Long-term renters! You may have to pay SDLT on your tenancy!

Stamp Duty Land Tax (SDLT) is usually something people associate with purchasing a property or land rather than with renting tenants, but it may surprise you to know that certain long term renters have had to pay 1% SDLT since 2003.

Who is effected?

People who have been renting for a substantial amount of time, having made £125,000 worth of rental payments, may have to pay 1% SDLT on the property. SDLT may be due on the grant of a lease (tenancy agreement) and is assessed by reference to the ‘Net Present Value’, meaning the total value of the rent.

Many tenants have been caught out by this clause simply because they are unaware of their tax obligations, leaving them in with a horrible surprise when SDLT arises as an issue they must deal with.

£125,000 threshold

To be clear, the threshold currently sits at £125,000 – the threshold for zero rate band SDLT for residential conveyancing. It means people who are paying rent which has equated to more than this sum are obliged to pay up. In the current state of affairs, with many people falling under the umbrella term of Generation Rent, with the amount of people renting increasing while homeownership falls, it is highly probable that more and more people will find themselves paying this surprising Stamp Duty.

Net present value is calculated by taking into account the highest 12 monthly rent in the first 5 years of the tenancy. It is done via a complicated formula which maybe the HMRC is only capable of understanding. If anyone is interested in test it, their online calculator is available here: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro .

Roughly speaking, if someone’s rent adds up to £17,800 each year then they may be liable to pay the 1% SDLT in their seventh or eighth year of the tenancy.

It should be noted that when calculating the term of the tenancy, it is likely to include both fixed term tenancy and periodic tenancy (where the tenancy continues after a fixed term).

Consequences of not paying?

Failing to pay in what is described as a ‘timely fashion’, which actually means within three months of the filing date, the renter could incur a £100 fine.

Where no payment is made after three months passes that penalty will rise to £200, and could continue to rise to the full amount of the tax due if the return is 12 months overdue.

What is more, and will come as another blow to the renting community, is that although the Stamp Duty holiday is currently being taken advantage by many, it does not apply to renting arrangements. The reason for this is because the scope of the holiday relates to tax being lifted for buyers rather than renters, which will offer no comfort to those who do not own their homes.

What can you do to check?

We advise people to take action to discover what their personal situation is, as in cases such as this ignorance is not bliss; it is better to be prepared rather than be caught off guard.

If a person is close to reaching the threshold, they are encouraged to reach out to HMRC, who should be able to offer further advice on the amount which needs to be paid, and how the tax should be met.

Of course, in matters like this Lisa’s Law are able to offer advice and peace of mind for anyone who finds themselves worrying about such things.

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Shareholder claims and principle of ‘reflective loss’ – What can be learnt from Broadcasting Investments Group Ltd v Smith?

Written by Rosa Huang.

In the most recent case, the Broadcasting Investments Group Ltd v Smith, application of principle of ‘reflective loss’ in the Supreme Court decision in Marex Financial Ltd v Sevilleja was considered by court, shareholder of a shareholder of a shareholder of the claimant company seeking an order of specific performance, has been allowed to proceed to trial.

The principle of ‘reflective loss’

If a third party did something wrong to a company, can shareholder of that company bring a claim for its own loss against the third party?

Under the UK law, a shareholder can only bring a derivative action for losses of the company, and may not claim a loss in its personal capacity for its personal loss. This is the principle of ‘reflective loss’, or ‘no reflective loss’ rule, which is intended to avoid the double recovery of losses.

In the leading case Prudential Assurance v Newman Industries Ltd, the court ruled that shareholder of a company ‘cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend’.

Subsequent authorities extends the scope of “no reflective loss” rule beyond the diminution of value of shares and the loss of dividends to non-shareholder creditors and employees.

The Marex Financial Ltd v Sevilleja

The judgment in another leading case, Marex Financial Ltd v Sevilleja, however, cut back the scope of the ‘reflective loss’ principle. In this case, Lord Reed of The Supreme Court drew the distinction between claims brought by a shareholder in relation to loss which he or she has suffered in the capacity of shareholder, and claims which a shareholder or anyone else may bring in any other capacity, for example as a creditor or employee of the company.

As concluded by the court in Marex Financial Ltd v Sevilleja, the considerations to justify the ‘no reflective loss’ rule are:-

The need to avoid double recovery from the defendant by the claimant and the company.

Causation – if the company chooses not to claim against the wrongdoer, the loss to the claimant is caused by the company’s decision and not by the defendant’s wrongdoing.

The public policy of avoiding conflict of interest; particularly that if the claimant has a separate right to claim it would discourage the company from making settlements.

The need to preserve company autonomy.

The need to avoid prejudice to minority shareholders or other creditors.

Whether the company is able to pursue an action itself – the rule will not apply where, as a consequence of the actions of the wrongdoer, the company no longer has a cause of action and it is impossible for it to bring a claim or for a claim to be brought in its name by a third party.

Broadcasting Investments Group Ltd v Smith

The Marex Financial Ltd v Sevilleja applied to a claim brought by a shareholder of a shareholder, in a decision handed down by court in Broadcasting Investments Group Ltd v Smith, on 21 September 2020.

Background

Mr Burgess, Mr Smith and others entered into an oral agreement for a joint venture and agreed that a public company, Streaming Investments plc, would be incorporated as the vehicle for the joint venture. Broadcasting Investments Group Ltd (‘BIG’), owned as to 51% by VIIL, which is controlled by Mr Burgess, would have a 39% shareholding in Streaming Investments plc.

