REMOVAL OF A CHILD FROM THE JURISDICTION

What happens to children when a relationship breaks down and one parent wants to relocate abroad and take the children with them – permanently?

Without the written consent of all parties with Parental Responsibility for the child (generally that means just the parents) an application to court must be made for leave to remove the children from the jurisdiction of England and Wales.

In 2001 the Court of Appeal case of Payne v Payne determined how the courts should consider any such application. Any application to the court must be decided with careful reference, by the Court, to the “welfare checklist” (s1 Children Act 1989) which is a fairly rigorous list of criteria, having at its core the “best interests of the child”, that must be met before any order can be made.

Additionally, Payne v Payne directs the court to consider (in addition to the welfare of the child being paramount): whether the application is genuine and not derived from some ulterior motive (such as restricting or preventing contact with the non resident parent), whether the application is realistic & based on well-researched & investigated practical proposals (where are they planning on living, are there good schools and educational facilities? Good medical care and other provisions for the child?), how the child's relationships with the parent ‘left behind’ and their family will be affected, any detriment to the child and their future relationship with the 'left behind' parent if the application is granted and finally the impact of a refusal on the Applicant either as a single parent or as a new spouse.

In practical terms, the power currently resides with the person wanting to relocate which has historically usually been the mother, who has to furnish the court with the information they require to meet the requirements listed above. The onus is then on the ‘left-behind’ parent to demonstrate to the court that the proposals are unworkable and not in the best interests of the child. Some would consider this a more onerous task.

Despite the fact that there should be no presumption in favour of the Applicant the approach by the courts has been criticised as being weighted in favour of the person wishing to relocate, prioritising the interests of the relocating parent over and above that of the left behind parents. This surely must be more so in a world where families are changing with both parents having a more active role in the day to day care of the child and shared care arrangement being increasingly the norm.

So where are we now?

In the recent 2010 case of Re D (Children), Lord Justice Wall commented in terms that are widely read as extremely encouraging for future cases that this area is ready for review (but that that was not the case where it was appropriate to start that process).

So the position is that we are stuck with the principles of Payne v Payne until a case goes to court which forces the kind of review that Lord Justice Wall predicted.

If you are considering relocating or want advice on challenging plans to relocate please call Louise Pearce on 01737 854599 or email louise.pearce@morrlaw.com who will be able guide you in the right direction.

Launch of ‘fit notes’ in April 2010

In April ‘fit notes’ (proper name ‘Statement of Fitness for Work’) were introduced in place of GPs’ sick notes. They will be available in paper or electronic format and will focus more on what the individual can do, rather than simply stating their incapacity. The idea is to provide employers with information, where appropriate, as to what duties an employee can undertake and what support should be provided.

The new form will require the GP to state that the employee is either unfit for work or that he/she may be fit for some work taking into account the following options (which are set out as a tick list):

• A phased return to work;
• Altered hours;
• Amended duties;
• Workplace adaptations

The GP will also have to indicate how long any adjustments are likely to need to be in place and explain the functional effect of the employee's condition. There is also a "comments" box which GPs will be encouraged to complete for complex conditions (which may have been caused or aggravated by work) or where guidance is needed from an occupational health professional.

The maximum duration a medical statement can be issued for has been reduced from 6 to 3 months during the first 6 months of a health condition.

As GPs are likely to have limited knowledge of an employee’s workplace and what their job entails their recommendations are intended to encourage discussions between employer and employee to work out exactly what adjustments can be made to enable the person to return to work. Although the new fit note may represent a shift in emphasis by focussing on what an employee can do, rather than what they can't, employers are still responsible for providing a safe workplace for staff. Therefore they will still have to consider all the circumstances including the employee's duties, the nature of their illness or injury and the GP’s comments before allowing an employee to return to work. In certain cases, employers may also want to get an independent medical report before making that decision.

The aim of fit notes is to help employees stay in work and to reduce the number of employees whose illness or injury means they descend into long term absence. They may facilitate an earlier, and perhaps phased, return to work with help and support from the employer.

