William Kanaan
- Oct 15, 2016

Archived Posts

Trustees in bankruptcy pierce corporate veil of companies operated by bankrupt

by William Kanaan

The bankrupt debtor had been convicted and sentenced on a number of charges of dishonesty. He had structured the ownership of his assets through a number of third parties including companies. All his assets had vested in his trustees in bankruptcy.

It came to the attention of the trustees that large amounts of money were being paid through accounts held by third parties on his behalf.

The trustees applied to Court for an injunction to freeze those accounts and relied on the "evasion principle", which applies when a person tries to evade a legal obligation, liability or restriction by interposing a company under his control.

That being proven, the court may pierce the corporate veil (though this is limited to depriving the company of an advantage it would have had as a company).

The Court granted the injunction and thus pierced the corporate veil on the basis that the companies were effectively his nominees, they were being used to shelter the bankrupt's money and assets and the assets were acquired during his bankruptcy.

What is a "shadow director"?

by William Kanaan

A relatively common situation arises where someone with no formal appointment as a director of a company has influence and decision making powers within that business.

This commonly occurs where, for example:

shareholders become involved in day-to-day operations;
directors of holding companies exercise control over subsidiaries;
lenders or investors become too involved while trying to protect their money;
an outside consultant is appointed to help run the business; and
an employee is given significant responsibilities.

In such circumstances that person will be deemed to be a "shadow director" and thus will be treated by the Courts as having the same powers, and liabilities, as an appointed director. This means that, amongst other things, they must at all times have exercised reasonable care and skill, avoided conflicts of interest and declared their interest in transactions.

In addition, other parties may treat that person as having the power to commit the company to binding contracts.

Debt under letter of credit is situated where it is payable

by William Kanaan

The recent decision of the Court of Appeal in Taurus Petroleum Limited v State Oil Company of the Ministry of Oil, Republic of Iraq confirms the positon that a debt arising under a letter of credit is situated at the place where payment is to be made against documents, as opposed to ordinary debts which are situated where the debtor is resident.

Compensation for actual loss is the overriding principle of damages in cases of anticipatory breach

by William Kanaan

Anticipatory breach of contract occurs when one party repudiates the contract before performance is due, by indicating their intention not to perform its obligations under that contract.

For example, Buyer Ltd contracts with Supplier Ltd to provide bricks for an upcoming building project. A week before the date of delivery, Supplier Ltd notifies Buyer Ltd that it will not be able to deliver the bricks due to problems with sourcing enough of them. The notification constitutes an anticipatory breach of contract.

The Supreme Court recently confirmed that compensation for actual loss is the overriding principle of damages in cases of anticipatory breach.

Land Registry to publish data on property owned by foreign companies

by William Kanaan

In a similar vein to the previous post of 31st July, the Prime Minister has asked the Land Registry to publish data on all land and property owned by foreign companies.

The intention is to increase the transparency of ownership in the UK property market and will apply to approximately 100,000 titles on the Land Registry.

Personal Liability of Agents

by William Kanaan

A recent High Court decision highlights a provision of the Companies Act that an agent is personally liable for a contract he purportedly makes for a company that has not yet been formed, unless there is an agreement to the contrary.

This particular case involved a firm of solicitors signing a contract to purchase a property. They did so as agent for the purported corporate buyer, which had not been incorporated when the contract was signed. The solicitors were found to be personally liable to the seller.

Public Disclosure of Ultimate Owners of Shares

by William Kanaan

There are six months to go until a new law takes effect forcing all companies to:

identify the persons who have significant control over them ("PSC");
find out certain details about those persons; and
keep a register of those persons and their interests.

What this means is that any company whose shares are wholly or partly owned by another company or nominee will have to find out who the ultimate owner is and disclose that information, along with details about them (name, service address, nationality, date of birth and the nature of control), to Companies House. In turn, Companies House will publish a public register of those details.

Who is a PSC? Anyone who: • holds, directly or indirectly, more than 25% of a company's shares; • is entitled, directly or indirectly, to exercise more than 25% of the voting rights of the company; • may, directly or indirectly, appoint or remove a majority of the board of directors; and/or • has the right to exercise "significant influence or control" over a company.

The purpose is to improve transparency in dealing with UK business.

Those affected, such as all private companies, investors, fund managers and nominee shareholders, should begin to consider how these changes will impact on their business.

