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An open invitation to Executives, Human Resource professionals and other interested parties to learn more from the Thames Valley experts on Executive Remuneration. This is a joint event held by Grant Thornton LLP and Pitmans LLP. Read the rest of this entry »

Award winning law firm Pitmans LLP has acted on behalf of Kinetic Facilities Limited, part of the Panalux Group, in its acquisition of the Direct Lighting business from Metro Imaging Limited for an undisclosed consideration.  The transaction was led by Pitmans Corporate Partner, Stephanie Perry.

Panalux offers the world of film and television production the very best in lighting rental Equipment and facilities.  With bases located throughout the United Kingdom, this vast production resource is home to a huge inventory of modern equipment maintained by a team of highly skilled, experienced professionals.

A small selection of their portfolio of credits include: X-Men: First Class; Clash of the Titans 1 & 2; Pirates of the Caribbean; Quantum of Solace; Harry Potter Series; Dr Who; Casualty; Holby City.

Commenting on the transaction, Steve Smith, Managing Director of Panalux Worldwide said: “We are immensely proud to have worked alongside Pitmans in order to extend our presence in the photographic market through the acquisition of the UK’s largest photographic rental facility, Direct Lighting, and the subsequent inception of our new brand, Direct Photographic. I have no doubt that we will continue to obtain Pitmans invaluable assistance as we develop and expand all our operations both in the United Kingdom and overseas”.

Stephanie Perry, Pitmans Corporate Partner added: “The Kinetic team are long-standing clients of the firm and we were delighted to help them with this “bolt on” acquisition which will enable the business to expand further”.

Created by Panalux, Kinetic Facilities Limited provides a flexible, competitive service combining an extensive range of cameras, lights and expendables with the support of experienced, friendly staff.

Direct Lighting has a long history of hiring lighting equipment for a range of productions.  Contracts comprise television commercials, broadcast television and feature films, with a small selection including: Prime Suspect 6: The Last Witness; The Inbetweeners; Auf Wiedersehen Pet: Series 4 & Christmas Special; and Two Pints of Lager and a Packet of Crisps. Direct Lighting is a patron sponsor of the British Society of Cinematographers, and an approved lighting contractor to both the BBC and ITV.

Award winning law firm Pitmans LLP has acted on behalf of John Wright and Barbara Wood, the sellers of Thames Travel Limited, a local bus company based in Wallingford, Oxfordshire. The company has been purchased by Go-Ahead plc, one of the UK’s biggest providers of rail and bus services, for an undisclosed consideration. The transaction was led by Pitmans’ Corporate Partner, Philip Weaver, and Corporate solicitor, Carolyn Butler.

Commenting on the transaction, John Wright said “We are very pleased to been able to place the business with one of the UK’s leading public transport operators so that the business can continue to grow and prosper into the future. We would like to thank Philip Weaver and his team for successfully guiding us through a very exacting ‘due diligence’ and would recommend Pitmans to anyone considering a business sale.”

Philip Weaver, Pitmans’ Corporate Partner said: “It was a great pleasure to achieve a successful outcome for John Wright and Barbara Wood. The sale was completed in a short timescale thanks, in part, to my clients’ speed of response when under significant due diligence pressure from Go-Ahead and the demands of continuing to run the business.”

David Brown, Deputy Chief Executive, of Go-Ahead said: “Thames Travel is a strong business with a proud tradition of providing high quality services to the local community. We are delighted that the company will be joining the Go-Ahead family. With the resources of Go-Ahead behind Thames Travel, the business will be in a stronger position to grow over the years ahead.”

In line with Go-Ahead’s devolved business strategy, the company will continue to be run and managed locally. The bus fleet will retain its existing livery and branding and the existing fare structure will remain.

Facebook’s recent, silent UK roll-out of its auto-tagging functionality, which prompts users to tag facial-recognition links of friends, has given further cause for concern over privacy in relation to social network sites (“SNSs”). Philip James, Partner, and Carolyn Butler, Solicitor, at Pitmans LLP examine how the existing regulatory framework and technology needs to adapt and evolve to protect users’ identities online more effectively.

Tagging and Privacy

“I never forget a name or a face, but sometimes have difficulty correlating the two.”
Anon

Recently, the media’s attention has focused on the rights of individuals to control the use of their facial image online. In particular, Facebook’s largely unannounced launch of its auto-tagging functionality in the EU in June, which followed its official launch in the US in December last year, has caught the attention of the European Commission, as well as local regulators.

