Anti-Deprivation Principle and Contractual Indemnity

In the recent decision by the High Court the Anti-Deprivation Principle has been reconsidered. The principle first discussed in British Eagle International Airlines Limited v Compagnie Air France [1975] states: -
"… a common law rule of public policy that the property of an insolvent person must be administered for the benefit of his creditors in accordance with the provisions of what is now the Insolvency Act 1986. Consistently with and as part of this rule, the individual bankrupt or insolvent company may not contract at any time, either before or after the making of the bankruptcy or winding-up order, for its property subsisting at that date to be disposed of or dealt with otherwise than in accordance with the statute. Put another way, it is not possible to contract out of the Act."
The principle has also been considered this year in the case of Perpetual Trustee Company Limited v BNY Corporate Trustee Services Limited where Lord Neuberger stated: -
"44. In British Eagle, reversing Templeman J and a unanimous Court of Appeal, the House of Lords, by a bare majority, decided that a clearing house arrangement between a large number of airline companies relating to debts arising as between them was ineffective as against the liquidator of one of the companies, British Eagle, which had gone into liquidation. As explained by Lord Cross of Chelsea (with whom Lord Diplock and Lord Edmund-Davies agreed), this conclusion was reached on the ground that, insofar as the arrangement purported to apply to debts which existed when the members of the company passed the resolution to go into creditors' voluntary liquidation, it would have amounted to contracting out of the statutory requirement that the assets owned by the company at the date of its liquidation should be available to its liquidator, who should use them to meet the company's unsecured liabilities pari passu, under s.302 of the Companies Act 1948 (now effectively re-enacted as s.107 of the Insolvency Act 1986)."
The effect of this principle is to deny the contractor with the company the right in most cases to provide a clause that denies liability if the company enters an insolvency event. - for those drafting contracts this must be considered so as to ensure that attention is drawn to the risks of using such a clause.

Transfer of undertaking - Exemption for Pre-Packaged Sale

In previous blogs the impact of Oakland -v- Wellwood has been considered. It was approved that where a pre-packaged sale takes place with an anticipation that there would be a subsequent creditors voluntary liquidation Regulation 8(7) of TUPE applied. However whilst the Employment Tribunal applied Oakland in a recent case of Coombs and Another -v- RedWeb Security and others it stated that there were strong grounds for thinking that both tribunals in Oakland were wrong in their approach to Regulation 8.
The vagueness of the impact of Regulation 8 to the Administrator and the onward purchasers continues to concern practitioners.
If this or any other issue is of interest to you contact the author at brendan.obrien@breezeandwyles.co.uk

The Employer's Traps and Other Tips

1. Part-Time Workers
Apparently, as a result of the recession, an increasing number of people are now working part-time. You may be aware that part-time workers are protected in law from discrimination under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. As an employer, you should be familiar with these and if not, take advice.
2. TUPE Transfers
Remember that particular care needs to be taken in a transfer situation to avoid claims for breach of the Regulations and/or constructive or automatic unfair dismissal. The TUPE Regulations remain a minefield, so it is always best to take advice.
3. Retirement Age
Although the default retirement age will be phased out, at the moment the statutory procedures for employees approaching retirement still apply and it is very important that these are followed to avoid a claim of unfair dismissal.

What's in the Pipeline?

