July Legal Alert

legal alert

This month: 

Case law: Ruling gives guidance on when IT adjustments are reasonably required for disabled employees

Employers will welcome guidance on when adjustments are reasonably required for disabled employees or job candidates, particularly in relation to new IT, in a recent ruling.

A blind employee – who was the employer's disability officer - asked his employer many times to install software that read out text, so he could access databases at work. He was told that it cost too much and was not needed for his job. He later applied for a new job with the same employer and needed to access a database during the application process, but was unable to. He claimed disability discrimination.

It is direct discrimination if an employer treats someone with a disability less favourably than it would treat someone without a disability in the same circumstances.

It is indirect discrimination if an employer operates a provision, criterion or practice (PCP) which puts people with a disability (including the employee who is complaining about it) at a substantial disadvantage compared with people who do not have that disability. In that case, the employer must make 'reasonable adjustments' for disabled employees to remove the substantial disadvantage. Whether an adjustment is 'reasonable' depends on the circumstances.

However, a PCP will not be unlawful if it is a proportionate means of achieving a legitimate aim, for example, if there are health and safety reasons for it.

In this case the Employment Tribunal ruled that the employer had failed to make reasonable adjustments, so there had been discrimination.

Operative date

  • Now

Recommendation

  • Employers should ensure they consider whether adjustments are reasonably required for disabled employees or job candidates; and whether such adjustments would reduce disadvantages suffered by disabled employees, given the cost and inconvenience to the employer.
  • Particularly, employers should consider the needs of disabled workers when introducing new IT and should not ignore requests for adjustments made by disabled employees.

Case law: Lambert v Lewisham Southwark College unreported

Case law: Employers revisit mobile phone policies following contrasting legal decisions

Employers should ensure their mobile phone policies are clear and complete, to reduce uncertainty over whether or not they apply, following two contrasting legal decisions.

A bus driver thought he had set the alarm on his mobile phone and fell asleep while parked in his bus. The alarm did not go off and when he awoke, realised he was late. He started the engine and drove off with the phone still in his hand. Taking both hands off the wheel so he could put the phone in his pocket, he then put one hand back on the wheel while he adjusted it. The incident was caught on CCTV.

The employer operated a clear, well-communicated, absolute ban on use of mobile phones at work, and also on their 'visible presence' in their drivers' cabs. The employee was already on a final disciplinary warning and his employer dismissed him. The Employment Tribunal (ET) ruled that his dismissal was fair.

In a separate case, an employee was seen using his mobile while driving his own car into the works car park. An investigation was carried out and he was dismissed.  Here, the ET ruled that the dismissal was unfair.  He was an employee of 36 years' standing who had worked his way up to a management position, was considered 'competent, conscientious and law-abiding' and had a clean disciplinary record. Particularly, it was not clear whether the employer's policy on mobile phones prohibited use of phones while entering the works car park in his own car.

Operative date

  • Now

Recommendation

  • Employers should ensure their mobile phone policies are as clear and complete as possible, to reduce uncertainty over whether or not they apply .

Case refs:      Ruparell v East London Bus & Coach Co Ltd ET/3201040/2014
                    Whitehead v FirstGroup Holdings Ltd ET/1400993/2014

 

New guidance: New guidance on calculating holiday pay and right to work

Businesses will welcome new Acas guidance on calculating holiday pay, and new guidance on right to work checks from the Home Office.

Acas has published guidance on calculating holiday pay following recent rulings on whether non-guaranteed overtime, commission and work-related travel should be taken into account when calculating holiday pay.

The Home Office has also issued new guidance to help employers carry out proper 'right to work' checks on employees and candidates.

Operative date

  • Now

Recommendation

 

New law: New rules for landlords terminating Assured Shorthold Tenancies (ASTs) of residential property

Landlords of ASTs should review their tenancies to check whether, and how, new rules affect their ability to recover possession of their properties.

The law says that landlords can usually recover possession of property let under an AST by giving tenants two months' written notice to quit (a 'section 21 notice') without having to give any reason. The notice can be given during the AST or, if it has expired, during the periodic tenancy which automatically arises on expiry if the tenant remains in possession of the property, but the landlord must follow different procedures in each case.

