Author: Chris

(full case at http://www.bailii.org/ew/cases/EWHC/QB/2018/3227.html)

Mr & Mrs Mason were misled by Martyn Balm into a disastrous mortgage.

In 2008, they were sold on the idea of investing in property having sold up their family business and borrowed to obtain capital to start up this venture. Having obtained some funding and been advised (by Mr Balm through another business) as to a potential target site, they were advised on remortgaging the family home to extend the borrowings and invest into the venture.

At this time Mr Balm had been paid a fee in excess of £50,000 to locate the site and obtain a mortgage over the site; and stood to obtain further commissions in remortgaging the family home.

To do this Mr Balm misrepresented the Mason’s earnings, and Mr Mason spotted this when approving the application and required that it be corrected before submission. However it was never corrected.

Sadly, after this remortgaging, in 2011 the loan over the development property was called in and ultimately receivers sold the land and the shortfall on that loan was written off.

The Masons therefore did not have the asset or projected profit to pay off the borrowings invested in the property business.

Accordingly, the Masons sued the lenders for inappropriate lending. Unfortunately in this case, because Godiva’s processes met the standards required for self-certification at the time, and a regulated mortgage broker (Mr Balm) brokered the deal the court could not find that Godiva acted inappropriately or in breach of their duties as lender.

Because no case was brought against Mr Balm nothing is said about his responsibilities or his firm’s responsibilities.

Today, it would be almost impossible to obtain such a self-certified mortgage – because the rules have been made stronger after the financial problems of the last decade – and so cases like this should be rarer and rarer.

When looking at mis-selling cases it is vital to take early effective advice as the last paragraph of the judgment points out. Mr & Mrs Mason are, at 79 and 80 years old, facing repossession and a judgment against them for the outstanding sums.

One slight ray of hope is that the judge directed that a copy be sent to the FCA in order that they can consider the factual matters he determined in respect of Mr Balm’s conduct.

If you have a mis-selling claim and need advice call my clerks on 01823 247 247.

The Commercial Court has given some recent insight into what goes on behind the scenes at a poor financial advice firm – Liberty Partnership Ltd v Tancred [2018] EWHC 2707 (Comm)

Mr & Mrs Tancred ran GD Tancred Financial Services Ltd for many years and, in 2007, sold it to Liberty Partnership Ltd. After the sale a number of complaints arose from past business costing Liberty quite dearly.

When selling the business the Tancreds had to make warranties and assurances regarding the work they had done as this can affect the new owners. These are fairly ordinary warranties in this type of transaction and for a well run business do not present any major issue.

However, Mr & Mrs Tancred are alleged to have been less than forthcoming regarding complaints and regulatory compliance issues they had faced. This has had consequences for Liberty and would have affected the sale price.

The case heard so far is a preliminary issue to decide if the case has been brought inside the time limits. Liberty had to prove that the Tancreds wilfully concealed (or were otherwise fraudulent or dishonest) in respect of each matter complained of in order for the time limits not to apply and the claim to be brought. This is an ordinary feature of English law designed to ensure that the dishonest and fraudulent cannot rely upon a time bar arising out of their dishonesty or fraud. It is accepted that the standard of proof is unchanged from the ordinary civil standard but that there is a reluctance to find dishonesty without clear evidence. So the court determined that the important questions it had to answer were:

1. “Whether there was wilful concealment of the FSA letter dated 24 June 2005 and the letter in response dated 4 July 2005.
2. Whether there was wilful concealment of the true extent of Ms McKenna’s involvement in the Company’s pension transfer transactions.
3. Whether there was wilful concealment of breaches of a warranty stating that 360 Services had assumed compliance of all income drawdown products sold by the Company.
4. Whether there was wilful concealment of a failure to comply with an FSA requirement that the Company should send a letter “in a form… signed off by an external compliance consultant, and to the satisfaction of the FSA, to all existing income withdrawal customers…”
5. Whether there was wilful concealment of complaints alleged by the Claimant to have been made before the SPA by customers surnamed Aldous, Fox, Holling, Isaacs, Johnson, Smith and Vickers.
6. Whether there was wilful concealment of matters which eventually gave rise to complaints made after the SPA by customers surnamed Allen, Bloodworth, Clarke, Drury, Holloway, Hornsby, Lingard, Smalley, Smith, Trout, Upex, Vesty and Vickers.
7. Whether any claims which I may find to have been wilfully concealed under the various issues just identified will not only be outside the contractual limitation period (by reason of the wilful concealment) but will also entitle the Claimant to pursue other similar claims.”

This does mean that the court has to hear the substance of the case, that is whether or not the Tancreds are in breach of the sale agreement, but that a swathe of key findings have been made regarding what occurred. Ultimately the court allowed iii through v to proceed to full trial.

