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Important High Court Motion Rules to note
A recent Law Society library LawWatch update, under the heading “New Legislation”, referenced the above-mentioned amendment to the Rules of the Superior Courts which was brought into effect by the Minister for Justice on the th September .
S.I. amends and renders even more perilous, for those acting for defendants in High Court litigation, strictures which were introduced by S.I. of , ules of the Superior Courts Procedure on Default .
If the new rules are applied strictly by the Court, and they will be, a default in delivery of defence in actions claiming unliquidated damages in tort or contract will, upon application to the Court by way of motion by the plaintiff, result in udgment against the defendant .for such speci c relief claimed in the statement of claim to hich the ourt considers the plainti to e entitled unless the ourt is satis ed for reasons to e recited in the order that it is necessary in the interests of ustice that the time for delivery of the defence should e e tended in hich case .. the Court . .shall to the e tent possi le determine the speci c relief claimed in the statement of claim to hich it considers the plainti to e entitled in the event of the failure of the defendant to deliver a defence . and shall make an unless’ order granting udgment against the defendant automatically in the event that it fails to deliver its defence within the extended time period.
Note, however O.27 R. 10 (4):
f the defendant a elivers a defence to the plainti not later than days after the service of such notice of motion for udgment and odges a copy of the defence in the entral ce ith a certi ed copy of the notice of motion attached thereto not later than ten days efore the return date the said motion for udgment shall not e put in the udges list ut shall stand struck out and the defendant shall pay to the plainti the sum of for his costs of the said motion for udgment.
The days of a first motion for udgment in default of defence invariably being struck out on the basis of an old-style order allowing further time for delivery of defence are well gone. At worst, the defendant will now have udgment in default of defence marked against it upon the first motion. At best, the court will extend time for delivery of defence but only where it is necessary in the interests of ustice . and .for reasons to e recited in the rder and even then, an unless’ udgment will be granted against their defendant in the event that its defence is not delivered within the permitted extension period and filed in the Central Office.
imon c leese is a partner at imon c leese olicitors
Liam Moloney Elected PEOPIL Vice-President
Liam Moloney, Managing Partner of Moloney Co Solicitors, has been elected as the new ice-President of the Pan uropean Organisation of Personal In ury Lawyers P OPIL . e is the first Irish lawyer to hold the position.
P OPIL is one of the largest Personal In ury Lawyers’ Association in urope with over members from urisdictions within urope and seven urisdictions outside urope. Its core ob ectives are to promote greater access to ustice for in ury victims and to enhance udicial co-operation in all uropean urisdictions in the field of Personal In ury Law.
DSBA Hill Walk
The DSBA hill walk hike took place recently in beautiful autumn sunshine up the Dublin mountains with breathtaking views over the City.
Led by DSBA president Diego Gallagher, colleagues, family members and canine loved ones assembled at the Blue Light pub car park where we navigated a circular loop of about minutes duration before ending conveniently from where we ventured and where Matthew Kenny had organised some food and refreshments.
We were fortunate in being expertly guided all the way up and down the foothills by High Court Judge and local resident Tony O’Connor. We hope to continue with this initiative in the future. evin iggins
Practice Observation for Conveyancers
As a specialist family law solicitor, I regularly receive enquiries from unmarried parties who are living together and whose relationship has broken down. Frequently the enquirer is stunned to learn that their former partner may have rights as a Cohabitee under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act , which commenced in January . In all cases, the enquirers have stated that they were not advised by their conveyancing solicitor in respect of the Act when purchasing their property. The Act provides a redress scheme for cohabitants whose relationship ends through separation or death. A cohabitant may apply to Court for maintenance, pension ad ustment orders, property ad ustment orders or a share in the estate assets of a cohabitant who has died.
Advice in respect of the Act needs to be given to all people purchasing a property, and of the option of entering into a Cohabitation Agreement, when they are purchasing a property, regardless of whether they are in a relationship or not. It’s important to note that in the case of MW v DC IC A the Court – in considering what constitutes living together – stated it would look at all the circumstances and that the parties don’t have to be physically living together day by day. Although clients may consider their relationships to be “unregulated”, under the Act a partner may acquire rights without either party intending such rights to be bestowed. nless parties contract out of the Act they fall under it if they satisfy the definition of a cohabitant. ltimately, a party seeking redress under the Act may not be successful however, that may only be determined after lengthy Court proceedings.
