Landlords, Tenants and Human Rights

The European Convention on Human Rights’ principle relevance to tenants’ rights is enshrined in Article 8, the “right to respect for private and family life, home and correspondence.”

As with all the rights set out in the convention, the primary intent is to govern the relations between a state and its citizens and so the ECHR is most often called upon by tenants where the landlord is the state (for example council tenants). In this most recent case, however – that of McDonald v McDonald – the dispute was entirely between private parties – a mortgage company against an individual tenant. So where does the ECHR come in?

McDonald, the tenant, suffered from a personality disorder and lived in a property bought by her parents with the benefit of a loan from Capital Home Loans. Financial difficulties resulted in arrears and Capital appointed receivers who took control of the property. Notice was given to the tenant under her lease and a possession order was applied for.

The tenant sought to invoke Article 8 not against the mortgage company as a private entity, but against the court itself, claiming that as a public institution it was bound to take the ECHR into account in its decisions and that under the circumstances the possession order was a disproportionate act by the lender (acting as landlord) depriving the tenant of her right to home and private life.

On the face of it, one might have thought this was doomed from the outset. However, although the court found against the tenant, the appeal raises some interesting issues. The lender’s receiver stood in the shoes of the property owner, but the tenant’s position was unusual and a mortgage company and a private landlord do not necessarily meet an identical reception in court. Perhaps it was a realistic proposal for the lender to sell the property with the tenant in place – hence the argument about possession being a disproportionate remedy under the circumstances.

A world in which the courts made every decision informed by the basic rights granted by the ECHR as of standard practice, rather than because those rights are woven into UK legislative decisions, might conceivably be a fairer world. One of the great watchwords of the law, however, is certainty. If every court decision was required to consider the ECHR, over and above existing legislation and legal precedent, much of what certainty the law has would be lost. The court’s decision was that the relevant law (in this case the Housing Act 1988) already provided a means of balancing the rights of the landlord and those of the tenant. To pass any decisions through the further filter of the ECHR would represent needless interference with private contractual rights. The judges ruled that even if Article 8 was considered when making the final decision in such a case, this could not justify deviating from the existing legal and contractual position which provided certainty to the parties’ relationship.

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Luke Patel

Luke Patel
Commercial Dispute Resolution Team
0113 227 9316

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An End to the Blame Game?

Today will see 150 family lawyers travel to Westminster to meet with their MP in a campaign for no fault divorce. The campaign is run by Resolution, a 6,500 strong organisation that believes in a non-confrontational approach to family law. So what is meant by no fault divorce and why is this so important?

As unfortunately many of you will know from experience, divorce is common in the UK with almost half of all marriages ending this way. Could this be because many people no longer see marriage as lifetime commitment? I’d like to think not, but the fact is divorce is on the rise which means it’s a process many people will experience in their lives.

When couples do decide to split up, they are often keen to have a quick divorce and settlement of finances to avoid the emotional and financial strain. With more marriages ending in our modern society, the spotlight has been on the way couples can divorce. Current divorce law is set out in legislation dating back to 1973 and at present there is only one ground for divorce: the irretrievable breakdown of the marriage. This may sound amicable enough – and it would be, were it not for the fact that this ground for divorce has to be supported by one of 5 “facts”.

If a couple wants to divorce immediately following the breakdown of their marriage then the available facts are either one party’s adultery or one party’s unreasonable behaviour (apart from civil partners wishing to dissolve their marriage who cannot cite adultery due to the legal definition of adultery). This means that at present the only means to an immediate divorce is to cite examples of one party’s unreasonable behaviour or allege adultery. Those couples wanting  a “no fault” divorce currently have to wait until they have been separated for 2 years – and this relies on both parties agreeing to that.

So what does this mean for those couples that want to get divorced as quickly as possible? Unfortunately, it can turn into a blame game with divorce petitions usually citing 3 to 4 examples of a partner’s unreasonable behaviour. While there may be some who would revel in the opportunity to tell their exes exactly why we want rid of them, the reality is that the current procedure which relies on one person’s fault can turn a relatively amicable relationship breakdown into something much nastier.

