Is this worth pursuing in court?
Discussion
Hoping some of the legal experts on here but be able to provide a little guidance on a civil matter that we're trying to work out the next steps for.
Bit of backstory.
My FIL died four years ago without a Will and with limited personal assets leaving his wife quote exposed financially. He did own a business (ltd company) which he had operated for many years alongside a trusted partner and family friend, a business that continues to operate partly under his name to this day. They both had their own client banks but operated the business together.
When he died it came to light a a life assurance policy had been established by him and his business partner to pay out in the event of one of their deaths. This was taken out many years ago and the terms of the policy and trust are not clear whether this life assurance was to protect the business and provide cashflow in this event, or to pay out the deceased's family for their share of the business.
In any event, the remaining business partner met with the family some months after FILs death to discuss what he thought should happen with this and to propose what should happen with any trail income streams that could be attributed to FIL, as well as any potential liabilities that the business could have to meet as a result of complaints or clawed back revenue due to cancelled business etc. The business would continue to trade and the remaining partner would be inheriting the bank of clients for ongoing work and future transactions.
The business partner proposed the following:
They would claim the life assurance as they were a trustee and were entitled to do so (This actually had to be signed for by a couple of ex business partners too on the basis that it would be distributed to the family). He would immediately hand over two thirds of this (because there ad been 3 other business partners at the time or writing the policy) and retain his share to prop up any business issues coming off the back of FIL's death.
He would hold these funds in the business as there was a significant amount of commission that could be clawed back for business written by the FIL. He wanted to ensure the business was protected and could meet any of these clawbacks if they occurred (there had been a £5k PI payment from an ongoing complaint that settled after FILs death) so this seemed reasonable .He then changed his mind on this as the potential liabilities were higher than first anticipated, and proposed that all funds were retained and distributed on a gradual basis.
He agreed that the funds would be gradually distributed to the family as the potential liabilities dropped off (less any costs incurred from this) and that after four years the whole amount would be paid over (less any clawbacks).
He also proposed small goodwill payments to the family for existing client's of FIL that signed up for repeat business soon after his death and an agreement for ongoing trail commission that would be distributed accordingly.
This was all agreed in a meeting at his home and was documented over several lengthy detailed email exchanges between me and him, as well has him and MIL and wife.
Fast forward four years and you all know where this is going. No life assurance monies have been distributed, the goodwill payments to the kids never materialised, and no trail commission made it's way back to the family. MIL had to sell the house and has had a significant amount of stress and depression over that time period. We have chased the business partner periodically and have generally been met by radio silence.
There has been an attitude that he should be given the benefit of the doubt to some extent as he was also left exposed by FIL's death, and FIL should have had better protection in place for his family. However, what was agreed was agreed, and the business partner has breached all of the terms that he laid out and that the family agreed to. This is all documented in emails. He is still trading and his industry is one of the few that has actually done well through the pandemic (mortgage broking).
What we need to work out now is if we have a case that is worth talking to a legal professional about, what type of solicitor we should engage with and if it would be worth any costs as resources are tight. There is some apathy around this subject but it also seems an insult to FIL's memory by not fighting this a little more.
Any thoughts or advice is gratefully received.
Bit of backstory.
My FIL died four years ago without a Will and with limited personal assets leaving his wife quote exposed financially. He did own a business (ltd company) which he had operated for many years alongside a trusted partner and family friend, a business that continues to operate partly under his name to this day. They both had their own client banks but operated the business together.
When he died it came to light a a life assurance policy had been established by him and his business partner to pay out in the event of one of their deaths. This was taken out many years ago and the terms of the policy and trust are not clear whether this life assurance was to protect the business and provide cashflow in this event, or to pay out the deceased's family for their share of the business.
In any event, the remaining business partner met with the family some months after FILs death to discuss what he thought should happen with this and to propose what should happen with any trail income streams that could be attributed to FIL, as well as any potential liabilities that the business could have to meet as a result of complaints or clawed back revenue due to cancelled business etc. The business would continue to trade and the remaining partner would be inheriting the bank of clients for ongoing work and future transactions.
The business partner proposed the following:
They would claim the life assurance as they were a trustee and were entitled to do so (This actually had to be signed for by a couple of ex business partners too on the basis that it would be distributed to the family). He would immediately hand over two thirds of this (because there ad been 3 other business partners at the time or writing the policy) and retain his share to prop up any business issues coming off the back of FIL's death.
