The first over the line – Dixons Carphone

Dixons Carphone (“DC”) is investigating a hacking attempt which involved almost six million credit and debit cards and over a million customer data records. The incident could be the first significant data breach to be investigated by the Information Commissioner’s Office (“ICO”) under the General Data Protection Regulation (“GDPR”) and the Data Protection Act 2018. The company is in the embarrassing position of having to admit a significant data breach has occurred for the second time in three years and just weeks after the new data protection laws came into force last month.

According to DC the breach was discovered last week, but the hack itself began in July 2017, involving 5.9m payment cards and 1.2m non-financial personal data records (such as name, address or email address). DC also confirmed that only 105,000 non-EU issued payment cards affected did not have chip and pin protection.

The outcome of the ICO investigation and subsequent action will be keenly watched especially if the breach is deemed to have taken place after the GDPR compliance deadline of 25 May 2018. Ambiguity arises because the breach occurred or commenced in pre-GDPR times (July 2017) when the Data Protection Act 1998 was in force. If the incident is deemed to be subject to GDPR rules, the ICO could potentially fine DC up to 4% of its annual global revenue. Last year the group reported total sales of £10.5 billion and a fine under GDPR may potentially be a figure worth hundreds of millions of pounds. Under the Data Protection Act 1998 the maximum fine would be significantly less.

The ICO are playing their cards close to their chest, saying: “It is early in the investigation. We will look at when the incident happened and when it was discovered as part of our work and this will inform whether it is dealt with under the 1998 or 2018 Data Protection Act.”

Britain’s National Crime Agency (“NCA”) said it was heading a criminal investigation into the hack, working with the National Cyber Security Centre, the Financial Conduct Authority and the ICO. Mike Hulett, the NCA’s head of operations said: “The complexity of these inquiries means this is an investigation which will take time.”

The incident reflects a long-term complacency around cybersecurity issues for many companies, despite the introduction of GDPR earlier this year. This data breach is the first such heavily publicised breach in the UK since the GDPR and Data Protection Act 2018 have come into force – there will undoubtedly be many more. It could well undermine consumer confidence in DC whose share price fell 3.1% after disclosure of the breach. Some companies (such as DC) are always going to be a rich source of credit card and personal information for cyber criminals. Though DC has said there is no evidence of fraud occurring, as the data is now in the hands of cyber criminals it clearly leaves the victims of this breach exposed to potential phishing attacks.

Tate Chakrabarty

Tate Chakrabarty
Associate Solicitor
Corporate and Commercial Team
0113 227 9260 

Posted in Intellectual Property | Leave a comment

Finally an end to the gig-economy worker conundrum?

The Supreme Court’s Judgment in Pimlico Plumbers and another v Gary Smith could spell an end to gig-economy ‘jobs loophole’ being used to avoid worker status. The Supreme Court’s dismissal of Pimlico’s recent appeal has confirmed that their workers are in fact just that: not the self-employed contractors that their contracts with Pimlico sought to label them as. This could have significant ramifications for several other high profile cases on the same subject.

Facts of the Pimlico case

Mr Smith had worked exclusively for Pimlico on a self-employed basis. After suffering a heart attack he sought to reduce his hours from 5 to 3 days per week; a request that was denied by Pimlico, ultimately resulting in his dismissal. Mr Smith made several claims to the Employment Tribunal for unfair and wrongful dismissal, entitlement to pay and discrimination. He has been successful at every stage of his claim including in the Employment Appeal Tribunal and Court of Appeal, having been found to be a worker under s230(3)(b) of the Employment Rights Act 1996 and being “in employment” for the purposes of the Equality Act 2010.

The significant factors for the Supreme Court in drawing the distinction between self-employed and worker status lay ultimately in the strict requirements that Pimlico placed upon its workers. All of these factors would indicate that Mr Smith worked for Pimlico, not that he was a supplier to them.

So what does this mean for Mr Smith? As a worker he is entitled to several rights not afforded to him as a self-employed contractor such as:  statutory sick pay, protection for whistleblowing, protection from discrimination and statutory paid holiday – rights many people assume come as standard when working for a company.