Following the incorporation of Streaming Investments plc, and the fulfilment of certain financing obligations, Mr Smith was to procure the transfer to the company of all the shares in two companies, SS Ltd and TVP, which were developing certain technology.

Mr Smith, however, failed to procure the transfer to Streaming Investments plc of the shares in SS Ltd and TVP, after Streaming Investments plc was incorporated and the financing obligations were fulfilled.

SS Ltd became insolvent and a liquidator was appointed.

Mr Burgess and BIG brought proceedings against Mr Smith and others alleging breach of contract. BIG claimed damages for breach of contract and an order that Mr Smith specifically perform the contract by procuring the transfer to Streaming Investments plc of all the shares in SS Ltd and TVP.

Mr Smith applied to strike out the claims of BIG and Mr Burgess. The grounds are that the claims were barred by the reflective loss principle, the loss suffered by Mr Burgess was the diminution in the value of his shareholding in BIG consequent on the diminution in the value of BIG’s shareholding in Streaming Investments plc.

The court’s decision

The court believed that while Prudential Assurance v Newman Industries Ltd was correctly decided, the reflective loss principle was an incident of company law and was limited to the very specific circumstances where:

a shareholder in a company and the company suffered an injury which was actionable by both of them, and

the loss claimed by the shareholder was limited to the diminution in the value of their shares in the company or in the dividends or other distributions which the company might make to them consequent on the loss suffered by the company.

The principle extended beyond claims for damages to any relief claimed by a shareholder in respect of such loss.

The court decided that:

BIG was a shareholder in Streaming Investments plc and the loss that it claimed was the diminution in the value of its shareholding in Streaming Investments plc or in the dividends and distributions that it might receive from that company.

Streaming Investments plc, while not a party to the contract, was entitled to enforce the contract pursuant to section 1 of the Contracts (Rights of Third Parties) Act 1999 and thus was able to bring its own claim for the loss that it had suffered. Accordingly, BIG’s claims were barred by the rule in Prudential v Newman and were struck out.

Mr Burgess sought only an order of specific performance by Mr Smith of his contractual obligation to procure the transfer to Streaming Investments plc of the shares in SS Ltd and TVP. Mr Burgess was not a shareholder in Streaming Investments plc and the rule in Prudential v Newman did not therefore bar his claim, which would be allowed to proceed to trial.

Comments

In relation to any wrongdoing by third parties, it is important for shareholders to appreciate what claims properly lie with the company and what claims the shareholder may bring in their own right. Where a diminution in shareholdings is attributable to loss caused to the company by a third party, it is the company which will generally have the claim, not the shareholders themselves.

However, as the court’s decision in the two latest cases, Marex Financial Ltd v Sevilleja and Broadcasting Investments Group Ltd v Smith demonstrate, reflective loss principle was an incident of company law and was limited to the very specific circumstances.

Further, there are other recourses for shareholders who believe they or the company have been wronged, for example the recourses of unfair prejudice claim (section 994, Companies Act 2006 (CA 2006)), derivative claim (Part 11, CA 2006), or petition for winding up on just and equitable grounds (section 122, Insolvency Act 1986).

In summary, there are remedies for shareholders but generally speaking, remedies for shareholders are not straightforward and shareholders’ claims are restricted due to the “no reflective loss” rule.

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Restraint of trade – out with the old, in with the new

Written by Salina Lim.

In the recent case, Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36, the Supreme Court has shed light on the law and questions posed in respect of contractual restraints which restrain the use of the land.

On 19 August 2020, in the case of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36, the Supreme Court regarded that the ‘trading society’ test was the proper test for the restraint of trade by agreement. The ‘trading society’ test replaced the ‘pre-existing freedom’ test which was recognised in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269.

**Salient facts of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd as follows:**

In 1979, a property developer owned land in Londonderry. The property developer intended to build a shopping centre.

In February 1981, the property developer granted a lease to Dunnes Stores (Bangor) Ltd (“Dunnes”).

The lease indicated that the property developer was “…to promise not to cause or permit the establishment on any other part of the site of a unit measuring more than about 3,000 square feet for the sale of food or textiles” at paragraph [4] (“the covenant”) to Dunnes.

Dunnes constructed its store.

In October 1982, the shopping centre opened.

Later, the property developer’s interest in the land and covenant was assigned to Peninsula Securities Ltd (“Peninsula”)

Peninsula argued that the shopping centre became unsuccesful due to the covenant but Dunnes disagreed.

Subsequently, Peninsula brought a claim against Dunnes that the covenant was unenforceable under the doctrine against restraint of trade (“the doctrine”).

Initially, the case was dismissed by a judge who deemed that Peninsula had given up pre-existing freedom to use the land due to the assignment of the land and covenant.

Peninsula then appealed the case with success.

Subsequently, Dunnes appealed to the Supreme Court.

What was the Supreme Court decision?

In Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd , the Supreme Court considered the law on the restraint on trade. Also, the Supreme Court considered whether the doctrine was engaged at all. The Supreme Court agreed with Dunnes and determined the covenant was reasonable and, hence, enforceable.

The Supreme Court found that the ‘pre-existing freedom’ test used in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd had the following issues:

it had been constantly condemned for more than half a century;

there was “no principled place within the doctrine” at paragraph [50];

the reasoning was difficult to defend; and

it was rejected in common law jurisdictions, for example some parts of Canada and Australia, and produced legal issues in terms of consistency between common law countries.

