes the application then except in limited circumstances (for example where the squatter has built on the land in the mistaken belief that he/she owned the land and the owner has not objected or if the squatter has paid money over to the land owner for land but transfer of the legal title has never taken place) the application will be rejected. The registered proprietor will then have two years to gain possession of the land but should the proprietor fail to do so in that time and the squatter remains in occupation then the squatter may at the end of two years apply again to be registered as the proprietor and the application will then be granted.

Unregistered land is not affected by the change in the law and squatters on unregistered land will retain the right to apply to be registered as proprietor after 12 years adverse possession.

Transitional provisions will apply in respect of squatters who have already acquired 12 years adverse possession by 13 October 2003. They will remain entitled to apply to be registered as owner of the land.

If title to your land is currently unregistered you can protect yourself against future squatters or squatters who currently have less than 12 years adverse possession by voluntarily registering title to your land at the Land Registry. This is a relatively simple process. The Land Registry offer a discount on Land Registry fees for voluntary registration. Registration will ensure that you will receive notice of any application by a squatter to be registered with title to your land and will give you the opportunity to take the appropriate action to gain possession.

However, you will only receive notice from the Land Registry of such an application if the Land Registry has your correct address for service. It is therefore essential that the Land Registry are advised of any change in your correspondence address. This is particularly relevant for those who own more than one property where your correspondence address is unlikely to be the property. One of the further Land Registry changes is the provision for up to three addresses for service to be registered which can include e-mail addresses or document exchange box numbers. We can make enquiries at the Land Registry to check addresses for service on your behalf and update details where necessary.

For further information, please contact Catherine Ainley caa@meadeking.co.uk

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Employment update

Personal emails and telephone calls

Part 3 of the Employment Practices Data Protection code on monitoring at work has been published. The code lays down good practices for employers in order that they comply with the Data Protection Act 1998.

The code covers a number of ‘monitoring’ activities including: checking of emails being sent and received by employees; recording telephone calls and videoing workers outside work to establish if they are genuinely ill.

Points to note are:

• it will usually be intrusive to monitor workers;
• workers have a legitimate expectation that they can keep their personal lives private and that they are entitled to a degree of privacy in the work place;
• if employers wish to monitor their workers, they should be clear about the purpose of the monitoring and be satisfied that the particular monitoring arrangement is justified;
• workers should be aware of the monitoring unless there are good reasons for them not to be.

Employers should also give clear guidelines to employees about the use of the employers telephone systems, internet and email. These guidelines should be specific if they are to be relied upon by the employer.

A copy of the code can be found on the information commissioners website at www.dataprotection.gov.uk

For further information on these issues or in relation to any aspects of employment law and practice, please contact Richard Holmes rwfh@meadeking.co.uk or Ben Thomas bt@meadeking.co.uk

The 2002/2003 Employment Tribunal annual report has been published.

Interesting statistics are:

• largest number of claims are for unfair dismissal (26%); unlawful deduction of wages makes up 23% of claims; breach of contract claims account for 17% of claims and finally 12% of claims are for discrimination
• 74% of all cases are heard within 6 months with Bristol having the best record, hearing 91% of cases within 6 months
• 39% of cases are settled through ACAS; 31% were withdrawn; 13% were successful at tribunal; 11% were unsuccessful at tribunal and 6% were disposed of otherwise
• Costs orders were made in favour of the Applicant in 307 cases, and in favour of the Respondent in 691 cases

The full report can be found at: www.ets.gov.uk/annaulreport2003.pdf

Age Discrimination

The DTI has published a consultation paper seeking views on legislation to prohibit age discrimination.

It seeks opinions on the following issues:

• the abolition of employers’ mandatory retirement ages (dismissal at a given age) unless employers can objectively justify them
• the possibility of a default retirement age of 70, at which employers could retire employees without having to justify dismissal on objective grounds
• proposed legitimate aims which employers, exceptionally, could use to help justify the retention of a small number of age-related practices; and
• changes to the legislation regarding unfair dismissal and redundancy

Following this consultation process, the government plan to introduce regulations at the end of 2004 which will not come into force until 2006. This should give employers plenty of time to change policies and make them compatible with the new regulations.

