Currently, if someone dies leaving a spouse or civil partner and children their estate would be distributed as follows:

• The spouse or civil partner would receive all of the personal chattels and a statutory legacy of £250,000.
• The remainder of the estate would be split into two equal shares; the first share would be held on trust for the children, with the spouse or civil partner benefitting from the trust during their lifetime, and the second share would pass to the children.
• If the estate is less than £250,000, the spouse or civil partner would receive everything and the children nothing.

The difference under the proposed rules would mean that the spouse would receive the first £250,000 and half of the remainder outright. This reduces the amount which your children would inherit.

If someone dies leaving a spouse or civil partner and no children their estate would be distributed as follows:

• The spouse or civil partner would receive all of the personal chattels and a statutory legacy of the first £450,000 in the estate.
• If the estate is over £450,000 the balance would be split in to two equal shares; the first share would pass to the spouse or civil partner and the second share would pass to surviving relatives in the prescribed order of parents, then siblings then children of siblings.

Under the proposed rules the spouse or civil partner would receive the whole estate and the relatives would have no entitlement to a share in the estate.

The intestacy rules do not allow a cohabiting partner to benefit from the estate of an intestate. Under the proposed rules rights are included for cohabiting partners. If someone dies having cohabited with their partner for five years, ending immediately before the deceased’s death, they would have the same rights to inherit from the estate as if they were married or civil partners. Where the cohabiting couple have a child together the right would be applicable after two years of cohabitation, providing the child was living with the couple when the deceased died.

All of the above changes will result in the spouse being the primary beneficiary of an intestate estate. In a lot of cases it is right for the estate to pass to the surviving spouse or civil partner. However, it will impact heavily on complex family structures such as where there are children from previous marriages or relationships.

It is not known when these rules will come into effect, or whether the proposals will stay in their current form. In order to ensure your estate is distributed in accordance with your wishes it is advisable to have a will drawn up. The will can state who you wish to leave your estate to and in what proportions. In complex family structures assets can be ring fenced to guarantee that the children will benefit from the estate, to avoid this uncertainty the answer is simple – make a will with your solicitor.

Google operates the blogging platform Blogger.com from the US. In April 2011, the blog “London Muslim” used the platform to publish an article about Payam Tamiz. A number of anonymous users posted comments beneath the article.

On 29 June 2011, Mr Tamiz wrote to Google complaining that the comments were defamatory. Although there was an issue as to when Google first received the complaint, the parties agreed that the letter was received by Google in early July. On 11 August 2011, Google referred the complaint to the blogger. On 14 August 2011, the blogger removed all the comments about which Mr Tamiz complained.

Mr Tamiz sought to bring an action in the UK against Google for defamation based on the publication of the comments. In March 2012, the High Court held that the Court should decline jurisdiction. In reaching that decision, the High Court found that three of the comments were arguably defamatory but that, on common law principles, Google was not a publisher as its role had been purely passive. Mr Tamiz appealed the decision and the matter went before the Court of Appeal.

The Court of Appeal likened the blogging platform to the provision of a notice board, and considered it particularly important that Google made the notice board available to bloggers on its own terms and that it could easily remove or block access to any notice that did not comply with such terms. As a result, if Google allowed defamatory statements to remain on the blog after it had been notified of the presence of those statements, it might be inferred to have associated itself with or to have made itself responsible for the continued presence of the statements on the blog.  However, such inference could not properly be drawn until such time as Google had had a reasonable time to act to remove the defamatory statements.  The Court decided that in this case Google’s potential liability between notification of the complaint and the removal of the comments was so trivial as not to justify the maintenance of the action. 

Although Google was ultimatlly successful before the Court of Appeal, this decision will give it and internet service providers in general some cause for concern.

If you have a dispute and would like advice on this or a related topic, please contact Catherine Mathews.  Catherine specialises in defamation claims and also consumer disputes (including those relating to holidays, timeshare, cars and financial services).  She also deals with commercial and contract litigation.  Catherine is a member of the Dispute Resolution Team in Exeter. The Team is described as “exceptional” in the Legal 500 2010 independent directory and “extremely effective” in the Legal 500 2011 independent directory.

