MEES regulations make it illegal to let ‘F’ and ‘G’ Commercial Properties from April – how to prepare for EPC changes

Commercial property landlords should be aware of an important deadline coming up in the very near future. On 1^st April, the application of minimum energy efficiency standards (MEES) for commercial properties come into effect. This will mean that landlords who own properties which are rated either ‘F’ or ‘G’ on the energy performance certificate (EPC) scale will be prohibited from continuing to lease them. Consequently, landlords in this situation will be required to make the necessary improvements, regardless of whether the property was leased out before or after MEES comes in.

MEES has already applied to the grant of new leases or the extension of existing leases since 1^st April 2018. These changes will be of interest from a range of people, including landlords, investors, developers and tenants due to the impact it will have on the property market.

Despite the freezing temperatures, energy efficiency is a hot topic at the moment due to the energy crisis and large increase in energy prices. While households and businesses alike have been financially supported following legislation brought in by the short-lived Truss government, businesses are set to lose that support by April 2023, when it will be replaced by the less comprehensive “Energy Bills Discount Scheme”.

It is important to point out that these changes to the Minimum Energy Efficiency Standards will only apply to commercial properties. Since April 2020, residential properties have already been required to be rated E or higher. This will be upgraded in 2025 to a rating of C for new residential lettings. Previously, standards for commercial properties have not been as high, but this new legislation brings commercial properties in land with the residential sector.

Keep reading to learn more about the changes and what they will mean for commercial landlords.

What is an EPC rating?

Firstly, what is an EPC rating? You might already have a fair idea of what an EPC rating is if you have ever rented or bought a property. Put simply, an EPC rating provides a useful indication of how energy efficient a property is. This is helpful information for anyone looking to lease or purchase a property, whether it is residential or commercial.

Properties are rated on a scale from A to G. As previously mentioned, since April 2020 residential properties have to be rated at least an ‘E’, with commercial properties now also required to be rated as such.

Owners of commercial properties that do not have an EPC rating of A to E will need to carry out sufficient works in order to bring the properties up to scratch, register a valid exemption, or face the consequences of a penalty. While MEES does not prohibit the sale of a property which falls into the ‘F’ or ‘G’ energy performance category, they are unlikely to be as easy to sell given that it will no longer be possible to lease properties in these categories.

What are the penalties?

Properties which do not comply with the new regulations can face a both a civil financial and publication penalty. These penalties will vary depending on a few factors including the length of the breach and the rateable value of the property. For a breach of less than three months the maximum penalty is the greater of £5000 or 10% of the rateable value of the property at the date of service of the penalty notice, up to a max of £50,000.

On the other hand, breaches of three months or more would naturally face a greater penalty. For a breach of this length of time, the maximum penalty would be £10,000 or 20% of rateable value of the property on the date the penalty notice was served, up to a max of £150,000.

In addition to a financial penalty, there is also the possibility of a publication penalty. This would mean information about the breach being on the Government’s PRS Exemptions Register. The public nature of this could therefore draw negative attention which the landlord would not want.

What exemptions are there?

While not common, there are certain exemptions for commercial landlords to the minimum energy efficiency standards. These main exemptions include:

‘7 year payback’ – If the improvement works made to the property does not pay for itself over a seven year period.
Devaluation – This type of exemption occurs where an independent survey from the RICS advises that measures which meet specific energy efficiency standards would reduce the market value of the property or the building it is part of by more than five per cent. This exemption generally lasts 5 years.
Consent – Another exemption may apply where the landlord has been unable to obtain necessary third-party consent such as local authority planning consent, consent from mortgage lenders or having the tenant’s consent to works.
All improvements made – Quite simply, this is where the property remains sub-standard despite all “relevant energy efficiency improvements” having been made. This exemption lasts for five years before the landlord must try to improve the EPC rating again

There are some other exceptions which do not need to be registered on the PRS Exemptions Register:

Short leases – leases not exceeding six months (this includes when there is no previous continuous period of occupation exceeding 12 months and no right to renew)
Long leases – leases of 99 years or more

Our thoughts

We welcome these measures to increase standards within the commercial property sector. With the current Energy Bill Relief Scheme expiring at the end of March 2023 and replaced by an inferior set of measures, any small improvements to improve energy efficiency must be welcomed. While landlords may feel that the MEES are a threat to them, improvements to the energy efficiency of their properties will only help to increase the value of their properties. With the demand for energy efficiency properties higher than ever, this promises to be a good opportunity for landlords, tenants and developers alike.

Have questions about this article? Get in touch today!

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James Cook

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Lacoste’s handling of flexible working request found to be indirect discrimination against former manager

Although flexible working has been around for a while now, it reached a new level of prominence during the Covid-19 pandemic due to the need to alter working habits. Post-pandemic, employees and employers alike are continuing to favour flexible working more and more as a way to boost staff retention, work-life balance and also productivity. Today, we are going to look at a recent indirect discrimination case relating to an application for flexible working. The case centres around a retail manager at a Lacoste store who was told that she could not work part time after returning from maternity leave. However, an appeals tribunal found that this amounted to discrimination by Lacoste after she originally lost her claim for indirect sex discrimination.

