Category: Uncategorized

Our previous briefing [Labour plan to make work pay. What does this mean?] covered some of Labour’s intended employment law proposals and what the consequences of a General Election 2024 Labour victory may be for individuals and businesses alike. The Conservatives, Reform UK and the Liberal Democrats are the other parties averaging over 10% in the polls. What do they propose for employment law reform?

 

Please note that this piece is not exhaustive in terms of covering each of these parties’ proposals in this area.

 

Conservatives

 

The Conservative Party do not propose changes as  radical as those intended by Labour in this area and instead would continue with current government plans and draft legislation in this area should they win the General Election. Of note, their manifesto includes:

• Overhauling the fit note process. While not new, with reforms having been suggested earlier this year to “change the sick note culture”, responsibility for issuing fit notes would shift from GPs to specialist work and health professionals. This has the aim of helping people stay in or return to work.
• Amending the Equality Act 2010. The protected characteristic of sex would be clarified to mean an individual’s biological sex. This has the aim of protecting women and girls by ensuring single sex services and spaces can be provided, with examples of in healthcare and sports settings given.
• Continuing to implement the Minimum Service Levels legislation. This came into force last year, intended to strike a balance between the right to strike but also enabling regulations providing for minimum service levels of public services (eg education, health, transport etc) to be introduced.
• Cutting employee National insurance to 6% by April 2027. This would be a continuation of recent cuts put in place by the government, with the long-term goal of abolishing NI altogether.

 

Reform UK

 

Reform UK’s ‘Our Contract with You’ (the equivalent of their manifesto) is briefer than both Labour and the Conservative’s manifestos and so lacks detail on their proposals for employment law, but their plans include:

• Raising income tax starting threshold to £20,000 per year. This would have the aim of “getting people off benefits”, relieving up to 7 million people from the tax, and saving workers about £1,500 per year. The basic rate would stay at 20% and higher rate starting threshold at £70,000.
• Cutting Corporation Tax. Reform want to free small and medium sized businesses from the tax and would lift the minimum profit threshold to £100,000. They would also cut the tax rate from 25% to 20%, ultimately to 15% in year 3.
• Abolishing IR35. Reform want to support sole traders and the self-employed, who they say work longer and take more risks.
• Scrapping existing laws. No specific laws are referenced, but there is a general pledge to “Scrap thousands of laws that hold back British business and damage productivity, including employment laws. We must make it easier to hire and fire so that businesses can grow”.
• Scrapping EU Regulations. Reform propose to rescind the over 6,700 retained EU laws, citing employment as one of the areas in which they will do so.
• Replacing the Equality Act 2010. Reform propose to “replace” the “2010 Equalities Act” [sic], which they say requires discrimination by way of performing ‘positive action’ and getting rid of such rules that they say have lowered standards and reduced economic productivity. They do not elaborate on the proposed replacement.

 

Liberal Democrats

 

Like Labour, the Liberal Democrats’ manifesto has considerable employment law reform focus.

There is intention to match employment rights to the “age of the ‘gig economy’”, and enhance parental, disability, sickness, and carers’ rights by:

• Establishing a new dependent contractor status. This would sit between employees and the self-employed, with minimum earnings rights, sick and holiday pay. We currently have ‘worker’ status in that space, and so it would remain to be seen how this new status would tie in or differ there.
• Raising minimum wage for zero hours contracts. To compensate individuals on zero hours contracts for their uncertain fluctuating working hours, they would receive a 20% higher minimum wage at time of normal demand.
• Giving a right to request a fixed-hours contract. Zero hours and agency workers would have the right to request a fixed-hours contract after 12 months, to not be unreasonably refused.
• Shifting the burden of proof. In employment tribunals, proving (or disproving as the case may be) employment status would be on the employer, rather than the employee.
• Doubling Statutory Maternity and Shared Parental Pay. These would be paid at £350 a week.
• Increasing paternity leave pay. This would be increased to 90% of earnings, higher earners capped.
• Introducing ‘use it or lose it’ month. For father and partners, this would be an extra month on top of paternity leave paid at 90% of earnings.
• Requiring large employers to publish parental policies. ‘Large’ is not specified, but large employers would have to publish their parental leave and pay policies.
• Making day one parental rights. All parental pay and leave would become a day one right and include those self-employed.
• Increasing availability of statutory sick pay. Making more than one million workers earning less than £123 a week (mostly made up of women) eligible, and payment available from first day of sickness (rather than the fourth as it is currently).
• Introducing specialist disability employment support. Employer awareness of the ‘Access to Work’ scheme would be raised (and the application process sped up and simplified). ‘Adjustment passports’ would be introduced to record a disabled person’s adjustments and modifications, which would carry over with the individual to any new job, together with their Access to Work support.
• Introducing caring and care experience as protected characteristics under the Equality Act 2010. This would be to require employers to make reasonable adjustments for those with caring responsibilities to support those providing care, and to enhance the rights of those in or have been in care.