The rules governing section 21 notices were changed from 26 March 2015:

  • Since 6 April 2007, landlords of ASTs have had to protect tenants' deposits under one of three government-accredited schemes, designed to ensure fairness between landlords and tenants when the tenancy ends. Where the contractual term of an AST ended before 6 April 2007 (ie before the tenant deposit rules were introduced) and the deposit has not been protected before 23 June, a landlord may not serve a valid notice to end the AST (a 'section 21 notice').
  • A landlord may not be able to give a valid section 21 notice if a tenant has given notice to the landlord complaining about disrepair at the property.
  • Landlords may no longer serve a post-dated section 21 when the AST begins, but must wait at least four months from the start of the tenancy.
  • The old rule that the date specified in a section 21 notice for expiry of the tenancy had to expire on the last day of a periodic tenancy has been abolished. Landlords can give two months' notice expiring at any time to terminate a periodic tenancy.

In addition, new rules may well come into force in October 2015, that section 21 notices are only valid for six months after they are served.

Operative date

  • Now

Recommendation

  • Landlords of ASTs should review each of their tenancies to check whether the new rules have affected their ability to give a section 21 notice, and how they should do so.

Case law: Sub-contractor's employee may have TUPE protection if ultimate customer takes work in-house

An organisation that takes work carried out by a sub-contractor in-house may find the sub-contractor's employees are protected by TUPE, even though there is no direct contractual relationship between the organisation and the sub-contractor, following a recent ruling.

Council A contracted the management of an ice rink and its car park to Company B, which sub-contracted management of the car park to Company C. The Council ended the contract and closed the ice rink and car park. Shortly afterwards it re-opened the car park and managed it itself.

A person who had been employed first by Company B and then by Company C to manage the car park claimed his employment had transferred to the Council under the TUPE rules.

The TUPE rules are designed to protect employees in certain circumstances – by preserving their jobs and terms and conditions of employment - when there is a 'service provision change'. One example of a 'service provision change' is when a customer brings work being done by a contractor in-house.

The Council argued that, as an employee of Company C, the employee had not transferred under TUPE as there had been no direct contractual link between the Council and Company C. He claimed constructive unfair dismissal.

The Employment Tribunal disagreed, ruling that TUPE could, in certain circumstances, protect an employee of a sub-contractor such as Company C. The application by the Council to strike the employee's claim out was sent back to the Tribunal for reconsideration.

Operative date

  • Now

Recommendation

  • Organisations that end a contract with a main contractor, that the contractor has then sub-contracted, and take the work in-house, should check whether employees of the sub-contractor may be protected by TUPE in the circumstances, even though there is no direct contractual relationship between the organisation and the sub-contractor.

Case ref: Jinks v London Borough of Havering UKEAT/0157/14/MC

 

Case law: Employee under no implied duty to report police investigation against him to his employer

Employers who want employees to self-report criminal allegations against them and/or police investigations unrelated to their jobs, should ensure their contracts of employment expressly require this, following a recent ruling.

A college dismissed an employee after discovering he had been investigated by the police for an alleged sexual assault against a student at another school, where he had also been working -without the college's permission. The allegation was not proved.

The college dismissed him on the basis that he was under an implied duty to disclose any allegations of impropriety made against him, whether or not they related to his job at the college, and had failed to do so.

The Employment Appeal Tribunal (EAT) disagreed. It ruled that employees were not under any implied obligation to report such allegations or police investigations, where there was no conviction or caution, unless they believed they were guilty of actual misconduct.

The college had also argued there was an express obligation to report such allegations in his contract of employment. The EAT said it could not find any such obligation in the contract in the circumstances, which were that the employee did not believe he was guilty of misconduct, and he had been neither convicted nor cautioned.

Operative date

  • Now

Recommendation

  • Employers who want employees to self-report criminal allegations made against them and/or police investigations, unrelated to their jobs, should ensure their employees' contracts of employment expressly say they must.

Case ref: The Basildon Academies v Amadi & Anor UKEAT/0342/14/RN

 

New rules: New way to protect designs in US and Japan 

Businesses and individuals who want to protect their designs in the US or Japan can now protect them through one application under the Hague System.  They must specify those (and other) countries in their application, rather than go direct to each national design registry, as each has now joined the Hague System.

