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Is your pension available to creditors?

The English High Court has ruled that a trustee in bankruptcy should not be permitted to have access to a bankrupt person’s pension scheme savings to discharge debts before the pension becomes payable.The Court has ruled that the Insolvency Act 1986 does not give the Court the ability to issue an “Income Protection Order” (“IPO”) against a pension for which payments had not yet begun. This ruling was out of line with an earlier decision, so the issue may not be regarded as settlement until it is considered by the Court of Appeal.Pension providers will most likely believe the decision was the correct one to make in the circumstances. The general effect of the legislation is to protect pension money from a trustee in bankruptcy unless the person has already started to receive payments under his or her pension. A 2012 case indicated that a Court could compel a bankrupt member of a pension scheme to exercise an option to begin to be paid a pension not yet accessed. There has been a certain amount of disapproval of this earlier decision.It is commonplace for savers to have the right to take some benefits from age 55. As a consequence, the trustee in bankruptcy may, potentially, have access to this money. Further, from April this year, scheme participants will have significantly greater freedom to “cash out” their pension.Under the relevant provision of the legislation, a trustee in bankruptcy may apply to the Court for an IPO to receive income from the bankrupt’s estate for a particular period of time. A Court may make an IPO in respect of any income a bankrupt is entitled to receive, including pension payments.In the case at hand, the trustee had applied to the Court for an IPO against various pension policies held by the bankrupt. None of them were payable. One had a large sum of money.In its decision the Court noted that before the earlier decision, HMRC and other government bodies treated pensions that were in payment, and those that were not yet in payment, differently. He attributed this to the fact that once a pension is in payment, the sums payable will be known, whereas before a pension is in payment, the sums to be paid are uncertain. It also can involve a number of elections on the part of the pension holder.The Court stated:Mr Henry is not entitled to payment under his pensions 'merely by asking for payment'. There is a considerable variety of options open to him. It would only be after he had made elections that any payment would be due to him. Only then would he become entitled to any payment. I do not consider that there is any power in the court under section 310 or in the trustee to require Mr Henry to elect in any particular way.In effect then, the bankrupt’s pension was not “brought forward” to make it available to creditors. Until the Court of Appeal determines the issue, there will be uncertainty about whether this reflects the correct position at law. Mr. San This email address is being protected from spambots. You need JavaScript enabled to view it.
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Be careful what you wish for: statutory inheritance claims

In 2001, Patricia Wright wrote a letter to her mother, Mary Waters. In the letter, Ms Wright stated that she did not want to stay in touch, and that she wished her mother were dead. Ms Wright did not make any attempts to repair the relationship, and the pair had no contact before Ms Waters died.Ms Waters did not leave anything to Ms Wright under her will. After Ms Waters’ death, Ms Wright applied to the Court for relief under the Inheritance (Provision for Family and Dependants) Act 1975 (the “Act”) having been left out of the will.The Act provides a mechanism for a family member or a dependant to make a claim for "reasonable financial provision" from the deceased's estate. Where the application is made by the offspring of the deceased, this means financial provision for the person’s maintenance. The Act permits the court to take into account a range of considerations when determining whether "reasonable financial provision" was made under the will, and then to balance these various considerations. When performing this exercise, the Court is essentially applying its judgment in a discretionary way.Ms Wright was an adult claimant with a child and grandchildren. Even though it is the case that an adult claimant does not need to prove special circumstances or breach of a specific obligation by the deceased, generally speaking, the Court does not look favourably on financially independent adult offspring claimants. However, in this particular case Ms Wright was not financially independent. There was evidence she had various medical ailments including heart disease and depression, amongst other things. Usually this is the kind of thing that works in an applicant’s favour.In terms of exercising the discretion referred to earlier, the judge was entitled to consider Ms Wright’s conduct toward her mother. In particular, the Act required the judge hearing the case to take into account "any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant." This acts as a “catch all” provision which permits the Court to consider the conduct of the applicant.The judge put emphasis on the claimant’s conduct in writing the letter and stating that her mother was dead; a letter the Court described as extreme. In exercising its discretion the Court determined that this conduct outweighs the other considerations which worked in her favour: her ill-health, her financial circumstances and other factors.Accordingly, Ms Wright’s statutory claim failed: the Judge concluded that it was reasonable for Ms Waters to have excluded Ms Wright from her will.Anyone considering a statutory claim under the Act should speak with a solicitor, who can make a preliminary assessment of all relevant matters, including any aspect of the person’s conduct which might be relevant to the exercise of the Court’s discretion in deciding whether to grant relief. It should be noted that behaviour the Court construes negatively may have the effect of reducing the financial provision rather than removing it altogether.Mr. Richard This email address is being protected from spambots. You need JavaScript enabled to view it.
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Employer note: is being obese a disability? Sometimes, says European Court