I believe this is a serious area of potential risk for solicitors carrying out conveyancing. In order to protect against this risk it may be prudent for Conveyancers to include a question in the Purchaser’s uestionnaire regarding relationship status which is broader than married or single . Also, Conveyancers may wish to consider including a reference to the Act in their initial advices to a purchaser to ensure that they have given the advice and are therefore covered if it was raised in the future.
Time Matters
Joanne yan and Lulu Trainor review a recent Court of Appeal that dealt with Inordinate and Inexcusable Delay
The Court of Appeal COA has upheld an Order of the igh Court striking out the plaintiff’s claim for inordinate and inexcusable delay Doyle v Foley I CA . The plaintiff’s claim arose out of a Syndicate Agreement for a share purchase in a stallion standing at the defendant’s stud farm. The stallion was leased to a stud in France in and was ultimately purchased by the French stud in .
The plaintiff issued proceedings in January claiming damages for breach of contract, negligence, breach of duty and specific performance in respect of the Syndicate Agreement Proceedings . Thereafter the relevant chronology is as follows January Statement of Claim delivered February defendant raised otice for
Particulars June plaintiff secured an interim in unction preventing the defendant from selling the stallion prior to the conclusion of the Proceedings July in unction vacated August plaintiff replied to e oinders April plaintiff filed otice of Intention to
Proceed March plaintiff issued motion to remit the
Proceedings to the Circuit Court March plaintiff issued fresh otice of
Intention to Proceed February plaintiff issued second motion to remit the Proceedings May defendant issued motion to strike out the
Proceedings Application .
Two periods of delay formed the basis of the Application from August to April , a period of three years and eight months First Period , and from April to February , a period of two years and ten months Second Period . Applicable Legal Principles
The igh Court Court and the COA determined the Application by reference to the principles set out by amilton CJ in Primor Plc v Stokes Kennedy Crowley I Primor . Was there inordinate delay .Was the delay inexcusable . If the answer to both questions is yes, where does the balance of ustice lie
The Court concluded that the First and Second Periods amounted to inordinate and inexcusable delay on the part of the plaintiff. The Court concluded that there was no active delay on the defendant’s part and that any inactive delay should not be counted against the defendant .
On the balance of ustice, the Court noted that the case was not a pure documents case, it would require oral testimony and held that a fair trial was not possible. The Court struck out the Proceedings.
COA - Inordinate and Inexcusable Delay
On appeal to the COA, the plaintiff conceded that the delay was inordinate but argued that it was excusable upon four grounds xplanations , namely the . time taken up with the taxation of costs from the interim in unction application .plaintiff’s ill health . plaintiff’s solicitor’s ill health and .lack of clarity in the defendant’s response to the application to remit the Proceedings to the
Circuit Court.
The plaintiff also argued that the defendant had acquiesced in the delay by not issuing a motion to dismiss, and that he would suffer no pre udice as this was a documents case .
The COA re ected that these explanations ustified or excused the delay. The issue of recovering the costs
Joanne Ryan is an associate and Lulu Trainor is a trainee in the Litigation and Dispute Resolution Department at William Fry
of an interim in unction was not relevant to the progress of the proceedings. The evidence of the ill health of the plaintiff and his solicitor was insufficient to explain why the case could not proceed during the First Period, especially when the plaintiff and his solicitor were able to progress the proceedings both before and after that period.
The COA was critical of the failure by the plaintiff to advance any evidence in support of his argument that individually the xplanations may not excuse the delay, but when taken together, they do. In re ecting this argument, the COA reiterated the earlier words of Denham CJ that seven times zero is still zero .
In terms of the Second Period, save for seven months when the plaintiff sought the defendant’s consent regarding the application to remit, and the separate one-month periods under the otices of Intention to Proceed, a delay of two years and one month was not excusable.
COA – Balance of Justice
aving established that the total delay of five years and nine months on the part of the plaintiff was inordinate and inexcusable, the Court went on to consider whether the balance of ustice lay in favour of striking out the Proceedings. Part of the balancing exercise involves weighing a plaintiff’s constitutional right of access to the court, against the defendant’s constitutional rights to fair procedures and the timely resolution of litigation. It also involves consideration of the greater public interest in ensuring the timely and effective administration of ustice. Inherent in the assessment of the balance of ustice is the asserted pre udice to either party.