Designers, inventors and other businesses in the UK can protect certain designs in the UK by registering them at the UK Intellectual Property Office, or protect them throughout the EU by registering them at the Community Trade Marks office (the Office of Harmonisation in the Internal Market – 'OHIM').

However, there is also the 'Hague System', which enables you to make one application to protect your design in all or any of the multiple countries or regions that have signed up to the System, including the UK. If you have registered your design under the Hague System it is protected in each country or region you specify as if you had registered it by going direct to the relevant national or regional registries there.

This means you can protect your design in multiple countries and regions by filing one application at one office and paying one fee, but specifying a number of countries and/or regions where you want your design to be protected.

The US and Japan have now signed up to the Hague System, therefore, if you want to protect your design in either of those countries you can now do so using the Hague System rather than going to the expense of registering in each country directly.

The application is still examined in each country specified in your Hague System application to ensure it meets local requirements. We strongly recommend you take advice from a local lawyer to ensure your application is not rejected when examined in a particular country. Your legal advisers can assist you with finding a suitable lawyer.

Operative date

  • Now

Recommendation

  • Businesses and individuals who want to protect their designs in the US or Japan should consider whether they may be able to do so through one application, made under the Hague System and specifying those countries in their application, rather than go direct to each national design registry.

Case law: Client complaint about employee did not stop employee claiming TUPE protection when client later transferred work to new provider

Employers who receive a complaint about an employee from a client, and the employee is part of an organised grouping of employees assigned to do the client's work, should consider whether to expressly remove the employee from the grouping, otherwise the employee may still be protected by TUPE if there is a subsequent service provision change.

A local authority granted a contract to a company to provide services. The authority complained about an employee after she had a falling out with her line manager, and it did not want her working on the contract. The company suspended her but challenged the complaint.

The authority decided not to renew the contract with the company, transferring the work to a second provider. The employee claimed that TUPE rules applied and her employment should transfer to the new provider.

The TUPE rules are designed to protect employees in certain circumstances – by preserving their jobs and their terms and conditions of employment – including when (among other circumstances) there has been a 'service provision change'.  A service provision change can take place where, as in this case, a contract is re-assigned to a replacement contractor.

In order for TUPE to apply on a change of service provision there must be an "organised grouping of employees" which "has as its principal purpose the carrying out of the activities concerned on behalf of the client". In those circumstances, the employment contracts of the employees assigned to the organised grouping of employees will pass to the transferee.

The employee was initially told she was protected by the TUPE rules and her contract of employment would transfer to the new provider. However, it was then decided that the complaint meant she had not been assigned to the relevant 'organised grouping of employees' immediately before the transfer of the work. There was no other work for her so the company made her redundant. She claimed unfair dismissal against the company and the new provider.

The Employment Appeal Tribunal found she was protected by TUPE. The authority's demand that she be removed from the contract did not, of itself, mean she was no longer assigned to the relevant organised grouping of employees. Removing her was a decision that could only be taken by the employer (or someone the employer had authorised to make that decision).  The employer had not made that decision.

Operative date

  • Now

Recommendation

  • Employers who receive a complaint about an employee from a client, and the employee is part of an organised grouping of employees assigned to do the client's work, should consider whether to expressly remove the employee from the grouping;  otherwise the employee may still be protected by TUPE if there is a subsequent service provision change.

Case ref: Jakowlew v Nestor Primecare Services Limited T/A Saga Care & Anor UKEAT/0431/14/BA

 

New law: Residential tenants can operate 'home businesses' without getting business tenant security of tenure

Landlords should consider whether they wish to allow residential tenants to operate home businesses from their homes to make them more marketable, given that new laws will reduce the risk of tenants having security of tenure as a result.

Changes to the law mean landlords will be able to give certain residential tenants a right to run their business from home without the tenants being able to claim they have security of tenure as business tenants. This will apply whether or not the lease permits the tenant to run a home business, and whether or not the landlord later consents to it.

However, the exemption will only apply if:

  • The lease is of a house or part of a house, let to an individual occupying it as a separate dwelling. This may mean that residential flats in a block are not within the exemption.
  • The let premises are the individual's home – although they may be within the exemption if there is mixed residential and business use.
  • The business is a 'home business'. Under the new law this means "a business of a kind which might reasonably be carried on at home". It is likely the Government will make further regulations to clarify what this means.