The government reportedly plans to give employees the right to request flexible working from day one at their new job. You can read more about these plans, as well as the current flexible working rules more generally by clicking here.

Keep reading this article to learn more about this case, flexible working and indirect discrimination more generally.

Background

The claimant, Melissa Glover, worked as an assistant store manager at the fashion retailer Lacoste. Prior to her maternity leave, Glover worked 39 hours per week on a flexible basis. In November 2020, while she was on maternity leave, she made a request to work three days a week. This request was rejected, and following the completion of her maternity leave in March 2021 the claimant was placed on furlough as a result of the Covid-19 pandemic.

Glover appealed the decision to reject her flexible working request that same month. The appeal was upheld, with the claimant offered part-time work on any four days of the week. This was offered on a six-month trial period, but would be problematic in terms of the claimant’s childcare. It was not accepted by the claimant and her solicitors wrote to Lacoste to ask them to reconsider her request. If this request was not accepted, Glover would resign and claim constructive dismissal.

This approach was successful, and Glover returned to work on the basis of her original flexible working request after her furlough period had ended in April 2021. Despite this, the claimant presented the employment tribunal with a claim for indirect sex discrimination on the basis of the original rejection of her flexible working request.

Decision

The claimant’s claim for indirect sex discrimination was rejected by the employment tribunal. The employment tribunal claimed that the claimant had not suffered any disadvantage due to the fact that Lacoste had reversed their decision to not allow the flexible working request. As a result, the PCP (provision, criterion or practise) did not apply to the claimant.

PCP is the application of a workplace policy or practise in relation to indirect discrimination. Under the Equality Act 2010, there are two main types of discrimination: direct and indirect. As the word suggests, indirect discrimination is usually unintentional. The provision, criteria or practise applies to everyone regardless of any of the protected characteristics defined in the Equality Act. Pregnancy and maternity were the relevant characteristics mentioned in this case, one of nine protected characteristics overall.

As a result of the rejection of Glover’s employment tribunal claim, she appealed to the Employment Appeals Tribunal (EAT). The appeal was allowed by the EAT, who found that Glover was disadvantaged at the point that Lacoste rejected her flexible working request, despite being on leave at the time.

The Employment Appeal Tribunal decided that the PCP applied when the appeal process had been completed. This applies even if the decision is reversed at a later date by the employer, as it was in this case. The employment tribunal had misinterpreted the decision made in Little v Richmond Pharmacology which was used by the EAT as justification for the rejection of Glover’s initial claim. As a result, the EAT found that the PCP did apply in this case.

The case will now return to the employment tribunal in order to determine the remaining issues including the specific nature of disadvantage suffered by the claimant. This will help to ascertain the appropriate award for general damages.

Our thoughts

Employers should be mindful of the consequences when it comes to indirect discrimination and PCP. While employees currently have limited statutory rights when it comes to making flexible working requests, it should be noted that businesses are required to consider the request carefully and only refuse it for a valid business reason. While in this case Lacoste held that managerial staff must work full-time and be fully flexible, this was found to be indirectly discriminatory on the basis that Ms Glover was unable to do so following the birth of her child.

Flexible working is an important equaliser when it comes to the workplace as it allows for a level playing field between different types of people who may otherwise be discriminated against. The government has announced plans to expand flexible working legislation by allowing employees to request flexible working from day one among other measures which you can read about here.

We would advise employers to proactively review their policies and rules to ensure that they are not unwillingly discriminating against their employees. As was seen in this case, failure to apply PCP has the potential to be discriminatory even when it is not deliberate. If you are unsure of your rights when it comes to request flexible working, or you would like help navigating the legal ramifications of flexible working for your business, feel free to contact us for legal advice and we will be happy to assist you.

Have questions about this article? Get in touch today!

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James Cook

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Court finds that Chikwamba only relevant in certain circumstances

In a recent judgement, Alam and another v Secretary of State for the Home Department [2023] EWCA Civ 30, the Court dismissed the Appellant’s appeals against the refusal of their leave to remain application.

The Appellants (SA and AT) both lived in the UK unlawfully. They wed British citizens and made an application for leave to remain in the UK. The requirements under Appendix FM meant that the Appellants should have made this application from abroad.

The Appellants inter alia relied on the judgement of Chikwamba v Secretary of State for the Home Department [2008] UKHL 40 (Chikwamba). In Chikwamba it was held that it would be disproportionate for the Appellant to have to return to their home country simply to make an application for entry clearance that would be bound to succeed. The Court went on to state that in rare cases that the Tribunal should dismiss an appeal under Article 8 solely on the ground that the Appellant could re-apply for entry clearance from their home country.