It is noted that for the “trading society” test, the doctrine of the restraint of trade does not apply to restrictive covenants that are accepted because it has “passed into the accepted and normal currency of commercial or contractual or conveyancing relations” at paragraph [46], that has progressed due to demands of various factors such as competition, negotiation and public policy. These types of covenants can now be understood to be acceptable as a part of the trading society.

Implications to note

The Supreme Court in Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd departed from ‘pre-existing’ test to ‘trading society’ test because they deemed that there was no defence of it and for public policy reasons.

It is imperative that for this type of covenant, that commercial landlords and tenants should be aware and have a reasonable understanding of what is considered to be a trading norm.

Legal advisors, commercial landlords and tenants should take note that:

they should review these types of covenants carefully;

the anchor tenants (larger tenant in shopping malls) benefit from these types of covenants;

landlords should reassess the risks they have taken to filling vacant land because they may breach these restrictions; and

common law jurisdictions in this world have confirmed and accepted that is normal for a grant of a long lease in part of a shopping centre to contain a covenant in relation the landlord’s use such as in the case of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd.

Have questions? We are here for you!

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Case reference: Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36

Date of judgment: 19 August 2020
Court: Supreme Court
Judge: Lord Wilson, Lord Carnwath, Lord Lloyd-Jones, Lady Arden, Lord Kitchin

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Can you discharge or modify the Restrictive covenant, easement / right that is affecting your land?

Written by Jessie Cheow.

Creebray Ltd v Deninson and another [2020] UKUT 262 (LC) – Unsuccessful application to modify or discharge covenant.

Background

The applicant company, the registered proprietor of a vacant plot of land (Oldways) applied to discharge or modify a restrictive covenant pursuant to section 84 of the Law of Property Act 1925 (LPA 1925). It intended to build a house on Oldways and a planning permission had been granted by council but it is in a position that would breach the restrictive covenant as the covenant prevents building in front of a line 50 feet away from its rear boundary. There had been a house on Oldways, which had been demolished in 2008. The planning permission was for a six-bedroom family house over three levels (including accommodation in the roof space), and a triple garage with a gym above it. Its footprint would be larger than that of the demolished dwelling. The registered proprietors of the house next door to Oldways had the benefit of the restrictive covenant. The objectors genuinely believe that the building line protects their privacy and outlook, that the new building would overlook Severalls and the inhabitants of the new house will be able to see them, hence, it would have a very significant impact on its value as it affected their privacy and seclusion. Further, there is an interference with the right of light as the new house will overshadow Severalls. Therefore, they have objected to its discharge or modification because of the detrimental effect they claimed the breach of the covenant would have on their property.

The Relevant Law

Section 84 of the Law of Property Act 1925, subsections (1) (aa) and (c). Section 84 provides, so far as is relevant:

“84(1) The Upper Tribunal shall … have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to dis-charge or modify any such restriction on being satisfied-

(aa) that (in a case falling within subsection (1A) below) the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user; or

and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say either –

(i) a sum to make up for the loss or disadvantage suffered by that person in consequence of the discharge or modification; or

(ii) a sum to make up for any effect which the restriction had, at the time, when it was imposed, in reducing the consideration then received for the land affected by it.

(1A) Subsection (1)(aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of the land in any case in which the Upper Tribunal is satisfied that the restriction, in impeding that user, either –

(a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; or

(b) is contrary to the public interest;

and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.

(1B) In determining whether a case is one falling within section (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.

(1C) It is hereby declared that the power conferred by this section to modify a restriction includes power to add such further provisions restricting the user of or the building on the land affected as appear to the Upper Tribunal to be reasonable in view of the relaxation of the existing provisions, and as may be accepted by the applicant; and the Upper Tribunal may accordingly refuse to modify the restriction without some such addition.”

Issues and Decisions

The applicants have reliance ground (aa) and (c), however the applicants have accepted that ground c is not applicable in this case. Therefore, the court will look only at ground (aa) and decide the following issues accordingly:

Whether the proposed use of Oldways is reasonable;

Decision: The building of a house on Oldways is obviously reasonable and indeed desirable. This particular proposed house is large and could be regarded as overbearing but it has planning permission and we regard its construction as a reasonable use of the land.

Whether the covenant impedes that use;

Decision: The objectors’ Statement of Case stated that the covenant did not impede a reasonable use of the land because it was open to the applicant to build a house behind the building line; in other words, there were reasonable uses that were not prevented by the covenant. However, the objectors stated that LPA 1925 s 84(1)(aa) required that the proposed use would be a ‘reasonable use’ and ‘the restrictive covenant impedes that use’.

It was not in dispute that the building of the proposed house would be a breach of the covenant. Accordingly, the covenant impeded that reasonable use of the land (see [52] of the decision).

Whether the impeding of the proposed use secures practical benefits to the objectors; and 4) Whether, if so, those benefits are of substantial value or advantage;

Decision: The restrictive covenant, in preventing the building of the proposed new house in front of the building line, secured a practical benefit to the objectors, regarded as being of substantial advantage to them. The rural leafy outlook of those properties, in which buildings did not intrude, was a big attraction and the whole character of Severalls would be changed if the view in front of the house included the building next door in front of the building line, of whatever size, and especially one so tall and bulky as was being proposed. That was not a ‘de minimis’ intrusion in front of the line. It was a very large house, most of which was in front of the line. It would certainly be visible at times of the year when the hedge was thin, and that view would completely change the outlook from the front garden of Severalls and the character of Severalls as a property (see [66] of the decision.

