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Sharland (Appellant) v Sharland (Respondent) [2015] UKSC 60 On appeal from [2014] EWCA Civ 95 JUSTICES: Lord Neuberger (President), Lady Hale (Deputy President), Lord Clarke, Lord Wilson, Lord Sumption, Lord Reed, Lord Hodge

BACKGROUND TO THE APPEAL

This appeal considers the impact of fraudulent non-disclosure on a financial settlement agreed between a husband and wife on divorce, especially one embodied in a court order.

The parties were married in 1993 and separated in 2010. They have three children, one of whom has severe autism and will require care from Mrs Sharland throughout his life. Mr Sharland is an entrepreneur who has a substantial shareholding in a software business, AppSense Holdings Ltd, which he developed. In the financial proceedings between the parties the value and manner of distribution of this shareholding was the principal matter in dispute. Both parties instructed valuers, who produced valuations on the basis that there were no plans for an Initial Public Offering (IPO) of the company.

In the course of the trial in the High Court in July 2012, after Mr Sharland gave evidence confirming that there was no IPO ‘on the cards today’, the parties reached an settlement by which Mrs Sharland agreed to receive 30% of the net proceeds of sale of the AppSense shares whenever that took place, together with other assets. The judge approved the agreement and a draft consent order was drawn up. Before it was sealed, however, Mrs Sharland became aware that AppSense was being actively prepared for an IPO which was expected to value the company at a figure far in excess of the valuations prepared for the hearing.

Mrs Sharland immediately invited the judge not to seal the consent order and applied for the hearing to be resumed. At the hearing of her application in April 2013 the judge found that Mr Sharland’s earlier evidence had been dishonest and, had he disclosed the IPO plans, the court would have adjourned the financial proceedings to establish whether it was going ahead. However, by the time of the hearing, the IPO had not taken place and an IPO was not now in prospect. The judge declined to set aside the consent order on the ground that he would not have made a substantially different order in the financial proceedings, applying the decision of the House of Lords in Livesey (formerly Jenkins) v Jenkins [1985] AC 424.

The Court of Appeal upheld the judge’s order (Briggs LJ dissenting) and Mrs Sharland appealed to the Supreme Court.

JUDGMENT 


The Supreme Court unanimously allows Mrs Sharland’s appeal. The consent order will not be sealed and Mrs Sharland’s application for financial relief will return to the Family Division of the High Court for further directions. Lady Hale gives the only judgment.

REASONS FOR THE JUDGMENT

It is in the interests of all members of a family that matrimonial claims should be settled by agreement rather than adversarial battles in court [17]. Such an agreement cannot oust the power of the court to make orders for financial arrangements [18] and does not give rise to a contract enforceable in law [19], but the court will make an order in the terms agreed unless it has reason to think there are circumstances into which it ought to inquire [20]. Allied to this responsibility of the court is the parties’ duty to make full and frank disclosure of all relevant information to one another and to the court [21].

Family proceedings differ from ordinary civil proceedings in two respects: a consent order derives its authority from the court and not from the consent of the parties and the duty of full and frank disclosure always arises [27]. The consent of the parties must be valid. If there is a reason which vitiates a party’s consent there may also be good reason for the court to set aside a consent order. Whether the court is bound to do so is the question arising on the appeal [29].

It is not necessary to decide in this case whether the greater flexibility which the court now has in cases of innocent or negligent misrepresentation in contract law, restricting a victim’s right to rescind the agreement, should also apply to such misrepresentations or non-disclosure in consent orders in civil or family cases. The present case is one of fraud. It would be extraordinary if the victim of a fraudulent misrepresentation in a matrimonial case was in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case, including a contract to settle a civil claim. Briggs LJ in the Court of Appeal was correct to apply the general principle that ‘fraud unravels all’ and should lead to the setting aside of a consent order procured by fraud [32]. The only exception is where the court is satisfied that, at the time when it made the consent order, the fraud would not have influenced a reasonable person to agree to it, nor, had it know then what it knows now, would the court have made a significantly different order, whether or not the parties had agreed to it. The burden of establishing this must lie with the perpetrator of the fraud [33].

On the facts of this case it is clear that the judge would not have made the order he did, when he did, in the absence of Mr Sharland’s fraud, and the consent order should have been set aside. The judge had misinterpreted Livesey, which had drawn a distinction between triviality and materiality at the date of the order and not at some later date [34]. He had also been wrong to deprive Mrs Sharland of a full and fair hearing of her claims by re-making his decision at the hearing of the application on the basis of the evidence then before him [35]. The consent order should not be sealed and the matter should return to the Family Division for further directions [36].

