Clarion Solicitors LLP Blog

Springing to the Aid of Employers

Thu, 12 Nov 2009 13:28:19 GMT

A recent case involving a firm of solicitors has highlighted the need to review and, where appropriate, take action to enforce the terms of individual contracts of employment to protect the employer's core business.

In Dass Solicitors -v- William Southcott, Mr Southcott who was a solicitor employed by Dass sought to leave his employment without giving Dass any or the requisite 3 months notice which was provided for in his employment contract. In addition, during the period in which he was employed by Dass and in breach of his implied duties of good faith towards his employer, Mr Southcott had sought to persuade Dass' clients to transfer their instructions away from Dass and to him at his new firm.

Dass sought and obtained an injunction against Mr Southcott on the "springboard" principle. Springboard relief is most commonly seen in circumstances where employees misuse confidential information and the court's prevent that individual from then using such information for a period in order to ensure that that the employee does not obtain an unfair start over his former employer. In this case, by reason of his breaches of contract, the Court restrained Mr Southcott from acting for and soliciting Dass' clients until the expiry of the injunction. Mr Southcott was not prevented from acting for or soliciting clients after this time because, unusually for a professional services firm, his contract did not contain any restrictive covenants to otherwise restrict his activities.

Comment

At a time where many businesses have been obliged to make staff redundancies this case provides a welcome reminder that all employee departures (forced or otherwise) need to be properly managed and subsequently monitored to ensure that the employer's core business is not threatened or damaged in any way by the departing employee. This is particularly so where the employee is in possession of the employer's confidential information. This case further demonstrates the Court's willingness to provide "springboard relief" to employers to restrict employees who have breached their employment contracts and/or their ongoing duties to their previous employer from taking and gaining an unfair advantage and occasioning future or further serious economic losses to their former employers.

If you wish to discuss any of the issues in this article please contact Stephen Inglis on 0113 336 3315 or at s.inglis@clarionsolicitors.com or Richard Port on 0113 222 3202 or at r.port@clarionsolicitors.com

Don't get in a Fix

Tue, 10 Nov 2009 14:09:21 GMT

Over the last year or so as the economy has taken a dive, the number of disputes involving dilapidations has soared. With many tenants reviewing costs and operations as the recession continues to bite, the number of premises being closed has, of course, increased, bringing up the thorny and potentially costly issue of the condition of the premises and whether dilapidations are due.

It is first important to understand what is meant by the term. ‘Dilapidations' are breaches of repairing obligations, usually by the tenant, under a commercial lease. The relevant lease clauses usually include repair, decoration, alterations (including reinstatement) and yield up. These clauses will vary from lease to lease and set the bench mark by which the tenant is expected to maintain and repair the premises.

Although usually an issue at term end, they can also be relevant during the term in relation to break clauses, statutory lease renewal, requests to sublet/assign and where a landlord is concerned that disrepair is prejudicing the value of its reversionary interest.

In some cases, tenants are simply extending their lease in order to delay the issue of dilapidations until the economy improves. They may use the opportunity to re-negotiate for better terms and, as the landlord has the benefit of keeping the tenant for longer, the deal is mutually advantageous.

Surveyors play an important role in the dilapidations process and should be involved at an early stage. They can prepare Schedules of Dilapidations, deal with negotiations and frequently act as expert witnesses and independent adjudicators.

A landlord can only claim for disrepair (items which fall below the requisite standard of repair). The wording of the repairing covenants is highly relevant, but cannot be read in isolation. The case of Proudfoot v Hart brings in to play the importance of age, character and location. Whilst each case must be judged on its own merits, the following principle will often apply:

a) Good repair does not require perfect repair , the standard will vary from building to building and location to location

b) The tenant is not expected to reverse the natural ageing process

c) The tenant may not have to return the premises in exactly the same condition as it was in at the beginning

Leases will sometimes incorporate a Schedule of Condition in order to limit the tenant's repair responsibilities, particularly where the property is dilapidated at the outset. However, this may offer little protection where items are likely to require renewal during the term.

Under common law the normal measure of damages is the cost of repair, however Section 18(1) of the Landlord and Tenant Act 1927 limits damages to the reduction in value of the landlord's reversionary interest, which could be a much smaller sum.