Unsigned contracts can still be binding

by William Kanaan

A recent court case reminds us that contracts do not have to be signed to be binding.

Broadly speaking, provided that the parties acted on the terms to which they both agreed, a contract will bind them both whether it is signed or not.

The facts of each matter will be relevant to determine that a binding contract has been formed, or not as the case may be.

High Court rules on validity of clauses referring to "UK courts" and "UK arbitration"

by William Kanaan

The High Court has held that references in a contract to "UK law" and "the Courts of the UK" are to be interpreted as references to English law and the Courts of England.

The contract in question included the following words:

The proper law of this Agreement is the law of the UK, and the Parties submit to the exclusive jurisdiction of the Courts of the UK and of all Courts having jurisdiction in appeal from the Courts of the UK.

The claimant argued that as the United Kingdom contains the laws and courts of Scotland and Northern Ireland, together with the unified laws and courts of England and Wales, the above provisions are ambiguous and ineffective as not specifying any one of the three potential laws or courts involved.

The judge's ruling included the following finding from a previous case: "It is widely known that the Commercial Court and the Admiralty Court, both parts of the High Court, deal on a daily basis with a wide range of international maritime business, much if not most of it referred by agreement to English law or jurisdiction. No doubt for historical and geographical reasons, no other court in the United Kingdom enjoys that reputation or dispatches that business."

For those reasons, the High Court found that references to "UK law" and the "Courts of the UK" must mean English laws and Courts.

Supreme Court restates penalty rule

by William Kanaan

In the recent case of El Makdessi and ParkingEye the Supreme Court unanimously held that the relevant contractual clauses did not engage the rule against penalties, were therefore not unenforceable penalties and that, although the penalty rule did apply to the parking charge, the charge was not an unenforceable penalty nor in breach of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR 1999).

The brief facts of the case are that a parking fine of £85 was charged by ParkingEye, a parking management company, on El Makdessi for overstaying his parking time. Fines are classed as a penalty, which are unlawful as penalties need to bear a relation to an actual loss incurred. Parking Eye did not incur any loss from an overstay.

The decision confirms that the tests established in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd exactly a century ago (they distinguished between a genuine pre-estimate of loss on the one hand, and a penalty on the other) are simply considerations, and that they do not automatically apply to every case on penalties. These tests are important for straightforward liquidated damages clauses, but are not necessarily of use in complicated cases where a broader test should be adopted – for example, where the innocent party's interest in performance extends beyond the prospect of financial compensation for the breach.

When considering whether a clause is a penalty, it is necessary to consider if there is a justification for the clause and, if there is, whether, in the particular circumstances, the clause is nevertheless unconscionable or extravagant. It is, therefore, possible for a clause to be commercially justified and not a penalty, while at the same time being a deterrent for breach.

The Supreme Court ruled that the charge was not unfair, and that overstaying penalties are a ‘normal feature of parking contracts’. The judgment said fines were beneficial to motorists themselves as they make parking spaces available to them which might otherwise be clogged up by long-stay users.

Court of Appeal upholds restrictive covenants in agency agreement

by William Kanaan

The Court of Appeal has upheld clauses restricting the UK agent of a money transfer business from acting as agent for the principal's competitors during the term of the agency agreement and, after termination, from offering services similar to those of the principal within 5 miles of the agent's premises for a period of 6 months.

The Court of Appeal found that:

The restriction in the contract preventing the agent from acting for competitors of the principal during the term did not "sterilise" the agent's activities and prevent him earning a living. There was an obligation on the principal to process any business the agent introduced and to pay the agent commission.
The post termination restriction was reasonable because not only were the terms limited both in time and area, but they were also commercially necessary to protect the principal's investment in training and supporting its agents.

High Court dismisses actions against Facebook UK and Google UK on basis of wrong parties

by William Kanaan

The High Court, in two defamation actions by the claimant, Saskia Richardson, against Facebook UK and Google UK, upheld previous decisions to strike out the claims and grant summary judgment to the defendants.

Ms Richardson was suing in relation to a publication of a Facebook profile and a posting on the Google Blogger service about her, both of which she alleged had been created by an impostor and were defamatory. Her claim was for damages for libel and for breach of her right to privacy, under Article 8 of the European Convention of Human Rights.

