Consent Orders: Triumph or Disaster? Working towards best practice in reaching consent orders

Carol Mashembo has written an article for the Family Law week website in conjunction with Dr David Pitcher, CAFCASS titled ‘Consent Orders: Triumph or Disaster? The article follows a hugely successful multi-disciplinary seminar which gathered professionals involved in all aspects of family proceedings to share ideas and experiences of the issue of consent in private law proceedings and to inform future best practice.

The article can be downloaded from  http://www.familylawweek.co.uk/site.aspx?i=ed192142

The Rise of Private Financial Dispute Resolution Hearings

Paul Waterworth

Retired District Judge, Associate at Magdalen Chambers, Exeter and Member of their Financial Resolution Consultancy

In his final announcement, the recently retired President of the Family Division of the High Court, Sir James Munby, referred to a development which is playing an increasingly significant role in financial disputes in family cases. This is the increase in the use and effectiveness of the process known either as early neutral evaluation or private financial dispute resolution hearings (private FDR’s). For the purposes of this piece, the latter description is used.

What is a private FDR?

Sir James said:

‘A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It usually replaces the in-court FDR.’

The timing of a private FDR

The President continued his remarks by mentioning the inter-relationship between the formal court process and a private FDR:

‘Usually, where the parties have agreed to a private FDR, the order made at the first appointment will record such an agreement in the recital, and will provide for a short directions hearing shortly after the date of the private FDR. The directions hearing can be vacated if agreed minutes are submitted following a successful FDR. If it has been unsuccessful then directions for the final hearing can be given. An alternative is for the case to be adjourned generally while the private FDR takes place.’

As a rider to the comments by Sir James, it should be noted that a private FDR can take place at any time during the court process or even, if the parties agree, before an application is issued. There will usually be little difficulty obtaining from the court, an (often temporary) adjournment of the court process to enable the private FDR to be held.

It is, however, important that the parties have made full, or at least adequate, disclosure of their respective financial positions before the private FDR is held, to avoid any later arguments about the financial information upon which a settlement was achieved.

Who will conduct a private FDR and where?

Private FDR’s are invariably conducted by practising or retired legal practitioners or retired judges, using the knowledge and expertise gained in this discrete area of family law.

There are groups of retired judges and practising and retired legal professionals (both barristers and solicitors) who have established polished systems and facilities for dealing with private FDR’s.

The advantages of a private FDR

The advantages of the private FDR system, now formally endorsed by the President of the Family Division, as indicated above, as an alternative to at least part of the exclusively court based process, are seen to be many.

Busy family practitioners are more aware than most of the problems associated with the court FDR lists which include:

. Delays in cases reaching court are inimical to the maintenance of the momentum of

  negotiations between the parties.

. Even when a date has been obtained, cases are regularly over listed so that is

  frequently the case that there is insufficient time for the judge both to prepare

  adequately for all the FDR’s in the list or to give each case the time that is needed to

  explore in depth the possibilities of a settlement.

. Cases often overrun and parties cannot guarantee that their case will start on time

  with the result that there are unacceptable waiting times

. Facilities in courts are far too often found to be unsatisfactory, insufficient and not

  conducive to calm and effective negotiations.

. Cases are sometimes listed before judges with insufficient experience or the

  expertise required for a particular case.

In contrast, if parties elect to hold a private FDR:

. Whilst the structure of the private FDR bears a resemblance to a hearing in court,

   the atmosphere is less formal and intimidating for the parties.

.  There are no other cases or parties and the surroundings are quiet and conducive to

   calm discussion and negotiation.

.  With the help of their lawyers, the parties can select the identity of the private FDR

   judge thought to be suitable for the case from amongst those professionals offering

   this service.

.  There is less, often much less, delay in fixing an appointment for a private FDR than

   waiting for a court date so that continued uncertainty for parties is reduced.

.  The judge conducting the private FDR will have time to read the papers and prepare

   for the hearing.