The two major risks in any dispute are cost and uncertainty. In the current climate, it is more important than ever to manage these risks effectively. Dilapidations litigation can be notoriously expensive. However, if parties involve their professional advisers and take an early ‘reality check', they can usually reach a sensible resolution early in the dispute.

It is essential to follow the Pre- Action Protocol: it exists to help parties reach agreement without having to resort to court proceedings and there are costs sanctions if you ignore it. A key theme is ADR which offers a relatively quick and inexpensive way of resolving disputes including mediation and both non-binding and binding forms of expert determination by an independent surveyor with expertise in dilapidations. While dilapidations litigation can be expensive, few cases reach trial as there are a number of strategies available to avoid this.

With those green shoots still hard to spot, it is likely that dilapidations will continue to be an issue next year. As tenants are facing increased financial pressure and properties become harder to let in the current market, both parties are likely to adopt a more entrenched position than in more buoyant times. Be aware that disrepair in a lease can result in significant liabilities. It is essential to be pro-active, seek professional advice early and ensure you have an informed understanding about the extent of disrepair and the potential sums involved. You also need to adopt a clear strategy. Once you understand the extent of liability, decide what level of risk is involved and dedicate appropriate resources towards addressing that risk including mitigating liabilities, positioning yourself to negotiate the best deal and if necessary by using ADR.

This blog also appears as an article in the November issue of Leeds & Yorshire Lawyer and was co-written with building surveyor Brian Larter of Watts International Property and Construction Consultants.

More flexible Maternity and Paternity Leave: Another Administrative Burden for Business?

Tue, 10 Nov 2009 11:32:08 GMT

The government has announced a consultation on the proposed introduction of a more flexible system of maternity and paternity leave. The new regime, if approved by parliament, would apply to parents of children due on or after 3 April 2011 and would, in effect, allow fathers to take advantage of maternity leave not used by mothers significantly increasing their potential eligibility to both paternity leave and pay.

The Current Situation

Currently mothers are entitled to 52 weeks maternity leave of which 39 weeks are paid if they fulfil the relevant requirements. In contrast, if fathers meet the eligibility requirements, they are only entitled to 2 weeks paid paternity leave which can only be taken in either a single block of one week or two weeks.

The New Regime

Under the new scheme families would have much more flexibility in how they choose to implement their maternity and/or paternity leave. Families could choose to transfer up to 6 months of the mother's maternity leave to the father. The transfer is only possible if the mother has returned to work and only during the second 6 months of the of the child's life. This additional leave, once introduced, would be known as Additional Paternity Leave.

As a consequence of fathers potentially being able to utilise the last 6 months of a mother's maternity leave, they may be able to claim up to 3 months of the mother's remaining and untaken Statutory Maternity Pay as Statutory Paternity Pay. The proposals suggest that this would be paid at the same rate as Statutory Maternity Pay which currently stands at £123.06 per week. This would increase a father's paternity leave from 2 weeks to a potential 6 months, three months of which would be paid. Once affective this new legislation therefore significantly increases a father's right to paternity leave.

The new regime would require parents to provide details of their eligibility for leave and pay to their employers and in effect "self certify" their entitlement. However, as a safe guard both employers and HMRC would be able to carry out further checks on the eligibility of parents if they felt it necessary.

Reaction from Business

Business Minister Pat McFadden suggests that the number of businesses affected is expected to be small. It is estimated that the proposals could affect as little as 0.7 per cent of small businesses. It is the government's aim to work with business to ensure that the introduction of the proposed changes is completed in such a way as to minimise the burdens placed on business. It is hoped that this support will ensure that business will not suffer from the more uncertain leave entitlements.

Small business leaders have expressed concern about the new regime. There concerns do not relate to the additional paternity leave or pay but rather that business will be further burdened by administration. It is argued that in a time of economic hardship businesses should not have to suffer additional administrative burdens which consume precious resources. David Frost, director-general of the British Chambers of Commerce has stated that the British Chambers of Commerce believes the "focus in these very difficult times should be on business getting out of this very deep recession and this will be an administrative nightmare for employers".

