Law reports

Law reports

CHARITY

Disposition of interest in land by charity - trustees failing to obtain pre-sale report from independent surveyor - specific performance of contract for disposition of land to bona fide purchaser for value refused because contract void

Bayoumi v Women's Total Abstinence Union Ltd and another: ChD (Mr Simon Berry QC): 21 January 2003

The second defendant agreed to purchase premises from the first defendant, a registered charity.

Contracts were exchanged, although the first defendant had not complied with section 36(3) of the Charities Act 1993 which required the trustees to commission a report from an independent surveyor on the proposed disposition, be advised by him on how best to advertise it, and satisfy themselves in the light of the report that the terms on which the disposition was proposed to be made were the best that could be reasonably obtained.

The second defendant assigned the benefit of his contract with the first defendant to the claimant.

When the first defendant failed to complete the sale the claimant sought specific performance.

The claimant applied for summary judgment on the basis that, even if section 36(3) had not been complied with, the transaction was saved by section 37(4), which validated a disposition of land by a charity to a bona fide purchaser for value when section 36(3) had not been complied with.

The master rejected the application and gave summary judgment for the first defendant.

The claimant appealed.

Jane Evans-Gordon (instructed by Freedman Green) for the claimant; Jonathan Evans (instructed by Winward Fearon) for the first defendant; Tracey Angus (instructed by Howard Kennedy) for the second defendant.

Held, dismissing the appeal, that on a true construction, section 37 of the 1993 Act applied only to an effected disposition and not to a contract to make a disposition; that a mere contract for the sale of land therefore fell outside the scope of section 37(4); and that, notwithstanding that there was no evidence of bad faith on the part of either the claimant or the second defendant, since it was clear that the requirements of section 36(3) had not been fulfilled the contract was, accordingly, void.

COMPANY

Penalty for late filing of accounts - charity and company claiming liability not strict and challenging legality of procedure - liability strict and procedure legal and convention compliant

R (POW Trust and another) v Chief Executive and Registrar of Companies and another: QBD (Admin) (Mr Justice Lightman): 18 December 2002

The claimant charity and company sought judicial review of the decision of the defendant to impose penalties on them for late filing of accounts.

The claimants claimed that liability under section 242A of the Companies Act 1985 for late filing of accounts was not strict and that the recovery of penalties under that section was in breach of their right to a fair determination of their case under article 6 of the European Convention of Human Rights and infringed their property rights under article 1 of the first optional protocol.

The claimants were represented by a director; Philip Jones (instructed by the Treasury Solicitor) for the defendant; Adrian Francis (instructed by the Treasury Solicitor) as advocate of the court.

Held, refusing the application, that liability under section 242A was strict; that the section did not prevent a fair determination of the claimant's rights because, first, the defendant was required to establish the non-compliance in the county court before he could recover the penalty and secondly it was open to those liable to pay the fine to challenge the exercise of the defendant's discretion as to whether or not to recover the penalty under section 242A(3) by way of judicial review; that the exercise of the defendant's discretion was limited and had to be uniform and consistent; that the ambit of the discretion had to be elicited from the purpose and policy of section 242A and of the 1985 Act as a whole and the principle implicit in the section was that the registrar should in every ordinary case, so far as his resources allowed, seek to recover the penalty, but, as an exception to the general rule he might decide not to do so in exceptional cases where the purpose of the legislation of timely compliance with section 242(1) was considered together with ensuring the economic and efficient application and management of resources available for the recovery of penalties; that the binding internal rules governing exercise by his staff of the discretion, implemented by the defendant were not legally objectionable in any way and did not infringe the parties' rights under article 1 of the optional protocol to the European Convention on Human Rights, even though it meant that the claimants did not have their cases considered; that, however, in the interests of transparency the internal rules or at least a document setting them out should be made available to the public.

CRIMINAL

Court of Appeal quashing claimant's conviction on grounds of abuse of process - claimant not denying guilt - claimant entitled to compensation

R (Mullen) v Secretary of State for the Home Department: CA (Lords Justice Schiemann and Rix and Mr Justice Pumfrey): 20 December 2002

The claimant was convicted of conspiracy to cause explosions and sentenced to 30 years' imprisonment.