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

With two weeks until the General Election and the polls favouring the Labour Party, Labour propose to ‘Make Work Pay’ and to ‘Deliver a New Deal for Working People’. But what do they intend to do and what does it mean individuals and businesses?

 

Labour’s manifesto sets out a number of areas in employment law that they propose to address should their lead in the polls translate to an election of a Labour government following election day on 4 July 2024. However, it is worth noting that this briefing is not exhaustive in terms of covering all of Labour’s proposals in this area.

 

End zero hours contracts

 

Labour’s view is that zero hours contracts offer “one-sided flexibility” (in favour of the business) and are exploitative. They propose to ban them (or at least those which are exploitative,) in place of a contract reflecting hours regularly worked, to offer security and predictability of hours for the individual. Such a move would reduce the flexibility according to demand that both employers and employees have previously enjoyed by working and engaging under such contracts. Employees’ costs to employers could also increase due to a more regular salary.

 

End ‘fire and rehire’

 

A controversial practice that earlier this year saw a statutory Code of Practice published for employers to follow. ‘Firing and rehiring’ is a process by which employers have sought to force through changes to employees’ terms and conditions; by terminating their employment and immediately offering a new contract on the changed terms. The Code offers protections to employees through consultation and considering alternative solutions. Labour claims the current Code to be “inadequate” and propose a strengthened version to end this practice.

Introduce a single status of worker

 

There are currently three different classifications of staff: employees, workers, and self-employed, with differences between each in terms of their legal status, rights and the protections they have, with employees enjoying the greater of those. Labour wants to simplify this framework to abolish employee status and have a worker status (under which those currently employees and workers would sit) and self-employed status. Labour accepts that this will require significant further consultation. It is unlikely that a ‘one size fits all’ for the new worker category, encompassing current employee rights such as holiday pay, sick pay and family leave, would be straightforward to roll out, given the flexible working regimes of those who are currently workers There are considerable questions around the taxation structure for this new classification of worker. This is one change which is potentially significant.

Unfair dismissal protection from day one

 

Currently an employee only acquires the basic right of protection against unfair dismissal after two years’ continuous service. This leaves employees in a somewhat vulnerable position during this time, with no recourse (in terms of unfair dismissal) against their employer if dismissed. One of Labour’s more eye-catching proposals is to remove the two-year period and give this protection against unfair dismissal from day one. This would increase the number of people with the right to bring an unfair dismissal claim (even more so with the new ‘worker’ status, above, in place). While this would place additional burdens on employers to follow fair and proper procedure when dismissing any individual, which employers have not been obliged to do for those in their first two years, it is a welcome development for individuals working as employees/workers having greater security in their role with a new employer.

 

Extend time limit for employment tribunal claims

 

Labour plans to generally overhaul and improve the employment tribunal service, but notably have said that they will increase the limitation period in which an employee may bring a claim in the employment tribunal from three to six months. The change is not so excessive that it would make defending a claim any more difficult or expensive than it currently is, and it would increase the time in which the parties can resolve a matter before recourse to the tribunal. However, it could still see an overall increase in tribunal claims being brought against employers and uncertainty hanging over employers for longer.

 

What do these changes mean for you?

 

In short, the proposals would grant more individuals greater rights, which could result in increased litigation and claims, and generally it would appear that the changes will increase costs and uncertainty for employers. However, in a positive for employers, their workforce may be strengthened by more individuals (particularly those currently self-employed) wishing to be afforded these greater worker protections and changing to worker status.

 

When would these changes come into effect?

 

Labour say that they will start to introduce legislation within 100 days of entering government, but don’t expect any of the changes to be in force by then. There is a significant amount of consultation to take place on some of their proposals. We often see employment law issues fall down the list of a government’s policy priorities and it remains to be seen how a newly formed government prioritises these matters together with their other manifesto pledges.