.  The judge will have no other cases to hear on the day fixed for the private FDR and

   can give sole attention to the private FDR.

.  There will be adequate time for privater discussion by the parties with their lawyers

    and negotiations with the other party

.  The parties can continue to have the support of their legal advisors who can

   accompany them to the private FDR.

.  Whilst the judge at the private FDR cannot make a formal court order, the parties

   can sign an agreement setting out the terms of any agreement reached which can

   later be converted into a court order approved by the court usually without the need

   for the parties to attend court.

. The parties have the advantage of hearing the views of an independent professional

   experienced in cases of this sort and will be given reasonable time to consider

   whether or not an agreement can be achieved.

.  The private FDR will be conducted on the basis that what is said is confidential to

   that meeting, so that if agreement is not achieved, neither party can take advantage

   of anything said at the private FDR. This means that the parties can speak freely

   and openly without fear of prejudicing their legal position.

.  Research has shown that cases which are resolved by agreement between parties

   rather than being imposed upon them by the court, have a far higher prospect of

   being observed.

.  If the private FDR does not result in an agreement to settle the case, the parties are

   still able to continue the proceedings in court.  

Summary

There are some who say that the system of private FDR’s is a “privatisation” of the justice system, akin, for example, to private medicine or education. The reality is that the engagement of an independent expert to express a view on a case is no more than many parties seek already, for example, in attending mediation or taking a (sometimes second) professional opinion on the whole or part of their case.

Others refer to the cost as being a disincentive to attempts to settle in this way. Again, in cases which are conducted before the courts, more often than not, when parties are legally represented, there will be regularly be discussions and negotiations between the lawyers who seek to achieve a fair settlement. Such actions by the lawyers will not take place without cost  to the clients. If a case is referred to a private FDR and a settlement is achieved, then the continuing costs of the court case is avoided.

The Financial Resolution Consultancy, which is part of Magdalen Chambers, offers a full and confidential private FDR service by retired judges and practitioners who have judicial experience.

For further information and a confidential preliminary discussion please contact chambers.

01392 208484 frc@magdalenchambers.co.uk

Charles Cooper

NIL-RATE BAND LEGACIES AND THE NEW RESIDENCE NIL-RATE BAND

CHARLES COOPER REVIEWS THE CONSEQUENCES FOR NIL-RATE BAND LEGACIES OF THE NEW RESIDENCE NIL-RATE BAND FOR INHERITANCE TAX

Since 09 October 2007 it has been possible to claim, on their death, the unused Inheritance Tax Nil-Rate Band (‘NRB’) of their spouse or civil partner who died before them. This is often referred to as the ‘Transferable Nil-Rate Band’ or ‘TNRB’. By 2014, the Court of Appeal had been asked  to consider whether the wording of a so-called ‘Nil-Rate Band Legacy’ should properly include the TNRB as well. The case was Loring v Woodland Trust [2014] EWCA Civ 1314.

In that case, the relevant part of the NRB legacy read:

                ‘MY TRUSTEES shall set aside out of my residuary estate assets or cash of an aggregate value equal to                        such sum as is at the date of my death the amount of my unused nil-rate band for inheritance tax and to                      hold the same for such of the following…’

The Court of Appeal upheld the first instance decision that the legacy should be calculated so as to include both the unused NRB and the TNRB, even though the legislation had been introduced after execution of the will. Particular reference was made to the wording of s.8A Inheritance Tax Act 1984 as applying to increase the NRB rather than being a separate, additional, NRB.

HMRC has criticised the decision in Loring, in their Inheritance Tax Manual at IHTM43065, on the basis that the clause uses the specific words ‘the amount of my unused nil-rate band’.

From 06 April 2017, however, there is now an additional ‘Residence Nil-Rate Band’ and a ‘Transferable Residence Nil-Rate Band’ to contend with, the legislation for which is set out at ss.8D-8M Inheritance Tax Act 1984. Now, more than ever, caution is advised when drafting or interpreting NRB legacies within a will.