Facebook has featured ‘tagging’ on its photo-sharing facility for some time now. This is a feature that allows an individual in a photo to be identified by a ‘tag’ that contains personal information such as the individual’s name and a link to his or her profile on the relevant SNSs. For the benefit of anyone viewing the photo, the tag identifies the individual depicted from other people of the same name using that SNS. For the individual that has been tagged, he or she is alerted as part of the tagging process that a photo featuring them has been uploaded (and, significantly, only after they have been tagged are they notified and presented with an opportunity to remove the tag).

The process of tagging individuals in a series of photographs was previously a relatively manual exercise. Now, following the trend evident in Google’s Picasa image-organising suite and Face.com’s Photo Finder and Photo Tagger apps, Facebook’s auto-tagging function uses facial-recognition technology to streamline the tagging process. Facial-recognition software works as follows:

• it analyses a digital image for the distinguishable landmarks that make up facial features;

• it then converts the data derived from those landmarks into a numerical code called a ‘faceprint’;

• the faceprint acts like a digital ‘fingerprint’ which is then compared against other faceprints on a particular database to find a match; and

• since Facebook already has a vast database of tagged images at its disposal, its software identifies a person’s face in photos by analysing and comparing the new image against other images where that person has previously been tagged.

Given a faceprint’s similarity to a fingerprint, there is significant concern as to how tagging, and auto-tagging, in particular, compromises privacy. This concern derives from the lack of the requisite prior consent from the data subject to this type of tagging. This also raises the issue of whether a more stringent level of consent should be required for facial recognition tagging (and whether this should be considered to be sensitive personal data, in the same way as possibly location data should also be).

On Facebook, the consent is not sought before a tag is placed on a photo – they are only notified once they have been tagged. Even though, under Facebook’s terms of use, users are required to seek consent from those individuals before tagging them, this requirement is not brought to the users’ attention during the tagging process and undoubtedly, that requirement is not observed by users in practice. Gerard Lommel, of the Article 29 Data Protection Working Party, agrees that “tags of people on pictures should only happen based on people’s prior consent”. Nevertheless, consent is not automatically sought as part of the tagging mechanism, a fact that had not attracted much attention, let alone widespread criticism, until auto-tagging recently forced the issue into the limelight.

Under the current law, personal data is defined as:

“data relating to a living individual who can be identified from it, or from the data and other information which is in the possession of (or is likely to come into the possession of) the data controller”

Personal data must be lawfully processed, not kept longer than is necessary and, unless certain other exempting criteria apply, the data subject must give his or her unambiguous consent to processing. There is some debate as to whether SNSs can be properly characterised as “data controllers”, but the opinion of the Article 29 Working Party is that they are (see also recent opinions issued by the Canadian privacy regulator which is often seen as a trailblazer in relation to social-networking regulation).

Facebook would be well advised to review the ways in which it should obtain the requisite consents to process personal data in the content of its auto-tagging facial technology. In so doing, specific and informed consent will need to cover:

• Firstly, the actual processing of users’ faces to create the faceprint and name suggestion (‘faceprint name’) (undoubtedly, having their ID facially recognised was not in the contemplation of data subjects at the time of accepting Facebook’s terms of use); and

• Secondly, the act of tagging itself, once another user has confirmed the suggested faceprint name.

It will come as no surprise that all Facebook privacy settings are switched off by default (therefore opting users in to the technology). Once users have discovered the auto-tagging function existed, it is up to them to opt out of auto-tagging by amending their privacy settings. For many users, the procedure to engage privacy screening is too complicated for them to navigate successfully. Often, users do not realise that they need to amend their settings themselves. Since the activation of auto-tagging was not announced, users were not even aware of the need to adjust their privacy settings before (and not until some time after) the function was activated. This raises the question of what privacy notices users should be required to review before they sign up, as well as at the time any new feature is introduced. Requiring users to review and confirm their settings on their privacy dashboard at both points would greatly assist SNSs satisfy compliance requirements.

In a wider context, facial-recognition software used in other technological applications, such as in the analysis of CCTV footage, is fuelling civil liberties concerns and has prompted parliament to introduce further regulatory provisions. While the Information Commissioner already has a code of practice for monitoring CCTV images that covers the whole UK (including the public and private sectors), its enforcement powers have never been used . The Protection of Civil Liberties Bill, which is currently before the House of Commons, introduces measures such as a new body to regulate CCTV, a code of practice for surveillance camera systems (including facial and ‘gait’ (i.e. a persons way of walking) recognition systems), and provides for judicial approval of certain surveillance activities by local authorities.

