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17 October 2024 | Half Day Property Seminar | Leeds

Join our property specialists at our half day property seminar for an afternoon of talks and networking at the <a href="https://www.google.com/maps/place/The+University+of+Law+-+Leeds/@53.7986878,-1.5492722,17z/data=!3m1!4b1!4m6!3m5!1s0x48795c1c43d77e67:0xaebb12f5c6663dd3!8m2!3d53.7986878!4d-1.5466973!16s%2Fg%2F11b7rtlzkx?entry=ttu&g_ep=EgoyMDI0MTAwNS4yIKXMDSoASAFQAw%3D%3D" target="_blank" rel="noreferrer noopener">University of Law, 15-16 Park Row, Leeds, LS1 5HD</a>.   Programme  12:45-13:30 – Registration with Lunch  <a href="https://www.parklaneplowden.co.uk/our-barristers/bryan-patterson-whitaker/" target="_blank" rel="noreferrer noopener">Bryan Patterson-Whitaker</a> Building Safety Act - Remediation Contribution Orders – A Beginner’s Guide  <a href="https://www.parklaneplowden.co.uk/our-barristers/stuart-roberts/" target="_blank" rel="noreferrer noopener">Stuart Roberts</a> Landlord and Tenant - The Renters Rights Bill – where do we stand?  14:30 - Break with Refreshments  <a href="https://www.parklaneplowden.co.uk/our-barristers/dominic-crossley/" target="_blank" rel="noreferrer noopener">Dominic Crossley</a> Proprietary Estoppel - What is the point of proprietary estoppel?  <a href="https://www.parklaneplowden.co.uk/our-barristers/robert-allen/" target="_blank" rel="noreferrer noopener">Robert Allen</a> Nuisance, Boundary, Adverse Possession - Mine or my neighbours'? Securing boundaries by adverse possession  15:30 - Break with Refreshments  <a href="https://www.parklaneplowden.co.uk/our-barristers/sean-kelly/" target="_blank" rel="noreferrer noopener">Sean Kelly</a> & <a href="https://www.parklaneplowden.co.uk/our-barristers/cait-sweeney/" target="_blank" rel="noreferrer noopener">Cait Sweeney</a> Partnership (Property) Workshop - Partnership property seminar and workshop  16:30 - Networking and drinks   If you wish to attend this event, please contact our <a href="mailto:events@parklaneplowden.co.uk" target="_blank" rel="noreferrer noopener">events team</a>.

Fraud Unravels All? Not Always…

Bryan Patterson-Whitaker considers the Court of Appeal’s recent decision in Kevin Ralph William Riley & Anor v National Westminster Bank Plc (NatWest) [2024] EWCA Civ 833.  Mr and Mrs Riley were directors of Riley (Holdings) Limited (“RHL”). The company was involved with residential property development.  In or about 2004, RHL acquired a site on the river Trent, the development of which was financed by NatWest, via a series of loans totalling £26.5m. In 2008, these facilities were replaced by an on-demand loan for £32m linked to LIBOR (“the LIBOR Loan”).  Those familiar with the history of the NatWest / RBS Global Restructuring Group (“GRG”) will be aware that many thousands of UK businesses were allegedly pushed into the banks’ controversial “turnaround” division so that their assets could be seized.  In the index case, RHL became insolvent, and the Rileys’ alleged that such insolvency had come about because of various fraudulent misrepresentations made by the bank. They said that the LIBOR Loan was made under the stated guise of trying to support and help their business, whereas the reality was that the bank had a strategy of exiting the relationship by disposing of RHL’s assets cheaply to one of its subsidiaries and, pending exit, profiteering from the relationship.  At first instance in 2023, Freedman J granted NatWest reverse summary judgment on the Riley’s claims of fraudulent misrepresentation. The Judge decided that such claims had been compromised and released by a settlement deed (“the Settlement Deed”) in 2014 and that they had no real prospect of successfully establishing otherwise.  It is worth noting that the Settlement Deed was drawn in very wide terms, releasing all and any claims, whether known or unknown, and encapsulating claims that the Rileys may or could have in the future against NatWest. By clause 7.2, the Rileys also undertook not to bring any proceedings whatsoever in connection with the released claims.  The quid pro quo for entering the Settlement Deed was a significant reduction in the Rileys’ indebtedness to the bank, arising from related personal guarantees.  The twist in the tale was that RHL was not a party to the Settlement Deed, with the company having been wound up, dissolved, and finally struck off the register of companies in 2015. Its assets, including any claims it may have been entitled to make, then passed to the Crown under the rules of bona vacantia.   In 2022, Mr Riley acquired the benefit of RHL’s own claims in misrepresentation from the Crown, and undertook to apply any funds recovered in accordance with the terms of its liquidation, for the benefit of its creditors.  In the index proceedings, Mr Riley asserted that RHL was not a party to the Settlement Deed, and could not therefore be bound by it. Furthermore, he claimed not to hold his acquired claim in a personal capacity, but rather as a trustee on behalf of RHL’s creditors.  In upholding the first instance decision, the Court of Appeal rejected the argument that because RHL’s claim had been acquired by assignment, or was said to be brought in a representative capacity, it was somehow immune from the terms of the Settlement Deed. Bean L J opined that “the whole point of the Settlement Deed was that the Rileys would pay a significantly reduced sum, over an extended period, in full and final settlement of their personal liability to the bank and would not and could not reverse or in any way undermine the finality of that arrangement by themselves bringing any subsequent proceedings….” . Whilst acknowledging that a third party acquiring the claims from RHL’s administrators may have been untroubled by the Settlement Deed, that was clearly not the facts of this case, which the Court agreed had no real prospect of success.  The Rileys arguments did not end there. They also asserted, amongst other matters, that the “equitable sharp practice” doctrine prevented the bank from relying on the Settlement Deed in relation to the fraud claims. They said that the bank had committed a fraud upon them, of which they had no knowledge. Their argument was that it was sharp practice for the bank to sit by whilst they entered into an agreement discharging its own liability. At first instance, it had been held that the Rileys had settled unknown claims, which extended to fraud, so there was no scope to find that the bank was guilty of sharp practice.   On appeal, the Rileys argued that a generally worded release should not preclude the victim from being able to pursue a claim in fraud, where facts are subsequently identified which enabled such a claim to be brought.  In the index case, Bean LJ noted that the first instance judge had put the case in a nutshell when he said that allegations of deliberate wrongdoing formed the backdrop of the Settlement Deed. In the Court’s view, anything discovered subsequently added very little to the thrust of the case.  The Court also observed that the index case had a striking similarity to the Court’s own binding decision in Maranello Rosso Ltd v Lohomij BV and Ors [2022] EWCA Civ 1667, which made clear that express words are not always, or even generally, required to release a claim in fraud.     The Court of Appeal acknowledged that there were strong policy reasons why, when a party was an innocent victim of concealed fraud, which was not reasonably capable of being discovered before a settlement was reached, a generally worded release clause may not preclude the victim from pursuing a claim in fraud. Conversely, it was also noted that there were strong policy reasons for settlements to be upheld and that it was in the nature of wide-ranging settlement agreements, such as the one under discussion, for a party to give up a potential cause of action of which he was not aware. Furthermore, in the index case, the clear background to the Settlement Deed were allegations of fraudulent conduct. There was therefore no scope for the equitable sharp practice doctrine to be deployed and such a claim had no real prospect of success.   The appeal was therefore dismissed, albeit it is understood the Rileys are seeking permission to appeal to the Supreme Court.  Learning Points  Firstly, it would have been a safer prospect for Mr Riley to have acquired RHL’s rights in the name of a third-party entity, unconnected with the Settlement Deed (or at least assigned those rights on), before instigating proceedings.   Secondly, lawyers often cite the phrase “fraud unravels all” indiscriminately, but as Riley clearly demonstrates, this is not always accurate. Where parties enter into wide ranging settlement agreements, for their own benefit, against a background of fraudulent allegations, they will very likely be held to their bargain, regardless of whether the “F-word” is used.