He would hold these funds in the business as there was a significant amount of commission that could be clawed back for business written by the FIL. He wanted to ensure the business was protected and could meet any of these clawbacks if they occurred (there had been a £5k PI payment from an ongoing complaint that settled after FILs death) so this seemed reasonable .He then changed his mind on this as the potential liabilities were higher than first anticipated, and proposed that all funds were retained and distributed on a gradual basis.
He agreed that the funds would be gradually distributed to the family as the potential liabilities dropped off (less any costs incurred from this) and that after four years the whole amount would be paid over (less any clawbacks).
He also proposed small goodwill payments to the family for existing client's of FIL that signed up for repeat business soon after his death and an agreement for ongoing trail commission that would be distributed accordingly.
This was all agreed in a meeting at his home and was documented over several lengthy detailed email exchanges between me and him, as well has him and MIL and wife.
Fast forward four years and you all know where this is going. No life assurance monies have been distributed, the goodwill payments to the kids never materialised, and no trail commission made it's way back to the family. MIL had to sell the house and has had a significant amount of stress and depression over that time period. We have chased the business partner periodically and have generally been met by radio silence.
There has been an attitude that he should be given the benefit of the doubt to some extent as he was also left exposed by FIL's death, and FIL should have had better protection in place for his family. However, what was agreed was agreed, and the business partner has breached all of the terms that he laid out and that the family agreed to. This is all documented in emails. He is still trading and his industry is one of the few that has actually done well through the pandemic (mortgage broking).
What we need to work out now is if we have a case that is worth talking to a legal professional about, what type of solicitor we should engage with and if it would be worth any costs as resources are tight. There is some apathy around this subject but it also seems an insult to FIL's memory by not fighting this a little more.
Any thoughts or advice is gratefully received.
It would appear from what you say that there is a binding agreement with consideration being given by both sides, and evidenced in writing. So far so good. Much will depend on how much money is at stake. Litigation is expensive and there is no guarantee of success. If the amount is worth it I would see a solicitor. Ask about for recommendations. You want someone familiar with contract law. You are probably better off using a larger firm which is more likely to have specialist advice available as opposed to the local "general practitioner". Getting specialist advice will be more expensive but generally worth it. There´s an old saying that good advice is expensive but poor advice is even more expensive. Don´t be shy to ask for a fee quote at the outset so you know what you are committing to.
crouchingpigeon said:
Thanks for the responses so far.
In terms of numbers we're talking £50k+ so not insignificant. Obviously conscious that legal fees can mount up though and no ide if people work on a no win no fee basis with these type of things nowadays?
So probably worth spending 1k on getting good advice.In terms of numbers we're talking £50k+ so not insignificant. Obviously conscious that legal fees can mount up though and no ide if people work on a no win no fee basis with these type of things nowadays?
Doesn´t sound like the type of case for which a solicitor will act on a no win no fee basis but you can but ask.
There is a clear legal distinction between personal assets and those of the business, which is a separate legal entity.
What happened his shares in the limited company? Absent contrary provisions in a shareholders agreement, they would normally have passed to his wife under the rules of intestacy.
Who paid the premiums on the life insurance policy - did he pay them personally, or were they paid by the company?
What happened his shares in the limited company? Absent contrary provisions in a shareholders agreement, they would normally have passed to his wife under the rules of intestacy.
Who paid the premiums on the life insurance policy - did he pay them personally, or were they paid by the company?
quinny100 said:
There is a clear legal distinction between personal assets and those of the business, which is a separate legal entity.
What happened his shares in the limited company? Absent contrary provisions in a shareholders agreement, they would normally have passed to his wife under the rules of intestacy.
Who paid the premiums on the life insurance policy - did he pay them personally, or were they paid by the company?
Good questions, I'm not actually 100% on whether it was a ltd company or not actually, I think they operated as a representative under a network so maybe not (Would be able to find those details out though)What happened his shares in the limited company? Absent contrary provisions in a shareholders agreement, they would normally have passed to his wife under the rules of intestacy.
Who paid the premiums on the life insurance policy - did he pay them personally, or were they paid by the company?