EU Policy

The European Commission observed in its strategic communication on A comprehensive approach on personal data protection in the European Union, issued in November last year, that “social networking… presents significant challenges to the individual’s effective control over his/her personal data”. Vivian Reding, the Vice-President of the European Commission EU Justice Commissioner, agrees. In March she spoke to the European Parliament about how the modernisation of the existing legal framework will enshrine “four pillars” of online data protection for individuals. In relation to social-networking sites, individuals should enjoy:

• A right to be forgotten, where individuals have shall have the right to withdraw their consent to data processing, and have their personal data deleted from servers;

• Transparency, where users of social networking are properly informed of the restrictions over their control of their own private data or that their data may be made irretrievably public;

• Privacy by default, since privacy settings often require considerable operational effort in order to be put in place and therefore such settings are not a reliable indication of users’ consent; and

• Protection regardless of data location, where domestic privacy regulators shall be endowed with powers to investigate and engage in legal proceedings against non-EU data controllers whose services target consumers in the EU.

It is clear from this missive that the European Commission has SNSs including other location-based services firmly in its sights. Reding’s four pillars will encourage SNSs to lead by example to inculcate a culture of privacy.

The Article 29 Working Party has argued for data controllers to demonstrate greater accountability in, for example, producing and enforcing data protection compliance programmes. However, supplemental to that objective is the need for users to be better educated about the intrinsic risks and responsibilities in uploading their own and their friends’ personal data to SNSs. Whilst it is not suggested that the “household exemption” is removed and direct enforcement action is taken against individuals, regulators may consider that placing a duty on SNSs to ensure that users comply with data privacy laws is the only means of effectively protecting the public from their own worst enemy: themselves.

Right to be forgotten
Even where consent is given, data subjects will shortly have a legal right to withdraw their consent and request the deletion of content: a “right to be forgotten”. Implicitly, this applies to all online data concerning an individual, whether they uploaded it themselves or otherwise. Again, SNSs will need to consider how the developing EU policy, which will shortly become legislation, may affect the existing and future processes programmed into their products. Examples of this may include:

• introducing functionality that allows user generated content to ‘fade’ (or automatically be suppressed) after a defined period (cf. the time limits search engines employ);

• in addition to making it simpler for users to delete their profile, allowing users an ability to remove all tags (simple or faceprints) which reference their name (by means of identifying a UID which links any tags to their profile);

• encouraging third-party developers to produce Privacy Enhancing Technology (PETs) in the form of applications which users can add to their profile to give them greater control over the use of their ID, and to scour for and remove any unwanted tags, or provide users with customised privacy dashboards to allow greater control over their data.

By the same measure, the European Commission needs to be realistic and alive to the practical dynamics of SNSs in developing policy. While SNSs can remove content if notified to do so, they have little control over the content being uploaded by users, and the possibilities that content holds for infringing the rights of other users. The elements that SNSs can control, and which should therefore be targeted by the Commission, are the technical mechanics used to upload and protect personal data.

Poacher turned Gamekeeper
While certain applications have the potential to undermine privacy, the same tools can be harnessed to protect it. Although PETs are not new, consumers that may be alarmed by the ways in which their privacy may be compromised are driving the demand for technological solutions.

For example, Face.com’s Photo Finder already allows users to apply face-recognition software to Facebook searches to find photos of themselves or their friends that have not yet been tagged. This application could allow individuals to regain control of their own personal data by identifying unknown sources of personal data in order to arrange its deletion.

Google has to date resisted temptation to combine its Picasa face-recognition software with its popular Google Image Search, saying that such an innovative step would be “creepy”.

In any event, any organisation seeking to employ facial recognition technology should carry out a PIA (or privacy impact assessment) and ensure its technology has been devised using the concept of Privacy by Design (PbD). It would be an interesting exercise to audit what steps and precautions those who are currently employing such technologies have taken to measure the potential effect its use may have on people’s privacy. In the vein of ‘Jack Bauer and 24’: “we’re watching you”.

This article was published in the June 2011 issue of Data Protection Law & Policy and has kindly been reproduced with the consent of the publisher.