Conclusion

The government's proposed new regime would provide much greater flexibility to families and reflect the modern family much more accurately. This increased flexibility will however, come at a cost to business, especially small business. In particular, when considered in combination with other recent legislative developments such as the exclusion of tips and gratuities from the calculation of the national minimum wage, the early increase of the maximum ‘week's pay' and the news that Gordon Brown has expressed support for increased flexibility in parental leave which is likely to cause still further administration for business. At a time when many small businesses are feeling the effects of the harsher economic environment, the cost of positive legal development for families may simply prove too much.

Companies Act 2006 — Final Implementation

Thu, 01 Oct 2009 16:11:05 GMT

Since the Companies Act 2006 (the "2006 Act") received royal ascent on 8 November 2006 its provisions have been introduced gradually and the final provisions came into force on 1 October 2009. This means that at long last the 2006 Act is in full force and effect (subject to certain transitional arrangements).

Memorandum of Association

A company incorporated after 1 October 2009 will no longer need to have a memorandum setting out the objects of that company. For any companies incorporated after 1 October 2009, the memorandum will contain a limited amount of information, stating that the subscribers want to form a company, providing the company name and setting out the initial share capital. For instance, the memorandum will provide a snapshot of the company. For existing companies, the information currently contained in its memorandum will be deemed to form part of its articles under section 28 of the 2006 Act and any existing objects will continue to apply.

Companies incorporated prior to 1 October 2009 can often have restrictive objects within their memorandum and, if such companies want to take advantage of the new more relaxed rules, they will need to pass a shareholder resolution to amend or remove those objects pursuant to the 2006 Act.

Any of the relevant information included within a company's memorandum, for instance the location of its registered office, a statement of its limited liability, the share capital and any confirmation that it is a public company, will be deemed to be incorporated into the articles.

Authorised Share Capital

From 1 October 2009, a company will no longer need to have a maximum authorised share capital.

Companies incorporated before 1 October 2009 will, however, continue to be subject to any authorised maximum capital as stated in its memorandum or as increased pursuant to any shareholder' resolutions. As directors need authority under section 551 to issue shares beyond a stated maximum, that provision of the memorandum (or articles) may quickly become irrelevant and it is advisable for companies to consider removing such provisions by ordinary resolution.

If a company does take advantage of the new provisions on authorised share capital it will need to notify Companies House of any changes by way of a new statement of capital.

Issue of Shares

The sometimes time consuming provisions in relation to the issue of shares will no longer apply from 1 October 2009. If a private company has one class of shares the directors will no longer need authority from the shareholders to allot new shares, as was the case under the Companies Act 1985 (the "1985 Act").

If a company has more than one class of shares, the directors will still need authorisation to issue those shares either in its articles of association or by a shareholder ordinary resolution.

For companies incorporated before 1 October 2009, this provision of the 2006 Act will not apply unless the shareholders have passed a resolution giving the directors powers to issue shares.

Alteration of Share Capital

Under the 1985 Act a company's power to sub-divide or consolidate its shares must have been authorised in its articles. Under the 2006 Act the position is reversed so that the company will have this power unless it is prohibited or restricted from doing so by its articles. Accordingly, an existing company whose articles do not restrict sub-division or consolidation of shares will need to amend its articles if it wants such restrictions to continue to apply.

Redemption and Purchase of Own Shares

The 2006 Act now permits companies to issue redeemable shares without a specific authority under its articles, as was the case under the 1985 Act.

A company whose articles do not contain an authority to issue redeemable shares will need to modify its articles if it wishes to continue to restrict or prohibit the issue of redeemable shares.

With respect to a purchase of own shares under the 1985 Act, a company needed to have a specific authority within its articles if it wanted the ability to do this. The 2006 Act has reversed this so that a company will automatically be permitted to purchase its own shares without the need for such an authority to be inserted in its articles. As with the issue of redeemable shares if a new company or existing company wants to continue to restrict or prohibit the purchase of its owns shares it will need to modify its articles accordingly.

Whether or not the articles authorise a power to purchase own shares this power cannot be exercised without the approval of the purchase contract by a relevant shareholder resolution.

Company Names

The 2006 Act provides that a company can insert provisions into its articles allowing it to change its name without the need to obtain shareholder approval. The provisions of the 1985 Act will still apply and the 2006 Act simply gives extra rights to the directors of a company to deal with name changes.