REPLAY: TOLATA Law with Lunch | 31st July 2024

<iframe width="560" height="315" src="https://www.youtube.com/embed/IaQrPAcvMIM" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe>   PLP's Anna Metcalfe and Adam Gould hosted a TOLATA Law with Lunch event on the 31st July 2024.  Anna discussed:  <ul class="wp-block-list"> <li>“Express Yourself” - Can an express declaration of trust ever be ‘varied’ by a common intention?</li>  <li>"Orders for Sale" - Prospects of getting an order</li> </ul>  Adam discussed co-ownership and equitable accounting.

Club Property Problems

<ol class="wp-block-list"> <li>Unincorporated associations (which include clubs and associations) are extremely varied and range from barristers’ chambers, which are commercial in nature, to party political associations and working mens clubs, which are directed towards improving the lives of their members and the larger community. No specific statute applies to unincorporated associations. The general law of trusts and property does. </li>  <li>Under English law a trust for a (non-charitable) purpose is void under the Rule Against Perpetuities. In particular, party-political purposes are not charitable. As a result, any gift of land or any other asset to an unincorporated association has to be made to (and will be construed by the Court as having been made to) the members for the time being of that unincorporated association and subject to its rules (see Re Recher’s Will Trusts [1972] Ch 526). Land has to be held by up to four trustees upon such trusts. The rules of an unincorporated association may restrict the right of members to occupy or make use of specific parts of the premises held on trust for them (such as separate changing rooms), but it would be very rare for such rules to restrict entirely the right of a member to use the premises. Accordingly, each member of an unincorporated association has a largely unrestricted right to occupy and make use of the premises of that unincorporated association. </li>  <li>This article deals with five practical issues affecting the ownership of club property, being as follows: 1) Issues relating to joining and leaving 2) Alienation 3) Adverse possession 4) Missing or deceased trustees 5) Missing conveyances 1) Issues relating to joining and leaving </li>  <li>The fact that the premises are held upon trust for the members of the unincorporated association for the time being means that (unless the rules state otherwise) no introduction payment is made when a member joins and no exit payment is made on departure. No document has to executed in either case. Beneficial ownership is tied to the list of members. The adequacy is such a list is a problem for many clubs especially where the rules provide for automatic cessation of membership on non-payment of subscriptions. </li>  <li>An unincorporated association may decide that its premises should be held in a different way. This could be by way of a separate trust or a company. In either case, the decision has to be made as to whether each member of the unincorporated association is to have an equal interest in the separate trust or an equal shareholding in the company or whether there should be fixed interests in the separate trust and set shares in the company. Fixed interests and set shares may create an “us” and “them” problem particularly where senior members have beneficial interests in the separate trust or shares but junior members do not. However, tying beneficial interests in the separate trust or share ownership to membership of the unincorporated association also carries with it problems as it is necessary to acquire such interests on joining and sign away such interests on cessation of membership. In practical terms, this can be difficult. In many unincorporated associations it is often assumed that the beneficial interest in premises held on a separate trust or shares in a company holding the same will be relinquished on cessation of membership. However, if this assumption is not set out expressly in the rules (or in the trust deed or the articles of association), this may cause disputes if the premises have to be sold. The issue should not be considered retrospectively when this occurs. I dealt with a case some years ago (Faulkner v Bennett [2011] EWHC 3702) where it was necessary to obtain the approval of the Court to enable shares in a company incorporated to hold premises used by an unincorporated association to be expropriated on cessation of membership even where it was accepted that share ownership was tied to membership. 2) Alienation </li>  <li>Trustees of premises held upon trust for an unincorporated association often assume that they have a right to decide whether such premises are to be sold. This is not the case. Such trustees hold the premises upon trust for the members of the unincorporated association for the time being and subject to its rules. Invariably, rules provide that management is vested in the management committee and not the trustees. Accordingly, the trustees hold the premises at the direction of the management committee. In any event, as each member has a beneficial interest in the premises there is no power for the management committee, or the trustees or for a majority of the members to alienate the premises of the unincorporated association against the wishes of a “significant minority” of the members (see Ashton & Reid, Second Edition, paragraph 8.5; Murray v Johnstone (1896) 23 R 981). “Significant minority” is not defined as this is case law. Each member is allowed to vote and “significant minority” is tied to voting rather than membership. I have always taken the view that 10 per cent of voting members is a “significant minority”. </li>  <li>As regards premises, “alienation” involves either a sale or the grant or a long lease or the grant of a tenancy subject to the provisions of Part II of the Landlord and Tenant Act 1954. </li>  <li>As the trust is now a trust of land, the trustees could apply to the Court for a direction as to whether the premises ought to be alienated under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. There is no suggestion that the principle described above does not apply. However, the trustees might be able to persuade the Court that an alienation ought to be made against the wishes of a “significant minority” of the members in exceptional circumstances. Such exceptional circumstances might arise if the premises became dangerous or impossible to maintain. </li>  <li>Subject to the difficulty described above, the ability of the members of an unincorporated association to alienate premises is crucial because it prevents premises from becoming unused if not required. This is against the public interest and is the main reason for the Rule Against Perpetuities. Subject to any rules to the contrary, if the premises are alienated, the members can in theory merely divide the proceeds between them equally even if there is an underlying party political or moral purpose to the unincorporated association. 3) Adverse possession </li>  <li>As the members of an unincorporated association are entitled to occupy at least the majority of its premises (by reason of their beneficial interest), there can be no question of members claiming adverse possession as against the trustees. Claims for adverse possession of other land which is not within the “paper” title of the trustees are problematic because the membership fluctuates from year to year. It is the members who are in possession and not the trustees. It is also far from clear who would make a claim for adverse possession. 4) Missing or deceased trustees </li>  <li>Trustees of the premises of an unincorporated association are usually selected for long-service or status. In practical terms, this does not make sense because such persons are likely to die first or leave the area. As unincorporated associations continue to operate for decades without change, it is inevitable that situations will arise when some or all of the trustees have died or cannot be located. </li>  <li>Section 44 of the Trustee Act 1925 gives the Court the power to vest the property of an unincorporated association in new trustees where the Court has appointed new trustees or when it is “uncertain” as to who the trustees are. In practice, the Court is reluctant to exercise this power where the same result can be obtained by other means. The identity of trustees cannot be uncertain merely because no efforts have been made to trace. Other means usually involve extensive research by the current officers or members of the unincorporated association. Where premises are conveyed to the unincorporated association (whether by gift or otherwise), it will usually be possible to identity the original trustees. There may be a minute which records this or articles in the local newspaper. The legal title is held on joint tenancy and survivorship applies. It will usually be possible (albeit difficult) to identify when each original trustee died and thereby identify the last original trustee to die or a surviving original trustee. The surviving trustee or (if dead) his or her personal representatives can use section 36 of the Trustee Act 1925 to appoint new trustees. If necessary, a chain of representation with grants of probate can be used. Where there is no such chain, it may be possible to persuade a relative of the last trustee to die to take out a grant of letters of administration or for a member of the unincorporated association to take out a limited grant (a grant de bonis non) merely in relation to the premises. 5) Missing conveyances </li>  <li>Compulsory registration of title commenced area by area in 1975 and only affected the whole country in 1990. Where premises are conveyed to the trustees of an unincorporated association, it would be rare for any necessary compulsory registration to be omitted. Even so, there are many situations where conveyances were made before 1990 and there has been no requirement to register since such time. Inevitably, pre-1990 conveyances are often lost particularly when the same are held by trustees who have died. More often than not, this problem is combined with the missing trustee problem described above. </li>  <li>The position adopted by HM Land Registry on an application for first registration of premises held upon trust for an unincorporated association can be difficult to predict. It is necessary to provide evidence of the existence of the lost conveyance (whether by minutes or press articles or the like), and any documents necessary to perfect title but HM Land Registry is often overly concerned as to the possibility that there might be alternative claimants even where this is unlikely. A period of long-user by the unincorporated association might persuade HM Land Registry that potential alternative claims are to be ignored. If HM Land Registry is not prepared to grant first registration on the evidence tendered to it, it will be necessary to apply to the Court for a declaration that particular trustees hold the premises upon trust for the unincorporated association. HM Land Registry will then be obliged to give effect to such declaration. </li> </ol>