June 2018

 [Charles practised as a Solicitor and Higher Court Advocate before being called to the Bar, and specialises in tax, trusts, wills and probate.]

Pimlico Plumbers Ltd & Mullins v Smith [2018] UKSC 29

In what is likely to be the leading authority on employment status for years to come, the Supreme Court today has dismissed the appeal of Pimlico Plumbers from the Court of Appeal decision that Mr Smith was a worker and not a self-employed contractor.

Mr Smith is a plumber who carried out work for Pimlico between 2005 and 2011. After suffering a heart attack in 2011, Mr Smith claimed to have been unfairly dismissed despite having presented himself as self-employed for VAT and income tax for 6 years. The facts of his engagement are complex, but the dispute between the parties centred around the legal categorisation of Pimlico’s business model. The model presented operatives to clients as working for the business, but at the same time the business internally sought to maintain that there was a legal relationship of self-employed independent contractor rather than employer and employee. The paperwork in this regard was confusing at best. The employment tribunal, EAT and Court of Appeal all reached the decision that Mr Smith was a ‘worker’ rather than a self-employed contractor. Today the Supreme Court judgment upheld that finding.

Whether or not someone is a worker or an employee is largely a matter of fact for the Tribunal to decide. Here Lord Wilson determined that, “the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance …there were features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor.” The substantive claims will now proceed to be heard in the employment tribunal.

Although Charlie Mullins (the owner of Pimlico) prophesies that companies using self-employed contractors now face a ‘tsunami of claims’, this claim is most likely a gross exaggeration. As has always been the case, every individual case will require careful legal analysis of the true nature of the working relationship. The contractual label alone is not enough. The contract may term the relationship as one of self-employed contractor, but the substance of the obligation of personal performance is what counts. Here, there was criticism of “an irrelevant contract, cast in highly confusing terms”, necessitating proper scrutiny of the entire engagement. The famous judgment of Lord Templeman in Street v Mountford [1985] AC 809 comes to mind that “The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”

Companies routinely engaging self-employed contractors on any sort of routine basis would do well to potentially scrutinise and revise its contracts in light of this judgment. Individuals who feel as though they have been ‘strong armed’ into signing a contract declaring them to be self-employed, despite being heavily controlled by their company, may wish to consider negotiating a clearer and more honest working legal relationship. When it comes to drafting contracts that seek to control an operative whilst describing them as self-employed, the ‘careful choreography’ exercised by Pimlico is not enough to balance such inconsistent objectives. In future, contracts- be they for an employee, worker or self-employed contractor- should really call a spade a spade.

https://www.supremecourt.uk/cases/docs/uksc-2017-0053-judgment.pdf

Andrew Worthley

Joint Head of Chambers, Michael Berkley is appointed as a Circuit Judge

Chambers are delighted to announce the elevation of Michael Berkley to the Circuit Bench. He has been appointed to sit as a Civil Judge based in Salisbury, but will be covering the whole eastern region of the Western Circuit. He will be formally sworn in at a ceremony before the Master of the Rolls at the Royal Courts of Justice on 5th February 2018.

Michael has given his inspiring and unstinting dedication to jointly leading chambers, with Christopher Naish, since the formation of Magdalen in 2013, for which chambers owes a debt of gratitude. Prior to the merger that brought about Magdalen, Michael had established, and headed, Rougemont Chambers from 1997 as the leading Civil set of chambers in Exeter.

His colleagues and clerks – his professional family – congratulate Michael on his fantastic achievement. We are immensely proud and wish him well in his future career, as we are sure do all of his former clients.

Burden of Proof under the Equality Act 2010: Ayodele v Citylink Limited & Napier [EWCA] Civ 1913 a Return to Orthodoxy after Efobi v Royal Mail Limited.