After he had been in prison for nearly nine years, the Court of Appeal quashed his conviction on the ground that the UK authorities' involvement in his deportation from Zimbabwe to the UK to stand trial had amounted to an abuse of process rendering his conviction unsafe: R v Mullen (Nicholas) [2000] QB 520.

The claimant had not argued that he was innocent of the offence of which he had been convicted, but relied only on the abuse of process.

The secretary of state refused his application under section 133 of the Criminal Justice Act 1988 for compensation for the time which he had served in prison.

His application for judicial review was refused: [2002] Gazette, 28 March, 26; [2002] 1 WLR 1587.

The claimant appealed.

Nigel Pleming QC and Campaspe Lloyd-Jacob (instructed by Christian Khan) for the claimant; Philip Sales and Hugo Keith (instructed by the Treasury Solicitor) for the home secretary.

Held, allowing the appeal, that compensation under section 133 was payable where there had been a 'miscarriage of justice', which included a case such as the present where the guilt or innocence of the claimant was not in issue; and that in a case where a conviction had been quashed, the presumption of innocence required that the court should proceed on the basis that a wrongly convicted person was not guilty.

(WLR)

DISCRIMINATION

Race - university student's action for racial discrimination by supervisor heard by judge and assessors - assessors to assist judge in evaluating evidence as well as giving expert advice

Ahmed v Governing Body of University of Oxford and another: CA (Lord Phillips of Worth Matravers Master of the Rolls, Lords Justice Waller and Laws): 20 December 2002

The claimant brought an action against the university at which he was a student and against his supervisor, alleging racial discrimination and victimisation.

The trial lasted for seven days before a judge and two assessors appointed under section 67(4) of the Race Relations Act 1976.

The judge found that the supervisor had discriminated against the black claimant in favour of a white student in relation to an examination which he had set and marked, but that discrimination was not on grounds of race.

He dismissed the claim.

The claimant appealed.

Robin Allen QC and Karon Monaghan (instructed by Christian Khan) for the claimant; John Bowers QC and Niran de Silva (instructed by Berrymans Lace Mawer) for the defendants.

Held, dismissing the appeal and giving guidelines, that assessors under section 67(4) of the 1976 Act were in a distinct category and were not governed by the Civil Procedure Rules, rule 35.15; that while the judge alone was responsible for making the decision, the assessors were to assist him not merely by giving expert advice but in evaluating the evidence; that, although there was no general duty of disclosure prior to judgment, the judge should make clear in his judgment that he had complied with section 67(4) and availed himself of the assistance of his assessors in reaching his conclusions on issues relating to possible racism; but that, on the facts, the judge's misunderstanding about the role of the assessors had not led to a miscarriage of justice.

Compensation - awards for injury to feelings and aggravated damages - guidance on levels of awards

Chief Constable of the West Yorkshire Police v Vento: CA (Lords Justice Ward, Mummery and Jonathan Parker): 20 December 2002

The Employment Appeal Tribunal remitted for recalculation an award of 165,829 for loss of future earnings made by an employment tribunal on a claim for sex discrimination and awarded the claimant 25,000 compensation for injury to feelings plus 5,000 aggravated damages.

The claimant appealed against the decision to remit, and the defendant cross-appealed against the award for injury to feelings.

Christopher Jeans QC and Jane Woodwark (instructed by Hewitt & Co, Leeds) for the claimant; David Bean QC and David Jones (instructed by the Solicitor to the West Yorkshire Police, Wakefield) for the chief constable.

Held, allowing the appeal and the cross-appeal, that sums in the range of between 15,000 and 25,000 should be awarded for injury to feelings in the most serious cases, such as where there had been a lengthy campaign of discriminatory harassment on the ground of sex or race; that between 5,000 and 15,000 should be awarded in serious cases which did not merit an award in the highest band; that awards of between 500 and 5,000 were appropriate for less serious cases, such as where the act of discrimination was an isolated or one-off occurrence; that the decision whether to award aggravated damages depended on the particular circumstances of the discrimination and on the way in which the complaint of discrimination had been handled; that regard should also be had to the magnitude of the sum total of awards of compensation for non-pecuniary loss made under the various headings of injury to feelings, psychiatric damage and aggravated damage; that, in particular, double recovery should be avoided by taking appropriate account of the overlap between the individual heads of damage; and that the award would be reduced to 18,000 for injury to feelings plus 5,000 aggravated damages.

