D UB LIN SOLICITORS B AR ASSOCIATION MAGAZ INE | WIN TER 2020 | ISSU E 86
MERRY CHRISTMAS TO ONE AND ALL Covid 19
JENNIFER CARROLL MACNEILL TD INTERVIEWED THE IMPACT OF BREXIT ON CROSS-BORDER LITIGATION
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Winter 2020 dsba.ie
From the Editor
elcome to the winter edition of the Parchment which always coincides with the lead-up to Christmas. Most practitioners are just after completing the annual professional indemnity insurance renewal with the stress and anxiety that generally goes with it. To have every solicitor’s practice in the country renew their professional indemnity insurance on the same date (30th November) every year is akin to those Insurers who are in the market, having a turkey shoot. If every person having car insurance had to renew their policy on the same date as everyone else in the country there would be an outcry. Those in the Law Society ought to look at this folly and make a change so that the insurance companies do not continue to take full advantage of us year on year. That anxiety and stress, as mentioned above, continues as it has emerged recently that Banks may be considering charging our client accounts negative interest rates if client account balances are above a certain limit. This is something that the profession and
our clients have never faced heretofore and hopefully it will be resisted or not come to pass as it will lead to ﬁnancial complications and ultimately additional costs for clients. The profession should not have to bear these potential cost implications. Please see article on page 58/59 for further information. Kevin O’Higgins interviews Jennifer Carroll MacNeill T.D. and the Parchment is putting its head on the block by predicting that this former lawyer is on her way to political stardom, given the range of skills and attributes which she has in abundance. May I wish you and your loved ones a peaceful and relaxing Christmas after what has been a diﬃcult and diﬀerent year. Here’s to a successful, healthy and normal 2021 for one and all.
John Geary firstname.lastname@example.org
DSBA COUNCIL 2020/2021
JOE O’MALLEY DSBA President
DIEGO GALLAGHER DSBA Vice President
MATTHEW KENNY Treasurer
PAUL RYAN Chair of Commercial Law Committee
JOAN DORAN Chair of Mental Health & Capacity Committee
GERARD O’CONNELL Chair of the Parchment Committee
AVRIL MANGAN Chair of Family Law & Minors Committee
EDITOR John Geary PARCHMENT COMMITTEE Gerard O’Connell (Chair) Keith Walsh Áine Hynes Julie Doyle Kevin O’Higgins Stuart Gilhooly Joe O’Malley Killian Morris Robert Ryan COPYRIGHT The Dublin Solicitors Bar Association
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the Parchment 1
Help is at Hand
The Reckless Company Director
Niall Cawley highlights the great service that is the Solicitors Helpline
Unification of the Legal Profession Robert Ryan provides an overview commentary on two recent Legal Services Regulatory Authority Reports
Judicially Astute Rising Star
The Impact of Brexit on Cross-Border Litigation
First time TD and lawyer, Jennifer Carroll MacNeill talks to Kevin O’Higgins
Eoin Martin seeks to unravel the new procedures that will apply from the start of 2021
eProbate – A lot Done, More to do Brian Broderick reviews the new Probate online process and sets out a number of pros and cons
Security for Costs
Update on Termination of Residential Tenancies
James Meighan scrutinises the role of security for costs in the litigation process
Marissa O’Keeffe outlines recent developments in the area of Notices of Termination
Dublin Solicitors Bar Association 1st Floor, 54 Dawson Street, Dublin 2, Ireland T: 01 670 6089 E: firstname.lastname@example.org W: www.dsba.ie
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ASTUTE RISING STAR JENNIFER CARROLL MACNEILL
Sean O’Sullivan identifies issues that directors ought to consider
I am passionate about politics as a tool to improve social justice, opportunity and fairness
Autumn 2020 dsba.ie
REGULAR FEATURES 01 Editor’s Note 04 President’s Message 58 News
Court of Appeal Clarity on Damages Robbie Slattery examines the recent Court of Appeal decision of Leidig –v- O’Neill
Medical Negligence Case Law Update
Maria Lakes reports on recent challenges and solutions in this area of the law
Avril Scally and Mark Jones give an overview of recent Superior Court decisions that will impact medical negligence law practitioners
Collection of Service Charge Debt Jason Harte examines what can be done when multi-unit members do not pay their way
Landlord Repossession Affirmed Ciara Ryan and Heather Mahon assess a recent High Court decision which refused to grant an interlocutory injunction to a tenant
Remote Working Considerations Jennifer O’Neill puts a spotlight on remote working and the issues for employers to consider
Concurrent Wrongdoers Judgment Kelley Smith assesses an important Supreme Court Judgment in the case of Defender v HSBC
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Message from the President
A Forward Outlook
fter the hardest of years and a second lockdown, most of us now long for even the illusion of normality and for the chance to enjoy even a merry little Christmas. Rather than despair and sink into a nihilistic apathy, we can draw strength from the very fact that we have come through the most challenging of times personally and professionally and with a clearer vision that things will improve soon. Our customary reflection and forward outlook at this time of year is very different on this occasion. Having endured radical changes to our professional and personal lifestyles and reached the point where we can now glimpse an end to this crisis, we should all take comfort from our remarkable resilience and adaptability during these unprecedented and challenging times. As Steinbeck aptly puts it in East of Eden “It is a hard thing to leave any deeply routine life, even if you hate it.”. Many of us have already resolved to implement, in the longer term, some changes to our personal and professional lifestyles that have been forced upon us as a result of this crisis. I’m sure that more of us will reflect on these changes and their longerterm viability over the coming period. The challenges for our Association have also been reshaped by this crisis. This has required a total rethink of our objectives for the period ahead. Chief among these is our priority to address the many difficult issues affecting our members and our legal community by reason of Covid-19. We have begun re-energising of our offering of top quality CPD programmes through live webinars, having hosted nine successful events since October with more planned before the end of the year and into next year. Clearly, we all need to be thinking about our own wellbeing. As a profession, we have never been especially known for taking care of ourselves. Studies have shown that rates of mental illness, fatigue, physical health problems and substance abuse for lawyers generally far exceed the national average for other professions. These problems take a heavy toll on our bodies and our personal lives. It is vitally important that all of us recognise that our wellbeing is critical to the effective practice of law, protection of the public trust and the vibrancy of our profession. The DSBA has long offered support and services for members struggling with these issues and we will continue to
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invest in and promote this service. This edition contains a timely and useful piece on our Consult a Colleague offering that I commend to all our readers. For the coming year, we will ensure greater messaging to our members about protection of our wellbeing. Thanks in a large part to the remarkable hard work of past Presidents Greg Ryan and Tony O’Sullivan, the DSBA has undergone a significant overhaul of its website and technological transformation over the past year. Our new user-friendly website is fully integrated with e-commerce and membership information systems. Along with comprehensive updates to DSBA’s video conferencing capabilities, the new site will make it easier for our members to connect with the Association and each other. At the risk of a gross understatement, we are living through an extraordinary and difficult time, one that should inspire all of us to extend ourselves to do whatever we can to help others. That is why we have endorsed the Public Interest Law Alliance’s Pro Bono Pledge and we are encouraging all of our members to consider taking on some kind of pro bono work in the coming year. This is part of an overall promotion of social responsibility amongst the legal profession which will put us all in a better light with the rest of society and provide us personally with immense satisfaction in helping persons who otherwise cannot access legal services. We are expert consensus builders and problem solvers, and these skills are needed now more than ever, particularly by the more vulnerable members of our society.
We will also promote diversity and inclusiveness within our member firms (as we have done within DSBA Council and its various Committees), not only because that is clearly the right and fair thing to do but also because it is increasingly and properly a demand of certain critical clients and prospective staff that we operate within an inclusive and equitable culture. The uncertainty of our times is not just coloured by Covid-19, Brexit and US politics. Until very recently nobody would have foreseen the UK Government admittedly breaching international law in a “specific and limited way” or its Ministers accusing Judges of being “lefty activist lawyers” for exposing problems in the criminal justice system. When times are so uncertain, it is all the more important that people are able to turn to trusted professionals, who they know will advise them on their rights and their obligations and give them some sense of surety. In concluding, I pay tribute to my predecessor, Tony O’Sullivan for his steady hand in steering the Association through unchartered and turbulent conditions while leaving the Association in a robust state to weather the final stages of this crisis. And finally, before ending my first President’s message, I wish to mark our remembrance of friends and colleagues who have sadly passed away during the year. Nollaig Shona Daoibh go léir Joe O’Malley, DSBA President
Help is at Hand In times of difficulty, with all of us beset with the pressures of a pandemic and its effect on our ability to practise, it is good to know that your colleagues are always willing to listen and help where we can. Niall Cawley highlights the great service that is the Solicitors Helpline
Background In 1984 the DSBA established what was then called the Solicitors Helpline with the simple but important aim of assisting colleagues experiencing difficulties. The helpline was subsequently renamed Consult a Colleague in the hope that the new name would more accurately reflect the services being offered.
Panel of Volunteers Consult a Colleague is independently run for the benefit of all solicitors in Ireland with administrative support from the DSBA. It is operated by a panel of volunteers who give freely of their time on a two week rotation so that at any time of the year, on every day of the year there are at least two solicitors on standby. The panel is organised in such a way that the contact details for all of the volunteers are available on the Consult a Colleague website at www.consultacolleague.ie so that, in the event that the two volunteers on call on that particular fortnight are colleagues whom a caller might not wish to speak with for any particular reason, he or she can still easily access the full list of volunteers and call any one of them. One of the most important points to take from this is that this is an entirely confidential support service. The colleagues who offer their assistance do so on a voluntary basis and will not and cannot accept instructions arising out of what passes between them and the caller.
Solicitors Only This facility is operated for the benefit of Solicitors only. 6 the Parchment
Confidentiality All calls are made on a no names basis. Of course, any caller can if he or she wishes identify themselves to the volunteer that they have called. While the volunteerâ&#x20AC;&#x2122;s identity is clearly shown the intent here is to shield the caller. All callers can be assured that volunteers do not keep records, even for members of the Consult a Colleague Committee or for other volunteers, of the information that has been furnished to them. This is a strictly confidential service.
Advice Consult a Colleague offers advice unlike some other counselling services.
Professional Representative Again to re-iterate, the volunteers of Consult a Colleague are not professional representatives in the sense that they will not take over the conduct of any matter on a professional level that you might ask them to take over as a result of your dealing with them as volunteers. This is to protect the integrity of the Consult a Colleague system and to copper fasten the fact that this is a voluntary service given by volunteers who are not out to make any sort of financial reward. If professional representation is required the Consult a Colleague website has the name of a couple of solicitorsâ&#x20AC;&#x2122; firms who work in this area professionally and for which of course they are paid but those firms are independent of Consult a Colleague.
Winter 2020 dsba.ie Niall Cawley is principal of Niall T. Cawley Solicitors, Blackrock. He is a Council member of the DSBA
The list that is set out on the website is not intended to be exhaustive but is merely indicative.
party such as a GP or other professional advisers depending on the issues that might be disclosed.
Making the Call
Areas of Advice
Any caller who has a problem of whatever nature can phone the volunteers who are identified on the Help Line or alternatively can contact any member of the panel of volunteers. Bear in mind that you are calling your colleague who may not be immediately free to talk to you depending on the circumstances of his or her working day or where they are at any one time when you reach them. But rest assured, our volunteers will make time to talk to you and address your problem with the attention it needs. On the rare occasions that a colleague cannot deal with your problem for whatever reason then that colleague will generally refer you to one of the other panel volunteers for assistance subject to your agreement.
Services Not Offered Sometimes, colleagues are phoning the helpline because they are facing very difficult situations of one sort or another. The volunteers of Consult a Colleague are all experienced solicitors with a knowledge of running solicitorsâ&#x20AC;&#x2122; practices and compliance with solicitorsâ&#x20AC;&#x2122; regulations. It probably does not need to be stated but they are not in a position to give any sort of advice outside of the legal sphere and working within same we are here to help within the limit of our abilities to do so. Volunteers may on occasion refer callers to a third
Consult a Colleague volunteers address a myriad of issues including: Finance & Accounts, staff & HR, legal situations, compliance issues, bullying, harassment, inability to cope with work and associated stress and depression. The helpline is not intended to be there to help someone who has a particular conveyancing or litigation problem where they are just looking for a second opinion. Generally speaking the helpline is there to assist people who are having professional or regulatory problems or who are having problems in the workplace arising out of bullying or other issues such as finding workplace life challenging and difficult and who are seeking an outside perspective.
Conclusion Consult a Colleague is a voluntary service set up for the benefit of our colleagues. It is staffed by volunteers whose only focus and interest is to help the colleague who calls them with problems. There is no defined limit to the nature of the problems relating to practice and it is intended that the volunteers will endeavour, either alone or with the assistance of other volunteers, to respond to any queries. If you need us we are there for you. Call us. Our number is 01 284 8484 www.consultacolleague.ie P
The helpline is not intended to be there to help someone who has a particular conveyancing or litigation problem where they are just looking for a second opinion
the Parchment 7
The Reckless Company Director Many companies are affected by the ongoing Covid-19 pandemic. Sean O’Sullivan identifies issues that directors ought to consider in order to minimise the risk of incurring personal liability for the company’s debts
he cost of the coronavirus / Covid-19 pandemic to the Irish and global economy is still to be counted and, despite promising recent news on vaccines, it will continue to affect all our lives for the immediate future. The effect on small and medium Irish businesses, in particular, is yet to crystallise, with so many yet to reopen to any significant or permanent degree. While I consider the potential life-line of business interruption insurance and the awaited High Court judgment in relation to same, this article is primarily intended to assist solicitors in advising directors of companies affected by the ongoing Covid-19 pandemic and the steps they ought to take if they find their businesses in a precarious state. It will also hopefully be useful in advising creditors and/or liquidators who may consider bringing claims for reckless trading against delinquent directors.
Business Interruption Claims By letter of 27 March, 2020, the Central Bank set out its broad expectations of insurers regarding pandemicrelated claims, and in Guidelines published on 5 August, 2020 set out its specific expectations regarding claims under policies including coverage for pandemic-related business interruption losses. 8 the Parchment
However, and on foot of separate advices it received, FBD Insurance PLC refused coverage under a number of policies which purported to cover business interruption losses, on the basis that such coverage did not extend to losses incurred due to a pandemic, such as has resulted from the coronavirus / Covid-19. Over 11 days in October 2020, the High Court (McDonald J.) heard claims by four licensed premises that the refusal of coverage by FBD Insurance plc was unlawful. The main issues raised before the High Court concerned interpretation of the contracts of insurance, including: • Whether there was cover for the effects of a pandemic or “disease”; • Whether the imposed closures arose from localised outbreaks; • Whether the losses resulted from the insured peril; • Whether the insurance covered only periods of enforced closure; and • Whether the trend in turnover prior to closure is relevant to the assessment of damages. While the High Court reserved its judgment, which is expected early in 2021, for guidance we look to the English High Court’s judgment in Financial Conduct Authority v Arch Insurance,  EWHC 2448 (Comm) which was relied upon in submissions made
Winter 2020 dsba.ie Sean O’Sullivan BL is a practising barrister in the area of commercial litigation and corporate insolvency, with a speciality in privacy and data protection law
by the parties in the FBD hearing. Asked to interpret 21 policies offered by eight different insurers, the Court in Arch applied the following general principle of interpretation: “[A] court must ascertain what a reasonable person, that is, a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the contracting parties to have meant by the language used.” In its judgment, and while it generally construed the policy terms in favour of the insured where possible, the English High Court found that each policy must be strictly construed according to the wording therein and that while most of the policies did provide some form of cover, the coverage does not necessarily extend to the entire period affecting trade, nor for the entire losses cause by the effects of the pandemic. The subsequent decision in TKC London Limited v Allianz Insurance PLC  EWHC 2710 (Comm) emphasises this point, as the English High Court approved the refusal of coverage on the basis of the wording in the specific policy, notwithstanding that it was held out as covering “all risks”. In light of the decisions in Arch and TKC, there is no certainty that the High Court will rule in favour
of policyholders, nor that any such favourable ruling will extend to each of the six issues highlighted above, which may result in significant claims being properly refused by insurers. In the circumstances, relying on the potential proceeds from a business interruption policy may involve significant risk for the directors of companies, particularly as they may be determined to have traded recklessly and so be made personally liable for the company’s debts.
Reckless Trading and Directors’ Personal Liability While the Companies Act 2014 details the consequences of reckless trading, it does not include any definition of “recklessness”, so we look to the following passage from the English High Court’s judgment in Shawinigan Ltd v Vokins& Company Ltd  3 All E.R. 396, 403: “recklessness is gross carelessness – the doing of something which in fact involves a risk, whether the doer realises it or not; and the risk being such, having regard to all the circumstances, that the taking of that risk would be described in ordinary parlance as ‘reckless’.” We can also look to the judgment of Charleton J. in ICS Building Society v Grant,  IEHC 17 where he stated: “Reckless trading must involve some lack of prudence
While the Companies Act 2014 details the consequences of reckless trading, it does not include any definition of “recklessness”
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While these Guidelines may give direction and comfort to directors, they apply only to the ODCE’s approach to applications to restrict directors – they did not involve any amendment of the Companies Act and so are not binding on Courts in an application concerning reckless trading allegations
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going beyond the risk-taking that is inherent in the enterprise of business so that a real and apparent risk emerges that a company will be unable to pay its debts. In those circumstances, the controllers of a company must also think of their debtors and make provision for the repayment of obligations.” Section 610 of the 2014 Act provides that the Court may impose personal liability on either a. A subjective basis, where an officer of the company was knowingly a party to carrying on business in a reckless manner; or b. An objective basis, where, due to the officer’s experience, skill and knowledge they ought reasonably have known that their actions would cause loss to the company’s creditors or where they contracted to a particular debt without reasonably and honestly believing that the company would be able to repay it and all its other debts. This important distinction was emphasised in Lynch J.’s judgment in Re Hefferon Kearns Ltd, in examining the actions of directors in an application by an aggrieved creditor to impose personal liability for the company’s debts, where he stated that what needs to be proven is: “knowledge, or imputed knowledge, that the [director’s] actions or those of the company would cause loss to creditors: it is not sufficient that there might be some worry or uncertainty as to the ability to pay all creditors.” With this in mind, Lynch J. determined there was no subjective basis on which to impose personal liability, as the directors did not knowingly engage in reckless trading, but he did find there was objective evidence that one of the directors did so. However, having so found, he exercised the Court’s discretionary power to relieve that director of personal liability on that the basis that he was “satisfied that the first defendant acted honestly and responsibly in relation to the conduct of the affairs of the company…” It is this discretionary jurisdiction that will likely be pivotal in such applications following the pandemic, with the following statement from Lynch J. on the otherwise overly-harsh impact of the provisions of particular relevance: “If, for example, a company became insolvent because of the domino effect of the insolvency of a large debtor, it would be reasonable for the directors to continue trading for a time thereafter, to assess the situation and almost inevitably they would incur some debts which would fall within para. (b) before finally closing down. It would not be in the interests of the community that whenever there might appear to be any significant danger that a company was going to become insolvent, the directors should immediately cease trading and close down the business. Many businesses which might well have survived by continuing to trade, coupled with remedial measures, could be lost to the community.” In this regard, it is notable that the ODCE (Office of the Director of Corporate Enforcement) issued Guidelines on 4 June, 2020 on what it would consider when deciding to require that applications to restrict directors of insolvent companies placed in liquidation be brought post-Covid. The Guidelines focus on how the ODCE will assess whether directors acted “honestly and responsibly” in continuing
to trade while insolvent, and state that the specific, challenging circumstances wrought by the pandemic will be considered, including the following: • Whether the insolvency was genuinely outside the directors’ control; • The adequacy of procedures for monitoring the company’s affairs and finances; • What advice and/or actions were taken to reduce costs, restructure the business or otherwise in light of the insolvency/impending insolvency; • The basis for a belief in the company’s reasonable prospect of survival and whether and when it became apparent the company was hopelessly insolvent; • That they otherwise acted in good faith, honestly and responsibly. While these Guidelines may give direction and comfort to directors, they apply only to the ODCE’s approach to applications to restrict directors – they did not involve any amendment of the Companies Act and so are not binding on Courts in an application concerning reckless trading allegations. Notwithstanding this, in the exercise of the discretionary jurisdiction to relieve directors of personal liability, the Courts may have regard to the Guidelines, and to the societal or community value of the company’s continued trading, as emphasised by Lynch J. in Hefferon Kearns. Finally, it should be noted that there is an exceptionally high bar to be reached in an application to impose personal liability, as emphasised in the Court of Appeal’s judgment in Re Appleyard Motors Limited,  IECA 280 where Hogan J. stated: “it is not enough that, viewed objectively, an experienced director ought to have known that his actions or those of the company might cause loss to a creditor. [s. 610(3)(a)] imposes an even more exacting requirement: viewed objectively, ought an experienced director to have known that the actions in question would cause loss. This suggests that the loss to the creditor must have been foreseeable to a high degree of certainty.” That the standard of proof is so exacting ought be considered carefully by both directors and applicants in the context of such applications, in assessing the prospects of the success of the application or the defence.