Decisive factors

The decision hinged on Mr Smith’s inability under his contract to reject work, his inability to make decisions on working hours. Ultimately the Supreme Court found Pimlico’s arguments that Mr Smith paid pay his own tax and used his own tools to complete work unconvincing as justification that he was genuinely self-employed. Whilst Mr Smith was required to provide his own tools, the job had to be carried out whilst wearing a branded uniform and driving a branded van, fitted with GPS. Workers are generally required to provide a personal service but Pimlico allowed its plumbers to swap jobs. Pimlico insisted this proved Mr Smith was self-employed, however the ability to swap shifts was only within the pool of plumbers working for Pimlico at any given time. Mr Smith’s ability to reject work and negotiate hours was hampered by a secondary contract requesting he work a minimum of 40 hours per week. Ultimately the control exercised by Pimlico overwhelmed the credibility of its contract which did not reflect the reality of the situation, a common theme in all of these related worker cases.

Consequences for the gig- economy  

With the surge in gig-economy related opportunities of late, exploiting technological advancements the law is playing catch up and high profile cases on workers’ rights such as Uber, Addison Lee and CitySprint are starting to close in on this fast growing market. A Supreme Court decision sets a strong precedent in advance of Uber’s upcoming appeal. The gig economy won’t be stopped in its tracks by this decision but the brakes are certainly being applied.

Tom Moyes

Tom Moyes
Employment Team
0113 227 9238

Posted in Employment Law | Leave a comment

Islamic and Civil marriage; Shariah law and Divorce

I recently met a new client seeking some advice about a pre-nuptial agreement. He was a young man who was potentially going to marry his partner in an Islamic ceremony and then they would both move into his home which he had bought prior to the beginning of the relationship. The young man was accompanied by his mother who was worried about the way in which he owned his property and wanted some advice about protection.

I asked the usual questions about the relationship; in particular when they were due to marry. The answer was that this was to be an Islamic ceremony and so there would be no engagement in particular and that the marriage would be planned over a short period of time before the ceremony. There was no plan to register the marriage as a civil marriage alongside the Islamic marriage.

This answer changed things. If there was to be no registering of the Islamic marriage as a civil marriage then it would not be recognised as a ‘legal’ marriage according to the law of England and Wales. Accordingly there could be no pre-nuptial agreement as there were to be no nuptials. The client’s partner could not make any claims under the Matrimonial Causes Act 1973 as his wife because she would not be legally recognised as his wife.


With good timing, in February this year a review was conducted by the Home Office into the application of sharia law in England and Wales. The review was chaired by Mona Siddiqui OBE and can be read in detail here

In particular the review focused on “whether sharia law is being misused or applied in a way that is incompatible with the domestic law in England and Wales, and in particular whether there were discriminatory practices against women who use sharia councils.”

In the example I referred to above, a sharia council would presumably be approached by the wife to make decisions about a separation. It is important to note however that the sharia council has no legal status and no legal binding authority under civil law and hence in the event that a marriage was registered as a civil marriage, the law of England and Wales (ie under the Matrimonial Causes Act 1973) would prevail.

Use of the shariah council by women

The review found that over 90% of people using sharia councils are women seeking an Islamic divorce. The reasons for this were several; ranging from cost, to family requirements, to religious beliefs. Also the review found shariah councils being relied upon because of the lack of a civilly registered marriage and the misconception that an Islamic divorce is all that is required.

Civil marriage alongside Islamic marriage

Evidence was then sought as to why Muslim couples do not register their marriage civilly alongside the Islamic marriage. A number of possible reasons emerged, from simple lack of awareness, to financial reasons including wanting to avoid the jurisdiction of the family court, to polygamy.

Implications in the family court

If the Islamic marriage is not registered civilly, there can be no divorce using the jurisdiction of England and Wales. Hence in situations for example where property is owned by one person alone, the other person cannot make any financial claim other than through the laws of property ownership, which are much stricter and less open to discretion as in the divorce law of England and Wales. The financially disadvantaged client who has entered into an Islamic marriage but not a civil marriage will therefore find themselves in a much worse position.

The future

The review recommends legislative changes to the Marriage Act 1949 and the Matrimonial Causes Act 1973, such to ensure that civil marriages are conducted before or at the same time as the Islamic marriage ceremony. This would ensure that a greater number of women would have the protection of family law in divorce.

It does seem rather bizarre that if a couple were married in another country in which an Islamic marriage was legally recognised, outside of England and Wales; they would then be able to use the divorce laws here, without having to register the marriage civilly. Yet those who have the Islamic ceremony here with no accompanying civil ceremony cannot.