In terms of the degree of pre udice which must be established by a defendant seeking to have proceedings struck out for inordinate and inexcusable delay, the COA, adopted the findings of Barniville J and Irvine J in recent urisprudence, and held that where the defendant proves culpable delay on part of the plaintiff, the defendant need only prove moderate pre udice arising from that delay. Once inordinate and inexcusable delay has been established, the defendant does not have to prove pre udice to the point that it faces a significant risk of an unfair trial modest pre udice suffices.
The COA held that the defendant established moderate pre udice should the case proceed to trial. This was a general pre udice inherent in a trial regarding matters that occurred between and and which would require critical issues to be resolved by oral testimony. In the court’s view, this sufficed to establish that the balance of ustice lay in favour of dismissing the proceedings. The COA refused the appeal.
Conclusion
The decision illustrates the courts’ intolerance for inordinate and inexcusable delay in the prosecution of proceedings. The decision also affirms the courts’ approach to dismissal applications, namely that each case depends on its own facts. Litigants should be mindful of the confirmation from the COA on the degree of pre udice a defendant must show to succeed in an application to strike out proceedings. Where a defendant establishes inordinate and inexcusable delay on the part of a plaintiff, they need only demonstrate that they would suffer moderate pre udice if the case proceeded to trial. P Once inordinate and inexcusable delay has been established, the defendant does not have to prove pre udice to the point that it faces a significant risk of an unfair trial modest pre udice suffices
Dishonesty and Misconduct
The Court of Appeal recently issued a udgment in the case of Law Society of Ireland v Daniel Coleman, which deals with the issue of dishonesty in professional regulatory proceedings. Aisling ay examines the udgment of Binchy, J, in which Whelan, J and Faherty, J concurred
The case of a ociety -v- oleman I CA had a protracted history and involved an appeal by a solicitor whose name was struck from the oll of Solicitors by Order of the High Court dated December , following findings made by the Solicitors Disciplinary Tribunal. The decision of Simmons J. in the High Court concluded that the Tribunal findings were legally sustainable and an Order was made striking the solicitor’s name from the oll of Solicitors, in circumstances where the solicitor has signed the name of a colleague on a series of contracts for sale, without the knowledge or consent of that solicitor colleague, with the intention of deceiving a lending institution.
Two core arguments were advanced by the solicitor in the Court of Appeal, which were, firstly, that the proceedings before the Tribunal were contaminated by procedural unfairness resulting in the admissions of the solicitor being unreliable, and secondly, related to the findings of dishonesty made by the Tribunal, which the solicitor claimed were flawed in three respects; . The pleading of dishonesty was inadequate, indeed not pleaded expressly .The Tribunal and igh Court made a finding of dishonesty without identifying any test for same; . The trial udge had made a finding of dishonesty on a strict liability basis.
We will consider below the important aspects of the Court of Appeal’s udgment, in particular in respect of the Court’s decision relating to dishonesty and misconduct, and its impact on professional regulatory proceedings where the conduct of the professional contains elements of dishonesty and the requirements of professional regulators when framing allegations of misconduct that are on their facts capable of being found to be dishonest.
Dishonesty
The Solicitors Disciplinary Tribunal the Tribunal found that the solicitor was guilty of misconduct. No specific’ mention of findings of dishonesty were made by the Tribunal in its findings.