Alam and another v Secretary of State for the Home Department

The Court considered this case and considered the interpretation of the decision made in Chikwamba and whether this had any bearing on this case. The Court determined that Chikwamba is only potentially relevant on an appeal when an application for leave to remain is refused on the narrow procedural ground that the applicant must leave the United Kingdom in order to make an application for entry clearance. Even in such a case the full analysis of the article 8 claim is necessary balancing against the Public Interest Considerations.

Section 117B is headed ‘Public interest considerations applicable in all cases’. It lists five considerations:

1. The maintenance of effective immigration control is in the public interest.

2. It is in the public interest that people who ask to enter, or to stay in, the United Kingdom, are able to speak English (for two stated reasons).

3. It is in the public interest that such people are financially independent (for two similar reasons).

4. ‘Little weight should be given’ to a private life, or to a relationship with a qualifying partner, which is established when a person is in the United Kingdom unlawfully.

5. ‘Little weight should be given’ to a private life or to a relationship formed with a qualifying partner when a person’s immigration status is precarious.

The Court held in both cases in which neither appellant’s application could succeed under the Rules, to which courts must give great weight. The finding that there are no insurmountable obstacles to family life abroad is a further powerful factor militating against the article 8 claims, as is the finding that the relationships were formed when each appellant was in the United Kingdom unlawfully. The relevant tribunal in each case was obliged to take both those factors into account, entitled to decide that the public interest in immigration removal outweighed the appellants’ weak article 8 claims, and to hold that removal would therefore be proportionate.

Our comments

The findings in Alam and another v Secretary of State for the Home Department [2023] EWCA Civ 30 provide a reminder that the principles of Chikwamba cannot be simply relied on to avoid making an application for leave to enter from abroad. An applicant must have strong article 8 grounds which renders public interest in removal to be disproportionate.

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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Welcome Fiona

We are delighted to welcome our newest colleague, Fiona Huang, to Lisa’s Law. Fiona joins us as a legal assistant and has already made an excellent impression on the team since arriving.

Fiona originally did her bachelor’s degree in Shenyang, China, at Northeastern University between 2014 and 2018. She then completed her MA Law degree at University of Bristol. Following this, she achieved a distinction in her Legal Practise Course in November 2022.

Prior to joining Lisa’s Law, Fiona worked for a law firm in Bangkok as a project manager for the litigation team. More recently, she worked for a Chinese start-up company as an in-house legal advisor.

Fiona is fluent in both Chinese and English. In her spare time, she likes to go for walks with her dogs. She also enjoys cooking and reading.

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.

Email us on [email protected].

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

James Cook

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Lisa’s Law helps to secure indefinite leave to remain for client despite long absence period due to Covid

We have recently been successful in an application for indefinite leave to remain on the 10-year route. Our client made an application based on exceptional circumstances outside the immigration rules and was granted settlement status despite 966 days outside the UK.

This case demonstrates the approach which the Home Office may take towards cases where not granting settled status would have a significant impact on the claimant and their family. It also gives an example of the impact of Covid-19 on the interpretation of immigration law.

Background

Our client arrived in the UK via a child student visa in 2012, where she began to receive the British education from the age of 12. She had a smooth transition to life in the UK, and faced few obstacles until 2020, with the outbreak of Covid-19. Like a lot of other international students, she returned to China to be with her family. Our client then returned to the UK in September 2022 via a new student visa, when by this point Covid-19 restrictions had been lifted by the UK government.

By our calculation, our client’s absence from the UK totals 966 days, with the last absence of 433 days taking place from 2020 to 2022. We made the application for the client on the basis of 10-year lawful residence outside of the rules on absence for settlement that requires up to 540 days in total and 180 days for a single absence.

The application

In our legal representation letter, our core submissions were as follows:

1. We argued that the last absence period to China which totals 433 days should be regarded as an exceptional circumstance. We focus on the strict circuit breakers between China and the UK implemented by China, demonstrating the rationality for this 433-day absence.

2. We argued for our client on the grounds of her private life established in the UK over the past decade. Our client has been in the UK since childhood, receiving a British education and forming a social network. These are proven by her graduate certificates, social events and her own property in London.

There was some correspondence between the next day of biometric submission and the decision date. We provided additional information and evidence the next day or the same day, in part thanks to our client’s timely assistance. The most important document provided was the cancelled flight ticket, which demonstrated the client’s original intention to come back to the UK instead of taking Covid as an excuse for the long absence.

The approved decision was received the week after providing our client’s biometric information due to our client choosing the Home Office’s priority service.

Our comments

This case demonstrates the fact that the Home Office has accepted that the absence period during the Covid pandemic can probably be disregarded. This successful settlement application is significant to our client and her family. If it was rejected by the Home Office, it would lead to a seriously adverse impact on both the life established in the UK of our client, as well as the devotion and support from her family back in China. We are very pleased with the result, as our client has been granted settlement after her long absence from the UK during the Covid-19 restrictions.