Conclusion While it is a very high threshold to be reached, in considering whether to continue trading, directors will need to carry out a “sober assessment” of the company’s position, seek advice and act reasonably in any attempts to save the business, without becoming “reckless to the realities and with the fact that they should put up the shutters.” If directors act in good faith, honestly and responsibly, Courts will be slow to impose personal liability in light of the pandemic, but this will require pro-activity and demonstrable evidence for their actions, in line with the ODCE Guidelines and the case law examined herein. P
Winter 2020 dsba.ie Trea McGuinness is a senior associate in the Private Client Department of BHSM Solicitors. Jessica Hickey is the principal solicitor of Hibernian Law Solicitors and the Chair of the DSBA Probate & Taxation Committee
Practical Paths to Probate Trea McGuinness and Jessica Hickey review a new book on Probate - Practical Probate, written by Karl Dowling, Barrister and Susan Martin, Solicitor
arl Dowling BL and Susan Martin have joined forces again, after the successful publication of the 3rd edition of Civil Procedure in the Circuit Court. Their latest collaboration, Practical Probate, provides just that, a practical guide through Probate procedures, from Will drafting to extraction of Grants of Administration. This manual comes at an opportune time, given the introduction of various changes to Probate procedures by the Probate office, implemented in an effort to streamline Probate procedures and to reduce the volume of rejected applications for Grants of Administration. This book provides a concise reference guide, similar in style to the much loved Probate in a Nutshell, written by the late Eamonn G. Mongey, BL. It covers a wide range of areas, such as estate planning, Will drafting and the administration of different types of estates. It includes a detailed chapter on Enduring Powers of Attorney, looking at the execution and subsequent registration of Enduring Powers of Attorney. It also touches on Probate Office procedures and the various applications that can be made to the Probate office before addressing Non-Contentious Probate litigation. The book includes a number of useful precedents and checklists, all in an easy-to-follow handbook. This is an excellent go-to guide, particularly for newly qualified solicitors or indeed, any solicitor new to, or returning to, the area of Probate practice. Issues encountered frequently by Probate Practitioners are also addressed, including matters such as capacity, validity of Wills, caveats and citations and estates with a foreign element. The Inland Revenue Affidavit was replaced in September 2020 by the introduction of the Statement of Affairs (Probate) (Form SA2) and further changes to Probate procedures are expected early in the New Year. Practical Probate, coupled with relevant updates
on the Courts Services website and the Revenue Guidelines on the Form SA2, will certainly greatly assist Solicitors in following the new regime. P Roundhall, â&#x201A;Ź55.00. Karl Dowling BL is a Barrister with a specialist practice in Probate Litigation and regularly appears before the High Court and Circuit Court. He is a Founding Member of the Probate Bar Association. Susan Martin is a Solicitor with a busy Dublin practice, and has significant experience in the administration of estates and probate litigation. She is an Officer of the Dublin Solicitors Bar Association and a Member of the Council of the Law Society of Ireland. the Parchment 11
Unification of the Legal Profession Robert Ryan provides an overview commentary on two recent Legal Services Regulatory Authority Reports which address the unification of the legal profession, legal education and training
he Legal Services Regulatory Authority [“the Authority”] has very recently published two Reports under Section 34 of the Legal Services Regulation Act 2015 [“the 2015 Act”] entitled: • Greater than the Sum of its Parts? Consideration of Unification of the Solicitors’ Profession and Barristers’ Profession [“the Unification Report”]; and • Setting Standards. Legal Practitioner Education and Training [“the Education Report”]. Each Report is dated 30th September 2020, was published on 19th November 2020, and is available to view on: www.lsra.ie/publications. By way of overview, the substantive conclusion of the Unification Report is that there should not be unification of the solicitors’ profession and barristers’ profession; and the substantive conclusion of the Education Report is that there should be Standard Setting for Legal Practitioner Education and Training. Those conclusions accord with the submissions of the DSBA to the Authority on each topic, and which have been extensively referenced by the Authority in both Reports. In a press release dated 19th November 2020 issued by the Department of Justice headed “Minister McEntee to reform legal education and remove barriers to becoming a solicitor or barrister”, the Minister for Justice Helen McEntee welcomed both Reports. The Minister made no specific comment in the press release on the Unification Report, but did state in relation to the Education Report that she “was committed to working with the LSRA to drive reform of legal education”. The Minister also stated that she had now called upon the Authority to prepare a report focusing on the financial and administrative barriers that aspiring lawyers face at the outset of their careers, and to make recommendations for change in that regard.
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Unification The Unification Report (125 pages) analyses the question as to whether there should be unification of the solicitors’ profession with the barristers’ profession. The analysis is applied across the five headings of examination provided for under Section 34 of the 2015 Act – as to the public interest, competition, administration of justice, the consumer interest, and other matters considered appropriate by the Authority. The Unification Report draws on relevant research in Ireland and in other comparable jurisdictions, as well as (extensively) on the various submissions received in response to its consultation on unification (the DSBA being one of the ten bodies listed as having made a submission, and the only solicitors’ bar association to do so). Most of the submissions advocate against unification of the solicitors’ profession with the barristers’ profession, and it appears for much the same reasons. As to whether any such unification might provide lower costs for consumers of legal services, both the Law Society and the DSBA expressed the view that this would require a full economic analysis, with the DSBA adding that reform of the court listing system might also be necessary. The Authority evidently hoped [para. 4.10] it would have received more submissions and from a wider stakeholder base (such as consumer, business and public sector entities or groups which are users of legal services). The absence of other such submissions might be indicative of unification not being regarded at large as necessary. In any event, having considered all relevant aspects, the Authority concluded that “there is a lack of compelling evidence to support a recommendation that the profession be unified” [para. 6.54].
Winter 2020 dsba.ie Robert Ryan is former chair of the DSBA Task Force and a member of the Law Society of Ireland Task Force, on the Legal Services Regulation Act. He is also a past president of the DSBA. Robert is the principal of Doherty Ryan & Associates Solicitors, Dublin 2
Accordingly the Authority’s recommendation to the Minister [para. 6.22] is that “the solicitors’ profession and the barristers’ profession should not be unified at this time”. This is subject to a time based saver [para.6.25] in that the Authority “undertakes to return to this matter no less than five years from the date of submission of this report to the Minister”. This period is as stated [para.6.22] designed to allow for changes over time in the legal landscape in Ireland, particularly the changes as are or may be allowed for under the 2015 Act as relevant to the unification question – such as to allow for new business structures (e.g. legal partnerships or multidisciplinary partnerships) or expanded direct access to barristers or easier transfer between the two professions and so on.
Legal Education & Training The background to the Education Report (105 pages) is the Authority’s September 2018 Interim Report to the Minister regarding Legal Education and Training in Ireland [“the 2018 Report”]. The 2018 Report attached the very lengthy report of the Consultants engaged by the Authority, and which report set out a case for the reform of legal education and legal training in Ireland based on two Core Proposals. The first Core Proposal was that a clear definition of the competence and standards required to practise law should be developed in relation to legal practitioners, as the “competence and standards-based approach …offers an opportunity better to define not only core knowledge, skills and attitudes required by legal professionals, but also the specific tasks they should be capable of performing, and the standard at which such tasks should be performed”. The second Core Proposal was that the Authority should establish a new independent body, to be called the ‘Legal Practitioner Education and Training Committee’, to be tasked with responsibility for setting and assuring standards of legal practitioner education and training. Subsequent to the 2018 Report the Authority undertook consultations on the proposals set out therein, including with the professional and educational bodies for solicitors and barristers as well as other key stakeholders (including the DSBA). The Authority also held a public symposium to discuss those proposals in September 2019. The Education Report refers to all of the foregoing, setting out the positions of all those subsequently consulted on the 2018 Report, as well as referring to the wider context of legal education and training. It then makes twelve Recommendations (set out on pages 98 & 99) and which may be broadly summarised as follows: • to establish an ‘Legal Practitioner Education and Training’ (LPET) committee tasked with developing, implementing and maintaining a clear definition of the competence and standards required to practise as either a solicitor or barrister; • LPET committee to have powers to compel adherence in relation to the required standards by existing and new legal education & training service providers;
• LPET committee to have power of accreditation and scrutiny of new legal education & training service providers; • LPET committee to be statutorily empowered to exercise its functions; • LPET committee to be established by the Authority, and to receive administrative and logistical support from the Authority, but to be independent from the Authority in its decision making; • LPET committee to be made up of no more than seven members and constituted as a part time committee; • LPET committee to be funded by a blend of State grant and accreditation fees.
Conclusion The Unification Report may be viewed as settling, at least for now and into the medium term, the question of unification of the solicitors’ profession and barristers’ profession. In the Education Report the Authority has evidently adopted in its recommendations the two Core Proposals of the 2018 Report, and that these have the support of the Minister. One may conclude therefore that it is only a matter of time before the LPET committee is established, albeit it appears dependant on statutory intervention for is establishment. And as to the Minister’s call for the removal of barriers to becoming a solicitor or barrister, this will in due course likely become another topic for detailed consideration by all concerned, and not perhaps for the first time. P
Most of the submissions advocated against unification of the solicitors’ profession with the barristers’ profession
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Winter 2020 dsba.ie Kevin O’Higgins is principal of Kevin O’Higgins Solicitors. He is a former President of both the Law Society and the DSBA. He is a former editor of the Parchment
Judicially Astute Rising Star First time TD and lawyer, Jennifer Carroll MacNeill has hit the political road running and is keen to make her mark. Here she talks to Kevin O’Higgins about Judges, politics and the Law
o messing about here. I launched straight into the Woulfe crisis which has, since Judge Woulfe’s meeting with the Chief Justice in early October, engulfed the twin arms of State – the judiciary, on the one hand and the Executive on the other. What did Jennifer Carroll MacNeill make of it all, I enquired, to which she demurred: “I can’t say anything”. It was omerta and there was no going there. The Taoiseach had ordained that there be no loose commentary. To do so could jeopardise a potential impeachment process. Says Jennifer – “It was a moment for cool heads and steady nerves. Rushing to judgment was not an option. Often the thing to do is to take a moment and reflect and not rush to make a comment which could potentially cause problems later on down the line.” At the time of our interview the Government had come to the realisation that there were insufficient grounds for impeachment and that no further action
Often the thing to do is to take a moment and reflect and not rush to make a comment which could potentially cause problems later on down the line
would be taken. Meanwhile Rise TD Paul Murphy was indicating his intention to put down such a motion – yet with little indication that it will attract any support. Mr Justice Woulfe will likely resume his duties as a sitting Judge of the Supreme Court in February. My interviewee is first and foremost a lawyer, having trained in Ronan Daly Jermyn and then Pearts. Jennifer then chose to undertake post graduate studies. She completed a PhD in politics in UCD where her work won her the coveted Basil Chubb Prize for the best politics PhD in Ireland. Her entry into politics might, therefore have seemed inevitable, but it was far from such. She knew John Paul Phelan TD, then the Minister responsible for the Local Elections. “I need a woman to run for us in Killiney-Shankill. Will you run?” Jennifer was living in the area, was at that stage working in Government and with four weeks to the election decided to give it a go and was handsomely elected as a councillor to Dun Laoghaire Rathdown County Council. “Swing-gate” then erupted. This concerned the Parchment 15
My vision for the future of Ireland is to continue to work through Covid, rebuild a strong economy, full employment, at the centre of Europe and a compassionate country that supports its people Maria Bailey, a Fine Gael TD in Jennifer’s constituency and related to a personal injuries claim brought by Ms. Bailey against a hotel following her fall from a swing. It got the full Joe Duffy treatment for weeks and ultimately Ms. Bailey was deselected. Fine Gael turned to Jennifer, then scarcely a wet week in politics, to run in place of Ms. Bailey in the Dun Laoghaire Constituency. She romped home albeit at the expense of her party colleague Mary Mitchell O’Connor. But while Jennifer would appear to be a political novice, the reality is that she had been at the political coal face for over a decade. She had worked as legal advisor for Enda Kenny as Opposition Leader. Then as policy advisor to Frances Fitzgerald from April 2011 until June 2013. She worked for the then Minister for Justice and Equality 16 the Parchment
Alan Shatter from September 2013 until his resignation in May 2014. She subsequently took a break from politics, not returning until October 2017 when she did a stint with then Minister for Housing, Planning and Local Government Eoghan Murphy, where she advised him on the National Planning Framework and the creation of the Land Development Agency until January 2019 when she left to work for a Public Relations firm for a brief period before her entry into elected politics in May 2019. Politics aside, Jennifer is the foremost legal scholar on the science of judicial appointments. This had formed the basis of her PhD and subsequently a legal tome The Politics of Judicial Selection in Ireland (Four Courts Press 2015) – an unprecedented analysis of the politics underlying the
appointment of judges in Ireland. It is enlivened by a wealth of interview material and she puts the Irish experience into a broad comparative framework. It tells the inside story of the process by which Judges have been chosen both in Cabinet and in the Judicial Appointments Advisory Board (JAAB) process over the past three decades and charts a path for future reform. Based on a large number of interviews with senior judges, current and former politicians, Attorneys General and members of JAAB, it relates the circumstances surrounding decisions about institutional change in meticulous detail, giving an excellent insight into the significance of the complex series of events that govern the way in which judges are chosen in Ireland. So who better to be quizzed about the latest twist in the Woulfe controversy. This arises from the efficacy of the Minister apparently having four names for consideration for appointment to the Supreme Court, three existing Judges (being non JAAB) and Seamus Woulfe, who was successful. This aspect of the controversy is the apparent contention that the Minister is politically charged with allegedly not having shared the other names with her political
Winter 2020 dsba.ie
Photography: Bryan Meade
masters when the appointment was made. Perhaps all of this will by now have become clear. But in any event Jennifer was also not going there! As to how Judges are appointed here Jennifer surmised that the perfect system may not exist. Some countries, such as the UK (including NI) have peeled away the political layer entirely but Jennifer does not favour this absolutist approach. “We have a hybrid system here where politics, through the elected Government of the day, chooses the judges. That’s how democracy works and means that the Minister for Justice, through Government, can choose from a group of individuals already approved by JAAB, an independent body.” She feels the system benefits from the political input and that after JAAB has done its job, the names going forward to Government have been vetted and are all suitable for appointment. “It’s for the politicians then (or the Minister for Justice in particular) to then seek to address any imbalance as may exist in the composition of a particular court, in areas such as gender, specialism, race, religion, sexuality.” In fact, I was struck by the comments of former Minister for Justice Alan Shatter from Jennifer’s book when he says – “I approached the matter on the basis of, not simply who were the best lawyers (for the particular Court) but where were the gaps in the judiciary – if a member of the judiciary who had retired had two or three specialities …. I tried, and I would religiously read all of the CVs …” His point was that JAAB does not have those considerations and that without the political ingredient (as in the UK), it would be arguably undemocratic and if a bad appointment is made there would be no political accountability. Jennifer agrees but recognises that the system needs modification. While JAAB bemoans the fact that it has no resources to conduct interviews of potential judicial candidates she would welcome interviews. However, she doubts if it would be correct for judges on JAAB to conduct same on the grounds of awkwardness of dealing with unsuccessful candidates in the court room in the future. Yet she feels that the Public Appointments Commission would be well equipped to do so. She also feels that JAAB has sometimes taken liberties with its interpretation of the legislation. That aside Jennifer was delighted with the recent nomination of 17 of our colleagues as Senior Counsel. “Absolutely marvellous. It’s a terrific opportunity for colleagues at the top of their game to achieve parity with their senior colleagues at the Bar. The fact that some of those appointed
Jennifer Carroll MacNeill at a glance
AGE 40 FIRST ELECTED TO DÁIL 2020 CONSTITUENCY Dun Laoghaire FAMILY Married to former Irish rugby player Hugo MacNeill. They have one son AUTHOR OF The Politics of Judicial Selection in Ireland (2016), Four Courts Press
are not necessarily litigators is particularly to be welcomed as it is a recognition that those in high end advisory areas play as important a role.” Is she politically ambitious? I ask, and if so what role would she covet the most – Minister for Justice or Taoiseach? She replies to the effect that having spent the last 15 years in some level of public service that this endeavour is very much where she is at. In political terms, Jennifer is flat out but thoroughly enjoying it. Her work divide as between parliamentarian in the Dáil and constituency politician is a healthy 50/50 split – Monday, Friday and Saturday – doing constituency work and Tuesday, Wednesday and Thursday – in the Dáil where she takes the legislative role most seriously. She sits on a hatful of committees close to her heart including the Justice, and Good Friday
committees while holding the Equality brief for Fine Gael. “I am passionate about politics as a tool to improve social justice, opportunity and fairness. My vision for the future of Ireland is to continue to work through Covid, rebuild a strong economy, full employment, at the centre of Europe and a compassionate country that supports its people.” Jennifer Carroll MacNeill may have come late into mainstream politics. In her short tenure to date she has impressed far and beyond her base. No surprise then that she is to the fore in the TV studios where she is calm and always well prepped – a strength honed from her lawyer’s training, no doubt. Clearly a politician of considerable substance if she has the staying power and desire to put up with its relentless attrition. P the Parchment 17
Sarah Lawn is an associate in the Employment Group at Arthur Cox
Sick Pay on the Horizon? Earlier this year, following clusters of outbreaks of Covid-19 in meat plants and nursing homes, much was made of the fact that there is no statutory entitlement to sick pay in Ireland. However, Sarah Lawn says the recent launch of a public consultation process by the Department of Enterprise, Trade and Employment could mean that statutory sick pay is on the horizon for Irish employees Current Position
In September 2020, the Labour Party published the Sick Leave and Parental Leave (Covid-19) Bill 2020, which proposed that after four weeks’ service, employees would be entitled to up to a maximum of 30 days of paid sick leave in any 12 month period
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There is no statutory entitlement to sick pay in Ireland. An employee who is unable to work due to illness or injury will be entitled to receive State paid Illness Benefit, after six days of absence, if they have made sufficient PRSI contributions. Illness Benefit rates are graduated according to an employee’s average weekly earnings in the relevant tax year. It was announced in Budget 2021, that the waiting period for the benefit will be reduced to three days from February 2021. In March 2020, in response to the Covid-19 pandemic, the Government introduced the Covid-19 Enhanced Illness Benefit at a rate of €350 per week for any worker who is advised to self-isolate by a medical doctor or who has tested positive for Covid-19. From August 2020, this benefit has been available to the self-employed and workers living in direct provision who are required to self-isolate or who have Covid-19. The Covid-19 Enhanced Illness Benefit is available from the first day of an employee’s illness or self-isolation and is due to operate until 31 March 2021. While there is no statutory obligation to pay sick pay, many employers across all sectors pay employees sick pay, either on a discretionary or contractual basis. Sick pay entitlements may also be set out in collective agreements. The duration of any such sick pay can vary significantly between organisations from a few days to a number of months and will usually involve an employer “topping-up” any State paid Illness Benefit. There are no statutory rules in relation to operating a company sick pay scheme. The recent WRC decision in User Interface Designer v Engineering Company is, however, a useful reminder to employers to ensure that any sick pay scheme is operated fairly and does not breach the Employment Equality Acts 1998-2015. In this case, a former employee of an engineering company was awarded €20,000 after an
adjudication officer found that her employer’s failure to pay her sick pay under its discretionary sick pay scheme was discriminatory on the grounds of race. The complainant, who was Croatian, was able to point to an Irish comparator who had previously been paid during her period of sick leave.
