Court of Appeal decides that a service provider cannot exercise a lien over an electronic database.

 

The Court of Appeal has held that a service provider cannot exercise a lien over the electronic database it managed (Your response ltd V Data Team Business Media Ltd).

The Court of Appeal has held that a service provider cannot exercise a common law lien over the electronic database it managed for a publisher. The publisher had engaged the service provider (a database manager which offered its customers the service of holding electronic databases and amending them as necessary to keep the information up to date) to maintain its database of subscribers.

The contract was both oral and in writing but did not deal with how the contract should be terminated and what was to happen to the database when the contract ended.

The Court of Appeal’s decision confirms that it is not possible to exercise the common law lien over intangible property. It also shows the reluctance of the courts to recognise intangible property as goods and to treat information in itself as property.

The way around these problems is probably to include a clause in the contract for the right to withhold access to the database,  pending full payment of fees.

 

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UNDUE INFLUENCE

How far can a wife be unduly influenced by her husband

Christine Davis V Allied Irish Bank

Mrs Davis claimed that she should not be liable for the loan (which had a number of related mortgage transactions)  which she entered into in 2001,  because she had been unduly influenced by her late husband. She and  her husband agreed to take on personal liability for a loan for over £1 million and take on the additional liability as guarantors in respect of her husband’s company debts for about the same amount.

After enjoying the benefit of the loans and after her husband’s death she then complained that her husband had failed to explain to her exactly what she was taking on. She claimed that was only conscious of being a guarantor under the mortgage and that the loan should be set aside.

The bank had taken the step of ensuring that Mrs Davis had taken independent advice on both the guarantee and the mortgage but had not required her to take independent advice on the personal loan which was also secured by the mortgage.

It was her claim that a substantial part of the personal loan monies were used for her husband’s companies benefit.

The Judge found against Mrs Davis.

She was liable for the loan secured by the mortgage because

  1. Her husband through his company had in fact given her independent solicitor all the information relevant to the 2001 transactions; and
  2. Mrs Davis had later agreed to increase her loans with the bank and these loans were recorded in facility letters which showed the totality of her liabilities i.e. she must have known that she was liable both under the personal loan and the guarantee.

The moral of this tale

If you think you are being bullied into taking a loan for your partners business do not continue to take money from the lender. It will make it pretty impossible for you to try and set aside the original loan or indeed any subsequent loans.

Moira O’Hara, partner, WGS Solicitors, moh@wgs.co.uk tel 020 7298 6298

Deposits held under Assured Shorthold tenancies

MOIRA O’HARA

PARTNER WGS SOLICITORS              TEL: 020 7298 6298 (direct)       EMAIL : MOH@WGS.CO.UK

Deposits held under Assured Shorthold Tenancies

If a Landlord wants to serve a Section 21 Notice to get possession of their property and they have taken a deposit they need to comply with the Housing Act 2004.

  1. Put the deposit in an authorised scheme and serve the Prescribed Information

This requires the deposit to be put into an authorised scheme (either by a payment into the scheme or obtaining insurance under an insured scheme) within 30 days after receiving the deposit and then to serve the Prescribed Information within the same time.

  1. Serve the Prescribed Information

The Prescribed Information is a complicated document and you need to read it carefully.

The DPS print some – but not all – of the prescribed information on the reverse of the form which gives landlords and agents their unique reference number.

You need to identify for the Tenant the tenancy terms which deal with the circumstances in which the deposit can be retained by the Landlord or in whole or in part.  The relevant terms in many standard Assured Shorthold Tenancy agreements are not all in one place.

The Tenant needs to be allowed an opportunity to acknowledge receipt of the prescribed information.

  1. Failure to (a) place the deposit with an authorised scheme or (b) to serve the Prescribed Information

What happens if a deposit is not placed with an authorised scheme or the Prescribed Information is not served?  The Section 21 Notice is invalid.

  1. Sanctions for failing to (a) place the deposit with an authorised scheme or (b) to serve the Prescribed Information

A Tenant or a former Tenant can ask the court to repay the deposit to the Tenant or former Tenant or put it in an authorised scheme. Worse  the court must also require the Landlord to pay the tenant or former tenant a sum equal to an amount between one and three times the deposit. Both of these payments have to be made within 14 days of the court order.

  1. Returning the deposit

A valid Section 21 Notice can always be served when the deposit has been returned to the Tenant in full or with such deductions as agreed between the Landlord and Tenant. So if you want to be really safe then you can simply return the deposit and then serve a Section 21 Notice. (NB This will not stop the tenant or former tenant being able to make the application for payment of up to 3 times the deposit being made to them.)