Court rules that Leave to Remain application under domestic violence route is not suitable for dependents of T2 visa holders

Written by Katherine Sun (Paralegal)

Leave to remain (LTR) applications under the Destitute Domestic Violence Concession (DDVC) scheme can be treated differently but not discriminated against based on what kind of status applicants hold. Recently, an Indian citizen’s LTR application was refused on the grounds that she was not eligible for the DDVC route by holding a T2 dependent visa.

Please note that the T2 visa and T2 dependant visa has now been replaced by the Skilled Worker visa and Skilled Worker dependant visa respectively.

Below we look at more details of the case and go through one of the core issues that might be a challenge in the DDVC cases. Keep finding to find out what the issues were.

R (on the application of SWP) v Secretary of State for the Home Department [2022] EWHC 2067 (Admin)

The Claimant was an Indian national whose husband came to the UK from India with a T2 migrant visa with the intention to apply for Indefinite Leave to Remain (ILR) as a T2 migrant worker. In 2017, the Claimant and her son joined her husband in London as T2 dependents.

Unfortunately, the relationship did not go well. The Claimant and her son moved out of their accommodation due to domestic violence. She therefore applied for a 3-month extension of her LTR under the DDVC.

The Defendant refused her application claiming that she was not eligible for the DDVC. The decision then was brought to the Judicial review.

Judicial review proceedings

The Claimant argued the following points in relation to lawfulness of the decision:

excluding her from the protection of the DDVC was discriminatory and accordingly, contrary to her right under art 14 of the ECHR.
her husband, as a T2 worker, has an expectation to apply for ILR comparable to that of a refugee or an EEA national, which both are within the DDVC protection.

Regarding the above points, the Defendant submitted the following arguments to support the decision:

the only issue is whether the Claimant should have been approved to maintain in the country as a victim of domestic violence rather than any other circumstances.
the comparison with refugees and EEA nationals is invalid.
The bottom line is not whether the application should succeed but whether she is eligible for LTR as a victim of domestic violence.

The judgement

The Court reviewed the decision stating that the difference of treatment was justified, although the Claimant’s husband had a strong expectation of settlement. As a spouse of T2 migrant workers, it is lawful that the claimant was treated differently from others eligible for the DDVC, namely the partners or spouses of British Citizens, those with settled status, refugees and EEA nationals.

Our comments

The DDVC route is no doubt a significant lifesaving choice to those who have been experiencing domestic violence from their spouses or partners. Before you hand in your application seeking protection from it, please assess your eligibility first. The case shows that only those who are in the UK as partners or spouses under the family route can be eligible. Dependents of other visa holders will be considered opposite.

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Britain’s hot strike summer heats up as legal sector industrial action gathers steam

The British summer of 2022 may well go down as the summer of strikes. Workers across a wide range of sectors, including railway workers, bus workers, post office workers, airport workers, and barristers have all been on strike so far this summer, largely over disputes involving pay and conditions as inflation continues to increase and worsen the country’s cost of living crisis.

The legal sector has not been immune to this, with legal workers suffering from the same side effects of inflation as other workers across the country and feeling the pinch in their pay packets as a result. As a result, barristers have been on strike for most of the summer, with magistrates’ court staff now set to follow suit. However, the perception among the general public tends to be that barristers in particular are high-earning workers who do not deserve a pay rise.

A recent survey by the polling company YouGov found that out of 14 professions, barristers were lowest when it came to public support. While 60% of the public would back a strike by nurses, just 19% would back a strike by barristers. 65% of those polled would oppose such a strike, with further polling showing that they also come lowest in terms of public sympathy for a strike by barristers. A massive 45% said they wouldn’t have any sympathy at all for striking barristers.

This is indicative of the attitude towards barristers by the general public. To them, barristers often feel aloof and elitist and are also perceived as being high earning. As a result, strikes among legal sector workers are likely to continue to be unpopular with the public. In reality, those who are just starting out as criminal barristers often earn far less than they would do in other practise areas. According to the Criminal Bar Association, crime juniors can average earnings of £12,200 in their first three years – less than minimum wage.

Keep reading to learn more about the strikes taking place in the legal sector and the reasons for them.

Magistrates’ court staff strikes

The latest set of strikes to take effect concerns magistrates’ court staff, who voted overwhelmingly (93%) in favour of industrial action over the rollout of HM Courts and Tribunals Service’s (HMCTS) Common Platform. The strikes are primarily a result of the digitisation of the courts which has taken place over the past couple of years since the introduction of the Common Platform in September 2020. The government spent £236m implementing the system. While the HMCTS describe the system as “key to modernising the court system”, it has been beset by problems since its introduction.

In a statement last month, the Public and Commercial Services union (PCS) said that the Common Platform is “fundamentally unfit for purpose and PCS members are no longer willing to have to grapple with a system that is negatively and significantly impacting on their health, safety and well-being.” They have called for a number of ‘clear, reasonable and achievable demands’ including stopping the input of new cases to the Common Platform, requiring all current Common Platform cases to be resulted outside of the courtroom, and ensuring there are no further job losses arising as a result of the Common Platform.

While there does seem to be agreement that the Common Platform is necessary in the long-term, as it is in theory meant to allow all parties, including court staff, solicitors, barristers, the Crown Prosecution Service (CPS) and members of the judiciary to access case information.

Criminal Bar Association Strikes

The magistrates court staff strikes follows strikes by barristers last month, which saw the Criminal Bar Association (CBA) take action partly over an increase to the government’s set fees for legal aid work.

The increase, set to take place in September this year, originally amounted to 9%, a figure described by the Law Society of England and Wales president I. Stephanie Boyce as what should be “the floor of funding increases and not the ceiling”. The 9% proposed failed to meet the bare minimum figure of 15% which was recommend in the independent review conducted by Sir Christopher Bellamy last year. The 15% figure was later met by the Ministry of Justice, however the CBA is now calling for a 25% uplift, to reflect the 28% cut in legal aid fees they say has occurred in the past decade.