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.

Email us on [email protected].

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James Cook

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Register of overseas entities deadline has passed – what now?

We previously brought you news of the register of overseas entities deadline, which you can read more about here. This deadline passed on 31^st January, and overseas companies which have failed to register now face the possibility of sales restrictions and tough fines, according to the Department for Business, Energy and Industrial Strategy’s latest press release. Lisa’s Law is one of a select group of UK-regulated agents who are able to complete verification checks on beneficial owners of an overseas entity. This involves completing verification checks on beneficial owners of an overseas entity The full list is available on the government website here.

Following the deadline on 31^st January, it has been revealed that an estimated 19,510 out of a total of 32,440 register overseas organisations have declared their beneficial owners. According to the government, the register will help to bring transparency to offshore trusts, something they often lack due to frequently being used to obscure assets for tax purposes.

Haven’t already registered? Contact us right away. The government has announced that they are now assessing and preparing cases for enforcement action, so any time wasted at this point could be hugely costly for you and your business. The UK government have made it very clear that they are serious about individuals using UK property to launder wealth.

Keep reading to learn more about the register of overseas entities, what will happens to overseas entities which fail to register, as well as potential issues with the register in terms of increasing transparency of property ownership.

What is the register of overseas entities? A reminder.

The Register of Overseas Entities was introduced by the government on 1^st August 2022 in an attempt to crack down on corruption by overseas entities. Following the introduction of the register, overseas entities that own land or property in the UK must declare their beneficial owners and/or managing officers. Entities which do not register face the possibility of getting a fine, a prison sentence, or both, as well as restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.

The government has recently made a concerted effort to better crack down on corruption, a timely intervention given London’s reputation as the money-laundering capital of the world. This has coincided with Russian’s invasion of Ukraine, with the UK government cracking down on Russian oligarchs who often resided in London.

The Economic Crime and Corporate Transparency Bill comes under this approach towards cracking down on corruption, with the bill currently making its way through Parliament. Its intention is reportedly to “make provision about economic crime and corporate transparency; to make further provision about companies, limited partnerships and other kinds of corporate entity; and to make provision about the registration of overseas entities.”

What happens now?

Once you have registered with Companies House as an overseas entity you will receive a unique Overseas Entity ID. Beneficial owners and managing officers will also be added to the register. You will be able to use the Overseas Entity ID to give to the land registry when you buy, sell, transfer, lease or charge for UK property or land. However, if your application is rejected then Companies House will notify you of what to do next and also refund you the £100 registration fee.

It’s important to point out that, like many registers, you will need to notify Companies House with any changes. This will be done on an annual basis, and not only will you be required to let them know of any changes, but also to ensure that the information held is still correct. This must be done no later than 14 days following the anniversary of the initial registration.

In some cases you might find it necessary to remove yourself from the register of overseas entities. This may be the case if you are no longer a registered owner of land or property in the UK.

Potential issues with the register of overseas entities

As of now, there are still thousands of properties which are undeclared in terms of who owns them. Transparency International, a non-profit which aims to increase transparency and reduce corruption, recently released analysis which found that nearly 52,000 UK properties were still owned anonymously despite the new laws. This translates as 18,000 offshore companies, near half of the offshore companies required to register having not done so. You can read Transparency International’s full report here.

Some organisations like Transparency have criticised the laws for not going far enough, raising concerns that there are potential loopholes within the register of overseas entities which could allow offshore companies to avoid the rules. One particular issue is that 12 per cent of companies which have filed information claim to have no beneficial owners, ensuring that the identity of, for example shareholders in the company remains a secret.

Our thoughts

As a select group of agents who are able to carry out verification checks on beneficial owners of an overseas entity, Lisa’s Law can help to assist your business with these matters. The government have made it clear that they will take action on overseas entities which do not register by pledging to introduce fines and prison sentences against those individuals.

Ultimately, the aim of the register is to make it more difficult for foreign criminals to launder money through UK property. If you would like our help with these verification checks, please don’t hesitate to contact us using the methods below. Read our previous article for the full guide to how to enrol on the register of overseas entities.

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.

Email us on [email protected].

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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James Cook

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Do I have rights in the matrimonial home if it’s in my spouse’s sole name?

The matrimonial home is undoubtedly one of the most valuable family assets one will own. As a consequence, people will often have a lot of questions and concerns about what might happen to it in the event of a divorce.

As you would expect, the law varies depending on the ownership of the property. Normally, if the property is held jointly between the parties, one party has to have the consent of the other party if they want to sell or mortgage the property. However, if there is a party who is not a legal owner of the property, they might be particularly concerned as they might feel that they are in a vulnerable position. Keep reading to find out how the law protects the non-owning spouse in such situations.