Calls for Change In September 2020, the Labour Party published the Sick Leave and Parental Leave (Covid-19) Bill 2020, which proposed that after four weeks’ service, employees would be entitled to up to a maximum of 30 days of paid sick leave in any 12 month period where the employee is incapable of working due to illness or injury. Further, on 8 October 2020, the Oireachtas Special Committee on Covid-19 Response issued a report recommending the establishment of a statutory sick pay requirement for low-paid workers, such as those working in nursing homes and meat plants. The Government voted to postpone debate on the Bill for six months pending a consultation, indicating that it planned to introduce its own bill on the matter, arguing that the Labour Party’s proposals placed an undue burden on employers.
Launch of Public Consultation On 11 November 2020, the Department of Enterprise, Trade and Employment launched a public consultation process on the introduction of a statutory right to paid sick leave for all employees. The Department is encouraging all employees and employers to engage with the consultation and to complete questionnaires by 18 December 2020. In circumstances where the Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD, has made a commitment to bring Ireland in line with other OECD countries by providing for a statutory entitlement to sick pay, it would appear that change is imminent. P
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The Impact of Brexit on Cross-Border Litigation Eoin Martin seeks to unravel the new procedures that will apply from the start of 2021
n 31st December 2020, the transition period, during which EU law continued to apply to the UK under the Withdrawal Agreement, will end. EU regulations which currently govern jurisdiction, recognition and enforcement of judgments, service, evidence, insolvency and choice of law, will all have to be replaced by alternative rules and procedures from the start of 2021. This article, which is based on a seminar for the commercial committee of the DSBA on 19th November 2020, does not deal with family law and other areas impacted by Brexit. Jurisdiction and the recognition and enforcement of judgments is currently governed by Regulation 1215 / 2012 (“Brussels Recast”). When the UK leaves this regime, from an Irish perspective, it will be treated like other non-EU countries such as the USA.The European Enforcement Order regime under Regulation (EC) 805 / 2004 will also no longer be available for enforcement of uncontested UK judgments in Ireland, or Irish judgments in the UK. To issue Irish proceedings against a UK-based defendant, it will be necessary to apply under Order 11 RSC (Rules of the Superior Court) for leave to issue and serve proceedings out of the jurisdiction. The court will have to be satisfied that the matter is one over which the Irish courts should exercise jurisdiction on the basis that the cause of action fits within one of the categories exhaustively listed in Order 11, Rule 1. When seeking to enforce a UK judgment in Ireland,
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a plaintiff will have to commence fresh proceedings (e.g. by summary summons where one has judgment for a liquidated sum) so as to turn it into an Irish judgment. The adverse effects of Brexit could be mitigated if the UK is admitted in its own right to the Lugano Convention. Brussels Recast evolved from the Brussels Convention of 1968. The Lugano Convention 1988 (replaced with an updated version in 2007), adopted the principles set out in the Brussels Convention and extended them to three of the states of the European Free Trade Association (EFTA) – Iceland, Norway and Switzerland. In April 2020, the UK applied to participate in the Lugano Convention in its own right. This would ensure that most of the same principles covering jurisdiction and the recognition and enforcement of judgments under Brussels Recast would continue to apply in future. Iceland, Norway, and Switzerland have agreed to welcome the UK into the Lugano Convention, but at the time of writing, the EU has not agreed to do so. A three-month notice period for admission of new members means the UK will not be joining Lugano on 1 January 2021, although it may be admitted later. Although the Lugano Convention is similar to Brussels Recast, there are certain key differences. The 2007 Convention was modelled on EC Regulation 44 / 2001, so it is now somewhat out of date. For example, Article 38 of the Lugano Convention still requires a party seeking to enforce a judgment in a second state, to obtain a declaration of enforceability in that second state, whereas this requirement has been abolished in
WInter 2020 dsba.ie Eoin Martin BL practises in the area of commercial, chancery and insolvency law. He was called to the Bar in 2011
Brussels Recast. European Enforcement Orders also do not extent to Lugano Convention states. Brussels Recast had stronger provisions than Lugano to deal with exclusive jurisdiction clauses and the “Italian torpedo” problem. Under Brussels Recast, Article 31(2) provides that unless and until the court specified in the choice of jurisdiction clause decides that it does not have jurisdiction, a court in any other jurisdiction must stay proceedings commenced before it. Under Lugano, the court first seised of proceedings must rule on jurisdiction before any other courts do so, which can facilitate deliberate efforts to frustrate such clauses. The interpretation of the Lugano Convention by the Court of Justice of the European Union is not binding on non-EU states, so there is some risk that a divergence could open between UK jurisprudence and that of the CJEU. The UK recently ratified the Hague Choice of Court Convention 2005. This is limited in its scope compared to the Lugano Convention, but it means that the UK will recognise choice of jurisdiction clauses in contractual agreements. Foreign arbitral awards can be recognised and enforced under the New York Convention which has force of law in Ireland by virtue of section 24 and schedule 2 of the Arbitration Act 2010. The UK is also an existing signatory so this area may feel less of a Brexit impact. Regulation (EC) 1393 / 2007 (“the Service Regulation”) governs service of legal proceedings in other EU member states. The Service Regulation
largely mirrors the Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters 1965. The Hague Service Convention provides for the same five methods of service as the Service Regulation, including the use of central transmitting and receiving agencies. The good news is that both Ireland the UK are parties to the Hague Service Convention in their own right (as distinct from merely as members of the EU), so the practical arrangements for service of Irish proceedings in the UK post-Brexit should remain largely the same, even if effected under a different legal instrument. When serving documents abroad, it is mandatory to use one of the methods of service prescribed in the Service Regulation to ensure that an application for judgment in default of appearance is accepted. In Alder v. Orlowska, C-325/11, the CJEU described those modes of service as “exhaustive” with respect to cases falling within the scope of the Service Regulation.In Shiblaq v. Sadikoglu  EWHC 1890 (Comm), the English High Court confirmed that the same principle applies to the Hague Convention. In the recent Irish case of Grovit v. Jansen  IEHC 22, Binchy J. found that service abroad by litigants themselves using registered post is not permissible, although transmitting agencies can use that method on litigants’ behalf. Council Regulation (EC) 1206 / 2001 (“the Evidence Regulation”) provides for streamlined
The good news is that both Ireland the UK are parties to the Hague Service Convention in their own right, so the practical arrangements for service of Irish proceedings in the UK postBrexit should remain largely the same
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Article 67 of the Withdrawal Agreement between the EU and the UK provides that in respect of legal proceedings instituted before the end of the transition period, Brussels Recast will continue to apply 22 the Parchment
methods for litigants in one EU member state to request the taking of evidence in another member state. Essentially, the Evidence Regulation allows courts in one member state to directly request a court in another member state to take evidence on their behalf or to facilitate the requesting court in taking evidence directly in the requested state. This is done by use of a standardised request form which is transmitted to courts identified by each member state as being competent to receive requests to take evidence. In the same way as the Service Regulation mirrors the Hague Service Convention, so too does the Evidence Regulation mirror the Hague Evidence Convention. Unfortunately, Ireland is not a party to the Hague Evidence Convention, although the UK is, so there is liable to be disruption in the way evidence is requested from the UK for Irish proceedings, or vice versa. To obtain evidence in Ireland for use in UK proceedings, parties will have to invoke the Foreign Tribunals Evidence Act 1856. The procedure for receiving foreign requests is governed by Order 39, Rules 39-44 RSC. Requests can be received by the Department of Foreign Affairs and transmitted to the Chief State Solicitor. Alternatively, a foreign litigant may apply ex parte grounded on affidavit to the High Court to give effect to a request from a foreign court. Where evidence is sought abroad for Irish proceedings, Order 39, Rule 5(2) RSC sets out the process for a party to Irish litigation to apply to the Court to issue a request to a foreign court to take evidence for the purposes of the Irish proceedings.
Alternatively, the Irish Court may order the taking of evidence on commission under Order 39, Rule 1 but this is not useful where the witness needs to be compelled. Regulation (EU) 848 / 2015 (“the Insolvency Regulation”) governs the jurisdiction in which insolvency proceedings against individuals or companies should be opened, based on an identification of the debtor’s centre of main interests (COMI). It also provides for the opening of secondary proceedings in another jurisdiction in which the debtor has an “establishment”. Despite being outside its scope, it seems likely that the UK will continue to apply many of the principles embodied in the Insolvency Regulation anyway (such as the test to identify COMI). However, mechanisms for the coordination of secondary proceedings with main proceedings will be lost. Irish Courts have however recognised the principle that a bankruptcy order made abroad should have universal effect, in order to ensure the fair treatment of all creditors and the effective recovery of assets. In Re Drumm (a bankrupt) IEHC 546 for example, Dunne J. was willing to approve an application by an American trustee in bankruptcy for assistance in getting his assets in Ireland. Section 142 of the Bankruptcy Act 1988 makes provision for the Irish Courts to act in aid of other courts overseas in any bankruptcy matter. Currently, this provision only applies to the Isle of Man and the Channel Islands. However, as originally enacted, it also applied to the courts of Northern Ireland, England & Wales, and Scotland. The application to these countries was removed in 2002, as it was superfluous in light of the introduction of the Insolvency Regulation. This provision could potentially be restored to provide an express statutory basis in Irish law for aiding UK insolvencies. The Rome I Regulation applicable to contractual relations, and the Rome II Regulation applicable to non-contractual relations, create a common system for determining conflicts of law, as distinct from conflicts of jurisdiction. The UK government has indicated its willingness to maintain these regimes as part of UK domestic law after the end of the transition period. Because formal reciprocity between jurisdictions is not necessary to give effect to these regimes, upheaval on this front will hopefully be minimal for the foreseeable future. Article 67 of the Withdrawal Agreement between the EU and the UK provides that in respect of legal proceedings instituted before the end of the transition period, Brussels Recast will continue to apply. Similarly, Brussels Recast shall apply to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, and to authentic instruments formally drawn up or registered and court settlements approved or concluded before the end of the transition period. The Insolvency Regulation shall also apply to insolvency proceedings provided that the main proceedings were opened before the end of the transition period. Article 68 provides that the Service and Evidence Regulations will continue to apply where requests for service or for evidence to be obtained were received before the end of the transition period. Article 66 provides that the Rome Regulations will continue to apply to contracts concluded or causes of action accrued before the end of the transition period. P
eProbate – A Lot Done. More to do The introduction of the new Statement of Affairs (Probate) Form SA.2 signals a significant change to the probate process, and provides the Revenue with earlier and more comprehensive access to the information executors are providing to the Probate Office. Brian Broderick reviews the new process and sets out a number of pros and cons
recent article from Revenue in the Irish Tax Review noted that one of the aims of Revenue’s Capital Acquisitions Tax (CAT) Strategy 2018-2020 was to increase levels of e-filing and e-payment of CAT through improved e-services.The online Form SA.2 is a step towards the improved e-services and practitioners filing CAT returns using a ROS business certificate will be able to use a ROS TAIN number, and have access to a wider range of online payment options for CAT. Revenue have better insight into the information to be gleaned from the probate application as a result of the process of turning the paper CA24 into the online Form SA.2, and as the system becomes operational, there could be an increase in Revenue queries in relation to estates. There may be future developments in terms of improving e-services. Revenue’s Corporate Priorities 2020 document indicates that they want to “Fully exploit opportunities to expand the pre-population of returns and leverage the benefits of the proposed online CAT form CA24 for Revenue, the Probate Office, taxpayers and agents”. One possibility is that CAT returns could be pre-populated from Revenue’s records in the future (similar to the pre-populated returns currently provided for income tax). On the one hand this would be very useful for a busy practitioner, but on the other hand, there would be a risk that if beneficiaries did
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not file their CAT returns in a timely manner, the Revenue might assess based on the pre-populated returns. This would overestimate the CAT in many cases as the Form SA2 provides a “date of death” profile for the estate, and information on the costs of administration and any changes in the value of assets are not available to Revenue. The beneficiaries could go on to file a return to displace the assessment, resulting in an accurate CAT liability. However, there would be a risk that some beneficiaries would simply accept the Revenue figures and overpay the CAT. A Revenue letter generally issues automatically to taxpayers once the Grant issues as a reminder that CAT returns are due. It is possible that this could include an indication of the CAT liability in the not too distant future.
Form SA.2 While the manner in which the information is provided to Revenue has changed, and the format and layout of the new online form is unfamiliar, the information that needs to be included in the form is largely the same as the information in the paper Form CA24. There are however some additional fields, including: • Confirmation of whether proceeds from a section 72/73 life assurance policy became payable to a beneficiary on the death of the disponer, • Domicile status of a beneficiary, and • Date of birth of a beneficiary.
Winter 2020 dsba.ie Brian Broderick is a tax practitioner at O’Hanlon Tax Ltd
The inclusion of this additional information has no impact on the tax rules, or the tax position of the beneficiaries of an estate, but the information (and the information previously contained in the paper Form CA24) is likely to be used by Revenue to improve taxpayer profiling.
Taxpayer Profiling It is likely that when Revenue look at “leveraging the benefits” they are considering the Risk Evaluation Analysis and Profiling (REAP) system that is Revenue’s risk analysis tool. REAP risk-rates Revenue’s customer base across all the main taxes and duties. ‘Risk’ in this context means the risk posed to Revenue’s core business of ‘collecting the right tax and duty at the right time’. REAP has been designed to analyse a vast amount of data (including third party data) that Revenue has on tax and duty cases and to attribute scores based on the level of risk posed. The REAP system prioritises cases based on risk, enabling Revenue to target its attention on those cases who need it most and minimising contact with compliant taxpayers. Revenue use returns such as stamp duty returns to build their database of information on the value of real property. Revenue have been known to link the value of property purchased by a taxpayer (from the stamp duty return) with the purchaser’s income (in the PAYE or income tax records) and raise queries if the value of the property purchased is too high
for the purchaser’s means, allowing for the current mortgage guidelines. Revenue are looking for undeclared income, or an undeclared gift, in such a situation. Practitioners should bear in mind that Revenue may be pulling existing information forward from their system to check the accuracy of the data in the Form SA.2, but they may also use the Form SA.2 to check back and assess the accuracy of pre-death returns. For example, if the Form SA.2 shows more than one residential property Revenue may check the deceased’s pre-death tax records, to see if the second property was rented, and confirm if any income received was returned. By linking the LPT Property ID number to a taxpayer’s PPS number Revenue can check if a taxpayer holds more than one residential property. They can also link into data from the Private Residential Tenancies Board to see if a second property is or has been rented. If income tax returns are not being filed to return rental income, Revenue can raise queries or open an audit. The level of data included in the Form SA.2 is significant, and Revenue are unlikely to have had such a detailed overview of the assets and general financial affairs of any deceased taxpayer, at any point during the taxpayer’s lifetime. The provision of the information to Revenue in an electronic format makes the data significantly more accessible to REAP.
Revenue may be pulling existing information forward from their system to check the accuracy of the data in the Form SA.2
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Use of Information by Revenue
Revenue are unlikely to have had such a detailed overview of the assets and general financial affairs of any deceased taxpayer, at any point during the taxpayer’s lifetime
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The Revenue approach to the information provided in the old paper Form CA24 has been changing over the last number of years and profiling of deceased taxpayers has increased. Example Kieran died in 2020 aged 85. At the time his main source of income was a State pension, and he was also in receipt of a private pension of circa €20,000 per annum linked back to his employment pre-retirement. Kieran had lived with family rent free and led a frugal life, and had a cash balance of €200,000 in the bank when he died. When Revenue reviewed the Form CA24 and compared the bank balance to the level of income it raised a flag, and Revenue wrote to the Kieran’s personal representative to ask where did he get the money. In this case the source of funds was relatively clear to the family as Kieran had received a tax-free lump sum of circa €140,000 on his retirement, and the personal representative felt that the balance of €60,000 represented the savings of a lifetime. This is just one example of how Revenue have started to use the information provided to them to extract a grant of representation, and in estates where the personal representative is not familiar with the financial affairs of the deceased, queries on the source of funds or assets may not be easy to answer. Other ways that Revenue might use the information provided in the Form SA.2 include: • Reviewing the residence and domicile position of the deceased to establish whether there is consistency with the residence and domicile information included in pre-death tax returns • Comparing real property values with property values on Revenue’s property valuation database (and ownership details on the LPT database) in the context of CAT, and also in the context of CGT if assets are sold by the estate or beneficiaries • Reviewing the summary of benefits included in the Form SA.2 and automatically linking this summary to
the CAT returns ultimately filed by the beneficiaries to ensure consistency The provision of the Form SA.2 information electronically to Revenue will allow for automated checks where there is a relief claim. Example John died in 2020 aged 80. His son Adrian had moved into the family home with John a number of years before he died and Adrian was appointed as the personal representative of John’s estate. Adrian was also the sole beneficiary of John’s estate and he did not own any residential property so he qualified for CAT dwelling house relief on the family home. Adrian contracted to sell the family home prior to filing the Form SA2 and intends buying a new home to preserve the dwelling house relief. In the meantime he has moved in with his sister so the address included for him in the Form SA2 is different to the address of the disponer (John). If Revenue’s system was set up to track property addresses for dwelling house relief this could result in queries from Revenue as there is generally a requirement for a beneficiary to be living in a property on the date of death to qualify for dwelling house relief, and a different address for the beneficiary in the Form SA2 may look like a beneficiary was living elsewhere.
Conclusion The provision of information to Revenue electronically may ultimately speed up the probate process and prove beneficial to practitioners, and it has the potential to streamline CAT compliance by linking the assets included in the form SA.2 and the CAT returns filed by beneficiaries. Going forward, there may be more of a focus on the Estate Accounts, which bridge the gap between the “date of death” position shown on the Form SA.2 and the final distribution figure in the Form IT38. However, if there is an increased focus on the deceased’s assets and liabilities, and Revenue are linking these back into historic tax returns filed by the deceased, then personal representatives, beneficiaries and their advisers may see increased levels of Revenue queries on probate files in the future. P
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Security for Costs The power on the part of a Plaintiff to issue proceedings can be significant. In most cases, Defendants are left with little option but to engage lawyers to act on their behalf irrespective of the meritorious nature of the Plaintiff 's claim. James Meighan provides an overview of the role of security for costs in the litigation process. In some cases, he says it is to recalibrate the relationship between Plaintiff and Defendant
ecurity for costs arises where the court directs a party to lodge a sum of money into the court to meet the costs of the other party to the proceedings, should the party ordered to lodge the money be unsuccessful in their action.
