Coronavirus Act 2020 – Business Tenancies

Coronavirus Act 2020 – Business Tenancies

27th March 2020

The government have now enacted provisions to prevent forfeiture claims being brought against businesses as a result of the crisis.

From the 26 March 2020 to 30 June 2020 (the “relevant period”), a landlord’s right of re-entry or forfeiture arising from non-payment of rent cannot be enforced. The relevant period can be extended beyond 30 June 2020 by the Secretary of State.

Conversely, during the relevant period, a landlord cannot be said to have waived his or her right of re-entry or forfeiture, unless it is done expressly in writing.

The result of these provisions is that from 26 March 2020 until 30 June 2020, no order for possession can be enforced and any order for possession made during that period must take effect after 30 June 2020.

During the relevant period, businesses affected by the crisis may be unable to pay their rent. Previously, under the Landlord and Tenant Act 1954, landlords could oppose the grant of a new lease protected by that Act by asserting the ground under section 30(1)(b) i.e. that there has been a  persistent delay in paying rent which has become due. The Coronavirus Act provides that any failure to pay rent during the relevant period is to be disregarded under the Landlord and Tenant Act 1954.

While the proposals grant tenants welcome protection during these difficult times, it does leave landlords with mounting rent arrears which may affect their ability to pay their own mortgages and outgoings. The Government has said that a mortgage holiday will be provided by lenders and the Financial Conduct Authority has produced guidance on this issue.

Dispute Resolution

Dispute Resolution

Department

Coronavirus Act 2020 – Residential Tenancies

Coronavirus Act 2020 – Residential Tenancies

27th March 2020

On 18th March 2020, the Government issued a press release stating that emergency legislation would be introduced to “suspend new evictions from social or private rented accommodation while this national emergency is taking place” and “no new possession proceedings through applications to the court to start during the crisis”.

The Coronavirus Act (“the Act”) entered into force on 25 March 2020. The Act refers to a relevant period within which these provisions will apply. That period is defined as beginning on 26 March 2020 and ending on 30 September 2020.

The Act applies to a variety of tenancies: Protected and Statutory; Secured; Flexible; Assured; Assured Shorthold; Introductory; and Demoted. For all these the Act extends the notice period for commencing possession proceedings to three months.

The three-month notice period can be extended to up to six months, but not above six months. This period can be changed multiple times.

A possible issue with this variation is that if the notice period is changed to six months, there is no provision for varying notices already served using the three-month period. It seems likely that such a notice would still be valid. In that case, proceedings would commence at the end of the three-month period but would still be within the now six-month notice period.

During the three-month notice period, any rent arrears that accrue can still be used as grounds for possession proceedings once the relevant period comes to an end. The Act merely changes when these proceedings can take place. Tenants who have lost their income due to the crisis will still be the subject of a possession claim.

This is particularly notable as the Act provides a solution to this issue for business tenancies. For the purposes of making out the ground of persistent delay in paying rent which has become due under the Landlord and Tenant Act 1954, any failure to pay rent during the relevant period is to be disregarded.

On top of this, the Act makes no provision for notices validly served prior to the passage of the Act. A notice validly served prior to the Act becoming law will be valid and will lead to new proceedings during the relevant period. Some of which, no doubt, will have been caused by the Coronavirus crisis. This is, of course, subject to Courts being able to hear such claims.

Dispute Resolution

Dispute Resolution

Department

Contentious Probate Update – Spring/Summer 2017

Contentious Probate Update – Spring/Summer 2017

31st May 2017

Hand and Campbell v George and Stanhope [2017] EWHC 533 (Ch)

This was a case decided by Mrs Justice Rose relating to a will trust made by Mr Henry Hand in 1946.

Background

Henry Hand’s will left the residue of his estate to his three children in equal shares for life with the remainder in each case to any of their children who attained the age of 21 years. The question that arose for the purpose of the proceedings was whether adopted children counted as children for the purposes of Henry Hand’s will.

The Claimants were the adopted children of Kenneth Hand, who was one of Henry Hand’s sons.  The Claimants accepted that under the domestic law in force they were not included and that their father’s share of the Henry Hand Trust would go to the Defendants, who were their cousins.  However, the Claimants argued they could rely on their rights under Article 14 of the European Convention on Human Rights (“the Convention”), which provides a prohibition against discrimination, in conjunction with Article 8 of the Convention which provides the right to respect for private and family life.  They said that the Convention should override the discriminatory effect of the domestic law so that they were treated as equals with the birth-grandchildren of Henry Hand.

The Defendants were the birth-children of the daughter of Henry Hand and the Trustees of the Henry Hand Trust.  They argued that if Henry Hand had wanted to include adopted grandchildren as potential beneficiaries then he would have done so but instead he used wording in his will which excluded adopted children.  They said that there was no justification for applying the Convention to interpret an instrument of domestic law that was drawn up before the Convention was even drafted. They said that to allow the Claimants to inherent would subvert the intention of Henry Hand.

Mrs Justice Rose agreed with the Claimants and found that the reference in Henry Hand’s will to the child or children of his children included any adopted grandchildren and so it included the Claimants.