The guidance issued by the then Labour Government states that the GP advice in the fit note is not binding and it is up to the employer how they act on the advice. It states that if an employer does not understand the advice on the fit note, they should discuss it with the employee in question, and if the matter is not resolved, they can then contact the GP for clarification. Employers are not obliged to comply with GPs’ recommendations but should be aware in particular of the potential relevance of the Disability Discrimination Act 1995 (DDA). If an employee is disabled for the purposes of the DDA there may be a legal duty to make reasonable adjustments to the employee’s duties, working methods etc to alleviate any disadvantage the employee is under because of their disability. A GP’s recommendation on a fit note may give details of such a proposed adjustment and prudent employers will give these due consideration.

Time will tell as to whether the introduction of fit notes will make any useful difference to the way employers manage sickness absence. However, the change should be welcome news for employers if GPs provide more information about employees’ conditions and their ability to work even with adjustments.

We recommend that early advice is sought where attendance issues are becoming a problem especially where the employer is considering dismissal and/or where the DDA may be an issue. For more information please contact David Seals on 01737 854573 or at david.seals@morrlaw.com.

PROBATE DIRECT - SAVING YOU STRESS, TIME AND MONEY

Unsurprisingly, a recent survey found that nearly two thirds of Britons found the death of a family member or friend one of the most stressful events in their lifetime.

This stress is often exacerbated when those same people are faced with the burden of administering the friend or family member’s estate. At this time of bereavement the last thing people want to be faced with is fighting their way through complex tax forms and paperwork. On average, with a Will, it can take 6 to 12 months to administer an estate. Many can take much longer, particularly when assets have to be sold such as the deceased’s home.

The same survey also revealed that the second most stressful time in a person’s life is when they are faced with financial difficulties. In the present climate, this is something that is ever present in many people’s minds.

At Morrisons Solicitors we recognise those stresses and are proud to launch our new online service, Probate Direct. We know that every penny counts so it is a fixed fee service costing only £300 plus VAT.

We know that clients do not want to be burdened with lots of paperwork and our team of qualified lawyers can obtain the Grant of Probate without the need for them to complete complex tax forms or attend the Probate Registry. In fact, they do not even need to visit our office – we can complete the whole process online.

Please visit http://www.probatedirect.net/ or http://www.morrlaw.com/ for more information.

THE 2010 BUDGET – UPDATE

The current inheritance tax threshold is £325,000 for 2009/10. The last Government had set out in a previous Budget that the threshold would rise to £350,000 for 2010/11. Due to the current financial climate and reduction in tax revenue for the Government, that plan has been scrapped. It is not likely to be addressed in the forthcoming emergency Budget on 22 June 2010.

Alistair Darling, the then Chancellor, said: “I do not believe that raising this allowance can be a priority, given the impact of the downturn on the country’s finances.”

The current threshold of £325,000 is likely to remain unchanged for the next four years.

Capital Gains Tax (CGT) is high on the agenda for reform in the forthcoming Budget. There has been much speculation in the press as to what those reforms may involve and it is very much a case of watch this space.

This highlights the need for people to review their wills, trusts and financial affairs on a regular basis. Labour’s last Budget may come as a disappointment to many hoping for a £25,000 rise in the inheritance tax threshold in April 2010. More than ever before it is important to undertake planning for the future to ensure that your estate is passed to your family in the most tax efficient way possible.

If you would like further advice on how the 2010 or Emergency Budget may affect you or for more information on wills, trusts and estate planning contact Rebecca Fisher on 020 8971 1037 or email rebecca.fisher@morrlaw.com

From Our Personal Injury Department …

Holiday Claims

With the approach of summer, many people will be looking forward to their holidays.

But what happens if someone has an accident and is injured in a hotel or villa abroad?

If the holiday is a “package holiday” as defined by the Package Tours Regulations 1992, it is possible to bring a claim against the Package Tour Operator if the holiday was arranged in the UK.

The liability of the Tour Operator is set out in Section 15 of the Regulations.

