Since its introduction in 2000, Partnership Lawyers have been as one in agreeing that Section 4(4) of the Limited Liability Partnerships Act was badly drafted. The Court of Appeal’s decision provides welcome guidance as to how the section is intended to work.

The section provides that a member of an LLP shall not be regarded for any purpose as employed by the LLP unless, if he and the other members were Partners in a Partnership, he would be regarded for that purpose as employed by the Partnership. The absurdity of the section arises because a Partner cannot be an employee of his own Partnership. Therefore, a literal interpretation must, inevitably, lead to the conclusion that a member of an LLP can never be an employee of the LLP. If that was the intention of the legislators, they need not have included the wording from “unless” onwards. The additional words must have an intended sensible meaning. As the Court of Appeal stated the presumption has to be that Parliament does not intend to enact legislation whose application leads to absurdities.

The Court decided that the way in which the section must work is that an assumption has to be made that the business of the LLP has been carried on, not in an LLP, but in a Partnership by two or more of its Members. Then, upon that assumption, an enquiry must be undertaken as to whether or not the member whose status is in issue would have been one of those Partners. If the answer is that he would have been a Partner, he cannot have been an employee. If the answer is that he would not have been a Partner, the further question arises as to whether or not he was an employee.

Any such enquiry will require consideration of the circumstances in which a person may become a Partner in a Partnership under the Partnership Act 1890. Section 1 of the Act defines a Partnership as the relation which subsists between persons carrying on a business in common with a view to profit. It is clear from the decision in M Young Legal Associates v Zahid that the sharing of profit is not an essential element of Partnership and the Act itself provides that the mere fact that an employee is remunerated by way of a share of profits does not of itself make the employee a Partner.

Mr Tiffin was a Fixed Share Partner who was remunerated by way of a small guaranteed fixed share of profit; he was entitled to extra profit by reference to a number of profit points; he contributed £5,000 as capital and had voting rights. He would share in any distribution of assets following a winding up of the business. He asserted employment rights and alleged unfair dismissal. The Employment Tribunal dismissed his claim. He appealed unsuccessfully to the Employment Appeal Tribunal. The Court of Appeal has now dismissed his appeal.

Had Mr Tiffin been remunerated by way of a fixed share of profit without contributing capital, without voting rights and without any right to share in a distribution on winding up the result may well have been different and it is clear that the status of individuals within a Partnership or LLP will depend upon what was intended at the time of joining as to whether or not a relationship of Partnership or akin to Partnership in an LLP was to be created. The starting point for any enquiry will be the Partnership Agreement or the Membership Agreement.

For further information on Partnership or Membership Agreements, please contact Peter Moore in our Professional Practices team on 0844 391 5848.

Form RQ is designed to assist property owners by protecting their empty or tenanted properties from being sold or mortgaged by a fraudster. The restriction, if granted, prevents any sale, transfer or mortgage of the property from being registered without a solicitor or conveyancer’s certificate. The certificate confirms that the solicitor is satisfied that the person who signed any transfer or mortgage which has been submitted for registration is the same person as the legal homeowner.

All applications are dealt with by the Land Registry’s Birkenhead Office, regardless of where the property is located and there is no charge for the application.

Unfortunately, Form RQ is not appropriate for use in respect of commercial property or development land or where residential property is owned by a company (as opposed to an individual). Property owners not entitled to use Form RQ, including owner occupiers, can still apply for a similar restriction but must pay an application fee of £50.

This Land Registry protection should provide sufficient comfort to an ever growing number of homeowners who are choosing to rent their property when they move, that their valuable asset is safe from fraud.

Are you a homeowner or private landlord currently renting a property or are you thinking about renting your property?

For more information on Form RQ and how best to protect your rental property contact James Clarke in our Real Estate team on 0844 391 5811.

Yet, set against that background, many of you will be surprised to learn that the NHS is not equipped to provide optimum healthcare 24 hours a day, 7 day a week.

It has long been a source of surprise to me that the NHS offers a “fully staffed” service on a Monday to Friday 9.00am to 5.00pm basis only. Accordingly, if you have the misfortune to fall critically ill at the weekend or out of core hours, you will be treated by a skeleton staff until the fully staffed teams return to work, which tends almost certainly to be on a Monday to Friday 9.00am to 5.00pm basis.

I have always thought that this is an odd situation for a business to be in; and the NHS is a business – a very expensive one funded by you and I. The NHS needs to meet health care needs 24/7, so why would it not run its business 24/7? I suspect that the answer to that question is multi-factorial. Culture and historical practices will play a big, part but the most significant issue is probably funding – or lack of it. It is reported that the NHS spends significantly less per head of population that other European Countries and the US. It can justify its results by boasting better life expectancy statistics than the US. However, healthcare and mortality issues cannot be viewed in isolation from cultural and economic issues. The differing regional healthcare pattern in the UK and abroad establishes that, without doubt.

It is not controversial to accept that tired professionals are not at their most skilful. UK society has accepted this for a number of years – this is precisely why lorry drivers and airline staff are subject to working hours restrictions. This trend has however, been resisted by the NHS for many years for a number of purported reasons, ranging from not enough staff to cover needs if working hours were reduced, to arguing that inadequate training would be provided if working hours were cut. But the underlying reason behind most views is funding – or more precisely, the scarcity of it.

Given the choice; would you choose to have your operation carried out at 9am by a refreshed surgeon – who has just clocked on, or at 2am when they have been in since 9am?