Including a change of name procedure in the articles will not exclude the right of the shareholders to change the name by resolution. The new provisions will make name changes quicker and easier thus removing the sometimes time consuming procedure.

Directors' and Company Secretaries' Addresses

Directors are still required to provide companies with a residential address. However, the 2006 Act provides that these addresses will no longer appear on the public registry of the company, for instance, Companies House and will only be kept in a protected register. Directors will be required to make an address public but this can simply be a service address which in most cases will be the company's registered office.

Company secretaries (if a company continues to have a company secretary) still need to provide their companies with a service address but this information does not need to be provided to Companies House.

Model Articles

Table A of the 1985 Act has now been replaced with a new set of Model Articles, which the government has introduced in an effort to simplify company constitutions. However, as was the case with Table A, the Model Articles are basic, may not reflect the precise requirements of the company and do not include many provisions that a company may want to include in its articles, for instance, provisions for the compulsory transfer of shares.

As the 2006 Act is now fully in force this would be a good time for companies to review their constitutional documentation and consider what provisions of the 2006 Act they may wish to take advantage of. If you require further information on anything within this article or anything else arising from the 2006 Act, do not hesitate to contact a member of the corporate team.

If you would like to recap on some of the implementations that have taken place prior to 1 October 2009, please click on the links below.

How to hang on to wealth in recessionary times

Tue, 22 Sep 2009 10:23:47 GMT

Your Wealth - how to hang on to it in recessionary times

When money becomes tight, for whatever the reason, it is important to preserve the income and savings that you do have. A reduction in income can occur for a number of reasons:

- job insecurity or redundancy
- the rising cost of living
- trade or income from your business reducing
- income from investments reducing
- taxes and other government charges rising

How can you protect your existing income and savings? There are still things that you can do to ensure your money and property is safeguarded for you and your family. Set out below are some tips:

•1. Lifetime taxation

It seems sensible to ensure that you are paying the correct amount of tax and are not overpaying in any area. Points to consider are:

- review your tax code;

- look carefully at tax position if you are considering disposing of any assets, for example, you could plan to dispose of a second property or even sell part of your garden for development but before doing so you should take advice to make sure you do not pay too much Capital Gains Tax;
- take advice from your Accountant or a specialist lawyer about payments into your pension - the rules are changing and you need to act;
- consider salary sacrifice to get the most out of your pension payments;
- move as many of your assets as you can into a tax free environment by taking up your ISA allowance each year;
- if circumstances allow, make gifts to utilise the £3,000 a year allowance for gifts free from inheritance tax on death;
- consider making gifts out of income which are free from inheritance tax on death, as long as accurate records are kept;
- consider contributing to the pensions of children and grandchildren to assist them should similar economic circumstances arise in their future.

•2. Your family

Lifetime gifts

You may wish to pass assets on to your family during your lifetime. In some circumstances, this is good tax planning and can reduce the Inheritance Tax liability the deaths of you and your spouse. But you may have concerns about making an absolute gift such as

- the money may be used for a purpose other than for which the gift is made
- the money may be used as part of a divorce or matrimonial settlement of the recipient
- the assets may be lost if the recipient gets into financial troubles.

It is imperative to consider these matters before making gifts to family members as once assets are given away you will not have any control over what happens to them and cannot get them back. It is possible to protect assets that you wish to transfer for the benefit of other members of the family by utilising a trust. By transferring assets into a trust, you and the other Trustee(s) that you appoint retain control of the assets but the value of the assets will fall out of your estate 7 years from making the gift, provided you do not retain any benefit. Depending on the amount of assets transferred into a trust it may raise a charge to Inheritance Tax during your lifetime but the rate payable is half that payable on your estate after your death and if you take specialist legal advice can often be avoided altogether.

Pre-nuptial and co-habitation agreements

Again, for parents who wish to make gifts to children or grandchildren who are married, are in registered civil partnerships or who cohabit, another safety mechanism to consider before making a gift is to request your child or grandchild put in place a pre-nuptial or co-habitation agreement. With a large percentage of marriages and civil partnerships ending in divorce or separation, you may have valid concerns your gift could form part of a financial settlement if your child's relationship ends.