 

However, all indications are that these proposals are a fundamental part of Labour’s manifesto pledges and we can expect fairly prompt action.  Furthermore, given the inclusion of these proposals in Labour’s manifesto, the House of Lords would not vote down legislation which has its roots in the manifesto (known as the Salisbury convention), which would speed up the process of passing legislation through the House.

 

While some of the changes could therefore be in place fairly quickly, they are worth bearing in mind at this stage and, whatever the outcome, there will be further changes to be aware of going forward.

 

We will release a further piece to cover the employment law proposals raised by the other major parties in this election.

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

The third and final tranche of provisions of the Charities Act 2022 (the ‘2022 Act’) came into force on 07 March 2024.  Designed to reduce unnecessary regulation on charities in England and Wales, saving them both time and money, the 2022 Act implements many of the recommendations made by the Law Commission in its 2017 report Charity Law: Technical Issues in Charity Law.

The 2022 Act has wide ranging implications for trustees, employees and indeed legal professionals working in the charity and not for profit sector.  In this article, we examine some of the key changes made by the 2022 Act which charity trustees should be aware of when selling charity land.

1. Designated Advisors

As was the case prior to the 2022 Act, trustees must obtain a written report on the proposed disposition from an advisor acting exclusively for the charity.  Importantly, however, the 2022 Act has widened the category of advisors who can provide such a report to include fellows of both the Central Association of Agricultural Valuers and the National Association of Estate Agents in addition to members of the Royal Institute of Qualified Surveyors (collectively referred to as ‘designated advisors’).  Section 21 of the 2022 Act has further confirmed that trustees, officers or employees of the charity can act as designated advisor so long as they have the requisite qualifications and experience.

By expanding the choice of advisors who can be instructed, trustees have greater discretion to choose the most suitable advisor for the transaction in question.  In the case of the disposal of residential property, for example, it is likely that a local estate agent may be most suited (and offer better value for money) to advise on a marketing strategy than a surveyor.  Furthermore, in lower value transactions, the ability to instruct an internal officer to act as designated advisor offers a cost-effective alternative to external professional advisors. Charity trustees should, however, ensure that they are always acting in the best interests of the charity and that no conflict of interest arises.

2. Designated Advisors Report

The content of the designated advisor’s report has been simplified by The Charities (Dispositions of Land: Designated Advisors and Reports) Regulations 2023 which has replaced the previous ‘one size fits all’ approach under the Charities Act 2011 regulations.  The designated advisors report must now cover the following points:

1. The value of the relevant land and any steps which could be taken to enhance that value;
2. Whether and, if so, how the relevant land should be marketed;
3. Anything else which could be done to ensure that the terms on which the disposition is made are the best that can be obtained for the charity;
4. Any matters the designated advisor believes should be raised with the trustees.

The above requirements are less prescriptive than under the previous regulations, allowing the designated advisor to give more tailored advice to the charity trustees.

Charity trustees must consider the designated advisors report and be satisfied that the terms of the disposition are the best that can be reasonably obtained for the charity before committing the charity to the relevant disposal (s.119(1)(c) CA 2011).

3. Advertisement of Charity Land

Prior to the 2022 Act, charity trustees were required to advertise the disposal of land in the manner that was advised in the surveyor’s report, regardless of whether such advertisement was out of proportion to the transaction in question.  The 2022 Act has granted charity trustees more discretion as to whether, and how, they advertise the disposal of land.  Charity trustees should still consider the advice of the designated advisor and importantly, where they choose to ignore such advice, keep accurate minutes of the charity’s decision-making process to be used if questions as to the sale process arise after the event.

4. Statutory Instruments

Section 23 of the 2022 Act has given further guidance on the information to be included in certain statutory instruments. Section 23(2) of the 2022 Act has confirmed that a contract for the sale of charity land must include a statement which confirms that the land is held by or on trust for a charity and that the disposal has been made in accordance with the provisions of s.117-121 of the Charities Act 2011 (as amended by the 2022 Act as described above).  HM Land Registry Practice Guide 14 sets out the specific wording that should be included.

Where such a statement is omitted from a contract for sale, section 122(6) of the 2022 Act provides protection to the purchaser of charity land who has acted in good faith by confirming that the contract will remain enforceable.