Misconduct under section d of the Solicitors Amendment Act is defined as “conduct tending to bring the solicitors’ profession into disrepute”. Counsel for the solicitor argued that because no party had in fact suffered any financial loss as a result of his actions, these actions could not be regarded as dishonest. It was also submitted on behalf of the solicitor that there is an obligation, in circumstances where dishonesty is being alleged by a regulatory body, that it must always be pleaded with particularity and reliance was placed on English and Welsh authorities by the solicitor. The Court of Appeal distinguished between the rules governing the professional regulatory regime here and in England and Wales. Binchy J held that the trial judge was correct in concluding that the English and Welsh authorities submitted on behalf of the solicitor on this issue were of little assistance, given what was described as the very real differences in the regulatory regimes applicable to solicitors in this country and in England and Wales, having regard to the differing rules and procedures in that jurisdiction and those that apply in this urisdiction, including our constitutional dimension. As regards the alleged failure of the trial udge to apply a test for dishonesty, the solicitor contended that his actions did not constitute misconduct, though accepted that some allegations, connoted dishonesty. The solicitor argued that the trial judge had failed to adequately apply a test for dishonesty. Binchy J noted
Aisling Ray is an associate in Fieldfisher’s Public and Regulatory Department
that a test in circumstances whereby the solicitor admitted that his actions were capable of being objectively assessed as dishonest served no useful purpose in this case. The case of Law Society v Kathleen Doocey was cited with approval by Binchy J as regards whether dishonesty is a matter to be considered objectively or subjectively. In Doocey, misconduct was admitted, but dishonesty was denied, the opposite of the current case. Donnelly J. in the Doocey case noted that dishonesty is to be udged on an ob ective standard, based on the standards of the community as to what constitutes dishonesty, with a limited subjective element relating to the state of the individual’s belief or knowledge as to the facts. As the solicitor admitted that his actions were capable of being ob ectively assessed as dishonest, the fact that the trial judge in the present case did not expressly apply an ob ective test was irrelevant. Therefore, the finding that the solicitor had acted in a manner constituting dishonest misconduct was the “rational and indeed unsurprising conclusion” given the circumstances of this case.
Misconduct
The Court of Appeal also considered the issue of how allegations of misconduct should be framed by regulators.
The trial judge had referred to O’Laoire v. Medical Council in which the Court noted the onus of proof lay upon the regulator to prove beyond reasonable doubt every relevant averment of fact which was not admitted by the respondent practitioner and to establish beyond reasonable doubt that such facts, as so proved or admitted, constituted professional misconduct. owever, the trial udge noted that this was not authority for the proposition that a regulator must prove, to a criminal standard, facts which are admitted by a respondent practitioner. Thus, the absence of the word “dishonesty” in this particular case was no defence to the charge of misconduct.
In light of the above, it was held that a strict analogy with criminal proceedings is of limited assistance. Provided that the requirements of natural justice are met, the obligation on the regulator is not the same as that of a prosecutor in criminal proceedings. What is required in professional regulatory proceedings is that the respondent practitioner is clearly on notice of the case that has to be met, as was the case here where it was noted that the solicitor fully understood and addressed the allegations made against him and had effectively conceded the core allegations of placing the name of a colleague on fictitious contracts with the intention of misleading a financial institution.
Conclusion
It is clear from this judgment that professional regulators must ensure that all allegations they are bringing against members of their professional body, while not necessarily required to be expressed to the same standard as in a criminal indictment, must nonetheless be expressed clearly as to the case to be met by the respondent practitioner, both in terms of fact and law. The respondent practitioner must be clear as to the precise nature of the allegations that must be met.
Therefore, best practice for regulators, in cases where the facts disclose potentially dishonest conduct, is to expressly plead in the allegations of misconduct, not only what the respondent practitioner is alleged to have committed, but to include express reference to “dishonesty” in the allegations from the beginning. P
Leadership in the era of Remote Working
With remote working appearing to be here for the long haul, Dr Melrona Kirrane looks at the challenges for leaders and sets out five key ideas
The essence of effective leadership is the capacity to influence individuals and groups towards achieving organisational goals. So leadership, in essence, is a social influence process. ere I would like to firstly share five key ideas of what lies beneath this process and then consider the additional demands of leaders in a virtual work environment.
The first idea is that good leaders have good character. By that I mean they are competent and have integrity. Competence comes in many forms, but the competencies that are particularly relevant for leadership include the capacity for analysis, communication and negotiation as well as expertise and personal fortitude. Integrity is a confluence of ethical behaviour, respect and honesty and a high degree of coherence between the values of courage, temperance, justice, prudence and humility. While we may all know leaders who do not reflect these character dimensions, good leaders embody them and this is what sustains the well-being of the people around them and the organisations in which they work.