5) If they are not, whether money would be an adequate compensation.

Because of that conclusion the court do not need to consider the further question of whether by impeding the proposed use the restriction secures to the objectors practical benefits of substantial value but the court have commented on the expert evidence provided by Mr Smith. The assessment of the diminution in the value of Severalls at between £250,000 and £450,000 seemed to be arbitrary; the only explanation he offered was his asserted skill and judgment as a valuer. He also relied as his main comparable upon the sale in 2018 of Oakendell, a property adjoining Oldways but without the benefit of the covenant and therefore likely to have been reduced in price because of the prospect of the 2016 planning permission being implemented next door. Mr Smith did not think the adverse effect upon Oakendell would be as great as that on Severalls, but the main part of the proposed house would have been closer to Oakendell than to Severalls and there would, in the judgment, have been some adverse effect on value. Mr Smith does not appear to have considered the benefit of the restriction to Severalls when analysing the sale of Oakendell for use as a comparable.

Conclusion

Application dismissed. The court decided that the restrictive covenant had secured a practical benefit to the objectors, regarded as being of substantial advantage to them, for the purposes of LPA 1925, s 84(1A). The rural leafy outlook of the properties, in which buildings did not intrude, was a big attraction and the whole character of the objector’s property would be changed if the view in front of the house included the building next door in front of the building line, of whatever size, and especially one so tall and bulky as was being proposed by the applicant company.

Opinions

The restrictive covenant produces a design for the three adjacent properties that ensure a leafy outlook to the south without sight of buildings. It does not restrict the size of the houses on the plots, and it does not need to because it places a tight restriction on position. If the applicants are willing to compromise and amend their plan/ drawing, perhaps this matter can be resolved amicably.

The only real protection the objectors have from the visual intrusion of a bulky three-story building visible from the objector’s garden is the hedge, in its current state. Based on the fact that the court is concerned that it will not provide adequate screening in winter. In my opinion, the respective parties may consider imposing a positive obligation on the owner or future owner of Oldways and Severalls to ensure that they will maintain the hedge. This could be registered as an additionally restrictive covenant on the registered title and require the future owner to observe and perform the positive covenant. For the safeguard, the current owner may also request an indemnity covenant from the future owner to secure their interest.

Have questions? We are here for you!

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Compliance is Key! Naturalisation, EEA Nationals and the ‘Good Character’ Requirements

When applying for naturalisation or attempting to register as a British citizen, adults and children aged ten or over must meet what is known as ‘the good character’ requirement. This is said to vet undesirables from integrating into the UK permanently by checking that the applicant has not taken part in illegal activity or ignored certain immigration laws.

Certain behaviours which will negatively affect applicant’s chances in meeting the requirements are obvious, such as:

Having committed a serious crime in the past

Associating with known criminals

Being linked to any kind of terrorist organisation

Being a persistent offender

These types of offences are clear cut and easy to understand, but where does the Home Office stand when it comes to blurrier territory relating to immigration laws?

Complying with immigration requirements

The Home Office recently updated its guidance and has focussed more on those who have been in breach of immigration rules within the last 10 years leading up to their naturalisation application.

The following behaviours will ‘normally result in refusal’ according to the latest guidance:

Failure to comply with conditions imposed under the immigration laws, for example:

- Accessed public funds when prohibited from doing so.
- Worked in the UK without permission to do so.
- Studied in the UK without official permission.

Where working is concerned, some people may find it harsh that applicants will be penalised for trying to earn some money, however in the eyes of the Home Office illegal working causes damaging social and economic problems for the UK. It is to be avoided at all costs if a person is serious about being naturalising as British citizen.

Overstaying

- Where a person has overstayed at some point in the 10 years prior to an application for citizenship, discretion to overlook this breach will normally only be considered if it is the only adverse factor weighing against the person’s good character. It is considered a serious issue.
- Certain factors will be taken into consideration by the Home Office, for example if the period without leave was not the fault of the applicant, say where it arose from a Home Office decision to refuse which is subsequently withdrawn or quashed or which the courts have required the Home Office to reconsider.

For more information of applications for overstayers, follow this link.

Illegal Entry

- If an applicant entered the UK illegally, an application for citizenship will normally be refused if the illegal entry is confirmed as having occurred during the preceding 10 years.
- In terms of asylum seekers, where people make themselves known at the earliest opportunity to UK immigration officials, some discretion may be granted to them in their favour in certain circumstances.
- Refugees will normally be refused citizenship because they entered illegally and chose not to claim asylum at the first available opportunity, or only claimed after enforcement action was taken against them. This will not be looked upon kindly by the Home Office.

EEA Nationals and their family members

The above rules apply to everyone, including EEA nationals, but with EEA nationals the EEA Regulations 2016 will also be taken into account.

People who are entitled to reside in the UK under the EEA Regulations 2016 do not require leave to enter or remain as the Home Office will take into account whether the applicant was subject to the EEA Regulations 2016 or the Immigration Act 1971 and whether they complied with the relevant requirements.

It is important to remember, however, that if a person has acquired EEA rights, any breaches of other Immigration Acts will still be taken into account.