Today’s lobby of Parliament shows just how much widespread support has been growing for “no fault” divorce legislation to be passed, allowing couples to divorce immediately after their marriage has broken down without having to allege adultery or unreasonable behaviour in order to avoid having to wait for 2 years of separation.  Any changes to the law would result in amendments being made to the Matrimonial Causes Act 1973 and the Civil Partnership Act 2004. This could allow couples to send a joint petition to the courts and proceed to the decree nisi stage quickly and efficiently.

Resolution chair Nigel Shepherd speaking at Resolution’s annual 2016 conference said “It’s wrong – and actually bordering on cruel – to say to couples: if you want to move on with your lives…one of you has to blame the other”. Resolution’s research has also shown that over 90% of family justice professionals agree that there needs to be a change to the law to modernise the divorce process.

It remains to be seen if and how things will change but the introduction of any significant change to the Matrimonial Causes Act is unlikely to take place for some time.

Ann Robinson, Paul Lancaster and Andrew Smith of Blacks are all members of Resolution and support constructive solutions to divorce.

Sarah Scullion

Sarah Scullion

Sarah Scullion
Family Team
0113 227 9215

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Government announces consultation on massive changes to claims system

In November 2015, George Osborne surprised many in his Budget speech by recommending an increase in the Small Claims Track (SCT) limit for personal injury claims from £1,000 to £5,000 and also stopping or reducing compensation for ‘minor’ soft-tissue injuries, which are mainly whiplash injuries arising out of Road Traffic Accidents.

Now, 12 months on, after changes in the PM and Cabinet, the Government has finally announced that it will be pressing ahead with such changes, starting a consultation period with relevant parties (insurers, legislators, specialist lawyers for both Claimants and Defendants, etc.) which will last until January 6, 2017. Thereafter, the Government has promised in the consultation paper that they “aim to implement these reforms as soon as possible”

The exact terms of the new laws are to be debated, but the proposals include measures such as reducing compensation for whiplash claims to around £400, preventing claims for whiplash injuries under 9 to 12 months or stopping such claims completely.

Insurers have been pressuring the media and Government for a number of years, alleging that the UK is the ‘whiplash capital of the world’ and tackling the SCT limit and whiplash claims could vastly reduce their outlay and they could then pass on such savings to all motorists.

However, solicitors specialising in this area have said consumers simply know their rights more readily these days, the insurers’ assertion of a ‘compensation culture’ is simply a myth, as supported by Master of the Rolls, Lord Dyson, in 2015 and that any savings made by the insurers will not be passed onto motorists, but instead will boost insurer profits.

Raising the SCT limit as above would mean that solicitors acting for Claimants with personal injury claims of a value of less than £5,000 could not recover their costs from the other side. Accordingly, lay Claimants may have to represent themselves against experienced insurance handlers or they would have to pay solicitors’ fees themselves.

Insurers have suggested that such claims are simple so Claimants could deal without legal assistance; therefore cases could be settled quicker, easier and cheaper. APIL have strongly argued against this, saying that this would lead to Claimants being under-compensated.

In recent years insurers have allowed solicitors access to a fraud database (AskCue), there has been the introduction of a Claims Portal for ‘low-value’ claims (upto £25,000), reduced recoverable costs, etc., but this time the Government is seeking to wipe out a huge swathe of personal injury claims in one go.

These changes were implemented after insurers successfully campaigned via sections of the media and lobbied the Government, proposing that they could pass on savings to every motorist to the tune of £90 per year. However, a recent report has found that despite insurers saving over £500m in whiplash claims, insurer profits remain high and no such savings have been passed on.

Parties representing both Claimant and Defendant lawyers (APIL and FOIL respectively) may agree that the Government should consider an increase in the SCT limit for personal injury cases, which has not changed since 1991, but whether it should be immediately raised to £5,000, is up for debate.