IMMIGRATION

Refusal of asylum - minister directing removal to country where right to practise religion restricted - convention rights not engaged and removal not unlawful

R (Ullah) v Special Adjudicator; Do v Immigration Appeal Tribunal: CA (Lord Phillips of Worth Matravers Master of the Rolls, Lords Justice Kay and Dyson): 16 December 2002

The claimants, an Ahmadi preacher from Pakistan and a Roman Catholic from Vietnam, each entered the UK and claimed asylum alleging that they feared persecution if returned to their own countries.

The home secretary refused them asylum.

Special adjudicators, dismissing their appeals, rejected their claims that their right to practise their religions and to teach their faiths would be severely restricted if they were removed to their own countries, that that would infringe their right to freedom of religion in article 9 of the European Convention on Human Rights, and that their removal would, therefore, be unlawful.

In the first case the judge dismissed the claim for judicial review by way of an order to quash the special adjudicator's decision.

In the second case, the Immigration Appeal Tribunal dismissed the claimant's appeal.

The claimants appealed.

Nicholas Blake QC and Martin Soorjoo (instructed by Thompson & Co) for the claimant in the first case; Manjit Singh Gill QC and Christa Fielden (instructed by Sheikh & Co) for the claimant in the second case; Monica Carss-Frisk QC and Lisa Giovannetti (instructed by the Treasury Solicitor) for the secretary of state.

Held, dismissing the appeals, that while it would be unlawful for a contracting state to remove an alien to a country where he or she was foreseeably at real risk of being seriously ill-treated within the meaning of article 3 of the convention, the court was not required to prevent the removal of aliens whose article 9 rights of freedom of religion, or other convention rights, would be restricted in the receiving country where the anticipated interference with those rights in the receiving state fell short of a real risk of such ill-treatment.

(WLR)

LAND

Mortgage - sale of mortgaged property to employee of mortgagee in breach of mortgagee's rules - mortgagor not entitled to set aside sale

Corbett and another v Halifax Building Society and others: CA (Lords Justice Schiemann and Scott Baker and Mr Justice Pumfrey): 18 December 2002

The mortgagors defaulted on repayment of a loan from the mortgagee secured on their property.

A possession order was obtained and executed and the mortgagee instructed agents to sell the property.

The mortgagee's terms of engagement provided that 'under no circumstances' might its staff or its agent's staff or their families purchase a property in possession.

The property was valued by the agents at 133,000 and by the mortgagee's in-house valuer at 142,000.

The second defendant, who was employed by the mortgagee but not concerned in any way in the sale, wished to buy the property and, since he was precluded from so doing by the agency terms and by the terms of his employment, arranged for his uncle to make the purchase for 140,000 and to sell the property on to him in a back-to-back transaction.

The mortgagors claimed to set aside the sales on the ground that the second defendant had deceived his employer and consequently could not take advantage of the statutory protection for purchasers from mortgagees afforded by section 104 of the Law of Property Act 1925.

The judge found that the best price attainable at the relevant time was 160,000 and that the second defendant was unaware of the undervalue.

He gave judgment for the mortgagors.

The second defendant appealed.

Thomas Jefferies (instructed by Wards, Bristol) for the second defendant; Philomena Harrison (instructed by Bevan Ashford, Bristol) for the mortgagors; Neil Levy (instructed by Hammond Suddards Edge) for the mortgagees.

Held, allowing the appeal, that the second defendant's deception of his employers did not confer on the mortgagors any right to set aside the sale which they would not possess against any other purchaser at an undervalue who did not know of the undervalue and who was not involved in the exercise of the power of sale by the mortgagee; that, to be set aside, the sale had to be tainted by some kind of impropriety or bad faith on the part of the mortgagee in the exercise of the power of sale; and that the judge should have left the mortgagors to their remedy in damages.

LANDLORD AND TENANT

Roof forming part of flying freehold in need of repair - roof serving claimant's and defendant's property equally - flying freeholder liable for half cost of repair

Abbahall Ltd v Smee: CA (Lord Justice Chadwick and Mr Justice Munby): 19 December 2002

The claimant was the freehold owner of the ground floor of a building.