The second key idea is that there is no one best way to lead. We all have to find our own personal leadership style and brand for an authentic expression of leadership. That said, there are numerous theories of effective leadership that can certainly help identify behavioural pathways for leaders. One popular approach is called Transformational Leadership. This identifies four I’ of essential behaviours of effective leaders. The first is Inspirational motivation where a leader articulates an appealing vision and highlights the purpose and meaningfulness of tasks. The second is Individualised consideration, where the leader attends to followers’ needs and concerns and acts as a mentor and coach to others. Thirdly is Idealised influence, where the leader acts as a role model and provides a consistent sense of mission and values. Finally, Intellectual stimulation is where the leader seeks input on problems and solutions and encourages curiosity and innovation. These four behaviours can be a helpful platform from which leaders can begin to build their own personal leadership style that applies across all situations.
The third key idea is that adaptability is the route to longevity. We live in a volatile, uncertain, complex and ambiguous world and a leader’s job is to respond to such environmental dynamics in a manner that is appropriate and effective. This means a leader must be flexible, adaptive and proactive and eschew one set of fixed responses that may have been effective in more stable times. The hybrid work environment demands such adaptability from leaders. Critical new behaviours required here include a focus on communication norms rather than behavioural norms; regular interaction and feedback, clarity concerning teamwork processes, good data, faster detection of problems and mistakes, and although it may sound like a contradiction, formal time for informal interaction.
The fourth key idea is that the leader’s role is to be a catalyst for all elements in the leadership situation to coalesce and result in goal achievement. This means getting out of the way of the operators, embedding the cultural values of the organisation in all activities and aligning everyone’s work with
Dr Melrona Kirrane is associate professor of Organisational Psychology at DCU Business School
the strategic intent of the organisation. There are two elements that enhance a leader’s capacity to be a catalyst that I would emphasise. One is emotional intelligence, or EQ. This concerns your awareness of yourself and how you use this awareness to exert self-control. It also incorporates social awareness, which refers to your ability to pick up social cues and use them to enhance your interactions with others. Happily, unlike cognitive ability, or IQ, evidence suggests that emotional intelligence can be enhanced via training programmes or using insights from authors such as Daniel Goleman. The second element that supports your role as a catalyst is fostering psychological safety in your work environment. This means modelling curiosity, remembering you are fallible, and emphasising learning as much as doing. Together, emotional intelligence and psychological safety will serve your effectiveness as a catalyst in the hybrid work environment.
The final idea is that leaders are self-made – they are not born but can be developed and should be focused on as a project of work over one’s lifetime as a leader. One route to enhancing your leadership is to seek out crucible experiences’. These are tough challenges that make you dig deep to show yourself what you are made of and boost your confidence to aim even higher the next time. Another route is to enroll in a leadership development programme like the one I designed and developed for female leaders at DC https business.dcu.ie course leadershipdevelopment-for-women . It’s a programme for women simply because men and women approach leadership differently and studies show that all-female learning environments are particularly enriching for women.
So these five key ideas form the bedrock of effective leadership in any context. But the remote working environment calls for an additional type of leadership, known as e-leadership, which requires the development of further distinct abilities. In this context, leaders, or e-leaders’, need to be more democratic in providing access to information and maintaining open communication channels. They need to establish a suitable social climate and demonstrate exemplary interpersonal skills. -leaders also need to address the teams’ social-emotional needs and promote healthy teams through frequent interactions. They should demonstrate a more inclusive leadership style where employees feel free to present their ideas, allowing them to participate in the decision-making process and encourage autonomy, collaboration, and responsibility. They must create a positive work atmosphere with a sense of connectedness within the group. This is facilitated by maintaining clear norms of communication, having regular interaction with the teams, providing positive feedback, avoiding ambiguous messages, and conducting good supervision of each member’s contribution. -leaders should develop tolerance for ambiguity and be creative in establishing the organisational structures and processes that ensure that all members of virtual teams are working for the shared objective. They should not be anxious about distributing the leadership well within their team and allow all team members take responsibility and assume authority to consider both their own spheres of work and the entire project.
Most importantly, effective e-leadership is characterised by building trust with each member of the team. Trust takes a long time to build up and can be supported by applying the ideas from the ABCD model of trust. A stands for Able’ which refers to the demonstration of your ability or competence in a specific domain. B refers to Believable’ such that you act with integrity. C refers to Connected’ and relates to how much you share of yourself in a personal sense with others, and D refers to Dependable’ which means honouring your commitments. Leaders must find opportunities to demonstrate these behaviours on a daily basis and so build trust among members of their work unit.