Partnership Property

These are the notes from the seminar and workshop provided by Sean Kelly and Cait Sweeney to the Property Bar Association on 30th April 2024.  1.         It is often thought that partnership claims revolve around issue of expulsion and the mechanics of winding-up. However, in most cases the major issues which have a monetary value concern the ownership of assets (and in particular land) used by or generated by the partnership. This will be the case whether the partnership is to be wound-up by the Court or the interest of a departing partner is to be bought under the terms of a partnership agreement. It would be rare for a partnership agreement to deal with land which is not partnership property.  2.         In relation to land used by a partnership, the issues to be considered are (in order) as follows:                          1)         Is the land partnership property?                          2)         Is the land held at a joint tenancy or tenancy in common outside the partnership?  Partnership property              1) The nature of partnership property  3.         Section 20(1) of the Partnership Act 1890 ("the Act") provides as follows:  "All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement."  4.         No partner has any interest in specie in partnership property. Rather, each partner has an interest in the net balance of the assets and liabilities of the partnership as manifested in the capital account (see Popat v Shonchhatra [1997] CA, 1 WLR 1367). Accordingly, partnership property is something distinct from property held:              1)         By one partner beneficially              2)         By some or all of the partners as beneficial joint tenants              3)         By some or all of the partners as beneficial tenants in common              4)         Under some other specific trust arrangement.              Partnership property is to be applied for the business of the partnership while trading and, following dissolution, it is available to meet the demands of creditors (under section 39 of the Act) with the ultimate surplus to be distributed between the partners in accordance with the partnership agreement.              2) The significance of partnership property in winding-up  5.         The significance of partnership property is tied-up with the manner in which accounts of a partnership are produced.  6.         In the context of partnership law, "capital" is a sum of money which is invested by a partner in the business of the partnership on the basis that the same is not to be returned until dissolution (or ceasing to be a partner in a joint lives partnership). It is similar to the concept of capital in a limited company or an LLP. An "advance" is a sum of money which is loaned to the partnership which is expected to be repaid. At least as a matter of law the two are different and such difference is accepted by the order of priority of payments set out in section 44 of the Act.  7.         Income profits arise out of the usual trading of a partnership. Capital profits arise from the sale of partnership property otherwise than as a result of normal trading such as the sale of the land from which it trades. Capital profits follow income profits save where the contrary is agreed expressly (which would be rare). Each is dealt with differently following dissolution.  8.         On dissolution, the right of the departing partner to income profits ends. However, the departing partner can claim under section 42 of the Act either interest at 5% per annum on the value of his share in the partnership or the profit generated thereby. This is the “net” share, so that if the capital account of the departing partner is in deficit, he can not claim a section 42 account (see Sandhu v Gill [2006] Ch 456). The logical extrapolation from this decision is that the capital accounts of the partners have to be calculated to dissolution (using valuations if necessary) so that the departing partner’s claim to interest or profits can be quantified properly.  9.         Section 42 of the Act does not apply to capital profits. Partnership property remains such until it is sold. The value of any partnership property in the accounts of the partnership is merely an estimate (and often a historic value). The value crystalises on sale (whether to a third party or one of the partners). On sale, the value in the accounts is replaced by the sale price and the capital profit which arises is divided between the partners in the capital profit sharing ratios over the period involved. Where there has been a change in profit shares over a number of years, the allocation of capital profits will be difficult.  10.       A capital account in its strict sense is merely a statement of the amount of capital introduced by the partners. A current account in its strict sense is an account of what has happened since the partnership has commenced in terms of:              1)         Undrawn profits              2)         Advances made to the partnership              3)         Expenditure incurred by the partnership for individual partners.              In practice, it is rare to find accounts for a partnership which distinguish between capital accounts and current accounts in any way. The only general exception would be old farming partnerships. The usual capital account is a combined capital and current account where the total of the capital accounts of the partners equates to the net assets of the partnership. "Capital account" is normally used to refer to this combined account. Accordingly, it is possible (and indeed quite common) to have a negative balance on a partner's capital account.  11.       There is no Statement of Standard Accounting Practice (“SSAP”) for partnerships. Accordingly, there is no requirement to revalue partnership property and strong tax reasons for not doing so. Accordingly, partnership land is often included in accounts at extremely low historic cost and the capital profits on sale will need to be dealt with in winding-up.  12.       This logical analysis of the position does not accord completely with the decision of the Court of Appeal in Bathurst v Scarborow [2004] EWCA Civ 411. In this case, land was purchased during the course of a short-lived partnership in respect of which no signed accounts were ever prepared. Although it seems likely that the land was purchased with partnership funds, it was not alleged that this was the case. The conveyancing solicitors were instructed to purchase such land on a joint tenancy but the box on the transfer was not executed. At first instance, the Master held that the land was purchased as partnership property because this was the clear intention of the partners on the facts. The Court of Appeal overruled this finding of fact as it was clear that the partners intended that the land should be purchased by them as joint tenants. This is what the conveyancing solicitors had been asked to do. So far so good. The Court of Appeal then went on to suggest that partnership property could be held on joint tenancy without explaining how this might affect the sale of the same to enable the payment of creditors. Popat v Shonchhatra  was not cited to the Court of Appeal in Bathurst v Scarborow and Bathurst v Scarborow itself was not cited to the later Court of Appeal in Sandhu v Gill (which followed Popat v Shonchhatra). It is suggested that this (obiter) part of the judgment needs to be treated with care.  13.       The fact that the interest of a partner is reflected in his capital account means that a partner's capital account can be considered to be an interest in property in its own right. Thus, capital accounts can be held as joint tenants and can pass by survivorship. This principle was accepted by the Court of Appeal in Hopper v Hopper [2008] EWCA Civ 1417 where the only issue between the parties was as to whether there was a joint capital account between father and mother, with children having separate capital accounts or whether there was a single joint capital account. It was suggested in argument that joint capital accounts are common. This may be overstating the case. They are not uncommon as between husband and wife in farming partnerships. Indeed, this arrangement has many benefits because it means that the death of the first spouse does not lead to a general dissolution. The partnership can carry on as before (see also Graham v Graham [2018] 5 WKUK 132, HHJ Pelling, KC).                  3) Land becoming partnership property  14.       Unless the business of the partnership is selling land, there is no requirement that any land which it uses should be partnership property. The land can be owned by one or more of the partners outside the partnership and made available to the partnership either by way of a lease or licence whether subject to payment or otherwise. The mere fact that land is used by a partnership does not make it partnership property (see Davis v Davis [1894] 1 Ch 393). Nor does paying the rent make a farming lease a partnership asset (see Eardley v Broad [1970] 215 Estates Gazette 823).                          a) Land purchased before the partnership commenced  15.       Where the land was purchased before the partnership commenced, it has to become partnership property. This can arise by express declaration of trust in the usual way and such an express declaration of trust will be binding (see Pettitt v Pettitt [1970] AC 777).  The land would be transferred to A and B “as partners” or similar. This would be unusual. Such a declaration of trust can also be included in the partnership agreement. Otherwise, it is necessary to rely on the bringing in of the land into the partnership under section 20(1) of the Act.  16.       The transfer of land into a partnership necessarily requires the agreement of all partners because the partner who transfers the land into the partnership will require credit for the value of the same as an addition to his capital account. Without such credit, the accounts will not balance in any event. While this agreement can be express or implied (see Miles v Easter [1953] 1 WLR 581, Harman J), an implied agreement is unlikely to arise in the case of land as land can be made available to the partnership in a variety of ways. Section 20(1) of the Act is in effect a conveyancing section (see Wild v Wild [2018] EWHC 2197 (Ch) HHJ Eyre, KC). There needs to be an agreement to bring the land into the partnership and section 20(1) of the Act avoids the need to comply with section 2 of the Law of Property (Miscellaneous Provisions) 1989.                                      i) Bookkeeping entries  17. It is unclear whether bringing in needs to be accompanied by appropriate bookkeeping entries. Physical assets such as stock or machinery can be “brought in” to the partnership by delivery to the partnership premises. However, land does not move. All of the leading cases involve situations where the accounts show land as a partnership asset and the Court has been asked to determine whether this is sufficient evidence of an agreement to bring in. It is unlikely that there could be an agreement to bring in without this being accompanied by bookkeeping entries.  18. In practice, it can be very difficult to show bookkeeping entries to record the bringing in of land into a partnership. Invariably, the problem is the starting position. The accountant who produces the first accounts of the partnership ought to record the individual pieces of land which (when combined) give rise to the total land value. However, this is rarely the case for farming partnerships. The record (if made) might well become lost. Accountants also tend to treat money spent on improvements to land held outside the partnership as land investments of the partnership which can provide a further complication.                                      ii) Evidence of agreement  19. It is often assumed by clients that the bookkeeping entries themselves will provide sufficient evidence of an agreement to bring land into the partnership. Surely, that is the whole point of the exercise. Clients tend to assume that this is the case. This is not the way that the Court looks at the matter. Accountants who produce partnership accounts rarely have access to conveyancing documents and accountants often assume that all land used by a partnership is partnership property. In a line of cases starting with Barton v Morris [1985] 1 WLR 1257 and ending with Wild v Wild, the Court has refused to accept bookkeeping entries as reliable evidence of an agreement to bring land into the partnership. Insofar as it is evidence, it has to be weighed against other available evidence. As no partner has an interest in specie in any part of partnership property, statements made by a partner that he has an interest in a specific piece of land (whether by including it in his Will or in a trust document) may provide a strong rebuttal to the contention that the land is partnership property.                          