Facebook UK and Google UK both argued that, in essence, she had sued the wrong parties as they did not control user content, which control rested with American and/or Irish incorporated Facebook and Google companies who were not party to the action.

The Court agreed that the defendants were not responsible for the publications and that Ms Richardson had taken action against the wrong parties. The evidence showed that the defendants did not own or control the sites in question and were therefore not responsible for publication.

The moral of the story is to ensure that the correct parties are precisely named in any court action brought against them.

IP Enterprise Court rules on scope of implied licence following joint venture negotiations

by William Kanaan

The Intellectual Property Enterprise Court has rejected a claim for copyright infringement and passing off by the owners of a jewellery business involved in a joint venture.

The Court found that there was an implied licence granted to the defendants during joint venture negotiations. During 2009, preparations for the joint venture progressed between the parties and the claimant had granted the defendants a licence to use the claimant’s trade name, logo and a particular photograph for any purpose which they might reasonably consider to be for the advancement of the joint enterprise. Although the parties later fell out, this could not retrospectively affect the nature of the licence. It was held that the licence continued until April 2010, when the claimants letter of claim to the defendants terminated the licence.

Parties wishing to safeguard their intellectual property rights during joint venture, or other, negotiations should clarify their positon in writing at all times.

Estoppel by convention and forgotten pre-emption rights

by William Kanaan

The Court of Appeal recently held that an estoppel by convention can arise when the parties acted in a way that was different to that agreed in their contract. This applied whether they acted wittingly or unwittingly.

It made no difference if the parties had misappreciated, misremembered or forgotten the terms of the contract if they all adopted a common assumption.

In the case in question, shareholders had entered into contracts with pre-emption rights relating to the transfer of shares. Shares were later transferred without applying the pre-emption rights, and it seemed that the parties had simply forgotten about them.

Subsequent to that transfer, another shareholder wished to make a further transfer to the claimant. However, this time, other shareholders objected on the basis of the contractual pre-emption rights.

The court held that the objecting shareholders were estopped by convention from relying on those contracts because of their previous behaviour when they all ignored the pre-emption rights and allowed the original transfer of shares.

Note: What is estoppel? It is a legal principle that prevents a party in legal proceedings from denying or alleging a particular fact because of that party's previous conduct, allegation, or denial. The idea is to avoid an obvious injustice that could arise as a result of inconsistency and, in some cases, fraud.

Kanaan Legal client SABIS® announces new school in Brazil

by William Kanaan

Abridged Press Release:

SABIS® Network leadership took steps on Friday, October 16, 2015, to realize its latest expansion project – a world-class, private school in Sao Paulo, Brazil. The project was officially announced during a press conference attended by Carl Bistany, Director of SABIS® Holdings, guests and dignitaries including Jonas Donizette, the mayor of Campinas, Samuel Rossilho, the Economy, Social Development and Tourism Secretary of Campinas, Solange Pelicer, Campinas’s Secretary of Education, Juan Quirós, President of Investe Sao Paulo, the General Consul of Lebanon in Sao Paulo, Kabalan Frangieh, and city officials from various departments in Campinas.

Targeted to open in 2018, the SABIS® Escola Internacional – Campinas will join the global SABIS® Network of schools. The network educates 70,000 students, has roots in the 19th century in Lebanon and is present in 18 countries. The SABIS Escola Internacional – Campinas will offer a top-quality, college-preparatory education to local and international students at an affordable cost. The school will open serving students in Kindergarten and primary school and expand each year until it offers a full Kindergarten through Grade 12 program to at least 2,000 students. The purpose-built campus in Campinas will be housed on approximately 10 hectares of land, which are part of the 33 hectares SABIS® acquired.

For more information about the SABIS® Escola Internacional – Campinas, send an E-mail to seicampinas@sabis.net. To learn more about SABIS® and the SABIS® Educational System, visit sabis.net.

"Safe Harbor" regime ruled unsafe

by William Kanaan

“Safe Harbor” is the agreement made between the US and the EU to regulate the way that US companies export and handle the personal data (such as names and addresses) of European citizens. The ECJ has found that the Safe Harbor regime is invalid.

This ruling arose after Edward Snowden revealed the mass surveillance activity carried out by US government agencies. The ECJ no longer regards US businesses as providing adequate privacy protection for European users' personal data. Those that have relied on the Safe Harbor regime will now need to rethink how their data is transferred and handled in the US.