Andrew Smith

Andrew Smith
Associate Solicitor
Family Law Team
0113 3222807

Posted in Family Law | Leave a comment

Drink driver escapes lengthy jail term due to legal loophole

Despite being over 2 ½ times the legal alcohol driving limit and killing an 11-year old boy in an accident near Leeds, a self-employed farm worker has been jailed for just 16 months.

Harry Whitlam was visiting his mother, who worked at the farm, when a tractor driver, Gary Green, reversed into him and he later died in hospital.

As the incident was on private land at a farm, it could not be tried under the Road Traffic Act 1988, where maximum sentence is 14 years in jail and a driving ban.

Instead the case was brought by the Health and Safety Executive (HSE) under ’Failing to ensure the safety of persons other than employees’ under the Health and Safety at Work Act 1974  where the maximum sentence is 2 years. Additionally, as there is no driving ban for such an offence, Green can return to driving immediately on release.

In England, the ‘drink drive limit’ is 35 micrograms of alcohol for every 100 ml of breath. The accident was at 9.15am and the police advised that Green’s reading was 90 at the scene and then 74 at the police station. He told police that he had drunk around 4 pints of beer at the pub and then 2 cans of beer at home, but expert evidence presented at trial suggested he had probably had around 13 pints before going to bed at around 2am.

Green pleaded guilty to the offence and after sentencing, the Court was told that he had 2 previous convictions for drink driving.

Harry’s mum, Pamela Whitlam, said after the trial “It is not okay for anyone whether on a public road or private land to be drunk and get behind the wheel of a vehicle” and is now campaigning for ‘Whitlam’s Law’ with private land covered by the same drink driving laws as those for public roads.

Her local MP, Alec Shelbrooke, has raised the issue in the House of Commons and also met with the Department for Transport asking them to consider amending current legislation to close this loophole.

Nathan Clay

Nathan Clay

Nathan Clay, Solicitor
Personal Injury & Medical Negligence Department
0113 227 9355

Posted in Personal Injury and Clinical Negligence | Leave a comment

What’s holding up Roman’s Tier 1 application?

With reports over the weekend that Roman Abramovich’s Tier 1 Investor application is subject to an unusual and on-going delay, this article explores the relevant provisions of the Tier 1 Investor visa route and considers what could be the sticking point for Roman.

Unexpected delay

A report emerged from a Russian website, uncontested by Roman’s inner circle, that Roman applied to extend his visa 3 weeks ago and had not yet received a decision.

This delay would not be unusual if Roman was applying using the standard postal service: decisions through this method can take 6 months or longer and involve biometric enrolment at a Post Office.  However, with Roman’s £9.3bn net worth, he would not balk at the £12,733 Super Premium fee, which buys him Home Office attendance at a location of choice to collect biodata – and, usually, a decision within 24 hours. So what is keeping the Secretary of State?

Roman’s current visa position

We do not know Roman’s immigration history, but the maximum visa duration is 3 years and four months (if the application was for entry clearance). Given reports of his visa expiring in April this year, he must have been granted his present Investor visa no earlier than December 2014 (and much later if the application was an in-country application). Measures to tighten the Rules were introduced on 6 November 2014. However, given that Roman would probably use the Super Premium Service, which usually provides a decision within 24 hours, his current leave was probably decided under the post-November 2014 regime.

Roman’s new application could be for indefinite leave to remain (ILR), under the standard qualifying route of 5 years’ Investor leave to remain, provided he satisfies the key requirement of having invested at least £2 million in the UK.  However, given his wealth, Roman would surely look to apply for ‘accelerated ILR’, which can be achieved by upping the investment to at least £10 million. This brings the qualifying route down to just 2 years.

What could be causing the delay?

Roman is in the fortunate position of being able to employ a team of legal experts to make sense of the UK’s increasingly complex points-based system of immigration control.  It was described by Lord Justice Jackson as having “achieved a degree of complexity which even the Byzantine Emperors would have envied’.