5. Impact of the Charities Act 2022

The changes made as a result of the 2022 Act are welcome and should result in more tailored and useful advice to charities on the disposition of charity land. The trustee’s legal duties remain the same: generally speaking, to obtain the best value for the property in question.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

The Levelling-Up and Regeneration Act 2023 (LURA 2023) is designed to “speed up the planning system, hold developers to account, cut bureaucracy, and encourage more councils to put in place plans to enable the building of new homes.”

 

One significant feature of the Act (section 115) is the abolition of the ‘Four Year Rule’. This rule, which currently gives local authorities just four years to act against certain planning breaches, was revoked on 25 April 2024 (England only).

 

What was the Four Year Rule?

 

Section 171B of the Town and Country Planning Act 1990 (TCPA 1990) gave local planning authorities (LPAs) strict time limits to take enforcement action for breaches of planning control. There was:

 

• A four-year limit to start enforcement action against unauthorised operational development, including building, engineering, mining, and other operations;
• A four-year limit to start enforcement action against unauthorised changes of use to a single dwellinghouse.

 

LPAs could not initiate enforcement action after four years from the date of breach. So, if owners procure Certificates of Lawfulness, those developments could be regularised (apart from some specific circumstances).

 

What has changed?

 

After 25 April 2024, LPAs in England will have a decade to take enforcement action against unauthorised development or the change of use of a building to a single dwelling. This aligns with the current ‘Ten Year Rule’ for other planning control breaches such as unauthorised material change and breaches of condition as well the recent changes to the building control regime.

 

The change is not retrospective, so, as long as affected projects were substantially completed before the new rule takes effect, the ‘Four Year Rule’ will still apply.

 

Other legislative changes implemented on 25 April 2024 include (but are not limited to):

 

• Giving LPAs the power to issue temporary stop notices where they believe works are being carried out to a listed building without the required consent;
• Increasing the duration of new temporary stop notices from 28 to 56 days;
• Giving LPAs the power to issue enforcement warning notices when it appears a development has taken place in breach of planning control, thus inviting applications to regularise the position;
• Limiting the circumstances in which an appeal against an enforcement notice can be brought on the basis that planning permission should be granted for a development;
• Giving the Planning Inspectorate the ability to dismiss appeals against enforcement notices and certificates of lawfulness when the appellant is causing undue delay to the appeal process; and
• Increasing the financial penalties for a range of planning enforcement offences.

 

What does the ‘Four Year Rule’ change mean for developers?

 

Any developers carrying out work without the required authorisation should seek legal advice to determine whether the old or new immunity timeframes will apply.

 

• For works completed (or substantially completed) by 24 April 2024, LPAs will have four years to take enforcement action
• For developments not substantially completed by 24 April 2024,the new ten year time period will apply.

 

While the full impact of LURA 2023 is unknown, the extension from four to ten years may lead to increased action from local authorities as there is a greater period of time for them to become aware of planning breaches. There may also be insurance considerations as providers tighten their requirements to protect themselves from the changes.

 

At Underwoods, we have extensive experience in commercial property matters. By taking the time to understand your situation and particular requirements, we can oversee a smooth process and deliver the right outcome for you. For further advice, please contact our commercial property team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

 

 

Whilst it is relatively common knowledge that the Transfer of Undertaking (Protection of Employment) Regulations (“TUPE”) apply to the sale of a business as a going concern, TUPE also applies to service provision changes. TUPE will transfer employees “wholly or mainly engaged” in the provision of the services and preserves their terms and conditions of employment.

In relation to property management this can present unique challenges for those practicing and working in this area which we will summarise below.

Change of managing agent

When there is a change in the managing agent of a property, the employment terms and benefits which had been provided to the staff by the incumbent managing agent will often be at odds with those typically provided by the incoming agent to their existing workforce. This can mean that the managing agent is engaging staff working under a variety of different terms. This can be commercially unattractive and administratively burdensome.

Furthermore, the incoming managing agent may be unable to replicate certain benefits that it is required to (for example if it is a different type of corporate body), even though these benefits are in theory preserved by virtue of TUPE.

For example, the employee may have the benefit of an employee share scheme but the incoming agent is not a company, and therefore does not have shares to offer. To replicate this benefit, it may need to look at “buying out” the right from the affected employees. The value of any right may be very difficult to quantify, require specialist advice, and may not have been anticipated when the tender was submitted at the outset.