Freehold disclaimed by Crown can re-vest in restored company

by William Kanaan

In an unusual ruling that seems to conflict with similar court decisions, the High Court held that a company's freehold interest in property can survive that company's dissolution and Crown disclaimer of that interest, so that the freehold interest then re-vests in the company after it has been restored to the register.

Although a Crown disclaimer terminates the existence of a freehold title, the court found that this does not prevent the same freehold title from being re-created and re-vested in a restored company.

Non-disclosure order in "revenge porn" case

by William Kanaan

The High Court granted a non-disclosure order to prevent publication of photographs and videos portraying nudity and sexual activity between the applicant, JPH and XYZ. XYZ had threatened to publish the images on social media. To avoid publication before the hearing, JPH made the application to Court without notifying XYZ.

The Court agreed that JPH had a reasonable expectation of privacy and confidentiality under Article 8 of the European Convention of Human Rights. This defeated XYZ's claim to freedom of expression under Article 10, since there was no public interest in disclosure and XYZ's motivation was revenge or blackmail. The Court granted an order preventing publication of the images.

Further points of interest:

Although some images had been posted online for a brief period, the Court held that was not enough to argue that there was no longer any privacy interest to be protected.
The judge waived the requirement for personal service, and allowed service of the Order by email to ensure that XYZ was very quickly made aware of the order and the committal proceedings for contempt of court should XYZ ignore it.

EU and US agreement on new data transfer agreement

by William Kanaan

The new, so-called EU-US Privacy Shield has been agreed between the European Commission and the US. This sets out a new framework for transatlantic data flows.

A recent ECJ judgement ruled that the Safe Harbor provision was invalid. The Commission says that the EU-US Privacy Shield meets the requirements laid down by the ECJ.

In particular, it will place stronger obligations on US companies handling EU citizens' data, contains restrictions on US government access, and includes monitoring and redress mechanisms.

The necessary requirements for adopting the new rules will need to be made by both the EU and the US.

Duty of care when giving friends services for free

by William Kanaan

In a case labelled a “cautionary tale” by the judge, the High Court has found that a professional consultant owed a duty of care in tort for professional services that she performed for her friends - for free.

The professional consultant in question was an architectural designer who had carried out services on her friends' landscape gardening project.

She had arranged for cheap builders to carry out the work, but within weeks things went wrong, leading to the friendships souring. Her former friends claimed £265,000 from her, being the cost of remedial works.

The court decided that:

i) There was no contract in existence, because there had been no offer and acceptance or consideration or a deed of agreement.

ii) The professional consultant did, however, owe a duty of care to her friends in tort.

The court confirmed that a professional consultant can owe a duty of care in respect of pure economic loss and that such liability is not restricted to advice but also covers other services that it performs.

The court emphasised that "this was not a piece of brief ad hoc advice of the type occasionally proffered by professional people in a less formal context". In the context of this case, the judge described her former friends as "clients" because the professional consultant had provided services to them "on a professional footing".

Monitoring of personal messages on work internet

by William Kanaan

The European Court of Human Rights has ruled that an employer was entitled to monitor private messages sent by an employeee through a work-related Yahoo messaging account.

In a nutshell, an employee sent the messages while at work, contrary to his employer’s policy, and the employer accessed those messages, using them in disciplinary hearings and court cases. The ECtHR held that the monitoring and use of the personal messages was a "proportionate" interference in his article 8 rights. The monitoring had to also pass three other tests: transparency, necessity and fairness.

The decision does not alter the fact that Employees still retain a reasonable expectation of privacy at work and it does not override UK legislation, such as the Data Protection Act 1998 and the Regulation of Investigatory Powers Act 2000, which restrict employers’ powers to monitor their employees’ private messages.

High Court orders specific performance before contractual completion date

by William Kanaan

In an unusual case, the High Court has made a decision that amounts to making an order for specific performance of an obligation before the time had arrived for performance of that obligation, and require the defendant to take steps to achieve the prescribed result.

This will be of use to those seeking to enforce compliance with contractual obligations before there has been an actual breach of contract.

Settlement with one defendant prevents tort claim continuing against other joint defendants

by William Kanaan

There is an established principle that settlement of a claim with one joint tortfeasor (i.e. a defendant in a tort action) releases other joint tortfeasors (i.e. other defendants) in the claim from liability.