For further information regarding Pitmans Intellectual Property legal services, please contact:

Philip James
Partner, Intellectual Property
+44 (0)207 634 4655
pjames@pitmans.com

Carolyn Butler
Solicitor, Corporate
+44 (0)118 957 0234
cbutler@pitmans.com

For further information, please see “The Information Commissioner’s response to the Home Office Consultation on a code of practice relating to surveillance cameras” and “The Information Commissioner’s evidence to The Public Bill Committee on the Protection of Freedoms Bill”, both dated 24 May 2011 and available from the ICO’s website

The past few months have seen a number of cyber attacks in the headlines, including (and by no means limited to):

• an attack on the International Monetary Fund (which installed software designed to give a nation state a “digital insider presence”);
• Citigroup Inc was assailed by hackers using a customer-facing website to bypass conventional safeguards and steal the account details of more than 200,000 customers;
• Google was targeted by hackers attempting to break into the personal Gmail accounts of hundreds of top US officials, military personnel and journalists last month;
• an attempted attack on the security networks of US military contractor Lockheed Martin;
• in April, the Sony Playstation network was disabled after hackers stole the personal data of around 100 million accounts; and
• an attack in March on the e-mail systems of the European Commission, which followed the hacking in January of the EU Emissions Trading Scheme resulting in the theft of €30 million of carbon allowances from national registries.

In response to the recent spate of attacks, governments around the world have voiced proposals to enhance cyber security for their own systems as part of their national defence strategies, and to introduce legislation to protect the systems of others.

Direct government action
As part of its strategic defence and security review, the UK government has set aside a fund of £650 million to improve cyber security. Part of this fund is being used by the Ministry of Defence to recruit cyber experts to reduce the UK’s vulnerability to cyber attacks and espionage, as well as to bolster the UK’s critical infrastructure and vital government networks.

In addition, the UK military is developing a toolbox of “cyberweapons” to be used offensively in response to cyber attacks or threats, although the nature of the weapons under development can not be disclosed at present.

The European Commission is also currently setting up a Computer Emergency Response Team (CERT) of IT security experts to review the Commission’s systems and assess how a full-scale CERT should be set up for European Union institutions.

Legislation in the pipeline
Last September, the European Commission put forward a proposal for a Directive on Attacks against Information Systems. The draft legislation (i) lists crimes such as illegal access to, or unauthorised interference with, IT systems, the theft or deletion of data and the interception of non-public data transfers and (ii) introduces longer criminal sanctions for transgressors. The UK took the decision to opt into the directive in February this year.

This month, the UK also ratified the Budapest Convention on Cybercrime, which it signed in 2001. The international treaty seeks to harmonise national laws, improve investigative techniques and increase cooperation among signatory countries on issues such as hacking, online fraud and infringement of intellectual property rights, and will come into force in the UK on 1 September 2011.

Responses worldwide
In the US, meanwhile, the Pentagon is expected to release the unclassified sections of its first formal cyber strategy next month. As widely reported in the press, the Pentagon has taken the view that a cyber attack originating from another country could constitute a use of force synonymous with an act of war, permitting the US to respond with military force. The strategy’s object therefore, at least in part, is to act as a warning to potential saboteurs.

Similarly, the Australian government announced last week that it will begin work on a major new whitepaper to provide clarity on cyber security issues, which is expected in the first half of 2012.

Opportunities for the cyber security sector
What is increasingly evident is that there are numerous opportunities for technology companies to cater to the mounting need for cyber security, and for individuals to do well in this burgeoning industry.

To encourage more people to consider entering the cyber security profession, the Cyber Security Challenge 2011, a competition sponsored by the Cabinet Office, The Open University and numerous industry leaders, was launched last month. Prizes include bursaries to undertake university courses, internships and access to professional expertise in the cyber security sector.

Legal advisors to the defence industry need to get to grips with the cross-departmental nature of the challenge, as well as the variety of tactics used by cyber—criminals.

If you would like further information on the above article, please contact Carolyn Butler or Rustam Roy.

It is a common myth that, once a couple obtain a Decree Absolute of divorce, this dismisses their financial claims against each other. While this would be correct if the parties had entered into a Consent Order to reflect the financial agreement they had reached upon divorce, or if the Court has made an Order after a Final Hearing, it is far from being a universal rule.

In the current economic climate, many people will be keen to end their marriage by what they term an “amicable divorce” when they agree how they will divide the matrimonial assets and thereafter agree that they will not make any claims against the other. In many such cases the parties do not feel the need to involve solicitors and will happily act in person in respect of the divorce and obtain the Decree Absolute, thinking that because this ends their marriage it must also end all claims against the other in respect of the marriage. This is not however the case as, if the parties do not have a suitably worded Court Order, their respective claims against the other will remain open even after the Decree Absolute, up until the point that such an Order is made.