Change of client with change of property manager

The cases of McCarrick v Hunter [2012 EWCA Civ 1399] and Taurus v Crofts [UKEAT/0024/12] established the principle that where there is a simultaneous change of ‘client’ and incoming service provider/managing agent, then TUPE will not apply. In relation to property transactions this means that if a property is sold and the new owner simultaneously changes managing agents, then the site-based staff who work at the property will not necessarily transfer under TUPE. It is important to note that this does not affect circumstances where a property is owned by a corporate body and there is a sale of shares in that body. In such circumstances the owner or client remains the same, albeit with a change in shareholders, and TUPE would not be applicable.

Furthermore, who is the client is a question of fact, as opposed to law and it is important to look to see who is the ‘ultimate’ client. In your typical property management scenario, the ‘client’ would be the owner of the property who would employ a management company or managing agent to manage the same. However, difficulties arise where there are sub-contractors involved, for example, where the managing agent employs cleaners or security staff for the property. These would be deemed as ‘sub-contractors’ and the managing agent would be their ‘client’, with the property owner being the managing agent’s ‘client’ (Jinks v London Borough of Havering [UKEAT/0157/14]).

So, which ‘client’ needs to remain the same for TUPE to apply? Each situation will need to be looked at on its facts but, when considering if TUPE should apply on a property sale, it is important to look beyond the initial client and identify the end client for whom the services provided ultimately benefit.

Who bears the employee risks in a property management agreements?

Whilst certain management costs are usually recoverable through service charges, one of the key issues is which party (the owner, or the managing agent) should bear the risk of claims or disputes, especially any claims which could arise on termination if TUPE does not apply. The provision of appropriate indemnity protection (whatever side you are working for) is therefore crucial.

It is important to note that if TUPE does not apply when there is a change in managing agent, if the outgoing managing agent cannot relocate its staff to other properties it manages, the default position is that is required to cover the costs of redundancy of these staff members (some of whom may have been inherited from an outgoing agent and never have worked elsewhere).

The managing agent can therefore be reluctant to take on such risk if the staff have been inherited from a previous managing agent if appropriate indemnities cannot be obtained, and further, if the fee negotiated does not cover the potential risks. The owner can be reluctant to assume the risk given that they have little control over the managing agent or its staff and feel that staff should not be their responsibility or cost.

An additional  challenge can arise given that management agreements can often provide that the client can compel the agent to remove a member of staff from the property. The agent, as the employer, must be mindful of the employment rights of its employees, particularly if the agent considers that the request could result in an unfair or discriminatory dismissal. This results in a tricky challenge of balancing its contractual requirements and the wishes of its client, together with the employment rights of the individuals engaged by it.

Negotiation of Agreements

The above are all factors that come into consideration when negotiating property management agreements. Underwood Solicitors LLP have extensive experience in all aspects of property management agreements, from both the managing agent’s and the landlord’s perspective, and in respect of both residential and commercial properties and portfolios. Please contact Michael McDonnell, William Gubbins, or your usual contact at the firm, if you would like assistance with this.

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.

 

 

According to the Ministry of Justice, the number of inheritance challenges is rising. Legal rows over inheritances have risen 34% in five years, with court cases involving contested wills increasing by 140% over the past decade.

Cohabiting couples, second marriages, and blended families can make inheritance tricky. But, with a properly drafted will, most disputes can be avoided, or at least easily resolved. Nevertheless, life can change quickly, and factors such as shifting relationships, families, and finances could mean that your carefully drafted will no longer reflects your situation and wishes.

Estate planning is not a one-time task. You should review your will at least every five years or, after a significant change in your personal or financial circumstances, such as those outlined here.

On marriage

Most people do not know that getting married (or entering into a civil partnership) automatically invalidates a will. Unless your will makes specific reference to your intended marriage, it will be revoked after your marriage or civil partnership, and intestacy rules will apply. This means that:

• If you are married and your estate is worth up to £322,000, your spouse will inherit everything, even if you have children;
• If you are married with children (not including stepchildren), and your estate is worth more than £322,000, your spouse will inherit the first £322,000 plus personal belongings. Anything remaining will be split 50/50 between your spouse and your children*. Your children will all inherit an equal share of the remaining 50%.

*Your grandchildren and great-grandchildren will inherit in their place if any of your children die before you.

On divorce

Divorce does not automatically revoke your will. If you end a marriage or civil partnership, your will treats your spouse as if they have died. This means that anything you have left to them will no longer take effect.

Of course, the divorce process can take a long time. It is therefore often a sensible precaution to review your will at the earliest stage, to mitigate the risk of your spouse inheriting should you die before the divorce is finalised.