The case, Petrodel v Prest, showed that the husband purchased properties in London through various offshore companies, yet the Court of Appeal rejected the wife’s claims to have these properties transferred to her as part of her divorce settlement, due to the English law principle that a company has its own legal personality.

On appeal by the wife today the Supreme Court, whilst confirming that the divorce court had no special power to defeat a corporate legal personality, it said that in the Petrodel case the husband had injected assets into the company from his personal resources and therefore the company held the assets on trust for the husband.

They established that the husband was in effect the owner of the property held by the company and that the Court could transfer the asset directly to the wife as if it was legally owned by the husband rather than the company.

“This landmark ruling has many consequences for those who invest assets in corporate structures and subsequently divorce,” says Liz Allen, one of the UK’s leading divorce lawyers, from Stephens Scown LLP.

Liz continues, ”This ruling will be widely welcomed by those representing spouses in the South West, whose claims have been frustrated by questions over ownership of matrimonial assets. Now, in certain circumstances, if it can be demonstrated that the funds which purchased the property originally came from the spouse or spouses personally, then the Court can deal with the asset directly, in a way that effectively ignores the corporate structure.”

It can be seen that the Supreme Court has made a bold decision and also highlights the importance of considering pre and post nuptial agreements in conjunction with corporate restructuring. To read an in depth view of the case, visit http://www.stephens-scown.co.uk/blog/2013/06/supreme-court-delivered-judgement-in-the-appeal-of-the-petrodel-case/

Liz Allen is consistently ranked highly in the UK’s top two independent legal guides, Chambers and Legal 500, and is the only family lawyer in Devon and Cornwall to appear in the Citywealth Leaders List, an independent list of some of the best advisors in private wealth management in the world, for the 5^th year running.

The Court has ruled that a Divorce Court can in certain circumstances make direct orders over Company assets.    

In the Petrodel v Prest case the evidence was that the husband had purchased properties in London through various offshore companies.   In the Court of Appeal the wife’s claims to have these properties transferred to her as part of her divorce settlement was rejected as the court said that the court could not invade the English law principle that a Company has its own legal personality.   Whilst today the Supreme Court confirmed that the divorce court had no special power to defeat a corporate legal personality it said that in the Petrodel case the husband had, on the best evidence available, injected the cash into the company from his personal resources and therefore the Company held the assets on trust for the husband. They therefore concluded that the husband was in effect the owner of the property held by the Company and in those circumstances the Court could transfer the asset directly to the Wife as if it was legally owned by the husband rather than the company.

This judgement strengthens the abilities of a divorce court to go to the core of the case rather than being diverted by arguments as to corporate legal personality. It is likely to be widely welcomed by those representing spouses in this country whose claims have been thwarted by the  matrimonial assets being  owned by a foreign company which cannot be a party to the divorce or subject to enforcement by a English divorce court. Now, if it can be demonstrated that the funds which purchased the property originally came from the spouse or spouses personally then the court can deal with the asset directly in a way that effectively ignores the corporate structure.

The court also confirmed that if it can be shown that one party to a marriage deliberately transfers his or her assets into a corporate structure to avoid spousal claims against property, then the Court has the power to treat that property as if it was directly owned by the transferring spouse. The Court did however stress that this is unlikely to be a common event as it would require a high degree of proof. In the Petrodel case the court confirmed that there was no suggestion that the husband had set up the company structure to defeat his wife’s claims as the companies had been in existence and the properties purchased within them well before difficulties in the marriage arose. Despite this, the investment of his personal funds in the company to purchase property, justified the court’s decision to  transfer   the company owned property directly to the wife.    The court confirmed that there would be likely to be a presumption that a family home owned by a company is likely to be held on a bare trust for the spouse who funded its purchase.

It can be seen that the Supreme Court have made a bold decision but the reality is that this may prove to be an accountancy “fest” as the respective spouses argue whether or not the funds employed by the company to purchase assets were in fact derived from personal money invested in the company or were purchased by the company’s own assets in which case the divorce court may not have the power to make a direct transfer.

The judgment underlines the advisability of considering possible divorce issues when assisting clients in relation to corporate issues.   We are happy to discuss and advise on these issues.   

This decision also highlights the importance of considering pre and post nuptial agreements in conjunction with corporate restructuring.