Pre-nuptial agreements are becoming increasingly common and can be a useful tool for setting out the wealth of each party on entering a marriage or civil partnership and can clarify that your gift is to your child only. The existence of the pre-nuptial is one of the decisive factors to be taken into account by the courts when determining a financial settlement .

Similarly, co-habitation agreements are extremely useful for setting out the financial position of each party before they begin to co-habit and can address such issues as the amount of money that each party puts into the purchase of a property and whether any subsequent contributions to renovations or mortgage payments are intended to increase a person's share of the house or not.

When any gift is made to an adult child for the purchase of a jointly owned property, the question of how the property should be owned and who put in what proportion of the deposit and purchase monies must be addressed at the outset. If you do not take advice and a property is purchased as joint tenants by default, the equity in that property will always be split 50/50 between the joint owners unless there are exceptional circumstances. Not an ideal situation if you have provided funds for your child to contribute more than 50% of the purchase price.

•3. Retirement

Planning is the key. Whether you are disposing of your business, an interest in your business or retiring from employment, you can make a significant difference to the taxation of your assets by getting advice on the timing of the disposal and the way in which your assets are structured before and after such a disposal. When to start drawing from your pension pot needs careful consideration.

If you own a business or a share in a business, your executors can claim up to 100% relief from Inheritance Tax in the event of your death but you must check that your business qualifies for Business Property Relief. A small change in the structure of the business could make the difference. After carefully setting up a business, it is easy to overlook putting in place the correct documentation to ensure that your business will survive in the event of your death or incapacity. You should take specialist legal advice to ensure that your estate benefits from the value you have built up in that business.

There are similar provisions for agricultural property. However, due to the complex nature of the farming and estate industry, this relief needs careful consideration to ensure it applies. Once again it is 100% and therefore very valuable. A few small changes in the organisation of the business can make the difference of paying tax at 40% of the value or none.

•4. Key documents

Getting the basics in place is a worthwhile investment at anytime but particularly in the current economic climate. As a minimum we recommend that you put in place:

- Wills incorporating current Inheritance Tax minimising provisions;
- Lasting Powers of Attorney, for property and affairs and also for health and welfare in case you lose mental capacity in the future;
- Trusts to receive any payments due on your death, such as lump sums from pensions, life insurance and death in service. Such trusts will ensure that payment is received as quickly and easily as possible and can reduce unnecessary Inheritance Tax on your death;
- Agreement with business partners or shareholders on what happens on your death or incapacity together with insurance to fund the transfer of business and a trust to protect those funds from tax.

Maintenance: deserved or degrading?

Mon, 21 Sep 2009 16:03:18 GMT

In a series of law lectures last week, Baroness Deech, a family law expert and Chairwoman of the Bar Standards Board, declared that the current mechanism for deciding how assets and income are divided on divorce is inadequate.

Baroness Deech claims that the current legislation is unfair to men and degrades women by undermining their claims to equal pay and treatment. She has called for reform to the process, proposing that a wife should have no claim to her husband's assets in a marriage lasting less than three years. If longer, any claims should be limited to those assets acquired during the parties' relationship. It is also proposed that maintenance should only be paid to a wife where she is unable to work or has young children.

There have been a number of recent high profile cases involving generous payouts to the wife which may demonstrate why Baroness Deech advocates such an approach. In the case of Charman, the Husband lost his appeal and had to pay his former wife £48million after 27 years of marriage. The sum was notable in this case as it went beyond the wife's reasonable requirements. In the case of Miller, the wife received £5million after a childless marriage lasting only three years.

So is it time the law was reformed? It has been a while - maintenance law has not been overhauled since 1857. Society has moved on and nearly half the workforce is now female. In Baroness Deech's opinion, it would be inappropriate to ‘...cry for equal pay and expect to be a kept woman'.

It is clear a balance needs to be struck. The reality is that, in most divorce cases, there is insufficient income or capital to go around. The decision as to what constitutes an appropriate division is dominated in these circumstances by need.

In cases where there is a surplus of assets, it has long been recognised that the homemaker's contribution equals that of the breadwinner. The sacrifice made by the wife in such circumstances enables the husband to maximise his earnings. Why then, should the wife not be entitled to share the fruits of their labour? Baroness Deech says that women have a choice to work and child care does not take up the majority of a long marriage. But what happens when the parties mutually decide that it should? Is it still unreasonable in these circumstances for the wife to expect to be maintained?