The High Court ruled that this principle applies in the context of employee competition litigation.

In the case in question, the claimant sued two defendants for inducing an employee to breach her employment contract and her duty of confidence to her employer.

The claimant settled the claim with one defendant for the value of the damages it had sought in the claim.

This settlement automatically released the other defendant from all further liability to the claimant.

The practical implications are that clients must ensure that their particulars of claim are carefully worded, as well as the terms of any settlement, with the view to retaining rights against each tortfeasor or defendant.

Bank misselling claim fails

by William Kanaan

Thornbridge Ltd v Barclays Bank plc [2015] EWHC 3430 (QB) is a typical misselling claim. The case concerned a swap entered into in May 2008. As a result of the fall in interest rates after Lehman's collapse, the swap became expensive for the borrower. The borrower alleged that the bank had acted i) negligently, ii) in breach of contract or iii) in breach of statutory duty in respect of information and advice given in respect of the swap. The Court found against the borrower on all counts.

The Court's decision included the following key findings:

The bank had not taken on an advisory role. It was selling a swap and not advising in return for fees. The bank had provided information about how the swap would work and made predictions, but it had not moved from sales into advice. The borrower had the opportunity to seek advice from others and it made up its own mind as to what it wanted to do. Sales patter did not amount to advice.
Even if the bank had taken on an advisory role, the terms of the swap confirmation prevented the borrower from asserting that the bank had given advice. The confirmation contained wording to the effect that the borrower was not relying on investment advice from the bank. This created a "contractual estoppel" (basically, you cannot assert facts that are inconsistent with those that have been agreed to form the basis of the contract).
The bank was obliged to ensure that any information it gave to the borrower was accurate and not misleading, but not the wider duty that it was full, accurate and proper.
The borrower was categorised as a retail customer, but as it was carrying on business, it could not claim against the bank under section 138D of the Financial Services and Markets Act 2000 for alleged breaches of the then FSA's conduct of business rules.
The reference in the bank's terms of business to all transactions being subject to the FSA's rules and all other applicable laws, rules and regulations did not incorporate the FSA's rules into the contract. The borrower could not therefore claim against the bank on the basis that alleged breaches of the FSA's rules also constituted breaches of contract.
The information given by the bank could not be criticised. The bank gave an illustration of the costs of terminating the swap following a small fall in interest rates, but could not be blamed for failing to provide figures for higher falls when there was no evidence that a reasonable person would, at the time, have predicted the scale of the decline in interest rates that actually occurred. Furthermore, there was no indication that the borrower might want to refinance the loan or terminate the swap within the swap's five year term.

A deed is still valid where the signatory director is no longer in office on completion

by William Kanaan

The director of a company signed a debenture on its behalf, which was subsequently dated and completed several months later. However, in between the time he signed the debenture and its dating and completion, he had left his position as director.

The High Court considered if the deed was validly executed under the Companies Act 2006 ("CA 2006").

Evidence put forward to the Court included board minutes and resolutions that showed that the debenture had been validly executed while the director was still in office. This satisfied the CA 2006 execution provisions.

The fact that the debenture was subsequently delivered and completed when the signatory was no longer a director was not relevant.

The Court held that the deed was valid even though the signatory director was no longer in office on completion.

Supreme Court reinstates old tests for implying terms into a contract

by William Kanaan

After the ruling in a case called Attorney General of Belize and others v Belize Telecom Ltd, judges, lawyers and academics had understood (or, apparently, misunderstood) that a term may be implied into a contract if it is merely reasonable to do so.

The Supreme Court has overruled that case and confirmed that in order for a term to be implied it must be necessary for business efficacy or, alternatively, be so obvious as to go without saying.

The court also clarified that, contrary to the findings in Belize, the implication of terms is not part of the process of interpretation of a contract. The test is that the express terms of the contract must first be construed, and only then can the process of implying terms be begun.

Can enforceable agreements be created by email?

by William Kanaan

In short, yes. Sometimes whether intended or not.

A recent case highlighted the danger of parties involved in negotiating an agreement assuming that the enforceability of the agreement reached will need to be subject to setting it out in a formal document, and that until then, nothing is binding.