Announced by Michael Turner, Chairman of Fuller’s, as part of their full year results for 2012/13, the acquisition of Cornish Orchards is part of the good news message, which includes a 7% increase in revenue (to £271.5m) for Fuller’s.

Not only is this good news for Fuller’s and their customers, but very much so for Cornish Orchards’ former owners, Andy and Penny Atkinson, with Andy staying on as managing director to continue to spearhead the business.

Christian Wilson, partner at Stephens Scown, said: “We are obviously delighted that an intricate deal between two quite different businesses was achieved in an extremely short timescale, with Fuller’s wishing to announce the good news as part of its annual results. Achieving this in just five weeks is an incredible achievement and shows the commitment of all parties to reach a successful conclusion. Food and drink producers within the South West have a reputation of excellence so it is no wonder that national players in this industry continue to look to the region for quality, inspiration and growth.”

Andy Atkinson, creator of award winning premium cider maker, Cornish Orchards, approached Stephens Scown for assistance with this deal due to their additional expertise in the food and drink business sector.

Andy said: “Doing a deal of this magnitude was a real eye opener. Having the reassurance of Stephens Scown acting for us was a relief – Christian Wilson orchestrated the whole deal, quickly picking up on the nuances of cidermaking and understanding my business, which was essential. Terry Falcᾶo brought wisdom and got to the point just when it mattered. My wife Penny played an essential part in industriously handling the frenzied assault of requests for documents and answers. We played a good game and I feel confident the outcome was win-win for all parties.”

He continues: “The deal was not only good for Fuller’s and for me personally, but also for the sustainability of jobs within the business. Best of all a great Cornish brand will be spotlighted in over 360 premium Fuller’s bars and hotels, which are found in exceptional locations throughout London.”

Cornish Orchards was started in 1992 by Andy as a diversification from dairy farming, and currently employs a team of over 20 local staff at their Duchy of Cornwall estate farm. The intention is to increase the volume of production at the Cornish Duloe site with Fuller’s investing a significant £1.5million investment in the business, which will result in additional staff recruitment.

In 1988, the Hackney family placed chains and a concrete bollard on the disputed land preventing other persons from using it and they started using it as a parking space.

When the title plans were computerised in 2000, a further mistake was made by the Land Registry and they omitted to include the disputed land in the title plan to number 29.

In 2008, Parshall applied to the Land Registry for rectification of the title plan. The Adjudicator found that Parshall would have been entitled to rectification but for the argument raised by Hackney.  Hackney opposed rectification, claiming that she had possessory title based on 12 years adverse possession from 1988. She argued that the fact of her possessory title prevented rectification. The Land Registry Deputy Adjudicator and the High Court refused rectification, both determining that Hackney had acquired title by adverse possession to the disputed land. Parshall appealed to the Court of Appeal who allowed the appeal. The Court of Appeal held that Hackney had not acquired title to the land by adverse possession. The Court said that for Hackney’s argument based on possessory title to succeed, the owners of Parshall’s property must have had a right of action for recovery of the disputed land as against Hackney’s predecessors in the period 1988 to 2003. The Court determined that no right of action had in a fact arisen because throughout the relevant period Hackney’s predecessors were the registered proprietors of the disputed land and were therefore lawfully entitled to possession. Their possession did not occur via adverse possession, but was attributable to their registered title. 

The disputed land had therefore been vested in both the predecessors to Parshall’s land and Hackney’s land and there was therefore “concurrent registration” whereby there were two parallel registered estates in the same land.  These two registered titles co-existed until the situation was corrected by rectification and this mistake had to be rectified before the issue of possessory title could be determined. Accordingly, there were no grounds for interfering with the Deputy Adjudicator’s decision that he would have allowed rectification (had he not found there was adverse possession) as it would be unjust not to allow it. The matter was therefore decided in Parshall’s favour.

Recent comments made by The Good Life actress Penelope Keith, in an interview with Country Life magazine, made me smile wryly. Ms Keith spoke about blaming couples separating in their 50s and 60s for stoking up the housing market by buying up flats and small houses for their new single life.

Quite a bold statement to make from a woman who is obviously happy in her marriage of 35 years. Others are not so lucky. And the presumption that the family home is automatically sold upon divorce is not necessarily correct. Sometimes one party may wish to buy the other out or offset the value against other assets, or perhaps it is needed as a continuing home whilst the children are growing up.