Operative date

  • To be advised

Recommendations

  • Landlords should consider whether they wish to allow residential tenants to operate home businesses from let residential premises to make them more marketable, when the new law comes in, and reduce the risk of the tenant having security of tenure as a result.

Case law: Trade mark infringement claim fails because offending mark is infringer's 'own name'

Businesses choosing a trade mark should check that it is not the 'own name' of any other individual or business which has registered - or may register - their own trade mark in that name, as this may be a defence if you try to stop them using the same trade mark.

A company, ASSOS, claimed there was a likelihood of confusion between its trade mark and the trade mark of a company called ASOS. When ASOS applied for a European community trade mark, ASSOS applied for a declaration that ASOS's trade mark was invalid.

The ASSOS community trade mark covered cycling products and clothing, and casual clothing. ASOS's UK trade mark covered skin care products, clothing and the bringing together of those products.

If you have registered a trade mark which is the same as someone's own name, you generally can't stop them from using this name provided they use it in accordance with honest practices in industrial or commercial matters.  They will have a defence if you bring an infringement claim.

ASOS argued its trade mark was its 'own name', which it had registered a short time after ASSOS had applied to register its European Community trade mark and that it therefore had a defence to ASSOS's application.

The Court of Appeal agreed. It found the ASOS name had clearly evolved from its previous company name, As Seen on Screen - a name that had been used before the company knew of ASSOS and had not been chosen dishonestly. Once it knew of ASSOS the company had tried to reduce the risk of confusion with ASSOS by taking certain items off its website. The defence therefore applied.

Operative date

  • Now

Recommendation

  • Businesses choosing a trade mark should check that it is not the 'own name' of any other individual or business which has registered, or may decide to register, their own trade mark in that name.

Case ref: Maier & Anor v Asos Plc & Anor [2015] EWCA Civ 220

 

Case law: Court clarifies employers' duties to employees travelling abroad

Employers whose employees travel on business abroad should ensure they know what they must do to discharge their health and safety obligations to keep employees reasonably safe from harm, following a recent ruling.

An employee was killed on a private charter flight from Cameroon to the Congo when travelling on business. The main cause was pilot error. However, the carrier had a poor safety record and was on an EU banned list, although neither the charterer nor the employer knew this. His family claimed compensation from his employer.

The Court ruled that the employer:

  • Had a duty to take reasonable care to keep employees reasonably safe when travelling for work.
  • Should have checked the two countries on the Foreign and Commonwealth Office website.
  • Should have asked the charterer about the carrier it had chartered (including whether it had an air operator's certificate, what insurance it carried, whether it had been recommended and whether the charterer had used it before), the route and how the charterer had checked the flight would be safe. 

Different considerations may apply depending on whether the employer has booked travel itself or via a third party, the route, and the mode of transport used. For example, an employer may have minimal obligations where the travel is on a scheduled flight between Europe and the USA, compared to travel in a less developed country or where the carrier has a poor safety record.

Generally, the decision indicates that employers should arrange suitable insurance for workers abroad, ensure workers have their own insurance, carry out a risk assessment for foreign travel, and ask relevant questions of third parties booking or providing travel abroad.

Operative date

  • Now

Recommendation

  • Employers whose employees travel on business abroad should ensure they know what they need to do to discharge their health and safety obligations to keep their employees reasonably safe from harm, including when travelling.

Case ref: Cassley & Ors v GMP Securities Europe LLP & Ors [2015] EWHC 722

 

Case law: Contractual party could not take advantage of non-performance by another party if it caused the non-performance

If a party to a contract cannot perform a contractual obligation because of the other party's action (or inaction), the first party may be entitled to ignore that obligation, a recent ruling has confirmed.

Under a contract, the parties had to refer certain disputes to an 'Engineer' retained by one of them (Party A) before the dispute could be referred to an arbitrator. The Engineer then had 84 days to issue a decision. One of the parties (Party B) referred a dispute to the Engineer. However, Party A had ended the Engineer's retainer. It was therefore clear that the Engineer could not make a decision on the dispute. Party B therefore tried to start arbitration proceedings. Party A argued it could not do so until the 84-day period had expired.