1. Default Retirement Age to be phased out
The Government has announced details of how it will remove the default retirement age of 65 which is permitted by the Employment Equality (Age) Regulations 2006. It proposes to begin phasing out the DRA from April 2011. The proposals are subject to a consultation, which will run until 21st October 2010. The key proposals are:
· Retirements under the DRA will cease completely on 1st October 2011 and no new notices of intended retirement may be issued after 6th April 2011
· Retirement dismissals will still be permissible after 1st October 2011 but only if objectively justified.
· Transitional arrangements will apply to retirements that have been notified before 6th April 2011 to take effect before 1st October 2011.
Watch this space for up-dates.
2. National minimum wage increase
From 1st October 2010 the following changes to the national minimum wage will take place:
· The age from which the principle rate becomes payable falls from 22 to 21;
· For workers aged below 18 who have ceased to be of compulsory school age, the rate increases from £3.57 to £3.64 per hour.
· For workers aged 18 to 20 the rate will rise from £4.83 to £4.92;
· The principle rate (ie. for those aged 21 and over) increases from £5.80 to £5.93 per hour.
There will also be a national minimum wage at the rate of £2.50 per hour for apprentices who are employed under a contract of apprenticeship or who are engaged under certain government arrangements in England, Scotland, Northern Ireland and Wales.
Accommodation rate: the amount permitted to be taken into account where accommodation is provided to the employee rises from £4.51 to £4.61 per day.
3. Consultation on right to request time off to train
Since 6th April 2010, workers in businesses with more 250 employees have had the legal right to request time off to carry out relevant training. This right is now being reviewed as part of the Government’s aim of reducing the regulatory burden on businesses. Consultation will be carried out on this, closing on 15th September 2010. As part of this process employees, businesses and other interested parties will be asked for their opinions on the right to request time off to train.

Constructive Dismissal and TUPE Transfer

Employees employed by a building society who transferred under TUPE to the Nationwide Building Society resigned and brought claims of constructive unfair dismissal. They cited various fundamental breaches of contract and other detriments as reasons for their resignations, and also breach of the implied term of mutual trust and confidence. They argued they had been constructively and unfairly dismissed for reasons related to a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The EAT upheld the Tribunal’s decision that the employees were dismissed constructively and by operation of Regulation 4(9) of the TUPE Regulations. (Nationwide Building Society v Benn and Others)

No joy on retirement for partners in law firm

Another partner in a law firm has had a go at challenging the Employment Equality (Age) Regulations 2006 which not only provides a default retirement age for employees of 65 but also prohibits unjustified age discrimination in partnership (where the members are generally self-employed). However, the crux of the issue lies in the word “unjustified”. The Court of Appeal in this case has upheld the decision of the Employment Appeal Tribunal (EAT) that the compulsory retirement of 65 for partners was potentially justifiable by reference to the partnership’s workforce planning aims. The firm’s defence was that of objective justification, arguing that the firm had legitimate aims: ensuring that senior solicitors were given the opportunity of partnership; facilitating partnership and workforce planning; creating a congenial and supportive firm culture by limiting the need to expel partners by way of performance management.
Although the EAT considered that this last aim was discriminatory because it was based on a discriminatory stereotype that partners’ performance tends to drop at 65, the two remaining aims were legitimate and the EAT remitted the case to the same tribunal to consider the question of justification by reference to legitimate aims. The partner, Mr Seldon, appealed to the Court of Appeal on various grounds. This was rejected. (N.B. – please see the What’s in the pipeline section). (Seldon v Clarkson, Wright and Jakes)

Multi-millionaire divorce sparks law change branded a cheat’s charter

Divorcing couples will no longer be able to use illegally obtained evidence of their former spouse’s assets, following a controversial Court of Appeal decision, which has already been branded a cheat’s charter.

The ruling follows a divorce case surrounding the multi-millionaire owner of Del Monte foods and overturns the longstanding practice in the Family Courts, known as the Hildebrand Rules, which said that a spouse could obtain and use documents belonging to the other spouse without their consent, provided no force was used and that possession was disclosed within certain time limits.

But following the latest case, Imerman v Tchenguiz, the Court of Appeal has stated decisively that obtaining information in this way consists of a breach of confidence and is therefore illegal. They concluded that the Hildebrand Rules were bad law and in future any such information cannot be accepted by the courts.

Lisa Tchenguiz was the Iranian-born wife of South African millionaire Vivian Imerman, who made a fortune as the owner of Del Monte foods and the Whyte and Mackay whiskey brand.