Matrimonial Home Rights

The non-owning spouse is protected under Section 30 of the Family Law Act 1996 (FLA 1996) against eviction from the matrimonial home, which means that they have the right to occupy the family home. Please note that even if the spouse owns an equitable interest (i.e., right to occupy), they are still not a legal owner of the property and are still considered to be “non-owning”.

Section 30(2)(a) of the FLA 1996 explicitly states that, “If in occupation, [the non-owning party has] a right not to be evicted or excluded from the dwelling house or any part of it except with the leave of the Court”.

It is important to note that such rights terminate on the death of the owning spouse or on the grant of a decree absolute or final order. However, the Court can exercise its powers under Section 33(5) of the FLA 1996 and extend such rights beyond these events.

If the non-owning spouse wants to safeguard their interest, they should register their matrimonial home rights so that they bind any subsequent buyers and lenders. Once the notice is registered with HM Land Registry, it will appear on the title register of the property. That will prevent the owning spouse from selling, transferring, or mortgaging the property without the non-owning spouse’s consent.

Occupation Orders

An occupation order generally gives an excluded person the right to live in the home or it can be used to give a person the right to continue to remain in the home. Whether the non-owning spouse has rights to apply for an occupation order under the FLA 1996 depends on their status at the time of applying.

If the non-owning spouse has an existing right to occupy the home, he/she would be able to apply for an occupation order under Section 33 of the FLA 1996. The non-owning spouse may have this right because they have an interest or statutory entitlement (for example, the matrimonial home rights under Section 30 of the FLA mentioned above). The home must also have been the home of the couple.

The factors the Court will consider when deciding whether to grant the order are contained in Section 33(6) of the FLA, this includes, (a) the housing needs and housing resources of each of the parties and any child; (b) the financial resources of each of the parties; (c) the likely effect of any order, or of any decision by the Court not to make such an order, on the health, safety or well-being of the parties and any relevant child; and (d) the conduct of the parties in relation to each other and otherwise.

The Court will also have to apply the balance of harm test contained in Section 33(7). It states that if the applicant or relevant child is likely to suffer significant harm attributable to the conduct of the respondent if an occupation order is not made, the court shall make such an order. The case of Chalmers v Johns clarified the approach the Court should take when making such orders. The applicant must demonstrate that he/she would suffer significant harm due to the respondent’s conduct before the Court applies the balance of harm test. If the applicant cannot prove he/she will suffer such harm, the Court will determine the case on the basis of the Section 33(6) factors alone.

An occupation order under this section can be made for a specific period of time or until the occurrence of a particular event. If the applicant has no existing right to occupy the home and the other party has such a right, whether the applicant can apply for an occupation order depends on whether they are a former spouse or cohabitant. But as we are not considering the rights of couples who are not legally married at the time of application in this article, that is outside our scope of discussion.

Preventing Disposals

The non-owning spouse can apply for an injunction from the Court to prevent the owning spouse from disposing the property under Section 37(2)(a) of the Matrimonial Causes Act 1973 (MCA 1973). “Property” in this context is defined widely to include houses and any personal properties such as funds in bank accounts, yachts, furniture etc.

However, in order to apply for an injunction, the non-owning party must already have made an application for financial relief under the MCA. The Court may grant an injunction if there is concrete evidence to show that the owning party is about to dispose of the property with the intention of defeating the claim for financial relief, or if he/she has the intention to delay or frustrate its enforcement.

Setting Aside

If the non-owning spouse only knows about the disposition after it has taken place, they can apply for an injunction from the Court to set aside a reviewable disposition under Section 37(2)(b) of the MCA 1937. The Court needs to be satisfied that the owning party has made a reviewable disposition with the intention of reducing the amount of any financial relief which might be granted, or frustrating or impeding the enforcement of any order.

A “reviewable disposition” is one that is not made for valuable consideration to a bona fide purchaser. An example of this would be if the owning party gifted and transferred the matrimonial home to his friend, the Court would be able to set this aside as it was not made for valuation consideration.

In situations where the reviewable disposition is made after financial proceedings have concluded, if it was made with the intention of frustrating enforcement of an order for financial relief, it could also be set aside under Section 37(2)(c) MCA 1973.

If you have any questions or want any advice on this, please don’t hesitate to contact us. Our team of specialist family law solicitors have many years of experience and will be able to give you the help you need.

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.

Email us on [email protected].

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James Cook

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To what extent can a prenuptial agreement determine the outcome of financial provisions following divorce?

By Xinlei Zhang

January may be behind us, but despite its status as the most popular month for divorce, that certainly doesn’t stop us bringing you the latest developments in divorce law throughout the rest of the year.

This article is no exception. Today, we take a look at a common aspect of marriage, prenuptial agreements – commonly known as prenups. This is a topic we have looked at in some detail before. However, this time, we will focus specifically on whether prenuptial agreements can determine the outcome of financial provisions of divorce.

Prenuptial agreements have become more and more popular in recent times. But as you might know, the agreement made between the couple cannot supersede the jurisdiction of the Court to make financial orders under the Matrimonial Causes Act 1973.