There is also a huge backlog of 58,000 cases according to the CBA, meaning that without sufficient legal aid funding there aren’t enough prosecutors and defenders for the system to function smoothly.

A ballot for further strike action is expected to take place later this month, which would be an escalation of the current alternating weeks of action that has been in effect since late June. If CBA members do vote to strike, this would lead to uninterrupted strike action, a clear escalation of the current practise.

The action taken by the CBA in the strikes includes:

Court walkouts
Refusing to accept new instructions
No returns

Our thoughts

Clearly, this is not an ideal situation for anyone. The issues with the Common Platform appear to be widely felt by those Magistrates’ Court workers who felt that it is necessary for them to go on strike over it. Meanwhile, criminal barristers earning less than minimum wage may find it hard to justify continuing working in an underfunded practise area like this when they can earn more elsewhere.

It remains to be seen whether the transitional government will take any action over the issues highlighted by the Public and Commercial Services Union and the Criminal Bar Association, certainly before the next Prime Minister is put in place by the Conservative Party in September.

Have questions about this article? Get in touch today!

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Police registration enters the history books for foreign nationals

For those of you are foreign nationals, when you first arrive in the UK you will probably be familiar with the need to “register with the police station” after obtaining a new visa. Even if a foreign national’s personal circumstances change, they have also previously needed to report to the registered police station.

However, after slightly under the radar communication to the individuals affected, police registration has officially entered the history books. The UK Home Office has hence removed the mandatory requirement of “police registration” for certain applicants.

From now on, if you try to make an appointment online, you will also see an announcement on the Met Police’s official website, informing you that “Registration with a Police Station” has been cancelled. This also goes for police stations in other UK regions.

This means that no matter what visa you are holding or what your current nationality is, you no longer need to register with the police as you did before. According to the announcement, if you originally needed to register, and have already registered, you will no longer need to update and notify the police station if your personal information changes in the future.

It should be noted, however, that if your personal information changes, you will still need to contact the Immigration Department to inform them of your new changes.

For example, if your residential address changes then you do not need to apply for a new BRP (Biometric residence permit) card. However, you will need to inform Immigration of your new address via: https://visa-address-update.service.gov.uk/?_ga=2.38622955.933955761.1659617248-1068361535.1651159568

Complete the form and send it to the address on the form: https://www.gov.uk/government/publications/notification-of-change-of-circumstances-form-mcc

You will need to apply for a new BRP card if the following information changes:

Name
Nationality
Facial appearance
Date of birth (if it was wrong for example)
Gender

The detailed application process can be found on the UK Government website: https://www.gov.uk/change-circumstances-visa-brp

Jessica Luo, an immigration consultant at Lisa Law Firm, said that since August 1 this year, when the Immigration Department issued a visa, it began to remove the requirement of “police registration” in the decision letter. For these newly approved visas, the Immigration Service has not given mandatory conditions for “police registration”.

Therefore, it is now further confirmed that the cancellation of this requirement is actually traceable.

In response to the extended questions that may be brought about by the new changes, we have specially compiled the following queries and answers:

→ If I have registered before, do I still need to keep the relevant certificates?

According to the content of the announcement, the parties will not be required to provide proof of police registration. So, if you have completed the registration, you do not need to keep the Police Registration Certificate.

However, we suggest that if keeping the certificates isn’t particularly difficult for you, it is better for you to keep hold of them just in case you need them. You could also take screenshots or photos as a backup option.

→ If I just completed the registration, can I ask for the registration fee back now?

Unfortunately, if you have already paid the fee and registered, you cannot claim your registration fee back. Even if you complete your registration the day before your Police Registration is cancelled, you will not be able to apply to get your money back.

This is because the fee includes the administrative processing fee for “Registration with the Police Station”, and since they have already processed it, you naturally cannot claim the fee back.

→ What if it is said to have been “reserved”?

If you have already made an appointment but have not paid the fee, then you will not need to go to the police station to complete the registration. As previously mentioned, the Police Registration requirement has been removed. You no longer need to complete the registration at the original scheduled time and place.

If you make a special trip out of concern, when you arrive at the police station, the police officers will still tell you that the requirement for police station registration has been cancelled and they will no longer accept it. So, you don’t need to make an extra trip.

But again, just to be on the safe side, you can keep a screenshot of the “police bulletin” to prove you’re just doing what the bulletin says. This way you can also feel more at ease.

→ What about people who originally needed to register, but did not register in time?

Suppose you were originally required to register with the police, but you did not register with the police within 7 days of arriving in the UK, or within 7 days of receiving the result of your application. Well, now you also don’t have to book and register anymore.

As mentioned earlier, we still recommend that you keep the relevant content of the police announcement as a proof if necessary in the future.

In the end, we would like to remind again that although the “police registration” has been cancelled, the requirement that you need to notify the immigration office of changes in personal information has not been cancelled.

At the same time, if your personal circumstances change when you apply for a replacement BRP, you also need to inform the Immigration Department by filling out the following form. These changes include but are not limited to: criminal record, divorce/separation from your spouse or partner, independence of children live and no longer live with you, etc.

Link to the form: https://www.gov.uk/government/publications/notification-of-change-of-circumstances-form-mcc

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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Is Covid a viable defence by commercial tenants for rent arrears? No, says the Court of Appeal!

The Court of Appeal has recently found that a tenant cannot use Covid as a defence for rent arrears. The case acts as an important case study for rent arrears accrued during the pandemic as well as dispute resolution between commercial landlords and tenants.

The cases in question were as follows, Bank of New York Mellon (International) Limited v Cine-UK Limited and London Trocadero (2015) LLP v Picturehouse Cinemas Limited & ors. These appeals were made in the Court of Appeal by the cinema operators to quash the summary judgment in the first hearing that entitled the landlords to all rent arrears payments.