I suspect the premiums were paid by the business. My initial thoughts were that the policy would have been taken out to protect the business, but that is not clear on any documentation, but the fact that he suggested this should be distributed on to the family without any prompting is confusing. It is not clear if this was just because he wanted to help or appear to be a good guy, or whether that was the intention of the policy all along.
I guess what I am trying to establish is whether his commitment to pay that money over (whether it should have been passed over or not), constitutes a contract and whether he could/should be pursued for that and the smaller payments he promised.
zzrman said:
It would appear from what you say that there is a binding agreement with consideration being given by both sides,
I don't think that's clear at all. You need to work out who's money it was first - the company or the person - before you can get anywhere with the legal side. That's what the OP needs to be able to make progress on as he is asking. I think it's far from clear cut and would take a lot to outsort.Regarding the sum, it's very borderline as to whether it's going to make sense to spend the money to get advice in the first place. If 50k is the total and some form of settlement gets halfway, take 25k, remove solicitors fees, no idea, 5-10k, means 15k. Not a small sum, but if you have to spend 10k to get it and then there's issues actually getting any of the money....
I guess it's a question of spending money on some proper legal advice. I doubt whether a bunch of mindless jerks on a speed limits matter forum are going to shed much light
Bert
PS going through a HHGTTG phase at the moment.
BertBert said:
I don't think that's clear at all. You need to work out who's money it was first - the company or the person - before you can get anywhere with the legal side. That's what the OP needs to be able to make progress on as he is asking. I think it's far from clear cut and would take a lot to outsort.
Regarding the sum, it's very borderline as to whether it's going to make sense to spend the money to get advice in the first place. If 50k is the total and some form of settlement gets halfway, take 25k, remove solicitors fees, no idea, 5-10k, means 15k. Not a small sum, but if you have to spend 10k to get it and then there's issues actually getting any of the money....
I guess it's a question of spending money on some proper legal advice. I doubt whether a bunch of mindless jerks on a speed limits matter forum are going to shed much light
Bert
PS going through a HHGTTG phase at the moment.
Haha, this place has always had the odd few knowledgeable folk who know their stuff amongst all the opinion and conjecture Regarding the sum, it's very borderline as to whether it's going to make sense to spend the money to get advice in the first place. If 50k is the total and some form of settlement gets halfway, take 25k, remove solicitors fees, no idea, 5-10k, means 15k. Not a small sum, but if you have to spend 10k to get it and then there's issues actually getting any of the money....
I guess it's a question of spending money on some proper legal advice. I doubt whether a bunch of mindless jerks on a speed limits matter forum are going to shed much light
Bert
PS going through a HHGTTG phase at the moment.
In terms of who the money went to, it was paid to him as he was a Trustee and named beneficiary for the plan along with two other Trustees (ex business partners who signed their share over on the understanding it was going to MIL). So he received those funds personally as I understand it, and any agreements made were made with him directly rather than with the company (albeit everything was directly related to the business in terms of future income streams and liabilities).
I would therefore expect any claim would be made directly against him rather than the business?
It sounds like this should have been a cross option agreement, so in the event of death it gives the other shareholders in the limited company the money to buy out the widow (or whoever inherited his shares).
Also sounds like a financial services business.
If the estate has been finalised then surely the widow is a shareholder in the company as she hasn't sold the shares she inherited (or has she?) Should be fairly simple to find out by searching the Companies House listing.
4 years after death they should know the situation wrt any clawbacks as most have a maximum clawback of 4 years. Potential misselling claims, unfortunately, go on indefinitely. The normal time limit on complaints doesn't apply to financial services.
Doesn't sound like the business partner is as much of a family friend as you thought.
ps I am absolutely not an expert in this field so other feel feel to correct me.
Also sounds like a financial services business.
If the estate has been finalised then surely the widow is a shareholder in the company as she hasn't sold the shares she inherited (or has she?) Should be fairly simple to find out by searching the Companies House listing.
4 years after death they should know the situation wrt any clawbacks as most have a maximum clawback of 4 years. Potential misselling claims, unfortunately, go on indefinitely. The normal time limit on complaints doesn't apply to financial services.
Doesn't sound like the business partner is as much of a family friend as you thought.
ps I am absolutely not an expert in this field so other feel feel to correct me.
