Private ClientFILE May 2011

Black Day for Banburyshire Businesses

Brethertons solicitors, in association with Lloyds Bank, hosted the special Banbury Business Breakfast Club “Olympic Breakfast” on Thursday 31st March with Olympic silver-medal winning athlete Roger Black as the guest speaker. The event was held at Rye Hill Golf Club in Milcombe as part of Brethertons celebration of the countdown to the London Olympics.

Around 150 people attended the breakfast, where Roger Black’s speech focused on his own Olympic experiences and concluded with a screening of a video showing his gold-medal winning relay race at the 1991 World Championships. His talk featured anecdotes from his sporting career and inspirational words on overcoming personal set-backs, as well as an insight into his early athletic career. He then handed round his two silver medals, won during the 1996 games in Atlanta in the 400m and 4x400m relay, while he took questions from the room.

Brethertons Solicitor Receives Insolvency Practitioner's Association Honour

Edward Bible, head of Brethertons Insolvency Department, has been appointed as Vice President of the Insolvency Practitioners Association.   Edward will become President of the Association in 2012.

The Insolvency Practitioners Association promotes and maintains standards of performance and professional conduct amongst those engaged in insolvency practice.  They look to encourage wider knowledge and understanding of insolvency within and outside the insolvency profession through access to their examinations, qualifications and membership and through exposure and discussion of insolvency issues which affect the profession, its stakeholders and the general public.

Edward explains: “I am delighted to have been appointed as Vice President of the Insolvency Practitioners Association, which is one of the governing bodies of the insolvency profession.  I hope to be able to make a worthwhile contribution during my year as Vice President and look forward to my year as President in 2012”.

Brethertons Senior Partner, Richard Pell says: “We are delighted with Edward’s appointment within the Insolvency Practitioners Association.  We wish him all the best during his year as Vice President and as President in 2012”.

Court Will Not Rectify Will Executed in Error

When an obvious error is made, the courts will sometimes be willing to correct the mistake – but not always.

In a recent case, the court was asked to consider Wills executed by an elderly couple. Each Will was a simple ‘mirror Will’, in which each bequeathed their entire estate to the other and then, on the second death, the whole went to a man they had cared for since he was 15 years old and whom they regarded as their son.

Regrettably, despite witnesses being present, each signed the other’s Will and the error went unnoticed until they had both died.

The court ruled that despite the fact that this was obviously a mistake, the Wills could not be rectified as they had not been executed validly in the first place.

The Brethertons View

The unfortunate effect of the ruling is that the estate will now be distributed under the intestacy laws, which in this case means that it will pass to the couple’s natural children, who had been excluded under the Wills, and the couple’s intended beneficiary will inherit nothing.

Easement Established by Use Limited to Actual Use

When land is used over a long period of time by persons other than the owner of the land, they may acquire an easement (a legal right to use the land). Easements can also be acquired by express agreement, in which case the rights of use over the land will depend on the agreement. In cases where an easement comes into existence as a result of use, the rights of use are less clear, however.

In a recent case, a dispute arose over the right of way over a private road, which had been used by a farmer for more than 20 years. The County Court held that the use was effectively unlimited as far as his agricultural purposes were concerned. Since this included driving stock along the road, the owners of adjacent properties opposed it and appealed the decision.

The critical point was that although the use of the road by the farmer for pedestrian and vehicular access had been shown to have been permitted for more than 20 years – thus establishing the general right of easement – the use for driving stock had not. Since this was more burdensome on the owners of the adjacent properties than pedestrian or vehicular access, the High Court ruled that the right of easement did not include the right to drive stock along the road.

The Brethertons View

Allowing other people free use of your land for a long period can mean that you lose the right to prevent such use. If you have concerns about others using your land, we can advise you of the appropriate steps to take.

Discretionary Trusts – Possible Ways Forward

Clients who have discretionary trusts in place are reminded that the advent of higher rates of tax since April 2010 may warrant a review of the trust structure.

Since April 2010, trustees of discretionary trusts have been subject to a 50 per cent tax rate on trust income which exceeds the trustees’ basic rate band (the dividend income rate has also increased from 32.5 per cent to 42.5 per cent).