Permanent Residence Cards

If an EEA or Swiss national or their family member has a permanent residence card, the Home Office will likely accept that they complied with immigration requirements in the UK for the 5-year period before it was issued, and the period since then. This is provided they have not lost their permanent residence, for example by being out of the UK for more than 2 years.

Comprehensive Sickness Insurance

Comprehensive sickness insurance is a form of medical health insurance required across the EU.

The UK Home Office defines comprehensive sickness insurance as ‘any form of insurance that will cover the costs of the majority of medical treatment’ in the UK.

Comprehensive Sickness Insurance (CSI) is a legal requirement for EEA and Swiss students, self-sufficient persons and their family members who are residing in the UK with them. If an applicant does not have CSI, the Home Office will take this into consideration with dealing with the person’s application and it is possible to be refused due to the lack of it.

How can Lisa’s Law help?

Our immigration team are experts in this area and are able to provide advice and guidance in relation to naturalisation and registration applications, ensuring the highest chance of success. If you are interested in making an application but find yourself worrying about your immigration history, conduct or any other matter, Lisa’s Law is here for you!

Get in touch on 020 7928 0276 or email info@lisaslaw.co.uk and one of our lawyers will be happy to assist you and put your mind at ease.

Or, why not download our free app today? You can launch a new enquiry, scan over documents and much more.

If you have an iPhone, follow this link to download.

If you use an Android phone, follow this link to download.

Find the link here if you need some further instructions on how to use our new app!

Also, you can find the complete government guidance of the Good Character requirements here.

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Court Finds No Evidence of Discrimination as Women’s State Pension Age Rises!

Women across the nation are likely to be united in their disappointment in the Court of Appeal’s decision to disregard campaigner’s accusations of discrimination after their state pension age was risen to be the same as a man’s.

The case in question which we will be focussing on in this article is *R (on the application of Delve and another) v Secretary of State for Work and Pensions.

What is a state pension?

In brief, the state pension is a regular payment from the government which most people are able to claim when they reach the qualifying age. A person’s state pension age depends on when they were born.

For example, if a person was born in 1977, they will reach state pension age in 2044. But if they were born in 1959 they will reach state pension age in 2025.

You can find out your State Pension age by using the calculator on the GOV.UK website.

Original changes

The Pensions Act 1995 changed the age a woman could begin collecting her state pension from 60 to 65, matching the male age, from April 2010 to 2020.

The Pensions Acts of 2007, 2011 and 2014 then accelerated this change, raising the state pension age for some men and women born in certain years to as high as 68.

What did the claimants take issue with?

The primary issue the claimants (who are two women born in the 1950’s) took was that the changes to the pension age limit discriminates against women, both in terms of age and gender. They believe this to be the case because many women, especially those born in generations such as the 50s, 60s and 70s, were not in an equal economic position to men, and could not get the same types of jobs.

Essentially, their challenge to the legislation was that although one of the aims of PA 1995 was to end the gender based discrimination that had previously allowed women to claim their pension five years earlier than men, this equalisation had come before actual improvements in the economic position of women in their age group.

They also deemed it grossly unjust that women born between 6 April 1950 and 5 October 1954 are able to access their pension between the ages 60 and 66, while women born after 5 October 1954 but before 6 April 1960 must wait until they reach the age of 66 to receive theirs. Their argument is that not enough difference exists between these age groups to make the change in legislation reasonable. They further argued that the affected women were not given enough notice to prepare for up to six years extra without their state pension.

Their plight was backed by a huge amount of people, as an estimated 3.8 million women born in the 1950s have been impacted by the outcome of this case.

How did the Court of Appeal respond?

To put it plainly, the judges unanimously decided the claimants did not face discrimination on the grounds of sex and age when the Department of Work and Pensions (DWP) raised the state pension age.

To add insult to injury for the women affected, the government welcomed this ruling, saying the changes were a “long-overdue move towards gender equality”.

The reasoning behind the ruling was that there is a need to equalise the age of state pensions as men and woman become more parallel according to their career and payment options. They conclude that it is impossible to say that the decision to ‘strike the balance’ where they did was made without ‘reasonable foundation.’

No warning?

A key part of the claimant’s argument was that the changes to the legislation were made swiftly, leaving the women affected little time to prepare for life without access to their pension. This part of the argument was also disregarded as inconclusive.

Reaction

There has clearly been widespread disappointment and concern. Joanne Welch, founder and director of BackTo60 (the campaign group leading the opposition to this legislation), has said she would now consider taking the case to the Supreme Court and will draft her own legislation to bring a women’s Bill of Rights.

What do we think?

Here at Lisa’s Law we understand and appreciate the importance of gender equality. It is difficult not to feel sympathy with the women affected by this legislation; we fully understand their anger and disappointment. It is clearly true that women, on the whole, have historically been paid less than men. While thankfully this is changing, slowly but surely, we do feel that the situation could have been handled differently, or some additional support could have been given to the affected women to help bridge the gap in a more even manner.

It is likely that this case will be reignited in some way in the future, and we will be sure to report about it once more when it does.

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EU Settlement Scheme – Do not fall through the cracks!

The EU settlement scheme is designed to offer EU, non-EU EEA and Swiss citizens and their eligible family members living in the UK before the end of the transition period (during which free movement continues) the opportunity to protect their residence in the UK after the transition period has ended. The deadline to apply is set at 30 June 2021.

For more information on the details of the scheme and how it works, follow this link to our previous article: A Clearance Of The Past? – How Can You Benefit From the EU Settlement Scheme?