This is where the Court's discretion is vital and why any proposed reform which looks to categorise marriage, as Baroness Deech proposes, cannot succeed. When adjudicating upon a financial claim, the Court must have regard to all the circumstances of the case in accordance with the section 25 criteria. The current proposals have the potential to limit what the Court can take into account. This could produce an unfair outcome.

The current system is not perfect and divorcing couples still face a great deal of uncertainty when the Court is asked to resolve a financial dispute. The need for reform still exists but the categorisation of marriage will, in my view, serve only to add to, not resolve, the difficulties faced by the Courts in this area.

Keep it in the Family

Fri, 18 Sep 2009 10:13:56 GMT

The recent case of Karen Radmacher has been widely reported as the closest case yet to confirm the position of the Court to take full account of a pre nuptial agreement entered into by spouses prior to their marriage.

The case involved considerable family wealth on both sides, a fact that was known by each of them prior to their getting married. Indeed, one of two main factors that Mrs Radmacher made clear to court as being her reasons for wanting a pre nuptial agreement is that her father had insisted that their family wealth be protected and that he would disinherit her if she got married without an agreement in place. The other reason was that she wanted to be sure that Mr Granatino was marrying her for love, rather than her money.

I set out below the more specific factors of the case and comment but it is clear that for a family who wish to retain their wealth and protect their family position against any potential claim on the breakdown of a child's marriage, that a pre nuptial contract is a sensible, cost effective and legally relevant step to be taken. The Court has made clear that provided the agreement is well drafted and not manifestly unfair on one of the parties, that it will be taken into account and the decisions of the adults involved ought to be respected and upheld.

There were factors in the case that do not appear in every case that we see, particularly the international element. Mrs Radmacher is German, her husband, Mr Granatino is French. They were married in London in November 1998, having entered into a pre nuptial agreement in August 1998.

The agreement was drawn up which prevented either party from having any interest in any property brought to the marriage by the other; that any resources accrued by each party would remain theirs; neither would claim against the other on any future divorce or if the other died.

The Judges of the Court of Appeal who ultimately made the decision in the case made the following comments:

- that it was increasingly unrealistic for the court not to recognise the rights of adults to enter into agreements governing their future financial relationship in an age when marriage is not generally regarded as a sacrament and divorce is a statistical commonplace.

- That due respect for adult autonomy suggests that subject to proper safeguards, a carefully fashioned contract should be available as an alternative to the stress, anxieties and expense of the submission to the width of judicial discretion"

- Any agreement would be subject to a review in the event it was manifestly unfair

- Judges should give "due weight" as part of the discretionary exercise to agreements freely entered into.

- Whilst "public interest in a fair and just exercise of the courts' discretion" remained, there was "fairness and justice too in a proper appreciation of party autonomy"

Mr Granatino failed in his arguments that the agreement was unfair and it was held that, basically, he knew what he was getting into:

- he had been involved in the professional world at the time he entered the agreement
- he had had the opportunity to take independent legal advice and had chosen not to
- he had known Mrs Radmacher's family were significantly wealthy
- he had not intiated any negotiations when the agreement was being drafted.

Therefore, for a family who wishes to make their own decisions regarding their future financial arrangements with their offspring, a pre nuptial agreement is increasingly worth the paper it is written on, and significantly more.

Gone seem to be the arguments that a party did not have independent legal advice provided they had chance to do so but did not take it. Similarly, if the parties were aware of the extent of each others' wealth, the argument that they did not have financial disclosure may also be weak. If a party is or should be aware of the impact of the agreement and its effects, an argument of ignorance may fall on deaf ears.

The Court will look at the circumstances of each case and will treat adults as such, giving decisions made freely entered into by them due respect and weight, when considering the overriding aim of achieving fairness of outcome.

Mr Granatino is considering a further appeal to the House of Lords and therefore there may be even further clarification by which we as lawyers advising families of wealth can be guided.

If you require any advice at all about preserving your family wealth in advance of a marriage or remarriage or civil partnership please do contact Rachel Spencer Robb, Associate Solicitor in our Family Team.