Consequently if one party’s financial situation improves dramatically and the other party’s financial situation deteriorates after the Decree Absolute, then the party in the weaker position could apply to the Court for a financial remedy. This could be any Order available to them under the Matrimonial Causes Act 1973, including for a lump sum, property adjustment, maintenance or pension sharing. Even without a material change in circumstances, such applications can arise where one party is influenced by an unscrupulous third party or a new partner.

An amicable split is, of course, a sensible objective for both sides to have. Indeed, the field of Collaborative Law is based on that very principle. But it is in neither party’s interests to store up disputes for a later date. In an amicable divorce the way to avoid such a risk is to enter into a properly drafted Consent Order. This is a document which contains the appropriate terms and which both parties sign, agreeing that those terms are acceptable. It will also include clauses to dismiss any future claims that either party may have over the other under the applicable Matrimonial and Inheritance legislation, therefore giving a clean break if that is what the parties want to achieve. Once the Consent Order is agreed and signed by both parties, and the Decree Nisi has been pronounced, it is sent to the Court where a District Judge will approve the agreement and seal the document. It will then become an Order of the Court and if either party breaches that Order then the matter can be brought back before the Court to enforce the Order’s terms.

If the divorce is not an amicable one and no agreement can be reached, then an application would need to be made to the Court for a financial remedy. This will ultimately produce an Order whether made by consent at the door of the Court, or imposed by a Judge after hearing the case, but it is a process which is likely to be both more costly and more acrimonious than the amicable route.

Whether arrived at amicably or not, though, certainty (in the form of a final Order) is essential to protect a divorcing parties’ respective future interests, particularly if they intend to re-marry or if their financial situation could change significantly to their benefit.

If you would like to know more information about this article, then please contact either Marian Lynch or Owen Reynolds of our matrimonial team.

The Office of Tax Simplification (‘OTS’ established on 20 July 2010 to advise the Chancellor on delivering a simpler tax system) has on its “to do list” a review of Agricultural Property Relief (‘APR’). With this in mind and the prospect that “simplification” might not be to the advantage of parties relying on APR under the current regime, perhaps now is a good time for farming folk to sow their seeds for succession planning.

Uniquely, in farming (unlike even other owner-managed businesses) both the land and the buildings are the source of the business profits, while at the same time they may also be the home of the farmer and his family. In many cases the land and buildings will have been in the family for generations. The tax system (as it stands) admits succession by the next generation by offering relief from inheritance tax in the form of APR on the agricultural value of the land and buildings. Typically this will include the farmhouse and in some circumstances the value of any other dwellings occupied by family members who are employed in agricultural. Private Client lawyers and Tax Practitioners increasing need to turn to APR to try to protect large agricultural values from inheritance tax (‘IHT’).

In contrast with Business Property Relief, where “mere assets” are excluded from consideration, APR is principally assessed on the value of “mere assets” in particular categories as follows:-

• Agricultural land or pasture;
• Woodland occupied with agricultural land or pasture; where occupation is ancillary,
• Buildings used for intensive stock or fish rearing; where occupied with agricultural land or pasture and occupation is ancillary.
• Some Farm cottages or buildings and their land; of a character appropriate to farm buildings and their land of a character appropriate,
• Some farmhouses and their land of a character appropriate, stud farms or land in habitat schemes; and
• a “look through” provision to the assets of farming companies.

With the exception of a heritage house open to the public there is virtually no other form of residence that can escape a charge to IHT making it very popular for taxpayers to claim that their residence should be treated as a farmhouse. In some of the instances outlined above, however, APR will only be attracted where the occupation of the land or buildings is ancillary to a farming purpose. Activities which are not farming include;

• the letting of cottages,
• the letting of farm buildings;
• equine activities other than the breeding of horses;
• market gardening and growing Christmas trees and commercial woodland (where that is the main activity undertaken);

It should also be borne in mind that letting the land associated with a farmhouse on a Farm Business Tenancy (‘FBT’) will be fatal for any claim for APR as the occupant of the house is no longer the occupier of the land. Issues can also arise where the land is no longer occupied “for the purposes of agriculture”.

Under s.117 of the Inheritance Tax Act 1998 (‘IHTA’) the conditions for APR have to be satisfied continuously for either a two year period (farming by the farmer) or a seven year period (land continuously owned by the farmer but let throughout the previous 7 years and occupied for the purposes of agriculture) prior to the relevant date which is either to be the date of death or a gift. If the conditions are not satisfied in that period then relief will be wholly denied, there are no provisions for apportionment.
 