Security against Individual Plaintiffs In the context of natural persons, Order 29 of the Rules of the Superior Courts provides inter alia: “When a party shall require security for costs from another party, he shall be at liberty to apply by notice to the party for such security; and in case the latter shall not, within 48 hours after service thereof, undertake by notice to comply therewith, the party requiring the security shall be at liberty to apply to the Court for an order that the said party do furnish such security.” The jurisdiction of the courts to make orders for security for costs as regards individual Plaintiffs has evolved significantly since the application of European law in this jurisdiction. Traditionally, security was granted against individuals outside the jurisdiction on the basis of the potential difficulty of recovering costs against an unsuccessful Plaintiff. However, obstacles which could potentially have been placed in the way 28 the Parchment
of a successful Defendant seeking to recover on foot of a costs order have essentially been removed by instruments such as the Brussels Regulations which levels the playing field in the area of European private international law. The modern position is that security for costs will not be ordered against an individual Plaintiff who is a national of, and resident in, another member state of the European Union in the absence of very cogent evidence of substantial difficulty in enforcing a judgment. For a Defendant to secure an order for security for costs, they must demonstrate the following to the court: (a) The Plaintiff must be ordinarily resident out of the jurisdiction, the European Union or a contracting state of the Lugano Convention; and (b) The Defendant must have a prima facie defence to the merits of the Plaintiff 's claim. On the defence of the action, Order 29, rule 3 provides that “[n]o Defendant shall be entitled to an order for security for costs by reason of any Plaintiff being resident out of the jurisdiction of the Court, unless upon a satisfactory affidavit that such Defendant has a defence upon the merits.” The term ‘satisfactory affidavit’ has been considered in a number of cases and it is not sufficient for the Defendant
Winter 2020 dsba.ie James Meighan is an associate solicitor at Eugene F. Collins
to merely assert that they have a defence to the action, they must go further and set out evidence establishing some specific or ascertainable defence. On the residence of the Plaintiff, Order 29, rule 4 provides that “[a] Plaintiff ordinarily resident out of the jurisdiction may be ordered to give security for costs though he may be temporarily resident within the jurisdiction.” There has been judicial consideration of the term ‘ordinarily resident’ and the courts have found that the issue of citizenship is irrelevant, the court must consider the practical position as regards residency and whether, considering all the circumstances, the Plaintiff could be said to be ordinarily resident outside the European Union. An obvious concern on the part of a Defendant is a Plaintiff 's ability to meet a potential order for costs, where the Plaintiff resides within the jurisdiction or within the European Union. There has been several attempts to extend the jurisdiction as regards security for costs to include potential impecunious Plaintiffs. However, the courts have resisted these attempts. Courts have always pointed out the original purpose of the relief, to protect Defendants, with a prima facie defence from being in the position where they were left with no real ability
to enforce an order for costs against a foreign (now outside the European Union) Plaintiff.
Procedure for Seeking Security against an Individual Plaintiff Order 29 sets out the court’s jurisdiction for the granting of security for costs and the procedure to be applied when seeking an order. The procedure is as follows: 1. A request for security must be made on a voluntary basis, 2. The party against whom the security is sought, must provide the security or confirmation that it will provide security within 48 hours of the request, 3. If the security is not provided on a voluntary basis, the party seeking the security may issue a notice of motion, grounded on affidavit which should set out a background to the matter, the applying party should confirm that they have a bona fide defence to the proceedings, an averment that the Plaintiff resides outside the jurisdiction (and the European Union) and that the applying party first sought security on a voluntary basis. 4. The grounding affidavit must be sworn by the Defendant and not the Defendant's solicitor.
The court must consider the practical position as regards residency and whether, considering all the circumstances, the Plaintiff could be said to be ordinarily resident outside the European Union the Parchment 29
Security against Companies and Corporate Entities
While the rational for the provision of security in certain cases is clear, the provision of the security must be weighed up against a Plaintiff ’s right to litigate
Section 52 of the Companies Act 2014 (previously section 390 of the Companies Act 1963) provides: “Where a company is Plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the Defendant if successful in his or her defence, require security to be given for those costs and may stay all proceedings until the security is given.” There are a number of restrictions on the application of Section 52 including that its scope does not extend to companies registered outside the jurisdiction or unlimited companies incorporated within the State. There is a marked distinction between the requirements of the Defendant in satisfying the court between applications for security against individuals and companies. Hogan J in CMC Medical Operations Limited .v. Voluntary Health Insurance Board  IECA 68 distinguished security for costs against an individual from a corporate entity. To satisfy the requirements of section 52, the applicant must show: 1. That the Defendant has a prima facie defence to the Plaintiff 's action; and 2. That the Plaintiff will not be in a position to pay the Defendant's costs if the defence is successful. Section 52 only applies to companies incorporated under the Companies Act 2014 or an existing company. The exercise of the jurisdiction under Section 52 is not mandatory on the court. Therefore, the court may use its discretion in deciding whether it is appropriate for the granting of such an order. When considering whether an order is appropriate in the circumstances, the court may have regard to factors such as whether the Defendant may potentially be responsible for the Plaintiff 's inability to meet such an order and whether a potential issue of public importance arises in an action. The nature of the proceedings which can potentially attach an order for security for costs is broad in the context of Section 52, “or other legal proceedings”. It has been held that these other legal proceedings may include decisions of the Taxing Master or judicial review proceedings.
Procedure for Seeking Security against a Corporate Plaintiff A party seeking security against a corporate entity should first attempt to agree the security on a voluntary basis. If security cannot be agreed, a notice of motion, grounded on an affidavit should issue seeking the necessary relief. The grounding affidavit must be sworn by the Defendant and not the Defendant's solicitor. The affidavit should set out an outline of the nature of the proceedings, an averment that the Plaintiff will be unable to meet the Defendant's costs if the Plaintiff is unsuccessful, that the Defendant has an arguable defence to the proceedings and that the applying party sought to agree the security on a voluntary basis. As noted, the provisions of Section 52 do not apply to companies incorporated outside the State or unlimited companies incorporated within the State. However as with commerce and other aspects of modern life, litigation in Ireland is not a solely indigenous exercise or restricted to limited companies 30 the Parchment
incorporated under the Companies Acts and is often deployed by entities incorporated in other countries and unincorporated companies within the State. Defendants are not precluded from seeking security for costs against such Plaintiffs and the court’s jurisdiction to grant orders against these Plaintiffs derives from Order 29 of the Rules of the Superior Courts. Over time a practice has developed where a Defendant seeking security against a Plaintiff of this nature would rely upon Order 29 and Section 52 (previously Section 390). In such applications, the court relies upon its jurisdiction under Order 29 and applies the principles which have developed under Section 390/Section 52 in determining such applications.
A Balancing Act While the rational for the provision of security in certain cases is clear, the provision of the security must be weighed up against a Plaintiff ’s right to litigate. A Plaintiff ’s right to litigate was defined by the Supreme Court in Tuohy .v. Courtney  3 IR 1 as follows, “the right to achieve by action in the courts the appropriate remedy upon proof of an actionable wrong causing damage or loss as recognised by law.” The right to litigate should not be confused or understood as the right of access to the courts, these are two distinct and separate rights. In Farrell .v. Bank of Ireland  IESC 42 the Supreme Court considered the delicate balancing act which must be applied by the court and they commented that the default position with regard to security for costs is that, in the absence of some significant countervailing factor, the balance of justice as between the litigants will require that no security be given. In his judgment in Farrell, Clarke J emphasised that the starting point must always be that the Plaintiff has a constitutional right to litigate and while it is possible to compromise the Plaintiff 's right, the courts exercise of their jurisdiction to grant security should only be ordered when they are satisfied that the Defendant has established the minimum requirements for the granting of such security. The constitutionality of Section 390 of the Companies Act 1963 (now Section 52) has been considered by the courts in a number of cases and in commenting on the balancing of the Plaintiff 's right to litigate as against the Defendant's right to seek security, Peart J noted Section 390 had a reasonable and objective justification and that its aim was the legitimate one of balancing the rights of access to court with the right of a Defendant to resist unstateable claims (Superwood Holdings plc .v. Ireland  3 I.R. 398). If a Plaintiff can make out a prima facie case against a Defendant's application for security, that the Plaintiff 's inability to give security is as a result of a wrong committed by the Defendant, the court may refuse the application. In such an application, the onus of proof rests on the Plaintiff to bring forward prima facie evidence of the Defendant's responsibility in the act complained of. A significant advantage accrues to a Defendant who secures an order for security for costs. An order of this nature can for all intents and purposes bring the case to an end if the Plaintiff cannot comply with the order. Therefore,
Winter 2020 dsba.ie
a question arises whether a Plaintiff can obtain security from a Defendant. The traditional position on security being ordered against a Defendant was that it â&#x20AC;&#x153;would be almost a mockery of justiceâ&#x20AC;? (Leonard .v. Scofield  I.R. 715) to require a Defendant to provide security where a Plaintiff has commenced the action. However, limited situations have arisen where courts have granted security against Defendants, for example, costs of an appeal to the Supreme Court and where a counterclaim bearing no connection to the Plaintiff 's action is put forward by the Defendant. The exercise of this jurisdiction against Defendants would be deployed very sparingly indeed.
The Amount of the Security A further noticeable distinction between security pertaining to individuals as against corporate entities concerns the amount of security which may be required to be paid by the Plaintiff. With regard to individual Plaintiffs, a rule of practice has developed that the security would amount to approximately one third of the estimated costs to be incurred by the party against whom the security has been granted. However, in the case of a corporate entity, full security will usually be required. This is, however, at the discretion of the court. Order 29, rule 7 provides that the Master of the High Court determines the amount of security to be ordered. Therefore it is a mathematical exercise which will
usually require evidence from cost accountants as to the quantum of the potential costs. Order 86, rule 9 and Order 58, rule 11 provides that the Court of Appeal and Supreme Court, respectively, may direct the deposit of security with regard to appeals in special circumstances. With regard to discovery, Order 31, rule 12(2)(b) provides that on the hearing of an application for discovery, the court may make orders for security.
Conclusion There is a marked distinction between security concerning individuals and corporate entities. The most noticeable distinction is that for individuals, the Plaintiff must be ordinarily resident outside the European Union and for companies, the Plaintiff cannot be incorporated outside the State. A second variation between individual and corporate security is that with companies, the court may have regard to the ability of the Plaintiff to meet a costs order in the action. However, such consideration does not generally arise in the context of individual Plaintiffs. The potential outcome of security for costs being awarded against a Plaintiff is that it may stay the proceedings indefinitely if the Plaintiff is not in a position to meet the security. Applications for security for costs can be commenced in the context of litigation strategies and the courts are mindful of this and their responsibility to balance the rights of the parties in the given case. P the Parchment 31
Update on Termination of Residential Tenancies Marissa O’Keeffe outlines recent developments in the area of Notice of Termination in Residential Tenancies and offers advice on how best to deal with a termination scenario
Key Legislation There has been a raft of legislation introduced in the past number of years, and in particular, in the recent months, affecting residential tenancies in Ireland. This article will focus on the provisions of that legislation insofar as they affect the termination of residential tenancies that are within the scope of the Residential Tenancies Board (“RTB”). This following legislation is now collectively known as the Residential Tenancies Acts 2004 to 2020 (“the Acts”): i. Residential Tenancies Act 2004 (“the 2004 Act”) ii. Residential Tenancies (Amendment) Act 2009 iii. Residential Tenancies (Amendment) Act, 2015 (“the 2015 Act”) iv. The Planning and Development (Housing) and Residential Tenancies Act, 2016 (“the 2016 Act”) v. The Residential Tenancies (Amendment) Act 2019 (“the 2019 Act”) vi. Residential Tenancies and Valuation Act 2020 (7/2020) (“RTVA 2020”) vii. Residential Tenancies Act 2020 (17/2020)(“RTA 2020”) 32 the Parchment
The Law Reform Commission have prepared an unofficial consolidated version of the Residential Tenancies Acts 2004 – 2020 incorporating all changes up to 29 September 2020. It does not, therefore, incorporate the changes introduced by the RTA 2020 which were commenced on 24 October 2020. The Emergency Measures in the Public Interest (COVID-19) Act 2020 (2/2020) also affected the termination of residential tenancies until 10 August 2020. In addition, there are a number of other enactments which affect residential tenancies generally but are not the focus of this update e.g. Housing (Standards for Rented Houses) Regulations 2017 (SI 17/ 2017), Equal Status Acts 2000 – 2015 etc.
Termination Notice Periods When a tenancy lasts for more than six months, the tenant will acquire security of tenure under Part 4 of the Acts (“Part 4 tenancy”). The 2016 Act extended the cycles of such tenancies from four years to six years duration. S.66 of the Acts contains a table of notice periods that apply to both a landlord and tenant when terminating a Part 4 tenancy. These periods have been extended over the years, most recently in the 2019 Act.
Winter 2020 dsba.ie Marissa Oâ&#x20AC;&#x2122;Keeffe is a senior associate solicitor with St. John Solicitors. She is a member of the Panel of Mediators and Adjudicators appointed by the RTB and a Member of the Property Committee of the DSBA
Duration of Tenancy
Notice by Landlord
Notice by Tenants
Less than 6 months
6 months or more but less than 1 year
1 year or more but less than 3 years
1 year or more but less than 2 years = 42 days 2 years or more but less than 4 years = 56 days
3 years or more but less than 7 years
4 years or more but less than 8 years = 84 days
7 years or more but less than 8 years
8 years or more
A tenancy agreement may provide for a longer notice period. A landlord and tenant may agree a shorter period of notice at the ending of the tenancy (s.69). It is important to bear in mind that the notice period starts the day after the notice is served (s.61). The RTB therefore, recommend including a few additional daysâ&#x20AC;&#x2122; in the notice served to ensure the legal minimum statutory notice period is satisfied. Shorter notice periods apply if the tenancy is being terminated for a breach of obligations under the tenancy by either party.
Grounds for Termination by a Landlord A landlord may terminate a tenancy during the first six months of a tenancy and at the end of a Part 4 tenancy without providing any reason (s.34(b)), provided there is no tenancy agreement between the parties which would otherwise restrict a landlord from doing so (i.e. a fixed term tenancy without a break option). Other than aforesaid, a Part 4 tenancy may only be terminated on the grounds specified in the table to s.34 of the Acts, namely: 1. An unremedied breach of tenant obligations,
Landlord & Tenant
The RTB therefore, recommend including a few additional daysâ&#x20AC;&#x2122; in the notice served to ensure the legal minimum statutory notice period is satisfied the Parchment 33
excluding rent arrears (28 days’notice period subject to reasonable prior warning notice); 1a.Rent arrears where certain conditions are satisfied from 1 August 2020 (otherwise the NoT may not take effect until after 10 January 2021 under the RTVA - Residential Tenancies and Valuation Act 2020); 2. The dwelling is no longer suitable to the accommodation needs of the occupying household; 3. The landlord intends to sell within 9 months; 4. The landlord requires the dwelling for his/her own use or his/her family’s occupation; 5. The landlord intends to undertake substantial refurbishment requiring the tenant to vacate (and certain conditions are met); or 6. The landlord proposes a change of use to the dwelling.
Grounds for Termination by a Tenant A tenant may terminate a tenancy at any point for no reason provided the relevant notice period as specified in s.66 is furnished to the landlord. It should also be noted that a tenant may still terminate a fixed term tenancy agreement (regardless of whether there is a break option) if the landlord refuses to consent to a sub-letting or assignment of the tenancy (s.186 of the Acts). A shorter period of notice may be served by mutual agreement. A tenant may also terminate a tenancy for an unremedied breach of landlord obligations by providing 28 days’ notice (subject to prior reasonable warning notice being served) or by providing seven days’ notice where the landlord’s behaviour poses an imminent 34 the Parchment
danger of death or serious injury or imminent danger to the fabric of the dwelling or the property contained in the dwelling (s.68(2)(a) of the Acts).
Service of a valid Notice of Termination & Supporting Documentation A valid NoT must comply with the requirements of s.62 of the Acts. The RTB have created a number of sample NoT templates as well as the accompanying statements or statutory declarations (where appropriate) for guidance purposes. Whilst these provide a very useful resource for practitioners it is, nevertheless, imperative that the relevant provisions of the legislation are consulted in order to ensure that a notice as well as the accompanying statement or statutory declaration is properly drafted. The 2019 Act also introduced a new requirement whereby a landlord must provide a copy of the NoT to the RTB within 28 days of the expiry of the termination date specified in the NoT(s.13(d) of the 2019 Act). The RTB have a sample “Notice of Termination Return Form” to assist landlords in complying with this obligation.
Restrictions on Terminating a Tenancy 1. Covid-19 (a) Rent Arrears. The RTB have issued an eight step guidance procedure for termination on the basis of rent arrears: 1. Landlord serves rent arrears warning on tenant (28 days’ notice);
Winter 2020 dsba.ie
Landlord & Tenant
2. Landlord serves copy of warning on RTB (the 28 day period commences only after both tenant & RTB are served); 3. RTB will write to tenant providing information regarding self -declaration (inability to pay due to Covid-19) and seeking consent regarding engagement with MABS; 4. Tenant may provide consent to RTB to assist with engaging with MABS; 5. Tenant to make self -declaration (if applicable) and serve RTB and true copy on landlord; 6. Landlord can proceed with 28 day NoT if no self -declaration completed by tenant), if tenant has served a self-declaration, landlord can serve NoT with 90 days’ notice but it will not take effect until after 10 January 2021 (see the RTVA 2020); 7. Landlord must serve copy of NoT on RTB on the same day as serving tenant (failure to do so will invalidate NoT); 8. RTB will contact tenant informing them of dispute resolution options. (b) Emergency Period At the time of writing this article, the current emergency period provided for in s.2 of RTA 2020 (17/2020) is due to expire on 1 December 2020. However, that Act will apply to any subsequent emergency periods that may arise if the Minister introduces restrictions requiring people to stay within 5Km of their residences. Whilst a NoT may be served during such periods, the time frame will effectively be paused during any such emergency period (with the exception of a number of limited terminations for breach of obligations by a tenant). Instead, a Revised Termination Date will apply under that Act i.e. unexpired notice period in NoT at the time of the emergency period + emergency period (or remainder thereof) + 10 days(s.3(4)). 2. Fixed Term Tenancies If the tenancy is the subject of a fixed term tenancy agreement that does not include a break clause, a landlord could not serve a NoT until after the fixed term expires (s.61(2) of the Acts). A break clause in a fixed term lease merely lifts the prohibition on a landlord terminating a tenancy during the fixed term, all of the rights and obligations associated with a Part 4 tenancy still apply. A tenant, however, may terminate a fixed term tenancy agreement if a landlord refuses to consent to a proposed sub-letting or assignment (this does not apply to tenancies of Approved Housing Bodies). 3. The Tyrrelstown Amendment (sale of 10 or more dwellings within a development) S.40 of the 2016 Act amended s.35A of the Acts with the introduction of a restriction on a Landlord’s right to terminate a Part 4 tenancy on the grounds of an intention to sell, where the Landlord is seeking to sell 10 or more dwellings within a development at a relevant time. Additional information must be included in the statutory declaration accompanying a NoT where an exemption to the Tyrrelstown Amendment is being relied upon. ‘Relevant time’ means any period of six months within the period beginning with the offer of sale of the first dwelling
and the ending with the offer for sale in the development of the last dwelling. The restriction does not apply where the landlord can show, to the satisfaction of the RTB, that the price to be obtained by selling the occupied dwellings at market value is more than 20% below the market value that could be obtained if sold with vacant possession and, that applying this restriction would, having regard to all the circumstances, be unduly onerous on the landlord, or would cause undue hardship on the landlord.
Conclusion If a tenant remains in a rented dwelling and fails to leave on the termination date specified on the NoT, a landlord must lodge an application for dispute resolution with the RTB seeking an order for recovery of possession. In the first instance an application can proceed via Mediation or Adjudication and on appeal to a Tenancy Tribunal. The carrying out of an illegal eviction, which includes prohibiting access to a dwelling or making the dwelling uninhabitable by disconnecting services, can result in damages of up to €20,000 being awarded to a tenant. The RTB can seek an injunction from the Courts to reinstate a tenant and have stated that they will continue to prioritise these cases. It is likely, given the considerable legislation in this area, that clients will seek legal assistance to ensure notices that are served comply with the requirements of the Acts. Practitioners will be greatly assisted by the LRC’s unofficial consolidated version of the Acts, however, this does not include the RTA 2020 (17/2020). The procedure for validly terminating a tenancy by a landlord has changed and can be broadly summarised as follows: 1. Check the legislation does not restrict the termination of the tenancy; 2. A warning notice may need to be served (if applicable); 3. A valid NoT will need to be served, when appropriate; 4. The said NoT may need to include a statement or be accompanied by a statutory declaration in compliance with s.34 &s.35 of the Acts; 5. A “Notice of Termination Return Form” will need to be served on the RTB within 28 days of termination date accompanied by the NoT and any statutory declaration if applicable.
