Company

Debenture - charge over book debts 'by way of specific charge' - company able to use proceeds of debts in course of business subject to restrictions - fixed charge

In re Spectrum Plus Ltd (in liquidation): CA (Lord Phillips of Worth Matravers MR, Lord Justice Jonathan Parker and Jacob): 26 May 2004

The company opened a bank account with an overdraft of 250,000 to provide working capital for the business.

By a debenture, the company created a specific charge in favour of the bank over its book debts.

The company was obliged to pay the book debts into the specified account with the chargee bank, and was permitted to draw on the account so that its overdraft fluctuated.

It was never in credit.

The company went into creditors' voluntary liquidation.

The liquidators collected in the book debts but refused to account for them to the bank.

The bank sought a declaration that the debenture created a fixed charge in favour of the bank and an order for the liquidators to account to the bank for them.

The Customs and Excise commissioners, the Inland Revenue commissioners and the secretary of state for trade and industry (the Crown) were joined as parties.

Vice-Chancellor Sir Andrew Morritt refused the relief, holding that the charge created was a floating charge.

The Crown appealed.

Gabriel Moss QC and Jeremy Goldring (instructed by Allen & Overy, London) for the bank; Philip Jones and Catherine Addy (instructed by solicitor, Commissioners of Inland Revenue, solicitor, HM Customs and Excise, Treasury Solicitor) for the Crown.

Held, allowing the appeal, that a charge over book debts created by a debenture which provided that the book debts were not to be disposed of prior to collection and that on collection were to be paid into a bank account at the chargee bank created a fixed rather than a floating charge, since the charge by those conditions imposed restrictions on the use of the proceeds of the book debts.

(WLR)

Costs

Taxation - legal expenses costs insurance - cover for costs and disbursements - costs incurred to assess litigation risk not recoverable as disbursement

The Accident Group Test Cases: Sharratt v London Central Bus Co and other cases: CA (Lord Justice Kennedy, Lord Justice Buxton and Lord Justice May): 20 May 2004

An organisation, Accident Group Ltd operated to claim compensation for personal injuries on behalf of litigants on a 'no win, no fee' basis backed by an insurance scheme to cover the fees for acting for the litigants and costs payable by unsuccessful litigants.

The group's policy was to refer potential claims to its subsidiary to assess risks involved before the litigants for which the subsidiary charged a fee (referral fee) in each case.

The group successfully brought claims on behalf of several of its clients and sought to recover the referral fee as disbursement within the meaning of section 29 of the Access to Justice Act 1999, but the costs judge held that the referral fee had been incurred contrary to the Solicitors Introduction and Referral Code 1990, and was not recoverable as disbursement.

The group appealed.

Timothy Dutton QC and Nicholas Bacon (instructed by Mace & Jones, Huyton) for the claimants; Michael Pooles QC and Andrew Neish (instructed by Beachcroft Wansbroughs, London) for the defendants.

Held, dismissing the appeal, that the subsidiary of the action group had carried out the risk assessment work as the agent of the panel solicitor of the action group prior to retaining the client the fee for which the action group had been under an obligation to pay and, therefore, the fee was a referral fee paid as a reward to introducers contrary to rule 2(3) of the 1990 code, irrespective of whether it was the action group or the subsidiary who had introduced the client; and that since the risk assessment fee had been incurred before the solicitor's retainer came into existence it was not a disbursement payable by the client.

Immigration

Asylum application - tribunal dismissing appeal without reference to new evidence in party's absence - onus on applicant to make formal application under new rules

Bashir v Secretary of State for the Home Department: CA (Lord Justice Kennedy, Lord Justice Jonathan Parker and Lord Justice Dyson): 19 May 2004

A Sudanese citizen appealed to the Court of Appeal from the dismissal of his appeals to the Immigration Appeals Adjudicator and the Immigration Appeal Tribunal from the refusal of the secretary of state to grant his political asylum application on.

The Court of Appeal remitted the matter to the tribunal for rehearing of the applicant's appeal with any new evidence that had not been placed before the tribunal and the applicant's solicitors lodged a bundle of new evidence without writing to the tribunal to indicate their intention to refer to it at the hearing.

The tribunal dismissed the appeal without making any reference to the new evidence when the parties failed to attend the hearing.

The applicant appealed, contending that the tribunal had acted unfairly and irrationally by failing to take into account the significance or relevance of the new evidence contrary to the Immigration and Asylum Appeals (Procedure) Rules of 2000 and 2003.

Martin Soorjoo (instructed by Thompson & Co, London) for the applicant; Julie Anderson (instructed by Treasury Solicitor) for the secretary of state.

Held, dismissing the appeal, that under rule 21(2) of the 2003 rules if a party wished to ask the tribunal to consider evidence that had not been submitted to the adjudicator, he should file with the appellate authority and serve on the other party a written notice to that effect indicating the nature of the evidence and explain why it had not been submitted to the adjudicator; that that requirement marked a significant shift from the old rules; but that since the applicant had been represented by his solicitors in the appeal there were no exceptional circumstances justifying waiver of such a requirement.

Refusal of state support - asylum claim not made as soon as reasonably practicable after arrival - support required to avoid subjecting asylum seeker to inhuman or degrading treatment

R (Limbuela) v Secretary of State for the Home Department; R (Tesema) v Same; R (Adam) v Same: CA (Lord Justice Laws, Lord Justice Carnwath and Lord Justice Jacob): 21 May 2004

In three test cases, destitute asylum seekers were refused support under section 95 of the Immigration and Asylum Act 1999 because they had not made a claim as soon as reasonably practicable after their arrival in the UK within section 55(1) of the Nationality, Immigration and Asylum Act 2002 and support was not necessary to prevent a breach of their convention rights under section 55(5).