The defendant was the freehold owner of the first and second floors and the roof (the flat) by right of adverse possession, with the result that the flat comprised a flying freehold.

It was common ground that the relationship between the two freeholders was regulated not by covenants but by the law of easements and by the law of nuisance and negligence.

The defendant had allowed parts of the flat - the roof in particular - to fall into disrepair, with the consequence that water leaked into the ground floor and there was a danger of masonry falling onto visitors to the ground floor.

The claimant brought an action seeking a contribution to the cost of repairing the roof.

The judge held that the defendant was liable to contribute only a quarter of the costs.

The claimant appealed, contending that the defendant should pay all the costs of the repair.

Oliver Ticciati (instructed by Wilmot & Co, Cirencester) for the claimant; Juliet May (instructed by AJ Bond & Co, Bromley) for the defendant.

Held, allowing the appeal in part, that where the roof served equally to protect both the claimant's and the defendant's premises, common sense, common justice and reasonableness as between neighbours all suggested that those who were to take the benefit of the works ought to shoulder the burden of paying for them; that it would not be unreasonable to apportion the benefits to be derived from the repair of the common roof among the various owners having regard to a comparison of the space which each owned or by reference to floor areas; that the true nature of the duty owed by the owner of a flying freehold was to make the appropriate contribution to the cost of the appropriate works; and that, in the present case the fair, just and reasonable basis of apportionment was half and half.

POLICE

Officer deployment - operational or management decisions - not amenable to judicial review

R (Tucker) v Director-General of the National Crime Squad: CA (Lords Justice Aldous and Scott Baker and Sir Philip Otton): 17 January 2003

The claimant, a detective inspector in the Derbyshire Constabulary, was seconded to the National Crime Squad (NCS).

In April 2001, the NCS was involved in a covert operation into drug-related crime.

On 28 April 2001, ten people, some of whom were officers seconded to the NCS, were arrested on suspicion of drug-related offences.

Two other officers seconded to the NCS had their secondments terminated with immediate effect and were returned to their home force for disciplinary investigation.

The claimant also had his secondment summarily terminated and was returned to his home force, but without any disciplinary implications.

He was informed that the deputy director-general of the NCS had lost confidence in his management performance and that he was being returned to the Derbyshire Constabulary forthwith.

His claim for judicial review of that decision failed before Mr Justice Harrison who held that the decision, although amenable to judicial review, had been fair notwithstanding the absence of reasons for the decision and the lack of opportunity for the claimant to make representations.

The claimant appealed.

Martin Westgate (instructed by Russell Jones & Walker) for the claimant; John McGuinness QC and Christopher Johnston (instructed by Winckworth Sherwood) for the director-general.

Held, dismissing the appeal, that, while there was no dispute that the NCS was a public body and that the claimant had no private law remedy, it was necessary to focus on what the deputy director had been doing when he had made the impugned decision; that the case was not about dismissal; and that there was a clear line between disciplinary issues, where an officer had the right to public law safeguards such as fairness, and operational or management decisions such as that impugned, where the police were entitled to run their affairs without the intervention of the courts.

REVENUE

Capital gains tax - employee's share option exercisable on particular date at stock market price as at date of grant - costs of acquisition of shares to be computed as at date option exercised

Mansworth (HM Inspector of Taxes) v Jelley: CA (Lords Justice Kennedy, Chadwick and Jonathan Parker): 12 December 2002

The taxpayer, an overseas resident working for a subsidiary of an English company, was granted three options to acquire the company's shares which were exercisable at particular dates at their market value on the New York Stock Exchange at the time of their grant.

By the time he exercised the options he had become a UK resident.

He later sold the shares at a considerable gain.

The revenue assessed him to capital gains tax on the basis that the costs of the options was to be assessed as at the dates on which they had been granted, which were deemed to be nil.

The special commissioner allowed the taxpayer's appeal and held that the costs of the options were the costs as at the date of their exercise.

The judge dismissed the revenue's appeal.

The revenue appealed.