If it is intended that the terms should be formalised in a written document, then that should be recorded expressly in the email exchanges. For example, words such as "subject to contract" will normally suffice.

In brief, the facts of this case involved a construction dispute where, through email correspondence, the parties had reached an agreement to settle. The judge held that, in order to form a binding agreement, there is no reason why "a clear acceptance communicated by email would not be sufficient, because the existence of the email would be a matter of record".

Public law defence of legitimate expectation not available in private law contract dispute

by William Kanaan

A recent Court of Appeal decision concerned a claim for specific performance (a court order requiring a party to perform a specific or particular act) of a contractual obligation for the transfer of land to a local county council.

The defence relied partly on a public law defence based on legitimate expectation (briefly, where a person has an expectation or interest in a public body abiding by an agreement or promise).

The court held that as the arrangement was a private commercial contract, even though a party to the contract was a public authority, public law remedies could not be relied upon. The issues were a matter of private law unless there was bad faith or an improper motive on the part of the public authority.

Lender not obliged to advise borrower about onerous term

by William Kanaan

In a case that will be of interest to those involved in the misselling of financial products, the High Court has made it harder for a borrower to establish that its lender had a duty to advise it about the terms of loan documentation.

Here, the lender did not advise the borrower that it would be liable for potentially significant hedging break costs incurred by the lender if it prepaid the fixed rate loan made to it.

The claimants argued that a duty to advise arose because of the close relationship between the borrower and the lender, who was a "trusted advisor" to the borrower and its investors.

It was found, on the facts, that the lender had no contractual duty to advise the borrower about the terms of the loan agreement.

The court further found that it did not have a duty of care in tort. The argument that the lender was effectively under a duty to give disinterested advice voluntarily in relation to the product it was offering, even though that advice was or might be contrary to its commercial best interests went beyond the type of tortious duty considered in existing cases.

The circumstances in which such a duty could arise "would have to be exceptional and markedly different from the conventional relationship of banker and customer" particularly when, as was the case here, the borrower was represented by a broker and solicitors.

EU referendum: UK votes to leave

by William Kanaan

On 23rd June 2016, the United Kingdom voted to leave the EU.

The formal process begins when the government invokes the now (in)-famous Article 50 of the Treaty of the European Union by notifying the European Council that the UK has decided to leave the EU. Thereafter, there is a period of two years to negotiate terms of exit.

It is impossible to know or even guess at this stage what the terms of exit will be, so until the parties agree terms, the direct legal implications for UK businesses are unclear.

Court of Appeal finds that terms of offer letter prevail over inconsistent mortgage conditions

by William Kanaan

Where a party wants the certainty that a particular term has been effectively incorporated into a contract, this should be included in the special conditions document which is specified to have priority, and not left in the standard terms and conditions.

The Court of Appeal has overturned a High Court ruling relating to the interpretation of conflicting terms in an agreement.

The parties entered into a mortgage contract which incorporated terms from a mortgage offer letter. This letter set out the specific details of the mortgage. The offer letter also incorporated by reference the lender's standard conditions.

The offer letter contained a term that in the event of an inconsistency, its terms would prevail.

The Court of Appeal held that the correct approach when faced with an inconsistency clause is to approach the inconsistency without any pre-conceived assumptions, so one should not strive to avoid or to find inconsistency.

Applying this approach, the court found that the offer letter and the conditions were inconsistent and could not sensibly be read together.

Therefore, the offer letter prevailed, and the inconsistent clause in the conditions was not incorporated into the contract.

The court also referred to the established principle that special conditions will prevail over general conditions if there is a conflict. Further, a printed standard term must not be construed so as to defeat the main object and intent of the contract.

Trust deed rectified by summary judgment without a hearing

by William Kanaan

A series of draft trust deeds had been prepared for a new scheme as part of a transfer from the Independent Schools Pension Scheme. The drafts were circulated for comment before a final version, including provisions that would allow for future changes to the benefit structure, was agreed. Unintentionally, one of the earlier drafts was executed, and not the agreed final version.

An application was made to the High Court to remedy the error and the Court granted the application for rectification by summary judgment, without a hearing, to correct this mistake.

In granting summary judgment without a hearing, the Court confirmed that it was happy to do this "in such a plain case". The evidence supporting the application had satisfied the judge that there was "no real prospect of a realistic challenge" to the position that the final version of the deed should have been executed.