The Court ruled that the dispute could go straight to arbitration. Party A could not insist on Party B waiting 84 days for nothing, because it was Party A who had ended the Engineer's retainer.

The Court relied first on a long-standing legal principle that if a party entered into an arrangement which could only take effect by the continuance of a certain existing set of circumstances, "there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative".

It also relied on a more recent legal ruling saying that the question in such circumstances was "what the [contract], read as a whole against the relevant background, would reasonably be understood to mean".

Once it was absolutely clear that the Engineer was not going to make a decision, then the parties' choices were either to find another engineer or elect that the contract no longer bound them in this respect. Since Party A had not tried to find another Engineer, the requirement to go to the Engineer for a decision no longer applied.

Operative date

  • Now

Recommendation

  • If a party to a contract cannot perform an obligation under it because of the other party's action (or inaction) then the first party may be entitled to ignore that obligation.

Case ref: AL Waddan Hotel Ltd v Man Enterprise Sal (Offshore) [2014] EWHC 4796


New law: Landlords and tenants entitled to clear costs from letting agents

Landlords and tenants dealing with letting agents should ensure they have a copy of the agent's published fees, as required under the new Consumer Rights Act.

Under the new law, letting agents are now required to display prominently a full list of their 'relevant' fees, including VAT and/or other taxes, at every premises where they deal face-to-face with clients or prospective clients, and on their websites.

Relevant fees include those charged to either landlords or tenants in relation to letting agency work (which is defined in the new law), property management work and 'otherwise in connection with' an assured tenancy, or a proposed assured tenancy, of a dwelling.

Clients must be able to understand the description of the service or the costs on the list – therefore, descriptions such as 'administration fees' will no longer be lawful. Costs must be inclusive of VAT and/or any other tax payable. Where a fee cannot be given in advance the agent must explain clearly how it is calculated.

There are also new rules governing agents who hold clients' money and agents' redress schemes.

Operative date

  • Now

Recommendation

  • Landlords and tenants should ensure they have a copy of the letting agents' published fees under the new law when entering into a residential lease.

Case law: Court gives son property despite father's Will to the contrary, because of earlier promises he would inherit it

Landowners should take care not to make representations to individuals such as family members that they will inherit their land – then leave it to someone else in their will - otherwise the land may pass on death to that person if they relied upon such representations to their detriment.

A farming couple had five children. Only one (the 'working son') worked on the farm. When the father died in 1999 his Will said that the farm would be held on trust for the working son until he was 60, then divided into five equal shares. The working son's children would receive one share and the other four would go to the son's siblings.

The mother suppressed the contents of the Will until 2012 but, when they became known, the working son claimed he was entitled to the farm. His claim was based on the legal doctrine of 'proprietary estoppel'.

Proprietary estoppel prevents a landowner from backing out of a promise to leave someone land, or an interest in it, if:

  • The landowner has made a representation or assurance to a person that they will do so.
  • That person has relied on it.
  • That person suffers a 'detriment' – which need not be financial, but must be substantial - as a result.

The working son said his parents had consistently said they would leave him the farm ever since he worked there aged 17. For example, when he was 26 his parents moved into a retirement bungalow they had built on the farm premises, gave him the keys to the farm and told him "there we are then, it is all yours now".

In reliance on those promises, he went to agricultural college rather than join the police, working for rates as low as 10p per hour.  He received little appreciation (including missing out on gifts given to the other children by the parents over the years) and invested many thousands of pounds in the farm after his parents retired.

His mother was too frail to give evidence but he said his mother's suppression of the Will was because she knew of the promise, and the fact the Will contradicted it. Others, including a neighbour and a local councillor, gave evidence that they had understood from the father that the working son would inherit the farm.

The High Court found that the promises had been made and the working son had relied on them to his detriment – even though he had enjoyed some benefits, such as cheap rent throughout, and receiving the farm's profits after his parents retired. It would therefore be unconscionable for the provisions in the Will to take effect - and he was entitled to inherit the farm.

This case should not be confused with a similar (and similarly-named) case involving a farming couple and their daughter.