Further to my article on 9th October 2017 the Court of Appeal has considered the effect of section 136 of the Equality Act 2010 in the case of Ayodele v Citylink Ltd. The point arose as an additional ground of appeal before the Court of Appeal as a consequence of the EAT’s decision in Efobi.
Their Lordships considered not only the well-known, pre-Efobi, domestic law on this point but also the Opinion of Advocate General Mengozzi in CJEU case C-415/10 Galina Meister v Speech Design Carrier Systems GmbH, which supported the view that in EU law the initial burden lies on a claimant and that this maintains a fair balance between the rights of claimants and those of defendants or respondents.
Singh LJ at paragraph 93 of his Judgment in Ayodele said “I can see no reason in fairness why a respondent should have to discharge that burden of proof unless and until the claimant has shown that there is a prima facie case of discrimination which needs to be answered” Singh LJ was reinforced in that view by reason of the Opinion of the Advocate General in Galina Meister. Further comment was made that there was no material before the Court of Appeal that tended to show that there was a mischief that Parliament intended to remedy by the altered wording in Section 136. It was concluded that the change in wording was because the earlier legislation was not entirely clear that what should be considered at the first stage was all the evidence, from whatever source it had come, and not only the evidence adduced by the claimant. This had been clarified by the Court of Appeal in Madarassy. The changing of the wording was a “tidying up” exercise and not intended to change the law in substance. It was concluded that the pre-Efobi decisions of the Court of Appeal remained good law and that the interpretation in Efobi is wrong and should not be followed.
There is, however, an important point still to be drawn from Efobi, namely the clear warning given to Respondents of the possibility that an adverse inference might be drawn if they do not call alleged discriminators, without a good explanation, to give evidence.
It should be noted that the Court of Appeal has not determined whether permission to appeal should be granted in Efobi and as such there may be further developments.

The Court of Appeal Gives Judgment in Fundamental Dishonesty Case

On Monday 30 October 2017 the Court of Appeal gave judgment in the case of Howlett v Davies [2017] EWCA Civ 1696, which concerned the issue of fundamental dishonesty for the purpose of removing the costs protection provided by Qualified One Way Costs Shifting (‘QOCS’). Rule 44.16 of the Civil Procedure Rules provides the exceptions to the costs protection provided by QOCS and specifically provides in relation to fundamental dishonesty as follows: “Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probability to be fundamentally dishonest.”

The facts of the case are of limited relevance but in brief concerned a claim by a mother and son that they had been passengers in a vehicle that had reversed into another stationary vehicle. They alleged that they had suffered injury and sued the driver of the vehicle they claimed to have been a passenger in. The driver of the vehicle they were in also gave evidence supporting the case of Mrs Howlett and her son.

At the start of the trial counsel for the Howletts attempted to get the defence struck out on the ground that the defendant insurers should either allege fraud (which they didn’t) or accept that the accident occurred as alleged with the consequential injuries. It was contended that the Howletts “should not be allowed to sit on the fence”. The application to strike out was dismissed and the fast track trial (taking 4 days) proceeded. At the conclusion of the trial the deputy district judge found that there was fundamental dishonesty, dismissed the claims and allowed the defendant insurer to enforce their costs. The Howletts appealed firstly to HHJ Blair QC who dismissed their appeal and then secondly to the Court of Appeal resulting in this judgment.

2 principal points of importance arise out of this decision of the Court of Appeal (judgment of Newey LJ with whom LJJ Lewison and Beatson agree).

Firstly, the Court of Appeal approve the meaning of fundamental dishonesty given by HHJ Moloney in the County Court decision of Gosling v Hailo (2014) in which he said:

“It appears to me that when one looks at the matter in that way, one sees that what the rules are doing is distinguishing between two levels of dishonesty: dishonesty in relation to the claim which is not fundamental so as to expose such a claimant to costs liability, and dishonesty which is fundamental, so as to give rise to costs liability.