It may also be helpful to think about TRUST as a mnemonic, with T standing for Transparency, where there are no hidden agendas, full information is provided, you say what you mean, enable disclosure and encourage connection. R stands for respect which enables people to speak up when there’s a problem, and share creative solutions. It involves a mindset shift from power OVER to power WITH. U stands for understanding others by standing in their shoes and seeing things from other perspectives. S stands for shared success such that team members value working together to achieve collective goals. Finally, T stands for truth whereby honesty characterises interactions. esearch in the field of e-leadership is still in its infancy, but the ideas shared above should support leaders’ transition to the e-leadership space. As leaders commit to building skill in the competencies outlined and become more proficient in demonstrating them in their behaviour, the well-being of their teams and organisations can be enhanced. P -leaders should develop tolerance for ambiguity and be creative in establishing the organisational structures and processes that ensure that all members of virtual teams are working for the shared objective
Consumer Representative Actions Take Shape – but who will pay?
Consumer-facing businesses, particularly those operating in sectors which are sub ect to regulation, are bracing themselves for a potential increase in consumer litigation following the publication of the General Scheme of epresentative Actions for the Protection of the Collective Interests of Consumers Bill the Scheme . Julie Murphy-O’Connor and isín Peart look at some key elements of the Scheme, including the incongruity it would appear to create in terms of how actions of this potential magnitude might be funded in Ireland
Background
Ireland has been moving closer to the introduction of a form of consumer class action since the draft epresentative Actions Directive - Directive on epresentative Actions for the Protection of the Collective Interests of consumers, and repealing Directive C COM the Directive was published in .
The implementation of the Directive will fundamentally alter the commercial litigation landscape in Ireland, and across urope, by enabling consumers to act collectively and harmoniously in claims concerning a wide range of consumer-facing industries, including financial services, technology and health. The new mechanisms will also allow a wider application of class actions to data privacy breaches than is currently provided by Article of the General Data Protection egulation and section of the Data Protection Act .
Recent Progress
The Directive came into force on December with a deadline of months for Member States to transpose it into their domestic law. Prior to the publication of the Scheme, it was unclear to what extent Ireland would choose to implement the Directive, which allowed a considerable amount of discretion to individual Member States. owever, we now have a clearer picture of what the act is likely to look like, sub ect to any amendments which might be made as it proceeds through the legislative process.
Pre-legislative scrutiny of the Scheme was commenced by the Joint Committee on nterprise, Trade and mployment on June . When that process is complete, the Bill will be formally drafted and we will have more clarity on its precise provisions. It will then pass through the D il and the Seanad before being signed into law by the President. The Directive requires the new law to be operational in each Member State by June at the latest.
Key Elements
Types of Actions: The new law will apply to actions taken under a wide-ranging list of consumer protection legislation against any business that deals with consumers. The list of legislation has not been amended or expanded from what was set out in the Directive but that was already quite expansive and covered most areas of consumer law, including financial services, technology and health.
Julie Murphy-O’Connor is a partner in the Dispute Resolution Team at Matheson. Róisín Peart is a professional support lawyer at Matheson
Retrospection: The Directive provides that the new regime will only apply to actions brought after June but it appears possible that those actions could be based on alleged infringements of law which took place before June - Article of the Directive Transitional Provisions states that it will apply to representative actions brought on or after June . Article goes on to provide that certain provisions in relation to the suspension of limitation periods for in unctions will only apply to claims based on infringements that occurred on or after June . Given that Article does not mention the timing of the infringements that might form the basis of a representative action brought on or after June , it might be inferred that those infringements may occur prior to that date. Businesses need to be mindful of this element of retrospection as we move closer to the implementation date. uali ed entities Actions can only be brought by a qualified entity as designated by the Minister for nterprise, Trace and mployment and cannot be initiated by private law firms. Ministerial regulations will be enacted to deal more specifically with the designation process but broadly speaking, qualified entities must be independent properly constituted and solvent operating for at least months in the consumer protection area and be non-profit – a key criterion we will be looking at in more detail. Designation will be reviewed every five years. ross- order Several qualified entities can come together to bring cross-border actions and the uropean Commission will maintain a list of qualified entities from each Member State for that purpose. edress In Ireland, actions can be taken in the igh Court for in unctive relief and or financial redress. Consumers do not have to opt-in to representative actions for in unctive relief but they must expressly opt-in to representative actions for monetary redress. In reality, this could mean that consumers might wait for the outcome of the in unction hearing before ultimately electing to oin the redress action and a successful in unction could therefore have the potential to precipitate a significant increase in the number of consumers participating. Limitation periods are suspended while the in unction is being determined to ensure that consumers’ rights to proceed to redress are preserved. Consultation: The Scheme requires traders to engage in pre-litigation consultation to resolve the alleged breach and the court will only authorise a representative action