The media has reported the recent statistics showing significantly increased death rates over night and at weekends as a matter of great surprise. However, with a little foresight, surely those statistics should come as no surprise. Surely the NHS would offer us a more reassuring place to be looked after if critical medical staff were rostered on a shift basis, which covered seven days not five?

I’m not suggesting that individuals should work seven days or that individuals should work onerous hours. I do, however, suggest that the level of cover provided should be more of a “level playing field” rather than the traditional system that relies on huge commitment overnight and at weekends by junior doctors, with less than ideal on-site support from senior colleagues. The nature and demands of medicine will dictate that some treatment will be carried out by staff who have been subject to huge strains and stresses. Most medical staff are enormously talented at providing the very best service they can irrespective of onerous hours. In fact, it is a testament to our medical colleagues that they manage the long hours and stressful jobs they do so well. However, talented and robust as many individuals are, that is not a justification for a flawed system. There has been movement in the right direction in the last decade. Gone are the 100 hour weeks habitually survived by junior doctors, and there is a move towards more and closer physical proximity of senior medical staff “out of hours” – but still the basic framework is a five day one not a seven day one. Talented and committed as our medical colleagues are; they are only human.

NHS staff themselves have known for a considerable period of time that “out of hours” care is more risky than work done “in hours”. It is for that reason that elective (planned) operations are not permitted during the night in most Trusts.

Whilst we can all understand why the NHS might be reluctant to change its “five day week” to a “seven day week” – as it would inevitably have a financial impact, what cost can we place on our health and those of our loved ones?

For further information on Personal Injury issues – please contact Nicola Winslett from our Personal Injury team on 0844 391 5860.

The rule of forfeiture, which still applies, holds that an offender should not benefit from their crime. Therefore if someone is convicted of killing a person they should not be able to then inherit from the deceased’s estate, therefore benefiting from their crime.

Prior to February, if an offender was convicted of killing their parents then the grandchildren of the deceased would also be disqualified from inheriting. It is quite possible that this would not have been the wish of the victims.

As a result of a case in 2001, the Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Act came into force on 1^st February 2012 and the rules have now changed meaning that in the above scenarios descendants of the disqualified or disclaiming beneficiary will no longer be disqualified from benefiting. 

The rule of forfeiture which states that persons guilty of unlawful killing cannot benefit from their crimes still stands in place, but now descendants of the convicted offender will be entitled to their inheritance.

It is also good news for those descendants of individuals who have voluntarily elected to disclaim their inheritance.

In addition, the law change effects the position so that a child of a minor can now inherit their parent’s interest, when the parent is under 18 and neither married or in a civil partnership. 

It is important to note that the rules only apply to estates where the deceased did not leave a will and the rules of intestacy apply. Where the deceased left a will the substitute provisions of the will still apply. Therefore, it is extremely important to have a valid will in place to ensure your wealth is passed onto your chosen beneficiaries.

For further information on estate planning please contact Sarah Goodwin in our Private Client team on 0161 475 7689.

The deal was advised by Mitchell Charlesworth’s corporate finance arm MC Vanguard and law firm SAS Daniels LLP.

Mr Wootten, an accountant from Wilmslow, said: “We are delighted to have completed the deal. GB Controls is renowned for its quality, service and technical excellence. The firm has a strong core client base due to this excellent reputation and a long-standing dedicated workforce. Our aim is to build on this using our knowledge and expertise with an expanded network of contacts.”

Mr Hibbert, a chartered engineer from Romiley, said: “GB Controls prides itself on delivering high quality solutions with a quick turnaround. We believe the business has great potential for growth and employment by the strategic expansion of the firm’s expertise within existing and new target markets.”

GB Controls specialises in the manufacture of energy saving control equipment used for refrigeration and other industrial and commercial applications. It has been operating for more than 25 years and has a current turnover of circa £1m.

Mitchell Charlesworth’s Corporate Finance Partner Bob Gore worked alongside Santander Corporate Bank to create a package to fund the deal. He said: “This is a good business with significant opportunities for profitable growth and ideal for a Management Buy In. Both parties worked well together which was a significant factor in enabling us to put the deal in place.” Ian Bateson, Director of Business Development from Santander Corporate Bank said: “Santander Corporate Bank are delighted to have worked in partnership with Peter and James in supporting their exciting acquisition and wish them every continued success.”

SAS Daniels Corporate Law Partner Lorna Bennett led the team which advised the MBI purchaser GB Technology Limited on the corporate, real estate and employment aspects of the deal. She said: “We were pleased to be able to assist James and Peter with this significant step in the history of GB Controls and I am confident of their abilities in developing growth”.

The firm has been sold by Alf Black and Jack Glasgow who set up the business in the 1980s. Mr Glasgow said: “We are extremely proud of the reputation we have built at GB Controls. The firm has grown steadily in recent years and we are very happy with the result of the sale. We have total confidence that the future of the business is in very safe hands.”

Back L to R: Lorna Bennett (Partner, SAS Daniels), Rob Davies (Partner, Mitchell Charlesworth), Peter Wootten (GB Controls) Front L to R: Ian Bateson (Santander Corporate Bank), Bob Gore (Partner, Mitchell Charlesworth), James Hibbert (GB Controls)

This MBI Deal was also published in the MEN Business Bulletin. Click here to view the online coverage.

For further information on management buy-ins or buy-outs please contact Lorna Bennett in our Corporate team on 0844 391 5831.