Comment

In light of advancements in technology and modern medicine in dealing with fertility issues and the changing perception of family arrangements, it is possible that similar disputes could arise in the future. This decision is likely to be helpful in providing clarity on the Court’s approach to those issues.

British Red Cross v Werry (Ch) Unreported

This case related to the setting aside of a consent order based on the contractual principle of common mistake.

Background

The claim was brought by a number of charities, who sought to set aside a consent order which had provided the longstanding unmarried partner of the deceased with an award under the Inheritance Act from the deceased’s estate.

The settlement which gave rise to the consent order had been predicated on the belief that the deceased had died intestate such that his partner did not, on that basis, inherent anything from his estate.  The settlement provided that the partner should receive a life interest in one of the deceased properties plus £25,000 to cover essential repairs to the property with the purported intestacy beneficiaries inheriting the balance of the estate.  The consent order specifically recited that the deceased’s intestacy had failed to make reasonable financial provision for the partner.

However, following the partner’s death some 3 years later, it was discovered that the deceased had, in fact, left a will which had left the property which, by this time had been sold, to the partner absolutely, with a life interest in another property.

Accordingly, the charities sought to set the consent order aside and they claimed an entitlement to the sale proceeds of the property.

The Judge hearing the case held that the mistake in question, namely the belief that the deceased had died intestate (without a will), was fundamental.  Accordingly she held that the settlement agreement was therefore void for common mistake and she agreed that the proceeds of the sale of the property should be paid to the charities.

Comment

This is an interesting case given that the doctrine of common mistake is rarely applied in practice. In the context of contested probate, it demonstrates the Court’s approach to the importance of a valid will, even where this is found some years after an agreement based on no will existing. It also demonstrates the importance of a testator notifying next of kin about the whereabouts of a will.

Scrapping Probate Fees

The government has dropped plans to increase the costs of obtaining a grant of representation or grant of probate.

The proposed fees were to be applied on a scaled basis in line with the value of the estate where an estate valued at over £2million was to incur a fee of £20,000. The proposed increase was due to take effect from May 2017 and was met with severe criticism given that current flat fee for obtaining a grant is £155 for solicitors or £215 for individuals.

There was considerable concern expressed about how executors would fund this payment and many viewed the payment as a tax on death.  The fact that it has now been scrapped will be a welcome relief for practitioners and executors generally.  Watch this space as to whether the next government reinstates the proposed increases…

Matt Smith

Matt Smith

Senior Associate

Contentious Probate Update – Spring/Summer 2017

Charity Begins at Home: A Cautionary Tale for Disinherited Children

20th March 2017

Having recently grappled with the complex constitutional issues raised by the Government’s Brexit appeal, the Supreme Court Justices were faced with another important decision in the case of Ilott v The Blue Cross & Others [2017] UKSC 17.

It was the first opportunity for the Supreme Court to consider and give guidance on the issue of what constitutes “reasonable financial provision” within the meaning of the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”).  The 1975 Act essentially enables the Court to make financial provision from a person’s estate for that person’s family and dependants, in certain circumstances.

From a public policy perspective, this is an important issue. There is general consensus from the public that a person’s wishes on their death (assuming they have made a will) should be complied with. Indeed, there is, in English law, particular significance attached to testamentary freedom. Set against this, are the needs of the deceased’s family and dependants, who may have been deliberately disinherited by the deceased.

Decision

This was a case where the deceased, Mrs Jackson, had made a will which disinherited her adult daughter, Mrs Ilott. Mrs Jackson left her entire estate (worth circa £486,000) to various charities (with whom she had no particular connection) whilst her daughter (and family) lived in modest financial circumstances, receiving state benefits.

The Supreme Court decided that the Court of Appeal had made errors in the application of the test for reasonable financial provision under the 1975 Act. The Court of Appeal had awarded Mrs Ilott the sum of £143,000 to buy a house and £20,000 for additional income.

The Supreme Court upheld the District Judge’s decision at first instance (where he awarded Mrs Ilott a lump sum payment of £50,000).  They placed significant weight on the value judgments made by the District Judge in respect of the evidence heard at first instance, which included evidence about the period of estrangement between Mrs Jackson and Mrs Ilott of some 26 years and the fact that Mrs Illot had no expectation of benefitting from the estate. They made clear that a testator’s wishes, and their reasons for making a will, are both highly relevant factors that should be afforded significant weight.

The Court also made clear that in the case of an adult child (or that category of claimant under the 1975 Act); reasonable financial provision means such provision as it would be reasonable for them to receive for maintenance.  “Maintenance” does not extend to “any or everything which it would be desirable for a Claimant to have”, nor is it limited to “subsistence”.”  It implies provision to meet the every day expenses of living.  Accordingly, an adult child with an income and in comfortable circumstances will not have a need for maintenance.

Comment

The decision is important in the context of disinherited offspring and, perhaps most importantly, emphasises the value of a testator’s wishes.  The decision also provides important commentary on the principles to be applied in valuing and determining 1975 Act claims.

Furthermore, in her supplementary judgment, Lady Hale set out her view of the unsatisfactory state of the present law, which gives no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance.  Accordingly, it seems that despite the helpful guidance from the Supreme Court, there will continue to be difficult claims brought under the 1975 Act which have to be resolved on a case-by-case basis.