The European Union Court of Justice has recently determined that, in certain circumstances, obesity may be regarded a disability in the employment context.The case in question concerned a Danish overweight childcare worker who instigated a discrimination claim against his employers following his dismissal. The claimant said he was dismissed because of his weight whereas the employer contended it was due to reduced demand for child care services.The Court ruled that discrimination on the basis of obesity, of itself, was not unlawful. However, where obesity leads to some other condition –depression for example – the employee’s obesity may fall within the concept of disability as the terms is understood in the relevant EU directive.So, where an individual’s obesity affects that person’s participation in working life by way of reduced mobility, for example, preventing that person from carrying out their duties or causing discomfort when engaging in work then the individual may be disabled person for the purposes of the EU directive. Arguably, the real issue is the way the obesity affects the person, rather the fact that the person is obese.This decision does not alter UK law in respect of the issue as to whether someone is disabled for the purposes of the Equality Act 2010, the relevant local legislation. To satisfy the requirements of disability discrimination legislation a person still needs to be able to prove that he or she has a physical or mental impairment which has a material adverse impact on his or her ability to perform their everyday duties and which is sufficiently long term (i.e., having lasted or likely to last at least twelve months). In essence, the European Court has determined that obesity itself is not a disability, but instead that its effects can result in a person being disabled for the purposes of the relevant disability discrimination laws. If a person’s obesity results in a specific adverse condition– such as, for example, a problem with mobility, or depression – then the Equality Act 2010 may be triggered, depending on the particular circumstances.In general terms, employers should appreciate that an employee’s obesity may result in the person being deemed to be disabled for the purposes of the Equality Act. This could enliven the duty to make “reasonable adjustments” for the employee. These could concern issues of access to the work place, seating and other logistical arrangements which relate to the discharge of the employee’s function.Whether the legislation applies in a particular situation will require careful scrutiny. However, as a matter of generality, it would pay for responsible managers of people to put this issue “on the radar”. Careful managers will think ahead about employees who might potentially attempt to claim they are disabled at some time in the future.If you have any questions about any of these issues, please contact Adams Law partner Antony Marquis at This email address is being protected from spambots. You need JavaScript enabled to view it..
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“Without Prejudice” - what does it mean?