So, if you sign a prenuptial agreement, does it prevent the Court from making financial orders which are inconsistent with the terms in your agreement? A recent family remedy case, HD v WB [2023] EWFC 2 considered this very question.

Keep reading to learn more.

Background

In this case, the Wife (W) and Husband (H) started their relationship in 1996 and started living together at around the same time. The relationship broke down in 1999. In 2001, H and W resumed living together and got engaged in 2003. In 2008, they moved to a property in England purchased by W, the purchase was funded by a £4m loan from W’s family trust. Besides this, there was substantial financial support from W’s parents during the relationship, which was derived from W’s family business.

On 26 July 2014, H and W got married and signed a pre-nuptial agreement on their wedding day. During the marriage, all assets were held in separate names, but almost all of the assets were held entirely under W’s sole name. This included the family home which was purchased with the sale proceeds of the property mentioned above, some investment properties the W bought and liquid cash and investments in the W’s sole name. The matrimonial pot in total exceeded £43m. The Wife was the main contributor financially, and most family expenses were paid by her. The parties separated in December 2020.

One of the issues, in this case, is about the Pre-Nuptial Agreement entered into by the parties on their wedding day and its relevance when it comes to the appropriate financial provisions. The main agreed terms are 1) W and H wanted to retain their separate property; 2) The parties’ pre-marital assets under their sole name and assets held in their respective ownership acquired during the marriage by way of gift or inheritance would remain in their beneficial ownership; 3) H had no beneficial interest in the matrimonial home, or any new property which was subsequently purchased with the proceeds thereof; but H shall receive a certain share of the net profit in the family home index linked in accordance with the Retail Prices Index. 4) H is entitled to a sum based on a sliding scale depending on the number of years of marriage.

Is the Pre-Nuptial Agreement valid?

H’s position is that the Pre-Nuptial Agreement should be disregarded as it was entered into in undue haste, with no legal advice and insufficient disclosure, and it was not able to reasonably meet his needs. W disagreed and maintained that a) H did know about the purpose of the Pre-Nuptial Agreement as he made amendments to W’s draft, and b) H was told he should consult legal advice and had the opportunity to obtain such advice.

The Court did not agree with H. The Court commented that ‘H signed up to provisions which he understood but did not think would ever bite. H, now appreciating the consequences and regretting having signed it, seeks to cast doubt on the Pre-Nuptial Agreement, and in so doing has misrepresented what took place.’ The Court was satisfied that H was fully engaged in the process, he knew what the purpose of the Pre-Nuptial Agreement was and he also knew that W’s assets came mostly from her family. The Court also decided that H did, in fact, have the opportunity to obtain legal advice but failed to do so. The Court concluded that the Pre-Nuptial Agreement was freely entered into by each party, with a full appreciation of its meaning and consequences.

Should the Pre-Nuptial Agreement determine the outcome?

During the financial proceedings, W offered H a sum of £362,500 which she believed represented what H was entitled to under the Pre-Nuptial Agreement, and she also offered a further £2m for a housing fund for H but on a trust basis (the housing monies will revert back to W eventually). However, H wanted £8m so that his housing and income needs could be met.

The Court decided that the Pre-Nuptial Agreement should not be fully upheld and that the outcome should not be determined solely by such an agreement. It is the Court’s view that the amount under the Pre-Nuptial Agreement would not reasonably meet his housing and income needs, especially when considering maintaining a similar lifestyle he enjoyed during the relationship for around 20 years. Therefore, the Court concluded that it is reasonable to depart from the Pre-Nuptial Agreement. In the end, the Court ordered a sum of around £1.9m (4% of the liquid wealth), plus a housing fund of no more than £2.5m which will eventually revert back to W on H’s death.

The Court commented that had the parties married without signing a Pre-Nuptial Agreement in the first place, H’s award would have been significantly higher.

Our thoughts

It is advisable to enter into a pre-nuptial agreement as it can be an effective way to protect assets that you may have had prior to the marriage, or to protect certain family assets. It can also give more certainty to financial arrangements in the event of divorce. However, it is important to know that pre-nuptial agreements cannot override the Court’s ability to decide how your finances should be divided in a divorce.

As we can see in this case, the needs of the parties can justify a departure from the agreed prenuptial agreement. The Court normally considers, at the time of divorce, whether the prenuptial agreement signed is still fair and can provide for both parties’ financial needs. Financial needs are unpredictable in advance, circumstances might change, what may have been fair at the time of the agreement might not be considered fair at the time of divorce if your or your spouse’s circumstances have changed significantly, i.e. reduced earning capacity.

When it comes to the appropriate award in financial proceedings, it is the Court’s obligation to look at all the circumstances of the case and make a decision that not only reflects a proper recognition of the consequences of the Pre-Nuptial Agreement but is also balanced against all the other s25 criteria, in this case, it included looking at the scale of wealth, the parties’ earning capacity and resources, the duration of the relationship and contribution to the welfare of the family, but especially the parties’ needs.