Risk of falling behind!

Some people are at risk of being left behind from the scheme for a variety of reasons. Missing the deadline to the EU Settlement Scheme is likely to have very detrimental consequences for some migrants living in the UK. In fact, they would be risking being classed as an illegal migrant, lose the right to live and work in the UK and potentially face detention and removal.

Who is most at risk?

Several factor may result people not successfully applying for the EU Settlement Scheme.

For example:

Being aware! Awareness of EUSS and an understanding of it should not be presumed. Some people may be in the dark about its existence.

Vulnerable people (including those in poverty, victims of modern slavery, of domestic abuse, and homeless people/rough sleepers) will be much less likely to apply due to having their options reduced, not having access to the right documents or a computer or simply not being allowed.

Technical difficulties – some may struggle using the application process for many reasons, including:

○ being unable to read the application (language or literacy barriers)

○ mental and physical health problems and disabilities

○ low digital literacy

No evidence! Many EU citizens may lack the proper evidence to prove their eligibility for EUSS, and the greatest risk will be faced by those who lack evidence of both residence and economic activity. It is more common than people think that people are without the correct documentation, through no fault of their own.

We are here to help!

If you or anyone you know is yet to apply for the EU Settlement Scheme but needs to do so, get in contact with us. We can guide you every step of the way to ensure you and your loved ones do not face prosecution.

Call us on 020 7928 0276 or email info@lisaslaw.co.uk and we will give you the peace of mind and security you deserve.

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High Court: GAGAs can be enforced!

To enter into a commercial lease, one of the requirements of a landlord giving their consent to assign the lease will normally be that the original tenant agrees to enter into an “authorised guarantee agreement”, or (AGA) with the landlord to guarantee the incoming tenant’s liabilities for the lease.

When the incoming tenant fails to comply with the obligations under the lease, the landlord can pursue a claim against the original tenant for losses under the AGA. However, under the Landlord and Tenant (Covenants) Act 1995 (LTA 1995), if the incoming tenant then assigns the lease to someone else, the original tenant will normally be released from the AGA he/she provided to the landlord.

However, in many leases, the landlords also require the original tenants to have guarantors as well. What will happen to these guarantors (original guarantors) if the original tenants subsequently assign the leases and provide AGAs to the landlords? Are these guarantees of AGA (GAGAs) by the original guarantors enforceable under the LTA 1995? A recent case EMI Group v Prudential Assurance has provided answer to this question.

Background of EMI Group v Prudential Assurance

Many people may still remember HMV UK Limited, which was a musical company. In this case, it was the original tenant, with EMI acted as a guarantor. Prudential was the landlord. The lease was later assigned to Forever21 (UK) Limited. In the assignment of lease, HMV entered into an AGA with the landlord.

HMV and Forever21 both became insolvent and were then dissolved. Subsequently, Prudential came after EMI under the GAGA for the rent.

Judgement

The court found that EMI’s GAGA was valid and enforceable.

The Judge made a decision on the basis of the construction of the Lease. The guarantees should be fairly construed in their context. Refer to Tindall Cobham Ltd. v. Adda Hotels [2015] 1 P&CR 5 (CA), Section 25 of the Landlord and Tenant (Covenants) Act 1995 (LTA 1995) itself gave the court freedom to read the offending parts of the lease, and to consider if it was necessary to prevent the removal of the void words from emasculating the remainder of the clause. The court is also entitled to look at the structure of the lease in an objective and common sense way.

In this case, the court rejected the argument that there was an equality of treatment for tenants and guarantors. A GAGA is not subject to the same reasonableness requirement as an AGA. The court stated that the essential part of the GAGA was compliant under s24(2) LTA 1995.

The Court held that the guarantor who gave the GAGA would not be released from liability when the original tenant who gave the AGA entered into liquidation and dissolved. As a result, EMI was not released from the liability by the dissolution of HMV.

Comments

The judgement can be used as a reference for any future guarantors who are pursuing to avoid liability under GAGAs and any future landlords who are pursuing to enforce GAGAs of AGAs.

The judgement clarifies that if a GAGA infringes what was permitted by LTA 1995, it is important for the court to have freedom to construe the agreement in its particular context. It prevents the removal of the void words from emasculating the remainder of the clause.

This judgement has reminded any cautious landlord that they can strengthen their position by incorporating a determinative clause, which states that if a GAGA indicates to go beyond what is permissible under LTA 1995, it is only valid to the extent that it is compliant.

The judgement stated that a provision requiring a GAGA to be given in all circumstances when an AGA is required remains valid. On the other hand, an AGA can only be required when it is reasonable to do so. This again is a reminder to cautious landlords to strengthen their position when drafting a lease.

Have questions? We are here for you!

In the meantime, we are operating as usual, and you can reach us on 020 7928 0276 or email in to info@lisaslaw.co.uk for any questions you may have on this topic.

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Rishi Sunak – What is the economic plan for the UK going forwards?

Currently, you could be forgiven for not being completely up to date with government policies, laws and legislations, as the Coronavirus has meant constant alterations and updates from the government.

Today’s announcement from Chancellor Rishi Sunak is certainly one to pay attention to, however, as it dictates the UK’s plan for dealing with the economics of Coronavirus leading up into the winter months.

The Chancellor has outlined the following three main pillars of the Winter Economy Plan.

Support viable jobs and making sure that employees are working a third of their normal hours, paid as normal by the employer, in order to receive a top up provided from the Government.