Timothy Brennan QC and Hugh McKay (instructed by the Solicitor, Inland Revenue) for the revenue; Michael Sherry and Lewis Rippon (instructed by BP Collins, Gerrards Cross) for the taxpayer.

Held, dismissing the appeal, that the costs of the acquisition of such shares ought to be computed in accordance with section 137(3) of the Capital Gains Tax Act 1979 (now section 144(3) of the Taxation of Chargeable Gains Act 1992) and section 29A(1) of the 1979 Act (section 17(1) of the 1992 Act), which treated the acquisition and exercise of the option as a single transaction; that the option could become effective only when exercised and so the grant of it could not be treated as a disposal of the underlying asset; and that, accordingly, the costs of the options should be computed as at the dates of their exercise.

Tax avoidance - rent factoring scheme - sum received under rental assignment taxable as capital

Inland Revenue Commissioners v John Lewis Properties Ltd: CA (Lords Justice Schiemann and Dyson, Lady Justice Arden): 20 December 2002

In 1995, the taxpayers, a property holding company, pursuant to a widely marketed scheme, assigned to a bank their rights to receive six years' rent from their trading company from several commercial properties.

In return, the bank paid the taxpayers a lump sum of 2.5m.

Under a deed of assignment the taxpayers authorised the trading company to pay the rents direct to the bank.

The taxpayers appealed against an assessment to corporation tax for their 1996 accounting period raised on the basis that for tax purposes the lump sum was income and not capital.

The judge, upholding a determination by a special commissioner, allowed the appeal [2002] 1 WLR 35.

The Crown appealed.

Launcelot Henderson QC and Michael Furness QC (instructed by the Solicitor, Inland Revenue) for the Crown; David Goldberg QC and Wayne Clark (instructed by Lovells) for the taxpayers.

Held, dismissing the appeal (Lady Justice Arden dissenting), that whether a payment was to be regarded as capital or income had troubled the courts for a long time; that indicia in Strick v Regent Oil Co Ltd [1966] AC 295 were relevant and of assistance; and that the sum, being a substantial one, a single payment in return for a once-and-for all disposal by the taxpayers of rights to six years' rental and which diminished the value of their reversionary interest, was properly to be classified as a capital and not an income payment.

Section 110 of the Finance Act 2000 now imposes liability on sums received for such property assignments.

Income tax - share buyback scheme - not caught by anti-avoidance provisions

Inland Revenue Commissioners v Sema Group Pension Scheme Trustees: CA (Lords Justice Aldous and Jonathan Parker and Mr Justice Aikens): 19 December 2002

The taxpayers ran an occupational pension scheme which was approved for the purposes of section 592 of the Income and Corporation Taxes Act 1988 and as such was exempt from income tax on income derived from its investments.

It was common ground that, by virtue of sections 209 and 254 of the 1988 Act, where a UK resident company bought back its own shares part of the purchase price which exceeded the nominal value of the shares the subject of the buyback was treated as a 'qualifying distribution' for the purposes of section 231 of the Act.

As a consequence, the recipient of the purchase price, being a UK resident and not being a company, was (prior to the removal of such entitlement by the Finance Act 1997) entitled to a tax credit equal to such proportion of the amount or value of the distribution as corresponded to the rate of advance corporation tax in force for the financial year in which the distribution was made.

The two buybacks took place in May and June 1996.

Following the buybacks, the taxpayers claimed tax credits in respect of them.

The claim was accepted by the Crown, which subsequently sought to reverse the payment by recourse to the anti-avoidance provisions in part XVII of the Act.

Mr Justice Lightman [2002] STC 276 upheld an appeal by the Crown from a decision by the special commissioners that cancelled a notice served on the taxpayers under section 703(3) of the 1988 Act and a subsequent assessment to schedule F income tax for 1996-97 for 484,563.

The taxpayers appealed.

John Gardiner QC and Jolyon Maugham (instructed by Lovells) for the taxpayers; Launcelot Henderson QC and Christopher Tidmarsh QC (instructed by the Solicitor, Inland Revenue) for the Crown.