The carrying out of an illegal eviction, which includes prohibiting access to a dwelling or making the dwelling uninhabitable by disconnecting services, can result in damages of up to €20,000 being awarded to a tenant
If a landlord or tenant approaches a practitioner for advice after they have served a NoT which appears to be invalid, the existence of a slip or omission rule in s.30 of the 2015 Act may assist. This allows an Adjudicator or Tribunal to make a determination that a slip contained in a NoT or occurred during the service of a NoT, will not of itself invalidate the NoT. This is provided that the Adjudicator or the Tribunal are satisfied that the slip concerned does not prejudice in a material respect the NoT and the NoT otherwise complies with the provisions of the Acts. Where the slip rule will not apply, the 2019 Act also introduced the concept of a Remedial NoT (s.16 inserting s.2A into s.66 of 2004 Act) which can be served within 28 days of the issue of a Determination Order by the RTB providing 28 days’ notice of the notice period in the original invalid NoT has expired. P the Parchment 35
Court of Appeal Clarity on Damages Robbie Slattery examines the recent Court of Appeal decision of Leidig –v- O’Neill where the Court reduced the sum of damages awarded to a plaintiff
Background In Leidig v O’Neill  IECA296 the plaintiff was injured in August 2015 when a motorbike which he was riding was struck by the defendant’s car. He fractured the scaphoid bone in his wrist and ultimately required surgery as it failed to heal naturally. This required fixation using a screw and he was in a cast for eight weeks following the surgery. His treatment concluded in September 2017 but at the date of trial he continued to have residual complaints. He had an operation scar of 5cm although that was well healed and non-tender. Expert evidence was to the effect that it is not unusual for someone who suffered this type of injury to complain of some ongoing symptoms and that whilst one would expect those symptoms to gradually improve he would most likely always have some pain. Indeed, the defendant’s own medical expert believed that the plaintiff had likely suffered loss of about 5% function to his hand.
High Court Judgment The High Court Judge explicitly referred to and had regard to the Book of Quantum in assessing damages and found that the plaintiff ’s injury fell within the ‘severe and permanent condition’ category and was “at 36 the Parchment
the top end of that scale”. The High Court awarded a total of €155,000 in general damages, comprising €70,000 for pain and suffering to date, €40,000 for loss of job opportunity, €15,000 for loss of hobbies and €30,000 for pain and suffering into the future.
Court of Appeal Decision The Court of Appeal granted an appeal against this decision on the basis that it amounted to an error of law. It emphasised that an award of damages must be proportionate in the context of the cap for general damages (Morrissey –v- HSE  IESC 6) for the most serious injuries and in the context of past awards by the courts for comparable injuries. If the Book of Quantum is relevant to the injury in question the Court is obliged to have regard to its provisions. In terms of wrist injuries, the Book of Quantum gave guides of the range of damages appropriate depending on the seriousness of the injury suffered, ranging between ‘minor’, ‘moderate’, ‘moderately severe’ and ‘severe and permanent conditions’. Accordingly, the High Court Judge had placed the injury in the most serious possible category in assessing damages at €155,000.
Winter 2020 dsba.ie Robbie Slattery is is an associate in the commercial litigation team at Hayes Solicitors
The Court of Appeal made the following specific findings in overturning that decision:• The plaintiff ’s injury was not a ‘severe and permanent condition’. That category is illustrated in the Book of Quantum by examples such as incomplete union of the bones which may lead to a fusion being required. In this case, although the injury took a protracted course the plaintiff ultimately achieved a good outcome without the need for such serious intervention. The injury was to the plaintiff ’s non-dominant wrist and the Court of Appeal did not believe “on any realistic assessment that this could be categorised as a severe and permanent condition”. • Whilst the High Court did consider the Book of Quantum, Court of Appeal disagreed with the manner in which it should be applied to the facts of the case. The figures in the Book of Quantum encompass the entirety of the range of damages which might apply. Further, it was not appropriate to award €70,000 damages for past pain and €30,000 for future pain in circumstances where the absolute upper amount set out in the Book of Quantum is €78,000. In other words, the valuations given in the Book of Quantum include
Personal Injury Litigation
both past and future pain. • It is not permissible to award damages for ‘loss of hobbies’ as any such loss is encompassed within the damages for pain and suffering (Shannon –vShannon  IECA 93). • The plaintiff ’s injury should properly be characterised as falling within the ‘moderately severe’ category and, as a result, damages for pain and suffering should be reduced to a total sum of €65,000 for past and future pain.
Analysis This decision underlines the fact that not only must a Court have regard to the Book of Quantum in assessing damages it must also apply the Book of Quantum in a specific way. For each injury dealt with in the Book of Quantum, four categories of seriousness are listed with the appropriate level of damages different for each. This decision suggests that only the very most serious of injuries should be found to come within the ‘severe and permanent condition’ range, which brings the highest valuation. This decision brings welcome clarity to the manner in which the Book of Quantum should be applied. P
Not only must a Court have regard to the Book of Quantum in assessing damages it must also apply the Book of Quantum in a specific way
the Parchment 37
Jason Milne is a partner in A&L Goodbody’s Environmental and Planning Group
The Polluter Must Pay Jason Milne assesses a recent High Court decision and Judgment of Mr. Justice Humphreys
The court held that it was not precluded from imposing a fine or putting in place other measures, even if the fine is greater than the means available to that person
he events leading up to these proceedings date back to October 2016 when the court ordered the Respondents, Eileen Hendy, Fred Hendy, Green Energy Recycling Ltd, Mark Farrelly, Mark Farrelly Plant Hire Ltd, Padraic McDonnell trading as McDonnell Haulage, Gerard Conroy and Andrew Fox, to discontinue illegal dumping on their sites in Enfield. In his judgment, Humphreys J held the Respondents in contempt of court for a failure to remedy the same illegal dumping that was the subject of the 2016 order. The High Court fined the Respondents the total cost of the remediation works, which totalled €6.26m. The Judge held that the Respondents’ inability to pay the fine would not be a barrier to effective enforcement of the fine and remediation of the land. The Judge instructed that the fine be made payable to Meath County Council and, significantly, he held the fine would be charged on the Respondents’ lands, in order to fund the remediation works.
Background In September 2015, proceedings were initiated by Meath County Council under section 57 of the Waste Management Act 1996, as amended, seeking orders requiring the Respondents to discontinue the unauthorised holding, recovery and disposal of waste on their land. Up to 100,000 tonnes of waste, including asbestos, had been illegally dumped on areas of the Respondents’ land, over a three-year period. In October 2016, Noonan J made a final order that the Respondents were to discontinue the holding, recovery and disposal of waste on the site (the 2016 Order); the Respondents never complied with it. The Council brought contempt motions in 2019 and 2020 against the Respondents for their failure to comply with the 2016 Order. On 27 July 2020, Humphreys J made a declaration that the Respondents were in contempt of court and elaborated specifically on how the 2016 Order would be enforced.
The Order The Judge held that the most appropriate course of action was to fine the Respondents the entire cost of remediation, estimated at €6.26m in 2015, to be charged on the land and payable to the Council. The Judge held that as three-years had passed with nothing effective done by the Respondents to remediate the lands, it would be the Council who would remediate with specific recourse to the Respondents’ assets to do so.
Analysis of the Order The Judge noted that Respondents’ property rights 38 the Parchment
and rights to personal liberty were subordinate to their requirement to comply with court orders. He added that their right to fair procedures had not been infringed: they had multiple opportunities to put forward a defence to the 2016 Order or to comply with it, and they did neither. The court held that it was not precluded from imposing a fine or putting in place other measures, even if the fine is greater than the means available to that person. The Judge dismissed the theory that a court cannot fine a defaulter more than their assets calling it “a polluter’s charter and a defaulter’s dream, because of the sheer practical difficulty of framing such an order”. The Judge ruled that the Respondents’ entire pool of assets came within the remit of the 2016 Order. The fine of €6.26m was charged on the lands, and the Council have liberty to register it over any assets of the Respondents and exercise a power of sale. The Judge clarified that a power of sale cannot be exercised over contaminated parts of the land until the waste has been removed. The 2016 Order is future-looking in nature, in that the door was left open by the court for further requests to attach any future income or assets of the Respondents. The Judge granted the Council liberty to apply in this regard. The Judge noted that “such an order ensures that whatever assets they have will be available, whereas an order artificially limited to my estimate of their present assets would not.” The Judge held that the fine was ‘coercive’ not punitive as it was not intended to punish them for their three year contempt but rather to ensure remediation of the lands actually happens. As the Respondents had failed to do so themselves, the Council was the appropriate party to remediate the lands.
Conclusions There are two particularly striking conclusions that arise from this judgment: 1. Where it is apparent that a respondent is unable to comply with the instructions of a court order because it is beyond their financial means, the court is open to creative workarounds to ensure compliance with court orders. 2. These creative workarounds can go as far as charging a respondent’s assets in favour of the plaintiff and looking to a respondent’s wider pool of assets, and future assets, for recompense. This judgment is important, as it is a reminder of the polluter pays principle and the measures a court is willing to take to enforce it. P
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Probate Trends -
Recent Challenges and Solutions Although Probate law is not very trendy, it nonetheless does have its trends! Maria Lakes has noted certain probate trends recently which appear to arise in response to social, cultural and technological shifts
hese trends in particular deal with: 1. An Executor/Administrator with no capacity, 2. Links between Social Welfare, Fair Deal and Revenue Commissioners, 3. Proving a will in terms of a translation. I am confident that if I am facing these random challenges â&#x20AC;&#x201C; colleagues will also encounter them and the solutions found may be of use.
1. An Executor/Administrator with no Capacity Capacity related conditions, such as dementia, continue to increase. Thus, we now encounter circumstances where an executor/administrator has lost capacity prior to the administration of an estate. This issue has arisen in our practice on two occasions recently: â&#x20AC;˘ An application under the Nursing Homes Support Scheme (Fair Deal) for a Nursing Home Loan where a care representative was to be appointed. The respondent was a widow and the family home had been left by her husband, the sole owner, on an intestate basis. She was entitled to be registered as owner of two-thirds of the property. The estate remained unadministered. The two-thirds share of the property required to be registered into her name for the purpose of the nursing home loan. 40 the Parchment
â&#x20AC;˘ Within the context of settlement of contentious probate proceedings where one beneficiary was deceased and his spouse, who had lost capacity, was his sole executor and beneficiary. His estate was required to sign the settlement terms. My main concern in the above cases was to establish title for a party to administer the estates rather than dealing with the management of the personal and financial affairs of the executor or administrator who lacked capacity. My starting point was Order 79 Rule 27 of the Rules of the Superior Courts which provides: In a case where a person of unsound mind has not a committee appointed by the Court; a grant may issue to such person as the Probate Officer may by order assign with the consent of the Registrar of Wards of Court. The application for such order shall be grounded on an affidavit of the applicant showing the amount of the assets, the age and residence of the person of unsound mind and his relationship to the applicant together with an affidavit of a medical practitioner relating to the incapacity of such person. This rule allowed me to proceed to apply for a Probate Officer Order to have a family member, a child in both cases, appointed to extract the relevant grant. The process I followed was to obtain medical
Winter 2020 dsba.ie Maria Lakes is a senior associate solicitor at Tracey Solicitors. She specialises in Personal Injury and heads up the Wills & Probate Department
evidence of mental incapacity and a medical affidavit, prepare an affidavit for the applicant, obtain the consent of the Registrar of Wards of Court by way of letter application and thereafter apply for the Probate Officer Order. Once the Order was received, I could apply for the grant in the normal fashion and the title of the Oath was straightforward requiring only that the Order was cited: Intestate: died Intestate leaving him/her surviving his/ her widow/er xxx I am the Committee lawfully appointed of the said xxx by Order of the Probate Office dated the xxx Testate: and did therein name as sole Executrix/or and universal legatee and devisee xxx and I am the Committee lawfully appointed of the said xxx by Order of the Probate Office dated the xxx Whilst this procedure assists in obtaining the necessary grant it does not resolve the issue of distribution to a beneficiary lacking capacity. Often the executor/administrator lacking capacity is also a beneficiary in the estate. Each case should be reviewed to ascertain the distribution requirements. In the above cases, the two-thirds share of the family home was transferred to the surviving spouse without the need for her to execute any document and the distribution in the contentious
probate case ultimately required the executor and ultimate beneficiary being made a Ward of Court. It is possible that a beneficiary lacking capacity may have a registered Enduring Power of Attorney (EPA) that could empower the Attorneys to receive the inheritance but it should be noted that an EPA would not enable the Attorneys to undertake statutory entitlements in terms of estate administration. Lastly, a word of warning – the procedure under Order 79 Rule 27 cannot assist where the applicant is resident outside Ireland as the Probate Officer’s Order cannot be used to appoint someone outside the jurisdiction. In those cases, a Section 27(4) application to the Court can be used. Section 27(4) of the Succession Act, 1965 provides: (4) Where by reason of any special circumstances it appears to the High Court (or, in a case within the jurisdiction of the Circuit Court, that Court) to be necessary or expedient to do so, the Court may order that administration be granted to such person as it thinks fit. This application should be used as a last resort due to the cost implications for the estate.
The procedure under Order 79 Rule 27 cannot assist where the applicant is resident outside Ireland as the Probate Officer’s Order cannot be used to appoint someone outside the jurisdiction
2. Links between Social Welfare, Fair Deal and Revenue Commissioners Increased capabilities in data processing and the Parchment 41
We have noted an increase in claims for overpayments by the Department of Social Protection against estates
analysis have highlighted the linkage between the Department of Social Protection, the HSE Fair Deal Scheme Section and the Revenue Commissioners. In practice we are increasingly encountering enquiries regarding the deceased’s declared assets on the Inland Revenue Affidavit (now the SA.2) and the deceased’s declared assets to the Department of Social Protection for any means tested social welfare benefits. Probate practitioners are no doubt familiar with the need to notify the Department of Social Protection of the intention to distribute in order that any claim against the estate can be confirmed. We have noted an increase in claims for overpayments by the Department of Social Protection against estates. Investigations by the Department have arisen regarding the deceased’s receipt of carer's allowance and pension payments due to assets not being declared during the lifetime of the deceased. Often these investigations result in significant monies being repaid to the Department as the assets are ultimately revealed to the Department in the date of death scheduled assets. Lately, as the death of recipients of the Fair Deal Scheme occurs, issues are arising in connection with the declared assets under the scheme versus the date of death scheduled assets. In this regard it should be noted that a similar obligation is placed upon legal personal representatives of deceased persons in receipt of support under the Fair Deal Scheme to send a schedule of assets to the HSE at least three months prior to distribution. In one case recently a reassessment of the State Support payable occurred due to a review of the date of death scheduled assets. This reassessment resulted in a decision that just under €40,000 was to be repaid by the estate due to an overpayment being made during the lifetime of the deceased. This reassessment arose as the date of death schedule of assets did not match the declared assets on application to the scheme as one asset was omitted and further there was a sale of the family home within 12 months of the date of original application. No reassessment took place at the time of the sale as the HSE was not notified. The reality is that assets are traced on death and compared with previous declarations. Further, as asset sources are often queried, there is the potential for taxation issues to arise such as in connection with gifts etc. The linkage between these State departments and the consequences that can arise do not appear to be widely known or realised. A Department of Social Protection investigation or HSE reassessment can be very upsetting and stressful for those grieving family members left behind and often they feel it is tarnishing their loved one’s reputation. In addition, an unexpected debt on an estate can frustrate the deceased’s wishes as provided under their will.
3. Proving a Will in Terms of a Translation As the volume of foreign applications to the Irish Probate Office is increasing, probate practitioners will encounter foreign wills in foreign languages. We have encountered this recently in the context of Dutch and German wills that deal with worldwide 42 the Parchment
assets and which have been processed in their home jurisdiction by the relevant notaries. These estates included Irish assets and therefore it became necessary to prove the wills in terms of a translation in the Irish Probate Office. This is permitted by way of Probate Officer Order under Order 79 Rule 5 (10) of the Rules of the Superior Courts: Where a will is in any language other than the Irish or English language the Probate Officer may admit it to proof in terms of a translation thereof in the Irish or English language. The process involves application for a Probate Officer Order as a preliminary matter before the standard application for a Grant itself. These applications are complex by their very nature. My starting point was the original will or an appropriate sealed and certified copy of same and an official translation of the will. My application to the Probate Officer include my grounding affidavit as the applicant solicitor setting out the full circumstances of the estate, an Affidavit of Laws from a competent lawyer within the foreign jurisdiction dealing with the deceased’s domicile, the facts of the case, exhibiting the original will or appropriate sealed and certified copy, setting out the applicable succession law within the foreign jurisdiction and specifically dealing with the entitlement to extract the grant and finally an affidavit from the interpreter who provided the official translation of the will. We found it challenging as we were tasked with drafting the Affidavit of Laws for review by the foreign lawyer. In order to draft such affidavit, we required a detailed understanding of the succession law in the foreign jurisdiction. In this regard there are resources widely available to probate practitioners detailing the succession law in foreign jurisdictions, such as the STEP directory. My experience was that the more detailed the draft sent to the foreign lawyer for review the less resistance we encountered in return as there was certainly frustrations on the part of the foreign lawyers in response to the Irish requirements. Probate Officer John Glennon is happy to review these applications prior to the documentation being furnished for execution in the foreign jurisdiction and we gratefully used this resource as a final review of the papers. Once the Probate Officer’s Order was received the application was drafted as standard and the Probate Officer provided guidance in respect of the title for the Oath due to the complexity of such matters.
Trending Probate practice evolves and naturally responds to social, cultural and technological shifts. There is no common theme to the latest trends other than some of your colleagues have likely come across them already so continue to use the resources at your disposal, be it our associations, networks and our probate office and don’t reinvent the wheel! P
Winter 2020 dsba.ie Mark Woodcock is a partner and Head of the Insolvency and Restructuring Department at Fieldfisher. Ciara Gilroy is a solicitor in Fieldfisher’s Insolvency and Restructuring Department
Guarantee your Guarantees We will soon enter a phase of the Covid-19 era when more and more companies will be forced to apply for protection from their creditors under the Examinership provisions of the Companies Act, 2014. Security as always will be a key consideration for the stakeholders in this restructuring process. Ciara Gilroy and Mark Woodcock raise the issue of personal or corporate guarantees in Examinerships The Legislation The legislation is very specific regarding guarantees. Guarantors temporarily benefit from a company’s protection from creditors during examinership and guarantees are not enforceable during the protection period. The Companies Act, 2014 (the Act) provides that a guarantor’s liability is not affected by the fact that the debt is the subject of a scheme of arrangement, unless the guarantor and the creditor agree otherwise. However, creditors relying on guarantees should be aware of the steps required to ensure they remain enforceable when examinership ends. In order to avail of this principle, creditors must comply with the very specific provisions of section 549 of the Act. When an Examiner serves notice of a meeting to consider a scheme of arrangement on creditors, any creditor who has a guarantee must serve a written notice on the guarantor offering to transfer to the guarantor, the creditor’s right to vote on the Examiner’s scheme of arrangement. Where less than 14 days’ notice of the creditors’ meeting is provided by the Examiner (as is almost always the case), the offer must be served on the guarantor within 48 hours of receipt of notice from the Examiner. Where a creditor fails to comply with the notice provisions of the Act and a scheme of arrangement takes effect, the company debt will be written down in accordance with the scheme and the creditor will be prevented from pursuing the guarantor for the deficit under the guarantee.