But even experts cannot predict the future. Previously, ILR applicants were permitted up to 180 days’ absence from the UK, over any fixed year of the qualifying period.  This was calculated by looking back at each fixed 12 months interval of the qualifying period.  This allowed some flexibility: applicants could meticulously record absences and plan so that periods of high absence fell into different twelve months periods. However, any careful planning went out the window when, on 11 January 2018, the 180 days rule was tightened.  From then an applicant could not be absent for 180 days during any 12 months period of the qualifying period. Could this rule change, applied with retrospective effect, have caught out Roman’s jet-set lifestyle?

More likely, the real issue runs deeper than this.  Seemingly in response to the poisoning of former Russian spy Sergei Skripal (allegedly by Russian agents) the government committed to reviewing the visas of wealthy Russians who came to the UK prior to the tightening of the Tier 1 Investor Scheme on 6 November 2014.  However, as noted above, Roman was probably granted a visa in accordance with post-6 November 2014 Rules.

Roman’s close links to the Russian President Vladimir Putin are well-known and the delay could be a retaliatory move following the poisoning of Skripal. Nonetheless, any move to refuse Roman’s application would be highly controversial, and of course any refusal notice is obliged to give clear reasoning for any refusal.

Current Investor rules allow for refusal where money has been ‘acquired by means of conduct which is unlawful in the UK, or would constitute unlawful conduct if it occurred in the UK’. This provision was introduced on 6 November 2014 and therefore Roman’s current visa probably passed this provision.

General Grounds of Refusal will be considered in Roman’s case. This includes controversial paragraph 322(5) – under which 1000s of highly skilled migrants have reportedly had indefinite leave to remain applications refused  Refusal under this paragraph has occurred even for making minor amendments to tax returns, in circumstances where no prior criminal or HMRC proceedings had been instigated. Paragraph 322(5) gives the Secretary of State broad powers to refuse based on ‘conduct, character or associations’.  But again, Roman’s earlier visa approvals likely passed this test.

This delay in decision-making comes after a recent Foreign Affairs Select Committee Report stated in uncompromising terms: “The UK must be clear that the corruption stemming from the Kremlin is no longer welcome in our markets and we will act.”

The political noise suggests a refusal could be forthcoming, but this would be a dramatic turnaround by the Secretary of State given the previous green light. Furthermore, given Roman’s integration into UK life and his ownership of Chelsea FC, this probably is just noise, and is simply a move to make Roman feel slightly less welcome than before.

Louis MacWilliam

Louis MacWilliam

Louis MacWilliam
Associate Solicitor
Business Immigration Team
0113 322 2842

Posted in Business Immigration | Leave a comment

Pre-nuptial agreement signed on the day before the wedding is accepted by the Court of Appeal

We commented on the case of Mr and Mrs Versteegh in February of this year regarding the ex-wife awarded £90 million in a divorce settlement who was fighting for more in an appeal against the judgement.

On 10th May the Court of Appeal handed down its judgement, dismissing the appeal by Mrs Versteegh. The appeal focussed upon a number of issues including non-matrimonial assets, the sharing principle and the valuation of certain business interests. A point of interest however are the comments from Lord Justice Lewison who focussed on the treatment and consequences of a pre-marital agreement, more commonly known as a pre-nuptial agreement.

Historically pre-nuptial agreements have been unenforceable in family law, not least because the perception was that they were contrary to public policy. In the ground-breaking 2011 case of Radmacher v Granatino (Radmacher) [2011] 1 AC 534 however, it was decided that pre-nuptial agreements were no longer contrary to public policy and Lord Philips in that case said:

“If parties who have made such an agreement, whether antenuptial or post-nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement.”

Since Radmacher there has been a sea change in the family courts. Provided that pre (and indeed post) nuptial agreements are drafted correctly and family lawyers follow a certain protocol it appears to be the case now that the agreements, whilst still not automatically binding, will be followed by the court.

In the Versteegh case Lord Justice Lewison helpfully summarised the position regarding pre-nuptial agreements. His words are worth repeating verbatim:

“The key points in Granatino v Radmacher seem to me to be these:

i) Whether a PMA (Pre-Marital Agreement) is contractually binding or not is irrelevant. The court should apply the same principles whether or not a binding contract has been made

ii) There is no need for black and white rules about the process leading up to the making of a PMA. What matters is whether each party has all the information material to his or her decision, and that each should intend that the agreement should govern the financial consequences of the marriage coming to an end

iii) Factors which would vitiate a contract will negate any effect that the PMA might otherwise have had. But factors falling short of those which would vitiate a contract may reduce, rather than eliminate, the weight to be given to the PMA

iv) If the terms of the PMA are unfair from the start this will reduce (not eliminate) the weight to be given to it.