It is anticipated that the decision will provide assistance for those making a will (and estate planning generally) and those involved in contentious probate proceedings.

For further information and advice on all aspects of estate planning or general concerns about inheritance, please do not hesitate to contact Hardeep Nijher or Matt Smith.

The judgment can be found at the following link: http://www.bailii.org/uk/cases/UKSC/2017/17.html

Matt Smith, Senior Associate

Email: matt.smith@colmancoyle.com

Matt Smith

Matt Smith

Senior Associate

Contentious Probate Update – Spring/Summer 2017

9,000% increase in Probate Fees – More Inheritance Disputes?

13th March 2017

From May of this year, the fee for rubber-stamping an inheritance is set to increase by over 9,000% in England and Wales for some estates.

Probate fees, which are the fees paid to the Courts for overseeing the discharge of a deceased’s estate, will increase to £20,000 in some cases.  The current probate fee is set at a flat rate of £215, or £155 if you use a solicitor.

The main reason behind the increase is to generate additional funding for the Government’s Courts and Tribunal Service.

There is widespread disapproval of the increased fees, particularly because the size of an estate is not determinative of the amount of work that the Court has to do to grant probate.  This is, in fact, a process which requires limited work by the Court, which usually includes examining the deceased’s will (if they have made one) and death certificate.

Most critics see this as a further “stealth tax on the dead” which penalises the wealthy. However, surges in house prices in recent years means that even modestly wealthy home owners, especially in London and the South-East, are likely to see their estates liable to pay the higher probate fees.

The increased fees could promote a greater awareness about the importance of careful estate planning.  This might encourage people to think about reducing the size of their estate in time for their death, possibly by making life time gifts which may become exempt.

The increased fees may also lead to more sophisticated estate planning with people making complicated wills and setting up complex trusts.  This may ultimately lead to more disputes and litigation, particularly from disappointed beneficiaries.

For further information and advice on all aspects of estate planning or general concerns about inheritance, please do not hesitate to contact Hardeep Nijher or Matt Smith on +44 (0)20 7354 3000.

Matt Smith

Matt Smith

Senior Associate

Contentious Probate Update – Spring/Summer 2017

Litigants in Person – Special Treatment by the Courts?

15th July 2016

There are an increasing number of parties in civil proceedings that are deciding to represent themselves, as litigants in person. The reasons for this are not entirely clear but are likely to be linked to the significant increase in court fees, legal aid cuts, the public’s perception of legal professionals being expensive and, possibly, the fact that success fees under Conditional Fee Agreements (No Win, No fee) are no longer recoverable from the losing party.

The result of this is that the Courts are struggling to deal with how they treat litigants in person and there appears to be an inconsistent approach by the Courts. The key question is to what extent should the Courts exercise leniency towards a litigant in person and, if they do, is this unfair to the legally represented party?

In the recent case of Barons Bridging Finance 1 Limited & Ors v Barons Finance Limited (In Liquidation) [2016] EWCA Civ 550, the Court of Appeal allowed an appeal on the basis that the Appellants did not receive a fair trial.  In considering whether the Appellants had received a fair trial, the Court of Appeal appeared to suggest that the Courts should take into account when a party is a litigant in person (this is where the party does not have legal representation and they have chosen to represent themselves).

In that case, the Appellants were represented by Mr Gopee, appearing as a litigant in person.  The Court of Appeal appeared to accept that Mr Gopee had a somewhat chequered career in the Courts in relation to his conduct of the Respondent Company and his other associated money lending companies. The Court of Appeal found that whatever view the Judge took of Mr Gopee’s experience as a litigant, the Judge nevertheless should, in all the circumstances of the case, have given him, as a litigant in person, a proper opportunity to give evidence.

However, in contrast to the above is the recent case of Peter Malcolm Jones v David Charles Longley  & Ors [2016] EWHC 1309 (Ch). In that case, the Court struck out a counterclaim by a litigant in person as an abuse of process or as otherwise likely to obstruct the just disposal of the proceedings. The Judge confirmed that many of the problems stemmed from the fact that the Defendant was not a qualified lawyer. The Court also acknowledged that the Defendant was perfectly entitled to act for himself. However, there was only one set of rules, applicable to everyone, legally represented or not. The Courts could not, and did not, modify the rules for unrepresented litigants.

The Law Society has provided specific guidelines to solicitors dealing with litigants in person. Furthermore, the Courts are more likely to ask a represented party to undertake additional duties in proceedings, perhaps preparing bundles for hearings, which inevitably increase the represented party’s costs. Whilst the effect of dealing with a litigant in person should not be assumed to be negative, it is clear that the general impact of litigants in person upon the Courts is one of an increased demand on time, costs and resources.

Whilst there are no firm conclusions as to how the Courts might treat a litigant in person in a particular set of proceedings, there will obviously always be litigants in person in the Court system. Therefore, it is incumbent on represented parties to act fairly and courteously to litigants in person but it would seem inherently unfair to give them special treatment.

Matt Smith

Matt Smith

Senior Associate

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