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”)

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.

Marissa O’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

Less than 6 months 6 months or more but less than 1 year 1 year or more but less than 3 years 3 years or more but less than 7 years 7 years or more but less than 8 years 8 years or more

Notice by Landlord

28 days

90 days

120 days 180 days

196 days

Notice by Tenants

28 days

35 days

1 year or more but less than 2 years = 42 days 2 years or more but less than 4 years = 56 days 4 years or more but less than 8 years = 84 days 84 days

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 days’ 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,

The RTB therefore, recommend including a few additional days’ in the notice served to ensure the legal minimum statutory notice period is satisfied

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 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);

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.

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 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

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 [2020] 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 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 [2020] 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.

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 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 –v-

Shannon [2016] 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.

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

Jason Milne is a partner in A&L Goodbody’s Environmental and Planning Group

The Polluter Must Pay

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 Jason Milne assesses a recent High Court decision and Judgment of Mr. Justice Humphreys

The 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. 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.

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

These 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 – 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: • 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. • 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

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.

2. Links between Social Welfare, Fair Deal and Revenue Commissioners Increased capabilities in data processing and 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

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 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!

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. 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

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 [2020] 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.

In the recent case of McKeown v Crosby [2020] 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 [2020] 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

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 [1998] 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 [2019] IESC 33 and Green v Hardiman [2019] 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 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 [2020] 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.

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?

Most 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 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

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

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

Background In Oysters Shuckers Ltd v Architecture Manufacture Support (EU) Ltd [2020] 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 [2019] IESC 65. Decision of the Court 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

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 [2009] 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.” 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

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

In 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 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

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. 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

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

The 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 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

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). 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.

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

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

This 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 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. Judgment

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

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

The Late Dr Eamonn Hall

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. 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 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

DSBA AGM

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

Negative Interest Rates WHAT ARE THEY AND WHAT CAN YOU DO ABOUT IT?

President. 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

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

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

The 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[2020] IESC 57 [59] 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 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 [2020] IESC 57 [58] 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

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 [2019] IECA 68) and to the High Court (UCC v the Information Commissioner [2019] 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 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. 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

Concurrent Wrongdoers Judgment

Kelley Smith assesses an important Supreme Court Judgment in the case of Defender v HSBC

In 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 [2020] 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 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

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 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

s 17(2) of the CLA provided HSBC with a complete defence to the claim.

The Supreme Court 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 [2017] 2 IR 196. See also, Cafolla v O’Reilly [2017] 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 [2002] 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.’