Constructive Dismissal: Notice Pay

Thu, 17 Sep 2009 09:49:36 GMT

In the recent case of Stuart Peters Limited v Bell [2009], the Court of Appeal has held that, when calculating the amount of the compensatory award due to a constructively dismissed employee, tribunals must offset earnings from alternative employment during the notice period. In making its decision, the Court of Appeal has refused to extend the established principal developed in Norton Tool v Tewson [1972].

A constructive dismissal is where an employee resigns in a situation where they are entitled to terminate their employment as a result of their employer's conduct. In order to justify resignation in this manner the employer's conduct must be a repudiatory breach or a fundamental breach of the employee's contract of employment. The employee's resignation after such a breach is considered an acceptance by the employee of the employer's breach of contract.

The History

According to the principle established in Norton Tool it is good industrial practice for an employer who has unfairly dismissed an employee without notice, to compensate them fully in respect of their notice period without making any reduction for alternative earnings (the "Norton Tool Principle"). The Court of Appeal's recent decision means that the Norton Tool Principle only applies to actual, and not to constructive, dismissals.

The Norton Tool Principle is a very specific exception to the general rule established by the House of Lords in the case of Dunnachie v Kingston upon Hull City Council [2004]; that a dismissed employee can only recover the actual loss which they have suffered as a result of a dismissal at Employment Tribunal.

In Langley and Carter v Burlo [2007] the Court of Appeal approved the Norton Tool Principle, but held that it could not be extended to create a wider principle, and that it was appropriate to take into account other aspects of good employment practice when assessing the amount of compensation awarded.

The facts of Bell

In Bell Ms Bell was unfairly constructively dismissed by her employer, Stuart Peters Limited, without being paid her six months' contractual notice pay. Following the decision made in Langley and Carter v Burlo, the Employment Tribunal awarded Ms Bell her full six months notice pay without making any deductions for earnings which she had received during her notice period.

Stuart Peters Limited appealed the decision arguing that the Norton Tool Principle only applied to dismissals by the employer and not constructive dismissals. The Employment Appeal Tribunal agreed with the Employment Tribunal's initial decision. Stuart Peters Limited appealed the decision to the Court of Appeal.

The Court of Appeal agreed with Stuart Peters Limited. It explained that in practice, employer's treated the two forms of dismissal quite differently. Although in cases where an employer had dismissed an employee without notice, it was good industrial practice not to deduct monies from the compensation payment to reflect monies earned by the employee during the notice period, this was not the case in constructive dismissal cases. In constructive dismissal cases there was often a dispute about whether the employer's breach of contract was serious enough to entitle the employee to resign claiming that their employment contract had been terminated. The Court of Appeal therefore did not extend the Norton Tool Principle to cover cases of constructive dismissal.

The Effect

The Court of Appeal's decision must come as a relief to employers in the current more pressurised economic climate. The decision means that employees who choose to treat their contracts of employment as having been terminated through the actions of their employer will not benefit in the same way as their counterparts who have actually been dismissed by their employer. Any notice pay which constructively dismissed employees receive will be reduced by the amounts they earn through alternative employment during their notice period. They will not therefore be able to double up in the same way as their actually dismissed colleagues during this period.

Clarion Family Solicitor Featured in Independent on Sunday

Wed, 02 Sep 2009 13:48:53 GMT

I was asked to make a comment to the Independent on Sunday in relation to the fact that increasing numbers of people are seeking to resolve matrimonial issues themselves. I attach below the link to the Independent on Sunday in which I was quoted in their article "Take the DIY approach to the end of the affair"

http://www.independent.co.uk/money/spend-save/take-the-diy-approach-to-the-end-of-the-affair-1779148.html

A full copy of my comment is set out below

In these times we are often faced with clients who wish to deal with their own divorce. This is largely to save fees but also in order to keep solicitors out of the picture as it is perceived that to involve a lawyer in a divorce is a sure fire way to ratchet up the pressure, the time it takes to get resolved, and therefore to increase the costs.

Where a couple have a good level of communication and there are no complex assets to resolve, a DIY divorce can indeed be beneficial. It only works however, where both parties are fully aware of their respective financial positions and there is a considerable measure of trust between the two. This is essential if the divorce be finalised but also the related discussions concerning the division of money can take place on a level playing field.