15(1) The other party to the contract is liable to the consumer for the proper performance of the obligations under the contract irrespective of whether such obligations are to be performed by that other party or by other suppliers of services …

This means that if a holidaymaker on a package holiday trips on a protruding flagstone outside a hotel and breaks her hip, she can bring a claim in the UK against the Package Tour Operator and does not need to bring a claim using a foreign lawyer.

However, the Courts have ruled in a number of cases that the standards to be applied are local standards and not UK standards. So if someone is injured falling on slippery flooring tiles, the test will be whether those tiles complied with the standards of that country and not with British standards. This will involve instructing a local health and safety expert or lawyer or both.

In many cases it may not be necessary to involve experts because the “failure to perform the contract or the improper performance of the contract” is clearly negligent such as the protruding flagstone in the example given.

It is worth mentioning that the holiday does not have to be taken outside the UK for the regulations to apply.

If a holiday is booked directly with a hotel or villa owner abroad (or in the UK) it is unlikely to be covered by the regulations.

Our personal injury department has considerable experience in this type of claim and can act for clients on a “no-win, no-fee” basis or under a pre-existing policy of insurance with a guarantee that you will recover 100% of your damages.

If we can be of any assistance with these or any other personal injury claims please contact Peregrine Lavington on 0208 971 1041 or email peregrine.lavington@morrlaw.com

Property Prices - Where Next?

Against many commentators’ expectations, last year saw something of a recovery in house prices.

According to the Land Registry House Price index, Surrey House Prices reached an average high of £311,733 in March 2008. This was some months after the Northern Rock crisis in September 2007 which fuelled the financial crisis (although it was not until a year later that Lehman Brothers collapsed in September 2008). However Land Registry Prices are recorded on completion which is some months after the price is first negotiated so lag behind the market.

The lowest average prices recorded by the Land Registry were in June 2009 when the average price in Surrey was £258,960. Since then prices have risen month on month and in March 2010 (the last month currently available) the average price was £289,781.

Most commentators attribute the rise in 2009 to a lack of property on the market combined with a pool of cash rich buyers and the availability of low interest rates. Although mortgage lenders have been somewhat more cautious than in the past, money has been made available to them by the government and they have been keen to lend on low risk deals although first time buyers have experienced difficulty.

The beginning of the year got off to a slow start due to adverse weather conditions. Fewer properties came onto the market. This led to some rather optimistic pricing by sellers. Some agents have indicated this was partly due to competition for instructions between agents. Most agents know that the instruction is likely to go to the agent who values highest thus creating pressure to overvalue and “talk the price down later.”

The National Association of Estate Agents (NAEA) reported a fall in the number of buyers registering in February with only 258 people registering, which is the lowest number for a year and was down from 291 in January. However much of the country was again affected by snow in February as well as the arrival of Christmas credit card bills. At the beginning of the year the SDLT starting rate went back down to £125,000. However the average number of sales agreed by NAEA agents in February rose to 6.8 per office as against 5.7 in January.

Rightmove say there was a .1% rise in values over March. This is the lowest they have ever recorded for March. However they say the price increase in February of 3.4% was more substantial than usual which may partly account for a lower March figure. However the Halifax showed a loss of -1.5% and Nationwide showed a reduction of -1% for February so these figures are debatable and cause some to fear a further down turn – what’s known as a W shaped recovery.

However Rightmove report that March saw a dramatic increase in houses on the market. March is traditionally a good month for both new instructions and price increases. Rightmove say that in March there has been a 17.4% increase in houses on the market over February and more than a third more than March last year. However the number of new instructions this March was still 26% down on the average pre credit crunch levels of 2005-2008. Rightmove also say that the average time to sell a property reduced from 84 days to 63 day during March.

Over April Rightmove say that Sellers have increased prices on average by 2.6% (3.7% in the South East) and in May by an average of 0.7% and May has seen the highest weekly figure for new sellers since June 2008 although the spring market has been patchy. They say that the number of properties coming onto the market is recovering to levels last seen in September 2008 (before the Lehman brothers collapse). Buyer level has not kept pace so stock levels have increased over the country. However this does tend to happen in the spring. Prices are up but so is supply and it remains to be seen whether the increase will be sustained. For desirable properties or locations there is strong demand and good prices are being achieved.