The claimants were granted judicial review of the secretary of state's decision to refuse support on the ground that they were verging on destitution and a breach of their rights under article 3 of the European Convention on Human Rights was imminent.

The secretary of state appealed.

Nigel Giffin QC, John-Paul Waite and Kate Grange (instructed by the Treasury Solicitor) for the secretary of state; Christopher Jacobs (instructed by White Ryland, London) for Limbuela and Tesema; Susan Monaghan (instructed by Hanne & Co, London) for Adam; Stephen Knafler acting pro bono (instructed by Claire Sephton, Shelter Legal Services) for Shelter as intervener.

Held, dismissing the appeal (by a majority, Lord Justice Laws dissenting), that the secretary of state was obliged under section 55(5) of the 2002 Act to provide support for asylum seekers verging on destitution who had not made a claim in time within section 55(1) and had no access to any other support, in order to prevent their being subject to inhuman or degrading treatment in breach of their convention rights; and that the courts could not determine on a day-to-day basis which cases met the article 3 threshold.

Negligence

Claimant injured when ejected from nightclub by employee of security firm contracted by club owner - security firm not holding public liability insurance - owner owing claimant duty to ensure contractor competent but no freestanding duty to ascertain that it held insurance

Payling v Naylor (trading as Mainstreet): CA (Lords Justice Waller, Latham and Neuberger): 7 May 2004

The claimant suffered serious head injuries after being ejected from the defendant's nightclub by a door attendant employed by a firm engaged to provide security.

At a hearing to determine liability, only the judge held that the defendant had owed a duty to ensure that the security firm's owner held public liability insurance; that the defendant had failed to fulfil that duty and so was in breach of his duty of care to the claimant as a visitor to his club.

Derek Sweeting QC and Steven Ford (instructed by Hafezis, London) for the defendant; Eliot Woolf (instructed by Irwin Mitchell, Sheffield ) for the claimant.

Held, allowing the appeal, that once it was established that the defendant did not owe a non-delegable duty, the only obligation on the defendant as owner was to take reasonable steps to ensure that the independent contractor he engaged to provide security services was competent; that there was no free standing duty save in exceptional circumstances on the owner to ensure that the contractor held public liability insurance cover; and that, since no such exceptional circumstances existed, the judge had erred in approaching the matter by imposing a duty to ensure the contractor was insured.

Taxation

Bare trustees making contract to sell land - before completion of contract beneficial owners assigning part of beneficial interest to non-resident trustee of overseas settlement - beneficial owner not liable to capital gains tax on proceeds of sale belonging to overseas trustee

Jerome v Kelly: HL (Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Scott of Foscote, Lord Walker of Gestinghthorpe and Lord Brown of Eaton-under-Heywood): 13 May 2004

In 1987, the taxpayer and his brother, as trustees for sale of land held on trust for themselves and the taxpayer's wife, agreed to sell certain parts of the land to C Ltd.

Completion was to take place in May 1994 at the latest, but with provision for earlier completion once outline planning permission had been obtained.

In December 1988, the taxpayer and his wife established two settlements in Bermuda with a Bermudan company as sole trustee for both settlements.

In December 1989, and before completion of any part of the contract, the taxpayer and his wife made assignments to the Bermudan company of half of their respective beneficial interests in the land, subject to the contract.

Completion of the sale to C Ltd by the vendors took place in three tranches in November 1990, December 1991 and December 1992.

During the tax year 1991-92 the revenue assessed the taxpayer to capital gains tax for the year 1987-88 on the basis that the effect of section 27(1) of the Capital Gains Tax Act 1979 (now section 28(1) of the Taxation of Chargeable Gains Act 1992) was that on 16 April 1987 the taxpayer and his wife had disposed of the whole of the beneficial interests in the land that they had immediately before that date, despite the assignments they had made between contract and completion.

The special commissioner upheld the assessment but the judge allowed the taxpayer's appeal.

The Court of Appeal [2003] STC 206 allowed an appeal by the revenue.

The taxpayer appealed.

Robert Venables QC and Amanda Hardy (instructed by Stokes, Portsmouth) for the taxpayer; Launcelot Henderson QC, Kenneth Munro and David Rees (instructed by the Inland Revenue Solicitor) for the revenue.

Held, allowing the appeal, that an uncompleted contract for the sale of land could not be treated as equivalent to an immediate irrevocable declaration of trust or assignment of beneficial interests in the land, and until the contract was completed the vendors were entitled to enjoyment of the land and to make assignments of their beneficial interests; that, following the assignments in 1989, the vendors were nominees for the Bermudan company to the extent of the interests comprised in those assignments; that, although the vendors were acting under the contract of 16 April 1987 when they transferred the legal estate in the land to C Ltd, section 27(1) did not have the effect of regarding the contract as the disposal thereby treating the beneficial interests that the Bermudan company acquired in 1989 as already having been disposed of in 1987; that section 27(1) was concerned solely with fixing the time of disposal by a person whose identity was to be ascertained by other means, and the contract until completed was neither a disposal nor a part disposal; and that, therefore, the taxpayer was not liable to capital gains tax as if he and his wife had disposed of their entire beneficial interests in the land at the date of the contract in 1987.

(WLR)

The law reports are prepared by the reporters to the Incorporated Council of Law Reporting for England and Wales; telephone: 020 7242 6471; fax: 020 7831 5247; http://www.lawreports.co.uk.WLR means that a report has been submitted for publication in the Weekly Law Reports