When cohabiting with a partner

Contrary to popular belief, there is no such thing as ‘common law’ marriage. If you establish a household with your partner, you should consider what ought to happen if one of you were to die. Should financial provision be made for each other? Should a partner have rights over your share of any property?

A cohabiting partner will have no rights or inheritance under English succession law.  Naturally, if you have provided for a cohabiting partner, you should review your will if that relationship ends.

When welcoming new children to the family

You should review your will once you have children, to consider when they might inherit, who should manage funds for them during their youth, and who should act as their guardian(s) if you die whilst they are young.

You should also consider updating your will if a new partner has their own children. You will, between you, need to consider the possibly competing interests of all family members.

If you become a grandparent

It is common for grandparents to add their grandchildren to their wills so they inherit directly. As such, the birth of grandchildren may require a will review.

On a change of financial circumstances

Significant changes in the value and makeup of your estate may impact the planning your current will implements. There can also be tax consequences to factor in. You should consider updating your will if:

• You purchase/ sell property, or your property changes in value significantly;
• You inherit or are gifted assets;
• Your business interests change in value, or your business changes in nature.

If your health or personal circumstances change (or that of a loved one)

Deteriorating health is often a distressing event, and reviewing your will may not be the priority it should be.  If you or a dependant needs care, you may want to use your will to help you do this and protect your estate from care fees.

You will also want to update your will if the executors you have named are in poor health, so that new people are appointed to administer your estate.

Should a beneficiary die

If a beneficiary should die, you should review your will to ensure that the assets you planned to leave them are redistributed according to your wishes. The death of potential beneficiaries will often have been provided for in a solicitor-drafted will, but it is always sensible to check.

Unfortunately, most people are unaware of the impact life changes can have on the distribution of their estate. According to recent research, only 56% of people have updated their will within the last five years, meaning around half of UK wills are out of date.

At Underwoods, we help ensure your loved ones are taken care of when you pass on. In addition to drafting, reviewing, and amending your last will and testament, we can also advise you on several other key areas of law that may impact your estate planning. For further advice, please contact James McLean, Alex Shah or Shirin Wright in our private client team.

 

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.

As our society ages, there are growing incidences of individuals making significant changes to their Wills later in life. English succession laws have a proud tradition of testamentary freedom, but it is important to recognise that late-in-life amendments can have consequences.

The recent case of Rea v Rea (2023) EQHC 1901 (Ch) highlights the difficulties with challenging a Will, and the importance of regularly reviewing your Will.

What happened?

Mrs Rea (deceased) had one daughter and three sons. She made a Will with a solicitor in 1986 appointing one son as sole executor and left her estate in four equal shares to her four children. She made no subsequent Will or Codicil since 1986 – for almost thirty years.

In 2015 Mrs Rea had a solicitor prepare a new Will. She wanted to ensure her home went to her daughter, feeling that her sons did not care for her and had abandoned her. At the time Mrs Rhea had several physical health issues.

The solicitor arranged a capacity assessment – a sensible precaution, given Mrs Rea’s age and health, and the departure in her instructions – with Mrs Rea’s GP who confirmed capacity. They made no suggestion of undue influence.

The Will was witnessed by the solicitor and GP.

After Mrs Rea’s death in 2019, her sons challenged the validity of the 2015 Will on grounds including lack of testamentary capacity and undue influence. The Court concluded the Will was valid.

After several attempts the sons appealed in 2022, and were successful due to a procedural error the judge had made when conducting the trial.  A re-trial was heard in July 2023.

The judge ruled that Mrs Rea did have capacity to make her 2015 Will. However, the judge decided after reviewing the evidence that despite having a solicitor draft the Will and the GP conducting a capacity assessment, there was undue influence by her daughter. The judge determined that due to Mrs Rea’s age and vulnerability, dependence on her daughter, the fact that her daughter had made the arrangements for her mother to make the 2015 Will and that the new Will was unbeknownst to the sons until after their mother had died, Mrs Rea had been coerced to make the new Will.

Mrs Rea’s daughter appealed the decision with the Court of Appeal, and on 23 February 2024, Lord Justices Moylan, Newey and Arnold unanimously ruled in her favour.  They determined that the ruling in 2023 had been wrong; the dependency Mrs Rea had on her daughter should not determine that there was undue influence.

What does this mean?