Pro Bono said:
The first thing to establish is what the terms of the trust were. Have you actually seen the declaration of trust that's linked to the policy? If so, what does it say in exact terms?
I have seen the trust/policy document although I am struggling to find the copy of it having changed jobs and email addresses. I think we could dig this out if required and the insurance provider could help if required.Looking back through my email exchanges with him, the policy was in trust with the beneficiaries listed as the remaining partners of the business (which I believe was a limited company at that time). There was nothing in there about what the beneficiaries were to use the funds for, it was just a straightforward insurance company trust form) Some of the other guys were bought out at some point and eventually the limited company was wound up and I think they set up as sole traders under the same banner if that makes sense (I know this is different my OP, it's been a while since I've been over the email exchanges).
Enut said:
It sounds like this should have been a cross option agreement, so in the event of death it gives the other shareholders in the limited company the money to buy out the widow (or whoever inherited his shares).
Also sounds like a financial services business.
If the estate has been finalised then surely the widow is a shareholder in the company as she hasn't sold the shares she inherited (or has she?) Should be fairly simple to find out by searching the Companies House listing.
4 years after death they should know the situation wrt any clawbacks as most have a maximum clawback of 4 years. Potential misselling claims, unfortunately, go on indefinitely. The normal time limit on complaints doesn't apply to financial services.
Doesn't sound like the business partner is as much of a family friend as you thought.
ps I am absolutely not an expert in this field so other feel feel to correct me.
As above, I think they were actually sold traders working under the same banner, which meant the remaining partner had some liability for any clawbacks and complaints etc.Also sounds like a financial services business.
If the estate has been finalised then surely the widow is a shareholder in the company as she hasn't sold the shares she inherited (or has she?) Should be fairly simple to find out by searching the Companies House listing.
4 years after death they should know the situation wrt any clawbacks as most have a maximum clawback of 4 years. Potential misselling claims, unfortunately, go on indefinitely. The normal time limit on complaints doesn't apply to financial services.
Doesn't sound like the business partner is as much of a family friend as you thought.
ps I am absolutely not an expert in this field so other feel feel to correct me.
Again, it is not clear what the funds were to be used for on payout other than it was to pay out to the remaining partners in the event of one of their deaths.
So any legal action would be directed at him as an individual based on his promise and the family's agreement to pass those funds on. I'm not familiar with contract law and don't know if a promise to pay like this has any actual credence or if it's just the same as me saying I'll give someone £100 for Christmas but never delivering?
As others have said get 100% clear in the facts.
Trust deed, who paid etc. It sounds like a key man policy to protect the business.
However again as above the estate would own the share of company / partnership share which would have some degree of Value - even if only the tail revenue given nothing else would have been sold by that person
Get 100% facts before spending money. If you don’t then the lawyer will make his first £5k off you finding out.
Also you need to share the quantum of the sun involved. Don’t fight on principal. It is not worth it
Trust deed, who paid etc. It sounds like a key man policy to protect the business.
However again as above the estate would own the share of company / partnership share which would have some degree of Value - even if only the tail revenue given nothing else would have been sold by that person
Get 100% facts before spending money. If you don’t then the lawyer will make his first £5k off you finding out.
Also you need to share the quantum of the sun involved. Don’t fight on principal. It is not worth it
OP, on the facts that you have described, it is not clear that the partner of your late father in law made a binding agreement to pay anything. What was the partner to receive in return? As described, his promises sound like they may have been gratuitous, and if that is so the promises would not be enforceable. One possibility, I suppose, is that the widow agreed to give up any claim to a share in the business in return for the promises, but I am speculating as to this. Absent an enforceable contract, or clear evidence of a trust to benefit people outside the business, there would be no basis for a claim.
In any event, you need to be clear about whether the business was run through a company, a partnership, or otherwise. The idea that your late father in law and the partner were not in fact partners but that each was trading on his own account sounds unlikely from your description.
If the business was run via a company or a partnership, there might be issues as to company shares or partnership share in any event, even if there was no relevant contract or trust. Please note that a partnership is what is called an unincorporated association and is not a legal entity. There is a modern form of partnership called an LLP which, in broad summary, has some of the features of a company.