Operative date

  • Now

Recommendation

  • Landowners such as farmers should take care not to make representations to someone that they will inherit their land, then make a Will leaving the land to someone else, otherwise on death the land may still pass to that person if they relied upon those representation to their detriment.

Case ref: Davies v Davies & Ors [2015] EWHC 1384

 

Case law: Document varying Will to reduce inheritance tax was ineffective without special clause

Beneficiaries trying to save inheritance tax by varying a Will must ensure the deed of variation contains a special clause, or it will be ineffective to save tax.

A father made a Will which created an inheritance tax liability.  A Will can be varied after someone has died, to reduce the amount of inheritance tax or capital gains tax payable, provided:

  • You do so within two years of the death.
  • Any beneficiaries who would receive less as a result agree to it.

The beneficiaries and executors agreed to vary the Will, just five days before the two-year time limit had expired. Instead of the sons named as beneficiaries in the Will inheriting the father's estate, it was agreed it would go to his spouse, to enable the exemption from inheritance tax for transfers between spouses to apply, and no inheritance tax would be payable.

Deeds of variation are not effective to reduce inheritance tax retrospectively unless they contain a clause specifically stating that the parties wish to claim retrospective tax treatment for the purposes of inheritance tax. By mistake, the necessary clause was omitted and this meant the variation did not reduce the inheritance tax payable after all.

The family went to the High Court to have the mistake rectified. The Court decided that there was just enough evidence to satisfy the very high burden of proof required before it will order such a document to be rectified.

The sting in the tail was that the evidence produced to show a mistake had been made also revealed that the variation had been part of a scheme whereby the spouse would subsequently transfer the estate back to the sons who were the original beneficiaries. This means it can be challenged by HM Revenue and Customs as being 'part of a wider arrangement'.

Operative date

  • Now

Recommendation

  • Beneficiaries wishing to vary a Will to reduce inheritance tax should ensure:
    • The deed of variation contains the necessary clause for it to be effective.
    • That it cannot be challenged by HMRC on grounds it is part of a wider arrangement.
    • They take specialist advice if in doubt.

Case ref: Vaughan-Jones & Anor v Vaughan-Jones & Ors [2015] EWHC 1086

 

Case law: Power of Attorney can contain complex conditions and still take effect

Individuals making a Property and Financial Affairs Lasting Power of Attorney (LPA) can require complex conditions to be satisfied before it takes effect, but these should be drafted very carefully for the LPA to be effective.

A wealthy individual wanted to make a Property and Financial Affairs Lasting Power of Attorney (LPA) in case he lost the ability to manage his own affairs. He wanted to ensure he really had lost the ability to make decisions before his attorneys took over his affairs. He also wanted to lower the chances they would make hasty decisions he might disagree with if he subsequently regained the ability to manage his affairs.

His advisers put complex conditions into the LPA that had to be satisfied before his attorneys could act, including that: 

  • Two psychiatrists with specified qualifications had to verify his mental capacity.
  • Their opinions had been approved by a named friend (called his 'protector' in the LPA).
  • A period of 60 days had elapsed after the psychiatrists had given their opinions.
  • No other psychiatrist had disagreed with the psychiatric opinions the attorneys were relying on.

An LPA must be registered with the Public Guardian before it takes effect, ie, before the named attorneys can take over the financial affairs of the person making it. The Public Guardian argued that most of the extra conditions were legally ineffective or unworkable, and it would only register the LPA if they were removed.

The Court of Protection ruled that although there were legal rules allowing the Public Guardian to refuse to register an LPA, the careful way this one had been drafted meant it fell outside those rules, and he had to register it.

Operative date

  • Now

Recommendation

  • Individuals wishing to make a Property and Financial Affairs LPA appointing attorneys to look after their financial affairs if they lose mental capacity, can include complex conditions that must be satisfied before it takes effect.
  • However, these should be drafted carefully or the Public Guardian may be able to refuse to register it.
  • If in doubt, legal advice is strongly recommended.

Case ref: Re XZ (2015 EQCOP 35)

 

New case: Court clarifies when gifts in contemplation of death are valid

Individuals claiming someone made a gift of property to them under the legal doctrine of donatio mortis causa, which means the gift takes effect when the giver subsequently dies, must satisfy stringent conditions before the gift will be recognised by the courts.