Statistics, and experience, show that more women than men instigate divorce proceedings –77,016 women and 40,369 men instigated action in 2011. This is down to a variety of factors, many clichéd scenarios spring to mind but the majority are listed as down to ‘behaviour’, which excludes adultery and desertion. A common reason is the classic ‘empty-nest syndrome’ where the culmination of many frustrating and unhappy years comes to the surface once the children leave home.

However, the growing trend for ‘silver separators’, those aged 50 and over, goes against the current overall fall in divorces across other age groups – and women feature highly in this trend with numbers increasing year on year for the 50-plus group. Interestingly the older you are the greater the number of divorces registered – a 43% rise among the over-60s in the last decade.

The age-old view that marriage is for life, ‘until death us do part’, familiar since before the Victorian era, does not necessarily suit much of the present population. Marriage was not expected to last for 60, 70, 80 years purely down to life expectancy and divorces registered in England and Wales when records began, in 1858, show a grand total of 24 as opposed to 117,558 in 2011 (down from a high of 165,018 in 1993).

Don’t get me wrong, marriages of any great length are heart warming to observe – tales of love over adversity are a delight to hear, but it is now socially acceptable to divorce. Alison Steadman, 66-year old Gavin and Stacey actress, recently spoke of this acceptability in the lead up to her new television drama about love and marriage. Ms Steadman told of her character’s decision to walk out of her unhappy life, saying: “I think retiring and death do make us as human beings re-evaluate our lives. And when we do, sometimes we change. Sometimes life and marriages do just tick along for years and years and years and it takes something to make that person go ‘I want to change things’.”

The greater fairness in splitting of assets is helping couples forge ahead in their new single lives financially stable. The ability to share pensions built up during the marriage is helping couples in this area. However, since the advent of pension sharing in 2000 – allowing the pension arrangements on divorce to be divided completely, creating a clean break between the divorcing couple – only 6% of current divorce settlements take advantage of this. Pension sharing is relatively cheap, quick and tax efficient, so why don’t more people take advantage of this? The importance of expert advice is undoubtedly the key to true fairness and, in turn, hopefully a happy long and fruitful life beyond divorce, regardless of what people such as the outspoken Ms Keith may say!

There is a well known principle in company law that a company is a separate entity from it’s shareholders, officers and directors.  This means in general that the company’s obligations remain the liability of the company entity itself and not that of the shareholders, directors or officers of the company.  There is however an exception to this established principle known as “the piercing of the corporate veil”. This is a principle by which the courts disregard the separateness of the company and hold the shareholder responsible for the company’s actions as if they were his own.

This can have relevance in financial relief applications within a divorce.  It may be that one of the parties sets up “a sham” using their company as their vehicle to do so. It means,  in the words of LJ Diplock, “acts done or documents executed by the parties to “the sham” which are intended to give  to third parties or to the court,  the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations which the parties intend to create”.

If a spouse, however,  in an ancillary relief case wishes to establish a claim to assets which should she think be in the name of her spouse but are in fact in the name of someone other than her spouse the she must identify that asset and have some proper legal basis for doing so. It is insufficient for a court to grant her relief just because the other spouses’ company dealings appear to be “artificial or dodgy”.

The corporate veil is only likely to be pierced in circumstances as follows:

If there has been some impropriety and that impropriety is linked to the use of the company structure to avoid a disposition to the other spouse or conceal it from them

It is necessary therefore that the court needs to show both the control of the company by the wrongdoer and impropriety, that is misuse of the company to conceal their wrongdoing.

The court will pierce the veil only as far as it is necessary to provide a remedy for the particular wrong which  those controlling the company have done.

The test imposed before the veil will be pierced by the court is a stringent one: suspicion and implausibility of a business  dealing are insufficient and there must be clear evidence of a sham; for instance that it was is an act whereby the parties intend a document to do something different to that which it says it does.

