One of the first decisions of the new Supreme Court

One of the first decisions of the new Supreme Court (which last month replaced the House of Lords as the highest court in the land) will be a disappointment to many bank customers who suffered high levels of charges after they exceeded agreed overdraft limits.

The Court accepted the banks’ argument that the British tradition of free ‘in credit’ banking (rare elsewhere in the world) was only possible because of charges levied on those who go overdrawn.

The decision does not preclude the possibility that the Office of Fair Trading could challenge the fairness of other aspects of bank charges, but it does mean that tens of thousands of customers who had pending applications for refunds of charges will not now receive them.

For private customers who do not go overdrawn on their current accounts, the decision may well mean that free banking will continue.

Earlier this month, the banks announced a plan to phase out cheques: they already charge business customers up to 65p more for writing a cheque than paying a bill electronically.

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Latest legal news from Dale and Co. Solicitors Lincoln

Divorce – Future Pension Not Taken Into Account

A recent, bitterly contested ‘big money’ divorce case shows how reluctant the courts are to upset financial settlements on the basis of contingencies and reinforces the point that bad behaviour is not a basis for changing the division of the assets.

It involved, as do so many high profile cases, a man who was successful in the City and his wife. The couple had lived together for five years before they married in 2003, but the marriage broke down in 2005. The couple had one child.

Both parties tried to keep secrets from the other. The husband failed to disclose that he would be the beneficiary of a ‘lucrative’ pension plan in 2023 and the wife failed to disclose that she had become pregnant by another man, with whom she had a relationship that could be described as cohabiting.

In late 2006, the husband was ordered to pay his wife £7,500 per month in maintenance and the family assets were apportioned. When she discovered that her husband was to benefit from the pension, the wife sought to obtain an increase in the maintenance payable for her and their child. The husband sought to resist her sharing in any wealth which he had created after their separation.

The outcome of the case was that the judge ordered some changes to the maintenance payments and the division of assets. However, the important points relate to the changes he could have made and did not.

With regard to the pension, he concluded that since it could not be touched before 2023, it would not in his view be fair to require the husband to share, in whatever proportion, the value of this fund with his ex-wife.

On the matter of the wife being deprived of a share in the post-separation earnings, the judge concluded that, ‘I do not accept that such contributions by a wife to the family after the end of the marital partnership can generally be said to warrant a conclusion that a proportion of the husband’s future income continues to be attributable to the wife’s domestic contribution and thus a fruit of the marital partnership’. He therefore denied the claim that she shouldshare in the increase in assets between their separation and divorce. Interestingly, he remitted for negotiation whether the revised maintenance payments should be set in Pounds Sterling or (as the wife now lives in Ireland) in Euros.

Neither was the judge swayed by the wife’s commencement of a new relationship nor was the possibility of financial support from her family, who are wealthy, a factor which affected his decision.

In reaching this decision, the judge commented, ‘Sadly this has been an application, both during its gestation in documentation and its investigation in oral evidence, where both … have undoubtedly (and sometimes deliberately) reprocessed elements of the history for perceived tactical advantage’.

Says Georgia Corby, “Financial settlements on divorce depend on many factors, but the bad behaviour of one or both of the parties is seldom if ever one of them.”


Partner Note
G V G [2009] EWHC 494 (Fam).

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Treasury Proposes New Construction Tax Regime

Hard on the heels of several cases dealing with whether builders on construction sites are employed or self-employed for employment law purposes, the Treasury has announced yet another review of the employment status of construction workers for tax purposes.

The review, only a few years after the system of taxation of workers in the building industry was overhauled, is designed to address the problem of ‘false self-employment’. This occurs when workers are treated as self-employed for Income Tax and National Insurance purposes despite the fact that the way in which the work is carried out on a day-to-day basis demonstrates that there is an employment relationship.

The Treasury’s proposals would treat all workers in the construction industry as employed except those who:

provide the plant and equipment required for the job that they have been engaged to carry out. This would not include normal ‘tradesman’s tools’, as these are traditionally supplied by tradesmen;
provide the material necessary to do the work; or
provide other workers to carry out the work under contract and are responsible for paying subcontractors.

The consultation closes on 12 October 2009 and can be viewed at http://www.hm-treasury.gov.uk/consult_false_selfemployment_construction.htm.


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NICs on Dividends

It is often assumed that the mere payment of a sum by way of a dividend, rather than as salary or bonus, will avoid PAYE and National Insurance Contributions (NICs). In the case of PAYE, the tax treatment as payment of a dividend will override that applicable to payment as remuneration, so PAYE will not apply. This does not, however, mean that NICs are not payable.

In a recent case, a company which arranged for its employees to receive a bonus by way of a payment of £24.6 million into an offshore trust, which then paid them dividends, sought to persuade HM Revenue and Customs that neither PAYE nor NICs were payable as a result.

The case reached the Special Commissioners, who decide tax cases based on points of law. They concluded that the legislation which excludes dividends from being treated as remuneration for income tax purposes does not apply for the purposes of NICs. The Commissioners concluded that since the dividends derived from employment, they were therefore subject to NICs.

The facts of this case were based on the law as it applied in 2003. Subsequent to that, anti-avoidance legislation has been enacted with the result that it is now more difficult to make such schemes work. Indeed, in certain circumstances, an ill-thought out scheme could lead to a double charge to tax.

Partner Note

PA Holdings Ltd. and another v HMRC UKFTT 95 (2009).

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Stamp Duty and VAT changes

As of the 1st January 2010 :


Stamp Duty goes UP for many residential properties:

Up to £125,000.00 - Zero (no change)

£125,001.00 to £250,000.00 - 1% (increase from zero for many)

£250,001.00 to £500,000.00 - 3% (no change)

Over £500,000.00 - 4% (no change)

VAT goes UP 2.5 % to 17.5%

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Court Takes Commonsense View of Delivery of Notice Clause

When a dispute arises under a contract and notices or other documents have to be delivered to the other side in the dispute, in order to avoid problems it is essential that these are delivered in accordance with the contract terms. This may seem obvious, but proceedings are quite frequently challenged on the basis that notices are incorrectly delivered and therefore invalid.

In a recent case involving a construction dispute, a claimant issued a notice referring the dispute to adjudication as provided by the contract. This was sent by post and, although incorrectly addressed, was received the next day. The defendant passed it on to its solicitor. The adjudicator found in the claimant’s favour and ordered the defendant to pay.

The defendant refused. The contract had specified that the notice of adjudication was to be delivered personally or by fax. The defendant argued that the adjudicator therefore had no jurisdiction over the dispute. The clause covering delivery also stated that it would be sufficient ‘to prove that personal delivery was made’.

The matter then went to court, where the claimant argued that as a matter of fact the defendant had received the notice, so the requirements of the delivery clause were satisfied. The court considered that the term ‘delivered personally’ meant that the notice was delivered by an appropriate individual representing the claimant to an appropriate individual representing the defendant. In the view of the court, the method of delivery did not matter. On the facts of the case, actual delivery to an appropriate person (the defendant’s solicitor) had occurred, so the delivery clause was satisfied.

In this case, the claim to resist the notice was unsuccessful because the court took a commonsense approach to the clause. This need not necessarily have been the case. The matter would never have gone to court had the notice also been delivered by fax.


Partner Note
Primus Build Ltd. v Pompey Centre Ltd. and another [2009] EWHC 1487 (TCC).

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