The final part of the judgment discusses the procedure to be followed by parties seeking to challenge the final order of a court in family proceedings. The court retains jurisdiction over a marriage even after it has been dissolved and s 31F(6) Matrimonial and Family Proceedings Act 1984 gives the family court power to vary, suspend, rescind or revive any order by it. It is open to the parties either to make a fresh application or to appeal against the consent order. Lady Hale endorses the observations of Lord Wilson in the judgment in Gohil v Gohil [2015] UKSC 61 on the question of how such applications should be made, while emphasising that the renewed financial remedy proceedings need not start from scratch and the court may be able to isolate the issues to which the misrepresentation or non-disclosure relates [37-43].


For a full copy of the judgment see https://www.supremecourt.uk/cases/uksc-2014-0074.h...

Criminal Legal Aid cuts

On 9 April 2013 the government published proposals to reform criminal legal aid with the aim of saving over £220m per year.

To achieve these savings the consultation proposes some changes in scope (prison law cases are removed and it is made harder to obtain legal aid for judicial reviews), cuts to advocacy fees for public-law family cases and introduces a new financial eligibility threshold above which a defendant would not receive legal aid in the Crown Court.

However, the primary mechanism for achieving savings is a fresh proposal for price-competitive tendering.

The Law Society's assessment of the proposals – based on interviews with members and our knowledge of the whole market – is that as currently drafted they will fail to achieve these aims, particularly in the short timeframe envisaged by the Ministry of Justice (MoJ).

We have raised our concerns directly with the lord chancellor and are in continuing dialogue with the MoJ. We are also informing parliamentarians about the potentially serious detrimental impact of the proposals on the criminal justice system.

This campaigner briefing – prepared by the Government and Parliamentary Affairs and Legal Aid teams – describes how you can aid this process by responding to the consultation and lobbying your local MP directly.
http://www.lawsociety.org.uk/representation/govern...

April 2013

Protection from Harassment Act

The PHA makes it a criminal offence to pursue a course of conduct which amounts to harassment of a person. A court may issue a restraining order against someone found guilty of such an offence.

This is a very important piece of legislation which can potentially provide protection in neighbourhood disputes, cases of racial harassment, bullying at work, confrontation with the media or stalking, as well as hate mail and persistent unwanted telephone calls. The PHA can also potentially apply in cases of domestic abuse.

There is no complete definition of harassment in the PHA and so it will be a matter for assessment based on the facts in each case, though the PHA does make it clear that harassment includes causing alarm or distress. It is important to note that there must be a 'course of conduct' in order to bring a claim. This means that there must be at least two incidents representing harassment - more than one telephone call - and the person who is carrying out the harassment must know or ought to know that it would amount to harassment. Although two incidents can be enough, the fewer the incidents, and the further apart in time they are, the less likely a court will be to find that there has been a 'course of conduct'.

News - cases

22/07/2014

L and Ceredigion County Council - Ombudsman's Report

Mr and Ms B made a complaint to the Ombudsman about Ceredigion County Council, as the Local Education Authority (“the Authority”). The Authority had considered a complaint made by Mr and Ms B about their son’s (“L”) education provision. L transferred to secondary education in September 2011. He has Global Developmental Delay, a brain tumour and Epilepsy; he suffers both Petit-mal and Grand-mal seizures. He has low muscle tone, poor visual spatial awareness, poor balance and chronic constipation. He has a range of prescribed medication which must be administered regularly. He passed as having Special Educational Needs (“SEN”) and he has had a Statement of Special Educational Needs (a Statement”) since February 2003.

In her first complaint to the Ombudsman, in April 2013, Ms B said that the Authority had failed to listen to them or L’s key worker during the annual reviews of the statements. Following discussion between this office and the Authority, the Authority, the Authority was given time to complete its own formal investigation of the complaint. The Authority subsequently apologised for the time taken to reply to the first complaint and made some recommendations, but it did not uphold the complaint. In October 2013, Ms B made a further complaint to the Ombudsman, she said they were dissatisfied with the outcome of the Authority’s formal investigation because:


  • L’s Statement was out of date.
  • The Authority did not listen to or, work with, Mr and Ms B to ensure that the appropriate educational provision was made for A.
  • Mr B had lost income as a result of the situation, and Ms B felt they had to engage a solicitor to help them deal with the Authority. They wanted the Authority to cover their “material losses”.