v) If the parties to the PMA are nationals of a state in which PMAs are common and binding, that will increase the weight to be given to the PMA.

vi) In principle, if parties have made a PMA there is no reason why they should not be entitled to enforce it.

vii) Thus, the court should give effect to a PMA that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.

viii) Typically, it would not be fair to hold the parties to their agreement if it would prejudice the reasonable requirements of any children of the family; or if holding them to the agreement would leave one spouse in a “predicament of real need”.

ix) But in relation to the sharing principle the court is likely to make an order reflecting the terms of the PMA.

A final point to note in relation to the Versteegh case is that Mrs Versteegh’s pre-nuptial agreement was signed on the day before the marriage. Mrs Versteegh claimed that she did not have legal advice before signing it and had not read the document before the wedding. Her evidence was however not believed by the original trial judge and it was found that she knew and understood the impact of the pre-nuptial agreement.

Contrary to previous conceptions, this shows us that a pre-nuptial agreement does not necessarily need to be signed a long period of time before the wedding. It does though need to have sufficient time to be drafted, considered, financial disclosure exchanged and both parties having the benefit of legal advice. Provided that sufficient time is taken to do these things then the likelihood is that the pre-nuptial agreement will be followed by the court.

Andrew Smith

Andrew Smith
Associate Solicitor
Family Law Team
0113 3222807

Posted in Family Law | Leave a comment

Court decision recognises inadequacies in English law for unmarried couples

A recent Court of Appeal decision has highlighted the requirement for English law to develop to take into account the modernising society in which we live.

In personal injury and medical negligence cases for deaths, there are different rules for some elements of the claim.

Although various people can be classed as ‘dependants’ and claim for funeral expenses and loss of dependency, including husband, wife, civil partner, parent, child and a partner who had been living with the deceased for at least 2 years pre-death “as if husband and wife or as civil partners”, the criteria for claiming the bereavement award is much more restrictive.

The loss of dependency includes claims for their loss of wage as well as services in terms of the tasks they did, for example, housework, DIY, childcare, etc.

The statutory bereavement award is a fixed sum, currently £12,980 and is considered to be compensation for grief. Under section 1A of the Fatal Accidents Act 1976 (“the Act”) to receive the statutory bereavement award you must be: –

(a)          The spouse of the deceased

(b)          The parents of a child (under 18) born to a married couple; or

(c)           The mother of a child born to an unmarried couple

Accordingly, whilst unmarried partners could make a claim for funeral expenses and loss of dependency if they fit the criteria mentioned above, they could not claim the bereavement award.

In the recent case of Smith v Lancashire Teaching Hospitals NHS Foundation Trust, a Ms Smith brought a medical negligence claim in relation to the death of her partner, a Mr Bulloch, with whom she had lived for 11 years. As part of this claim she argued that it was wholly unfair that she could not claim the bereavement award because they were not married as their relationship was “equal in every respect to marriage in terms of love, loyalty and commitment.”

Ms Smith argued that the Act was in breach of the European Convention on Human Rights (ECHR) as it affected her right to respect for private and family life (Article 8) and discriminated against her non-married status (Article 14).

The Court of Appeal looked closely at the current law and decided that much has changed in society since the Act was drafted and that the law did discriminate unjustifiably against her, therefore she should be given the statutory bereavement award and the Government should consider revising the Act.

In making this decision the Court of Appeal has opened up the possibility that other people will bring claims alleging discrimination by the Act, such as unmarried fathers, step-parents, etc. but also suggests more widely that other elements of English law will require amending to keep up with society as a whole.

Nathan Clay

Nathan Clay

Nathan Clay
Associate Solicitor
Personal Injury Team
0113 227 9355

Posted in Personal Injury and Clinical Negligence | Leave a comment

The right to be forgotten and the removal of information that may disproportionately impact the lives of individuals

Last week, an individual won his legal action against Google in connection with what is known as the “right to be forgotten” in a UK High Court case.

The right to be forgotten (also referred to as the right to erasure) is a precedent set by the Court of Justice of the European Union in 2014. It allows people to request information (about them) to be removed where it is no longer relevant but disproportionately impacts their lives. Search engines can decline to remove such pages if they declare their content to be in the public interest. Google have mentioned that since 2014 there have been 655,000 requests, demanding the removal of almost 2.5 million links.