The Case Law Much of the case law in this area considers whether the service of the notice on the guarantor was effected within the 48 hours. In the case of Ely Medical Group Limited (2009, unreported), the Court heard evidence from a creditor relying on a guarantee, that the guarantor had deliberately evaded service of the notice. On the facts of the case, the Court held that the service was good and the guarantor remained liable. In Padraic Tuffy Limited -v- O’Neill & Anor, (2013 IEHC231) an examiner served notice of the meeting to consider a scheme of arrangement on all creditors by email and by letter. The issue for consideration was the
timing of receipt of the notice and whether the 48 hours for its transfer to a guarantor commenced on receipt of the notice by email, or, the following day when it was received by letter. The Court held that the 48 hour period starts from the time of first receipt of the notice, regardless of how it was delivered. Similar circumstances were considered in the recent UK case of Bank of Baroda v Maniar (2019 EWHC 2463). An Indian Bank sought to enforce guarantees governed by English law, but which were given in respect of the liability of an Irish-registered company. The company had entered into examinership under Irish law and an Irish Court had approved a scheme of arrangement. One of the primary issues in dispute was whether service of a notice on the guarantors in accordance with the Act was effected. The High Court of England and Wales held that a failure to comply with the specific notice requirements of the Irish Companies Act would be fatal to an action to enforce the guarantees in the English courts. Even where the notice provisions of the Act have been correctly complied with, a creditor must be careful not to jeopardise a personal guarantee. In a recent unreported case, a creditor issued the requisite notices which did comply with the 48 hour time limit. The offer to vote at the creditors’ meeting was neither accepted nor rejected by the guarantor. Perhaps because of this, the creditor attended at the creditors’ meeting and voted in favour of the scheme of arrangement. In doing so, it was found that the creditor had negated the notice delivered to the guarantor and compromised its ability to rely on the guarantee.
Conclusion and Advice It is clear that the Courts in this jurisdiction and in the UK adopt a very strict interpretation of the provisions of the Companies Act on the enforceability of guarantees in an Examinership. Anyone relying on guarantees must be hyper vigilant in protecting their security. Indeed, we suggest any creditor relying on guarantees prepares a detailed schedule and appoints an individual responsible for monitoring the corresponding debtors. Contact details for personal guarantors, registered addresses and email addresses for corporate guarantees should all be included. P
Where a creditor fails to comply with the notice provisions of the Act and a scheme of arrangement takes effect, the company debt will be written down in accordance with the scheme and the creditor will be prevented from pursuing the guarantor for the deficit under the guarantee
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Medical Negligence Case Law Update Civil proceedings in the Irish courts have slowed considerably as a result of the ongoing Covid-19 pandemic. Despite this, a number of significant decisions have been handed down by the superior courts over the past year concerning the field of medical negligence litigation, particularly decisions regarding the capping of damages and the application of the statute of limitations. Avril Scally and Mark Jones give an overview of these decisions and their implications for medical negligence law practitioners
Cap on General Damages The cap on general damages in personal injury cases was first established by the Supreme Court in 1984 in Sinnott v Quinnsworth and was set at IR£150,000. The cap has been increased at various points over the years in accordance with inflation and the rising cost of living and was most recently fixed at €450,000 in 2009. In the recent case of Morrissey v Health Service Executive  IESC 6, Mr Justice Cross in the High Court raised the cap on general damages once more to €500,000. This award was upheld by the Supreme Court on appeal with Mr Justice O’Donnell noting that in light of the economic circumstances which prevailed in 2009 at the time the previous limit of €450,000 was fixed, it did not seem unreasonable to place the current limit at €500,000. The Court of Appeal, meanwhile, has continued the approach it originally set out in Payne v Nugent in 2015 and Nolan v Wirenski in 2016 of reducing awards of general damages it deems to be excessive. Since 2015, the Court’s decisions have followed the principle that compensation in respect of pain and suffering should be fair, reasonable, and proportionate to both the cap on general damages and within the scheme of awards for personal injuries generally. 44 the Parchment
In the recent case of McKeown v Crosby  IECA 242, the Court of Appeal confirmed that awards of general damages in personal injury and medical negligence cases must be proportionate in the context of the cap of €500,000, which is awarded only in cases involving the most serious and catastrophic injuries. The Court also held that the award must be proportionate in the context of awards for comparable injuries. In particular, the Court held that if the Book of Quantum is relevant to the particular injuries at issue, the Court is obliged to have regard to it as a guide for the award to be made. Mr Justice Noonan stated that where the Book of Quantum is clearly relevant, “it would assist the court’s considerations to hear submissions from the parties about how it should be applied”. Similarly, in Leidig v O’Neill  IECA 296, the Court held that a fracture that was still causing pain some three and a half years later, with the expectation of both improvement and future pain, was not a “severe and permanent” injury and that accordingly the High Court award of €155,000 for general damages was “excessive to a degree that rendered it disproportionate and an error of law”. The Court of Appeal applied the three-tiered system of assessing damages set out by
WInter 2020 dsba.ie Avril Scally is a partner and Head of Medical Negligence at Lavelle Partners. She is a member of the DSBA litigation committee. Mark Jones is a solicitor in Medical Negligence at Lavelle Partners
Ms Justice Denham (as she was then) in the Supreme Court decision of MN v SM in 2005 distinguishing between minor injuries, moderate injuries, and severe injuries. The Court decided that the type of injury in this case was a moderate injury that ought to attract moderate damages. Accordingly, the award of general damages was reduced to €90,000.
Statute of Limitations Section 2 of the Statute of Limitations (Amendment) Act 1991 provides, inter alia, that the time within which an action in respect of an injury may be brought depends on the injured party’s date of knowledge. Section 2 further sets out that an injured party’s date of knowledge refers to the date on which they first had knowledge of the following: (a) That they have suffered an injury; (b) That the injury was significant; (c) That the injury was attributable in whole or in part to the act or omission which is alleged to constitute negligence, nuisance, or breach of duty; and (d) The identity of the Defendant. Since the decision of Mr Justice O’Higgins in the High Court in Gallagher v The Minister for Defence  4 IR 457, the courts have considered the
Plaintiff ’s date of knowledge to be the date upon which the Plaintiff is deemed to have the knowledge to “know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed Defendant, taking legal or other advice, and collecting evidence”. In other words, the date of knowledge was the date upon which the Plaintiff had enough information to be put on a path of enquiry. Two recent Supreme Court decisions, O’Sullivan v Ireland  IESC 33 and Green v Hardiman  IESC 51 have signalled a change of direction by the courts as regards what constitutes “knowledge” such that the statute of limitations starts to run on a Plaintiff ’s claim. In O’Sullivan, the Plaintiff contracted MRSA while recovering in hospital following a hemicolectomy operation in September 2005. He was informed by a hospital doctor on or about the 4th October 2005 that he had been infected by MRSA in the course of the operation and this necessitated a second operation. He contacted a solicitor in March 2006 and the solicitor obtained the relevant medical records in July 2006. The solicitor sought a preliminary expert
The time within which an action in respect of an injury may be brought depends on the injured party’s date of knowledge
the Parchment 45
The Supreme Court stated that “a reasonable basis must exist” in order to issue medical negligence proceedings against a Defendant
report and this was obtained on the 22nd February 2007. Charleton J in the Supreme Court held on appeal that the Plaintiff ’s knowledge that he had been infected with MRSA was not sufficient on its own for the statute to start running on his claim. Charleton J set out that a Plaintiff must identify acts or omissions that are alleged to constitute negligence in order for the statute to begin to run and that an MRSA infection can be caught in a hospital “without negligence on the part of any treating medical person and despite care in the hygiene management of the hospital”. Consequently, it was from the receipt of the preliminary expert report on the 22nd February 2007 that time began to run in the Plaintiff ’s case as it was on this date that the Plaintiff learned there had been an outbreak of MRSA in the hospital from which he should have been protected. In other words, the statute of limitations does not begin to run merely because the Plaintiff was aware that they contracted MRSA in a hospital; the Plaintiff must know, in some way, that they were injured as a result of negligence. This marks a significant change from the previous approach taken by the courts and in a dissent, Mr Justice O’Donnell noted that in its decision, the court held that the statute of limitations did not run for at least 18 months after the Plaintiff consulted a solicitor specialising in the area of medical negligence seeking advice as to whether he had a possible claim against the hospital. The Court’s decision in Green v Hardiman, meanwhile, was fact-specific but followed a similar line as that in O’Sullivan. The Plaintiff in Green was admitted to hospital for a colovesical fistula by laparotomy on the 11th December 2007, during which his bowel was accidentally perforated. He was discharged without this being noticed by the hospital and no other intervention was made. He returned to hospital and underwent a second laparotomy on the 19th December 2007. He was informed by the hospital that an internal suture had come away following his first operation, requiring the second operation and a stoma bag. The Plaintiff was referred back to hospital on the 6th February 2008 where the stoma was reversed. Proceedings were eventually issued against the hospital more than four years later.
Mr Justice Charleton in the Supreme Court held that in this case, the most influential factor in the Plaintiff ’s delay was the fact that his clinicians positively assuaged the Plaintiff from looking further into the matter. He held that the limitation period was delayed “in the exceptional circumstances of this Plaintiff being given, in good faith and on the basis of a professional assessment, an incorrect set of facts in consequence of taking the reasonable step of consulting expert medical advice”. In other words, the Plaintiff had been led to believe by his doctors that the condition from which he suffered was an unfortunate but not uncommon consequence of the initial surgery. The judgments of the Supreme Court appear to indicate that but for this assuaging by his treating doctors, time would have started running against the Plaintiff. The finding by the Court in Green does not fit completely with the decision in O’Sullivan set out above and clarification will be needed as to whether Plaintiffs and practitioners can rely on the new rule set out in O’Sullivan without the type of misdirection that was present in Green.
Expert Evidence In Mangan v Dockeray  IESC 67, the Plaintiff initially brought his case for catastrophic birth injuries against one defendant, his consultant obstetrician only. The First Named Defendant sought leave to issue third party notices against a consultant paediatrician, who provided neo-natal care for the Plaintiff, as well as the hospital and the Plaintiff sought to have those parties joined to the action as co-defendants. The Plaintiff did not have any expert evidence of his own against the parties he sought to have joined as co-defendants, however the Plaintiff sought to join them at this stage on the basis that the First Named Defendant had obtained the requisite evidence of negligence and substandard care. The new Defendants argued that the Plaintiff could not maintain proceedings against them on the basis of another Defendant’s evidence. This argument was accepted by both the High Court and the Court of Appeal, however the Supreme Court held otherwise. The Supreme Court stated that “a reasonable basis must exist” in order to issue medical negligence proceedings against a Defendant. In this case the pleadings do not fail to disclose a cause of action against the consultant paediatrician or the hospital, and accordingly it had not been shown that the Plaintiff ’s case against the two new defendants was bound to fail. The Supreme Court accepted that, pending discovery, the Plaintiff was entitled to rely on expert evidence referred to by the First Named Defendant in the joinder application.
Conclusion The jurisprudence from the superior courts over the past year demonstrates the evolving approach being adopted to previously well-established legal principles in medical negligence and personal injury litigation. In light of these developments, practitioners are well advised to keep abreast of the changes which will undoubtedly have an impact on their practices and the queries they are likely to face. 46 the Parchment
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Collection of Service Charge Debt Multi-unit developments, typically apartment complexes, rely on owner management companies (OMCs). How and to what extent an OMC is funded is crucial. Jason Harte examines what can be done when members do not pay their way?
ost OMCs are financed by contributions from their members, typically each owner who owns a unit in the development. The annual fee, or service charge, paid by each member, provides the cash flow that the OMC needs to provide the necessary services and maintain the development, particularly the development’s common areas.
What Happens when the Members don’t pay their Service Charges? A perennial problem that faces OMCs is the nonpayment of those annual service charges. Nonpayment was referred to in a recent independent report jointly commissioned by the Housing Agency and Clúid Housing (the Report). Unlike trading companies, OMCs have a fixed customer base – its membership/unit owners. Usually, service charges are based on a budget approved by an annual general meeting of the membership and apportioned per member. Where a member does not pay their annual service charge, then it makes it very difficult for the OMC to fund all of the services. Typically, these services include repair/maintenance and cleaning of common areas, electricity for common areas, gardening, refuse collection, block insurance and professional charges. Non-payment frequently means that all services cannot be provided, for cash flow reasons. In turn, this can cause members to refuse to pay their own service charge, causing the standard or quality of services to fall further. The inability of the OMC to fund professional charges for debt collection may also cause members to believe there is no legal sanction for non-payment, which can further exacerbate the situation. It often happens that where there is default in a given year, then the compliant members will be asked to fund the shortfall in the following year. Non-payment and its 48 the Parchment
knock-on effect on services provision is a vicious cycle.
What is Usually done to Oblige Members to Pay? There are a number of sanctions that the OMC can seek to impose upon non-paying members, such as: • Denial of access to car parks or refuse areas • Removal of the member from a block insurance policy, or • Addition of interest onto the service charge debt. Some of these penalties may depend on the terms of contract/lease in question, but in reality it is practically and legally very difficult to deny services to non-paying members. Some OMCs may seek to name and shame nonpaying members, for example by publishing a list of delinquent members at the OMC’s AGM, though obviously GDPR/data subject issues may arise. Separately, the non-paying member may also be denied the right to vote at those AGMs, though this sanction is rarely successful.
Will Legal Action Help? Traditional debt enforcement through the legal system is often not an effective remedy for the OMC. Unlike the delivery of goods, annual service charges are a recurring debt, owed by the member to the OMC. If an OMC sues a member for the arrears of service charges, the next annual charge may well have fallen due by the time the OMC obtains judgment. The OMC may then face the scenario of starting litigation once again for those new charges. Also, service charges are deemed to be contract debts (Section 22 of the Multi Unit Developments Act 2011) and as such are subject to the Statute of Limitations 1957. This means that the annual service charges may become statute-barred and legal action may not be possible. This occurs after six years from the time when they became due, unless there is a
Winter 2020 dsba.ie Jason Harte is a partner at Mason Hayes & Curran and head of the firm’s Debt Recovery Team
written acknowledgement from the debtor or a partpayment in the interim. Indeed, often the best opportunity for payment of arrears of service charges is on sale of the unit by the owner, as a new purchaser will not willingly buy the unit unless the service charge history is clean. The prospective purchaser will check this point via MUD Act pre-contract enquiries.
What Happens in Other Countries? The Report looks at the collection of service charges in a number of other jurisdictions. It suggests that Service charges owed to OMCs are seen as priority debt, elsewhere, unlike in Ireland. For example, in Finland, if a member does not pay their annual service charges, the Finnish equivalent of the OMC has the power to evict that member. A similar, fairly draconian, power may also be exercised in the UK, as against owners who do not pay their service charges, they too, are effectively evicted, following the deemed forfeiture of their lease. Commentators note that the UK courts are generally more supportive of OMC rights, than their Irish equivalents.
Can Anything more Radical be Done Here? The Irish government recognised service charges owing to OMCs as meriting special protection as “excludable debts” in the Personal Insolvency Act 2012, the Government could re-categorise service charges as not being capable of being statute-barred, or to provide that subsequently-occurring service charges, can be later added into existing legal proceedings, before judgment. Such recommendations have been made in the Report, which also advocates for the statutory establishment of a Regulator of OMCs (Housing Regulatory Authority). The Report also proposed
that this Housing Regulatory Authority would have jurisdiction for all disputes arising involving an OMC, including those relating to service charges. This would avoid legal fees that OMCs might incur, in dealing with those defended cases, where the member claims that the services provided were inadequate. Invariably this is the most common ground of defence that we have encountered to service charge debt claims. The implementation of some of the Report’s other recommendations would bring about hugely positive changes for the financing of OMCs in Ireland such as: • Enhanced provision for a sinking fund within multi-unit developments • Mandatory training for OMC directors • The standardisation of accounts to a format prescribed for OMC • Enhanced insurance obligations. Minister for Justice Helen McEntee, signalled in September 2020 that she intended to commence a review of legislation regarding OMCs “in the coming months”. Hopefully this will lead to some of the reforms suggested in the Report. If OMCs are unable to collect service charges, it leads on to inadequate funding, lack of service provision and ultimately insolvencies in the sector. The developments that these OMCs manage have had to deal with legacy construction and financial issues, such as Priory Hall and Longboat Quay. Where a properly funded OMC is not present to deal with such issues, the fall-out will presumably otherwise revert to local or national government. Non-payment of service charges is and is likely to remain a persistent problem for OMCs in Ireland. The measures advocated in the Report would greatly assist OMCs, particularly those changes that would make debt collection litigation more effective. As part of Minister McEntee’s forthcoming review, it is hoped to see those measures become reality. P
If an OMC sues a member for the arrears of service charges, the next annual charge may well have fallen due by the time the OMC obtains judgment
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Landlord Repossession Affirmed Ciara Ryan and Heather Mahon assess a recent High Court decision which refused to grant an interlocutory injunction to a tenant preventing a landlord from taking possession of restaurant premises. The Court refused to imply a suspension of rent into the lease during the pandemic or to hold that the lease had been partially frustrated
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Decision of the Court
In Oysters Shuckers Ltd v Architecture Manufacture Support (EU) Ltd  IEHC 527, there was a dispute between a landlord and tenant as to whether a new lease had been agreed between them some two years earlier. Pending the outcome of the proceedings, the tenant sought an interlocutory injunction to prevent the landlord taking possession of the restaurant premises from it as an overholding tenant or otherwise interfering with the tenant’s use and quiet enjoyment of the property. However, significantly, the tenant had not paid rent since March 2020 as a result, it claimed, of the impact of Covid-19 on its business and it had never paid the increased amount of rent due under the disputed new lease. The tenant had been initially successful in preventing the landlord taking immediate possession. It obtained an ex parte short term interim injunction from the High Court largely on the basis that under section 5(7) of the Emergency Measures in the Public Interest (Covid-19) Act 2020 “all proposed evictions in all tenancies in the State” were prohibited during the operation of that Act. Arguments from the landlord were not heard at that application. However, by the time that the interlocutory injunction came on for hearing, the “emergency period” during which that Act was in operation was no longer in force and did not influence the court’s decision which was decided according to the usual principles governing an interlocutory application, in particular the framework proposed in the recent Supreme Court judgment in Merck Sharpe & Dohme v Clonmel Healthcare Ltd  IESC 65.
Applying those principles and having reviewed the relevant case law, in summary, Sanfey J was satisfied that: • There was a fair question to be tried as to whether the disputed new lease was valid, binding and effective; • The existence of rent arrears did not automatically preclude a plaintiff from obtaining the type of injunction sought here; • The failure to discharge rent in the past and an admitted inability to discharge rent in the future were matters which weighed heavily when assessing the balance of convenience or justice; • Having examined its terms, there was no stateable basis upon which the court could hold that rent was not payable under the disputed lease for periods in which the plaintiff had to close the premises because of the Covid-19 pandemic; • Following on from that point, there was therefore no basis upon which any amount towards arrears or towards (part payment only) of any future rent should be paid into escrow, rather than directly to the defendant. The court also noted that there were no proposals as to how any rent shortfall would be met; • The plaintiff had not persuaded the court that it would suffer irreparable harm if an injunction was refused, or that an award of damages would not fully compensate it. It was not evident how any goodwill of the business was dependent on the plaintiff remaining in the premises or whether the premises was an integral and essential part of the business or not; • There was no substance to the undertaking as to
Winter 2020 dsba.ie Ciara Ryan is a partner at McCann Fitzgerald. She specialises in property disputes and dealing with all aspects of commercial landlord and tenant law. Heather Mahon is a senior associate at McCann Fitzgerald
damages offered by the plaintiff who could not currently pay the full rent, was unlikely to resume trading until 2021 and had not produced any other evidence of assets to satisfy this undertaking. The court concluded that the balance of justice required that the plaintiff ’s application be refused.
