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St Philips Commercial

St Philips Commercial

We are delighted to announce that Head of our Business & Property Group, James Morgan QC, has been appointed as a Deputy High Court Judge.

Our congratulations go to James who is now authorised to act as a Judge of the High Court in the Chancery Division on the Midlands Circuit for a four year term until August 2023.

James will of course continue in full time practice at St Philips whilst undertaking his judicial responsibilities and his full CV can be accessed here.

Date & Time: 17/10/2019 | 9:30am - 1:00pm (registration 9:00am)
CPD: 3
Cost: Free

Speakers

Richard Atkins QC: Registration and Welcome

Avtar Khangure QC: Spilling the beans – Search orders, third party applications and pre-action disclosure

John Randall QC: Widening the net – economic torts – pleading and proof

James Puzey: MTIC fraud

Andrew Smith QC: Dodging the bullet – Deferred Prosecution Agreements

James Morgan QC: Nuclear weapon update: Freezing orders

Simon Davis: Self-help: Private Prosecutions

Book Now

It has today been announced that former member of St Philips, The Hon Mr Justice Pepperall, has been appointed as the next Presiding Judge for the Midland Circuit.   The appointment is made from 1 January 2020, when the current Presiding Judge Mrs Justice Carr steps down, and will run to 31 December 2023.  Having only been appointed to the High Court in 2018 it is a great honour to take such a position and we look forward to seeing him sitting more regularly in Birmingham.

The full announcement from the Courts and Tribunal Judiciary can be found here.

1. Disputes often arise between neighbours over shared driveways. Different principles will apply to determining a boundary line, acquiring easements of parking or vehicular access by prescription, or claiming title to a portion of disputed land. 

2. Where one of the parties is advancing an adverse possession claim to a portion of disputed land, a key question is: what acts constitute factual possession? Is parking on a driveway sufficient? What about cleaning it, weeding it or re-surfacing it? Thorpe v Frank [2019] EWCA Civ 150 provides helpful clarification.  

Facts of Thorpe v Frank

3. Mrs Thorpe and Mr and Mrs Frank lived in neighbouring properties: No. 8 and No. 9. Mrs Thorpe acquired No. 9 in 1984 and obtained first registration in 2014. Mr and Mrs Frank became registered proprietors of No. 8 in 2012.

4. Mrs Thorpe applied to the Land Registry for registration as freehold proprietor of part of the shared driveway on the basis of a title acquired by adverse possession.


5. In support of her application, she relied on the fact that:

  1. Her son had repaved the driveway in 1986;
  2. She had regularly parked on it and power-washed it, wearing out a number of washers in the process [Kudos to anyone who can wear out more than one pressure washer];
  3. She regularly cleared the area of litter and weeded it.

6. By the time the matter reached the Court of Appeal, the issue was simply this: had Mrs Thorpe established factual possession of the disputed land by the laying of the 1986 paving and the continuation of that paving on site?

Summary of the Law

7. First, a quick summary of the established legal principles. In Powell v McFarlane (1977) 38 P&CR 452, Slade J said:

“(1) In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land, as being the person with the prime facie right to possession. The law will thus, without reluctance, ascribe possession either to the paper owner or to persons who can establish a title as claiming through the paper owner. 

(2) If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (“animus possidendi”).” 

8. Lord Browne-Wilkinson clarified the meaning of legal and factual possession in JA Pye (Oxford) Ltd. v Graham [2003] 1 AC 419 as follows:

“…there are two elements necessary for legal possession: (1) a sufficient degree of physical custody and control (“factual possession”); (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit (“intention to possess”).” 

9. In Thorpe v Frank the court drew attention to this extract of Slade J’s judgment in Powell v McFarlane (emphasis added):

“(3) Factual possession signifies an appropriate degree of physical control. It must be a single and exclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed… Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.” 

The Court of Appeal’s Decision 

10. In giving judgment for Mrs Thorpe, the Court of Appeal held that:

  1. While enclosure of the land (by fencing etc) is an obvious manner in which a person can take possession, it is not an absolute requirement;
  2. Having regard to the nature of this open forecourt area, the ripping up of the old surface, digging out the land, inserting hardcore, levelling the surface with the area surrounding it and then replacing the flags with new flags and bricks of one's own choosing were just the sort of actions that one would expect an occupying owner to do in dealing with this land;
  3. This was a clear interference with the rights of the paper title owner, asserting not merely a momentary control over the nature of the land's surface but a control of it for the future. This was not merely a temporary trespass for two weeks during the works period, as [counsel for the Franks] put it; it was the creation of something of permanent and enduring character. Mr Thorpe's work for his mother had created something that gave the entire apron the appearance of being an adjunct to No. 9, whatever might have been said of the pre-existing paved surface;
  4. In completing these works, the paper title owners were also excluded from the soil below the apron's surface by a permanent covering of Mrs Thorpe's construction.