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James Cook

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Luxury flat residents win Supreme Court private nuisance battle against Tate Modern

In a high-profile case, the Supreme Court has ruled that the Tate Modern’s viewing platform violates the privacy of luxury flats located opposite the art gallery. Located in the heart of Central London, in 2020 the Tate Modern was listed as the 3^rd most visited art gallery in the world, with around 5 ½ million visiting each year.

The gallery has a public viewing gallery on the top floor which allows visitors to see 360-degree panoramic views of London. Unfortunately, this means that for the claimants in this case, visitors to the viewing gallery are able to see straight into their living areas. According to the Supreme Court, this constituted an unacceptable level of intrusion.

So what does this case mean for privacy laws, and why did the Supreme Court come to the conclusion that it constituted a private nuisance? Keep reading to find out.

Background

The Tate Modern’s viewing gallery originally opened in 2016 and was swiftly followed by legal action from the Neo Bankside residents affected based on the common law of private nuisance. The viewing gallery is open from 10am until 5:30 pm from Sunday to Thursday, and 10am to 7pm on Fridays and Saturdays. However, the north and east sides can stay open until 10pm, with the whole gallery open until 10pm once a month. These hours have been shortened after previous complaints from the residents. Other measures taken by the Tate to address the concerns included asking visitors to stop taking photos of the properties opposite and putting up signs.

The claimants for this legal action are seeking an injunction which would require the Board of Trustees of the Tate Gallery to “prevent members of the public from viewing their flats from the relevant part of the viewing gallery walkway”. Alternatively, they are also seeking an award of damages.

Judges in both the High Court and the Court of Appeal had previously ruled against the flat-owners despite finding that the interiors of the flats drew significant interest from visitors to the Tate’s viewing gallery. This included people not just looking in, but also taking photographs and posting them on social media. In the initial trial, despite finding that the extent of the viewing into the claimants’ flats could in principle give rise to a claim for nuisance, it was found that this did not amount to a nuisance. The reason for this is that the judge found the use of the top floor of the Tate as a viewing gallery was reasonable, and also that there were two main factors which meant the claimants’ were responsible for their grievances.

1. They bought properties with glass walls

2. Remedial measures could be taken such as lowering blinds during the day or installing net curtains

On appeal the Court of Appeal found that the judge had applied the law incorrectly. Despite dismissing the appeal, they found that if the principles of common law nuisance were correctly applied to the facts of the case, the claim should succeed. The appeal was dismissed on the basis that “overlooking” cannot in law count as a nuisance. It is important to note that there is also no precedence for this in English law.

Judgment

The majority of the Supreme Court judges (3 out of 5) agreed with the Court of Appeal that the judge had incorrectly applied the law. However, they disagreed with the Court of Appeal in deciding that the law of nuisance does not cover such a case. They stated that the reason behind the lower courts dismissing the case could have been that they were reluctant to favour “a few wealthy property owners” over allowing the general public to have an unrestricted view of London.

One of the main tests applied by The Supreme Court was whether the viewing gallery “necessary for the common and ordinary use and occupation of the Tate’s land”. Lord Leggatt criticised the Court of Appeal for not applying such a test, and came to the conclusion that had it done so, it would have concluded that the Tate was not using its land in a “common and ordinary way, but in an exceptional manner”. Leggatt added that simply asking the claimants to put up curtains in order to prevent overlookers wrongly placed the responsibilities of avoiding a nuisance on the victim. He compared this with a noise complaint, stating that it would not be appropriate to simply ask someone to wear earplugs in such a situation.

In concluding that the Tate was liable in nuisance, Leggatt suggested that some form of remedy was required. However, he stated that this was not a matter for the Supreme Court, and that instead it should be up to the Chancery Division to decide on remedial action if the two parties cannot reach agreement on a solution.

Our thoughts

This is both a high-profile and important case which could have a significant impact on how other courts in England choose to interpret the law when it comes to privacy laws and overlooking. Some members of the public may have issues with the decision, determining that rich people who buy properties next to one of the world’s most visited museums should have little to complain about.

However, the Supreme Court made clear that the outcome was specific to the case itself. Nevertheless, it will be interesting to see whether the case leads to more claims around private nuisance and overlooking more specifically. In a city like London, with countless tall buildings in close proximity to each other, and space coming at a premium, it would be hardly surprising to see more cases of this kind. Whether it will have an impact on property developers will also be one to keep an eye out for.

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Does a solicitor owe a duty of care to a person who is not a client?

Duty of care is a relatively broad concept which refers to the obligations placed on people to act towards others in a certain way. While solicitors are used to having a duty of care towards their client, it is far more unusual for a solicitor to have to hold a duty of care to someone who is on the other side of the transaction in which they are acting. Where a solicitor does have to accept responsibilities of third parties, this is known as the Al Kandari principle.