Following my investigation, the Ombudsman upheld the complaint and recommended that the Authority should:


  • Give Mr and Mrs B an unequivocal written apology for the failures identified by this report.
  • Make a payment of £1,000 to reflect the amount of time L had reduced education; the delays in the Authority’s handling of the case; and the time and trouble taken by the family in pursuing this complaint with the Authority and this office.
  • Share this report with the staff involved in the case, the Resource Panel and the First School (so that the lessons that should be learned from the report can be understood).
  • Revise the format of the SENC1 forms and other notices it has issued with the proposed statement, a proposed amended statement or an amended notice between 1 April 2013 and 31 March 2014. The audit should seek to confirm that each SENC1, or other notice issued, complied with Schedule 1 of the Regulations. I f the audit identifies that any notice issued did not comply with the Regulations, within one month of the audit each affected family must be given a written apology and full information must be provided.
  • Complete an independent audit of the Resource Panel records to ensure that those records are capable of explaining the rationale for any departure from the SEN Code of Practice. If the audit identifies a systematic lack of Panel records then, within two months of the audit, the Authority must must develop and implement an appropriate record keeping process.
  • Formally instruct all staff involved in the administration of its SEN provision to follow the relevant guidance.
  • Carry out refresher training on its Complaints and Concerns Policy for the Education department. The training should include clear guidance on the escalation of a complaint from stage 1 to stage 2 of its Policy.


Baht & Others v. Masshouse Developments Ltd

Summary:

Recovery of deposits paid on the off-plan sale and purchase of apartments following delayed completion.

Factual Background

The Cs entered into Contracts (twenty-one in November 2007, one in December 2007 and another in February 2008) for the off-plan sale and purchase of long leases of apartments to be built by D in an apartment block, Block M, Masshouse, Birmingham. At the time, it was anticipated that the apartments would be completed by April 2009 so that Cs could take possession in Spring or early Summer 2009. Progress with the development of Block M stopped in October 2008. By February 2010 the works of construction and fitting out ‘would have appeared to an unobstructed viewer to be no further forward than would have appeared at the end of October 2008’. Nevertheless there was some activity in early 2010. On 18 February 2010, and in a similar letter dated 18 March 2010, Cs’ solicitors gave notice to D purporting to accept D’s repudiatory breach of contracts (‘the Termination Letters’). In fact, Block M was only completed in April 2011. On 5 May 2011, D’s solicitors served notices to complete. On 18 May 2011, D sought to exercise a contractual right of rescission for Cs’ failure to complete and purported to forfeit Cs’ deposits. D also sought damages for Cs’ breaches of contract in failing to complete their purchases. Cs sued D for the return of their deposit and D counterclaimed.

The Issues

(i) Was it an implied term of the Contracts that D would complete Block M and the flats within a reasonable period of time?

(ii) If there was such an implied term, was D in breach of the term?

(iii) Was D in breach of the express term, contained in each of the Contracts, requiring D “to arrange that the Apartment is completed with all due diligence”?

(iv) If either of the two previous questions is to be answered in the affirmative, were the circumstances such that when sending the Termination Letters the Cs were entitled to treat D as having repudiated the Contracts and to accept that repudiation?

(v) Assuming that the previous question is to be answered in the negative, was D entitled to hold Cs to the Contracts and in due course to forfeit the deposits and claim damages for breach of contract?

The Contracts

The Contracts were in a similar form and were made by reference to the Law Society’s Standard Conditions of Sale (4th Edn.), which were expressed to apply except to the extent that they were varied by or inconsistent with the special provisions of the Contracts. The Contracts provided for the Completion Date for the sale and purchase of each apartment to be 10 days after the giving by D’s solicitors of a notice (a “Notice of Readiness”) stating that the relevant apartment had been completed. Law Society Standard Condition 6.1.1. was expressly excluded. Law Society Standard Condition 6.8 (which permits, on or after the Completion Date, the service of a notice to complete by a party who is ready, able and willing to complete, making time of the essence of the contract on service of the notice to complete) was modified to a period of 5 days (rather than the usual 10).

By Law Society Standard Condition 7.2 rescission of the Contracts as a result of D’s breach of contract permits Cs to require the return of the deposits with interest. On the other hand, by Law Society Standard Condition 7.5 it is expressly provided that if a buyer fails to complete in accordance with a notice to complete, the vendor is entitled to rescind the Contract and to forfeit and keep any deposit and accrued interest, as well as claiming damages.

Special Condition 4.1 of the Contracts provided as follows:

“The Seller shall arrange that the Apartment is completed with all due diligence in accordance with the drawings and specifications copies of which are available for inspection at the Seller’s office and have been inspected by the Buyer at the date of the Buyer’s reservation of the Apartment and otherwise in accordance with this Agreement and the relevant planning permission and building regulation approval but the Seller shall not be liable for any delay caused by industrial or labour disputes shortage or late delivery of materials shortages of labour the default of any contractor or supplied fire tempest frost hazardous or adverse ground conditions or any other like circumstances or any cause beyond the control of the Seller.”