The danger is that although nothing in the legislation as such requires a farming operation to be profitable (which is just as well in the present economic climate) difficulties do arise for a farmer who may at points during those time periods have relied as a sole source of income on an entitlement to Single Farm Payment. There are particular difficulties where, in reliance on that scheme, the farmer has sold all farm machinery and other equipment. In such a situation farm buildings may have become redundant and as a result they will lose APR being no longer “occupied” for the purposes of agriculture.

Illness or disability also present particular dangers. Where the occupant of the farmhouse has to be taken into hospital care; APR will be denied if the property is let to help fund care costs.  Relief on the other hand should be guaranteed if the absence is for less than two years, the house is kept ready for the expected return of the occupant, and the house continues to function as a farmhouse.  HMRC continue to argue that no relief will be due if there is no “realistic” prospect of a return.  In case where there has been an inability to farm through illness for the two years prior to the assessment date, APR has been denied.

Diversification might seem to be the solution to economic difficulties for many farmers, but there are pitfalls that will lead to the loss of APR. Such pitfalls include permitting the grazing of pasture predominantly by recreational horses, which does not qualify as an agricultural occupation. Allowing buildings to be used for housing recreational horses will debar relief in the same way as the pasture. As referred to above, separating the ownership of buildings from the ownership of land that historically the buildings have been occupied with will lead to loss of relief. Buildings that are not used for any purposes are therefore not occupied for the purposes of agriculture as required by Section 117, such as old barns, watermills, granaries, dairy buildings and any buildings that have no other recognisable use. All these will all lose APR.

The only obvious solution for the farmer if APR is not to be lost is to find a new agricultural use. However Business Property Relief (‘BPR’) and prenuptial agreements may offer slightly less obvious alternative solutions. 

In that context it is worth remembering that APR only applies to the agricultural value of agricultural property. Section 115(3) of the ITA (1984) states in relation to agricultural value that “the agricultural property should be taken to be the value which would be the value of the property if the property was subject to a perpetual covenant prohibiting its use otherwise than as agricultural property”. This is likely to be lower than its open market value, except where that presumption is borne out in an Agricultural Tie condition in the planning permission for more recent farmhouse development.
 
The value in excess of agricultural worth may qualify for BPR.  Therefore it ought to be considered that every claim for APR should have a supporting claim of BPR to prevent a tax on areas of mixed estate that do not qualify for APR. Should APR disappear or be simplified this protection should be considered in advance of any change as a result of the review by the Office of Tax Simplification. Careful and considered estate planning should be at the forefront of every farmer’s mind.

Recent progress in relation to the endorsement of pre-nuptial agreements (discussed here in an article by Marian Lynch of our matrimonial team) may also offer opportunities to think laterally about succession issues. A fear of farming land falling victim to subsequent divorce has historically operated as a barrier to the early settlement of land onto succeeding generations (something which can avoid IHT liability altogether if done correctly and at least seven years prior to death), but a suitably drafted pre-nuptial agreement might perhaps in assuage that fear and encourage more farmers to take stock now rather than waiting to close the barn door after the horse has bolted!

If you would like any more information about the topics covered by this article, then please contact Sheilagh Magee of our private tax and family business team.

You might think that if someone made a Will, and expressed in clear terms what they wanted to be done with their estate, that their decision would be treated as final (provided that it was arrived at without undue influence, and with a sound mind). There have been a couple of recent cases which have served to underline that matters are not always that simple, however, particularly when the effect of the Will is not what was expected by the beneficiaries of the person making it.

… there’s a disappointed daughter

One method of challenging the dispositions made under a Will is an application under the Inheritance (Provision for Family and Dependants) Act 1975. A person who qualifies (by being a family member or a dependant as defined in the Act) may apply for a court order which modifies the provisions of the Will (or the statutory Will created on an intestacy) where that Will did not make “reasonable financial provision” for the person applying.

This was the situation in the case of Ilott v Mitson and others reported recently. The deceased had left almost all of her £486,000 net estate to various charities established for the protection of birds and animals. The reasons for the selection of these charities were unclear. As the Judge records in his judgment “there is no evidence that the deceased … had any particular love of, or interest in, either animals or birds”. She left one daughter, who was married with five children and who was living in “modest circumstances”. It may be that they simply had the virtue of being a repository of her estate, to avoid it passing to her daughter (who made the application).