b) Land purchased during the partnership  20. Section 21 of the Act provides as follows:                                      "Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm"  21. This provision usually deals with the ownership of land bought using partnership funds. A contrary intention will only appear if there is an express declaration of trust or evidence that this is what was actually intended by the partners. Contrary intention is not merely failure to include land within partnership annual accounts unless that failure is intentional (see Mehra v Shah [2004] EWCA Civ 632)  22. There are a number of issues relating to whether in any particular case property is bought with money belonging to the firm. These are as follows:                          1)         Partnership funds can only be used if the partnership has a bank account or payment can be otherwise proven.                          2)         The section is dealing with monies owned beneficially by the partnership at the date of the purchase. Monies taken by a partner as agreed drawings and then applied by him in buying property are not monies of the partnership. However, it is not clear whether this principle applies to drawings which are not agreed. In practice, monies misappropriated by a partner are treated as drawings when the next annual accounts are drawn up (because there is no other way of making the accounts balance). The accountants with often do this without explaining what has been done. In James v James [2018] EWHC 43 (Ch) the Court accepted at face value the fact that monies used by one partner had been treated as his drawings and that such drawings had been used to buy land as indicating that such land was not partnership property. There was no analysis of whether the drawings were agreed.                                                                                                    3)         The section is most obviously directed at one off purchases. It is far from clear  that the section applies to a situation where one partner buys land with the  assistance of a mortgage and the partnership pays the sums due under the  mortgage. It can be easily inferred that such payments are to be treated as rent  (see Morton v Morton [2022] EWHC 163).                4) Land transferred out of a partnership  23. Section 2 of the 1989 Act (relating to the agreement for the sale or an interest in land) and section 53 of the Law of Property Act 1925 Act (relating to the actual transfer of an interest in land) need to be considered in respect of each transaction whereby land is to leave a partnership. Section 20(1) of the Act is a one-way ticket in.  24. Where parties agree to a transfer of a share of a partnership, whether on dissolution or retirement, section 2 of the 1989 Act must be complied with if the partnership owns land. Where an option is granted by one partner to another to sell or purchase another's share, the option must also comply with section 2 of the 1989 Act if the partnership includes land.  25. Strictly, any transfer of an interest in land into or out of a partnership must comply with section 53 of the 1925 Act. The fact that there is no written transfer may indicate that there was no actual agreement for the transfer of land into or out of the partnership. The strength of this indication will depend on the extent to which the partnership otherwise complied with legal formalities. If the parties agree that land is to be transferred into a partnership and act in reliance upon the fact that it has been, then it is very likely that an estoppel will be found to this effect. This is probably why points based upon section 53 of the 1925 Act are rare.              5) Rights of occupation  26. If the land is not an asset there has to be some right to occupy. There will not be a lease implied for the benefit of a partnership which occupies land which is not a partnership asset. The use made of it by the firm and all the partners is given effect to by the creation of implied ‘non-exclusive' licences to the partners, not to the partnership (see Harrison-Broadley v Smith [1964] 1WLR). These licences will not be determinable during the partnership if it is inconsistent with the duty of good faith. On dissolution given the right of all partners to wind up the firm, the licences will continue for this purpose              6) Rules for determining whether non-land assets are partnership property  27. The fact that an asset is not capable of being sold does not prevent it from being partnership property (see Don King v Warren CA [2000] Ch 291). The partner in whom it is vested will have to account for its value. Non-alienable assets cannot be sold as part of winding-up. However, the partner in whom they are vested can be made to account for their value.  28. Miles v Clarke is an important case because it is often assumed that all of the non-land assets used by a partnership in the conduct of its business will be assets of the partnership. This will be the case where the asset is bought using the funds of the partnership. Otherwise, the asset will only be a partnership asset by implication is this is required as a matter of business efficacy which will be unusual.              7) Property generated by the partnership  29. Where an asset is generated by one partner through his position as a partner, there is no presumption as to whether such asset is partnership property. The Court will have to determine whether there is an agreement to this effect (see Goldup v Cobb [2017] EWHC 526 (Ch).) In this case a partner in a solicitors practice acquired pension rights as a result of being a coroner. Income derived from such position was treated as partnership income. However, the Court held that the pension rights which had accrued to such partner were not partnership property because there was no agreement (express or implied) to this effect.              8) The sale of partnership assets after winding-up                          a) Presumption that all of the assets of the partnership should be sold  30. Following dissolution the Court has the power to order the sale of all of the assets of the partnership (including land) and will usually do so because to do otherwise would or might deprive the former partners from realizing the maximum return from the assets of the partnership. The practice is only departed from in two situations, namely (i) when a Syers v Syers Order is made and (ii) where the sale of the partnership assets would offend statute or would otherwise be difficult to achieve  31. It follows that in many cases it will be obvious that there will need to be a sale of the assets of the partnership and that the winding-up of the partnership cannot commence in proper without such sale. Although the current editors of Lindley state that the practice of the Court is not to order a sale at an early stage of a partnership dispute, this is not the practice of the Court. Unless there is some good reason why a sale would not be ordered at the trial of the claim, there is no good reason to delay a sale until such time. For example, if the issue between the partners is whether the profits are to be shared equally or one third two thirds, there is no good reason why the sale should be delayed until the trial. Obviously, of there is an issue as to whether a particular asset is a partnership asset, the sale might not be ordered until this issue has been determined. However, if the issue is whether the asset is partnership property or held as tenants in common in equal shares, sale might well be ordered as the Court has power to order sale of assets held as tenants in common in any event (see Bagum v Hafiz [2016] Ch 241).                          b) Method of sale  32. In principle, there is little difference between the conduct of the sale of partnership assets and a sale of co-owned assets. Any partner will be allowed to bid and the likelihood that a particular partner may bid will affect which who has conduct of the sale. A partner cannot bid and have conduct of the sale. The only concern of the Court is that the assets of the partnership should be sold at the best price reasonably obtainable in the circumstances. It is common for one partner to be given conduct of the sale on the basis that he will sell at or above a particular price provided that his agent considers that the price is the best price reasonably obtainable in the circumstances (which is a deliberately vague expression).  33. It would be normal practice to allow a purchasing partner P effectively set off his share in the partnership against the price which he has to pay for a particular asset. P would agree to pay the purchase price and this would be included in the accounts as the value of the asset concerned. P's capital account would be adjusted accordingly and would be set off against the purchase price. P would normally be expected to pay a deposit pending the calculation of the set-off.                          c) Syers v Syers Orders  34. The majority of partners (either in number or by partnership share) may apply to the Court for an Order that they be entitled to buy out the minority usually at the date of dissolution at a price to be determined by the Court. As remarked by Hoffmann LJ in Hammond v Brearley [1992] WL 12678533, Syers v Syers is more often cited than applied. It is an unusual order because it deprives the minority of the ability to test the market so as to ensure that the assets of the partnership are sold at the best price obtainable.  35. A Syers v Syers Order was made in Mullins v Laughton [2003] Ch 250, Neuberger J. In Mullins the partnership was a joint lives partnership where the defendants had attempted to expel the claimant for breaches of the partnership agreement. The claimant sought the dissolution of the partnership under section 35 of the Act. This was granted, but the Court gave the majority the opportunity to buy out the claimant at a valuation. There are a number of unusual features of the case which make it easy for the Court to make a Syers v Syers order. These were as follows:              1)         The application was heard at the same time as the partnership was dissolved.                          2)         The majority could have expelled the claimant if they had properly used the procedure of the partnership agreement                          3)         There was no real opposition to the making of the order and no suggestion that the assets of the partnership could not be valued easily.        36. A Syers v Syers Order was refused in Benge v Benge, 13/02/17, Murray Rosen, KC where there was a real risk that a valuation would not achieve the result achievable on a sale in the open market.  37. Where the Court makes a Syers v Syers order, the usual rule is that the sale will take place following the order. However, the order can be retrospective so that the assets of the partnership are deemed to have been sold on dissolution. This may be an advantage for the departing partner in that retirement relief for CGT can be retained.  Land bought for business purposes  38. Once it has been determined that land has not been bought as partnership property, it is necessary to determine whether it has been purchased as joint tenants or tenants in common. As always, a declaration of trust will determine the issue. However, if there is no declaration of trust, how is the issue to be determined.  39. In a domestic context, the starting point is that equity follows the law. Where land is transferred to A and B, the initial starting point is that they hold the same as joint tenants (see Stack v Dowden [2007] 2 AC 432) and Jones v Kernott [2012] 1 AC 776). However, where land is purchased for business purposes, the starting point has always been that survivorship is not to apply as this is inconsistent with a business relationship. In Williams v Williams [2024] EWCA Civ 42, the Court of Appeal held that the presumption relation to business purchases still applies as no purchase could be approached “in a vacuum”.  40. Accounts of a partnership do not operate as severance of joint tenancy (see Bartin v Morris).