The individual (referred only as “NT2”) won his legal action to compel Google to remove search results about past criminal convictions. NT2 was convicted of conspiring to intercept communications 10 years ago and spent 6 years in jail as a result. A separate claim brought against Google at the same time by another individual (referred to as “NT1”) was dismissed by the court on the basis that the crime he committed was more serious and therefore the information about his crime should not be removed. Google’s legal representative stated that Google will not allow people to re-write “history” or “tailor [their] past”.

As a result of the ruling, Google (who have generally been reluctant to honour “right to be forgotten”) requests will now be required to remove any historical articles about the businessman intercepting communications in the past. Google has confirmed that it will accept the ruling.

The General Data Protection Rules (GDPR) which comes into force in May this year will incorporate the right to be forgotten under Article 17. The right is not absolute and only applies in certain circumstances including where the personal data is no longer necessary for the purpose it was originally collected for, where consent to hold the data is withdrawn or where the personal data has been processed unlawfully. Parties holding such data that is the subject of such a request shall have one month to respond to it.

Tate Chakrabarty

Tate Chakrabarty                                            
Associate Solicitor
Corporate and Commercial Team                   
0113 227 9260  

Posted in Company & Commercial Law | Leave a comment

Sands of Time : Discretion and limitation

The periods set out in the Limitation Act 1980 are relatively generous. Most civil matters must be brought within 6 years of the event that triggered the claim and there are a variety of special circumstances that may allow particular types of claims to be brought even later than that, or impose a stricter limit. Debts based on “specialties” – created by a deed, like a mortgage, have a 12-year limitation period. Claims for compensation for injury, on the other hand, have a three year period, but the three years runs from either the date of injury or, alternatively, the date of knowledge of the injury. This last provision is extremely important when claiming for conditions such as industrial injury – for example asbestosis or industrial deafness, where the initial triggering incident may be long past by the time the claimant discovers the condition.

However, once the limitation period is up, this usually means the claimant is out of luck. The courts generally expect a claimant to act with reasonable promptness, and the time limits are intended to give people more than adequate time to make the decision to claim, and to conduct any required research and evidence gathering. If the claimant leaves matters too late then, under most circumstances, the claim cannot be brought no matter how well-merited.

In a few limited areas of litigation, however, the courts retain a residual discretion over such limitation periods, giving a narrow chance of bringing a late claim. Most recently under the legal spotlight, section 33 of the Act permits the court to stretch limitation for claims for personal injury or death where it is equitable to do so. In coming to a decision, judges are expected to consider the length of delay and the reasons for it, and how much that delay will affect the parties’ and witnesses’ ability to provide evidence.

This section was tested recently in the case of Carroll v Chief Constable of Greater Manchester. The claimant was a former undercover policeman exposed to narcotics at work who subsequently became a drug addict, suffered from depression and eventually lost his job and received a criminal conviction. The initial addiction occurred in 2009 and the claimant, after some back and forth, conceded that his knowledge of the issue dated back to this year. The claim was brought in 2013, outside the 3 year period for personal injury claims.

The court considered that, under the circumstances, the delay had not prejudiced the defendant. The police authority had argued that the loss or destruction of documents in the intervening time impacted its ability to defend the claim but had not been able to provide compelling evidence as to when such documents had been destroyed (or, it seems, if some documents had even existed).

Another issue this case looked at was whether it was reasonable for Carroll to conceal his drug addiction from his GP when being treated for depression. As the addiction would likely have led to his earlier dismissal from the Force, the court ruled that he had acted reasonably in hiding it.

The decision in this case leaves defendants on the back foot with personal injury limitation periods. Defendants intending to rely on limitation to ward off a claim must be able to show that the additional lapse of time has had a material effect on the chance of the claim receiving a fair and informed hearing.

Adrian Czajkowski

Adrian Czajkowski
Legal Executive
Commercial Dispute Resolution Department
0113 227 9296

Posted in Commercial Dispute Resolution | Leave a comment

The Modern Approach to “Meal Tickets” – Court overturns Order that granted a millionaire’s ex-wife maintenance for life

The Court of Appeal (“CoA”) yesterday reaffirmed the Court’s more modern approach to spousal maintenance,  championing “clean breaks” between divorcing couples and limiting claims for ongoing spousal maintenance (reports of the story are accessible both here and here).