Keep reading to learn more about the case.

Background

As we all know, the lockdowns precipitated by the Covid-19 pandemic had a disastrous impact on economies across the world, affecting businesses and individuals alike. One of the types of business perhaps most affected by the pandemic were cinemas – with the activity of sitting in a room of people for hours lending itself particularly well to a virus which spreads extremely well in poorly ventilated areas.

The lockdowns which subsequently came in and justifiably meant that cinemas were not allowed to legally operate resulted in a considerable decrease in revenue which ran concurrently with the reality that cinemas had to continue to pay rent to their landlords. This is the topic of contention in this jointly held case.

Businesses from other industries have also attempted to use the pandemic as reason to avoid paying rent that was due during the pandemic, with the property fund manager First Property Group recently winning half a million pounds in rent arrears from the operators of jewellers H. Samuel and Ernest Jones.

The government acted on the considerable level of dispute over rent arrears which accrued during the pandemic by passing the Commercial Rent (Coronavirus) Act 2022. This made provision for the enabling of rent debt relief in certain circumstances where business tenancies were adversely affected by coronavirus. This was to be made possible through arbitration.

The landlords in the respective cases were Bank of New York Mellon, which operates a cinema complex situated in a shopping centre in Bristol (Cine-UK), and London Trocadero, which operates a cinema complex in Piccadilly, London(Picturehouse).

The case

The tenants, Cine-UK and Picturehouse Cinemas, which are both part of the Cineworld Group, filed their appeals in late 2021, after they had been allowed to open following the end of restrictions on cinemas.

Cine-UK’s premises were only open for business for a very short window between March 2020 and May 2021, when they finally opened again for good. However, it wasn’t until July 2021 that cinemas were finally able to reopen unrestricted. This was also the case for the Picturehouse cinema, which was only open for about 2 months between March 2020 and May 2021.

Both tenants objected to the payment of rent during this period for two main reasons. Their arguments for this were as follows:

The Government restrictions imposed due to the pandemic had given them the right to seek relief from their obligation to pay rent during this period
It was an implied term of the agreement that should the tenant not be able to lawfully use their premises as a cinema, then they should be relieved of their obligation to pay rent.

Cine-UK made a third argument in the case of Bank of New York vs Cine-UK. They claimed that the phrase ‘damage or destruction’ was pertaining to non-physical damage in the form of the effect which the Covid pandemic had on the business, rather than purely physical damage or destruction.

Judgements

All of the arguments made by the tenants were rejected by the Court of Appeal.

With the first argument, which focused on failure of basis, the judge observed that it was “difficult to argue that the landlord had been unjustly enriched in circumstances where the rent had not been paid”.

The second argument, concerning implied terms of the agreement, was dismissed by the Court as the ‘leases worked well without the need for implied terms to be read into them’.

For the other argument which was made by Cine-UK, the judge ruled that the landlord’s argument that “damage and destruction” was limited to physical damage and destruction was correct. Cine-UK had attempted to construe the term “damage and destruction” as not being solely physical, meaning that the enforced lockdowns could come under this description as well.

Our thoughts

While these businesses clearly struggled during the pandemic as a result of not being able to open and legally operate, this was also the case for businesses up and down the country, many of which were much smaller in size than Cine-UK and Picturehouse.

The outcome of this case will bring much more certainty to commercial landlords, as it confirms their right to enforce against long-standing rent arrears which are not subject to mandatory arbitration. As a result, making an exception for these businesses does not seem justified, and the decision made by the judge in the Court of Appeal therefore seems to be the right one.

It may subsequently result in commercial tenants favouring the arbitration route in future, for which they have until 23^rd September 2022 when the scheme closes.

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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Successful appeal on behalf of elderly Chinese national after Home Office’s unsympathetic refusal of leave to remain

We have recently been successful in an appeal which has led to our client, aged 84, obtaining leave to remain on the basis of her family and private life. This follows an initial leave to remain refusal by the Home Office.

Our client made an application based on exceptional circumstances outside of the immigration rules.

Background

Our client is an 84 year old Chinese national. Her son and his family live in the United Kingdom and she has been visiting them regularly from China over the years. She had always complied with her visa requirements.

During her recent visit, our client was involved in road traffic accident whilst crossing the road, which led to her suffering significant injuries to her head and back. Although her physical injuries were slowly recovering, our client became dependent on her son, and feared living on her own in China.

An application was made outside of the rules for her to remain in the UK with her son. The Home Office refused the application stating that there were no extenuating circumstances, and she could receive adequate treatment in China.

We appealed the decision.

The Appeal

The Appeal was heard by the First-tier Tribunal. The Secretary of State for the Home Department (SSHD) relied on their reasons given in the refusal of the application.

Our key arguments were as follows:

1. Our client was a genuine visitor and had a long history of compliance with UK immigration rules.

2. We argued the importance of appreciating the context of her circumstances that led to the application for leave to remain. The client would have returned to China if it was not for the road traffic accident

3. There would be significant obstacles to her integration in China due to her ill health, frailty and age, together with lack of support

4. Our client had established both a private life and family life as she has closer than normal emotional ties with her son following her accident and was no longer independent. Removal from the UK would therefore be disproportionate.

The case was reserved and after a few weeks, we received a decision allowing the appeal.

Our Comments

This was an appeal that was of great importance to our client. If the Tribunal dismissed our client’s claim, then our client would be forced to return home where she would live alone without any support. We were adamant of the need for a successful outcome, as we could see the severe effect that it would have on our client’s well-being should she be forced to return to her home country of China.

We are very pleased with the result. The decision made by the Home Office initially had a lack of empathy and compassion of the client’s circumstances. The client is 84 and suffered a significant injury here in the UK and the only family member she had was her son, who lived in the UK. We are pleased that she will now receive the support she needs from her family in the UK.