The corollary term to ‘fundamental’ would be a word with some such meaning as ‘incidental’ or ‘collateral’. Thus, a claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps as to some minor, self-contained head of damage. If, on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim: a claim which depended as to a substantial or important part of itself upon dishonesty.”

Secondly, the Court of Appeal dealt with the main issue in this case, which was whether or not a defendant insurer had to expressly plead fundamental dishonesty in order for there to be such a finding. This was answered in the negative with Newey LJ stating as follows:

“I do not think an insurer need necessarily have alleged in its defence that the claim was “fundamentally dishonest” for one-way costs shifting to be displaced on that ground. Where findings properly made in the trial judge’s judgment on the substantive claim warrant the conclusion that it was “fundamentally dishonest”, an insurer can, I think, invoke CPR 44.16(1) regardless of whether there was any reference to fundamental dishonesty in its pleadings.” (Paragraph 32).

This news article is written by Russell James of Magdalen Chambers who appeared earlier this year in a successful County Court appeal on a fundamental dishonesty point

Magdalen Chambers are again ranked as a leading set by the Legal 500

Magdalen Chambers is thoroughly delighted to announce that for the fourth successive year we have been rated as a leading set on the Western Circuit by the prestigious Legal 500 directory. The authors mentioned chambers specialism in civil and family law, and our key practice areas of family finance and public children law matters.

They say the family team at Magdalen Chambers is ‘very strong with respect to financial and children work’. In public children law matters, the set has seen a recent increase in instructions involving sexual abuse and non-accidental injuries. They also praise chambers for being equally adept in planning, commercial and insolvency matters”, and for our expertise in property law.

In addition to chambers leading set ranking, 9 individual members were praised by clients for their work in their respective fields, and ranked in tier 1 on the Western Circuit for their expertise.

The editors of the Legal 500 singled out the following areas of law as being particular strengths of chambers’ practice:

  • Commercial, Banking, Insolvency and Chancery Law;
  • Construction, Planning and Environment;
  • Family and Children Law;
  • Personal Injury and Clinical Negligence;
  • Property Law

The members of chambers individually recognised by the directory as being in the top tier of practitioners are:

  • Joint Head of Chambers Michael Berkley for Commercial, Banking, Insolvency and Chancery law, and is described as “A robust advocate with a very good bedside manner” and for his work in Property law they say “Clients are reassured by his confident demeanour”.
  • Joint Head of Chambers Christopher Naish in the field of Family and Children law was described as “Very intelligent, calm, personable, courteous, analytical and thorough”
  • Rupert Chapman, Head of the Family team, was “Recommended for financial remedy cases and private law children matters”
  • Tony Ward recognised for his expertise in family work is also described as “Very experienced in financial disputes”.
  • Head of the Regulatory, Public and Administrative team, Gavin Collett was ranked in tier one, with the editors mentioning that “His practice encompasses planning, highways, and rights of way” and that “he made a successful challenge to the Secretary of State in the High Court”
  • William Hopkin, who heads up the Commercial team, was praised for being “Extremely able at assimilating complex information quickly”
  • Head of the Civil team, and leading property barrister, Russell James was described as having “a niche practice in homelessness law”
  • Carol Mashembo, a senior member of the family team, recognised in tier 1, has been described as “Experienced in cases involving same-sex families”.
  • Jonathan O’Neill was praised as “A specialist in personal injury matters” and for his expertise in property law as “An impressive cross-examiner”

In addition to the plaudits received by chambers’ members, two of our clerking team are mentioned in this years’ publication. Senior Clerk, James Basden and civil clerk Harry Turner were praised by clients for providing “a very effective personable service and are also very commercial in terms of fees” and that solicitors would “thoroughly recommend them”.

Burden of Proof under the Equality Act 2010 and Adverse Inferences

Burden of Proof under the Equality Act 2010 and Adverse Inferences: Efobi v Royal Mail Group Limited (Judgment handed down on 10 August 2017). 