To the observer, using the words “without prejudice” seems like a simple way to ensure that your letters or documents cannot later be used as evidence in court.  However, in the case of Avonwick Holdings Ltd v Webinvest Ltd, the Court concluded that marking a document “without prejudice” was not conclusive evidence of the parties’ intentions.  The most important consideration is whether the document is produced with the intention of settling a dispute.  Settling the terms upon which a party will pay an agreed liability is not “a dispute” and letters discussing such terms will not attract privilege.FactsAvonwick Holdings agreed to loan £100 million to Webinvest on terms that were recorded in a loan agreement in April 2010.  By April 2012, Webinvest was unable to make repayments on the loan and wrote to Avonwick seeking to alter the terms of the loan and repayments.  Avonwick was not prepared to agree to the terms that Webinvest suggested and served demands for the repayment of the outstanding monies.  Following discussions between the parties, Avonwick wrote to Webinvest with a draft agreement to restructure the debt.  The letter was headed “without prejudice and subject to contract”, as were several exchanges thereafter.  The Court was asked to consider whether these exchanges were genuinely “without prejudice” and therefore inadmissible in the main hearing of the dispute as to the terms of the loan.What is “without prejudice”?The words “without prejudice” are generally used with the intention of ensuring that a document or letter cannot later be produced in Court.  However, the words themselves are not some sort of magic shield: the Court must consider the objective intention for which the document was created.  A letter or document will only attract this kind of privilege if it was created with the intention of resolving a dispute.  As a result, it does not matter whether a document is marked “without prejudice” or not.  The intention of the party who created the document is definitive.  The rules was created with the intention of encouraging parties to feel more comfortable initiating and partaking in settlement discussions.Were Avonwick Holdings and Webinvest resolving a dispute?Webinvest admitted that it owed Avonwick money.  At the time of the “without prejudice” communications, Webinvest simply wanted to renegotiate the terms of the original loan.  The Court referred to the case of Bradford & Bingley v Rashid, where the House of Lords stated:"If the without prejudice rule is to apply not merely to attempts to resolve a dispute about the existence or extent of a liability but also to discussions as to how an admitted liability is to be paid, that would seem to me a very substantial enlargement of its scope."As a result, the Court was of the view that the documents marked “without prejudice” were produced with the intention of re-negotiating the loan and not for the purposes of resolving a particular dispute.  The Court noted that the documents were marked “without prejudice” by an experienced litigation solicitor, who presumably knew the effect and meaning of the words.  However, the Court found that it was likely to have been a mistake and the documents were capable of disclosure in the main dispute between the parties.In light of the above, it is worth remembering that it makes very little difference if you mark your letters “without prejudice” or not.  A Court will always consider whether there was a dispute capable of being resolved and whether or not the document in question represented a genuine attempt to resolve such dispute.If you have any questions about “without prejudice” communications, please contact James Smith at This email address is being protected from spambots. You need JavaScript enabled to view it..
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Landlords now required to check tenants’ immigration status

Last year the Immigration Act 2014 became law. Part of the legislation requires the owners of residential property to regularly check the immigration status of prospective tenants of the property, along with other occupiers. A failure to abide by this legislative requirement may result in a fine of up to £3,000.Under the legislation, a person may not occupy property pursuant to a residential tenancy agreement if they (i) are not a British citizen, (ii) are not a national of an EEA State, (iii) are not a national of Switzerland or (iv) do not have any right to rent in respect of the property. Further, a tenant has no right to rent a residential property if they require leave to remain in the UK and do not have such leave.All of this requires a landlord to check an existing tenant or a prospective tenant’s immigration paperwork/ documentation in order to assess whether he or she has the right to rent the property. Where there is uncertainty about whether there is such a right, a landlord will be able to make web or telephone queries. The relevant government department has said that they expect a turnaround time of 48 hours for emails sent to them.A landlord will have to review a tenant or prospective tenant’s documentation to determine whether they have a right to rent. Where it is not clear whether such right exists, landlords will be able to submit either a website or phone line enquiry. The email service will have a turnaround time of no longer than 48 hours. After this period, the landlord has the ability to let the property to the intended tenant. In essence this is much the same as existing employee checking type services.The main purpose of the legislation is to deter illegal migrants from obtaining occupation of private rented residential accommodation and encourage the observance of immigration laws. In economic and societal terms, lawmakers have in mind British communities affected detrimentally by unlawful building structures and overcrowding. The Home Office has also mooted that landlords may also enjoy the benefit from less loss of rental income because of the higher standards required.On the other hand, it is evident that there will be an additional administrative and bureaucratic burden on residential landlords. Some commentators have queried why responsibility for compliance with immigration legislation should sit with property owners. At an economic level, it may cause landlords to prefer a British tenant over a non-British one. One could argue that it would be very tempting for the landlord to prefer the former where the potential administrative burden associated with the latter’s immigration status is the only point of difference. Conversely, it may lead to migrants proposing that they pay a higher rent to address this. In both cases, there is potential for unfairness, and potentially even unlawful discrimination.Either way, the legislation has been passed and it is likely to be implemented some time in 2015, most likely after the General Election.If you have any questions about any of these issues, please contact Head of Immigration, Sanjeev Bakhshi at This email address is being protected from spambots. You need JavaScript enabled to view it..
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