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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What does it mean for a payment to be ‘subject to completion’? Judge rules in favour of law firm after client refused to pay legal fees!

Written by Paul Cheuk

The High Court of Justice has recently handed down an instructional judgment (Blacklion Law LLP v Amira Nature Foods Ltd [2022] EWHC 1500 (Ch)) in a lawsuit between a law firm and its client. The case involved a small London-based law firm suing a multinational rice distributor and its owner-director over unpaid legal fees.

The dispute concerns the interpretation of some ambiguous terms in the retainer, written by the law firm itself. The client asserted that with the terms ‘subject to completion’, there was a no-success-no-fee arrangement and refused to pay the legal fee. The judge found otherwise despite that wording. This ruling would be readily applicable to any other disputes between a law firm and its client, as well as contractual disputes in a commercial setting.

Keep reading to learn more about this commercial law case.

Background

The law firm involved was relatively small, but its proprietor Y was an experienced lawyer in handling legal issues relating to commercial law. Y’s firm had been providing a range of services to the company under a general retainer and its terms of business.

The client in the case was a company with an international business selling rice and rice-related products. It was listed on the New York Stock Exchange at that time (but subsequently delisted for failing to file financial reports). Its owner KC owned 60% of its shareholding and he maintained tight control on the company’s day to day operation, including its service bill payment.

In 2017, the company’s financial status came into trouble, and it was in need of fresh funds. After consulting with a financial professional arranged by Y, the company sought to raise funds by issuing corporate bonds. KC invited Y’s firm to be the organizing party of the project in communicating to banks and other law firms.

For this bond project, a time-based fee structure with a monthly minimum of £250,000 was initially agreed between the law firm and the client. KC requested to have the bill paid by an assignment of shares of the company at an equivalent market value, to which Y agreed.

This special arrangement however was not put into a written retainer, which did not occur until May and only after further negotiations and amendments. Nonetheless, Y immediately began the work from January, and several high-level meetings with banks and multiple law firms were held. Y worked tirelessly and diligently, and by the end of April 2017, more than 90% of all work had been done, and up to 643 chargeable hours were lodged.

Meanwhile, the accrued legal cost had amounted to around US$384,570, which was equivalent to £300,000 at the time. It was especially worrying to the firm at that point when it seemed that the bond project may not be successful after all.

The Case

By early March 2017, Y began to be concerned about the lack of a retainer that was signed by the client. The law firm therefore drafted a retainer for the bond project and asked for it to be signed by KC and the company. Sensing that their financial situation may not improve, KC and the company also hesitated to agree to the legal cost already incurred. After some back and forth negotiation, Y drafted a retainer with a fixed-fee arrangement at a lowered fee of £300,000.

In the final form of the retainer prepared by Y’s firm was signed at last on 3 May 2017. Among other alterations from the general retainer, it stated that “the Firm will charge the Company a fixed fee of £300,000 for the service in connection with this Matter, subject to the completion of the Matter by 31 May 2017.” It is this last line that created all the ambiguity and became the focal point of the judgment as there was ambiguity surrounding what is it that was being ‘subjected to’.

The company did not pay for the bill after the project fell through. In the ensuing trial, the company argued that the agreement between the parties was a conditional fee arrangement because it said it was “subject to the completion by 31 May 2017”. The company argued that the clause was there to condition whether a payment would be charged, and the legal fee was payable only if the project was completed in time. Evidently the project failed, and on the face of special retainer no payment should be liable. The company also submitted that as the clause was drafted by the law firm, and that the parties are commercially sophisticated, the wordings should be taken at face value.

The law firm, on the other hand, argued that the condition at that second part of the sentence did not operate on whether a payment would be charged at all, but only to determine whether the payment is to be one of fixed fee or not. The law firm submitted that the statement on the retainer should be taken to mean that if the project can be completed by 31 May 2017, then the law firm would only charge a fixed sum, but if the project was not completed, then the fixed fee would not be applicable. Presumably it would be reverted to the time-based calculation under the general retainer.

The Ruling

The judge at last ruled in favour of the law firm and ordered the company to pay for the legal fees. The judge sought to give a proper construction on the clause in the retainer. The law on construction is that the court will ask itself what a reasonable person, having all the background knowledge, which would have been available to the parties, would have understood the words used in the contract to mean. On top of the natural and ordinary meaning of the words, the court will look at the purpose of the contract term as well as considering business common sense.

In the judgment, the judge did find the language used to be unclear and ambiguous. The judge however refused to take the wordings at their face value, and also rejected the proposition that weight should be given to the fact that both parties were commercially sophisticated. On the contrary, the judge said that while the parties sophisticated, it does not mean that the language they use cannot be ambiguous, and the more complicated agreement, the harder it may be precisely expressed in writing.

Following fact finding, the judge found that the date of 31 May 2017 did not have any particular commercial significance for the company – it had already passed a near-term financial milestone date for the company anyway. The judge also relied on testimonies of several witnesses and found that while it is possible to have a minimum sum, fixed sum or contingent success fee on top, it was not the practice for lawyer working in bond issue to be remunerated wholly on conditional fee.

Furthermore, the judge noted that the fixed fee in the retainer was a discount from the general retainer that was based on time, and that the fixed fee of £300,000 was also cheaper than the billable time already spent. The judge concluded that it would not make business common sense for Y to tie up such a huge proportion of its human resources on a project, and that it would also not be reasonable for the firm to suggest a contingent fee in early May 2017, only to bet on the project being completed by the end of the same month, or else to receive no compensation at all. The court therefore arrived at an interpretation of the ambiguous terms based on reasonable business common sense, ruling that on a proper construction of the clause it was a condition on fixed fee, and not a contingency arrangement.

