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Lifting the Corporate Veil in Matrimonial Law

25 Jun 2013, 09:25 by Priya Bakshi

Labels: barrister, commercial, commercial-law, court, divorce, family-law, fraud, lawyer, legal-proceedings, matrimonial-law

In commercial cases the key principle is that a company is independent of its shareholders and so one cannot get at the company's assets in legal proceedings unless there has been fraudulent or dishonest use of the company, 

On 12 June 2013 the Supreme Court unanimously allowed the corporate veil to be lifted in financial divorce proceedings in the case of Prest v Petrodel Resources Limited and others [2013] UKSC 34. The question in this appeal brought by Mrs Prest was whether the court had power to order the transfer of properties to her given that they legally belonged not to Mr Prest but to his companies. 

Under the Matrimonial Causes Act 1973 section 24(1), it states that the court may order that "a party to the marriage shall transfer to the other party...such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion."

On the facts of this case, Mr Prest, and not his companies, originally provided the funds for the acquisition of the properties. He had control of the company assets as if they were his own during the marriage. Mr Prest concealing these facts coupled with the continuous failure to cooperate with disclosure and transparency, the Court inferred that both he and the companies were attempting to conceal the true beneficial ownership of the properties. 

Mrs Prest won in her appeal and the Court held that the properties invested in Mr Prest's companies were on trust for him. It was ordered that these assets be handed over to his wife. Therefore, in these exceptional circumstances, the Court disregarded the corporate veil in order to give effective relief. 

This landmark ruling has provided some clarity as to when the courts can lift the corporate veil, and that business people cannot deliberately hide assets in companies to protect them in the event of a divorce.

 

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Public Access Barrister

06 May 2008, 12:12 by Ruth Manning

Labels: administration, bar-council, barristers, commercial-law, direct-access, public-access

  Ruth Manning of New Walk Chambers, Leicester, was called to the Bar in 1993 and has completed the Public Access training course and is registered with the Bar Council to advise and act directly on behalf of the public without the need for them to instruct a solicitor or intermediary. The obvious benefit of this is that it saves costs whilst providing an excellent standard of service to those who instruct her.

Ruth has enjoyed a varied legal background in both the public and private sector and works as a part-time tutor at the College of Law. She is an experienced barrister in the following areas.

Commercial Law:-Breach of contract, building disputes, sale of goods, personal injury, public liability, consumer credit agreements.

Education Law:- she has worked extensively for LEA's on Education and Exclusion Appeals. Ruth can draw on such experience to advise and assist parents who find themselves involved in appeals against unfavourable decisions in respect of school places and school exclusions.

Family Law proceedings :- matters involving Children Act 1989 proceedings, injunctions and occupation orders under Family Law Act 1996, and financial settlements (ancillary relief) under the Matrimonial Causes Act 1973.

Immigration Law:- Appeal in the Immigration courts regarding asylum claims, visa  appeals and deportation appeals.

Ruth is available to advise in writing, in conference, to assist with drafting letters  and forms for clients to send both before and during legal proceedings, to assist with drafting pleadings and to provide representation and advocacy at court hearings.

 New Walk Chamber's clerks are available to assist with the agreement of fees and dealing with initial instructions.

They can be contacted by e-mail: clerks@newwalkchambers.co.uk. Telephone 0116 255 9144.

The Bar Council web site, http://www.barcouncil.org.uk/  provides useful guidance for the lay client on public access to barristers.

Written by Ruth Manning, Barrister at New Walk Chambers, specialising in Direct Access.

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Bank Overdraft Charges Test Case - The End of the First Chapter

24 Apr 2008, 15:03 by Christopher Jeyes

Labels: bank-charges, breach, commercial-law, contract, overdraft, penalty-clauses, unfair-terms

  After what seems like an eternity, Mr Justice Andrew Smith has released his judgment in the Bank Charges Test Case (Office of Fair Trading v. Abbey National plc and 7 others [2008] EWHC 875 (Comm) - BBC News), dealing with the questions of whether overdraft "penalty" charges are covered by the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083, "the 1999 Regulations") and therefore subject to an assessment of fairness, whether the terms and conditions of the banks who took part in the case were in plain and intelligible language, and whether the relevant terms were penal in nature and therefore unenforceable at common law.

In a gargantuan judgment of 119 pages and 450 paragraphs, which one expects will cause the Courts some headaches when the millions of charge-reclaiming consumers lodge copies of it in support of their claims, Andrew Smith J concludes that the charges levied by the banks are not charges for services provided, and are therefore not excluded from the assessment of fairness by reg.6(2)(b) of the 1999 Regulations. Although the Judge accepted that services are provided when a bank makes payment upon receipt of an instruction from a customer and thereby allows a customer to borrow funds, the way in which such fees had been packaged and expressed did not suggest that they were in fact fees for services, only fees arising from the circumstances in which a transaction took place. In any event, the banks had contended that the fees were part of the "free if in credit" banking structure, and that they financed the system as a whole. Given that situation it is not surprising that the Judge held that the 1999 Regulations do not exclude assessment of such terms.

As expected, "Money Saving Expert" Martin Lewis (from whose website millions of template claim letters have been downloaded) proclaims this decision to be a "major victory" for the consumer, but whilst it certainly does the consumer's case no harm (consumer in the singular because the 1999 Regulations have a bearing only on individual contracts), there is still a long way to go. For a start, the ruling applies only to the terms and conditions of the banks involved in the case, and only the current editions of those terms. The banks could now re-write their terms to clearly express the erstwhile penalty fees as the fees for services provided, or even re-structure their charging regime such that the "free if in credit" system comes to an end, and all bank customers have to pay the price. And of course, there may yet be an appeal to a higher court.

That being said, it is anticipated that the Office of Fair Trading ("OFT") will now rapidly produce its conclusions as to the fairness of the "penalty" fees applied by the banks, most probably in line with its decision on credit card default charges, in which charges were generally considered fair if they were £12 or less.

The penalty issue was decided in favour of the banks, the Judge considering that on the terms before him, the fees charged were not occasioned by a breach of contract, because the consumer was not under a relevant contractual obligation. Given that the sum was payable otherwise than on breach of contract, the rules on penalties did not apply. This was an argument I raised in an article in the New Law Journal ("Highly Charged?" 20 April 2007 pp.536-7). Disappointingly for me, my other argument (that by agreeing to an ad hoc overdraft the banks waived any contractual breach and charged a fee pursuant to a variation of the contract) did not find favour with the Judge, but I can take heart from the fact that it seems to have been adopted by the ten QCs appearing for the various banks!

The millions of outstanding bank charge claims will remain on hold for the time being, but I suspect that, unless there is an appeal and a further stay of the claims, the solicitors for the banks, and the courts, had better be steeling themselves for a summer deluge!

Written by Chris Jeyes, Barrister at New Walk Chambers, specialising in Contract, Banking, Civil and Commercial Law.

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