The proposal for an increase in the SCT limit was previously considered in 2013, but was not implemented after it was argued that genuine Claimants would be unable to claim because they could not afford the legal assistance required as changes would stop solicitors recovering their costs from the other side.

Recent studies by the insurance industry presented to the Government suggest that consumers could save £40-£50 per year if savings are passed on through reduced premiums. The Government suggests the insurers will save £1 billion a year and they “expect the vast majority of these savings to be passed onto consumers through reduced premiums”, but opponents argue that this will not be monitored by anyone and instead insurance premiums and profits will remain high.

This Government has already made a number of changes in other areas of the law, including increased fees for civil, divorce and employment claims, reduced Legal Aid, etc. with consumer groups arguing that the ‘man/woman on the street’ is increasingly unable to afford legal assistance, which is limiting access to justice and this latest change could be seen likewise.

It will be interesting to see how things develop in the coming months and years, how changes are perceived and then implemented and if any promised savings will be passed on.

Nathan Clay

Nathan Clay

Nathan Clay
Associate Solicitor
Personal Injury Team
0113 227 9355

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Digital Legacy Planning

Whilst we deal with our bank accounts, property etc in our wills, the repeated question is what happens to our online accounts and assets upon our death? These accounts and assets can include our Paypal accounts, online gambling accounts, Facebook posts and pictures, iTunes and Kindle books.

In the Digital Death Survey 2015, 75% of people said it was important to them to be able to view a deceased friend’s online profile on sites such as Facebook or Instagram. As our online accounts don’t automatically continue after our death, it’s important to plan and understand how our accounts can be used once we die.

Facebook can be used to notify people of your death and share your pictures and memories. Once Facebook have been notified of your death, they will block access to your account. You can nominate for your page to be memorialised in your lifetime.  This will mean that people can post messages to your account, view your pictures and a nominated person, called a Legacy Contact, will be able to access your account and send messages on your behalf.

Unfortunately, Twitter will not allow your account to be accessed by anyone upon your death, they will only allow your account to be deactivated.  Websites, such as Instagram, will allow for your account to be memorialised or deactivated upon your death.

It seems that there are various rules for all online accounts and therefore it is important to make plans and understand what happens to your online accounts during your lifetime.

Lucy Rigden

Lucy Rigden

Lucy Rigden

Private Client Team
0113 227 9263

Posted in Wills and Probate | Leave a comment

Fail to Plan, Plan to Fail – The Benefits of a Shareholders’ Agreement

Family, friends and other investors can often play a vital role in building a successful company, bringing money, experience and contacts to the table, often in exchange for shares in the company.

During the honeymoon period shareholders often forget, or do not recognise, the importance of formalising their relationship and how it is to be governed, hoping that because ‘she’s family’ or ‘he’s my best mate’ all business discussions and decisions will be amicable, no one ever wants to ‘rock the boat’. However, this often leads to shareholders failing to plan for certain situations that may, and more often than not, do arise in the day-to-day running of a company.

Unfortunately, these issues can quickly get out of hand, become convoluted and costly to overcome. This is where planning ahead and putting a Shareholders’ Agreement in place can prove a masterstroke in the event that ‘things go wrong’.

What is a Shareholders’ Agreement?

A Shareholders’ Agreement is a contractual agreement entered into between all or some of the shareholders of a company. It supplements the company’s Articles of Association, regulating the relationship between the shareholders, setting out principles for the management of the company, the transfer of ownership of the shares, and providing protection for the company and the shareholders which may not otherwise provided for in the company’s Articles of Association.

How can a Shareholders’ Agreement help me?    

A Shareholders’ Agreement can provide for many eventualities and effectively clarifies the rights and obligations of each shareholder in various circumstances, together with detailing any procedures to be followed.  Most importantly Shareholders’ Agreements can save time and expense for the company and the shareholders going forward by pre-empting disagreements between the shareholders and setting out appropriate ways for any disputes to be addressed.