The court went on to discuss an alternative doctrine to resolve the issue based on rectification, meaning to correct a mistaken record of agreed terms. The requirement for rectification is that the parties:

1) must have a common intention in respect of an agreement,

2) have outward expression of the intent,

3) that intent continued at the time of signing

4) by mistake the agreement did not reflect that common intent.

The court considered all the correspondence between the parties up to the signing of the retainer as well as the testimony by the parties at trial. The judge ruled that the parties’ common intention was a fixed fee, not a contingency fee, and that common intention had continued from April until the execution of the retainer. The outward expression was satisfied through previous emails from the company’s agent asking for a ‘flat fee’, and from the law firm’s email replies.

The court also decided on a supplemental matter concerning standard Terms of Business. This concern the interest payable on unpaid fee. The law firm sought an interest rate of 1.5% per month that was specified under the Terms of Business. However, the Terms of Business was only referred to by the general retainer, and not by the bond project retainer. On this point, the court ruled that as those terms made clear that it would apply to all business done by the firm, then unless it was later expressly or necessarily implied excluded in later agreement, the Terms would still be applicable.

Our thoughts

This case revealed several important matters in contract interpretation. Firstly, in suitable circumstances a court would not interpret an ambiguous contract term merely on its literal meaning. This is especially so in a commercial setting, which includes a retainer between a law firm and its client, where the court can put emphasis on whether the term follows business common sense. This is even the case when the parties are sophisticated businesses, and not least a contractual term written by the law firm itself.

Secondly, a court can elect to rectify a mistakenly or ambiguously written contract if it can find continuing common intentions between the parties up to the signing of the contract. This is highly fact sensitive, and a court can consider all previous correspondence between the parties.

As such, the keeping of evidence trail including the entire process of pre-contractual negotiation is highly important.

Lastly, although at the very end of the lawsuit the court did side with the party who had been owed a great sum of money after their service, this was not until 4 years after the event and after lengthy applications and trials. It goes to show the importance of accurately and clearly drafted contract terms, and that real future litigation risk exists if some key terms are left ambiguous.

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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Investigation launched into ASOS, Boohoo and Asda over ‘greenwashing’ claims

The Competition and Markets Authority (CMA) has launched an investigation into three fashion brands over their ‘green’ claims. The three fashion brands being investigated by the CMA for greenwashing include the supermarket Asda, as well as the online fashion brands, ASOS and Boohoo.

The CMA will look at the extent to which green claims made by each of the companies can be classed as ‘misleading’. If their green claims are found to have been misleading then the CMA have made it clear that they won’t hesitate to take action, including through the courts if necessary.

Keep reading the article to learn more about greenwashing, and the reasons for the investigation against these companies.

Greenwashing in the fashion industry

Greenwashing is used by companies across various sectors as a way of presenting themselves as being environmentally friendly, often by companies which have a negative impact on the environment in general.

Greenwashing may mislead the consumer into thinking they are making an ethical choice by deciding to purchase or use the services of that company. The UK Advertising Standards Authority has for instance previously taken action against Suzuki, SEAT, Toyota and Lexus for making false claims about their vehicles in the past.

The CMA has recently decided to place an increased focus on greenwashing, having published its Green Claims Code in September 2021. According to the government, it aims to “help businesses understand how to communicate their green credentials, while avoiding the risk of misleading consumers”.

The fashion industry is often particularly guilty of greenwashing and is one of the industries with the greatest polluters on the planet, responsible for up to 10% of global carbon dioxide output according to Bloomberg. It is also claimed that it contributes to emissions than both the aeronautical industries and the shipping industries combined. This is perhaps why the investigations into these companies is part of an increased focus on the green activities of the fashion sector by the CMA.

What are they being investigated for?

The issue appears to be around some of the branding by each of their companies, which they have used to add weight to their eco-friendly credentials. It is claimed that some of the slogans used including ASOS’s “Responsible edit”, Boohoo’s ‘Ready for the future’ and ‘George for Good’ by ASDA, may give the impression that their products are more sustainable than they actually are. All of the companies have committed to cooperating with the CMA in their investigation.

Explaining the reason for the investigation, Sarah Cardell, interim Chief Executive of the CMA, said:

“People who want to ‘buy green’ should be able to do so confident that they aren’t being misled. Eco-friendly and sustainable products can play a role in tackling climate change, but only if they are genuine.” Cardell went on to warn that: “all fashion companies should take note: look at your own practices and make sure they are in line with the law”.

Boohoo and ASOS, along with other brands like Shein, are often cited as examples of online clothes companies which are guilty of contributing towards the fast-fashion epidemic. People tend to buy more clothes than they used to, with fast fashion production having doubled since the year 2000. In a sign of how unfashionable the fast-fashion industry is becoming, the programme Love Island, hugely popular among Generation Z, this year turned its back on fast fashion by choosing to dress its contestants in pre-worn clothes from eBay.

Industry experts have questioned the long-term future of online fast-fashion brands, and this investigation by the CMA will certainly not help to detoxify their reputation.

Our thoughts

It seems only right that companies which seek to mislead consumers into thinking they are making an ethical decision by purchasing or using the services of the company are punished as a result. While Asda is a slightly different situation, the primary consumers of companies like BooHoo and ASOS are likely to be younger compared to many other fashion brands. Research shows that young people tend to be more environmentally conscious than older people, and are therefore more likely swayed into purchasing from a company which purports to care about its environmental impact.

Greenwashing is likely to continue to become more of an issue as the climate emergency becomes more tangible in the lives of everyday people. Furthermore, the commitment by the UK of decarbonising all industries and reaching net zero carbon emissions by 2050 will also put further pressure on fashion to commit to curbing their environmentally unfriendly practises.

It is worth keeping an eye on how the investigation by the CMA proceeds, and the extent of the action taken, if any. If the investigation concludes that action should be taken against the three named companies, the consequences could have serious ramifications for other fast fashion companies.

