Lawyers' Revelations

As an old hand at matters of law, I am rarely surprised at the ebb-and-flow of judgements, through the Times Law Reports.  But this week, I had three surprises - all in one week.

Commercial leases: one-way ratchet clauses   The former Sainsbury's subsidiary Homebase has launched a major legal assault on the UK practice of permitting landlords to use one-way ratchet clauses (which prevent a contract rent under a lease ever being reduced, even if the rental market collapses).  Homebase was caught with a lease in Wolverhampton under which the contract-rent (£8 per sq ft) compared with the "market" rent, which had fallen to £5 - they found a new sub-tenant to take the shop, at the new rent, which meant that Homebase would have to top-up, by paying the extra £3 per sq ft.  But the Landlord (Allied Dunbar) refused its consent to the letting, insisting that the "rent passing" should not fall below £8.  Homebase lost in the lower Court, and asked the House of Lords for leave to appeal.  They refused, so the case will rest there, and Homebase will have find another solution, such as a reverse premium, payable as a lump-sum to the incoming tenant.

• Homebase are right.  These one-way clauses are inconsistent with our contemporary understanding of markets, and their essential flexibility - there is something almost mediaeval about the rigidity of the reasoning.  They reflect the dominance of owners over occupiers, in English law.  But the Courts are nevertheless likely to uphold these clauses, because they underpin vested property interests, which English Courts have always been zealous to defend.  I suspect that the Judges will say, with one accord, that only Parliament can now change this basic rule of law...  Sorry, Homebase...

Apprenticeship is not a contract of employment.  Another bit of very "old" legal reasoning cropped up in the case of Whiteley v Marton Electrical Limited.   Mark Whiteley was taken on by Marton as an apprentice, one of the much-publicised five-year modern apprenticeships.  But halfway through, Marton's trading position weakened, and they sacked Mark, giving him instant notice.  He managed to find a new Apprentice Master three months later, and continued his training.  Mark sued Marton for the lost of those three months, both earnings and disruption.  The Employment Appeal Tribunal held Marton liable for damages - because they broken the Apprenticeship ContractL they promised to train him, over a five-year period, and they broke that promise.  Mark's position was the old one of apprenticeship status - he was not just a modern "employee".  If this decision stands, it is bound to act as a deterrent to the use of modern apprenticeships - watch this space...

Gambling Contracts - these have always been unenforceable, under Scots and English law - the Courts have taken the line that gambling is against public policy (although not illegal) and that they should not support the trade by enforcing gambling contracts through the Courts.  And Lorna Anderson, who had agreed to share her Bingo winnings with Isobel Robertson, argued that that agreement was unenforceable.  But the Scottish Judges held that the the "sharing contract" was not itself a "gaming" (or gambling) contract, and it was therefore enforceable.  Lorna would have to pay over half her winnings to Isobel.  Now - I did not expect that result...