Six months of targeted support at businesses that are most at risk – smaller and medium sized businesses to be prioritised, while larger firms allowed to apply if turnover is proven to have fallen.

Extending the existing self-employment grant in its current form.

Job Support Scheme

To be eligible for government support, employees must work a minimum on 33% of their usual hours. For the remaining hours that they have not worked, the Government and the employer will pay a third of those wages each, meaning an employee working 33% of their normal hours will get 77% of their normal wages.

It will be the smaller and medium sized businesses that benefit from this scheme at first, with the larger companies having to prove that they have indeed lost income because of the pandemic.

Employers can use this scheme even if they have not previously used the furlough scheme it replaces. It will run for six months from November.

VAT remains the same within hospitality

VAT is to remain at five percent for hospitality, which is some good news for restaurant owners. This will remain in place until 31.03.21 – originally it was supposed to go back to 20% on 14.01.21.

Concerning the self-employed

An extension to the self-employed grant, known as SEISS, will take place but on the terms of the Job Support Scheme, not the previous furlough scheme. The extension will provide two grants and will last for six months from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover 3 months’ worth of profits from the start of November until the end of January. It will be worth 20% of average monthly profits and will capped at £1,875 in total.

‘Pay as you grow’

A “pay as you grow” scheme was announced for businesses, allowing them to extend their bounce back loans from six to 10 years, reducing their payments. Businesses can also move to interest-only payments or suspend repayments for six months if they are “in real trouble”. Credit ratings will be unaffected.

Our thoughts

It is good to see the government being proactive and planning ahead. We think the Job Support Scheme should be able to help a lot of people, and will beneficial for businesses to retain their staff on shorter hours, rather than having to get rid of people.

It is also right for the self-employed to be given an extension on their support scheme, but we predict many will find the support unsatisfactory if their earnings have been dramatically cut during the pandemic.

Overall, it is at least something to work with for the meantime. We will keep you updated as new changes come to light.

Have questions? We are here for you!

In the meantime, we are operating as usual, and you can reach us on 020 7928 0276 or email in to info@lisaslaw.co.uk for any questions you may have on this topic.

Or, why not download our free app today? You can launch a new enquiry, scan over documents and much more.

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Court of Appeal: ‘undue harshness’ is indeed capable of occurring quite commonly!

Written by Caryn Toh.

Court of Appeal: ‘undue harshness’ is indeed capable of occurring quite commonly!

On 04^th September 2020, the Court of Appeal tackled the application of the definition of “unduly harsh” in the case HA (Iraq) and RA (Iraq) v SSHD [2020] EWCA Civ 1176.

Deportation

The UK Secretary of State has the power to make an order of deportation against ‘foreign criminals’ under the Immigration Act 1971, section 3(5) and 3(6), unless certain circumstances apply. A foreign criminal is defined as a person who has been convicted of an offence in the UK and sentenced to 12 months imprisonment in the UK.

The foreign criminals who had committed crimes and have been sentenced at least 12 months or more imprisonment will be subject to deportation albeit they will be given rights to appeal against the decision to deport them. The criminality threshold is set out under Paragraph 398 of the Immigration Rules.

The law provides some protection and exceptions to deportation in favour of the person with that predicament. One of the exception that is often relied upon under UK Border Act 2007, section 33 is that the removal of a foreign criminal would either breach their Convention rights under European Convention on Human Rights (“ECHR”). This usually involves the right to family and private life under the Article 8 ECHR or the UK’s obligations under the Refugee Convention.

Under Immigration Act 2014, section 117C(5) laid down considerations to be taken into account in deporting foreign criminals:

(1)The deportation of foreign criminals is in the public interest.

(2)The more serious the offence committed by a foreign criminal, the greater is the public interest in deportation of the criminal.

(3)In the case of a foreign criminal (“C”) who has not been sentenced to a period of imprisonment of four years or more, the public interest requires C’s deportation unless Exception 1 or Exception 2 applies.

(4)Exception 1 applies where—

(a)C has been lawfully resident in the United Kingdom for most of C’s life,

(b)C is socially and culturally integrated in the United Kingdom, and

(c)there would be very significant obstacles to C’s integration into the country to which C is proposed to be deported.

(5)Exception 2 applies where C has a genuine and subsisting relationship with a qualifying partner, or a genuine and subsisting parental relationship with a qualifying child, and the effect of C’s deportation on the partner or child would be unduly harsh.

(6)In the case of a foreign criminal who has been sentenced to a period of imprisonment of at least four years, the public interest requires deportation unless there are very compelling circumstances, over and above those described in Exceptions 1 and 2.

(7)The considerations in subsections (1) to (6) are to be taken into account where a court or tribunal is considering a decision to deport a foreign criminal only to the extent that the reason for the decision was the offence or offences for which the criminal has been convicted.

S117C(5) describes “unduly harsh” test as applicable when the effect of the deportation would be unduly harsh on the partner and child.

Relevant Case Law

A recent Court of Appeal case of HA (Iraq) and RA (Iraq) v SSHD [2020] EWCA Civ 1176 gives clarity and provide authoritative guidance on the definition of “unduly harsh” effects on a child in deportation cases when foreign criminals are deported.