to proceed if that process fails to yield an agreement. Alternative dispute resolution is encouraged but not required for that purpose. Costs: Other than charging a modest entry fee to consumers to oin an action which will be designated by further regulations , qualified entities must bear the costs of any actions brought under the Scheme and costs will be awarded by the courts in accordance with the loser-pays principle. Again, this is a key criterion we will discuss further below. There is provision for partial costs orders to be made against individual consumers if their intentional or negligent conduct results in a party incurring costs. u lication Once an action proceeds to redress after the in unction stage, any settlement reached between the parties must be approved by the court. The Scheme requires traders to inform the consumers concerned of any approved settlement, though it does not specify what level of detail might be required to be given. A qualified entity is also required to publish information in its website on the outcomes of the representative actions it has brought. The Directive refers specifically here to the importance of the reputational risks associated with such publication in acting as a deterrent for traders infringing consumer rights and businesses should be aware that it will be difficult to resolve disputes which have proceeded to redress stage in a discreet manner.
Funding
We have referred in our previous briefings to the fact that the funding of litigation by third parties who have no interest in the dispute is prohibited under Irish law. So, particularly with costs being awarded under the Scheme on a loser-pays principle, the question arises as to how a non-profit organisation might be expected to fund litigation of this potential magnitude in Ireland.
The Directive expressly requires Member States to ensure that the costs associated with taking a representative action do not create a financial obstacle and it is suggested that court fees should be limited and access given to legal aid or public funding. owever, when you look at how this requirement is being implemented under the Scheme – while it does provide for regulations to be made to remove court fees, there is no scope in its current form for any type of public funding or legal aid. The Scheme does contain a provision for third party funding of representative actions insofar as permitted under rish law”. owever, it is difficult to see what the practical purpose of that provision is in circumstances where most forms of third party funding are not permitted as a matter of Irish law, unless it is to provide for future change.
The udiciary has been calling for legislative intervention to provide for the possibility of third party litigation funding in Ireland for some time. In January a oint report by the Bar Association and the Irish Society for uropean Law was published which strongly recommended that proper provision be made for litigation funding as an essential mechanism to access ustice. Similar recommendations were made in A eview of Civil Justice report, known as the Kelly eport, in December . This eport makes over recommendations to improve the Civil Justice system in Ireland. The Government has most recently, on May , published an implementation plan for the Kelly eport which indicates no further policy change in relation to litigation funding apart from a limited form of third party funding for insolvency practitioners. The Kelly eport implementation plan does provide for legislation to be drafted next year to allow for a limited form of third party funding for liquidators, receivers, administrators under the Insurance o. Act , the Official Assignee and trustees in bankruptcy to fund proceedings that are intended to increase the pool of assets available to creditors . We will await the publication of a further report and recommendations from the Law eform Commission, so it seems unlikely that there will be any substantive change in the law before the Scheme comes into effect next year.
Separately, the Kelly eport implementation plan provides for legislation to be drafted in for the introduction of a comprehensive multi-party action procedure, similar to the Group Litigation Order process in the K, by . So either way, collective actions will likely be a feature of the very near future of litigation in Ireland.
Conclusion
Businesses should begin to prepare now for the implementation of this new collective redress procedure, particularly given the potential for actions under the Scheme to apply to infringements prior to it coming into force. The key message for businesses operating in urope is that it has never been more important to re-evaluate, enhance and implement strong governance and compliance systems and ensure operational resilience and effective enterprise risk management processes. This will be the first and best line of defence against funded class actions aimed at defending consumer interests.
Whilst a lack of availability of third party funding in Ireland may, for the time being, act as an effective bar to collective redress proceedings being brought here, qualified entities in Ireland are not restricted to bringing proceedings in their own urisdiction. It will be open to them to bring cross-border actions in other Member States where third party funding is permitted, or to oin in cross-border actions with other qualified entities if they have a branch or consumer domiciled in that alternative Member State.