From a consumer perspective the exploration of how the Tancreds ran their business improperly is most useful. It is far from uncommon to see allegations that what the paper file provided by an advisor says against what the consumer says occurred. Mr Tancred was referred to by the judge (at paragraph 137) as a fast-talking salesman who failed to recognise that complaints were upheld because they were his fault and the FSA and consultants had identified problems with how he acted. The judge acknowledged (at paragraph 155) Mr Tancred’s utter incomprehension of his own fallability and noted the Mr Tancred would have wrongly rejected complaints which were later upheld by the FOS.

This type of fast-talking salesman is, fortunately, not too common these days. However, that kind of approach has in the past caused significant losses for clients. The lack of proper complaints handling has left many people feeling unable to do anything – when in fact the duty on a firm is to address the complaint and consider it properly, and then to signpost the FOS.

The complaints where Mr Tancred was wholly failing to acknowledge his culpability or the possibility he was wrong could not proceed as the court could not find he wilfully concealed something he did not acknowledge.

However when it came to consider the obligation for a pension transfer specialist to approve any pension transfer advice (point iii); and the later involvement of compliance consultants in relation to income drawdown advice (point iv) there was good objective evidence from the external parties which contradicted the Tancred’s case and the judge found that there had been deliberate concealment.

With both of these external consultants Mr Tancred was obliged to have them approve specialist types of advice. The judge found that whilst some cases were certainly sent to be approved that none of them actually received approval from the external consultant. Furthermore that a lump sum cheque was produced very late as if to pay the pension consultant for approving advice – when the Tancreds were claiming that individual payments had been made by cheque for each case. This was particularly unimpressive as it was found to be a step to create a false paper trail.

The other issue which will proceed is that the Tancreds were required to write to all their income drawdown clients in terms ordered by the FSA to tell them that they could rearrange their drawdown arrangements at no cost. Liberty brought several witnesses who were supposed to receive this letter – none of them had done.

Ultimately, the judge was compelled to find that where he could not discern wilful concealment that the claims were outside the time limit. Therefore the trial will be about the pension transfer consultant, the compliance consultants and the FSA disciplinary action mailshot

This is a particularly egregious example of misbehaviour but, shows that fast acting clients who pressed their complaints to the Financial Ombudsman did obtain effective redress.

If you are unsure about a complaint it is vital to get good advice from an experienced financial services and pensions barrister quickly to protect your position.

Warner v Scapa FlowCharters [2018] UKSC 52

Mr Warner was sadly involved in an accident on a dive charter and thereafter undertook a dive to 88 metres (far beyond the reach of most divers!). Sadly, Mr Warner encountered difficulties and could not be revived.

Claims were brought by Mr Warner’s widow on her own behalf and on behalf of their infant son. Sadly these were issued nearly 3 years after the incident and planned date of debarkation (the relevant date for a death at sea under the Athens Convention).

No appeal was brought to the Supreme Court against the strikeout of Mrs Warner’s claim; but the Inner House had allowed their son’s claim to proceed as it was extended by domestic law and within the longstop.

The Supreme Court considered carefully the ideas of “suspension” and “interruption” and took a purposive view as to what was meant by the allowance in the Athens Convention for time to be extended beyond the ordinary two year period.

Fortunately for minors the Prescription and Limitation (Scotland) Act 1973 – in similar terms to the Limitation Act 1980 – was found to be a domestic provision which engages that additional year and can therefore provide a further brief window to bring a claim.

Nevertheless, aviation and maritime claims are a potential minefield and should be considered very carefully.

Today everyone wants jobs done swiftly and at a fixed up front fee. Ideally by the best person for the job.

Finding lawyers online isn’t exactly difficult. Finding one that can do what you need isn’t much harder but getting the job you want and no more done for a fixed fee seems somewhat elusive.

Well, unless you go to a barrister – whose business model has been fixed fees since before the phrase was invented.

This does mean you don’t get the long term direct support of a solicitor throughout a case, but when you just need a specific job doing you know you get that done.

Fortunately some solicitors are coming around to this idea, but for specific advice, drafting or advocacy barristers are well used to delivering a job at the right price.

PS yes, there are times you pay an hourly rate for a barrister but that’s much rarer.

The Supreme Court has answered a recurring question in court procedure – do parties without lawyers get any special treatment?

Today’s decision in Barton v Wright Hassall LLP [2018] UKSC 12 is a clear statement that special allowances are not afforded to litigants in person. This follows the trend in cases exemplified by a high water mark in Mitchell v NGN and then clarified and tempered in Denton v White – the rules are there to be followed.

The Barton case is a particularly hard case as Mr Barton was in the second set of professional negligence proceedings arising out of his divorce (suing the solicitors whom he instructed to sue his divorce lawyers). At the last instant proceedings were issued – otherwise the time bar in the Limitation Act would have stopped Mr Barton; and then attempting to serve those proceedings at the end of the period of validity of the claim form.