Prior to the advent of the Equality Act 2010 the burden of proof under the earlier legislation was stated by the Court of Appeal in Igen v Wong [2005] EWCA Civ 142. The first stage was that the Claimant had to prove facts from which the tribunal could conclude in the absence of an adequate explanation that the respondent has committed, or is treated as having committed, the unlawful act of discrimination. If that initial burden was established by the Claimant, the legislation then required the Respondent to show that unlawful discrimination had not occurred.

Section 136 of the Equality Act 2010 provides:

“136 Burden of proof

(1)     This section applies to any proceedings relating to a contravention of this Act.

(2)     If there are facts from which the court could decide, in the absence of any other explanation, that a person (A) contravened the provision concerned, the court must hold that the contravention occurred.

(3)     But subsection (2) does not apply if A shows that A did not contravene the provision.

…”

It is of note that the explanatory notes referred to in the Preamble of the Act state that “…the burden of proving his or her case starts with the claimant. Once the claimant has established sufficient facts, which in the absence of any other explanation point to a breach having occurred, the burden shifts to the respondent to show that he or she did not breach the provisions of the Act…”

In Efobi v Royal Mail Group Ltd UKEAT/0203/16/DA, a race discrimination case under the Equality Act 2010, the EAT considered the interpretation of S136 after the tribunal at first instance applied Igen v Wong. The EAT held that section 136 does not put any burden on the Claimant and that it was explicit in not placing any burden on the Claimant. S136 requires the Tribunal to consider all the evidence, from all sources, at the end of the hearing so as to decide whether or not there are facts, from which in the absence of an explanation, it could conclude that there had been discrimination. This therefore means that S136 prohibits a submission of no case to answer at the close of the Claimant’s case because the Tribunal has to evaluate all of the evidence, including that of the Respondent, before considering whether there is sufficient evidence to require the Respondent to show that discrimination did not occur.

Laing DBE J acknowledged that this was not the way the Explanatory Notes to the Equality Act 2010 interpreted S136 and although they can be used to aid construction of the statute they cannot be treated as reflecting the will of Parliament, which is to be deduced from the language of the statue in question. It was further acknowledged that this was not the way that the burden of proof had been understood in cases starting with Igen v Wong but the statutory provisions under consideration in those cases were worded differently to the Equality Act 2010.

Efobi is also a salutary warning to Respondents that choose, without explanation, not to adduce evidence of matters in their own knowledge in that they run the risk that the Tribunal may draw an adverse inference when considering whether S136(2) has been satisfied. In Efobi there was very little evidence adduced before the Tribunal as to the race and national origins of the successful candidates and the Respondent had not called, as witnesses, any of the staff who made decisions in relation to Claimant’s application for promotion. Although not referred to as part of Laing J’s discussion, Lord Sumption’s Judgment in Prest v Petrodel Resources Ltd [2013] UKSC 34 and Wisniewski v Central Manchester Health Authority CA [1998] PIQR P324 were cited in argument.

In Wisniewski, a clinical negligence case in which the Senior House Officer on call did not give evidence, Brooke LJ derived the following principles in relation to inferences:

(1)       In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

(2)      If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

(3)       There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

(4)       If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.

Conclusion

Efobi has not only clarified that there is not a burden of proof on the Claimant as part of S136(2) but has also highlighted the need for Respondents to adduce evidence if they do not want to run the risk of an adverse inference being drawn as to why a witness has not been called or why disclosure of other evidence has not been provided. It should, however, be noted that before an inference on any particular issue can be drawn there must be some evidence before the court or tribunal on that issue. Accordingly, Efobi is a clear warning to Respondents who do not call alleged discriminators, in the absence of a good explanation, to give evidence.

Permission to appeal has been sought from the Court of Appeal and a Judicial Decision on the papers is currently awaited.

James Bax

Magdalen Chambers