One relatively low cost way to assess whether it is worth asserting any claim would be to contact a relatively junior barrister in a non-grotty chambers who does direct public access work. If you PM me I can suggest a few names. Before one of the always ban-happy mods gets all excited, none of those names will be my name. I don't do DPA anyway.
In any event, you need to be clear about whether the business was run through a company, a partnership, or otherwise. The idea that your late father in law and the partner were not in fact partners but that each was trading on his own account sounds unlikely from your description.
If the business was run via a company or a partnership, there might be issues as to company shares or partnership share in any event, even if there was no relevant contract or trust. Please note that a partnership is what is called an unincorporated association and is not a legal entity. There is a modern form of partnership called an LLP which, in broad summary, has some of the features of a company.
One relatively low cost way to assess whether it is worth asserting any claim would be to contact a relatively junior barrister in a non-grotty chambers who does direct public access work. If you PM me I can suggest a few names. Before one of the always ban-happy mods gets all excited, none of those names will be my name. I don't do DPA anyway.
Breadvan72 said:
OP, on the facts that you have described, it is not clear that the partner of your late father in law made a binding agreement to pay anything. What was the partner to receive in return? As described, his promises sound like they may have been gratuitous, and if that is so the promises would not be enforceable. One possibility, I suppose, is that the widow agreed to give up any claim to a share in the business in return for the promises, but I am speculating as to this. Absent an enforceable contract, or clear evidence of a trust to benefit people outside the business, there would be no basis for a claim.
In any event, you need to be clear about whether the business was run through a company, a partnership, or otherwise. The idea that your late father in law and the partner were not in fact partners but that each was trading on his own account sounds unlikely from your description.
If the business was run via a company or a partnership, there might be issues as to company shares or partnership share in any event, even if there was no relevant contract or trust. Please note that a partnership is what is called an unincorporated association and is not a legal entity. There is a modern form of partnership called an LLP which, in broad summary, has some of the features of a company.
One relatively low cost way to assess whether it is worth asserting any claim would be to contact a relatively junior barrister in a non-grotty chambers who does direct public access work. If you PM me I can suggest a few names. Before one of the always ban-happy mods gets all excited, none of those names will be my name. I don't do DPA anyway.
Been offline for a few days, thanks for your response on this Breadvan. I think you're right about needing to get some clarity on the make up of the business. I seem to recall seeing the business referred to as an ltd at some point, maybe when the policy was taken out originally, but then the business changes shape as people left etc.In any event, you need to be clear about whether the business was run through a company, a partnership, or otherwise. The idea that your late father in law and the partner were not in fact partners but that each was trading on his own account sounds unlikely from your description.
If the business was run via a company or a partnership, there might be issues as to company shares or partnership share in any event, even if there was no relevant contract or trust. Please note that a partnership is what is called an unincorporated association and is not a legal entity. There is a modern form of partnership called an LLP which, in broad summary, has some of the features of a company.
One relatively low cost way to assess whether it is worth asserting any claim would be to contact a relatively junior barrister in a non-grotty chambers who does direct public access work. If you PM me I can suggest a few names. Before one of the always ban-happy mods gets all excited, none of those names will be my name. I don't do DPA anyway.
I'll drop you a pm, it would be good to send someone over a brief timeline of events, email correspondence and claim paperwork and see what they make of it.
on the information so far, the OP doesn't have any hard facts or even strong opinion on who was involved, what arrangement was in place, or anything substantial about what happened. Absent facts of the matter, any thought of going to court is a complete nonsense. Sorry OP, but you don't have a chance of getting anywhere with this.
Bert
Bert
Read Breadvan's post above. That's the right advice here.
If there was a life policy written in Trust then it's a simple matter of pressing to find out,
If there was a life policy written in Trust then it's a simple matter of pressing to find out,
- Who were the potential beneficiaries, and
- What has/have the Trustee(s) done with the money.
It would be fair to assume the life policy would only pay the monies to the correct party, so if the business received the funds, would that mean it was supposed to go there first?
I'd be amazed if this was the only policy, usually one would have an insurance for family and if required, suitable insurance to protect a business.
I also wasn't aware that directors estates can be swallowed up by companies. Look out richard branson
I'd be amazed if this was the only policy, usually one would have an insurance for family and if required, suitable insurance to protect a business.
I also wasn't aware that directors estates can be swallowed up by companies. Look out richard branson
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