Backgrounds

For the RA case, RA entered the UK as a minor and claimed asylum. His claim was refused. He subsequently married a British citizen and had a British citizen child. He was granted limited leave to remain before being convicted of possession of a false passport for which he was sentenced to 12 months. The Secretary of State for the Home Department (“SSHD”) made a decision to deport him which he, initially, successfully appealed. That decision was overturned by the Upper Tribunal (“UT”). The UT found that it would not be unduly harsh for his wife or child to relocate with him to Iraq, or for them to remain in the UK without him.

Similarly, the HA case had similar background facts. He was convicted of two immigration related offences: assisting unlawful immigration and possession of an improperly obtained identity card, and one offence of failing to surrender to custody at the appointed time. As a result, HA was sentenced to a period of imprisonment of 16 months. The SSHD made a decision to deport him which, as with RA, he initially successfully appealed. That decision was overturned by the UT. The UT found that although it would be unduly harsh for HA’s partner and children to relocate to Iraq, it would not be unduly harsh for them to remain in the UK without HA.

The Appellants rebutted that the UT’s interpretation of the “unduly harsh” was erroneous and appealed to the Court of Appeal which is subject to this guidance.

Issues 1

The Court of Appeal allowed both appeals. In HA, the court found the following:

UT had asked whether the effect of HA’s deportation on his partner and child would be anything other than what is ordinarily expected by the deportation of a partner or parent. Such approach is wrong given its guidance on the “unduly harsh”.

The alternative argument of ‘very compelling circumstances’ under NIAA 2002, s 117C(6), that in striking the proportionality balance, the UT had failed to take into account that HA’s sentence was 12 months which is the minimum level for him to fulfil the foreign criminal definition

Issues 2

Whereas in RA, it was found that UT had not clearly given the child’s British citizenship the full weight it required and that in various respects its decision was insufficiently reasoned.

Implications

The assessments of the above case laws resulted in the Supreme Court’s ruling in KO (Nigeria) & Others (Appellant) v SSHD [2018] UKSC53 when conducting an assessment of the impact of deportation of a foreign criminal parent on a child in question. Lord Carnwath delivered the lead judgment and suggested that decision-makers should be ‘looking for a degree of harshness going beyond what would necessarily be involved for any child faced with the deportation of a parent’. This has led to decision makers imposing the highest threshold. In reality, this appear to be a test which is difficult to meet in all but exceptional cases.

However, the Court of Appeal has now confirmed that while the statutory test has an ‘elevated nature’, the test is not equivalent to ‘very compelling circumstances’ (as set out in NIAA 2002, s 117C(6)—which applies to those offenders who have received sentences of four years or more). Decision-makers must carefully make an ‘informed evaluative assessment’ of the effects of deportation.

Most importantly, the court also noted that there is no reason in principle why cases of undue harshness may not occur quite commonly and that it is not possible to identify a baseline of ‘ordinariness’.

Further, the court also raised a few other significant ancillary points that should not be overlooked. The court has stated the following:

Rehabilitation can be relevant in determining the ‘very compelling circumstances’ test that an individual is no longer a persistent offender depending on the particular facts and circumstances(the previous Court of Appeal authority of Binbuga v Secretary of State for the Home Department[2019] EWCA Civ 551 had cast some doubt on the issue), that factual precedents are of limited use in deportation appeals, and that the British citizenship of any child concerned is an important matter in the best interests assessment.

It was also made clear that physical harm to a child should not be treated as intrinsically more significant than emotional harm, and referenced the lifelong emotional harm that can be caused by terminating the relationship between a child and a close parent.

Opinions:

In relation to the cases involving foreign criminal appealing against a deportation by relying on their relationships with qualifying children or partners, the decision makers should now read KO (Nigeria) v SSHD in conjunction to the guidance provided by the Court of Appeal in this case law. The new judgment indicates that the SSHD should not be applying guidance previously given on the same issue by the Supreme Court in KO (Nigeria) v SSHD which is positive news for appellants. This means that cases with undue harshness can appear more commonly or ordinarily.

If you are served on a notice of deportation, you will be able to challenge your deportation. Please contact Lisas Law Solicitors at 020 7928 0276 or email info@lisaslaw.co.uk for representation and specialist advice. Lisas Law solicitors have a wealth of experience in successfully challenging orders of deportation.

Have questions? We are here for you!

In the meantime, we are operating as usual, and you can reach us on 020 7928 0276 or email in to info@lisaslaw.co.uk for any questions you may have on this topic.

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News and Insights

Who is effected?

£125,000 threshold

Consequences of not paying?

What can you do to check?

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The principle of ‘reflective loss’

The Marex Financial Ltd v Sevilleja

Broadcasting Investments Group Ltd v Smith

Comments

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Salient facts of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd as follows:

What was the Supreme Court decision?

Implications to note

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Background

The Relevant Law

Issues and Decisions

Conclusion

Opinions

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Complying with immigration requirements

EEA Nationals and their family members

Permanent Residence Cards

Comprehensive Sickness Insurance

How can Lisa’s Law help?

What is a state pension?

Original changes

What did the claimants take issue with?

How did the Court of Appeal respond?

No warning?

Reaction

What do we think?

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Risk of falling behind!

Who is most at risk?

We are here to help!

Background of EMI Group v Prudential Assurance

Judgement

Comments

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Job Support Scheme

VAT remains the same within hospitality

Concerning the self-employed

‘Pay as you grow’

Our thoughts

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Deportation

Relevant Case Law

Backgrounds

Issues 1

Issues 2

Implications

Opinions:

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**Salient facts of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd as follows:**