When an application is made under the Act, the Court must take into account a variety of factors in deciding whether the applicant’s circumstances mean that the provision made (if any) under the Will is reasonable or unreasonable. On the daughter’s application, the Court ordered a payment of £50,000 to be made out of the estate for the daughter’s benefit. The decision took account of the fact that the split between mother and daughter had arisen because the daughter had chosen to marry and move away from her mother, against her mother’s wishes (something which the Court felt a daughter should be entitled to choose to do without penalty), but also of the daughter’s means and circumstances.

The daughter challenged the amount of the award on appeal, and the charities also appealed to object to any provision being made at all. This was on the basis that the mother was entitled to have taken the view that she did not want to benefit her daughter and that the Court had been in error to look behind it. The Court of Appeal rejected that argument and reinstated the award, leaving it open to the daughter to challenge the amount at a separate hearing if she wished.

This decision is reflective of a line of recent cases, all of which have reinforced the impression that the Courts will not be slow to substitute their judgment for that of the person making the Will, where the provisions of that Will do not seem to the Court to be reasonable. As such it is a development which is only likely to lead to an increasing number of such disputes, and uncertainty for any executor trying to give effect to the wishes of the person who made the Will.

… there’s a frustrated farmer

In Suggitt v Suggitt and others, there was again a disappointed beneficiary who had been left less under his father’s will than he had expected. This was a case relating to farming land and various properties, with a total value at probate of a little over £4 million. The disappointed beneficiary in question was the son of the deceased, who had throughout his life worked to a greater or lesser extent on the farm, and who said that he had expected the property to be left to him on his father’s death. Instead, the father left the estate to one of his three daughters subject to an expression of wishes (which was therefore not enforceable by the son) that if in the daughter’s opinion the son showed himself capable of working on and managing the farm, the daughter should transfer the farmland to him.

The son made an application to have the farmland transferred to him under the principle of “proprietary estoppel”. To prove an estoppel, the applicant must show that there was a promise of land, that the applicant relied on that promise, and that as a result of relying on that promise, the applicant had suffered some prejudice or detriment.

The son’s evidence was that on a number of occasions statements had been made to him suggesting that the farmland would be his after his father’s death. The Judge concluded that while the father may have hoped that his son would one day farm the land, he was consistently disappointed in his son as a farmer, and that the Will therefore accurately reflected the father’s wishes. Nevertheless, the Judge also explained that it was irrelevant (for the purposes of the proprietary estoppel application) what the father’s state of mind was. The relevant question was whether or not the son believed that the land was promised to him, and the Judge concluded that the son had genuinely believed this, based on what he had been told. He also found that the son had worked on the father’s land without pay in expectation that he would one day inherit, and that while his father had supported him while he was living on the farm, he did not receive in kind as much as he might have received in pay as an agricultural labourer.

On that basis the Court awarded the son the farming land and one of the farm houses to live in with his family, leaving the balance of the estate with his sister. A number of issues were left unresolved and the Judge gave strong indications that he would expect the family to co-operate in order to resolve these.

… there’s a need to negotiate

Both cases were marked by this characteristic, that the Judges in each instance felt that it was a shame that the parties could not have worked together to seek to find a resolution which did not involve the cost, delay and undoubted stress and anxiety that formal Court proceedings involved. In the Suggitt case the Judge remarked that “One of the unfortunate features of this case has been the inability of the parties to compromise an obviously compromisable case”. In Ilott v Mitson while (as explained above) the Court of Appeal left open the possibility of a further challenge to the level of the award made to the daughter, the President of the Court went on to say that he urged “the parties to consider carefully whether a further hearing is in anyone’s interests. No doubt substantial additional costs will be incurred, and compromise, now that the appellant has won her major point, must be in the interests of everyone.”

Anyone who has been involved in such disputes will know that compromise may sometimes be (or certainly feel) impossible to achieve. But these cases do act as a warning to any litigant thinking that their interpretation of the terms of a Will, and their expectation of entitlement under it, is bound to be upheld by the Court.

If you want any more information about the topics covered by this article, then please contact Will Richmond-Coggan of our contentious trust and probate team.

“Pitmans Pirates” powered their way into the finals of the Pangbourne Dragon Boat Race on Saturday 11th June 2011, raising over £1000 for their chosen charity, The Duchess of Kent House Hospice.

