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Ben Jones
Ben Jones, Solicitor
Category: UK Employment Law
Satisfied Customers: 38377
Experience:  Expert in UK Employment Law
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I am looking to pursue my former employer, following a succesfull

Resolved Question:

I am looking to pursue my former employer, following a succesfull tribunal for unfair dismissal. My employer has not paid the remedy.

My employer will claim that the company has no assets however he is also company director of a holding company that holds the assets (buildings) for the company I worked for. These properties were previously owned directly by my employer.

My employer is listed as a company director, but he recently relinquished his shares back to the company. I am looking to enforce a charging order against the properties. Will I be able to pursue based on benefical interest? Or liability as a director of that company?
Submitted: 1 year ago.
Category: UK Employment Law
Expert:  Ben Jones replied 1 year ago.

Ben Jones :

Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. Was your claim against the employer as a company?

Customer:

The employer was a sole trader, he instigated a limited company shortly before I was dismissed (resulting in the tribunal). The judge awarded against him as a sole trader as I had not been tupe'd over to the new company.

Ben Jones :

To be able to place a charging order on the properties you would need to show that they are actually owned by the debtor or that they have some legal interest in them.


 


The issue is that the employer no longer owns them and they are now the property of the company. As a director he will not be held to have any beneficial interest in them by solely being a director of that company - a director is simply a post that he holds in the company but that does not give him any beneficial interest in the properties that the company owns.


 


You can also not invoke any liability that he may have as a director of the company because the company was not a party to the proceedings which you are trying to pursue and your debt is against him personally. It does not matter that he was a director of a different company and you cannot place any liability on that company simply because he is their director.

Customer:

So, the company in question is simply a holding company. It has no business, other than collecting "rent" for the properties from his other company (the sole trader co / ltd co I mentioned above). Is it common practice for the owner of a property to do this with their properties and then extract money from the companies to pay the rent? And what would give him beneficial interest bearing in mind that company only has two directors, him and his significant other.

Ben Jones :

I would not necessarily say it is common but it can happen. beneficial interest usually comes about because of a relationship or marriage. Also some form of trust deed may signify a person's beneficial interest in a property. However, if he was the sole owner and simply sold the properties to the company then this will not give rise to beneficial interest

Customer:

>>Beneficial interest usually comes about because of a relationship.

Customer:

Can you explain how that relates to the the fact that the other company only has him and his partner (life not business) as directors.

Ben Jones :

it does not, this is not the type of relationship I was referring to, it would usually involve two [partners living in a house together and even if one is not the legal owner of the house they may have a beneficial interest in it due to the relationship, any contributions they have made, etc.

Customer:

Interesting. The business in question was a residential rehab company. It was run out of three houses. The respondent is currently living in one of those - based on your info above, same question. BTW, the company is no longer trading, however it has also not gone into liquidation.

Ben Jones :

This is becoming a more complex issue and I must advice that often a beneficial interest may not be established without the involvement of the courts. There are many individual factors that could support the argument for beneficial inertest and whilst I still believe that these are not dominant here, you may wish to spend some time reading this practice note to see just how complex the beneficial interest law can be and to try and see if any of the factors mentioned there apply to your situation:


 


http://www.pla.org.uk/__data/assets/pdf_file/0011/84692/NotesWICKSweb.pdf

Ben Jones :

has your query been dealt with?

Customer:

Ben, I'm still looking at the beneficial interest piece here. Here's why: I have in my possession a letter from my employer which relates to the second company. For context the letter was sent to my father who had loaned my previous employer £20k (which has never been repaid either). The loan was made to Company A (whom I was employed by), the letter is headed by Company B. I believe this letter could be used to prove beneficial interest and allow me to pursue that avenue for remedy. There are a couple of specific points which i believe could do this: firstly the letter states: "In the event of a sale of the business of (company a) and or the properties owned by company b, the borrower undertakes to ensure that all outstanding debt will be repaid". For the second part to be relevant, it would suggest that my employer has beneficial interest otherwise how could he take the sale of the properties into consideration regarding this debt?

Customer:

Sorry, pressed enter and it sent before I'd finished. Secondly as the letter was regarding a loan made to Company A, and yet Company B headed paper was being used in relation to repayment of this, it would suggest once again that the respondent has beneficial interest. I understand that we would probably have to have this accepted in court, however my original question stands, based on this, is it worth pursuing on the grounds of beneficial interest (as we know that the employer has moved all of his assets to this other company). Thanks.

Ben Jones :

hello again, I understand where you are coming from but the letter itself will not be sufficient proof to determine their beneficial interest in the properties. This is just a small piece of a much larger puzzle and whilst it may prompt the court to look at certain factors in making their decision, it will not provide a definitive answer to your assertion that they have a beneficial interest. You are therefore going into somewhat of an unknown territory where your prospects of success are far from clear. There is no clear evidence to suggest you have a more than average chance of success and at this stage I would say it is at best 50/50

Ben Jones, Solicitor
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Experience: Expert in UK Employment Law
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