Possible strategies include:

• Removal of the settlor as a potential beneficiary under the trust. Where the settlor is among the class of beneficiaries, the income is treated as if it were that of the settlor for tax purposes;
• Distribution of trust income to beneficiaries. The tax paid by the trustees is effectively paid on account of the beneficiaries, so making a distribution may lead to a repayment of tax to them; or
• Investing to maximise growth, not income. The trustees have an annual Capital Gains Tax (CGT) allowance of half of the individual amount. CGT is also levied at a lower rate (28 per cent) than Income Tax, so realising gains is generally more tax-efficient than having income.

There are other types of investment which may reduce the tax payable by trustees. For advice on family wealth preservation contact us.

House Builder Not Liable for £35,000 Defects

When the terms of a house building contract exclude any liability for losses incurred by the client on account of defective works, the client has no redress under a general duty of care.

This was the decision of the Court of Appeal in a recent case concerning the construction of a property in Prestbury in Cheshire. The property was built by PE Jones (Contractors) Ltd. for its client, Mr James Robinson. On completion of the works, it was sold to him.

During the construction of the property, Mr Robinson decided that he would like an additional gas fire flue built into a second room (the original contract included only one gas fire flue). This was agreed under the contract and the contractors constructed a second chimney flue and Mr Robinson arranged directly with British Gas for the supply and installation of a second fire. The work progressed to completion in April 1992.

It wasn’t until September 2004 that a British Gas service engineer discovered that the second gas flue was defective, which resulted in both gas fires being disconnected for safety reasons. A subsequent surveyor’s report indicated that the flues had not been constructed in accordance with good building practice nor with the Building Regulations in force at the time of construction. The required remedial work was estimated to cost around £35,000.

When attempts to resolve Mr Robinson’s claim for a refund of the cost of the remedial work failed, he issued a claim in the Manchester County Court. The claim was later transferred to the Technology and Construction Court, where it was rejected on the grounds that it was out of time under the contract.

On appeal, it was argued that the trial judge was wrong in rejecting the claim and that the builder owed a duty of care to its client resulting in a liability for the economic loss suffered by the house owner. The appeal, along with the original claim, sought to rely on the Unfair Contract Terms Act 1977. Although the building contract included terms excluding liability after a specified period of time, it was argued that such terms could not exclude a general duty of care.

The Court of Appeal rejected Mr Robinson’s arguments, however, and dismissed his claim for damages against the builder. The contract terms agreed between them were such that he could not invoke the law of tort in order to impose liabilities upon the builder which were inconsistent with the contract.

The Brethertons View

Building contracts are normally governed by the National House-Building Council’s (NHBC) standard forms of agreement It is vital that expert advice is sought on the implications of any contract, including one that uses the standard NHBC terms, prior to entering into any building agreement.

Attorney Faces Prison for Theft

A man who was appointed under a power of attorney to look after a woman’s affairs, when she could no longer manage to do so herself, has been sentenced to 15 months in prison after he abused his position of trust to steal more than £100,000 from her.

The man, who was a family friend, was given the power of attorney after the woman developed dementia. Although they were unaware of it at the time, he and his wife were the main beneficiaries under her will.

An investigation was only put in train when the woman’s care home fees went substantially into arrears.

In cases like this, a confiscation order under the Proceeds of Crime Act 2002 is normally sought.

Nadiya Virani-Bland head of the Private client department says “Whilst the appointment of an attorney is a very sensible precaution for most people, it is also one of the most important decisions a person can make. It is a position which requires the very highest degree of probity and trust. For that reason, it is often an advisable safeguard to appoint more than one attorney, one of whom is a professional person.”

Clarity (Again) the Key

When a wealthy cleric made his Will, he could little have expected that his estate would remain undistributed more than 15 years after his death because the Will was insufficiently clear about who should inherit it.

Dr Eric Taylor died in 1995, leaving the bulk of his fortune to the ‘Liberal Catholic Church’. Alas, there is not just one Liberal Catholic Church, but three (one of which has two distinct subdivisions). All three are based at the same address. The result has been more than a decade of legal wrangling over who gets what.

With legal costs spiralling, Judge Sir Andrew Morritt has indicated that he desires to see the resolution of the remaining legal issues by the end of the year.

The Brethertons View

It is very important that when making a bequest in your Will, the identity of the beneficiary is clear. For example, if a bequest is made to a charity, it is sensible to put the charity’s registered number in the Will. Otherwise, making a small error in its name could lead to a claim from a charity with a similar name, which would not only delay the distribution of your estate but could also lead to the bequest not going to the charity of your choice.”