Held, allowing the appeal, that the question posed by section 704A was whether, on the buybacks, the trustees received an abnormal amount by way of dividend; that what the section required to be considered, therefore, was the normality of the amount received by the trustees by way of dividend; that section 709(2) provided that 'references to dividends include references to other qualifying distributions'; that the amounts received by the trustees were received by way of a qualifying distribution other than a dividend; that what had to be considered was the normality of the amount received by the trustees by way of a qualifying distribution laid down in section 709(4)(b); that, in addressing the questions posed by sections 709(4)(b) and 709(6)(b), the special commissioners correctly directed themselves as to the law, and their conclusions on those questions were conclusions which they were fully entitled to reach; that the error of the judge was to ask himself the wrong question, namely whether the dividend was abnormal; and that that was not the right approach and had led the judge inevitably to an erroneous conclusion.

SOCIAL SECURITY

Human Rights - local authority social services review panel lacking independence - availability of judicial review sufficient to cure incompati-bility with right to fair determination of civil rights

R (Beeson) v Dorset County Council: CA (Dame Elizabeth Butler-Sloss, President, and Lords Justice Waller and Laws): 18 December 2002

The claimant, now deceased, had sought judicial review of a local authority decision that he had deprived himself of his house in circumstances such that the value of the property fell to be taken into account when assessing his ability to pay for residential care arranged for him by the council.

The Secretary of State for Health appealed against the determination that the availability of judicial review did not suffice to remedy, for the purpose of article 6(1) of the European Convention on Human Rights, the want of independence and impartiality which had arisen from the fact that the complaints procedure required one member of the panel to be independent; here two members had been councillors.

The claimant cross-appealed the determination that the appointment of a panel composed entirely of independent members would constitute compliance with article 6(1).

Nigel Giffen and Jason Coppel (instructed by the Solicitor, Department of Health) for the secretary of state; Richard Drabble QC and David Wolfe (instructed by Conrad Haley, Public Law Project) for the personal representatives of the claimant.

Held, allowing the appeal and dismissing the cross-appeal, that the real point was whether, given the quality of the first-instance process such as it was, the addition of judicial review satisfied the article 6(1) standard; and that if there was no reason of substance to question the objective integrity of the first-instance process, whatever might be said about its appearance, the added safeguard of judicial review would very likely satisfy the article 6 standard unless there was some special feature of the case to show the contrary.

CLARIFICATION

The original report in R (Maud) v Castle Point District Council, published last year (see [2002] Gazette, 24 October, 27), was factually incorrect.

The case was entirely concerned with Hackney carriages and not private hire vehicles.

Although the published holding, taken in isolation, is accurate, the erroneous facts may alter its meaning to such an extent that it becomes misleading.

We apologise for any confusion caused.

Note the revised report as set out here.

LOCAL GOVERNMENT

Licensing - council removing limit on number of hackney carriages to meet unmet local demand - alternative of restricting new licences to specific areas not lawful

R (Maud) v Castle Point Borough Council: CA (Lords Justice Kennedy, Buxton and Keene): 2 October 2002

The council commissioned a firm of consultants to investigate whether there was a significant unmet demand for hackney carriages in their borough.

The consultants, having conducted interviews and investigations in the local area, concluded that at two cab ranks in the borough there was significant unmet demand and recommended that restrictions on the maximum number of hackney carriage licences should be removed.

The council, relying on the report, resolved so to do.

The claimant, a hackney carriage taxi licensee, on behalf of himself and other licensees, sought judicial review of that decision on the grounds that it was based on an irrelevant consideration and that the council had failed to consider whether unmet demand could be met by a condition on new licences prohibiting them from plying for hire at a rank where there was no unmet demand.

The judge dismissed the claim.

The claimant appealed.

David Wolf (instructed by Griffith Smith, Brighton) for the claimant; Alan Newman QC and Andrew Muir (instructed by the Borough Solicitor, Caste Point Borough Council, Benfleet) for the council.

Held, dismissing the appeal, that section 16 of the Transport Act 1985 had qualified the discretion of the licensing authority under the Town Police Clauses Act 1847 by permitting it to restrict the number of hackney carriage licences to be issued only if satisfied that there was no unmet demand for hackney carriages in the area; that the council had not therefore taken account of irrelevant considerations in relying on the report; and that the issue of licences without restrictions to some and with restrictions to others would categorise the latter as second-class taxis and the council had no power to limit the areas where licensed taxis could ply.