By taking the service step in a fashion not permitted in the rules – when the rules were clear regarding what needed to be done to validly serve – was not held to be a circumstance in which the court should exercise its discretion to validate service.

The suggestion is made that the rules need to be brought up to date and this is up to the Civil Procedure Rules Committee.

Delighted to say that certain public bodies are able to take a balanced view of their decisions when challenged.

I successfully presented a clear case of a decision having been made which was incorrect against the legal background but seemed reasonable on the face of the decision. 

This is not a common occurrence in my work as the majority of decisions are made clearly in accordance with the law and relevant rules. Therefore I had to take the unusual step of preparing a judicial review letter before action.

In the modern world there are now many areas where the traditional framework of the law of contract or tort or trusts – or more often a blend of these – has an added statutory or regulatory dimension. This can allow alternative routes to redress or remedies but demands a lawyer who understands that additional dimension to obtain the best results, especially as the traditional view of the law may provide no recourse but the regulated nature of the case has introduced specific protections.

That additional dimension allowed a case to be brought in a different way, but that different route meant an alternative to a traditional civil appeal. 

Jackson LJ’s report can be found at the Judiciary website  and makes for interesting reading. 

More comment to follow once I have digested it. 

Today’s decision in the Tribunal Fees case – R(UNISON) v Lord Chancellor [2017] UKSC 51 – is hugely significant on a number of fronts which I expect to be linking to very soon.

However, I am not an employment lawyer and would not dare to tread on erudite toes on constitutional issues. But I do need to say something about the case.

In brief, the judgment written by Lord Reed was a lesson in constitutional law that will doubtless be required reading on any course worth the name. It is written in clear language which does not require the reader to be a lawyer or constitutional scholar to understand. It demonstrates in that clarity one other key principle of the law – that it should be accessible to all. That admirable clarity makes it easily accessible for anyone to understand the principles that the case enunciates.

It draws from centuries of common law principles that are so solid as to be immovable objects in the world of (English) common law – it is a judgment crafted to stand on common law principles; without the need for either modern invention of European Union law or Human Rights (at least in terms of the Act) to be relied upon.

By relying on common law principles the decision does not face later criticism if (for example) the Human Rights Act were repealed. Instead, it reminds us all that the basic standards set down in the UN Declaration of Human Rights (and eventually our own Human Rights Act) are essential requirements of a civilised nation which we recognised long before it was necessary to fix them in writing. As a country which has not faced revolution in so many centuries there has been no British impetus to nail a Bill of Rights to the courthouse door as so many nations have felt the need to when coming out of such a preiod of upheaval and rule of might rather than rule of law.

The judgment is almost as brief as it can be whilst both determining the case in front of the court and also setting out a clear position that the Supreme Court will not shy away from its constitutional role to hold the government to account for legislation which is unconstitutional.

At its heart the common law decision is that access to the courts is not a service which only benefits the vindicated claimant. Rather two significant benefits to society arise – firstly that the body of common law relies upon these difficult cases to clarify and extend the law; and secondly, but no less importantly, by having effective access to the courts.

That is what is meant by “Rule of Law”, that the law is known (or discoverable), can be determined if it is not clear, and CAN BE ENFORCED EFFECTIVELY. Once enforceability is compromised for the weakest in society, the strong will run roughshod, at first over the poor, then the less poor, until there are no rights but those that can be enforced by force – be it monetary or main strength.

If you can read nothing but paragraphs 66 – 68 you must read these.

Of course there is a good basis in modern Human Rights law to support the decision made – and because this is a more modern issue the ECHR jurisprudence on access to justice and at what point a legitimate requirement (particularly to pay a fee) becomes a breach of Article 6. Between paragraphs 110 and 115 there is a clear outline of the issues of the constitutionality – as well as lawfulness under Article 6 – of fees between an individual and the courts. This is doubly useful in that it provides the government with a framework of the issues that the Supreme Court considers necessary to be considered in any future court and tribunal fees legislation.

The other interesting point, and one which goes to the heart of the process being challenged, is the Supreme Court’s willingness to require the government to prove assertions made in consultations and responses. Whilst this may not seem to be a significant issue, the criticism levelled by the court provides future challenges with good ammunition to pin down decision makers who have pre-conceived notions or other unsupported opinions and hold such decision makers to account.

This is a victory which has far more importance than the case being fought.

Whilst tidying up my old records I rediscovered an interview with LexisNexis on compulsory arbitration: httpJoin us on Twitter – and give up your right to sue (although it would have been nice if my name were correctly spelled).

These specific protections in EU (and English) law are ones which the Consumer Rights Act 2015 (Sch2, Part 1, p.20) now enshrine that prohibition on compulsory exclusive arbitration clauses.

This is an important reminder that, even as the courts are considering how our procedural systems need to develop to face the 21st century, the right of access to the court is pivotal and that all alternative dispute resolution systems depend upon ultimate enforceability at law and the ability to have a case heard – especially where one party is significantly weaker than another.