Sean Kelly and Cait Sweeney to speak at the Property Bar Association’s Leeds Conference

The Property Bar Association's second regional conference will take place at the Doubletree by Hilton in Leeds on 30th April 2024.  Sean and Cait will be holding a workshop at this event, examining "property owned by partnerships: some current challenges for practitioners."  For more information on the conference, please <a href="https://www.propertybar.org.uk/events/property-bar-association-leeds-conference-challenges-for-property-litigators-in-2024" target="_blank" rel="noreferrer noopener">click here</a>.

Conflict and “The Tendency To Be Swayed By Human Nature Rather Than Duty”

Irwin Mitchell Trust Corporation v PW (By Her Litigation Friend The Official Solicitor) and The Public Guardian [2024] EWOP 16  Marisa Lloyd and Lucy Evanson summarise and comment on the judgment on Irwin Mitchell Trust Corporation v PW (By Her Litigation Friend The Official Solicitor) and The Public Guardian [2024] EWOP 16 in which Marisa represented the Public Guardian  Full Judgment here - <a href="https://www.bailii.org/ew/cases/EWCOP/2024/16.html" target="_blank" rel="noreferrer noopener">https://www.bailii.org/ew/cases/EWCOP/2024/16.html</a>  The court considered self-dealing and conflict in circumstances where Irwin Mitchell Trust Corporation (‘IMTC’) acting as deputy for PW, appointed Irwin Mitchell Asset Management (‘IMAM’) to manage the investment of PW’s funds.    Factual background  PW suffered global cognitive impairment which resulted in a loss of capacity. After a successful claim against the treating healthcare trust, she received significant damages. IMTC was appointed as her property and affairs deputy and subsequently held a ‘beauty parade’ after which the deputy appointed IMAM as investment manager for PW.  In 2019, IMTC made an application to the Court of Protection for authority to execute a statutory will for PW. Concerns were raised by the Official Solicitor (‘OS’) about the appointment of IMAM as investment manager. IMTC was directed to make an application to seek retrospective authority to instruct IMAM. The Public Guardian was joined as a party.  Legal background  Section 19(6) of the Mental Capacity Act 2005 (‘the MCA’) provides that, ‘A deputy is to be treated as P’s agent in relation to anything done or decided by him within the scope of his appointment’. HHJ Hilder noted that “the relationship between a deputy and the person for whom the deputy is appointed is a fiduciary one”.  The basic proposition about the position of a fiduciary in a position of conflict was set out by Lord Herschell in the House of Lords decision of Bray v Ford [1896] AC 44 at 51-52, ‘It is an inflexible rule of a Court of equity that a person in a fiduciary position… is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict. It does not appear to me that this rule is, as has been said, founded upon principles of morality. I regard it rather as based on the consideration that, human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty, and thus prejudicing those whom he was bound to protect.’  The general principle was restated in Boardman v Phipps [1967] 2 AC 46 which also referred to Aberdeen Railway v Blaikie (1854) UKHL 1 Macq. 461 at 136 per Lord Cranworth LC who said  ‘and it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict with the interests of those whom he is bound to protect.’  HHJ Hilder considered the law of agency stating: ‘Conversely, the law of agency generally provides that an act of the agent may rank as the act of the principal if the principal ratifies it … Where the principal lacks capacity to make decisions about their property and affairs, only the Court of Protection may grant such ratification. Its jurisdiction for doing so … is found in the conjunction of sections 15(c) and 19(4) of the Mental Capacity Act 2005.’  The Question  There were several questions agreed between the parties but the predominant question for HHJ Hilder to determine was whether the rule relating to conflict of interest was applicable to the appointment of IMAM by IMTC.  Decision  There is no English authority that directly deals with the question of whether the engagement by a fiduciary of a related investment company presents ‘a real possibility of conflict of interest.’ IMTC accepted that its engagement of IMAM gave rise to the ‘theoretical potential’ for a conflict of interest, but contended that there was “no real, sensible possibility” of conflict because it had adopted procedures by holding a beauty parade etc. which eliminated that potential. Counsel for the OS and PG disagreed contending that there was an actual conflict that was not mitigated by the processes followed by IMTC.  Having reviewed the evidence, HHJ Hilder held that :  61. The Court of Protection is no stranger to conflicts of interest…  62. The conflict of interest in question in this matter comes down to IMTC being financially better off if IMAM is appointed. IMTC accepts this as a “theoretical potential”. IMTC’s argument is that such potential is extinguished to the point of no “real sensible possibility” because of procedures it has adopted. Yet nowhere in the development of those processes or in these proceedings has IMTC ever denied either that the decision to appoint IMAM is made by IMTC in its fiduciary role… or that, even with full implementation of those processes, IMTC is better off if IMAM is appointed. At a most basic level, those two concessions amount to recognition of the existence of a conflict of interest: one plus one makes two.  63. The processes which IMTC has adopted when considering the appointment of IMAM do not target the substance of the self-dealing rule: that is, they do not remove the financial gain to IMTC. Such processes could have been adopted, for example by agreeing to waive any fee to IMAM where the instruction comes from IMTC as deputy. Then there would be no financial advantage to IMTC in the instruction of IMAM, no interest to be in conflict with the interests of the person for whom IMTC acts. Of course, I recognise that the Irwin Mitchell group would be likely to reject this approach as lacking commercial sense but that merely reinforces the existence of IMTC’s interest in the appointment of IMAM.  After further discussion of the processes adopted by IMTC, and the involvement of a family member in a beauty parade in ratifying or reducing the ‘theoretical potential’ of conflict of interest, HHJ Hilder concluded that there was a ‘very clear, not remotely fanciful, actual conflict of interest in IMTC appointing IMAM to manage PW’s funds,’ [67] This breached the self-dealing rule. She concluded that  ‘The processes adopted by IMTC do not and could not extinguish that conflict. In my view, that these proceedings have been necessary at all is a paradigm example of Lord Herschell’s wise recognition of the tendency of human nature to be swayed by interest rather than duty.” [93]  Commentary  The judgment confirms that there is a conflict of interest in a trust corporation instructing a connected company to act as an investment manager. The issue of conflict cannot be mitigated by conducting a beauty parade which includes the connected company. Further, the appointment cannot be ratified by a family member.  Ratification must be carried out by the Court.  The Public Guardian has already changed her guidance in the wake of Re ACC [2020] EWCOP. This reflects the view of the PG that, if financial advice is provided by a member of the deputy’s firm, potential conflicts of interest must be considered in the context of adhering to fiduciary duties,  and where the deputies own interest and the interest of P are linked there must be an application to court for authorisation to instruct your own firm.  There was insufficient evidence before the court to determine whether the appointment of IMAM was in PW’s best interests and should be ratified or whether it should be set aside. This will need to be determined in the future.  However, there are many other cases where IMTC and other trust corporations have instructed connected companies. These cases will need to be reviewed and consideration given to the way forward. Given the need for court ratification of existing cases and prospective approval in respect of future new instructions, it may be viewed as highly unlikely that the ongoing instruction of connected companies can be justified as being in P’s best interests. In my view, it follows that  in the absence of a successful appeal, this judgment is likely to signify the end of instructions of an asset manager from connected companies to the deputy.  Further, the judgment may also be viewed as relevant to the question of whether professional pension scheme trustees associated with firms providing other professional services can properly appoint their own firms to provide services.