New Directors’ Duties – Take Note
On July , the uropean nion Preventative estructuring egulations the egulations were introduced which gave effect to Directive on restructuring and insolvency the Directive . Lorna Osborne reviews the legislation and say that the Directive’s principal objective is to ensure that all member states have comparable and effective frameworks in place for early warning and prevention of corporate insolvency
The Regulations amend a number of provisions of the Companies Act the Act relating to examinerships in order to transpose requirements of the Directive. Interestingly, the Regulations have also amended the Act to provide that, for the first time, directors of companies now have a statutory duty to consider the interests of creditors during the period approaching insolvency.
Directors’ Duties During Insolvency
Traditionally, a general rule of Irish corporate law was that a director of a company owes certain fiduciary duties to the company, and the company alone. This principle is codified under Section of the Act which provides: “a director of a company shall owe the duties set out in section the relevant duties to the company and the company alone .
Section of the Act codified the fiduciary duties of directors and includes a duty to act in good faith, to act honestly and responsibly, to avoid conflicts of interest and to exercise care, skill and diligence in conducting the affairs of the company.
However, under Irish common law, there is a modification to this general rule where the company is insolvent and the directors are aware of the insolvency. It is well established under Irish case law that, when a company is insolvent and the directors are aware of the insolvency, the directors have a duty to have regard to the interest of the company’s creditors. However, until the introduction of the Regulations, this duty to have regard to creditors’ interest had not been recognised under statute.
New Statutory Duty in Favour of Creditors
The Regulations amend the Act by introducing a new section A and a new section i into the Act. New section 224A requires a director of a company ‘who believes, or who has reasonable cause to believe’ that the company is, or is likely to be, unable to pay its debts to have regard to: • the interests of the creditors; • the need to take steps to avoid insolvency; and • the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business of the company. ew section of the Act has been amended to introduce a new directors’ duty which provides that a director of a company shall “have regard to the interests of its creditors where the directors become aware of company’s insolvency”.
The provisions are significant – not only do they put the common law duty to have regard to creditors’ interests on a statutory footing, section 224A also creates two additional duties for directors i to have regard to the need to take steps to avoid insolvency;
Lorna Osborne is a managing associate at Addleshaw Goddard Solicitors. Lorna is a member of the DSBA Commercial Law Committee
and ii to have regard to the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business of the company.
Enforceability of the new Duties
As with the existing directors’ duties under the section 228 of the Act, the new statutory duty to have regard to creditors’ interest is owed to the company and the company alone. This means that creditors will have no direct right of action against a director for a breach of his her new statutory duty. A breach of this directors’ duty will most likely be enforced by a company acting through its liquidator.
A director found to be in breach of his her fiduciary duties may be liable to account to the company for any gain made directly or indirectly from the breach and or to indemnify the company for any loss that occurred as a result of the breach.
Introduction of Early Warning Tools
The egulations also inserted a new section A into the Act which provides that a director may have regard to ‘early warning tools’ which alert directors to circumstances that could give rise to a likelihood that the company will be unable to pay its debts and can identify restructuring frameworks available to the company and signal to such directors the need to act without delay.
owever, the new section A does not give any indication into what these “early warning tools” involve and it should also be noted that this provision is not imperative – it merely states that directors may have regard to early warning tools without setting out any consequences should a director choose not to consider such tools.
Conclusion
These amendments to the Act provide some welcome clarity on the extent of directors’ duties leading up to and during the period of insolvency and helpfully establish, on a statutory footing, that these duties are owed to the company and the company alone.
It should be noted that Section A went beyond the common law duty to have regard to the creditors’ interest and introduced two new duties i to have regard to the need to take steps to avoid insolvency; and ii to have regard to the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business of the company. It will be interesting to see how these novel duties will be interpreted by the Irish courts.
In the meantime, company directors who are concerned about the company’s ability to pay its debts or its financial stability should be cognisant of, and seek legal advice in relation to, their new statutory duties. P Section A also creates two additional duties for directors i to have regard to the need to take steps to avoid insolvency; and ii to have regard to the need to avoid deliberate or grossly negligent conduct
