‘FinTech’ or financial technology is a phrase increasingly used in the media, the finance sector and the business world in general. In the broadest sense, financial technology is any technology that is used and applied in the financial services sector which improves the delivery of financial services. But what does that mean and why should you care that it is one of the fastest growing areas for venture capitalists or that the sector generated almost £7billion revenue in 2016?
The Neuberg family operated a business producing light metal products and traded under the name Neuberg Metal Spinners for many years. In 1998 a company operated by Mr Neuberg called Neuberg Metal Spinners Limited went into liquidation. Despite this, the family business continued to trade under the name Neuberg Metals but through a new company, Watergate Services Limited, of which Mrs Neuberg was the sole director and secretary.
You buy (or think you buy) a vacant investment property. You complete the purchase and all goes smoothly until you get a visit from someone who says he is the owner and that he never sold you anything…
Rebecca joined Bermans in September 2016 as a Consultant in the Property team.
She has a degree in law & French and qualified as a Solicitor in 2005.
Rebecca advises a variety of clients including SMEs, private individuals and international investors. She specialises in all aspects of commercial property, in particular acquisitions and disposals, landlord and tenant, property finance and property development.
She is also a volunteer for Henshaws Society For The Blind and is a member of Solicitors Regulation Authority.
Alissa is a Partner in our asset based lending team, acting for both financial institutions as well as corporate borrower clients. Since joining Bermans in 2017, she has undertaken a broad range of banking and finance work including invoice finance, asset finance and general corporate finance.
Alissa graduated from Liverpool University with a law degree before qualifying as a solicitor in 2010.
Alissa has a keen interest in live music and travelling, and have previously spent time travelling Thailand, Australia and Fiji.
Andrew joined Bermans in January 2017 as a Partner based in Manchester, becoming Head of Litigation and Dispute Resolution in 2022.
Andrew studied law at University College, Oxford and The College of Law, Guildford, before qualifying as a Solicitor in 1987.
Andrew advises for owner-managed businesses, professional practices, insolvency practitioners, property developers, secured lenders and individuals.
He specialises in property litigation, shareholder and partnership disputes; litigation for secured lenders; contract disputes; professional negligence and insolvency.
Outside of work, Andrew enjoys football (both playing 5-a-side and watching Manchester City); running; walking/climbing; music and learning to play the piano. Plus he is a member of the Manchester Law Society.
Anita joined Bermans in 1987 and has over 25 years of experience in the recoveries arena and a deep understanding of finance and asset based recoveries procedures.
In addition to producing and managing court process for a variety of commercial clients Anita has her own caseload of undefended and defended small claims litigation primarily for the asset based lending industry.
Pat is a qualified Chartered Legal Executive and joined Bermans in 1997.
She works in our Litigation department and deals with a wide range of contract disputes and also property litigation matters (particularly Landlord and Tenant possession actions and Landlord’s claims for rent arrears).
She has developed real litigation nous and is respected by clients’ in their own right, as adept lawyers in their fields.
Melanie joined Bermans as a Trainee Solicitor in 2015, qualified into the Property team in 2017 and became a Senior Associate in 2021, before becoming a Partner in July 2023.
Melanie graduated from Lancaster University with a degree in Law in 2011, before completing the Legal Practice Course at The University of Law, Chester. Prior to joining Bermans, she spent time as a paralegal and working at an international bank.
Melanie deals with a wide range of property matters, including all types of property finance, commercial property acquisitions and sales, residential and commercial developments and acquisitions and redevelopment of buy-to-let properties. She also provides property advisory support for transactions conducted by our Corporate team and prides herself on her friendly, common-sense approach with clients.
An important decision of the Supreme Court has made it less likely that spurious challenges to asset financiers’ liquidated damages clauses will succeed.
For many years now there have been numerous challenges to liquidated damages clauses based on the common law rule against penalties, which in essence has been understood to provide that in order to be effective a liquidated damages clause must only provide for a genuine pre-estimate of the financier’s loss – otherwise it will be struck down as a “penalty” on the grounds of public policy.
Financiers have been careful to avoid a damaging precedent being set in a reported decision of the higher courts, but almost all asset financiers will have experience of being met with resistance to liquidated damages clauses on these grounds.
This area of law was ripe for review by the highest court, so a panel of seven judges sat in the combined appeals of Cavendish Square Holding BV v Makdessi and ParkingEye Ltd v Beavis (Consumers’ Association intervening) [2015] 3 W.L.R. 1373.
Unfortunately the judgments in these cases are rather complex, running to over 100 pages in total. Neither case involved asset finance but the principles to be derived are the same. The first case involved a complex series of investment agreements between sophisticated parties, whilst the second case involved the rather more mundane situation of a motorist overstaying the two hours allotted as free parking in a supermarket car park. However, both cases involved the court giving detailed consideration to the principles of liquidated damages and the concept of penalties.
The leading judgment was given by Lord Neuberger of Abbotsbury PSC and Lord Sumption JSC (with whom Lord Carnwath JSC agreed), who said at paras 31-32: –
“The real question when a contractual provision is challenged as a penalty is whether it is penal, not whether it is a pre-estimate of loss. These are not natural opposites or mutually exclusive categories. A damages clause may be neither or both. The fact that the clause is not a pre-estimate of loss does not therefore, at any rate without more, mean that it is penal. To describe it as a deterrent (or, to use the Latin equivalent, in terrorem) does not add anything. A deterrent provision in a contract is simply one species of provision designed to influence the conduct of the party potentially affected. It is no different in this respect from a contractual inducement. Neither is it inherently penal or contrary to the policy of the law. The question whether it is enforceable should depend on whether the means by which the contracting party’s conduct is to be influenced are “unconscionable” or (which will usually amount to the same thing) “extravagant” by reference to some norm.
The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance”.
Lord Mance JSC said something similar at para 152:-
“What is necessary in each case is to consider, first, whether any (and if so what) legitimate business interest is served and protected by the clause, and, second, whether, assuming such an interest to exist, the provision made for the interest is nevertheless in the circumstances extravagant, exorbitant or unconscionable.”
Comment
As a result of this decision standard liquidated damages clauses used throughout the asset finance industry will be more difficult to challenge as penalties. It will normally be possible for the financier to demonstrate that such clauses are commercially justifiable in the context of its legitimate interest in holding customers to their contractual obligations to make payments throughout the life of an agreement.
However, care should still be taken to ensure that as far as possible liquidated damages clauses properly reflect the losses likely to be sustained by a financier upon termination in the event of default, and particular regard should be had to the relevance of the value of repossessed equipment which may well differ in the case of a finance lease, an operating lease and a hire purchase agreement.
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