TA v the Public Guardian and duties of a Certificate Provider

Introduction  The Judgment can be found here <a href="https://www.bailii.org/ew/cases/EWCOP/2023/63.html">TA v the Public Guardian [2023] EWCOP 63 (07 December 2023) (bailii.org)</a>.  The case involved an appeal to Mrs Justice Lieven by P’s potential attorney (‘the Appellant’) from a decision of HHJ McCabe sitting in the Court of Protection. The Judgement is short, and therefore probably worth reading, particularly if you want to be refreshed of all the relevant statutory provisions which I have not set out in this note.  Facts  In brief, The case arose from a challenge by the Office of the Public Guardian (‘OPG’) to the validity of Lasting Powers of Attorney instruments for both Property and Financial Affairs and Health and Welfare (‘the LPA’s’), on the basis that they did not comply with paragraph 2(1)(e) Schedule 1 of the Mental Capacity Act (‘the 2005 Act’).  The Application originally included non-compliance on two grounds. However, the only ground pursued at the first hearing was that the Certificate Provider (‘CP’) ‘failed to make the requisite checks of understanding with P prior to certification’.  In the 2005 Act, Schedule 1 2(1) provides that : - ‘The instrument must include –  (e) a certificate by a person of a prescribed description that, in his opinion, at the time when the donor executes the instrument –  <ul> <li>The donor understands the purpose of the instrument and the scope of the authority conferred under it,</li>  <li>No fraud or undue pressure is being used to induce the donor to create a lasting power of attorney, and</li>  <li>There is nothing else which would prevent a lasting power of attorney from being created by the instrument.’</li> </ul>  The PG asked the court at first instance to determine whether the CP had failed to fulfil the requisite checks of understanding (i.e. those set out in the previous paragraph) with the donor prior to the execution of the LPAs.   The attorney argued that there was no requirement for the CP to carry out various checks of the donors understanding, and that how the CP satisfied themselves of matters relating to the donor prior to signing the LPAs was a matter for them. Further, that neither the Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 (‘ the 2007 Regulations’), or the 2005 Act, prescribed particular steps that the CP would have to take to ascertain the donors understanding.  HHJ McCabe disagreed and held that she was entitled to look for evidence from the CP that the requirements of Schedule 2 had been met. In this case, the CP had simply asked the donor whether she was happy about the LPAs, and the donor confirmed she was. The Judge held it was difficult to understand (from this information), how the CP had satisfied herself that the donor understood the scope of her authority; that there was no undue pressure or inducement; and there was nothing else to prevent the LPA being created. The LPAs were found to be invalid.  The Appeal  The appeal was on the basis that :-  The statutory scheme sets out in clear terms what is required in order for an LPA to be valid, and the only requirement in para 2(1)(e) was for the provision of a certificate. There was no requirement for the CP to take any particular steps prior to signing the certificate, or for the court to ensure that the requisite opinion is formed.  HHJ McCabe therefore wrongly concluded that “this opinion is one of the requirements of the creation of an LPA …” when it is wrong and there is no requirement for the opinion.  Finally, that the Judge wrongly introduced the concept that the opinion must be valid and imposed obligations on the CP.  It was argued by the Appellant that the Judge’s approach undermined the scheme of the MCA; that there was a presumption of capacity; and that the Judge’s approach was that even though the donor had capacity, the LPA was invalid because the certificate provider failed to undertake sufficient checks.  On behalf of the PG, I argued that it was clear that para 2(1) (e) required the CP to have formed the requisite opinion.  This opinion must be based on something which allowed the opinion to be properly formed. The provision of a certificate is fundamental to the formal validity of the LPA. It is not simply a signature verifying capacity, but it is a signature which also goes to issues such as understanding who the attorney is, and undue influence etc.  In order to establish the validity of what the signature is verifying, the court must be able to look behind the signature and the opinion which was formed prior to signing.  Whilst the Appellant appeared to be suggesting that as long as the signature was present, the formalities were met, I submitted that the appellants submission taken at face value could result in a situation where there was no enquiry as to the basis on which the CP had formed the requisite opinion. This could result in an LPA being taken as valid when the CP had not spoken to the donor, or ascertained anything about the wishes, intentions or understanding of the donor. Such a situation would be absurd and would undermine the protection intended in Schedule 1.  Mrs Justice Lieven considered the statutory language, the overall statutory scheme and the purpose at which it was aimed. She held that the court was entitled to check that the requisite opinion had been formed by the CP and that the Judges approach at first instance was correct. The appeal was dismissed.