Practical Impact

11. This decision will assist alleged possessors who can rely on acts such as paving a driveway or erecting fencing around the disputed land.  

12. Mrs Thorpe’s evidence of parking on the driveway was not sufficient to establish factual possession, but this will be viable in other cases. A claim did succeed partially on this basis in Williams v Usherwood (1983) 45 P&CR 235 where it was held that: “…the significance of parking varies greatly according to the exact circumstances of the relevant ground. Parking cars on a strip of waste land may have no evidential value whatever in relation to possession of the land. In the enclosed curtilage of a private dwelling-house, however, it may be regarded as evidence of possession.” 

13. Finally, Thorpe v Frank will not assist those who can only point to acts such as cleaning a driveway. If there was anyone who could establish adverse possession by pressure washing, it was Mrs Thorpe.

Egon Zehnder Ltd v Tillman [2019] UKSC 32

Unreasonable restrictive covenants are void at common law. But what if only part of a covenant is unreasonable? Can the bad be severed and the good enforced?

In Egon Zehnder Ltd v Tillman, the Supreme Court settled the uncertainty about the rules which govern this question. After a thorough review of the development of the prohibition of covenants in restraint of trade and the development of the severance rules, it restored the threefold test applied by the Court of Appeal in Beckett Investment Management Group v Hall [2007] EWCA Civ 613, [2007] ICR 1539. The bad part of a covenant may be severed if:

  1. the unenforceable provision can be removed without the need to add to or modify the wording of what remains;
  2. the remaining terms continue to be supported by adequate consideration (a criterion that can be ignored in run-of-the-mill cases); and
  3. the removal of the unenforceable provision does not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all.

The rule was then applied to the facts. Egon Zehnder Ltd, a head-hunter, employed Ms Tillman. She began work as a “consultant” but was soon promoted to be a “principal” and later a “partner”. Her employment contract said:

You [Ms Tillman] shall not without the prior written consent of the company directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal manager, employee, contractor, consultant, agent or otherwise howsoever …
… directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during the period of 12 months prior to that date and with which you were materially concerned during such period.

She left her employment in January 2017 and took up new employment with a competitor in May 2017. She contended that the non-competition covenant went further than was reasonably necessary to protect Egon Zehnder’s interests. She argued (among other things) that prohibiting her being “interested” in a competing business unreasonably stopped her from holding even a minority shareholding in a competing business. 

The Court of Appeal held that this restriction was an unreasonable restraint of trade and refused to sever the words “or interested” from the remainder of the clause. 

The Supreme Court held that the offending word ought to be severed. The words “or interested” could be removed without the need to add or modify the wording of the remainder. And doing so generated no major change in the overall effect of the restraints. 

Lord Wilson’s judgment (with whom the other justices agreed) ended with a warning to drafters of contracts. He approved Daniel Alexander QC’s description (in Freshasia Foods Ltd v Lu [2018] EWHC 3644 (Ch)) of the unreasonable parts of post-employment restrictions as “legal litter” which “cast an unfair burden on others to clear them up”. Lord Wilson warned that the employer might have to bear some of the costs of the litigation, even though it had succeeded: “In my view the company should win … but there might be a sting in the tail.”

St Philips Chambers is proud to host the Midlands Asian Lawyers Association (MALA) and its first event in Birmingham this year. A member of JAC and a recently appointed member of the judiciary will share their insight and answer questions on the new competition for Deputy District Judges and Fee-paid First Tier Tribunal Judges launched this month (with a deadline on 3 April 2019). This event will take place on 27 March 2019and a place may be booked through MALA’s website. A flyer for the event can be downloaded here.

St Philips is proud to promote diversity in the legal profession and has a long track record of supporting MALA. Iqbal Mohammed, a member of the Business and Property team, was appointed to MALA’s management committee in 2018.

All members of the legal profession are welcome to this event and light refreshments will be provided.

St Philips is delighted to announce that the Lord Chief Justice has appointed Naomi Candlin as a Deputy District Judge to sit on the Midland Circuit.

Re Sprout Land Holdings Limited: Tighe v Fraser-Peters

Iqbal Mohammed acted for one of two directors of a deadlocked company, where one director resolved to appoint administrators through the appointment of a third director by a members’ written resolution. The Judge held that the director was invalidly appointed, rendering the directors' meeting inquorate; subsequently invalidating the resolution to appoint administrators.