A recent Court of Appeal ruling found that there are exceptional cases ‘where solicitors have been held to a duty of care to someone who is not their client’. In this case, Ashraf v Lester Dominic Solicitors & Ors, the duty of care related to the bank’s solicitor potentially owing a duty of care to the seller of the property when they filled in Land Registry paperwork. It is a complex case, with a total of seven defendants being sued for negligence overall.

But why did Lord Justice Nugee decide that the solicitor owed a duty of care to parties other than the solicitor’s client? Keep reading to learn more.

Background

This litigation action had been longstanding, having initially by been brought by the late Mr Syed Ul Haq, who is now deceased. The action originated as far back as 2008 from a purported fraudulent property transfer and continued following Mr Ul Haq’s death.

Two acts of fraud occurred which rendered the property transfer unlawful. The property transfer was ineffective as the TR1 transfer form was not witnessed. This meant that even though the buyer was living and paying the mortgage for the property, the buyer was not in fact officially registered as the owner. The transfer was conducted by FLP Solicitors who acted for all parties; however a solicitor there misappropriated the mortgage money, which led to them being given a custodial sentence.

As the lender for the property transfer, Bank of Scotland then instructed another solicitors firm, Rees Page, to deal with the incomplete registration. In 2010, Rees Page declared that legal completion did take place during the initial property transfer in 2008. They subsequently asked Mr Ul Haq, the seller, and Mr Attarian, the buyer, to sign new documents, which were executed with the original date of completion. The new TR1 transfer form was executed in 2010.

However, following the receipt of the documents, Rees Page had reservations about the legitimacy of the signatures. Despite this, neither Mr Ul Haq and Mr Attarian were clients of Rees Page, and the transfer and charge was registered with the Land Registry using form AP1. A number of boxes and panels had to be filled in, with one of these (panel 13), confirming that each party was represented by a conveyancer. The purpose of this is so reduce the risks of property fraud.

Rees Page listed FLP Solicitors as the conveyancer for Mr Ul Haq, despite the fact that FLP Solicitors had been intervened in by this point. The application was then completed, and Mr Attarian was finally registered as the legal owner of the property.

Following Mr Ul Haq’s death, action was pursued by the claimant on behalf of Ul Haq’s estate. This claim was brought based on claims that a signature on the TR1 form had been forged, and that the bank’s solicitors had been negligent in registering the transfer and charge. The estate subsequently lost the property, and they filed for an alleged breach of duty of care despite the fact that Ul Haq was never a client of Rees Page.

As mentioned previously, it was well-established that solicitors owed duties to their clients alone, and duties of care were not ordinarily held towards those on the other side of the transaction. In exception circumstances it could be held that solicitors owed a duty of care to someone who was not their client, known as the Al Kandari principle.

Given their confidence about their situation and belief that the estate didn’t have any chance of succeeding, Rees Page applied for summary judgment. This summary judgement was granted by the Court on the basis that there was no duty of care to someone who was not the solicitor’s client. The decision was appealed by Mr Ul Haq’s estate. While this was dismissed, the estate appealed once again. It is this appeal that is the subject of this article.

Decision

The Court of Appeal confirmed that it was correct that Rees Page offered no duty of care to Mr Ul Haq up to the date they submitted and confirmed the application to HM Land Registry. However, by filling in box 13 of the AP1 form, the solicitor, Mr Kilvert, was also acting on behalf of Mr Ul Haq when the property transfer was executed. The argument is therefore that by giving such confirmation, the solicitor was not solely acting for the applicant, but also other parties. This therefore engages the Al-Kandari principle, where solicitors can owe a duty of care when they step outside of their normal role.

Furthermore, this would mean that the solicitor would also owe a duty of care in filling in the form accurately, something he did not do. The acting Solicitor, Mr Kilvert, mistakenly thought that the contract had been completed in 2008. He therefore believed that the replacement transfer’s purpose was to finalise the formalities which had not been observed.

Despite this, the Court decided against ruling whether the duty was breached. They did however allow the appeal, which included setting aside the summary judgment which Rees Page had applied for. They also allowed the claim against Rees Page to go to trial on the limited basis. This is because Mr Ul Haq’s estate’s case did not rely on the solicitor mistakenly filling in the AP1 form.

Our thoughts

This is an important court decision which offers a warning for the steps solicitors need to take to ensure that they do not step out of their normal duty to clients. By filling and confirming Mr Ul Haq ‘s information in Panel 13 of the AP1, the solicitor had taken him on as a client unwisely. This requires him to act in Mr Ul Haq’s interest and fill in the form correctly.

This case also offers an important lesson for the extent to which the Courts are prepared to extend a solicitor’s duty of care. Whether the solicitor intends to represent a third party or not is not taken into account and therefore underlines the risk to assuming a duty of care to a non-client. The forthcoming trial will therefore be one of interest for those involved in conveyancing and property law.

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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James Cook

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