When their marriage broke down, Ms Tchenguiz’s brothers, with whom Mr Imerman shared offices and an IT system, barred him from the office building and downloaded a large number of his computer files relating to finances and assets. They handed these files to their solicitor, who in turn handed them to Ms Tchenguiz’s solicitors.

Mr Imerman went to court to ask for an order that the information contained in the files should not be used in the divorce proceedings, because it had been obtained in breach of confidence.

The judges in the Court of Appeal recognised that “lack of candour on the part of spouses determined to conceal the true value of their assets from the courts was a very real problem” but said that the remedy was not in illegal self help, but through the powers of the court to grant orders for search, seizure, freezing, coupled with the fact that the court would take a severe view where a spouse would not give full and frank disclosure. But this approach has been condemned by divorce specialists.

Said family law specialist Olive McCarthy of Breeze and Wyles Solicitors in Hertford: “This judgment has been very badly received by many family law practitioners, and already been described as a charter for cheats. The Court of Appeal admits that dishonesty is a real problem in the family courts, yet they are suggesting remedies that have evolved in the commercial courts and would be impossibly expensive for ordinary people.

“Whilst the high value cases will be able to afford to pursue disclosure through the courts, it is likely to make it much harder for people in everyday divorce cases to get a fair result. These everyday cases are not about ex-spouses seeking millions in settlement, they’re often about a single parent trying to secure support for their children from an unwilling ex-partner.”

Content note:
This is not legal advice; it is intended to provide information of general interest about current legal matters.


Unfair double taxation is under the EU spotlight

EU Commission launches consultation on ways to tackle cross border inheritance tax obstacles within the EU.

European property owners are amongst those now waiting to hear the outcome of a consultation by the European Commission that aims to tackle unfair cross-border inheritance taxes levied by member states which can leave families paying taxes twice.
The solicitors in the Private Client Department at Breeze & Wyles Solicitors believe that an EU wide protocol should simplify matters and cut costs. This has been a growing problem as the EU expanded and we hope that this review will finally pin down where the main inheritance liability arises and allow tax paid in other EU states to be set against this primary liability. But even if the final outcome of the consultation is that no tax is saved, greater simplicity will reduce costs for the ordinary citizen.
The Commission has called for the review to tackle three main concerns, with a view to establishing an EU wide protocol to determine what tax is paid by whom in each state.
Firstly, the inheritance tax rules applied by member states often impose higher levels of tax on the estates of citizens who lived in other member states or who owned assets in other countries. This runs counter to the EU rules on free movement of capital and a number of inheritance tax disputes have been successfully referred to the European Court of Justice since 2003 on these grounds.
Secondly, there can be instances of multiple taxation when a person dies, because some states tax the estate of the deceased, as happens in the UK, but other states tax the beneficiary. Although double taxation can be avoided when there is an agreement between states, currently there are only 33 double taxation agreements between EU states out of a possible 351.
Thirdly, the Commission is concerned that these problems are discouraging EU citizens from exercising fully their right to move, and own property, freely within the EU.

Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.


Breeze & Wyles Solicitors LLP supports Hertfordshire County Council in its bid to create Local Enterprise Partnership

Hertfordshire County Council creates Local Enterprise partnership

Breeze & Wyles Solicitors LLP is pleased to confirm its support along with other businesses within Hertfordshire for the proposal presented by Hertfordshire County Council to the Department for Business Innovation and Skills and the Department for Communities and Local Government to create a Local Enterprise Partnership.


Breeze & Wyles Solicitors LLP supports Hertfordshire County Council in its bid to create LEP

Breeze & Wyles Solicitors LLP is pleased to confirm its support along with other businesses within Hertfordshire for the proposal presented by Hertfordshire County Council to the Department for Business Innovation and Skills and the Department for Communities and Local Government to create a Local Enterprise Partnership.