Shareholders’ Agreements often deal with the following matters:

  • Confidentiality – is the agreement to remain confidential between the shareholders? And/or does the company have confidential information to protect?
  • Deadlock – what happens if the company’s business is potentially hindered because shareholders cannot reach agreement on an important decision i.e. there is a 50/50 split in voting?
  • Disputes – how should a dispute between the shareholders be dealt with?
  • Dividend Policies – how and when will interim and/or final dividends be declared?
  • Majority Shareholder Protection – can controlling shareholders “drag along” minority shareholders to effect a sale of the company?
  • Minority Shareholder Protection – can minority shareholders “tag along” on a sale by controlling shareholders?
  • Management of the company – what powers do shareholders have to appoint/remove directors? And/or should certain decisions usually within the power of the board of directors be reserved for shareholder approval?
  • Transfer of Shares – what happens if a shareholder wants to sell up and exit the company?
  • Valuation of Shares – how will shares in the company be valued?

    Alex Hall

    Alex Hall

Alex Hall
Corporate & Commercial Team
0113 227 9239

Posted in Company & Commercial Law | Leave a comment

Uber loses landmark Employment Tribunal case on worker status

The London Employment Tribunal recently decided that drivers working for the taxi hailing app Uber fell fully within the definition of a ‘worker’ for purposes of the Employment Rights Act 1996.  They dismissed as ‘faintly ridiculous’ Uber’s assertion that the drivers were self-employed contractors.

UK employment law provides for different levels of protection, depending on whether an individual is classed as an employee, a worker, or self-employed.  The Uber drivers did not attempt to claim that they were employees, only that they should be classed as workers because they were providing services to Uber for a reward.  The consequence of being classed as a worker rather than self-employed means that Uber drivers will be entitled to certain rights such as the national minimum/living wage, paid holidays, rest breaks and a maximum 48 hours working week.

Uber argued that it was merely a technology company and not a transport business, and that rather than contracting with the drivers, the contractual relationship was actually between the passenger and the driver. Uber claimed it was merely a platform to connect customers with self-employed drivers who were operating their own businesses. The Employment Tribunal rejected this argument completely and, in coming to this decision, looked at the following factors:

  • Uber interviews and recruits the drivers;
  • Uber requires the drivers to accept trips;
  • Uber controls key passenger information and does not share this with the driver;
  • Uber sets the fare and the driver can only decrease it: the driver is not free to increase it;
  • Uber sets the default route to be taken, from which the drivers depart at their own risk; and
  • Uber imposes conditions on drivers regarding the type of vehicle that they can use, controls the performance of drivers, and subjects them to disciplinary sanctions.

The Tribunal felt that these factors indicated that Uber had a level of control over its drivers that was consistent with being a worker.  In other words, the Uber drivers personally undertook to do or perform work for Uber.  The drivers were not acting completely independently or autonomously – as a genuinely self-employed contractor would – nor was Uber their client.

The Employment Tribunal did however concede that Uber could have devised an alternative business model in which the drivers could be considered as being genuinely self-employed, and so would not attract the rights associated with being a worker.

Interestingly, the Employment Tribunal also found that a driver is ‘working’ when he has switched on the App, is in the territory in which he is licensed to use the App, and is ready and willing to accept trips. Uber’s argument that drivers are only working when they are driving passengers was rejected.  The Tribunal found that it is an essential part of Uber’s business that there is always a pool of drivers ready to be called upon when demand for driving services arises, so that being available is an essential part of the service rendered by the driver.

This decision will have implications for calculating whether Uber drivers’ earnings satisfy the requirements of the national minimum wage.  At present, drivers receive fares from customers but no remuneration for time spent ‘waiting’. The outcome of this case may not only affect its business model, but could also change the relationship between many firms and their self-employed workers.  The decision means that Uber now faces having to fund costly benefits for its drivers such as holiday pay, sick pay and pension contributions. This could result in Uber increasing the percentage of each fare that it keeps as commission or increasing prices for customers.