The sun shone and a large crowd of Pitmans supporters descended upon Pangbourne to fly the Pitmans flag and to watch 14 teams battle it out for the title. Pitmans were just pipped to the final post by Foster Wheeler in what was a very close finish. The Pitmans pitch was well positioned close to all the action, with queues forming for Pimm’s and homemade cakes baked by our dedicated staff.

Managing Partner and “Pitmans Pirates” Captain Christopher Avery commented: “It was an incredibly uplifting experience, and the “Pitmans Pirates” – from paralegals to partners, all pulled together on the day, to achieve a fantastic result for the Duchess of Kent House Hospice.”

Europeans are set to enjoy significant new rights under EU telecoms rules [1] (Rules) which are currently before Parliament as part of related revisions to the Communications Act 2003.

The main features of the new Rules are:

1. Easier and fairer access to telecoms services for customers

• The right to complete a switch of service providers in one working day
Currently it takes on average four days to switch mobile network operators and seven days to switch fixed line operators while keeping the same phone number. Under the Rules, customers would have the right to complete a change of service providers in one working day while keeping the same number.

• 24 month maximum initial contract length
In order to enable service users to take advantage of more attractive offers, the Rules suggest that the maximum initial duration of a contract is no longer than twenty four months and, if the customer so desires, twelve months’

• Greater transparency of service features
Under the Rules, operators must ensure that customers are informed about the precise nature of the service to which they are subscribing. In particular, operators must give comprehensive and accurate information to customers before a contract is formed about the communications services the customer is intending to purchase (e.g. minimum service quality levels).

• Net neutrality
The Rules give national telecoms authorities the power to set minimum quality levels for network transmission services so as to promote the principle of “net neutrality”, which gives internet users the ability “to access and distribute information or run applications and services of their choice” without restrictions by internet service providers or governments related to choice of networks or service providers.

2. Better Privacy Protection for Internet Users

• The Rules will require operators to secure personal data (as that term is defined in the 1998 Data Protection Act) and to inform their customers and data protection authorities promptly when personal data is lost.

• In line with recent developments in European privacy law, the Rules mandate that websites will be forced to obtain users’ consent in order to store cookies. Browser settings giving individuals more control over cookies is a possible solution to the problem.

3. More consistent regulation to promote competition and consumer choice

• Greater independence for national telecoms regulators
The Rules reinforce the independence of national regulatory authorities by outlawing political interference in their day-to-day duties and by protecting the heads of national regulators against arbitrary dismissal. In the UK this will result in the Office of Communications (OFCOM) receiving greater powers. The Rules also require Member States to ensure that national telecoms regulators have appropriate human and financial resources (including their own bespoke budget) to enable regulators to perform their functions effectively.

• Functional Separation
In essence, functional separation entails the separation of the wholesale and retail divisions of an incumbent or dominant operator, to ensure that third parties buying wholesale services from this operator can do so at the same price and service levels as the operator offers to its own retail division. Functional separation provides regulators with the ability to overcome competition problems without involving ownership separation or the creation of a separate company. Under the Rules, regulators should only consider functional separation as a last resort when it can be established that other measures have failed.

• As of 25 May 2011, the European Commission has increased powers to oversee the details of remedies proposed by national telecoms regulators to address problems relating to, for example, the conditions of access to the network of a dominant operator or fixed or mobile termination rates.

The aim of these regulatory changes is to create a fair and competitive single EU telecoms market for customers and service providers whilst providing telecoms operators with the regulatory certainty they need to confidently operate EU-wide.

Neelie Kroes, Vice President of the European Commission for the Digital Agenda said: “Citizens and businesses should take full advantage of the opportunities these Rules give them to get more competitive telecoms services I will do my utmost to help them to do so. If these rights are not made available in practice, I will take the measures necessary to fix that situation vis-à-vis Member States and telecoms operators”.

The European Commission has stated that reinforcing the single market for telecoms services is a key objective of the Digital Agenda for Europe [2] and will consider launching infringement proceedings against Member States which have not implemented the new Rules in time.

Mark Metcalfe
Tel: +44 (0) 118 957 0266
mmetcalfe@pitmans.com

Rustam Roy
Tel: +44 (0) 118 957 0180
rroy@pitmans.com

References

1. Directives 2009/140/EC and 2009/136/EC entered into force on 25th May 2011, amending five current Directives (known as the Framework Directive, Access Directive, Authorisation Directive, Universal Service Directive and the e-Privacy Directive).

2. http://ec.europa.eu/information_society/digital-agenda/index_en.htm