This year will also be an election year. Research by the London Central Portfolio, based on Land Registry figures, shows that property transactions tend to fall ahead of an election and raise again soon after. In the three months prior to the 2005 election prices only rose 0.8% but then rose 5.2% in the following quarter.

SDLT changes were announced in the March Budget. First time buyers (i.e. those who have not owned or partly owned a house anywhere in the world) will not pay SDLT on houses costing up to £250,000 provided they intend to occupy it as their main home. The purchase must complete before 25.3.2012. On properties worth over 1 million the SDLT rate will increase to 5% from 6th April 2011. These changes will undoubtedly have an affect on the market (assuming the new government do not announce further changes).

Simon Rubinsohn of the RICS was quoted as predicting an increase in the first 3-6 months of the year followed by a period of stabilization particularly if interest rates rise at the end of the year. The Halifax was predicting a period of both rises and falls month on month with not much change by the end of the year.

Ray Burrell of the National Institute of Economic and Social Research has been quoted as saying that prices are overvalued relative to fundamentals. Many economists predict that with high unemployment, low wage growth, possible interest rate rises and supply outstripping demand, prices may fall again.

While the number of mortgages available since the onset of the credit crunch has risen, Lenders are said to be facing a funding crisis which could mean they scale back. The FSA is said to be considering increasing the amount of capital banks hold in relation to total lending. The National Institute for Economic and Social Research estimates that this could prompt banks to increase mortgage rates by 0.3 to 0.9% (as holding more capital and liquid assets puts up their costs).

Although lending criteria have loosened a little since the onset of the crunch, they still remain tight and keenly priced mortgages are limited. This is a particularly difficulty for first time buyers.

Markets are notoriously difficult to predict. Against the expectations of many, the market rose last year. House price rises create a feel good factor for home owners but create problems for those entering the market or indeed those wishing to trade up.

The SDLT changes mentioned above will have an affect on the market. Those wishing to buy at over £1 million will should think about doing so early as they will face much higher SDLT. Sellers with houses worth just over £1 million should also think about selling. SDLT is charged on the whole price so a house worth £1,000,000 will be charged £30,000 tax and a house worth £1,000,001 will be charged just over £50,000. This means that buyers will want to negotiate on price for those houses worth a little over £1,000,000.

First time buyers of properties worth up to £250,000 should also think about buying now to take advantage of the SDLT holiday. Whilst some commentators are predicting a fall in prices in the short term, this is far from certain and there is reckoned to be significant pent up demand in the market which will lead to increases in the long term. Also interest rates will ultimately rise and there is now a relatively good supply of property on the market.

The Sunday Times on 4th April also suggested those looking to trade up should consider doing so now. The falls in the market mean that the rungs in the ladder are not as great and for those with significant equity there are good mortgage deals around. Savills estimate that across England and Wales the price differential between semi-detached and detached properties was 68% last year and 80% in 2000. In addition it is predicted that the supply will increase as those seeking to buy over £1,000,000 seek to sell their properties.

If you wish to see how house prices in your area have changed please visit http://www1.landregistry.gov.uk/houseprices/ and click on House Price Check. This will take you to the Land Registry price index. The Land Registry record all sales so their website is the most comprehensive.

For more information please contact Peter Mills on 01483 215353 or email peter.mills@morrlaw.com

Managing Disputes with shareholders

Many new businesses are started based on a firm friendship or mutual professional respect between the founder directors and shareholders. Unfortunately the dynamics of businesses and relationships change and this, or the addition of new stakeholders in the business, can erode even the best working relationship creating a shareholder dispute and damaging the business which has been built up over years.

Shareholder Disputes

A shareholder dispute could take many forms. The majority shareholders could look to remove one shareholder as a director and employee, taking away their rights to be involved in the running of the company, or they could simply apply their majority voting rights to make a decision which the minority does not believe is in their best interests or those of the company.