Background

The Company was incorporated to invest trust monies belonging to B and was directed by the Applicant and Respondent, who, along with B, held a share each. In 2018, the directors’ relationship broke down and the board was deadlocked. 

On 17 November 2018, the Respondent met with B and obtained her signature on a written resolution appointing her as a director, with both agreeing that the purpose of the new appointment was to enable the Company to enter administration. 

On 19 November 2018, the Respondent emailed the Applicant at 10.24 “requesting” that Company “circulates... a written resolution to appoint” B as Director and giving notice “of a director’s meeting to be held at noon today... by conference call.” 

The email failed to attach any resolution and gave 90 minutes’ notice of a directors’ meeting. The Applicant refused to attend on ground of insufficient notice, but the Respondent signed the resolution the same day and, with B, resolved to appoint administrators. Subsequent to its passage, the text of the resolution was posted to the Applicant. 

The Application and hearing

The Applicant applied for a declaration that both appointments were invalid. Before ICC Judge Prentis, Iqbal Mohammed argued that the appointment of B as director was invalid and, as a result, the appointment of administrators by one director was also invalid. 

Counsel for Respondent and the joint administrators argued that the appointment of the director was in accordance with the Model Articles and the Companies Act. Further, the Act did not require circulation of the resolution to all members at the same time or before it was passed. Alternatively, even if B was appointed invalidly, her decision (and/or the inquorate decision of the Respondent) to appoint administrators was valid under s. 161, Companies Act 2006, which states: 

“The acts of a person acting as a director are valid notwithstanding that it is afterwards discovered—(a) that there was a defect in his appointment… (d) that he was not entitled to vote on the matter in question.” 

Iqbal disputed that this provision applied to the appointment of administrators at all. 

Decision

ICC Judge Prentis gave two judgments. Firstly, he held that the appointment of B was invalid as there was wholesale non-compliance with s. 293 Companies Act 2006, which required circulation of the resolution to all members by the Company; circulation after passage was insufficient. Further, there was no consideration of the resolution by the Company under s. 292 and a general failure to propose, consider or circulate the resolution in accordance with Chapter 2 of the Act. 

After further submissions, he gave a second judgment invalidating the appointment of administrators. He held that under model articles 8(4) and 11(1), there was no quorum to transact any business, let alone appoint administrators. 

Considering that Aidniantz v Sherlock Holmes International Society Limited [2016] EWHC 1392 (Ch) and commentary in Palmer’s Company Law both suggested that section 161 intended to protect third parties dealing with the Company, this section could not provide a route to ignoring the requirement for a quorate meeting for out of court appointments, per Minmar v Khalastchi [2011] EWHC 1159 (Ch). 

The Applicant obtained declaratory relief and a costs order; with the Administrators seeking an indemnity and costs from the Respondent. 

Comment

This unreported decision is interesting for two reasons. Firstly, it deals with one of the many attempts made by deadlocked boards to appoint directors, this time through a members’ resolution. It shows that great care should be taken in ensuring that the Companies Act is complied with, and that reliance on “advice” alone will not justify non-compliance. Secondly, it shows that section 161 will not easily be applied to cure invalid appointments to overcome the requirement in Minmar, and nor will administrators be treated as third parties for the purposes of s. 161 as, after all, administrators are agents of the Company not third parties.

We are proud to announce that four of our members have been shortlisted for awards at the Birmingham Law Societys Legal Awards 2019.

In the category of ‘Barrister of the Year’, Employment specialist, Elizabeth Hodgetts along with Business & Property Group members, Anthony Verduyn and Iqbal Mohammed, have all been named in the final five nominees for this prestigious award. In addition, Sophie Garner has been nominated for the Pro Bono Award in recognition of her contribution to Pro Bono/charity work during 2018.

This years awards will be held at the International Convention Centre on March 14th and a full list of nominees can be found here.

Head of St Philips Business & Property Group, James Morgan QC, who was instructed by Osborne Clarke LLP, successfully acts for Northampton Borough Council in obtaining a £2.3m judgment against Anthony and David Cardoza arising out of their conduct as directors of Northampton Town Football Club.

Following a highly publicised 10-day trial in July 2018 in which the defendants denied all wrongdoing, HHJ Barker QC today handed down judgment in favour of the Council finding that the former directors had acted in breach of their fiduciary duties and were liable to compensate the Council as assignee of the Football Club. He also granted the Council relief under s.423, Insolvency Act 1986 in relation to the transfer by David Cardoza to his wife of his interest in their former domestic property.

A full copy of the judgment can be found here.

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