 The nephew of a frail and elderly lady said that she had given him the deeds to her house shortly before she died and that this amounted to what the law calls a donatio mortis causa (a 'deathbed gift'). If this was the case, the property would legally pass directly to him on his aunt's death, rather than go into her estate and pass under her Will to her beneficiaries.

There is a donatio mortis causa in law if:

  • The giver is contemplating their impending death when they make the alleged gift;
  • It is a gift that will become absolute on the giver's death, but can be revoked at any time before then (and becomes ineffective if the intended recipient dies first); and
  • The subject matter of the gift, or the 'essential indicia' of ownership of it, has been handed over in a way that amounts to parting with not just physical possession but with 'dominion' over the gift. For example, a gift of property itself, or of the key to a house could indicate a handing over of 'dominion' over the property.

As the nephew had been living in the property before she died, he also claimed that by not leaving him the property or its value, she had not made 'reasonable financial provision' for him in her Will.

The aunt had left much of her estate to charity.  Her house was worth about £350k and had been the major asset in the estate. If it went to the nephew, the charities would lose a significant bequest and they therefore opposed his claims.

The Court of Appeal decided that the aunt had not been contemplating her impending death when she gave the deeds to her nephew. It may have been different if she was 'suffering from a fatal illness', 'about to undergo a dangerous operation' or going to 'undertake a dangerous journey'.

It also found that she had had both the time and the mental capacity to make a new Will giving her nephew the property if she had really intended him to have it on her death, but had not done so.

It also noted that evidence before the court had to be unequivocal. The fact the nephew had a criminal conviction for dishonesty meant the lower court should have decided against him in the first place.  However, the Court did award the nephew £75k as 'reasonable financial provision' – although this was only half the £150k he actually claimed.

Operative date

  • Now

Recommendation

  • Those wishing to make gifts in contemplation of their death should ensure that they meet the conditions required for an effective donatio mortis causa or risk the recipient being unable to take the gift on their death.

Case ref: King v Chiltern Dog Rescue [2015] EWCA Civ 581

 

Case law: Builder inherits estate following unsuccessful claim that Will-maker did not know and approve contents of his Will

A person who wants to challenge a Will on grounds the testator did not know and approve its contents should be aware they must satisfy a strict test, a recent ruling has clarified.

A man left everything in his 2013 Will (around £472k) to a local builder who had befriended him in 2007. Previous wills, including one in 2011, had left everything to the testator's cousin and to a friend's children.

The testator died, and the cousin and his friend's children claimed the 2013 Will was invalid for 'want of knowledge and approval' (ie he did not know or approve of what was in it).

The Will was not prepared by a solicitor but was based on a DIY Will template.  However, it was properly executed at the testator's home and witnessed by a financial adviser and a plumber he knew, who were there at the time.

The builder said his relationship with the testator had not been close. He had carried out some building work for the testator, which he had not charged for, and visited him from time to time to do odd jobs for him. The testator had shown him the Will when he made it, and the builder said he had been shocked to see he was the beneficiary. When he had asked the testator if he was sure, the reply had been that he did not want to talk about it.

Proof of capacity to make a Will and its proper execution, is usually in the form of evidence that someone has knowledge and approval of the contents of their Will.  It is only where there are suspicious circumstances that the person alleging the Will is valid must produce evidence of knowledge and approval - by showing that the testator understood what was in the Will and what its effect would be.

In this case, the Court said the evidence showed the 2013 Will had been made with the man's knowledge and approval, and he had 'intended it to give effect to his testamentary wishes' because:

 

  • The Will was consistent with his previous Wills.
  • It was short, easy to understand and he had clearly read it.
  • He was an educated man who had made his own Wills before.
  • There was no doubt about his capacity to make a Will.
  • He knew he was executing a new Will because he had asked two people to witness it.
  • The builder had not known what was in his Will before the man had shown it to him.

Operative date

  • Now

Recommendation

  • A person seeking to challenge a Will on grounds the Will-maker did not know and approve its contents should be aware they must satisfy a strict test in order to succeed.

Case ref: Sharp v Hutchins [2015] EWHC 1240


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