There are approximately 40,000 Uber drivers in the UK. However, it must be borne in mind that the decision of this Employment Tribunal decision only applies to the two Uber drivers who brought the case.  The Employment Tribunal decision is not a universal ruling that all Uber drivers in the UK (or indeed individuals working in the wider ‘gig economy’) are workers.  The existence of worker status will depend on the specific circumstances of each driver.

This judgment serves as a reminder that an individual’s employment status depends on the practical reality of what they do.  Just because an individual is labelled as ‘self-employed’, does not mean that they are.  Wrongly classifying an individual as self-employed when they are a worker or employee could lead not only to Employment Tribunal claims but also potential liability for tax and national insurance, with added interest and penalties.  There may also be consequences with the Pensions Regulator as Uber may now be required to enrol all drivers into a pension scheme.

Uber is one of the most well-known companies operating in the ‘gig economy’, in which individuals are paid for separate pieces of work instead of working for one employer.  The consequences of this ruling will be felt far more widely throughout the ‘gig economy’.  The sector’s advocates say it provides convenience for users and flexibility for workers.  However, its detractors argue that the model erodes workers’ rights. The decision therefore does not just affect Uber, but may also affect other business models such as Hermes, Deliveroo and Amazon Prime.

But watch this space. Probably due to the huge financial consequences of this ruling, Uber says it will appeal. This means that the decision reached by the London Employment Tribunal will not cemented into UK law until the outcome of any appeal – which, in all probability could take years to be heard.

Paul Kelly

Paul Kelly

Paul Kelly
Employment Team
0113 227 9249

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Are You Still Bound?

If A enters into a contract on behalf of A and B but A does not have B’s authority, is the contract still valid?  This was the question which the Court of Appeal had to consider in the recent case of Marlbray Limited v Laditi and another.

Mr and Mrs Laditi attended a sales fair at which Mr Laditi entered into a contract to purchase a room in an “aparthotel” (a type of hotel providing self-catering apartments as well as ordinary hotel facilities).  The contract named Mr Laditi and his wife as joint purchasers although only he had signed the contract.  Mr Laditi paid a reservation deposit and later he paid a 25% deposit; however, he and his wife were subsequently unable to obtain a mortgage and therefore could not proceed with the purchase.  The developer, Marlbray, terminated the contract for breach and kept the deposit.

Mr and Mrs Laditi took the developer to court and tried to recover the deposit on the basis that because Mr Laditi had lacked authority to sign on behalf of his wife there was no binding contract.  The Judge found in favour of the Laditis.  He held that the contract was not valid and enforceable because Mrs Laditi had not signed it or authorised her husband to sign it on her behalf and had not subsequently ratified it.  The developer appealed.

The Court of Appeal reversed the decision and unanimously found for the developer.   It said that a valid and binding contract had come into being as between Mr Laditi and the developer but not as between Mrs Laditi and the developer because of the absence of any authority for Mr Laditi to contract on her behalf.

Key to this finding was the fact that the contract which Mr Laditi had signed had expressly provided that: “When two or more persons constitute the Purchaser all obligations contained in this Agreement on the part of the Purchaser shall be joint and several obligations on the part of such persons”.  Accordingly, the Court saw no reason why the obligations of Mr Laditi should not be contractually binding even if his wife was not bound.  Mr Laditi was therefore required to purchase the property notwithstanding the fact that no contract had come into existence between the developer and Mrs Laditi.

This case serves as a useful reminder that when signing a contract on behalf of another, it is important to have written authority to do so in order to ensure that the contract is binding on them as well.  It also highlights another fundamental concept of contract law: if a contract imposes joint and several liabilities on the parties to it then one contracted party can be held to perform the whole of the contract even if the other does not.

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Luke Patel

Luke Patel
Commercial Dispute Resolution Team
0113 227 9316

Posted in Commercial Dispute Resolution | Leave a comment