Although the majority can usually rely on their legal rights to direct the company, it would be open to the aggrieved shareholder to dispute the decision on several grounds:

• Bringing a tribunal claim relating to dismissal as an employee
• Claiming that the majority have acted in a manner unfairly prejudicial to their interests as a minority shareholder under the Companies Act 2006
• Alleging that the majority have failed to fulfil their statutory duties and responsibilities as directors

At the very least this will have an impact on the shareholders and the company in terms of lost focus and in meeting legal costs. At worst it could lead to the company being wound up or one party being ordered to buy out the others’ shares.

A little planning goes a long way

More often than not, there are no winners from a shareholder dispute, but with some planning and thought at the earliest stage of the company’s life, many of the disputes can either be avoided or carefully managed.

With some sound advice and a little planning at the start of the relationship (or indeed as it matures) a shareholders agreement can address many of the common issues shareholders may encounter. It puts in place, in advance, steps agreed by the parties to deal with the problems should they arise at some point in the future.

Common Areas of Dispute

As a shareholder you should be honest and ask yourself some questions.

• Who has day to day control of the business – are all shareholders to be directors, or will one or more have a working majority?
• If the company is owned and controlled equally by two shareholders, what happens in the case of a deadlock (i.e. if you cannot agree on an issue)?
• If there are minority shareholders, should there be any decisions requiring their consent?
• If you wanted to sell your shares who would buy them and how much would they pay?
• How would you feel about the equity of your company being diluted by your shares being sold to someone currently outside the business?
• If you have an offer to sell your business, how would you as the majority shareholder get the minority share holders to sell, or conversely as a minority shareholder what protection would you have in that situation?

Can any shareholder be forced to sell their shares, for example if they are no longer able to actively work for the company? If so, how are their shares valued?

It may well be that you are confident that solutions can always be found and in a positive working relationship many decisions can be reached by compromise, but when things have turned sour, this “team working” approach often disappears out of the window. This is where you need to plan in advance.

How does a Shareholder Agreement work?

As highlighted above, there tend to be a number of potential areas of dispute that occur between shareholders.

Broadly speaking it is common for shareholders to consider the following types of protection:

• Shareholder consents required on important issues
• Provisions relating to exits and share valuations
• Provision for the removal of directors
• Deadlock provisions in the event that the board and shareholders are split
• Restrictions on the authority to issue new shares

Measures for the resolution of disputes by independent experts or by other alternative dispute resolution (for example mediation or arbitration)

Alongside a shareholders’ agreement, it is also sensible to consider a review of the company’s articles of association to ensure that the two work together.

Cross Options and Life Insurance

It is also important to consider what would happen if one of the key shareholders were to die. Should their shares pass to their family, or would it be more important to allow the remaining shareholders to buy the shares at an agreed value?

If the buy-out option is preferred, we can advise on putting in place life insurance polices which can fund the purchase of the deceased shareholder’s interest by the survivor, avoiding dilution and retaining control. It is important that this is structured carefully to avoid triggering an inheritance tax charge.

Next Steps

The best way to deal with problems is to anticipate them and plan ahead as far as possible and this is where the shareholder agreement can come to the fore. Hopefully you’ll draw one up, put it in a drawer and forget it forever, but should the worst happen, the initial investment and time spent can pay huge dividends in terms of resolving business threatening disagreements.

For an informal chat please call Peter Savage on 01737 854548 or email peter.savage@morrlaw.com

Do I really need a Solicitor to administer an estate?

Practice Director, Gill Hynard, poses the question to Private Client Partner, Mark Walker.

Mark: I would certainly always discuss matters with a solicitor specialising in Wills and Estates. I recently helped a client to save £30,000 in tax as a result of a conversation about his mother’s estate (which he thought he had completed himself). Luckily he spoke to me just in time.

Gill: Are there any other benefits in an early discussion?