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Court rules that social worker’s assessment that teenage asylum seeker is an adult was false

A person who has entered the United Kingdom to claim asylum is treated differently depending on whether they are an adult or a minor. A minor’s claim is treated more delicately by the Home Office with respect to the asylum process, decision making, and support provided by a Local Authority.

Below, we look at a case where an asylum seeker’s age was disputed by a Local Authority, with the social worker involved concluding that the asylum seeker was an adult instead of a child.

R (on the application of HAM) v Brent London Borough Council

The Claimant was a Sudanese national who entered the UK in May 2021. On arrival he made a claim for asylum and claimed to be aged 17 and therefore should be treated as a child. The local authority did not believe the Claimant and therefore treated the Claimant’s claim as an adult.

A month later, a social worker undertook an age assessment on the Claimant and concluded that the claimant was 23 years old.

The Claimant instructed legal representatives who wrote a pre-action letter to the local authority criticising how the age assessment had been conducted and provided evidence from a charity organisation who confirmed that they believe that the Claimant’s age is 17. The Local Authority maintained their decision and the Claimant’s legal representatives filed a claim for Judicial Review.

Judicial Review Proceedings

The Claimant contented that the local authority had undertaken the age assessment unfairly. The Claimant raised the following points in relation to fairness of the assessment:

the interpreter should have been present in person, not by phone.
the assessors had not conducted the interviews with an open mind.
the interview was conducted without an appropriate adult.

The following arguments were raised in relation to the local authority reaching the wrong conclusion:

the assessors placed too much reliance on their opinion of the claimant’s appearance and demeanour and not enough weight was given to aspects of the claimant’s appearance that suggested he was a child.
the assessors incorrectly concluded that the claimant was ‘reticent’ as part of an attempt to avoid saying anything that might hinder his application.
the assessors had failed to realise that if the claimant was reticent that reticence could be because he did not wish to say anything that might prejudice his asylum claim, and not because of any matter relevant to the age assessment.
there was no ‘minded to’ process, the claimant was not given the opportunity to meet the assessors’ concerns about his credibility; and
the assessors had not recognised the need to give the claimant the benefit of the doubt on unclear matters or recognise ‘a margin of error’.

The judgement

The Administrative Court considered the case, stating that a fair interview would permit the person who was being assessed a genuine opportunity to explain his position to answer questions that might be put to him and to respond to matters adverse to his case.

The Court held that the Local Authority came to their conclusion as they had concerns with the Claimant’s credibility, and therefore these concerns should have been put forward to the Claimant. Accordingly, the Court held that the Claimant’s claim succeeds on the basis that he was not given the opportunity to meet the assessors’ concerns about his credibility.

The Court made a declaration that the age assessment was unlawful, however a substantive decision in relation to the Claimant’s age would be transferred to the Upper Tribunal to decide.

Our comments

The above case shows the importance of seeking legal representation and challenging decisions made by the Local Authority when an incorrect decision is made. Age assessments are done in person and are subject to human error. Should the Claimant in the above case have not contested the Local Authority’s decision, then it would have had a significant impact on the support he receives and on his asylum claim.

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Supreme Court says part-year workers entitled to proportionally same holiday pay as full-time workers

A new ruling (Harpur Trust v Brazel) by the Supreme Court has favoured part-year workers and casual workers, opening the door to thousands of claims for compensation. The ruling says that these workers are entitled proportionally to the same holiday pay as full-time workers. It also found that the methods of calculating pro-rated annual leave for part-time workers ran contrary to the Working Time Regulations 1998.

The Supreme Court upheld a decision made by the Court of Appeal that a music teacher on a zero hours contract, Lesley Brazel, should receive an average week’s pay for each week of statutory leave from her employer, Harpur Trust.

Previously, employers would generally prorate holiday pay at 12.07% of wages for the hours worked. As a result of dismissing Harpur Trust’s claim to use the 12.07% standard, this opens the door for potentially hundreds of workers to claim for historical underpayment. However, it is unlikely to result in a change in the law. Nevertheless, from now on businesses should calculate holiday pay for part-time workers based on average earnings over 52 weeks, rather than by the hours they have worked.

Keep reading to learn more about the case.

What is a part year worker and what industries will this ruling affect?

Part-year workers are workers who, perhaps unsurprisingly, only work part of the year. They are often seasonal or temporary workers. There is no specified number of hours that a part year worker works per week, and this can vary depending on their role.

This decision will have a profound impact on businesses who employ workers on zero hours, term-time or on a seasonal basis. This primarily affects industries such as education, care and the healthcare sector. These industries often employ a proportionally higher number of temporary workers.

Harpur Trust v Brazel

Lesley Brazel is a music teacher who works at a school run by the Appellant, Harpur Trust. Ms Brazel works part time and is only paid for the hours she teaches during term time, working a variable number of hours per week. According to Brazel, this resulted in her receiving less holiday pay than she did before.

Through the Working Time Directive, the majority of UK workers are provided with four weeks per year. They are also granted 1.6 weeks through the Working Time Regulations 1998, totalling 5.6 weeks overall. The latter is granted through the UK’s implementation of the EU legislation, which defines a week’s pay as an employee’s average pay over 12 weeks before a period of leave.

In 2011, the Trust changed the way that it calculated her holiday pay in with the Acas guidance of the time. Before 2011, they would calculate Brazel’s pay for the 5.6 weeks by calculating her average week’s pay in accordance with the Employment Rights Act 1996 and multiplying it by 5.6. After 2011, they amended this by multiplying the hours Brazel worked by 12.07% and then multiplied this by the hourly rate of pay, in line with the government guidance.

Brazel subsequently brought a claim before the Employment Tribunal for underpayment of holiday pay through unlawful deductions of her wages. While the Employment Tribunal dismissed her claim, the Employment Appeal Tribunal allowed her appeal and held that the statutory regime required the use of the calendar week method. The Court of Appeal dismissed the appeal made by the Harpur Trust, as did the Supreme Court.