This case illustrates several important lessons:

• When considering making major changes to a Will, there may be greater scrutiny placed on the circumstances of the new Will if a long period of time has elapsed.
• Although testamentary freedom forms the basis of English succession law, we know that people often have an expectation of inheritance. Where changes are being made that show preference to a family member (which is not unusual where significant care is being provided), it is important to try and explain the reasoning to all family members in a non-confrontational manner. We wonder whether the shock discovery of the new Will by Mrs Rea’s sons contributed to their determination to have it disregarded.
• Where a Will is amended to benefit a person on whom the testator depends, that dependency should not give rise to a presumption of undue influence. It has long been a principle of the Court that undue influence must be proved by the persons alleging it.

The full case judgement can be found here.

For further advice, please contact James McLean, Alex Shah or Shirin Wright in our private client team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

The expansion of AI raises some important questions particularly in relation to intellectual property; can a computer generated work be protected by copyright? Who benefits from the copyright protection the computer or the human being who set the parameters of the enquiry? And, in terms of the end product, how can you be certain that the AI output has not infringed someone else’s rights?

Somewhat surprisingly,  the Copyright, Designs and Patents Act 1988 (“CDPA”) does offer some guidance here. S.178 of the CDPA offers a definition of ‘computer-generated’ – “in relation to work, means that the work is generated by computer in circumstances such that there is no human author of the work”. Does this therefore mean that the computer itself can have the copyright? The answer can be located in s.9(3) of the CDPA where “in the case of literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken”.

It would seem that where a computer has generated a piece of work it is the person who made the ‘necessary arrangements’ that retains the rights associated with authorship. For example, if you ask a computer programme to generate an image, or a document, it should be the person setting the parameters or writing the ‘prompt’ that holds the copyright. That being said this is not explicitly set out in legislation. Conceptually whilst the most appealing answer is as suggested, that the user is the copyright holder, it could also be the case that ‘necessary arrangements’ could refer to the creator of the software itself. Therefore the company that created the software owns the copyright in its outputs.

One of the most significant issues concerning AI and copyright relates to the basis of the ‘knowledge’ the AI tool relies upon. Consider the most popular or recognisable forms of AI, ChatGPT, Microsoft’s Cockpit and similar.  These forms of AI are based upon what is known as a ‘large language model’, which means that these tools have been ‘taught’ by presenting them examples of human authored text, for example by data mining through thousands of pages of information available on the internet. Through a process known as ‘deep learning’ their algorithms can learn to recognise patterns, classify data and make predictions based on analysis of large quantities of data. These algorithms also calibrate and ‘learn’ to provide more specific answers based on user inputs. So the more they are used, the more they learn how to provide an accurate response.

Considering that AI based on large language models relies entirely on existing material to form the basis of its responses can the end user be certain that the answer that an AI tool has provided is not in reality infringing someone else’s copyright. After all copying without consent of the right holder is an infringement of the rights of the right holder even if you as the end user were unaware of the source of the material that AI generated or learned from.

Another significant issue that should be considered is the specific subset of intellectual property relating to the protection for database rights, both in the form of ‘sui generis database rights’ and in copyright. In the United Kingdom the Copyright and Rights in Databases Regulations 1997 amended the CDPA so that a ‘database’ means “a collection of independent works, data or materials which (a) are arranged in a systematic or methodical way; and (b) are individually accessible by electronic or other means.” The systematic ‘scraping’ of data from a website, even if it is easily accessible, in order to train an AI bot or algorithm could be an infringement of the database owner’s rights both in terms of the database right and in copyright.

There are some exceptions that would allow the use of the data, but currently these allow data mining and computer based analysis of materials for non-commercial research. If there is a commercial use and prior permission from the rights holder has not been obtained then commercial exploitation could amount to infringement, it is essential for users that clarity is sought on how the AI tool has been ‘taught’ prior to making use of its products so as not to become embroiled in intellectual property disputes.

In conclusion, the fundamental issue with AI and intellectual property is that the pace of the technological advance is greater than the law’s ability to react. The governmental response in the United Kingdom has been an attempt to be permissive, which has drawn a negative response from the creative industries as they stand the most to lose from de-regulation of copyright. We await with interest the publication of the Intellectual Property Office’s forthcoming code of practice on Copyright and AI in the hope that it gives clarity to a rapidly evolving area of law.

If you require further information about anything covered in this briefing, please contact Oliver Whitehead or your usual contact at the firm on +44 (0)20 7526 6000.