Clause 4.1 did not set out any express requirement for the Apartment to be made ready. On its face it contains only the express obligation on the part of D to progress the development of the Apartment with “all due diligence”. Also of relevance, the Contracts contain no provision expressly allowing rescission for breach of clause 4.1.

Cs pleaded that: “it was an implied term of the Contracts ..... that [Block M, Masshouse] would be completed within a reasonable time.” By re-amendment (allowed at trial), Cs pleaded reliance upon Special Condition 4.1 (set out above).

The Findings

Issue One: The implied term contended for by Cs added nothing to Cs’ re-amended case which was not already encompassed by the express terms of Special Condition 4.1 and therefore implication was unnecessary.

Issue Two: It was for the party alleging breach of an obligation to complete within a reasonable time to establish what that time would be, disregarding delays caused by the other party’s failure. It could not be said precisely when the reasonable time for building Block M and completing the apartments expired. It could not be said that by 18 March 2010 the reasonable time had necessarily expired so that D was automatically in breach of the Contracts (even though the time subsequently taken ‘could hardly have been a reasonable time’). Time was not of the essence in relation to the implied obligation to complete Block M within a reasonable time.

Issue Three: Construction works could and should have been put in hand by mid-June 2009. D had procrastinated until December 2009 before starting the enabling works and placing the main contract with another contractor. In the circumstances, D was in breach of Special Condition 4.1, which required the apartments to be completed with due diligence.

Issue Four: As regards Special Condition 4.1, mere failure on the part of D to arrange that the Apartment was completed with all due diligence would not be sufficient; and any assessment of what D did or failed to do of course fell to be made in the context of the prevailing circumstances. There would need to have been something done (or not done) by D which would lead a reasonable person to conclude that D no longer intended to be bound by the Contracts. Not merely would the necessary failure need to be established, but further it would need to be shown that the inference to be drawn from the gravity of the failure either by itself or in conjunction with other things said or done (or not done) by the contract breaker led to the conclusion mentioned above.

In the circumstances, the failure was not to be viewed simply as mere delay. D’s failure, following the period of several months after the contract’s administration when, to all intents and purposes, nothing at all was happening on site in the way of progress towards completion of the Apartments, signalled an intention on the part of D not to be bound by the Contracts. D was biding its time while deciding what to do and, materially, whether or not it would ever build out the residential development. The evidence of one of the Cs was that he visited the site during a weekday, some months after May or June 2009; he saw nothing happening on site at all, the site being locked and the on-site marketing suite being inaccessible. In other words, the passer-by could reasonably infer that the residential development was abandoned and it was an open question whether, and if so when, any development would ever be resumed. The Court was also able to have regard to the lack of response to Cs’ solicitors’ earlier letters to D’s solicitors asking for an update as to when the development was to be completed. In the circumstances, Cs were entitled to treat the Contracts as at an end by reason of D’s repudiation of the Contracts.

Issue Five: Did not arise given the Judge’s findings on Issues Three and Four.

Outcome

The Cs’ claim therefore succeeded and Cs were entitled to recover their deposits with interest in accordance with Law Society Special Condition 7.2. D’s Counterclaim was dismissed. D was given permission to appeal.

Baht & Others v. Masshouse Developments Ltd, High Court of Justice, Chancery Division, Mr George Bompas QC sitting as a Deputy Judge of the High Court, 15 March 2012.

Nicholas Yell (instructed by Alison’s Legal Practice) acted for the successful Claimants under a CFA. A full copy of the Judgment is available on Lawtel.

Lawtel Reference: LTL 19/3/2012

Hastings & Hastings v Johnsons Estates Ltd & Another: claim for return of deposits successful

A claim by 15 purchasers of off-plan apartments for the return of deposits paid to the developer succeeded where there had been an unreasonable delay (35 months at the date of termination) by the developer in completing the development. Judgment was also obtained against the developer's solicitors for releasing deposits held as stakeholder when not entitled to do so. The developer is thought to be insolvent. (Hastings & Hastings and Other Purchasers v Johnsons Estates Ltd and Bennett & Ryan; Chancery Division; Mr J.Baldwin QC sitting as a Deputy High Court Judge; June 21, 2011).

Nicholas Yell Instructed by Alisons Legal Practice) represented the Claimants under a CFA.

June 2011


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