Guardianship Orders: A Cut out and Keep Guide based on One I Made Earlier

Introduction  The Guardianship (Missing Persons) Act 2017 (“the Act”) came into force three and half years ago on 31 July 2019.  Informally known as ‘Claudia’s Law’ after Claudia Lawrence who disappeared in 2009, the purpose of the Act is to empower the court to appoint a guardian to deal with the property and financial affairs of people who have gone missing.   Despite the acknowledged need for such an Act, and the length of time for which the remedy has now been available, there are no reported cases of a court appointing a guardian.  I would like to be able to say “not until now”, but the nature of the hearing I had in December 2022, during which a DJ in the Business and Property Courts in Leeds granted my client a guardianship order did not lend itself to a reported judgment.  So I have taken it upon myself to provide a short overview of our application, followed by a brief “cut out and keep” guide to guardianship orders, based upon “one [a DJ in the Leeds BPC] made earlier” with the intention that you can keep this article in the magical cloud/internet storage/e-mail server and pull it out if you’re faced with a situation where you need to consider applying for such an order.  The Order made in Leeds  The background to my case was that the applicant had been contacted by professionals searching for relatives of the owner of a derelict property which was causing problems for its neighbours.  The identity of the owner was known, but he had not been seen or heard of for many years.  The applicant for the guardianship order was the brother of the owner.  Enquiries carried out by the applicant revealed a last known address for the missing person in 2017/18, from where it appears that the missing person was admitted to hospital, never to be seen again save for an unconfirmed sighting in the hospital around this time.  All other enquiries drew a blank, but equally no death certificate could be found.  Given that only four years had elapsed from when the missing person had last been seen, and there was no evidence to show that it was thought that the missing person had died, it was not open to the applicant to apply for a declaration of presumed death under the Presumption of Death Act 2013, so instead we applied for a guardianship order so that the applicant (and his wife) could deal with the derelict property.  One of the significant difficulties faced by the applicant was that he had not personally been in touch with his brother for over 15 years, and the missing person was a gentleman with few friends, no regular job, and no other family.  It was therefore necessary to track down and then obtain witness statements from the missing person’s friends to try and piece together a picture of the missing person’s life in 2017/18 so that it could be shown that the missing person was indeed ‘absent from his usual place of residence and usual day to day activities’ as required by s.1 of the Act.  There is no assistance as to the necessary time period for “usual” within the Act, but as the applicant could not find any trace of the missing person after 2018, we had to focus upon his ‘usual’ activities at that time.  CPR 57.27 makes it clear that the first hearing of an application for a guardianship order is usually a directions hearing.  In our case there had been a problem with the advertisement which needs to be placed in a ‘public news media’ no later than 14 days after notification of the date of the first hearing, and therefore an order was sought (and granted) to extend the time to advertise the claim.  However, even given the short period of advertisement, the remote hearing was attended by a member of the public; an academic with an interest in the derelict property due to its historical significance as a synagogue dating back to 1892.  Directions were given as to the filing of further evidence, and the final hearing was listed in person with the proposed guardians (the applicant and his wife) ordered to attend.  The order was subsequently granted with the court expressing concern that without the order sought the property was, and would remain,  uninsured, and the authority given to the guardians included permission to sell the property and to pay the legal costs of the application from the missing person’s estate.  Cut Out and Keep  The law relating to application for a guardianship order (“an order”) is set out within the Act and guidance for guardians and persons making applications under the Act is provided by the Guardianship (Missing Persons) Act 2017 Code of Practice (“the Code”), the most recent edition of which is dated June 2019.  The relevant section of the CPR is CPR 57.  Jurisdiction and Standing  Under s.2 of the Act, the court only has jurisdiction to hear and determine an application for an order if either:  <ul> <li>the missing person was</li>  <li>domiciled in England and Wales on the <a>day before (s)he was first known to be missing, or</a></li> </ul>  <ul> <li>had been habitually resident in England and Wales throughout the period of one year ending on the day before (s)he was first known to be missing,</li> </ul>  Or  <ul> <li>the application is made by the missing person’s spouse or civil partner and the applicant is:</li>  <li>domiciled in England and Wales on the day on which the application is made, or</li>  <li>has been habitually resident in England and Wales throughout the period of one year ending on the day on which the application is made.</li> </ul>  Pursuant to s.19 of the Act, any applicant for an order must have a sufficient interest in the missing person’s property or financial affairs.  The persons with automatic sufficient interest include the missing person’s spouse/civil partner, parent, child, or sibling.  Under s.20 of the Act any application for an order must be advertised in accordance with the rules of court and s.20(3) provides that the court must refuse to hear an application if it knows that the advertising requirement has not been met.  CPR 57.29 provides that the advert must be in the prescribed form, and must be advertised ‘within 14 days of notification of the date of the first hearing’.   In the event that the advert is late, relief from sanctions can be obtained via CPR 3.1(2)(a) – power of the court to extend or shorten the time for compliance with any rule or practice direction.  Criteria to be Satisfied to Make an Order  <a>Under s.3 of the Act, the court can make an order if satisfied that:</a>  ‘Missing’  Under s.1 of the Act, a person is “missing” if he is absent from his usual place of residence, is absent from his usual day to day activities, and his whereabouts are either completely unknown or are not known with sufficient precision to enable that person to be contacted for the purposes of decisions relating to his property or financial affairs.  Paragraph 4.4 of the code explains that the typical scenario for a case under the Act is “where a person has simply disappeared without explanation”.   Best Interests to make an Order  s.18 of the Act provides that when determining what is in the missing person’s best interests, the court must consider all the relevant circumstances of which the court is aware, and must consider, so far as is reasonably ascertainable—  (a) any relevant wishes and feelings expressed by the missing person at any time,  (b) the beliefs and values that would be likely to influence the missing person, and  (c) any other factors that the missing person would be likely to consider.  The court must take into account the views of any persons of whom the court is aware with a relevant interest in relation to the missing person's property or financial affairs, where it is reasonably practicable and appropriate to do so, and must consider the consequences of taking a proposed action.  However, the court is not required to decide any matter by reference to the decision the missing person is likely to have taken, or to consider any question as to whether or when the missing person might cease to be missing.  Appointment of a Guardian  The criteria of eligibility to be appointed a guardian is set out at s.4 of the Act.   Under s.16 of the Act, the court may appoint two or more guardians.   The Terms of an Order  Pursuant to s.5 of the Act an order must appoint a guardian in relation to all of the missing person’s property and financial affairs or such property or affairs as is specified or described in the order.   Under s.6 of the Act an order may impose duties upon a guardian and/or include conditions and restrictions.  Under s.10 the court may give directions to the guardian about how to act and/or the scope of the guardian’s power.  Under s.6(4), a guardian may be given the power to sell property.  Under s.7 of the Act, the maximum period of an order is 4 years.  An order can be varied or revoked at any time (ss. 12 and 13).