The consultation paper can be found at www.dti.gov.uk/er/equality/age.htm

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Lifetime Gifts and Undue Influence

In 1991 Enid Davidge, a spinster, made a will subject to two codicils.

In her will Enid left her house (value £200,000) to her niece Penelope Cairns who was also appointed her executrix. Enid also gave some pecuniary legacies worth £3,000 and divided her residuary estate as to one-half to Penelope Cairns and one-quarter to another niece Carolyn Jennings and one-quarter to a nephew William Lewis. At the time Enid made her will she had other capital amounting to some £300,000.

Penelope had a very strong relationship with Enid and in 1994 Enid made her a gift of £35,000. In 1995 Enid established a trust fund to pay for the education of Penelope's children and put some £170,000 into that fund.

Enid died in 1998.

When William made enquiries he discovered that the residuary estate was only worth a few thousand pounds. William claimed that Enid had been subject to undue influence from Penelope and issued proceedings.

The gift of £35,000 to Penelope had been made to enable her to buy out her husband's share of the family home. The husband had got into financial difficulties and the gift enabled Penelope to pay off the mortgage. Enid had been fully able to comprehend what was going on and had not thought it appropriate to spell out in detail to the rest of the family her generosity. The Court refused to set aside the gift of £35,000.

When Enid set up the Trust Fund, Penelope's husband had written to Enid and completely misdescribed the nature of the Trust and the identity of the Trustees. The advisor who prepared the Trust had not obtained direct instructions from Enid but had relied on instructions from Penelope’s husband. Enid had not entered into the transaction after full free and informed thought. Penelope’s failure to ensure that the gift was made after full disclosure placed her under a conscientious obligation to make full compensation and she was obliged to repay the money invested in the Trust Fund by Enid for her children.

If you wish to set up a trust fund or make a lifetime gift you need to ensure that you obtain independent advice. Similarly when making a will or enduring power of attorney your actions need to be free of the ‘undue’ or improper influence of others. The key is to arrange to see your solicitor personally and without those whom you wish to benefit.

For further information, please contact Richard Boulding rjb@meadeking.co.uk

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Electronic company formations

In conjunction with Jordans we are now able to form English companies electronically. This means that we can effectively offer a same day incorporation service. All it takes is a single telephone call without you having to complete any paperwork at all. Simply give us the chosen name for your new company and the names, addresses and other details of your first directors and secretary and we will do the rest. This new service allows us to offer you the benefits of the same day incorporation service without having to pay the Companies House same day incorporation fee.

If you would like to know more about this new service please contact James Hawkins on Bristol (0117) 926 4121

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Meade King NEWS

Hearty work

Congratulations to Meade-King employment lawyer Ben Thomas (pictured here before the event!) who completed the BUPA Bristol Half Marathon in a creditable 1 hour 48 minutes and raised £600 for charity.

Directory selection

Meade-King once again features in Chambers & Partners' latest directory of firms recommended for their specialisims. Both the insolvency team and Adam Chivers as head of commercial litigation are recommended for their "sensible approach" to solving complex legal issues relating to a broad range of claims

For more information, please contact Catherine Ainley caa@meadeking.co.uk

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Insolvency practitioners at risk

The recent case of Andrew Fender -v- The Commissioners of the Inland Revenue provides a useful summary of the duties owed to creditors by a nominee of a voluntary arrangement. In Fender the Inland Revenue applied for an Individual Voluntary Arrangement (IVA) to be revoked on the basis of material irregularity under section 262 of the Insolvency Act 1986.