In Waggott v Waggott [2018] EWCA Civ 727, the CoA overturned a previous ruling that would have granted the ex-wife of a millionaire travel boss £175k for life by ruling that her maintenance payments should cease after just three more years.

In 2012, Mrs Kim Waggott (“W”) petitioned for divorce against her former husband, Mr William Waggott (“H”), after finding about affairs he had over the course of their marriage.

H and W both trained as Accountants and met in 1990 when working for Coopers and Lybrand.  They married in 2000 and had a daughter with W giving up her job of 5 years with UCI Cinemas in 2002 to stay at home and look after their child.  H continued to climb the corporate ladder and in early 2011, he became the Chief Financial Officer of TUI Travel, formerly Thomsons.

Shortly thereafter, W discovered that H was having an affair with a colleague at work.  That affair allegedly ended after W confronted H about it.  Unfortunately, in Autumn 2012, W found out that H was having another affair with a different woman.  This time, after W confronted H about it, he moved out of the former matrimonial home and they separated.

W then issued divorce proceedings together with substantive financial remedy proceedings against H.  In 2014, when they divorced the couple’s overall assets were valued at £16.4m with W being awarded capital resources of £8.4m compared to the £7.8m awarded to H.  W also received an additional sum of just under £1.4m, representing a share of deferred remuneration that H received post separation, bringing her total award to £9.76m.

On top of this, W was awarded annual spousal maintenance payments of £175,000 for the rest of her life, or until her remarriage.  At the time, W’s successful argument was that fairness dictated that her maintenance award should continue due to the support she gave H and the sacrifices she made for the family during their long marriage rather than on the basis of an argument based on having a financial need for ongoing support. However, this line of reasoning has not been readily followed in subsequent cases.

In November 2017, W went back to Court and asked for a £23,000 per year increase in her annual maintenance payments to take account of H’s future earnings, in particular a 35% share of future bonuses.  W argued that due to the disparity in earning capacity she was entitled to a share of H’s post separation earnings as this was built up over the course of their marriage.

In response, H challenged both W’s appeal and original Order granting the maintenance payments for life.  H sought to kill two birds with one stone by advancing an argument that a marital partnership does not stay alive for the purposes of sharing future resources unless justified by the needs of either party.  The long and short of H’s argument was that “surely with £9.7 million [W had] sufficient resources for the Court to be able to fairly to effect a clean break.”

Lord Justice Moylan (“LJ Moylan”) laid down a comprehensive judgment (accessible here) in which he dismissed W’s appeal holding that earning capacity is not a matrimonial asset to be shared out and that “any extension of the sharing principle to post-separation earnings would fundamentally undermine the Court’s ability to effect a clean break.

In line with the Court’s recent approach, LJ Moylan went on to accept the Husband’s argument on the basis that W not only wouldn’t face any “undue financial hardship” by stopping the maintenance payments but she had considerable earning capacity herself.  There was nothing to prevent a clean break and on that basis, he ordered that her maintenance payments shall cease in March 2021.

In a rather candid closing, LJ Moylan went on to suggest that W could even make up the “shortfall” of the maintenance payments by investing roughly 10% of her original award and simply living off the interest;  should the remainder of her £9.76 million pay-out not be enough she could always go back to work.

As reported by the Family Law Gazette here, this is just the latest in a trend of cases which underscore the Court’s growing reluctance to award ongoing spousal maintenance awards when a clean break remains a genuine possibility.  The days of Court’s making generous provisions for ongoing  spousal maintenance certainly seems to be on the wane with former spouses now more often than not expected to seek to become financially independent following a divorce; especially when it is apparent that they will not suffer any “undue hardship” from a clean break.

Taking stock of recent case law we believe that going forward we will see more use now of term orders (where maintenance is set for a fixed number of years rather than on a joint lives basis); that there will be less spousal maintenance orders made and the ones that are in general are likely to be for lower amounts than may have been awarded in the past if they are to be assessed on the basis of avoiding “financial hardship” rather than on the basis of financial entitlement.

Paul Lancaster

Paul Lancaster
Family Law Team
0113 227 9215

Posted in Family Law | Leave a comment