Specific Arguments Canvassed Around the Impact of Covid-19 In the course of his judgment, while expressing sympathy for the plaintiff, Sanfey J also rejected its submission that it would be “unconscionable” if the defendant “sought to evict the plaintiff in the midst of a global pandemic”. The plaintiff had given no specific reasons for this contention, nor was it substantiated by any legal principle or precedent. He also rejected the plaintiff ’s submission that a rent suspension clause in the disputed lease entitled the plaintiff to regard the rent as being suspended when it could not trade due to the pandemic. Quoting from the clause, Sanfey J said that the premises could not be regarded as “destroyed or damaged”; it was not “unfit for occupation or use”. On the contrary, the plaintiff ’s injunction application was advanced on the basis that the premises was fit for occupation and use. Also, none of the insured risks applied to the plaintiff ’s situation. He concluded that to interpret the clause as the plaintiff contended would do violence to the meaning of the actual words set out in the clause. The court also rejected the plaintiff ’s argument that the obligation to pay rent under the lease had been “temporarily suspended and/or partially frustrated”. Sanfey J pointed out that in Ringsend
Property Ltd v Donatex Ltd  IEHC 568, Kelly J trenchantly rejected a defence of “partial frustration”. Sanfey J agreed saying that the obligation to pay rent was an integral and indeed fundamental part of the contract. The obligation could be suspended in certain circumstances set out in the lease but these did not apply here. Accordingly, the plaintiff could not argue that the rent obligation was frustrated, while arguing that the lease itself remained valid. There was also no basis on which the court could imply such a term into the lease, whether pursuant to the “officious bystander test” or otherwise. Having contemplated and purportedly agreed the circumstances in which rent could be suspended, the plaintiff could not now ask the court to amend this list to include previously unforeseen circumstances.
Comment This application provides an insight into the strains being placed on the landlord and tenant relationship as a result of the current pandemic. In many cases, parties will come to an accommodation on the way forward. However, Sanfey J neatly summarised the dilemma faced by the landlord in this case. “The plaintiff wants to remain in the premise… [and] to make certain payments towards arrears and rent in the future…[but the] defendant would still be at a substantial loss for an uncertain period going forward. The…defendant is in effect being asked to subsidise or underwrite the future trading prospects and prosperity of the plaintiff, which in the current circumstances can only be regarded as precarious. In the meantime, the… defendant is deprived of the use of its premises and the opportunity to attract another tenant.” P Conor Sheridan also contributed to this article.
Landlord & Tenant
Having contemplated and purportedly agreed the circumstances in which rent could be suspended, the plaintiff could not now ask the court to amend this list to include previously unforeseen circumstances
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Remote Working Considerations With so many employees now working remotely from home, Jennifer O’Neill puts a spotlight on remote working and the issues for employers to consider
n December 2019, the Department of Business, Enterprise and Innovation published a report entitled “Remote Work in Ireland”, which defined remote working as a “form of organising and/or performing work, using information technology, in the context of an employment contract/ relationship, where work, which could also be performed at the employer’s premises, is carried out away from those premises on a regular basis”. Remote working includes both working from home or working from another location that is not your office, i.e. a community hub or co-working space. Much has changed since the publication of that report, with the Covid-19 pandemic resulting in an unprecedented and unplanned exponential increase in homeworking, which looks set to continue for the foreseeable future. As a consequence of the pandemic, many employees have been trying to juggle homeschooling, childcare and remote working during traditional office hours. Employers were forced to implement temporary flexible remote working arrangements at short notice for almost all of their workforce. These ad hoc arrangements have now continued for much longer than many envisaged. It is now clear that many employees will seek longer-term remote and flexible working options, which will allow them to plan where, how and when they work. The question arises as to whether employers are complying with the strict legal requirements imposed under the Organisation of Working Time Act 1997 (Working Time Act) under these new remote and flexible working arrangements.
The Organisation of Working Time Act 1997 Pursuant to the Working Time Act, employers are obliged to record working-time information for each employee on a daily basis, including starting and finishing times, rest breaks, daily breaks and weekly breaks. This information must be retained for three 52 the Parchment
years. The information can be recorded electronically or in manual form. Many employers who had workplace-based clocking in and clocking out systems to record the working hours and breaks of their employees, are now faced with the challenging requirement to record information for a totally remote workforce. Employers’ obligations under the Working Time Act apply regardless of where their employees are located or what new flexible work patterns have been implemented. Not only must employers record their employees’ working hours and breaks, but they must also ensure compliance with the specific provisions of the Working Time Act. Therefore, if an employer discovers that the average maximum number of hours that an employee is working in a working week is in excess of 48 hours, then action needs to be taken. Similarly, if an employer is aware that an employee is not availing of their daily or weekly rest breaks, it is imperative that the employer deals with this.
Steps for Employers to Regularise Arrangements The following steps should be considered by employers in order to ensure compliance with working time legislation. • For those employers that do not currently have a software system in place to record working hours or daily and weekly breaks, immediate action should be taken. The working time legislation includes a sample OWT1 Form, which illustrates how the days and hours worked for each week for employees can be manually recorded where there is no electronic recording system in place. • If you have a system in place, assess the output of your time recording system and ensure that it is reliable and accessible. Employers are reminded that they may need to rely on the information generated by these systems for an inspection or a hearing before the WRC. Merely having a mass of unclear data which cannot prove compliance in relation to
Winter 2020 dsba.ie Jennifer O’Neill is a consultant in the Employment, Pensions and Employee Benefits Unit at LK Shields
particular employees, will not be helpful. • Establish whether the system and arrangements for notification of missed breaks which are in place are adequate to benefit from the exemption from the requirement to record employee breaks under the Working Time Act. • Establish whether the software system you have in place to accurately record employees’ working time and rest breaks goes beyond the recording of information required under working time legislation and seeks to assess employee productivity and performance. If this is the case, the necessity and proportionality of such a system should be considered under applicable data protection legislation and information relating to this processing activity would need to be communicated to employees in a compliant privacy notice. • If a new time recording system is being introduced, then appropriate training should be provided to employees. Also, this new system and the underlying processing of employees’ personal data must be considered as part of your obligations as a ‘controller’ under data protection law. • It is recommended that employers review the contracts of employment of their employees and/ or relevant policies, to ensure that employees are expressly required to record their hours and breaks to assist the employer in complying with its obligations under working time legislation. Ideally, such policies and contracts would clearly set out the expectations on employees in relation to how they are expected to record their hours and breaks on a daily and weekly basis and the consequences of failing to do so. • As most employees are not meeting their line managers on a daily basis in the workplace, it is important that a proactive approach is taken by managers to review the time reports submitted by employees, particularly addressing any concerns that arise relating to issues such as excessive working hours. Having clear records of employees’ working hours will not be helpful unless the employer took appropriate action when any breaches of the Working Time Act arose. • When agreeing any changes with employees to allow flexibility in their working hours, it is important that these new arrangements remain compliant with all of the requirements of the Working Time Act so that breaks are still taken, and maximum working hours are not exceeded. Other employees may need to be aware of the flexible hours worked by team members so that they are not pressurising colleagues for responses when they are not working. • Ensure that the working time data for employees is sent to the employer each week so that the employer can comply with the record keeping requirements under the Working Time Act and have the records available for inspection at the principal place of work.
Right to Disconnect Employers also need to be conscious of an employee’s right to disconnect. Given the sudden increase in remote and flexible working arrangements, many employees are unfamiliar with this style of working
and may find it difficult to disconnect from work because they no longer physically leave the office and their devices are always accessible at home – days, nights and weekends.
Liability The Working Time Act requires that employees receive a minimum daily rest period of 11 consecutive hours per 24-hour period, so requiring or even permitting employees to regularly perform work and respond to emails late at night after a full day’s work, may result in liability for the employer. The Labour Court determination of Kepak v O’Hara in 2018 illustrates how an employer can be held liable for its failure to stop the excessive working of its employees. It is evident from the Kepak case that whilst training on how to manage working time efficiently is helpful, it may not be sufficient, and employers are expected to monitor and actively curtail an employee’s excessive working hours. Managers should be familiar with employers’ obligations under the Working Time Act and given appropriate training to ensure that they are: 1. aware of the working time rules when agreeing flexible working arrangements; 2. regularly monitor the data on working hours and breaks which they receive from employees on their teams, and 3. take action when it appears that a breach has occurred in respect of any employee.
Responsibility of Employers to Demonstrate Compliance The WRC and the Labour Court have made it clear that the onus is on the employer to prove compliance with their obligations under the Working Time Act and proof is necessary to defend any statutory claim. As employers who have breached the working time provisions may have to pay compensation of up to two years’ remuneration and may face multiple claims across their workforce for such breaches, together with fines for failure to keep appropriate records, it is vital that employers review their systems and policies to ensure that employees’ working arrangements are in line with legal requirements and are properly recorded. P
The Working Time Act requires that employees receive a minimum daily rest period of 11 consecutive hours per 24hour period, so requiring or even permitting employees to regularly perform work and respond to emails late at night after a full day’s work, may result in liability for the employer
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Courts Address Novel Issues In two recent cases, the High Court and Court of Appeal addressed two different applications under the Companies Act 2014 (the “Act”). Joanelle O’Cleirigh provides an overview
he first matter concerned an error with a filing to the Companies Registration Office (“CRO”). The second matter concerned a failure to file to the CRO. In a recent case the Court of Appeal considered whether the High Court can rectify filings made to the CRO. In another recent application brought by Arthur Cox on behalf of its client, the High Court considered the operation of section 204 of the Act, which provides for the reduction in company capital carried out using the Summary Approval Procedure (“SAP”) – a streamlined procedure available to a company to authorise various types of activities, such as a reduction of company capital, which would otherwise require an application to, and the consent of, the High Court. Following a failure to file with the CRO as required by the SAP, the company applied to the High Court to have the capital reduction declared valid.
Can the High Court Rectify CRO Filings? In Wee Care Limited v Companies Registration Office the appellant sought orders directing the CRO to replace a set of full financial statements which had been filed by a small company, with a set of abridged financial statements instead. These orders were sought under both section 366 of the Act and/or pursuant to the inherent jurisdiction of the High Court.
Statutory Jurisdiction Under section 366 of the Act, statutory financial statements or directors’ reports can be revised 54 the Parchment
where they “[do] not comply with the requirements” of the Act or Article 4 of the IAS (International Accounting Standards) Regulation. The Court of Appeal noted that section 352 of the Act, which entitles a small company to file abridged accounts with the CRO, is optional and not prescriptive. The Court of Appeal described it as an “empowering provision”. The company “avails itself ” of the option to file abridged statements, meaning that it can decline to do so in favour of full financial statements. The Court added that this clear language was bolstered by section 277 of the Act which provides that any provision in Part 6 of the Act allowing for an exemption (such as section 366) does not prevent the company from declining to avail of that exemption. The Court of Appeal found that the small company was perfectly entitled to file full statutory financial statements and that doing so did not render the statements defective or in breach of the requirements of the Act. Accordingly, it was found that the High Court was correct in not ordering the Registrar of Companies to replace the company’s full financial statements with abridged financial statements.
Inherent Jurisdiction Secondly, the Court of Appeal considered whether the High Court has inherent jurisdiction to make the orders sought by the appellant. The Court of Appeal stated that inherent jurisdiction would only be exercised by the Courts in the absence of express statutory jurisdiction. The Court acknowledged that the Act is not exhaustive and that it does not provide for the revision
Winter 2020 dsba.ie Joanelle O’Cleirigh is a partner at Arthur Cox
of defective financial statements, nor is there specific provision for the scenario where a small company inadvertently files full, rather than abridged, financial statements. The Court of Appeal noted that there is a legislative policy discernible in the Act to allow rectification of the Companies Register “in quite limited circumstances and in a limited way”. The Court of Appeal held that it did not need to rule definitively on the inherent jurisdiction point as it found that the error in filing additional material did not result in serious or significant commercial prejudice to the appellant and that even if inherent jurisdiction to rectify exists, the appellant did not meet the threshold for intervention.
How does the Court Remedy a Failure to file in the CRO in Connection with the Summary Approval Procedure? We recently acted on behalf of a client in securing an order from the High Court to remedy a failure to file on time with the CRO. The High Court made an order (which we believe was the first of its kind made) granting the application under section 204(2) of the Act declaring valid for all purposes a reduction in company capital carried out using the SAP, pursuant to the Act. In this instance, the necessary steps to undertake the SAP had been carried out by the company, including the directors making the necessary declaration under section 204 and the company’s auditors providing a report which confirmed that the declaration was not unreasonable. However,
due to an oversight by the company’s accountants, the declaration was not filed with the CRO within the required 21 days. The company applied under section 204(2) of the Act, which allows the Court to remedy the failure to file by declaring that the carrying on of the activity in question shall be valid for all purposes “if the court is satisfied that it would be just and equitable to do so”. The Court took into account several factors when considering whether it was “just and equitable”, including: 1. That the shareholders of the company did not object to the application; 2. That the other requirements of the SAP were complied with; 3. That the declaration by the directors operates as a protection for creditors; 4. That the failure to file was due to inadvertence, in this particular case compounded by the effects of Covid-19; 5. That this is not a scenario where there is ordinarily any creditor participation; and 6. That the company is robustly solvent (even after the reduction in capital).
The Court of Appeal noted that section 352 of the Act, which entitles a small company to file abridged accounts with the CRO, is optional and not prescriptive
Concluding Thoughts These two cases give companies an insight into the approach of the courts to sections of the Act less commonly brought before them. In particular, these cases highlight the importance of seeking advice at an early stage when company law issues arise, particularly in relation to whether there is a need to apply to the courts to rectify or address these issues. P the Parchment 55
Claims Against an Estate – NEED FOR SPEED It is often difficult for a beneficiary to take that first step towards bringing a claim against an estate. This is particularly so, where there is a minor child involved. However, Jackie Buckley and Owen Burke say that it is extremely important that any such action is taken promptly
his was highlighted recently in the case of Caitriona Cunniffe -v- Michael Cunniffe and Martina Whyte, where the judgment was delivered by Mr Justice Meenan on 13 May 2020.
Background The facts of the case are not unusual for the era. Catriona Cunniffe, Michael Cunniffe and Martina Whyte were three of the four children of Patrick Joseph Cunniffe who died intestate (without having made a Will) on 30 September 1987. He was survived by his four children. Catriona Cunniffe, his daughter, was 17 when he died. Martina Whyte was elected by her siblings to administer the estate. It would appear that all of the siblings of the deceased agreed that their brother, Michael Cunniffe, would continue to run the farm as he had done since he left school at 14 years of age in the early 1980s. All the livestock and machinery were transferred to him for the ongoing operation of the farm. The estate included land, livestock, cash, insurance policies, household goods, farm machinery and a car. Letters of Administration were granted on 16 November 1988 and Martina Whyte commenced the formal administration of the Estate after this point. It was agreed that to maximise the return of the assets, the division of the monies should take place as each asset matured. Payments were made to Catriona Cunniffe in August 1988, January 1989, May 1989, and November 1995. It was further alleged that this agreement was reflected in a written family settlement which was signed by all the siblings. Under the family settlement which was signed in 1995, it was agreed that Catriona Cunniffe, Martina Whyte and
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the other sibling, Padraic Cunniffe, would disclaim all their interest in their father’s estate so that Michael Cunniffe would be the sole remaining person entitled to inherit. In consideration of this, Michael Cunniffe agreed to pay his siblings £30,000 each.
Proceedings Catriona Cunniffe initiated proceedings in May 2016. She maintained that it was agreed that her brother Michael would remain in possession of the farm without any claim being made by the other siblings. However, Catriona Cunniffe claimed that she was assured by both her brother and sister “that the family home house would always be there for her regardless of title, possession, or ownership and that [she] would be entitled to full access and possession of same as and when she opted to avail of same...”. She sought a number of reliefs against her brother and sister, including declarations that the family home was her sole property and that legal ownership should be transferred into her sole name, together with damages for personal injuries and consequential loss. She also sought damages for negligent misstatement and/or misrepresentation. Both defendants pleaded that her claim, if any, was statute barred and that the claim ought to be dismissed by reason of delay.
First Claim – Misrepresentation The first claim made by Catriona Cunniffe was one of misrepresentation on the part of her siblings. She made the case that following representations concerning the family home, she had agreed not to contest the lands of the deceased being transferred to her brother Michael. She stated that she continued
Winter 2020 dsba.ie Jackie Buckley is a partner and head of the Property team at Hayes Solicitors. Owen Burke is an associate solicitor at Hayes Solicitors
to live in the family home for extended periods until 2003, at which point her brother allegedly made the home uninhabitable (by disconnecting the water and removing the solid fuel cooker). It appears that her claim accrued on some date in 2003 or 2004. As section 11(2) of the Statute of Limitations Act 1957, requires such actions to be brought within six years, her claim was clearly brought too late and was statute barred given that proceedings were only commenced in May 2016. Second Claim – Administrator The second claim was against Martina Whyte as administrator of the estate. Section 45 of the Statute of Limitations 1957 (as amended) provides that no action in respect of any claim to the estate of a deceased person shall be brought after the expiration of six years from the date when the right to receive the share or interest accrued. The six-year time limit commences from the date the property the subject of the claim comes into the hands of the personal representative. Therefore, this claim by Catriona Cunniffe was also statute barred as proceedings had only been commenced in May 2016. The latest possible date, on the facts of this case, for the distribution of funds was 2004 when certain investment policies were distributed by the personal representative. Third Claim – Personal Injury Catriona Cunniffe also made a claim for personal injuries. The general rule is that such claims must be brought within two years of the injury. The High Court was of the view that she was aware that matters were going wrong at the latest in 2003/04 and this, apparently, was the source of her upset and consequent
personal injury. The proceedings were clearly issued well outside the time provided for the bringing of such a claim. Thus, this claim was also statute barred.
Some Chink of Light In her written submissions, Catriona Cunniffe also sought to rely upon the provisions of section 71 of the Statute of Limitations 1957 which provides: “Where, in the case of an action for which a period of limitation is fixed by this Act, either – (a) the action is based on the fraud of the defendant or his agent or of any person through whom he claims or his agent, or (b) the right of action is concealed by the fraud of any such person, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it...” The High Court stated that if Catriona Cunniffe could bring herself within the provisions of section 71, this would afford a defence to the plea that her action is statute barred. This did not apply to the personal injury action, which was clearly statute barred. As a result, the High Court directed a hearing as to whether she was entitled to rely on the provisions of section 71.
Conclusion This case is a reminder of the importance of acting in a timely fashion where an individual has a claim against an estate. Unless there is fraud involved, the Statute of Limitations is in place to prevent defendants having to deal with old and stale claims against them. Putting things on the long finger is counterproductive and timely professional advice should be sought at an early stage. P
Section 45 of the Statute of Limitations 1957 (as amended) provides that no action in respect of any claim to the estate of a deceased person shall be brought after the expiration of six years
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The Late Dr Eamonn Hall
The AGM of the Dublin Solicitors Bar Association took place in a virtual setting, on the 11th November 2020. The AGM was extremely well attended as it signalled the end of Tony O’Sullivan’s year as President. Newly elected DSBA Council members include Jessica Hickey and Ciara Hallinan. Susan Martin is the new Honorary Secretary and Niall Cawley is the Programmes Director for the year ahead. Joe O’Malley, Partner at Hayes Solicitors was installed as the new DSBA President.