Nuisance after Fearn v Tate Gallery

Background  The Neo Bankside development (“the Development”) consists of four purpose built residential towers on Holland Street, London. A stone’s throw from the south bank of the River Thames. Each has 21 floors and is designed to maximise the area of glass on each floor thereby giving the occupier a panoramic view of the city. Each tower was completed in 2013 / 2014 and subject to long leaseholds. Leases of many of the flats within the Development sell for over £1 million.   Across Holland Street and next to the Millenium Bridge is the Tate Modern gallery. In 2016 Tate Modern completed the construction of the Blavatnik Building. This is adjacent to the main building and in the form of a twisted pyramid including a 360 degree viewing gallery open to visitors. Block C of the Development (“Block C”) is the closest to the Blavatnik Building. The gap between the two is about 34 metres. The viewing gallery is at the height of floors 18 and 19 of Block C.   The Development and the Blavatnik Building are substantial developments and planning for both took a long period. There was an overlap between the applications for planning permission. At one stage there was a proposal to include angled glass and like features in the viewing gallery. However, this proposal was not pursued in amended plans. Thereafter, neither the planning consultants for Tate Modern nor the local planning authority considered in any detail the desirability of restricting viewing in the direction of the Development. Even after the Development opened, the plans for the Blavatnik Building could have been amendment, but were not.  The Court considered the relationship in space between the Development and the Blavatnik Building in detail, but it is not easy to see the problem without the benefit of Google Maps. A visitor to the viewing gallery would want to look downwards to the North to view the river. Such a visitor would also want to view the Houses of Parliament and the London Eye to the South West but these are some distance away. The visitor would probably be content to view these distant landmarks without looking down. In principle, the viewing gallery could have been designed to prevent viewing downwards in the South West direction (or indeed Southwards generally). Putting the matter another way, there is not much to look at immediately to the South of Tate Modern.   Once opened, the viewing gallery became very popular with visitors of Tate Modern. At any one time the viewing gallery could accommodate up to 300 visitors. Such visitors watched, filmed and photographed residents of Block C on a virtually constant basis. Some even used binoculars. For the affected residents of Block C, the intrusion was relentless and akin to being in a zoo. Tate Modern did put up signs in the viewing gallery suggesting that the privacy of the residents should be respected. These were largely ignored.  The residents of Block C most affected (ranging from floors 13 to 21) commenced proceedings to require Tate Modern to cordon off part of the viewing gallery so as to prevent the viewing referred to above.  Initial observations  At first sight, one might be forgiven for thinking that the issues of the claim would be limited to the required remedy and that liability would not be a serious issue. The claimants were leaseholders of flats within Block C (with exclusive possession) and have a sufficient proprietary interest to bring a claim in private nuisance (see Hunter v Canary Wharf Ltd [1997] AC 655). The types of activity giving rise to private nuisance are not closed. In principle, private nuisance could apply to interference with television signals (see Hunter v Canary Wharf). It could apply to damage caused by Japanese knotweed (see Williams v Network Rail [2019] QB 601). Private nuisance ought to apply to viewing in an appropriately extreme case.  The standard test or methodology involves asking three questions being as follows:  1)  Is the defendant’s use of its land “common or ordinary” in the locality? Some cases use “or” and some “and” without any discussion of the differences. If the defendant’s use of its land is “common or ordinary” then it may be able to avoid liability by relying upon the defence of “reasonable user” or “give and take” that is to say user necessary for the ordinary or common use of the land (see speech of Lord Goff in Cambridge Water Co. v Eastern Counties Leather PLC [1994] 2 AC 264 at page 299E).   2)  Is the claimants’ use of their land “common or ordinary” in the locality?  3)  Is there a substantial interference with the use of the claimants’ land?  The creation and use of the viewing gallery is now unlawful and might be desirable from a commercial perspective, but it is hardly “common or ordinary” in this or any other locality. It is unique and this is its selling point. The interference is substantial because it deprives the residents of flats from being able to use them in the usual way that people do. For some residents, it made their life a misery. Insofar as this might be relevant, Tate Modern had every opportunity to design the Blavatnik Building so as to mitigate the effects on the residents of the Development, but did not to do so.   However, this is not the way in which the case proceeded until the Supreme Court decision on 1st February 2023.  The decision of Mann J at first instance ([2019] Ch 369)  The claim was brought on two bases. The first was that Tate Modern was undertaking “functions of a public nature” and thereby bound to act fairly under section 6(3)(b) of the Human Rights Act 1998. It was claimed that it had not done so by facilitating viewing of the nature described. The second was that the acts constituted private nuisance and that the Court was entitled to take into account the right to privacy under article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) in order to extend if necessary the remit of private nuisance.  The Judge found that Tate Modern was not undertaking “functions of a public nature” even though it was publicly funded. This would only apply if the functions were of the nature normally undertaken by a Government agency.  As to private nuisance, the Judge considered that the requirement for the protection of privacy under the Convention enabled him to extend the tort of private nuisance (if necessary) so as to include viewing which interfered with such privacy. However, the Judge concluded that there had been no substantial interference with the claimants’ reasonable user of the flats for the following reasons:  1)  The way in which the viewing gallery had been operated was not unlawful or “unreasonable”.  2)  The claimants had created a “self-induced sensitivity” to viewing by deciding to live in flats which had been constructed so as to maximise glass frontage.  3)  The claimants could take steps to deal with the problem whether by installing tinted glass or curtains other otherwise.  Accordingly, the claim was dismissed.  I found the decision at the time troubling.   1)  As to the first point, the reference to user which was not “unreasonable” seemed to be misplaced. Mann J did not conclude that Tate Modern’s user was “common or ordinary”. Accordingly, “reasonable user” or “give and take” should not apply.  2)  As to the second point, this is normally an argument which judges hate. The amount of glass used in the construction of the towers enabled the residents of to enjoy their flats to their best advantage. Nothing more. Some years ago, I acted for an offal factory which had increased its production intensity. Nearby residents brought claims against it for private nuisance relating to noxious smells and noise. One of the arguments which the offal factory used was that these residents had created or worsened the problem by installing patio doors in their homes which they liked to keep open during the trading hours of the offal factory. As might be expected, this argument went down like a lead balloon. In my experience, similar arguments normally do. As a general rule, judges are the sort of people who like to enjoy their homes to their best advantage and empathize with a claimant who wishes to do so. There is also an element of blaming the victim, which is unattractive.  3)  This seems to be an issue as to remedy rather than the existence of a cause of action.  The decision of the Court of Appeal ([2020] EWCA Civ 104)  Before the Court of Appeal, the case took a different direction.  All three judges disagreed with the approach taken by Mann J as to substantial interference. None accepted that the claimants had created a “self-induced sensitivity”. The claimants were just enjoying their flats as people do.  However, all three judges concluded that the weight of judicial authority was to the effect that “mere overlooking” from one property to another was not capable of giving rise to a cause of action in private nuisance. Article 8 of the Convention could not assist in extending the ambit of private nuisance because concepts of privacy under the Convention were distinct from property rights protected under the law of private nuisance. Privacy is attached to the person. Private nuisance is a property tort linked inextricably with rights to enjoy property.  I found the decision at the time troubling because the essence of the tort of private nuisance is that it evolves with time, technology and the innate ability of the species to interfere with the rights of neighbours. It clearly applies to vibrations on one property which affect the neighbouring property. This type of vibration would not have been dreamt of when the tort originated. Neither would residential tower blocks lined with glass. In any event, the viewing by visitors was not “mere overlooking” in the sense that it arises merely because one property is higher than another. It was deliberate and intensive viewing for pleasure or amusement. Tate Modern had effectively encouraged its visitors to do so.  The decision of the Supreme Court  All five judges concluded that the tort of private nuisance was wide enough to enable a claim relating to viewing provided that it was sufficiently intensive. Insofar as this was relevant, the actions of the visitors of Tate Modern amounted to far more than the facilitation or encouragement of “mere viewing”. The fact that there had been no reported case to date relating to such a claim was not important. Article 8 of the Convention has no part to play in assessing the scope of the tort or private nuisance or any similar property tort.   The majority of the Supreme Court (Lords Leggatt, Reed and Lloyd-Jones) accepted the criticisms of the Court of Appeal with regard to the decision of Mann J and concluded what there had been substantial interference with the claimants’ “common or ordinary” user of their flats. While there was a balance between the conflicting right of neighbouring owners to be maintained (see Sedleigh-Denflield v O’Callaghan [1940] AC 880) the balancing exercise required the Court to intervene and relief would be granted. Lord Leggatt, who gave the speech of the majority, was scathing about the judgments below and considered that they may have been motivated by a desire to prefer the rights of the many visitors to Tate Modern at the expense of a few rich residents of the flats. In this regard, Lord Leggatt may be inferring more than is obvious from the judgments themselves. It is an unfair criticism of the Court of Appeal as all three judges would have found for the claimants but for the fundamental issue as to the nature of the actions giving rise to a private nuisance claim.    The speech of the minority (Lords Sales and Kitchin) is not easy to follow. They do not appear to have accepted the argument that the claimants created “a self-induced sensitivity”. However, they refused to interfere with the judgment of Mann J on the basis that private nuisance involves at its very essence the concept of “reasonable user” or “give and take”. For the minority, these concepts were not limited to actions required for “common or ordinary” user. The minority considered that residents of the flats were in a position to take steps to mitigate the problem and they should do so rather than Tate Modern.  The analysis of the minority is perplexing for a number of reasons including the following:  1)    The natural reading of the speech of Lord Goff in Cambridge Water limits “reasonable user” or “give and take” to actions required for “common or ordinary” user. No judge took the view that there was “common or ordinary” user of Tate Modern’s land.  2)  Extending the defence of “reasonable user” or “give and take” to situations where the user is not “common or ordinary” creates uncertainty and changes the whole nature of the liability. A person who constructs a property which is not “common or ordinary” in the locality (or commences a use which is not “common or ordinary” from an existing building) ought to assess and mitigate the consequences for his neighbours of such use. He is best placed to do so and mitigation can be filtered into the cost. One might be forgiven for thinking that these steps would be taken in conjunction with (or at the direction of) the planning authorities. On the facts, Tate Modern had been given every opportunity to construct the Blavatnik Building in a way which mitigated the obvious potential damage to the residents of Block C caused by hundreds of visitors gawping at them. It had taken none of these opportunities and had made no proposals to restrict the usage of the viewing gallery thereafter.  The law after the judgment  In a case with just two issues, it is surprising to find such fundamental difference of approach by the judiciary. As to the two issues, the nine judges considering the same decided as follows:  1)  Nuisance applies to viewing (6 to 3).  2)  There was substantial interference (6 to 3).  However, there were only three judges who found both. Fortunately, they were all in the Supreme Court.  The following can be said in the light of the judgment of the Supreme Court:  1)  The boundaries of the law of private nuisance are not closed. In appropriate circumstances, viewing can amount to private nuisance.  2)  Article 8 of the Convention is of no assistance in determining the ambit of private nuisance or any other property tort.  3)  Reliance upon “self-induced sensitivity” arguments as regards residential properties is likely to be very difficult.  4)  The standard test for substantial interference is to be applied that is to say the defence of “reasonable user” or “give and take” only apply to actions required for the “common and ordinary” user of the claimant’s land.  Sean Kelly  Parklane Plowden Chambers  22nd February 2023

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