One of the main arguments raised by the Inland Revenue related to the admission by the nominee for voting purposes of a debt for £141k claimed by a company ("G"). The admission of this debt in the sum claimed represented over 66% of the total unconnected debts admitted to prove. Whilst it was accepted by the Inland Revenue that G was not a connected creditor (and therefore was entitled to have its vote counted in the normal way) there was strong evidence of G being linked to the debtor.

G’s debt was based on a personal guarantee given by the debtor. The only evidence in support of the liability guaranteed was a manuscript amendment to a previous year’s balance sheet for the claimed principal obligor (a company connected to the debtor) showing the sum claimed. No invoices or correspondence were produced in support of either the primary or guarantee liability. The form of guarantee itself was also imprecise and potentially unenforceable.

The Court at first instance held that the nominee had no material upon which he could properly conclude that G should have been admitted to vote in any amount. The Court ordered the IVA to be revoked and for the nominee to pay the Inland Revenue’s costs in the sum of £9,895 personally.

The nominee’s appeal was heard in the Birmingham District Registry where HHJ Norris QC held that:

• the nominee when discharging his functions has a duty to exercise professional independent judgment informed by his qualifications and skills
• where doubts arise as to the reliability (or sufficiency) of information provided by the debtor the nominee must satisfy himself that he has received information of adequate quality to arrive at a view as to whether a claim should be admitted and in what amount. This is set in the context of a process which is designed to be "speedy and robust"
• a "material irregularity" under s.262 may occur in relation to the debtor’s proposal or his statement of affairs or the preparation of the nominee’s report or his chairmanship of the meeting (another significant factor in this case was the finding that the nominee had downplayed in his report the prospects of successfully setting aside an earlier transaction at an undervalue entered into by the debtor)
• not every mistake or omission will amount to a material irregularity
• the nominee cannot be expected to resolve difficult disputes about debts

HHJ Norris found that the nominee’s conduct fell short of the standards expected of a competent insolvency practitioner and found that, in relation to the guarantee liability, there were questions which called for an answer. There was no great cost involved in undertaking an enquiry. HHJ Norris also upheld the first instance Judge’s award of costs against the nominee personally although he directed that 35% of these be met by the debtor pending written submission as to this proportion.

For further information, please contact Clare Harris ch@meadeking.co.uk, Keith Mahoney kwm@meadeking.co.uk or Jon Law jl@meadeking.co.uk

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Adjudication: insurers not liable

The status of an adjudicator’s decision has received further coverage in the case of Galliford (UK) Limited (t/a Galliford Northern) v Markel Capital Limited (2003) EWHX 1216 (QBD (Merc Ct)). As we have reported in the past, an adjudicator’s decision is binding until subsequently overturned by future litigation and/ or arbitration and can be enforced through summary procedure in the courts.

However, the judgment in Galliford handed down on 12 May this year made it clear that the adjudicator’s award did not create a liability for damages. This was crucially important. Galliford had engaged a firm of consulting structural engineers to advise in respect of a conversion project in Leeds. A dispute emerged between the parties and an adjudication commenced.

However, prior to the start of the adjudication proceedings a resolution for voluntary winding up was passed by the consulting engineers and a liquidator was appointed. The consulting engineers were insured and Galliford, following the adjudicator’s decision, sought redress under the Third Parties (Rights Against Insurers) Act 1930 and claimed that the effect of the resolution for voluntary winding up of the consulting engineers was to transfer and vest in Galliford the consulting engineer’s right to be indemnified against any liability arising from the claim. Galliford argued that the insurer’s syndicate by way of that transfer and indemnity was indebted to Galliford in the sum awarded in the adjudication.

HHJ Berens did not find in its favour, stating that although the adjudication award had created a contractual obligation to pay Galliford, it was not an absolute obligation and so liability under the policy was not established until the adjudication award was enforced by a judgment of the court or by agreement.

For further information, please contact Philip Burbidge pjb@meadeking.co.uk

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Whilst every effort has been made to ensure accuracy, information contained in the Orchard may not be comprehensive and should not be acted upon without professional advice.