The Court added that, absent a public hearing, concerns had to be addressed over publicity of the decision. On publicity, the judge confirmed that as well as the judgment being available on BAILLI (a law reports website), notice should be given to all scheme members along with the offer of a hard copy if requested. The order for rectification would not take effect for 42 days.

Taking photographs in court can amount to contempt

by William Kanaan

The High Court has stated that taking photographs and moving images in a courtroom, and then publishing them online, can amount to a contempt of court.

A finding of contempt of court can lead to a fine or imprisonment or both.

Court orders destruction of confidential information on computers

by William Kanaan

A business (“B”) has successfully applied to the High Court for an Order that electronic devices and computers belonging to ex-employees (“E”) and their new employer (“R”) should be inspected and imaged, with all confidential information found on them and owned by B destroyed.

This was new ground as there was no previous authority for ordering the destruction of confidential material. However, the Court determined it could make such an order because E had admitted using R’s confidential information and there was evidence that showed that E could not be trusted to find and delete the material.

Can prescribed mode of acceptance of contract be waived?

by William Kanaan

In deciding whether a contract has come into existence when applying the offer and acceptance analysis, the Courts apply the principle of "the reasonable expectations of honest sensible businessmen".

This principle was applied in a recent Court of Appeal case in which the court had to consider if a provision in a contract, which required both parties to sign a document in order for it to be legally binding, could be waived.

The court applied established law that a party can waive a prescribed mode of acceptance if it acquiesces in a different way, so long as that acceptance has not prejudiced the other party.

The parties' subsequent conduct after the date on which the contract was formed would also be relevant in confirming whether or not they believed a contract had been formed.

The Small Business, Enterprise and Employment Act 2015

by William Kanaan

The Small Business, Enterprise and Employment Act 2015 comes into force and places an obligation on limited liability companies and partnerships to keep a register of any persons who have significant control (or “PSC”) over the company from 6 April 2016.

Anyone who ultimately

- owns, or

- controls

more than 25% of the company’s

- shares, or

- voting rights,

or who otherwise exercises control over

- the company, or

- its management

must be listed on the register.

The PSC register will be available for public inspection and will be searchable online via Companies House. The key implementation dates are:

- a PSC register must be kept by the company or the LLP from 6 April 2016; and

- the PSC information must be filed with Companies House from 30 June 2016.

Non-compliance with the new regulations can lead to criminal sanctions against the company itself and/or its directors.

Court of Appeal approves test for admissibility of deleted words as an aid to construction

by William Kanaan

The Court of Appeal recently approved the test for applying deleted words as an aid to the construction and intention of the parties to an agreement with ambiguous terms.

It said that "[t]he deletion of words may be taken into account … if the fact of deletion shows what … the parties agreed that they did not agree and there is ambiguity in the words that remain".

The Court also stated that where recourse is had to deleted words, care is required as to what inferences, if any, can be drawn from them.

Conspiracy to prevent assets being seized amounted to contempt of court and conspiracy to injure by unlawful means

by William Kanaan

A bank had obtained a freezing order in the High Court against the assets of its former chairman, C. The bank alleged that C conspired with a third party (his son in law, S) to prevent the bank recovering money pursuant to a Court judgment and in breach of a freezing order. The bank brought a claim founded on the tort of conspiracy to injure by unlawful means.

The tort of conspiracy to injure by unlawful means "involves an arrangement between two or more parties, whereby they effectively agree that at least one of them will use ‘unlawful means' against the claimant, and, although damage to the claimant need not be the predominant intention of any of the parties, the claimant

must have suffered loss or damage as a result''.

The only element of that definition which was in dispute in this case was whether at least one of the defendants used unlawful means.

The High Court held that the bank had a good arguable case that the alleged conspiracy and other acts by S constituting serial contempts of court founded a claim that S had committed the tort of conspiracy to injure by unlawful means.

Public Disclosure of Ultimate Owners of Shares

by William Kanaan

There are six months to go until a new law takes effect forcing all companies to:

identify the persons who have significant control over them ("PSC");
find out certain details about those persons; and
keep a register of those persons and their interests.

The purpose is to improve transparency in dealing with UK business.

Those affected, such as all private companies, investors, fund managers and nominee shareholders, should begin to consider how these changes will impact on their business.

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