The Supreme Court’s judgement

The Supreme Court rejected the arguments made by the Trust in a unanimous verdict. They found that the model left employees with irregular part-time hours out of pocket.

The Harpur Trust accepted that Brazel is a worker, meaning that she is entitled to 5.6 weeks of paid annual leave, which she takes during the school holidays. However, because she isn’t required to work at all during the school holidays, there are more than 5.6 weeks each year where she doesn’t work at all.

Harpur Trust suggested two alternative methods of calculating holiday pay, making the argument that while Brazel would be better off under the Calendar Week Method proposed by the Supreme Court, other hypothetical workers would be worse off compared with Harpur Trust’s suggested methods.

The Supreme Court rejected this, putting forward three main points of contention with the proposed methods proposed by the Harpur Trust:

The proposed methods are contrary to the Working Time Regulations, which determined that holiday pay should be calculated in accordance with a 12-week period which ignores the weeks in which the worker hasn’t received pay.
The two methods would require employers and workers to keep detailed records of every hour worked, even if the worker wasn’t paid at an hourly rate. These complicated calculations were seen as problematic as a result.
The Supreme Court rejected the idea put forward by Harpur Trust that the Calendar Week Method of calculating holiday pay is not appropriate. They decided that a worker in Brazel’s situation receiving holiday pay which represented a slightly higher proportion of their annual pay didn’t justify the Harpur Trust’s alternative method of revising the statutory scheme.

The judgement confirms the entitlement to 5.6 weeks holiday for full and part-time workers, without pro-rating.

Our thoughts

Following this outcome, employers should immediately look to rectify annual leave entitlements for part-year workers by moving from the 12.07% calculation method to the 5.6 weeks pay method. This calculates holiday pay by multiplying the average week’s pay for the part-year worker by 5.6.

It is important to clarify that 5.6 weeks does not necessarily equate to 28 days holiday, which is the amount a worker working five days a week would receive. For example, a part time worker who works three days a week is entitled to 16.8 days of holiday per year.

As mentioned previously, this will primarily impact those in the education and healthcare sectors, where seasonal and temporary work is more common.

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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Company administrators cleared of breach of duty despite deficiency during sale of properties

By Yitong Guo

Today’s article comes from one of our solicitors, Yitong Guo, who specialises in property law. The article is about a dismissal application in the Chancery Division of the High Court concerning allegations of breach of duty by company administrators in relation to two companies (“the Companies”) whose business involved the development and sale of two properties (“the Properties”) in London.

In 2015, the properties were eventually sold to two different purchasers respectively, with the sale amounting to approximately £62 million.

As a result of the sales, Barclays Bank PLC, the primary secured funder to the Companies, recovered the whole of the principal amount totalling around £51.5 million, plus fees and interest. There was still a shortfall in the region of £10 million, however.

The case in question is Swiss Cottage Properties Limited (in liquidation); Fitzroy Street Capital Inc and another v Manning and another. It shows that deficiency does not necessarily amount to breach of duty when it comes to property, where loss is not proved.

The application

The Applicants in this proceeding, being an unsecured and junior secured creditor of the Companies, received nothing from the Administrations.

The Applicants averred that insufficient value was realised from the Properties, and made a number of the allegations of wrongdoing against the Administrators under two grounds:

1. The Administrators had acted ultra vires by entering into contractual arrangements with one of the purchasers; such arrangements were said to involve disposition of the Properties, which were subject to fixed charge securities in favour of the junior secured creditors but without first obtaining the permission of the court pursuant to Schedule B1, Paragraph 71 of the Insolvency Act 1986 (IA 1986).

2. The Administrators had breached their duty in that the Administrators had ignored or paid insufficient regard to the interests of the junior secured creditors, and that the efforts undertaken to market the Properties were inadequate with the result that they were sold for below market value.

Under this head of claim, the Applicants alleged the following specific breaches of duty, namely that the Administrators (see Judgement para 5):

“a) failed to understand the market value of the Properties;

1. b) failed to understand the identity and interests of the creditors with fixed charge securities over the Properties and the value of the interests secured;

2. c) failed to perform their functions in the interests of the creditors as a whole and to act impartially in balancing the competing interests of individual creditors;

3. d) failed to provide creditors with sufficient information to allow them to participate in the collective administration regime in a meaningful way;

4. e) failed to take reasonable care to obtain the best price for the Properties which the circumstances of the case permitted.”

Mr Justice Adam Johnson presented an in-depth inspection into the Administrators’ conduct on marketing, valuation and sale process of the Properties before giving his legal argument.

The legal arguments

The Applicants’ primary claim relies on Insolvency Act 1986, Sch B1, para. 71: that the Administrators acted unlawfully and/or in breach of their custodial or stewardship duty by disposing of the Properties which were subject to fixed charge securities in favour junior secured creditors, as if they were not subject to those securities and without obtaining the permission of the Court.

This argument was rejected by the Judge who considered that entering the said contractual arrangement did not in fact involve any disposal of the property by the Administrators as if not subject to the Applicants’ security. As in the ordinary course, Administrators have no power to dispose of property in a manner which overrides a creditor’s security interest, at least not without the creditor’s consent.

The Judge shrewdly pointed out the obvious: “Administrators are agents for the company over which they are appointed and have no greater power to make a disposal free of such an interest than the company itself would have. Any attempt to do so would be bound to fail: the purchaser would be bound by the security interest, and if the company (or the Administrators) had contracted on the basis that the security interest was overridden, then it (or they) would be in breach of contract.