The divorce process itself is largely administrative and, if there is no objection to the divorce in principal, the necessary documents can be drawn up and the process undertaken with the assistance of the court staff who are usually fairly helpful. If however, there is an argument as to who should start the proceedings, the fact of divorce which is to be alleged, or who is to pay the costs of the proceedings, legal advice ought to be sought from a specialist solicitor.

The area of division of matrimonial assets is increasing complex and in the main, solicitors who offer this advice specialise in this area alone. It is vital to at least take some legal advice to explore what options are available to divorcing couples in particular where there are financial assets or indeed significant debts to resolve. There is a many a client who is unaware that there are alternatives to resolving matters in the "traditional" way and that these can be an extremely cost effect way of dealing with your divorce without going anywhere near a courtroom, collaborative law and mediation to name a couple. [more information can be provided about this is necessary].

There are circumstances where failing to seek legal advice can be downright dangerous, particularly where one party is concerned that their spouse is hiding or transfer money away; or where they are ignorant about their family finances; where there is a family business or the spouse has business interests. Very often, a pension is the second or even largest matrimonial asset, especially after a long marriage and this is an asset to be shared. Specialist knowledge is required to not only advise as to each spouses position regarding the pension but also in order to divide the pension assets fairly.

It is very often the case that clients can end up spending more money in having to sort out matters that have gone wrong because they did not take legal advice than they would have spent in instructing a specialist in the first place. The specialist family solicitor will present your case the most effective way, having knowledge of both the law and the practicalities and methods that can be utilised to maximum advantage whatever the nature of the case.

Rachel Spencer Robb, an Associate Solicitor of Clarion Solicitors LLP is a Resolution Accredited Specialist and a member of the SRA Family Law Panel. Contact 0113 336 3349 for more information.

Where's the money gone - retrieving assets in a divorce case

Tue, 25 Aug 2009 08:29:33 GMT

Imagine the scenario. You believe that you are happily married. Your spouse announces the marriage is over. You eventually go and see a solicitor, to try to resolve the financial matters. After weeks and weeks of requesting information from your spouse, your solicitor is finally sent some financial disclosure. You are shocked to discover that the aunt's property owned by your spouse is no longer owned; the boat has gone; the bank accounts have been cleared and there is very little left. Often, the first time we discover that assets have been disposed of is months after the disposition has happened when we get disclosure. However, all is not lost as it is possible to make an application to the Court to set aside a transaction or avoid property being disposed of, if the intention of the disposal or transaction is to defeat the other spouse's claim.

It may be, if there are enough assets, that the party can be compensated, as long as there are enough other assets to meet the claim. However, often this is not the case and there are procedures through the Family Courts to prevent such dispositions in the first place or, if the property, boat, money etc has been disposed of to set it aside and bring it back into the marital pot. The procedure is governed by Section 37 of the Matrimonial Causes Act and this sets out quite stringent criteria that must be satisfied, in order to persuade the Court that the disposal should be set aside. These criteria include:

1. The fact that there must be an application for financial relief before the Court.
2. That the party has to prove that the other party has disposed of an asset; that it was done with the intention of defeating the claim and, if it was set aside, financial relief or different financial relief be granted to the Applicant.
3. That it is a reviewable transaction namely for valuable consideration and that the third party acted in good faith.
4. The Court must be persuaded that even if the above has happened, that it should exercise its discretion and make the Order.

Many cases have gone before the Courts and quite often the third party who receives the boat, the property etc. is an innocent party. If they buy in good faith, why should they suffer?

This is a somewhat complex area of law and advice must be sought at the earliest opportunity, if you suspect that this will happen, or if it has already happened. Urgent applications can be put before the Court to freeze assets, so as to prevent properties being transferred; to prevent money being taken out from a bank account etc. However, it requires immediate action, as the longer it goes on, the harder it may be to track down the asset and recover the money.

At Clarion, we deal with many such applications and have experience in this field. I am an accredited member of Resolution, a family law association, and one of my areas of specialism is advanced financial provision. I can be contacted on 0113 336 3323 or j.osmotherley@clarionsolicitors.com.