The President and Council of the DSBA were deeply saddened to hear of the death of the late Dr. Eamonn Hall and they extend their sympathies to his wife Mary and children. Dr. Hall qualified as a solicitor in 1974 and during the course of his working life made an enormous contribution to the profession. A true renaissance man, as well as impressive academic achievements, a distinguished career in acting as Chief Solicitor for Telecom Eireann/Eircom Group and Fellow of the faculty of Notaries Public, Dr Hall was also an eminent author. The Law Society honoured Dr. Hall’s contribution to the profession in a room naming ceremony in August 2020. Ar dheis Dé go raibh a anam dílis.
Negative Interest Rates
WHAT ARE THEY AND WHAT CAN YOU DO ABOUT IT? For the past 20 years the European Deposit Interest Rate has been below 4% and, since 2009 below 1%. We are now in an era of negative interest rates and while it has taken some time, the pillar banks have indicated that negative interest rates will shortly be applied to deposits. Currently, the DSBA is not aware that any firm is paying negative interest rates on deposits. The pillar banks have all indicated that this is something that they intend to impose in 2021. In accordance with Central Bank guidelines, all customers must be given at least 60 days’ notice of any change in bank charges. While this is therefore not an immediate problem, it is on the horizon. It is certainly a matter which would merit consideration for all firms when planning for 2021. By way of example, a negative interest rate of 0.5% on €3m would equate to interest payable of €15,000 per annum. The law on interest on solicitors’ client accounts is set out in Regulation 8 of the Solicitors Accounts Regulations 2014. This regulation provides for interest which accrues to deposits and is silent as to negative interest that may be applied to 58 the Parchment
deposits. The Regulation does not provide that the cost of keeping money on deposit can be passed on to clients. I have tasked a sub-committee of the DSBA Council to review and monitor the matter. As your representative body, we will raise the matter of the Solicitors Accounts Regulations regarding negative interest rates with the Law Society of Ireland. Separately, based on the information available there are a number of steps that firms can take within the existing regulations to minimise their exposure to charges: A. The Solicitors Accounts Regulations 2014, at Regulation 4(3) provides that a solicitor can hold more than one client account. One bank (AIB) has indicated that it will move the deposit limit at which it currently charges a negative interest rate from €3million to €1million in 2021. Practitioners could consider opening further client accounts and thereby keep the balance in any one account below the minimum required to attract a negative interest rate. However, one would also have to consider the additional bank charges this will attract as well as any
administrative burden, costs and security considerations. B. Seek to actively reduce the amount you hold on deposit for clients. This might well be difficult due to the nature of legal transactions and would be subject to other considerations – e.g. in a conveyancing transaction one might need to draw down funds in good time, even if a negative rate of interest is attracted, to avoid an even higher rate of interest in the contract for sale. C. As of the date of this publication, two banks give a small positive interest rate (0.01%) on “Business Client Reserve Account”/“Solicitors Reserve Account”. Further products may be available with other institutions. It is therefore worthwhile considering a change in the nature of your account or change of bank to avoid negative interest rates. D. Monitor carefully any correspondence from your bank which will give you advance warning of any change in interest rates. E. Keep in touch with the DSBA through our website and e-bulletins for further developments. Susan Martin, Tony O’Sullivan and Paul Ryan
Winter 2020 dsba.ie
DSBA Commercial Litigation Seminar The Commercial Law Committee held its 2020 Annual Commercial Litigation Update seminar on 19th November, the first time it has been held via webinar. This was a topical seminar, covering some controversial issues and often citing exceptionally up-to-date case law. Mr. Justice Barniville, who is currently Judge in Charge of the Commercial List, very generously chaired the seminar, introducing the presenters, giving insights after each of the talks and fielding the Q&A session with aplomb. The presentation from Kelley Smith SC, entitled “Commercial Litigation: Relevant Recent Developments and the Impact of the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020” addressed the ongoing nature of civil litigation and the increased digitisation of the Court during this global pandemic. Kelley’s review of the Supreme Court cases of Defender v HSBC France and University College Cork v Electricity Supply
Board and of the High Court in Ryanair v An Taoiseach was afterwards described by Mr. Justice Barniville as a “…tour de force review of some of the more difficult recent cases to come before the Superior Courts.” The talk from Stephen Byrne BL,“Litigation in the Covid Era – The Impact of the Pandemic on Contractual Disputes,” was an in-depth analysis of the areas of Force Majeure clauses in contracts (which, it was observed, has not disturbed the collective consciousness of most lawyers since their undergraduate days), and the doctrine of Frustration of Contract; both from a Covid-era perspective. The seminar’s chair complemented the presentation as, “...extremely up to date – citing judgments given in the last number of weeks.” Sean O’Sullivan BL spoke on the topics of “Business Interruption Insurance and Directors’ Liability for Reckless Trading”, again in a Covid context. He referred to the recent FBD case (judgment due mid-January
2021) and the English High Court cases of FCA v Arch Insurance (September 2020, appeal underway) and TKC London v Allianz (October 2020). Finally, Sean reviewed the ODCE Guidelines for Directors post-Covid-19, issued in June 2020. Mr. Justice Barniville praised the presentation, saying that these are two very important issues that many attendees are encountering in their work. Finally, the talk from Eoin Martin BL “Jurisdiction, enforcement and cross-border litigation – an overview of the current law with a focus on the likely implications of Brexit” looked at the significant implications and anticipated changes for any Irish court litigation that involves a UK component, once EU law ceases to have effect in the UK on 31st December 2020. The seminar chair Mr. Justice Barniville commended the presentation as, “learned, detailed and covering a huge range”. Indeed, he noted each of the issues covered “… would merit a seminar on their own.” The speakers gave attendees an insight into the changes being brought about by Covid-19 and Brexit. Although this seminar was held virtually, this did not prove a barrier to a great learning experience. Paul Ryan, Chairperson of the DSBA Commercial Law Committee
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Supreme Court Rulings on Disclosure On 25 September 2020, the Supreme Court ruled in two important cases that public bodies must provide substantive reasons for refusing to disclose confidential or commercially sensitive information, following receipt of freedom of information requests. Jessica Cantwell takes a closer look
he Supreme Court ruled that where a public body refuses to disclose information based on the statutory exemptions available, an explanation must also be provided as to why the public interest does not justify the release of the documentation requested. While the Freedom of Information Act, 2014 (“the Act”) enshrines an individual’s right of access to official records held by government departments or other public bodies (as defined in the Act), it is not absolute as there are a number of statutory exemptions available. However, the legislation is premised upon the assumption that a public body will disclose information where requested to do so. As such, these recent cases provide an interesting discussion of the interplay between the right of access and reliance on the statutory exemptions available.
Minister for Communications, Energy and Natural Resources v the Information Commissioner IESC 57  This case related to a request made pursuant to the Act (“an FOI request”) by Gavin Sheridan to the Department of Communications, Energy and Natural Resources (“the Department”) in which he specifically sought a copy of a contract entered into between the Department and E-Nasc Éireann Teoranta (“eNET”). The contract itself related to eNET’s exclusive rights to manage the State’s fibreoptic broadband network. The Department refused the request on the grounds that the information was 60 the Parchment
both commercially sensitive and confidential and accordingly, was statutorily exempt. The Department indicated it had a “duty of confidence” to the private interests of eNET and the disclosure of this information “could have a negative impact” and “could result in a material financial loss to the company”.
University College Cork v the Information Commissioner  IESC 57  In this case, Raidió Teilifís Éireann (“RTÉ”) (through John Cunningham, a journalist in its investigative unit) made a request for various records concerning the financial management of University College Cork (“UCC”), which included a loan in a value of €100m given to UCC by the European Investment Bank (“EIB”). The loan involved several projects such as student accommodation, a €37 million investment into a new dental school and funding of campus development in the region of €27 million. UCC refused to release this information on the basis that it was commercially sensitive. Having considered the public interest arguments in favour of releasing the information, UCC determined that the release of this information would result in the EIB incurring financial loss and could potentially damage UCC’s ability to obtain credit facilities in the future and as such outweighed any public interest argument.
Independent Review by the Information Commissioner The refusals by the Department and UCC to disclose the information sought on the grounds of statutory
Winter 2020 dsba.ie Jessica Cantwell is an associate in the Dispute Resolution team at Eugene F Collins
exemptions were the subject of an independent review by the Information Commissioner’s office. In summary, the Information Commissioner determined that the records in these two cases should be released and indicated that non-disclosure of information should only arise in “exceptional” circumstances. The Information Commissioner’s decisions were appealed ultimately to the Court of Appeal (The Minister for Communications, Energy and Natural Resources v the Information Commissioner  IECA 68) and to the High Court (UCC v the Information Commissioner  IEHC 195) and both public bodies were successful at this stage.
Supreme Court Decisions The Information Commissioner subsequently appealed these decisions to the Supreme Court. As previously noted, the Supreme Court held that public bodies must justify any refusals to disclose information, pursuant to a FOI request, under the Act, notwithstanding the fact that a statutory exemption may apply. Further, the Supreme Court made it clear that public bodies must provide substantive reasons for refusing to disclose any such information and provide a detailed explanation as to why the public interest does not justify the release of the information requested. The Supreme Court had regard to the fact that the Act is premised upon a statutory presumption of disclosure and that while public bodies are permitted to refuse to fulfil a FOI request in circumstances where the information is confidential
Freedom of Information
and/or commercially sensitive information, a public body must adequately justify any such decision. However, the Supreme Court was of the view that the Information Commissioner’s assertion that non-disclosure could only be justified in “exceptional circumstances” was setting an “unduly high bar”. Of particular note in relation to the case concerning the Department was the consideration given by the Supreme Court to the ‘public interest override’ provisions contained in the Act with respect to the statutory exemptions relating to confidential information (section 35 of the Act) and commercially sensitive information (section 36 of the Act). Whilst the Supreme Court took the view in this case that the records of the Department were not exempt on the basis of confidentiality, it set out that it was possible for information to be considered confidential, where provided either under contract or by statute, provided the public interest would not be better served by disclosing the information. However, the Supreme Court clarified that it is not possible for public bodies to generate confidentiality over information in the absence of a contractual or statutory basis to do so. These two cases have now been remitted back to the Information Commissioner for re-assessment but the decisions highlight the need for public bodies to carefully consider their response to FOI requests and any reliance by them on statutory exemptions when refusing to disclose information. P
The Supreme Court clarified that it is not possible for public bodies to generate confidentiality over information in the absence of a contractual or statutory basis to do so
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Concurrent Wrongdoers Judgment Kelley Smith assesses an important Supreme Court Judgment in the case of Defender v HSBC
n December 2008, the former chairman of the Nasdaq, Bernard Madoff confessed that his asset management activities were “one big lie”. It transpired that Mr Madoff had been operating the world’s largest Ponzi scheme for which he is now serving a 150 year sentence. Mr Madoff perpetrated his fraud by having a multiplicity of roles: broker, fund manager and having custody of the assets of certain funds. Mr Madoff ’s Ponzi scheme is the background to the Supreme Court’s judgment in Defender v HSBC Institutional Trust Services (Ireland) DAC and Others  IESC 37 (‘the Judgment’) which addresses issues relating to concurrent wrongdoers. On 3 July 2020 the Supreme Court handed down the Judgment in respect to Defender’s claim for damages for professional negligence and breach of contract against HSBC France (formerly, HSBC Institutional Trust Services (Ireland) Limited)) (‘HSBC’) arising from investments made in Mr Madoff ’s related corporate entity, Bernard L Madoff Investment Securities LLC (‘BLMIS’). The Judgment addresses the interpretation and interaction of certain provisions of the Civil Liability Act 1961 (the ‘CLA’) in relation to concurrent wrongdoers. Critically, the Court upheld the finding of the High Court that s 17 of the CLA may provide a complete defence to one concurrent wrongdoer, despite their responsibility for damage, in the wake of settlement with another wrongdoer. Departing from
62 the Parchment
the finding of the High Court, O’Donnell J concluded that it was unsafe to make such a determination on the applicability of this defence in the context of the trial of a preliminary issue.
Background Pursuant to a custodian agreement, Defender, an investment fund, HSBC as custodian of its cash and other assets. HSBC entered into a sub-custody agreement with BLMIS such that it delegated custody of Defender’s assets to BLMIS. As a result, around US $540 million of Defender’s assets were held by BLMIS. Within days of Mr Madoff ’s arrest Mr Irving Picard was appointed as trustee in bankruptcy (‘the Trustee’). That appointment was pursuant to the Securities Investor Protection Act, 1970. In 2009, a claim was made in the bankruptcy on behalf of Defender. Ultimately, in 2015, a settlement was reached between the Trustee, Defender and others (‘the Settlement Agreement’). As a result, the Trustee granted Defender an allowed claim in the Madoff liquidation (‘the Allowed Claim’) and agreed to pay distributions based on the Allowed Claim. Defender anticipated that it could recover 75% of its loss through the settlement.
High Court Defender commenced the proceedings to recover the remaining 25% of its loss. One defence advanced by
WInter 2020 dsba.ie Kelley Smith SC was called to the Bar in 2002. She has a broad commercial and chancery practice. This article is based on Kelley's presentation at the recent DSBA Commercial Law Committee seminar on 19th November 2020
HSBC related to the CLA and the identification provisions contained therein. After hearing opening addresses at the trial, Twomey J raised the possibility that some of the issues raised by HSBC in its defence, in particular that relating to the CLA, might be capable of determining the proceedings and queried whether they should be addressed as preliminary issues. Twomey J proceeded to hear a preliminary issue in respect of the CLA. HSBC relied on the provisions of the CLA, in particular s 17(2), to argue that it had a complete defence to the damages claimed. It argued that, if HSBC was found to be a concurrent wrongdoer with BLMIS, the settlement meant that Defender could not pursue HSBC by operation of s 17(2) of the CLA. Section 17(2) provides that if there is not intention to release a concurrent wrongdoer indicated “the other wrongdoers shall not be discharged but the injured person shall be identified with the person with whom the release or accord is made, in any action against the other wrongdoers, in accordance with paragraph (h) of subsection (1) of Section 35…”. Section 35 (1)(h) provides that for the purpose of determining contributory negligence: “where the plaintiff ’s damage was caused by concurrent wrongdoers, and after the occurrence of the damage the liability of one of such wrongdoers is discharged by release or accord made with him by the plaintiff, while the
liability of the other wrongdoers remains, the plaintiff shall be deemed to be responsible for the acts of the wrongdoer, whose liability is so discharged”. The judge was satisfied that both BLMIS and HSBC were concurrent wrongdoers. He went on to find that Defender was to be identified with the fraud perpetrated by BLMIS by operation of s 17(2) and s 35(1)(h) of the CLA. Twomey J considered that a primary wrongdoer guilty of fraud and criminal conduct should not be entitled to a contribution from a secondary wrongdoer guilty of a civil wrong, such as negligence. Ultimately, the Judge determined that what was relevant was the qualitative difference between the situation where “one wrongdoer is guilty of a criminal activity and the other is guilty of a civil wrong such as negligence” and compared that to the situation where there is an “action between two wrongdoers who are both guilty of a civil wrong or indeed, both guilty of a criminal wrong”. Twomey J recognised there was a qualitative difference between that situation and “some other form of concurrent wrongdoers, e.g. an architect and a builder who are both sued for negligence arising from substandard building on the other hand”. The High Court concluded that BLMIS would have been liable to contribute 100% to Defender’s claim had Defender’s total claim been paid by HSBC. Accordingly, the High Court held that
Twomey J considered that a primary wrongdoer guilty of fraud and criminal conduct should not be entitled to a contribution from a secondary wrongdoer guilty of a civil wrong, such as negligence the Parchment 63
s 17(2) of the CLA provided HSBC with a complete defence to the claim.
The Supreme Court
The decision of the Supreme Court confirms that injured persons who enter into settlement arrangements with one concurrent wrongdoer may not, as a result of the operation and interaction of certain provisions of the CLA, be entitled to full damages
O’Donnell J gave the principal judgment of the Supreme Court. In that judgment he considered the background to the CLA, a piece of legislation approaching its 60th birthday. While noting the advances that the CLA represented at the time the Judge recognised that it is a piece of legislation showing its age in the context of complex modern litigation. In the past, O’Donnell J (and other members of the judiciary) have been critical of what is considered to be the unintended consequences of certain aspects of the CLA including the identification provisions (Hickey v McGowan  2 IR 196. See also, Cafolla v O’Reilly  3 IR 209). Turning to the issues of statutory interpretation, O’Donnell J shared the finding of the High Court that HSBC and BLMIS were concurrent wrongdoers, for the purposes of the trial of the preliminary issue, having been satisfied that HSBC and BLMIS were responsible to Defender for the same damage: the lost investment. Having so determined, O’Donnell J proceeded to consider the terms of the settlement and considered the proper interpretation of s 17(2) of the CLA premised on the existence of an accord. In the High Court, the trial judge was satisfied that the key factor in determining what was ‘just and equitable’ for the purposes of s 21(2) of the CLA was the respective blameworthiness of the concurrent wrongdoers. As noted above, a distinction made between criminal and civil wrongdoing gave rise to a finding that BLMIS would have been liable to contribute 100% to HSBC if Defender’s total claim had been paid by HSBC by virtue of the fraud which it had perpetrated. Having regard to the identification mechanism provided for by s 17(2) of the CLA, the Supreme Court recognised that it was ‘difficult to avoid the conclusion at which the High Court arrived’. O’Donnell J accepted that s 17(2) of the CLA operates in an overly rigid, abstract and theoretical way, which may discourage an injured person from entering a settlement with one concurrent wrongdoer. O’Donnell J stated: ‘…it is quite clear that the CLA in s 17 explicitly and
deliberately contemplates the possibility of a plaintiff recovering less than full damages, even though there is a solvent defendant who has been determined to be a wrongdoer and, moreover, responsible for the damage who does not have to make good the deficiency. The section does not distinguish between the case where the deficiency results from a failure of the plaintiff to properly value the claim and the liability of [the settling wrongdoer] and those cases where the plaintiff accepts the settlement as the best that is possible in difficult circumstances.’ Ultimately, the Supreme Court concluded that the High Court was correct in its interpretation of s 17(2) of the CLA. The Supreme Court went on to consider the issue of contribution and apportionment and, in that regard, departed from the findings of the trial judge. The judge noted that in order to succeed on the preliminary issue HSBC had to establish that any apportionment of responsibility between BLMIS (with whose acts Defender was identified) and HSBC must always amount to a full indemnity from BLMIS to HSBC. If there was a 1% chance of HSBC being responsible then the preliminary issue could not succeed. O’Donnell J could not accept that fraud always obliterated negligence in terms of fault such that a claim should be dismissed in limine. The Court looked at the Australian High Court of Burke v LFOT Pty Limited  HCA 17, relating to the doctrine of contribution and was supported in his view by the dissenting opinion in Burke. In that case the majority focused on the injustice that a fraudster could retain some of the benefits of a fraud. However, Kirby J (giving the dissent) was influenced by the apparent injustice that a person found guilty of serious wrongdoing could be insulated from all responsibility because of the existence of another solvent wrongdoer. Accordingly, the Supreme Court concluded that it could not be said with the requisite degree of confidence that there was no prospect of any apportionment of liability and damages other than 100% to BLMIS in the context of the trial of a preliminary issue; accordingly, the matter was remitted to the High Court to be determined by way of a plenary hearing.
Case Management For completeness it should be noted that Charleton J also delivered a judgment in this appeal. That judgment focused on the need for active case management of complex litigation: something Charleton J has been a proponent of for many years. The judge concluded, in light of the Rules of the Superior Courts, that the Trial Judge had all the necessary powers to manage the progress of the litigation.
Implications The decision of the Supreme Court confirms that injured persons who enter into settlement arrangements with one concurrent wrongdoer may not, as a result of the operation and interaction of certain provisions of the CLA, be entitled to full damages. It remains to be seen whether the Legislature will heed the calls for reform of the CLA. O’Donnell J has warned that ‘failure to make timely amendments…may have a consequence that the operation of the legislation…may be found to be inconsistent with the Constitution.’ P 64 the Parchment
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