…. it seems to me that the Administrators contracted on the basis that they would cause one of three things to happen at completion: (i) they would procure consent of secured creditors who would deliver the Land Registry DS1 forms; (ii) they would make an application to the Court under Sch. B1, para. 71; or (iii) they would procure that Barclays sold as mortgagee in possession. None of these alternatives, however, contemplated that the Companies would transfer a beneficial interest in the Properties free from the second-ranking charge prior to completion. On the contrary, each contemplated that an act from a third party independent of the Administrators would be needed in order for completion to take place. That structure, as it seems to me, is quite inconsistent with the idea that there was any immediate disposal of an interest in the Properties not subject to the existing security interests.”

Previous cases cited

On the alternative claim under the breach of duty claim, shortcomings and deficiencies in the conduct of the Administrators had been admitted and identified. Several legal standards and principles on standard of care and duty of administrators were cited and considered in assessing the conduct of the Administrators and their duty of care.

The basic legal standard on the relevant standard of care Re Charnley Davies (No. 2)[1990] BCLC 760 (at 775e-776a):

“It is to be observed that it is not an absolute duty to obtain the best price that circumstances permit, but only to take reasonable care to do so; and in my judgment that means the best price that circumstances as he reasonably perceives them to be permit. He is not to be made liable because his perception is wrong, unless it is unreasonable.”

The overall position Davey v Money[2018] Bus LR 1903:

“An administrator must be a professional insolvency practitioner. A complaint that he has failed to take reasonable care in the sale of the company’s assets is, therefore, a complaint of professional negligence and in my judgment the established principles applicable to cases of professional negligence are equally applicable in such a case. It follows that the administrator is to be judged, not by the standards of the most meticulous and conscientious member of his profession, but by those of an ordinary, skilled practitioner. In order to succeed the claimant must establish that the administrator has made an error which a reasonably skilled and careful insolvency practitioner would not have made.”

On the general duty to act with reasonable care and skill Brewer v Iqbal [2019] EWHC 182

“Failure to understand the nature of the intangible asset, and the true value of the EPGs, led to a failure to properly market the EPGs. These constituted a failure to act with reasonable care and skill.”

On the court’s position that it will generally not question the administrator’s commercial judgment unless it is under the grounds of wrongly applying the law or is conspicuously unfair to a particular creditor. Lightman & Moss:

“…a broad judicial understanding of the nature of the administrator’s task and the challenges that he faces on appointment; an appreciation, in particular, that the administrator will invariably be operating at pace in difficult and urgent circumstances which dictate the need for quick decision-making, often based on less than perfect information, if value is to be preserved. It also reflects an institutional judgment that licensed professionals are better placed than the court to formulate and implement commercial strategy according to the circumstances in which they find themselves.”

The principle that an administrator is entitled to rely on appropriate professional advice in carrying out his duties and will not be liable in negligence if the advice relied on appears to be competent: Davey v. Money. It is up to the administrators to establish that such reliance was reasonable in the circumstances: One Blackfriars.

The judgement

In light of the above, there were several deficiencies in the Administrators’ conduct that had been identified including lack of care, failure in engaging with second-ranking junior secured creditor, failure in explaining and circulating information and unreasonable imposition of deadline. However there had been no findings for breach of duty owed towards the Applicants.

The judgement went on to consider whether any of those deficiencies caused loss to the Applicants. That depends on assessing whether the overall outcome is likely to have been different for the Applicants, had the Administrators’ duties been fully complied with. The conclusion is it had not, because the Properties were sold for their market value, or for the best price reasonably achievable, it follows that whatever deficiencies there were in the Administrators’ conduct, they did not result in financial loss to the Applicants.

The Judge further dismissed the point made by the Applicants that they were deprived of the opportunity to participate in the Administrations in a more active way. This is because: “whatever the deficiencies in the Administrators’ conduct, the fact was that BMBAR and BMBSCI were sufficiently aware of what was proposed in relation to the marketing of the Properties, and if they had considered there was a real prospect of value being lost, they could and would have behaved differently than they in fact did. There is no good reason to think they would have behaved in any different manner, or that there would have been a different outcome overall, if the Administrators had engaged with them in a more formally correct way, including by means of a creditors’ meeting if BMBSCI and BMBAR had chosen to call for one.”

Our thoughts

Although there were some deficiencies in the conduct of the Administrations, the Applicants’ claims failed and were dismissed. Under the circumstances, the Administrators had not acted unlawfully. There is no realistic prospect that in a counterfactual scenario in which the Administrators had engaged differently with the secured creditors, any different outcome would have been achieved; and there had been no financial loss caused to the Applicants despite Administrators’ deficiencies in conduct.

Have questions about this article? Get in touch today!

Call us on 020 7928 0276, our phone lines are open and we will be taking calls from 9:30am to 6:00pm.

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News and Insights

R (on the application of SWP) v Secretary of State for the Home Department [2022] EWHC 2067 (Admin)

Judicial review proceedings

The judgement

Our comments

Magistrates’ court staff strikes

Criminal Bar Association Strikes

Our thoughts

→ If I have registered before, do I still need to keep the relevant certificates?

→ If I just completed the registration, can I ask for the registration fee back now?

→ What if it is said to have been “reserved”?

→ What about people who originally needed to register, but did not register in time?

Background

The case

Judgements

Our thoughts

Background

The Appeal

Our Comments

Have questions about this article? Get in touch today!

Background

The Case

The Ruling

Our thoughts

Have questions about this article? Get in touch today!

Greenwashing in the fashion industry

What are they being investigated for?

Our thoughts

Have questions about this article? Get in touch today!

R (on the application of HAM) v Brent London Borough Council

Judicial Review Proceedings

The judgement

Our comments

Have questions about this article? Get in touch today!

What is a part year worker and what industries will this ruling affect?

Harpur Trust v Brazel

The Supreme Court’s judgement

Our thoughts

Have questions about this article? Get in touch today!

The application

The legal arguments

Previous cases cited

The judgement

Our thoughts

Have questions about this article? Get in touch today!

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