Mark: First, I find clients can be tremendously reassured by a little practical guidance and encouragement to help with the numerous small questions which understandably arise just after a death. Secondly, suitably re-assured, it is valuable for a bereaved executor to have a calm assessment of the tasks and considerations that lie ahead.

Gill: What do Executors need to consider then?

Mark: They need to consider the following:-

Who should be acting

Usually only one of the named executors need act, and you could appoint an attorney to act for you. This can be helpful if executors live far away or are otherwise committed elsewhere.

Whether a long or a shorter Inheritance Tax (“IHT”) form needs to be completed

Although it is usually the shorter form in estates under £325,000 (or £1 million for widow(er)s), the rules are more elaborate. Once this is known, an executor can also be advised what information needs to be obtained and what type of valuations HM Revenue and Customs (“HMRC”) might expect. Establishing the correct IHT return form required at an early stage can save a great deal of work later.

Whether this is an estate where Capital Gains Tax liabilities are likely?

If so it is important to consider whether Capital Gains Tax savings can be made. This can still be an issue in estates where only the shorter IHT form needs completion. I recently helped such a “simple” estate save £10,000 when the shares gained in value.

Whether the executor can complete the IHT return themselves

If the longer IHT form in particular is required the executors need to ensure that they really understand it and can be sure that they will present it in the most beneficial manner.

Whether the amount of IHT paid can be reduced at a later stage

If IHT is actually payable, might this be an estate where the amount initially payable can later be reduced – and how would I know? If the value of assets falls during the course of an administration you could claw back IHT due or paid – if you adhere to deadlines and know how best to apply the rules.

Whether there is an opportunity to claim an income tax refund

This can usually be claimed for the deceased’s lifetime affairs. It may also be possible to mitigate income tax for a widow(er).

Whether the executor can comply with the Revenue reporting requirements for estates

HMRC will need to be notified of income received and “gains” made after the death and tax returns made (or excused where appropriate). Beneficiaries will also each need to receive a “Certificate” showing their share of any income and gains from the estate for their own tax affairs.

Whether the executor can I prepare estate accounts?

Comprehensive Estate Accounts will need to be kept for the beneficiaries sharing in the residue.

Whether the executor will be personally at financial risk

There can be penalties from HM Revenue & Customs where assets are not reported (mistakenly as well as dishonestly). Worse, an executor can become responsible for paying late discovered liabilities or for distributions to the “wrong” beneficiaries. We can help to mitigate these risks.

Gill: How could a distribution be made to the “wrong” beneficiaries?

Mark: Sometimes that might be a failure to accurately ascertain a relationship where the deceased dies without a Will. Bankruptcy of a beneficiary can also be problematic. I recently assisted with a sad case in which a distribution had been made to a thoroughly respectable nephew who had been made bankrupt, and had not notified the executor. The Trustee in Bankruptcy was entitled to the nephew’s inheritance and the executors were at risk for the shortfall and the Court costs

Gill: What about straightforward cases?

Mark: Most of the cases that we have already discussed appeared straightforward, but problems arose as the estates were being administered. Even where problems do not arise, executors often miss the opportunity to make tax savings if they do not take proper advice.

What I find most appeals to an executor is to be able decide, on an informed basis, what level of work they are comfortable with doing themselves. We can help with anything beyond this, and executors find that this is a burden lifted. The technical assistance helps too – to reassure and protect the executors and often to save tax for the benefit of all. We are happy to help with as much or as little as you wish.

There are cases where an executor might just need help to get a Grant of Representation and we have an excellent link http://www.morrlaw.com/Services-For-You/grant-of-probate-surrey.aspx


Gill: What about professional costs?

Mark: An estimate can be given following an initial discussion. Solicitors’ costs are subject to professional regulation. An advantage in employing Morrisons is that (unlike banks and many other firms) we do not make a charge based on the value of an estate. Often the costs can be offset by tax savings, but even where they are not, the gain is certainly in the reassurance, protection and general help that we offer.

For more information please contact Mark Walker on 01483 215011 or mark.walker@morrlaw.com