There has been a very recent case in this area of law ‘Petrodel v Prest [2012] At first instance the judge ruled that the entire corporation structure under dispute was held for the Husband’s benefit alone and under his control, and that the assets within it could and should be transferred to the wife. Three of the companies involved in the corporation appealed

On appeal the Court of Appeal rejected the approach of the lower court in disregarding the separate identity of the company. It stated  that “there may be factual circumstances in which it will be legitimate for the court to pierce the corporate veil and, to an appropriate extent, disregard the fact of its separate identity from that of its incorporators.{ Previous cases affirm, however, this can}  only be done in limited circumstances, central to which is the demonstration of relevant impropriety in the corporators of the company”

In this case it was decided  that there must be some relevant impropriety if the corporate veil could in consequence be pierced, following which it would be open to the court, so far as it might think fit, to treat certain of the companies assets as the husbands and make transfer orders to the wife in respect of them. In this case the decision of the court of appeal was that the company structure had been set up for acceptable means including wealth protection and avoidance of tax and therefore the corporate veil should not be pierced. The wife has appealed the decision to the Supreme Court and a decision is awaited. The principle of the corporate veil however, remains , for now in tact.

 It is a principle which  should be considered by a family practitioner when advising any spouse who believes that the other spouse may have siphoned off their assets through setting up a sham company, with the purpose of avoiding bringing them into the matrimonial pot for possible distribution. There will have to be evidence of an impropriety before the veil is pierced.

Years of very low interest rates and falling property prices have seriously affected the disposable income of many older couples who had previously relied on investment income. This particularly affects couples where there is no occupational pension and the couple need to rely on their investments for income. Once debts begin to mount the pressure is on with no realistic possibility of earning sufficient to repay such debt. This can often lead to a need to sell property or realise investments to pay off debt.

For most married people debt is a joint issue. The debts are often jointly incurred and known about and in the event of any divorce the court would consider that the debt should be jointly repaid from any assets. The difficulty can occur couples have maintained separate finances throughout the marriage and one party (often the wife in the case of an elderly couple) has no knowledge of the finances and that debt is being incurred. The existence of debt can come as a terrible shock and lead to marital problems. Whilst there is no legal liability directly for one another’s debts as a married couple, the attitude of a divorce court is to generally regard debts in sole names as a matrimonial debt which needs to be repaid. An exception could be made if there is clear evidence of debt being accumulated due, for example to gambling or another reason entirely unconnected with the marriage. In general however the court takes the view that if one party has run up credit card debt due to extravagant living within the marriage this will still be regarded as a matrimonial debt even though the other spouse may say they knew nothing about it.

All of this illustrates the importance of spouses both taking a close interest in financial matters. The attitude which can still predominate amongst older couples that the husband looks after the money and the wife looks after the home has severe dangers for couples who face debt pressures. If one party to a marriage is worried about debt it is important to understand the overall problem and then take advice. In conjunction with our insolvency team we are well places to assist anyone who is worried about their debt position within a marriage.

It should be said that the evidence reported by the newspaper is anecdotal, however it suggests that the family courts are appointing at an increasing rate legal representation of children who are already the subject of residence and contact disputes between parents.

In response, the Ministry of Justice has said:

“As part of our legal aid reforms we made sure that family cases involving children at risk continued to qualify for funding. This means cases including care proceedings, the unlawful removal of a child, and child contact cases where there is a risk of child abuse or where domestic violence has been an issue will all generally be covered.”

The Independent refers to Private Law family disputes resorting at its worst to the court considering placing children at risk into Local Authority care.  The MoJ correctly points out that in such circumstances legal aid would become available, however it will be a point of considerable concern if there is a groundswell of opinion at the coalface of family proceedings if cases are to become litigated in the way that the Independent’s report suggests. 

At Stephens Scown LLP, we continue to offer Legal Aid to families involved in cases concerning divorce, financial matters and children.  The criteria for eligibility is much more strict since the changes brought by LASPO 2012 came into force in April, however we may still be able to help you.  One of the key changes to the criteria for eligibility is to be able to demonstrate domestic violence or child abuse.  In cases where it is possible to evidence this, however, we can continue to help parents and children in providing them with legal advice that they desperately need. 

Our family team has a wealth of experience and has accredited specialists to help you in your situation.  We represent parents, children and CAFCASS as well as representing children’s services of the Local Authority.  Please contact us if you think that we can help you.  We can assess quickly whether or not we believe you will qualify for legal aid and if you do not, we can look at how you may still be able to fund legal advice at a competitive rate.